Officials hope their chances won't be undermined by renewed efforts in the state Legislature to enact a law to guarantee employees the right to store firearms in vehicles parked at work.
Volkswagen began making the midsize Passat sedan at its $1 billion plant in Chattanooga in 2011. The facility was designed to be able to accommodate the expansion to double its current size if needed.
Volkswagen, which has given largely glowing reviews of its experience in Tennessee, has spoken out against the guns proposal as hurting the company's security efforts at the plant.
Republican Gov. Bill Haslam, who has tried to moderate the proposal seeking to allow workers to override employers' wishes, acknowledged that the measure creates difficulties.
"Volkswagen has been up front that that's a concern of theirs," Haslam said. "We obviously would like to get that SUV."
Haslam has said he wants to find a better balance between the competing claims of gun and property rights.
"There's a lot of discussions going on right now prior to the Legislature formally convening (on Jan. 28) about if we can come up with something that addresses both of those situations," Haslam said.
Haslam was unwilling to say whether the passage of a guns-in-parking-lots measure would hurt the Chattanooga plant's chances of landing the new model.
"It all depends what that resolution looks like," he said.
Spokesmen for Herndon, Va.-based Volkswagen Group of America and for the Chattanooga plant declined to comment last week. Frank Fischer, the plant's chairman and CEO, had strong words about efforts last year to pass the guns measure.
"On the whole, the cooperation and mutual understanding has been excellent," Fischer said in an April interview with The Associated Press. "The only thing we see critically as a company is the guns law."
"We would not welcome people being able to carry weapons on factory grounds," he said.
Republican Senate Speaker Ron Ramsey has said he believes Volkswagen can be persuaded to drop its concerns about the bill.
"I think that if you talk to them reasonably about what we're talking about here one-on-one, they'll be fine with it," Ramsey told reporters after Republicans added to their wide majorities in both chambers after last year's election.
"Because I will guarantee you there are gun carry permit holders that have a firearm in their car in their parking lot as we're sitting here speaking," he said. "And all we're doing is making those people legal."
House Majority Leader Gerald McCormick, R-Chattanooga, opposed last year's bill but said he doesn't expect the fate of the measure to either make or break the state's chances for VW expansion.
"They're opposed to guns in parking lots, but they've never linked that to where they're going to put their next plant," McCormick said. "If we're competing with Mexico, I'd certainly put the safety of workers in Tennessee up against Mexico any time.
"I think it's a number of things they look at, including incentives and their ability to export and tariff," he said. "I don't think the guns-in-parking-lots issue is going to be a deciding factor."
McCormick said he expects the final version of this year's bill to include elements that will go against the wishes of both the gun and business lobbies.
"If it makes everybody unhappy, it may make for some pretty decent legislation," he said.