Last year, Tesla CEO Elon Musk and 38 company and environmental group leaders signed a letter proposing that the California Air Resources Board (CARB) lets VW off the hook in California for having cheated on reporting emissions in its diesel cars and in return, VW would be forced to significantly invest in electric vehicles or other zero-emission vehicles manufacturing in the state.

According to German newspaper Welt am Sonntag (via Reuters), the EPA, potentially inspired by the proposal, asked Volkswagen to manufacture electric vehicles at its Tennessee plant as part of the current negotiation over the fix of the more than 500,000 diesel vehicles in violation of pollution limits in the US.

Volkswagen is still not commenting about the state of the negotiations with US authorities, but the German newspaper reports that the EPA formally asked VW to produce electric cars at its Chattanooga, Tennessee factory.

Although VW didn’t confirm new electric vehicle manufacturing capacity in the US since the diesel scandal broke last year, the automaker has been announcing many new upcoming electric car models.

At CES last month, the company unveiled its all-electric microbus concept: BUDD-e with a massive 101 kWh battery for 373 miles of range.

The microbus featured Volkswagen’s new electric platform called MEB, which is short for Modular Electric Toolkit. This platform will allow the automaker to develop electric vehicles from the ground up rather than based on current gas-powered models, like the company’s only all-electric car: the e-Golf.

VW CEO Matthias Müller said the group will introduce 20 new electric vehicles by the end of the decade under all its brands (VW, Audi, Porsche and others).

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