Governments in Tennessee, Hamilton County and Chattanooga are planning a new round of public incentives in conjunction with Volkswagen’s recently announced expansion.

The state is providing a $165.8 million grant for site prep and a $12 million grant for training new employees, according to a news release. As part of the incentive package, the company has agreed to waive its right to claim other tax credits.

Hamilton County and Chattanooga have an existing payment-in-lieu-of-taxes, or PILOT, agreement with the company. A city spokesperson said the agreement will be changed to reflect the expansion.

The company announced Monday morning that it plans to spend $600 million in Tennessee and create 2,000 new jobs at its local plant to manufacture a new midsize SUV for the U.S. market. Production is slated to begin in the fourth quarter of 2016.

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The company also announced that it will create a new research and development center in Chattanooga.

Gov. Bill Haslam said the expansion and the new research and development center “sends a clear signal that Tennessee can compete with anyone in the global marketplace.”

Chattanooga Mayor Andy Berke said the expansion will result in a huge capital investment for the region.

“From day one, the city and county have worked hard to see today become a reality, when we can announce that Volkswagen will be adding more jobs, more investment and expanding their presence in Chattanooga,” he said.

Hamilton County Mayor Jim Coppinger said the company’s planned research and development center will create “tremendous opportunity” in the future.

“By working with Volkswagen to build on the tremendous success of their initial job creation project, we are establishing a foundation for continuing economic growth for years to come,” he said.

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