Volkswagen is planning a new US plant for electric cars as it takes the fight to Tesla

German car manufacturer Volkswagen is marking out spots for a future electric vehicle factory in North America, as major car firms gear up to face rival firm Tesla's impact on the market.

The newly-appointed chief executive of Volkswagen's US arm said the firm is planning a new plant to build a car that has yet to be revealed, due to be released in 2020 at a price point of up to $40,000 (£31,332).

"We are 100 per cent deep in the process of 'We will need an electric car plant in North America', and we're holding those conversations now,” Scott Keogh told journalists at the Los Angeles auto show last night.

Volkswagen said earlier this month that it planned to spend almost €44bn (£39.2bn) on developing electric cars, autonomous vehicles and new mobility services by 2023, while also exploring potential partnerships with US manufacturer Ford.

Keogh said the firm's existing plant in Tennessee could have the capacity to build its electric cars, but it will not necessarily be chosen. 

The news comes just days after rival manufacturer General Motors laid off around 8,000 of its workers and closed five plants in the US, as it hopes to cut costs while doubling down on resources for electric and autonomous vehicles.

Tesla's growing influence in the market of electric vehicles has pressed fast forward on the plans of many major car makers, as the young company makes headlines weekly on the eccentric behaviour of its chief executive Elon Musk.

Tesla announced earlier this year it would be building another so-called gigafactory in Shanghai to keep up with demand for its cars in China, where tariffs on imports have hit sales dramatically.