The decision of where Volkswagen’s new SUV will be built may be delayed by an incentive war between Tennessee and Mexico.

The SUV, squarely aimed at the American market, could be added to either assembly facility.

But the give and take between Tennessee and Volkswagen, combined with the union battle earlier this year, may be moot since the expressed preference of Volkswagen management has always been for Chattanooga to add a production line to build the SUV.

"VW is taking way too long again to tackle another pressing U.S. problem," Arndt Ellinghorst, a London-based analyst, told Reuters. "The crossover will be a gainful addition to their portfolio, VW has got no time to waste."

According to sources talking on condition of anonymity to Reuters, after the Mexican authorities pitched the German automaker for the local production of its future seven-seater crossover, Tennessee decided to reopen talks with Volkswagen.

Our newspartners at the Chattanooga Times Free Press have reported that Gov. Bill Haslam’s administration has returned to the table with Volkswagen officials, with discussions over incentives and assistance programs to persuade the German auto manufacturer to build a new line of vehicles at its Chattanooga plant.

"We've re-engaged in discussions with them," Haslam told reporters. "I don't really have any update beyond that except we are talking with them."

Volkswagen’s Puebla, Mexico facility, which is over 50 years old could produce the SUV.

Another option may be sister auto company Audi’s San Jose Chiapa plant, nearly 35 miles from the Puebla facility. The Audi plant will expanded to assemble the Audi Q5 SUV in 2016.