Volkswagen May Build Vehicles at U.S. Ford Plants in New Alliance
【Summary】A day after Germany’s top automakers were summoned to a meeting at the White House for talks with economic adviser Larry Kudlow to discuss tariffs on vehicles exported from the U.S., Volkswagen CEO Herbert Diess said that VW could use some of the Ford Motor Company's spare factory capacity to make some vehicles in the U.S.
WASHINGTON — A day after Germany's top automakers were summoned to a meeting at the White House for talks with economic adviser Larry Kudlow to discuss tariffs on vehicles exported from the U.S., Volkswagen CEO Herbert Diess said that VW could use some of the Ford Motor Company's spare factory capacity to make some vehicles in the U.S.
Tuesday's White House meeting was scheduled in response to President Donald Trump's pressure on German automakers, including VW, to make more vehicles in the U.S. Trump has threatened to increase tariffs on imported autos, arguing that European duties on American cars are unfair.
Trump administration officials met on Tuesday with German automotive executives, including Diess, Daimler CEO Dieter Zetsche and BMW officials. At the meeting, Diess expressed his willingness to explore building additional models in the U.S.
"The president has a point in trying to convince us to invest more into America, and we are prepared to invest more," Diess said Tuesday. He added, "We might use Ford capacity here in the U.S. to build cars for us."
Ford signed a signed memorandum of understanding with Volkswagen in June, which covers "conversations about potential collaborations across a number of areas" but "it is premature to share additional details at this time."
Volkswagen has said it's considering building a new plant in the U.S. to make VW and Audi vehicles, and Diess said that's still the case. The company currently has one American plant in Chattanooga, Tennessee that opened in 2011. The factory currently produces the VW Passat and Atlas SUV.
"We are in quite advanced negotiations in Tennessee, but there might be other options as well," Diess said.
VW rival BMW has also said it is considering building a second plant in the U.S. BMW currently operates a sprawling plant near Spartanburg, SC that produces the company's X3, X4, X5, and X6 SUVs. Most of these vehicle are shipped overseas. The Spartanburg plant employs around 9,000 people.
For VW, the potential Ford collaboration comes as the Dearborn, Michigan-based automaker is reducing its American car manufacturing capacity.
Ford has already announced it's discontinuing most of its slow-selling passenger cars, including the Fusion, Fiesta and Taurus. The move is in response to a shift in consumer preferences towards SUVs, truck and smaller crossovers.
Ford has not yet announced any plant closures, unlike rival General Motors, which last week announced plans to likely close several U.S. factories and one Canadian plant and eliminate 14,000 jobs. However, Ford is widely expected to implement major cost cuts in the coming months to shore up its profitability. Morgan Stanley projects that Ford might cut about 25,000 jobs next year.
Volkswagen and Ford have been in discussions about a global alliance since signing the MOU in June, but the nature of those talks has been not been made public until now.
Diess also said the alliance might include a collaboration on commercial vehicles in Europe.
VW U.S. CEO Scott Keogh said last week at the Los Angeles Auto Show that VW plans to introduce an electric car in the $30,000 to $40,000 range in the U.S. in 2020. The car is poised to be a serious competitor to Tesla's mass-market Model 3. However, Keogh said that car will be imported from China, for now.
Hinrich Woebcken, CEO of Volkswagen Group of America, said in an interview with Autocar in July that Volkswagen will build two electric cars in the United States. Today's statements from Diess hinted that these new electric models might be build in the U.S. in a collaboration with Ford.
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