Ford and Volkswagen may form new global automotive alliance – VW to use Ford's US plants to build cars

The Ford and Volkswagen partnership will go beyond just co-developing commercial vehicles, it seems. Following a recent meeting at the White House, Volkswagen AG’s CEO Herbert Diess said he intends to build an alliance with Ford Motor Co and might use the Blue Oval’s US plants to build cars, according to a Reuters report.

Diess also said VW was “considering building a second car plant” in the US, adding: “we are in quite advanced negotiations and dialogue with Ford Corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry.”

The plan is in line with US president Donald Trump’s move to impose strict new tariffs on European-made vehicles as part of his “America First” trade policy. The supposed auto tariff levied on imported cars and parts could be as high as 25%, but details of the policy have yet to be announced.

Ford executive chairman Bill Ford Jr told reporters that talks with Volkswagen about an alliance are going “very well.” When asked about Diess’ comments that VW could use some of Ford’s unused capacity for car production, Bill Ford said the companies “haven’t gotten that granular in our talks yet,” and declined to reveal more about the possibility of forming an alliance with VW as the automaker had “a lot of definitive things to talk about.”

RBC Capital Markets analyst Joseph Spak said in a research note that said Diess’ comments raised the chances that VW would use some of Ford’s unused capacity as part of a broader partnership. Spak also said that a European or Asian automaker could seek to acquire some of General Motors Co’s unused capacity – GM recently revealed plans to shut down five North American plants.

“VW may have a little negotiating power as some of the GM facilities could be bought (although this could impact their broader intentions with Ford),” Spak wrote. Volkswagen currently runs an assembly plant in Chattanooga, Tennessee, but Diess said the company (VW) is in “quite advanced negotiations in Tennessee but there might be other options as well.”

Diess added VW would not take an equity stake in Ford as part of its alliance. “We are building an alliance with Ford which will strengthen Ford’s position in Europe because we will share platforms,” he said. “We might use Ford capacity here in the U.S. to build cars for us.”

On the products side of things, both VW and Ford plan to release a new range of vehicles that will be aimed to better serve the evolving needs of customers. According to some news reports, electric vans look to be a strong possibility. A MoU has also been signed earlier this year, and the two companies will explore potential projects across a number of areas.

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