Volkswagen is considering adding a second factory to its U.S. manufacturing footprint and could tap Ford plants to build its cars, VW CEO Herbert Diess said after a meeting at the White House.

“We need additional capacity here in the United States, we need an additional car plant for VW and Audi combined,” Diess told reporters in Washington after meeting with President Donald Trump and trade officials.

Diess also said they are in advanced negotiations in Tennessee, where they already have a plant, but there could be other options. A decision could be made in early 2019, he said.

Diess was joined at the meeting by his counterpart for Daimler, Dieter Zetsche, and BMW Chief Financial Officer Nicolas Peter.

The carmakers have found themselves in harm’s way as Trump wields higher tariffs as a cudgel to rebalance trade with both China and the European Union.

BMW and Daimler are the biggest car exporters from the U.S. to China, while VW’s two most profitable brands, Porsche and Audi, would get hammered if Trump follows through with a potential 25-per cent levy on imports from the EU.

“That’s basically why we are here, to avoid the additional tariffs and I think we’re in a good way,” Diess said.

The three carmakers have no official role in the overall trade talks between U.S. and EU trade officials, and stressed that at the end of their meetings. The companies are trying to avoid becoming entangled in the talks but they accepted the invitation extended by a Trump administration eager to jump-start progress on its highest priorities.

The White House is looking to whittle down a $30 billion automotive trade deficit with Germany with increased production in the U.S., Commerce Secretary Wilbur Ross said ahead of a meeting with automakers in Washington Tuesday. It’s the biggest single chunk of an overall $65 billion trade deficit with the EU.

Daimler, the maker of Mercedes-Benz luxury cars, produces vehicles in Tuscaloosa, Alabama, shipping many of its SUVs made there to China. Daimler employs some 3,700 workers at the U.S. site, which can churn out more than 280,000 vehicles per year, including GLE and GLS SUVs for global markets and C-Class sedans for North America.

Ford and VW have been in talks for more than a year about the German automaker investing in Argo AI, the American automaker’s self-driving technology partner, to jointly develop autonomous cars, according to people familiar with the discussions. The two automakers also are considering tie-ups to produce electric vehicles and share manufacturing in regions around the world, the people have said. In June, VW and Ford said that they were considering a strategic alliance focused on a range of commercial vehicles.

“We’re having a very broad set of discussions about how we can help each other around the world,” Bob Shanks, Ford’s chief financial officer, said in an October interview. “Collaboration isn’t being limited in any way whatsoever.”

Source: Driving

December 4, 2018