Volkswagen isn't new to building cars in the United States; its plant in Chattanooga, Tennessee is one of its staple resources in building its well-known Passat and Atlas. Recently the automaker told Automotive News that it has already outgrown its manufacturing capacity and needs to expand, with one possible outlet being a partnership with Ford.
In a visit to its American headquarters, Volkswagen Global CEO Herbert Diess welcomed Scott Keogh as Volkswagen's new North American CEO. Diess took the opportunity to stress that he would bestow a great deal of decision-making power on Keogh, enabling the former Audi boss to shape the future of the brand in America, just as he did with Audi.
One particular decision would be how VW planned to press its manufacturing footprint deeper into U.S. soil. The automaker had already long outgrown its Chattanooga plant, operating at capacity since early 2018. With the upcoming introduction of electrification being heavy in the automaker's agenda, it will need to completely rethink its U.S. operations to plan for additional manufacturing capacity.
The choice of how to expand its current assembly plant capabilities now comes into question. Volkswagen says that it could potentially grow its seven-year-old Tennessee plant, stating that its 3.4 million square foot facility as a whole is currently underutilized, despite its manufacturing being at the plant's current capacity. But more options lie with the fate of the relationship between Volkswagen and Ford.
Strategically, the duo has worked together before in both Europe and Latin America. Though its major workings have long since dissolved since the 1980s, there is no lingering ill-will between the two companies and talks of potentially resuming a mutually-beneficial partnership have since returned to the table. In the past, Ford has stated that it did not plan to explore the possibility of a merger with Volkswagen through the transfer of equity stakes.
Volkswagen may instead license its modular electric platform known as MEB to Ford and other automakers, enabling Volkswagen to grow its economies of scale through revenue generated from licensing. If Ford and Volkswagen built vehicles on the same platform, the possibility of a joint manufacturing plant comes into question. Recently, Mazda and Toyota established a similar partnership and ultimately decided to build a joint plant in Alabama.
"There's nothing signed yet with Ford. We are in talks," Diess told Automotive News, "Most of the talks have been centered around our light-duty vehicles - our small commercial vehicles business in Europe, where we found huge synergies. We are both relatively small in size against our peers, so what we're talking about is sharing a few platforms and manufacturing sites there, which makes sense. And within the dialogue, we are also touching other options, but this will be the main focus if we come to a conclusion."
Another possibility would be to partner with Ford to create a global successor to its Amarok pickup truck, which, if deemed appropriate by Keogh, could go on sale in the United States. Diess also spoke about the "risky" possibility of a unibody pickup for the U.S. market, which means that Volkswagen may be eyeing a more appealing collaboration with Ford to produce a body-on-frame setup based on the Ford Ranger,
Volkswagen's board will discuss its relationship with Ford later this month.