Volkswagen AG is considering adding a second factory to expand its U.S. manufacturing footprint, possibly through a pending collaboration with Ford Motor Co., VW Chief Executive Officer Herbert Diess said.
“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 at the White House.
Diess also said VW is in advanced negotiations in Tennessee, where the company already has a plant, about boosting its U.S. capacity, but that 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 AG, 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.
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. They 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.
“We said in general terms that our planned additional investments here that are not commercially sensible per se of course would have to be part of a larger understanding and for that the conditions under which we operate cannot change. That was very well understood,” Zetsche said.
The White House is looking to whittle down a US$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.
All three carmakers met separately with Trump’s key lieutenants on trade, including Ross, U.S. Trade Representative Robert Lighthizer and economic adviser Larry Kudlow, before a joint meeting that followed. They then met with Trump in the Oval Office.
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.