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Volkswagen: Ford partnership and future plans

Volkswagen AG (VOW3) hinted that it might use Ford Motor Company’s (F) factories to build cars and that it is also mulling over building another production facility in the US.

The German carmaker said it was in talks with Ford over an automotive partnership that would benefit both companies as well as the US automobile industry, and that as part of strengthening this partnership, Volkswagen might build some of its vehicles at Ford’s spare facilities.

Ford, meanwhile, simply indicated that the dialog was progressing well. The company did not want to divulge too much information until all the details were properly fleshed out. Neither of the companies have expressed intentions to acquire any stakes in the other.

Volkswagen also hinted at the possibility of building another factory in the US, in addition to the one it has in Tennessee. President Trump’s threats on tariffs and his push for more production in the US are said to have played a role in the company considering this option.

Car companies are increasingly looking at partnerships in order to make the most of changing market trends and technological advances. Automakers are making changes in their operations to deal with the transformation the industry is going through.

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In light of the changing trends, Volkswagen is now planning to focus more on electric vehicles going forward. The company is looking to phase out its internal combustion engines and its next generation of engines, which will roll out in 2026, will be the last. Obviously, these changes will not happen overnight. Volkswagen will retain some of its traditional car models in countries where the charging infrastructure is not fully developed.

Analyst Joseph Spak of RBC Capital Markets said in a note that General Motors (GM) might also take the same path as its peers and that there was a chance that a foreign carmaker might look at utilizing GM’s spare facilities for production. Recall that the company recently announced a restructuring and the decision to shut down five factories in North America.

 

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