Siemens VDO Automotive AG is talking with Volkswagen AG about building a diesel engine plant together that would use Siemens' high-tech diesel injectors.
The German newspaper Frankfurter Allgemeine Zeitung reports the factory would involve a E500 million ($542 million) investment, with the German state of Saxony contributing as much as E150 million ($163 million).
Siemens and VW confirm the talks but won't offer details on the size of engine to be built or its volume. Siemens is a rival to Robert Bosch GmbH, which is the world leader for diesel fuel injectors and is VW's main diesel supplier.
Siemens entered the segment in 2001 with a second-generation injector, using piezo technology instead of electromechanics to open and close the injector valve. Through October, it made injection systems for 500,000 4-cyl. engines at PSA Peugeot Citroen, Ford Motor Co. and Renault SA.
Siemens' injectors have been used with common rail, in which one fuel pump feeds all four cylinders. Volkswagen uses unit injectors, in which a pump is attached to each injector, resulting in higher pressures. A Volkswagen spokesman says the new engines would use the unit injector system as well.
