Ford in Britain built its first Merlin in August 1941. The Mustang requirement included pilot and fuel protection from the start, avoiding the need for retrofits, add it was using the relatively proven Allison engine and supercharging.
Why is it Ok to produce both Allison and Merlin P-40's, but not P-51's?
There are a number of reasons including people at the time making predictions about the future. The P-40 was the interim USAAF fighter, a P-36 update that could be around in numbers in 1940/41/42, until the P-38 and in particular P-47 could take over. The early fighting in Europe stressed altitude performance, the single stage Merlin was a way to boost the P-40. Curtiss built the P-40F January 1942 to January 1943, the P-40L January to April 1943, first P-47B accepted in December 1941, then 5 in March 1942 then production from May, the Curtiss line opened in September, Evansville in October, first P-51B accepted in April 1943.
P-40 production, 1940 to 1942, 778, 2,246, 4,454, P-51 0, 138, 634. Getting any P-51 in 1941 or 1942 was a bonus and the 2 speed 2 stage Merlin was the obvious upgrade choice. In numerical terms the P-51 was a 1944 fighter and even then considered in short supply. To get Inglewood into B-25 and P-51 production required moving AT-6 to Dallas, to get the factory into mass P-51 production meant moving B-25 production to Kansas City. To get Dallas into mass P-51 production required ending B-24 production aided by the wind down in trainer requirements. For Allison Mustang production to continue into 1943/44 required another production line or taking over an existing line, preferably one using Allison engines at a time the allies considered themselves short of fighters. While the British might be impressed with Allison Mustang low level performance the USAAF tactical reconnaissance unit Mustangs in France in 1944 mostly used Merlin with a few Allison.
320 Mustang I/NA-73, 300 Mustang I/NA-83, 148 P-51/Mustang IA, 500 A-36A, 310 P-51A/Mustang II
When it comes to US single stage Merlin production for the British most ended up in Lancasters, when it comes to placing orders for the engines as of 1940 the RAF was going to use Vulture Manchester, Merlin Halifax and Hercules Stirling, during 1941 Manchester became Merlin Lancaster, during 1943 Merlin Halifax became Hercules Halifax. At several thousand aircraft a year times 4 engines that is a lot of adjustments, cutting planned Stirling production in favour of Lancaster would up Merlin requirements by 700 engines a month for example., throw in the need for more Hurricanes due to the problems with the Sabre Typhoon.
The British Merlin Mustang time line.
10 May 1941, RAF Chief of Staff to Ministry of Aircraft Production, future needs, "With fighters, height is gauged important", the most promising a Spitfire with ceiling exceeding 40,000 feet ,"These ceilings are not an inch too high". During the Battle of Britain and particularly in October heights had gone up, ultimately to Bf109 being reported at around 30,000 feet.
The Allison Mustang did not fit the RAF idea of air superiority fighter in 1941/42 but did offer an excellent low level reconnaissance platform that was survivable in contested airspace. Similarly the Allison Mustang did not fit with the USAAF turbo supercharged fighter and heavy bomber ideas. Limits on Mustang numbers and requirements for a possible 1943 invasion of France added to the decision to keep the Mustang out of Fighter Command at the time. End February 1943 there were 713 Mustang received, 107 lost, 302 were with Army Co-Operation Command, 1 with Bomber and 7 with Fighter Command, another 78 were being assembled.
October 1941 First Mustang arrives in Britain, 7 more in November, 24 more in December.
24 January 1942, RAF orders 10 Army Co-Operation squadrons equipped with Mustangs.
Rolls Royce performance estimates of Merlin Mustang, April 1942. Air Vice Marshall Wilfrid Freeman becomes very interested and starts briefing key Americans.
(6 June 1942, Winant's cable to Hopkins and Arnold talked Merlin 28 and 61.)
Air Vice Marshall Linnell formally informs the US Merlin Mustangs a good idea, 9 June 1942.
3 RAF Merlin Mustang conversions were ordered on 15 June 1942.
US/UK agreement for 1,200 Merlin Mustangs built January to October 1943, split half each, with the RAF releasing Packard Merlins from its order to the USAAF, 20 July 1942.
Air Marshall Richard Williams, RAAF representative in Washington, in a letter dated 20 July 1942 notes "The improved Mustang with Merlin 61 engine will not be in production until 1943." It was part of a section discussing the need for fighters with performance at altitude to counter the Zero. Apparently the local USAAF had asked for P-47 and were being sent P-38 "reported everywhere as being heavy in maintenance."
August 1942 General Echols inspects Merlin Mustang prototypes at Rolls Royce Hucknall.
British order request for 120 engineless Mustang airframes a month for Britain and up to 200 a month for overseas theatres 27 August 1942. RAF talks about an order for 3,000 Merlin Mustangs, half for the RAF.
2 P-51 airframes officially accepted as XP-51B prototypes, August 1942, to await engines.
16 September, Churchill to Roosevelt, "the Fortress and long range fighter are indispensable"
British request for bulk Merlin Mustangs 8 October 1942.
Mustang X first flight 13 October 1942.
Churchill request to Hopkins for Merlin Mustangs 16 October 1942, after 6 Mustang X test flights.
British request for 400 engineless Mustang airframes to be sent and converted to use Merlins. 5 November 1942. Around this time Rolls Royce laid out ideas for a Merlin 28 version given possible Merlin 60 series supply issues.
XP-51B first flight 30 November 1942.