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Released March 03, 2022 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Russia's invasion of Ukraine has begun to hit Europe's struggling car manufacturing industry with Volkswagen (VW) (Wolfsburg, Germany) stopping electric vehicle (EV) production at two German plants due to the shortage of components.
The company said that disruptions of deliveries of components from Ukraine led to the decision to halt production at Zwickau and Dresden. Zwickau is VW's largest EV plant in the world and the backbone of the company's ambitious plan to become a full EV-only company in the coming decade. It currently builds the Volkswagen ID.3, ID.4, and ID.5, Audi Q4 e-tron, Q4 e-tron Sportback and Cupra Born. Zwickau produces 1,200 electric cars daily. In a statement to the media, a VW spokesman said: "The Volkswagen Group's global supplier network, which comprises more than 40,000 suppliers, also includes some suppliers in western Ukraine. Due to the current situation in this region, there may be disruptions in the supply chain." Deliveries of Ukraine-made components including electrical cable harnesses have come to a halt. VW also has a car assembly plant in Kaluga, south of Moscow, which will be hit by sanctions from the West, preventing the exports of cars or components. The plant, with a capacity of 118,000 vehicles per year, makes the Volkswagen Tiguan, Polo and Skoda Rapid models, as well up to 150,000 engines for a variety of cars.
VW Group brand Skoda also warned of shortages and said it was limiting production at its domestic plants in the Czech Republic. "Due to the current situation in Ukraine, Skoda Auto is facing critical supply shortages of parts from several local suppliers that have an effect on some of our models," a spokesperson said. "This is the reason why we will limit production of the ENYAQ iV from this week on." The company said production at two plants in Russia was ongoing but that sanctions from Europe may cause interruptions. Russia is Skoda's second largest customer, taking 90,000 cars in 2021. With regards to future business the spokesperson said: "The sales strategy in Russia and Ukraine is currently the subject of intensive discussions. Sales in both Ukraine and Russia can be expected to fall in view of recent developments."
German luxury car brand BMW (Munich, Germany) has stopped exports of vehicles to Russia and also halted production with Russian car maker Avtotor, located in Kaliningrad, which assembles BMW vehicles from Semi-Knock Down (SKDs) kits. A spokesman said: "We condemn the aggression against Ukraine and follow developments with great concern and dismay. Due to the current geopolitical situation we will stop our local production and export for the Russian market until further notice."
Other car manufacturers that have suspended sales to Russia include Jaguar Land Rover and Volvo (Gothenburg, Sweden), citing sanctions and "potential risks associated with trading material with Russia." Daimler Truck announced earlier this week that it was freezing its business activities in Russia with immediate effect, including its cooperation with Russian truck maker Kamaz. Stellantis, a company officially formed in January from the merger of Fiat Chrysler and Peugeot S.A. (PSA), expects to take a hit from sanctions that will impact a manufacturing deal it has with Mitsubishi in Kaluga. Stellantis Chief Executive Officer Carlos Tavares told media this week that any alterations to its business in Russia and Ukraine "depends very much on what the politicians are going to decide. We're expected to be a compliant corporation. We comply with the rules, laws and regulations in peacetime and we comply with sanctions in wartime. So far, those sanctions are very targeted, but of course there will be a point in time when the plants are unable to run. We have one in partnership with Mitsubishi in Kaluga, and as long as they have parts, they can operate; if there are no parts, they can't operate."
Europe's car industry has suffered significantly over the past year due to the global semiconductor shortage. Other sectors severely impacted include health care, information technology, smartphones, energy, defence and industrial automation. There are now growing fears that the conflict will stop the supply of key minerals, such as neon gas and palladium, crucial in semiconductor manufacture. Most neon gas comes from Russia's steel industry which is purified before export in Ukraine. For additional information, see March 2, 2022, article--Ukraine Conflict Could Nip Critical Neon Supplies for Microchip Makers and February 28, 2022, article--Invasion of Ukraine Could Heighten Strain on Semiconductor Supply
Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Plant Database includes active profiles of more than 1,600 operational plants that manufacture semiconductors and related items. Subscribers can click here for the profiles.
Last month, Industrial Info reported the European Union (EU) had pledged billions of euros and a new strategic plan to make it easier for technology companies to build or expand semiconductor plants in the region. The European Chips Act, which is designed to reduce the region's over-reliance on chips from Asia and the U.S., is backed by 15 billion euro (US$17 billion) in additional public and private investment until 2030. This comes on top of 30 billion euro (US$34 billion) of public investments that it has already planned. For additional information, see February 21, 2022, article--Europe Enacts 'Chips Act' to Battle Semiconductor Shortages.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
The company said that disruptions of deliveries of components from Ukraine led to the decision to halt production at Zwickau and Dresden. Zwickau is VW's largest EV plant in the world and the backbone of the company's ambitious plan to become a full EV-only company in the coming decade. It currently builds the Volkswagen ID.3, ID.4, and ID.5, Audi Q4 e-tron, Q4 e-tron Sportback and Cupra Born. Zwickau produces 1,200 electric cars daily. In a statement to the media, a VW spokesman said: "The Volkswagen Group's global supplier network, which comprises more than 40,000 suppliers, also includes some suppliers in western Ukraine. Due to the current situation in this region, there may be disruptions in the supply chain." Deliveries of Ukraine-made components including electrical cable harnesses have come to a halt. VW also has a car assembly plant in Kaluga, south of Moscow, which will be hit by sanctions from the West, preventing the exports of cars or components. The plant, with a capacity of 118,000 vehicles per year, makes the Volkswagen Tiguan, Polo and Skoda Rapid models, as well up to 150,000 engines for a variety of cars.
VW Group brand Skoda also warned of shortages and said it was limiting production at its domestic plants in the Czech Republic. "Due to the current situation in Ukraine, Skoda Auto is facing critical supply shortages of parts from several local suppliers that have an effect on some of our models," a spokesperson said. "This is the reason why we will limit production of the ENYAQ iV from this week on." The company said production at two plants in Russia was ongoing but that sanctions from Europe may cause interruptions. Russia is Skoda's second largest customer, taking 90,000 cars in 2021. With regards to future business the spokesperson said: "The sales strategy in Russia and Ukraine is currently the subject of intensive discussions. Sales in both Ukraine and Russia can be expected to fall in view of recent developments."
German luxury car brand BMW (Munich, Germany) has stopped exports of vehicles to Russia and also halted production with Russian car maker Avtotor, located in Kaliningrad, which assembles BMW vehicles from Semi-Knock Down (SKDs) kits. A spokesman said: "We condemn the aggression against Ukraine and follow developments with great concern and dismay. Due to the current geopolitical situation we will stop our local production and export for the Russian market until further notice."
Other car manufacturers that have suspended sales to Russia include Jaguar Land Rover and Volvo (Gothenburg, Sweden), citing sanctions and "potential risks associated with trading material with Russia." Daimler Truck announced earlier this week that it was freezing its business activities in Russia with immediate effect, including its cooperation with Russian truck maker Kamaz. Stellantis, a company officially formed in January from the merger of Fiat Chrysler and Peugeot S.A. (PSA), expects to take a hit from sanctions that will impact a manufacturing deal it has with Mitsubishi in Kaluga. Stellantis Chief Executive Officer Carlos Tavares told media this week that any alterations to its business in Russia and Ukraine "depends very much on what the politicians are going to decide. We're expected to be a compliant corporation. We comply with the rules, laws and regulations in peacetime and we comply with sanctions in wartime. So far, those sanctions are very targeted, but of course there will be a point in time when the plants are unable to run. We have one in partnership with Mitsubishi in Kaluga, and as long as they have parts, they can operate; if there are no parts, they can't operate."
Europe's car industry has suffered significantly over the past year due to the global semiconductor shortage. Other sectors severely impacted include health care, information technology, smartphones, energy, defence and industrial automation. There are now growing fears that the conflict will stop the supply of key minerals, such as neon gas and palladium, crucial in semiconductor manufacture. Most neon gas comes from Russia's steel industry which is purified before export in Ukraine. For additional information, see March 2, 2022, article--Ukraine Conflict Could Nip Critical Neon Supplies for Microchip Makers and February 28, 2022, article--Invasion of Ukraine Could Heighten Strain on Semiconductor Supply
Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Plant Database includes active profiles of more than 1,600 operational plants that manufacture semiconductors and related items. Subscribers can click here for the profiles.
Last month, Industrial Info reported the European Union (EU) had pledged billions of euros and a new strategic plan to make it easier for technology companies to build or expand semiconductor plants in the region. The European Chips Act, which is designed to reduce the region's over-reliance on chips from Asia and the U.S., is backed by 15 billion euro (US$17 billion) in additional public and private investment until 2030. This comes on top of 30 billion euro (US$34 billion) of public investments that it has already planned. For additional information, see February 21, 2022, article--Europe Enacts 'Chips Act' to Battle Semiconductor Shortages.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
