Volkswagen to consider expansion outside Europe if Ukraine war continues

Volkswagen will contemplate increasing manufacturing exterior Europe if the battle in Ukraine continues, its chief govt has stated, because the continent’s largest carmaker struggles to safe essential provides from elements producers within the war-torn nation.

“For certain, we now have to consider further investments in the US and abroad,” Herbert Diess instructed reporters on Tuesday, though he cautioned that “the particular results [of the war] can’t be conclusively assessed at the moment”.

Russia’s invasion of Ukraine has pressured VW to idle some vegetation in Germany, because of a scarcity of specialized wiring harnesses being delivered from Ukraine. Diess stated the shortage of such elements remained the “dominant constraint” on manufacturing. A 150-person robust job drive at VW’s headquarters in Wolfsburg is engaged on figuring out various suppliers.

Diess stated VW had already shifted manufacturing of as much as 100,000 autos to the Americas and China, in an effort to bypass provide bottlenecks.

Final week, Diess instructed the Monetary Occasions {that a} extended battle may have a bigger influence on the worldwide financial system than the coronavirus pandemic, which shut automobile vegetation for weeks.

His newest feedback come as VW joined native rivals BMW and Mercedes-Benz in delivering increased annual income regardless of promoting far fewer autos, because it prioritised the manufacturing of high-priced high-end fashions through the semiconductor disaster.

Pre-tax income on the VW exceeded €20bn in 2021, virtually double that of the earlier yr, and better than the €18.4bn posted in 2019, when it offered 2.4mn extra automobiles.

VW’s Porsche model continued to guide the group by way of profitability, reaching a 16.5 per cent margin, pushed partially by document deliveries in China. The corporate stated it nonetheless deliberate a partial preliminary public providing of the luxurious carmaker in direction of the tip of this yr.

VW’s administration expects to make use of a number of the proceeds from a Porsche flotation to speed up the corporate’s electrification technique and assist construct six European battery vegetation, which executives say will most likely be too pricey for the carmaker to finance by itself.

The corporate confirmed on Tuesday it was in “remaining discussions” about constructing a battery manufacturing unit in Spain, so as to add to ones being constructed in Sweden and Germany. “We’ve got began the scouting course of for a fourth location in japanese Europe already,” Diess stated.

Individually, Sweden’s Northvolt, which VW has invested in, stated it will construct its third European battery manufacturing unit within the German state of Schleswig-Holstein, with the hope of beginning manufacturing in direction of the tip of 2025. The plant would have the capability to offer batteries for roughly 1mn autos a yr, the corporate stated.

Regardless of a surge in nickel, cobalt and lithium costs, VW’s chief monetary officer Arno Antlitz stated the corporate anticipated revenue margins from battery electrical automobiles to succeed in parity with combustion engine fashions “sooner than we initially thought”. This may occur partially as a result of uncooked supplies utilized in typical automobiles would rise too, he stated.