Volkswagen is considering moving car production away from Germany if current problems with natural gas supplies extend into 2023.
The drastic plan is one of several being discussed at Wolfsburg and could potentially result in Volkswagen switching production for several model lines from its German and Eastern European plants to other VW Group factories in Belgium, Portugal, and Spain, Bloomberg reports.
Like many northern European manufacturing firms, VW is suffering from Russia’s decision to limit gas exports. Russia is the primary source of gas in Germany and recently cut off the Nord Stream 1 pipeline. The closure was initially meant to be temporary and put in place to allow repairs to be made, but was later extended indefinitely. The decision is widely believed to be a political move designed to punish western countries for imposing sanctions on Russia for its invasion of Ukraine, and will cause serious gas shortages from June 2023 if the line isn’t re-opened, VW says.
“As mid-term alternatives, we are focusing on greater localization, relocation of manufacturing capacity, or technical alternatives, similar to what is already common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions,” Volkswagen said in a statement.
The carmaker claims it might be able to maintain production for the next six months if Germany carries on filling its gas reserves, which are close to 90 percent full, but that number could fall drastically over winter. Volkswagen has already pledged to reduce its gas consumption by at least the 20 percent target set by Germany’s government.
Bloomberg reports that Volkswagen is also concerned about its suppliers’ ability to handle energy price rises, and the potential impact on car production if those suppliers are forced to reduce or even stop their own production lines.