Volkswagen AG is now exploring ways to counter a shortage of natural gas, including shifting production around Volkswagen’s network of the global facilities, signalling how the energy crisis unleashed by the invasion of Ukraine by Russia threatens to upend the industrial landscape of Europe.
According to Volkswagen, reallocating some of its production was one of the options available in the medium term if the gas shortages lasted. The company has some major factories in Germany, Slovakia, and the Czech Republic, which are among the European countries that are most reliant on Russian gas, as well as facilities in the southern regions of Europe.
Geng Wu, head of purchasing at Volkswagen, said as mid-term alternatives, they are focusing on greater localisation, with relocation of manufacturing capacity, and technical alternatives, which are similar to what is already common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions.
The decision by Russia to throttle gas supplies to Europe has raised concerns that Germany may be forced to ration its fuel. But Germany faces a challenge in replenishing depleted reserves next summer without any contributions from Russia. Volkswagen was concerned about the effect that high gas prices could have on its suppliers.
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