Volkswagen AG is exploring ways to mitigate the natural gas shortage, one of which is redirecting production around its network of global facilities, given that the energy crisis triggered by the Russian war in Ukraine threatens the European industry. The largest European car manufacturer recently stated that reallocating part of its production is one of the medium-term options available if fuel shortages persist beyond winter.
It is worth noting that Volkswagen has large factories in Germany, the Czech Republic, and Slovakia, countries that rely heavily on Russian gas, as well as facilities in Southern Europe that receive energy from other countries.
Gas storage reached 90 percent
– We are focused on greater localization, relocating production capacities, or technical alternatives, similar to what has already become common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions – said Geng Wu, Volkswagen’s head of procurement, to Bloomberg.
Russia’s decision to reduce gas supplies to Europe could force Germany to limit its fuel consumption. Recent news that gas storage levels reached 90 percent ahead of schedule has eased growing fears of an acute shortage awaiting us this winter, but Germany faces the challenge of replenishing depleted reserves next summer – without Russian assistance.
Southwestern Europe or coastal areas of Northern Europe, which have better access to marine sources of liquefied natural gas, could benefit from any production shift, according to a Volkswagen spokesperson. The Volkswagen Group already operates car factories in Portugal, Spain, and Belgium, countries that have LNG terminals.
