VW could move production from Germany due to gas shortage

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Volkswagen Group could shift production out of Germany and Eastern Europe if natural gas shortages persist, the latest sign that the energy crisis triggered by Russia’s invasion of Ukraine threatens to upend Europe’s industrial landscape .

VW said on Thursday that moving production was one of its options in the medium term if gas shortages last well beyond this winter.

VW has major factories in Germany, the Czech Republic and Slovakia, which are among the European countries most dependent on Russian gas.

“As medium-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 the challenges associated with shortages of semi- -drivers and other recent supply chain disruptions,” Geng Wu of Volkswagen Consulting, the automaker’s in-house consultancy, said in a statement.

Southwest Europe or the coastal areas of Northern Europe, both of which have better access to maritime shipments of liquefied natural gas, could be the beneficiaries of any production changes, a spokesperson for VW.

VW operates car factories in Portugal, Spain and Belgium, countries that host LNG terminals.

VW said it should be able to maintain production in the next 5-6 months if Germany continues to fill its gas reserves, but rising energy prices and unstable grids in the supply chain pose a risk to global production.

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