War in Ukraine hits car factories and electric car production

The global car industry, still reeling from the double-whammy of Covid and the computer chip shortage, is now facing more disruption from Russia's war against Ukraine.

Companies such as Bosch, Kromberg & Schubert, SEBN, and Fujikara all have major investments in Ukraine, topping €550 million worth. While most of these factories and operations are located in the far west of Ukraine, which has not yet seen much violence, the crisis is affecting all parts of the embattled nation.

It has seen deliveries of crucial parts, not least electric vehicle wiring systems, interrupted which means that many of the major European car makers are now having to organise temporary shut-downs at their factories.

Volkswagen has this week closed production at its Zwickau electric car factory - where it makes the VW ID.3 and ID.4, the Audi Q4 e-Tron, the Skoda Enyaq, and the Cupra Born- and the German giant will also slow production at its key Wolfsburg plant this week. VW's Emden and Hannover commercial vehicle plants will be idled too.

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Volkswagen has since confirmed that it will also stop production of its cars in Russia – the German company has factories in Kaluga and Nizhny Novgorod, and that it will halt vehicle exports to Russia.

Robin Aschoff, VW's head of communications, said: "We have received the news about the war in Ukraine with dismay and shock. First, with the rest of the world, we continue to hope for a cessation of hostilities and a return to diplomacy. We are convinces that a sustainable solution to the conflict can only be found on the basis of international law. The worldwide supply network includes companies in the western part of Ukraine, and due to the current situation, there might be impairments and bottlenecks along the supply chain that will have impacts on production."

BMW has said that it will cut production, but hasn't yet said specifically which of its factories will be affected. Renault has said its production will be affected too, while Ford has warned of disruption as it closes down its Russian-based production (a process that was ongoing before the invasion of Ukraine).

Ford is also one of many car makers that have said they will cease the sale of their products in Russia. "Ford is deeply concerned about the invasion of Ukraine and the resultant threats to peace and stability. The situation has compelled us to reassess our operations in Russia" the company said in a statement. In withdrawing from the Russian market, it has been joined by the likes of Volvo, Jaguar, Aston Martin, VW, and Daimler Truck. Mercedes was reported by Reuters as looking for legal ways to extricate itself from a joint investment in Russian car-maker Kamaz.

Toyota's main Japanese factories have returned to work following a two-day shut down after one of its main supplier companies - Kojima Industries Corporation, which makes plastic an electronic components - was hit by a suspected cyber-attack. It's not known for sure if the cyber-attack had a Russian origin, but it did co-incidentally come after Japan had joined the global chorus of sanctions against Vladimir Putin and his allies, and Japanese prime minister Fumio Kishida had supported removing Russia from the SWIFT global payments system.

“It is difficult to say whether this has anything to do with Russia before making thorough checks,” said Kishida in a statement to the media.