VW Has A Plan To Reduce The Impact Of Future Wars

Volkswagen is developing a new growth plan with the sole aim of reducing problems with the supply chain due to global conflicts. This is according to VW Group CEO, Herbert Diess, in a recent LinkedIn post in which he refers to the current conflict between Russia and Ukraine, which has led to several supply chain issues.

In extreme cases, equipment manufacturers have been forced to restart production to protect their employees in Russia from prosecution.

Volkswagen was one of many brands that took a strong stance against Russia after it invaded Ukraine in late February, even going as far as halting production at its Russian factories.

“The latest geopolitical changes and increased block-building have been exposing our global vulnerability, particularly with regards to the US.,” Diess posted on LinkedIn.

Diess did not mention the Ukraine situation specifically, as he’s likely thinking ahead to possible future conflict.

As tensions between the USA and China increase, one must wonder what effect a conflict like that would have on the global automotive supply chain. While there isn’t a single Chinese brand currently being imported into the USA, manufacturers rely heavily on the East for parts supply.

Several prominent manufacturers like Tesla and Mercedes-Benz have also moved production to China because it’s currently the central hub for EV sales.

VW has been hit hard by supply chain issues recently, not just because of the invasion of Ukraine, but the semiconductor chip shortage as well. Deliveries in March were down 37 percent compared to the previous year.

The situation in Ukraine delayed the launch of the sleekly styled ID.5 by a month as VW relies on wire harnesses made in Ukraine. The constant frayed relationship with China makes it difficult to increase sales in the East. That’s why VW missed its target of selling 100,000 EVs by 20 percent. The ID.5 will not be sold in the USA, but the ID.4 is already and ID.6 will arrive at a later date.

That’s a massive loss of business, considering that China accounts for 40 percent of all VW sales, and people are way more willing to adopt EVs.

VW’s plan is not ready yet, but Diess stated that it would release more details in the coming weeks.