Europe’s largest automaker Volkswagen said Thursday that shifting production sites would be one of the company’s possible options in the future if natural gas remains short after this winter, according to a comprehensive foreign media report. Volkswagen has major plants in Germany, the Czech Republic and Slovakia, but those are the European countries most dependent on Russian gas.
This means that if gas shortages persist, Volkswagen could move production facilities from Germany and Eastern Europe to other regions, which could upend the industrial landscape in Europe to some extent.
Germany no longer a home base
As a medium-term option, Volkswagen will consider several options, including greater localization, relocation of manufacturing capacity and technology substitution, according to its head of procurement.
Although Germany has now increased its natural gas storage level to 90 percent, making the risk of supplying energy shortages this winter much lower. But as German Economy Minister Habeck said, German gas reserves could be swept away after the winter and fall back to their low point.
And it remains unknown whether Germany will be able to refill its gas storage tanks next summer in the event that Russia continues to stop supplying. Based on Goldman Sachs’ forecast for German gas supplies, Volkswagen is estimated to face a gas shortage starting in June 2023 if the Nord Stream 1 gas pipeline does not resume supplies.
In this case, energy-intensive companies such as Volkswagen will have to look for places where they can put down roots in a steady supply of energy, and Germany will look like a nest abandoned by migrating birds, losing its important place in the European economy.
A spokesman for Volkswagen said that either Southwest Europe or the coastal regions of Northern Europe, which have better access to seaborne LNG, could be the beneficiaries of future production shifts.
Volkswagen already has car production plants in Portugal, Spain and Belgium, where it has LNG terminals.
