Volkswagen is being forced to revert to coal and gas to power its plants after the EU proposed a phased ban on Russian oil.
Proposed today by European Commission president Ursula von der Leyen, the ban will be gradually implemented over the course of 2022.
“Understanding the situation, we just decided to upgrade our coal-fired power plants to still be able to use coal or gas,” said Volkswagen’s chief executive Herbert Diess. “This refers to our main operations here in Wolfsburg.”
According to Diess, the company remains concerned about the “threat there” even though its energy consumption in manufacturing plants “is not so high.”
“Most of it goes into the paint shop, and I think we are quite resilient there. But actually… a shut-off or cut-down of gas would harm the German economy quite substantially.”
Diess’s comments come on the same day the car maker announced its first quarter results, sticking to its guidance for 2022 despite supply chain headwinds.
The world’s largest automotive manufacturer said it was continuing to expect sales to rise between 8 and 13 per cent, with operating profit margins to station between 7 and 8 per cent.
The chief executive told journalists this morning that 2022 deliveries would continue to increase between 5 and 10 per cent, without pandemic-related supply chain issue disrupting its global production network.
“We used our position as a truly global company to balance production across our markets and relieve pressure where there were supply issues and product shortages,” Diess explained.
“For example when we had to cut back production in Europe due to a lack of wiring harnesses and in some areas had to shut down plants, we sent the semiconductors we didn’t need to other regions.”
Volkswagen’s output was put into question in mid-March when the manufacturer said a shortage of Ukraine-made wire harnesses had become the biggest supply chain issue.
Despite Diess’s reassurance, the automotive manufacturer announced today it had run out of battery-electric vehicles in Europe and the US because of supply chain bottlenecks.
Volkswagen reported to have sold 99,000 electric cars in the first three months of 2022, a third compared with rival Tesla, but a backlog of orders is expected to help the car maker pick up the pace going forward
“From where we are now, we anticipate a constantly growing battery electric vehicle volume and share in every quarter of 2022,” said chief financial officer Arno Antlitz.