Ukraine Crisis Deployment, New Tesla Factory, SAIC/Alibaba JV EV – The Week

As the Ukraine crisis worsened, Skoda said this week it was facing critical parts supply shortages from several suppliers in Ukraine and “will limit production of the Enyaq iV from this week”. The Volkswagen Group’s global supplier network, which includes more than 40,000 suppliers, also includes a number of suppliers in western Ukraine; Skoda, based in the Czech Republic, seems particularly vulnerable. VW Group procurement analysts will be working hard to assess a rapidly changing situation, quantify risks and research alternative sourcing strategies for critical parts. Along with the uncertain magnitude and duration of potential supply disruptions, GlobalData’s global light vehicle sales database also highlights the importance of the Russian automotive market to the brand. Data from 2021 shows that Russia was Skoda’s second largest market, after Germany. In Russia, Skoda produces the Rapid, Octavia, Karoq and Kodiaq models at two plants. In Nizhny Novgorod, Skoda produces three models: Octavia, Karoq and Kodiaq. The Rapid is produced at the Skoda plant in Kaluga. Skoda said production at its Russian factories was still running, but added that “the impact of possible disruptions to supply chains is continuously being analysed”. In addition to parts supply issues, an immediate and pressing concern will be the impact of economic sanctions on Russia and the collapse of the Russian currency which will decimate margins on all vehicles sold there, although they may continue beyond the immediate inventory of finished vehicles. A longer-term concern for Skoda – and indeed for the Volkswagen Group as a whole – will no doubt be the state of the sales environment in Russia.

Developments in Ukraine will have multiple impacts on the medium and heavy truck sector across the region, GlobalData commercial vehicle analyst Zita Zigan wrote this week. This has raised questions regarding the likely impact on the automotive industry. The Ukrainian automotive market and sector will undoubtedly be the hardest hit, but the effects are also expected to be felt elsewhere in the region. Some of the variables that could be immediately affected are extremely relevant to truck demand in the region, such as oil and gas prices, as the rising TCO (total cost of ownership) puts downward pressure on Requirement. Russia’s position as a major supplier of energy, minerals and other raw materials means additional risk of disruption to already strained supply chains, with negative consequences for manufacturing and industrial production, a key driver freight demand. Air, road and rail freight flows are already affected and worsening shortages in car manufacturing in some places. The combination of looming sanctions, inflation and oil prices sent the ruble – and European investor confidence – plummeting, just as Covid worries began to fade. A slump in investment – ​​as happened in the CIS region in 2015 – would deal a heavy blow to capital goods such as trucks.

VW Group warned this week that due to the current situation in Ukraine there could be supply chain disruptions. This could lead to production adjustments at the group’s individual sites, the company said in a statement. Group purchasing has also been “engaged in an intensive dialogue with affected suppliers and is looking at alternatives,” the company said. Skoda assembles cars from SKD kits in Ukraine – the Superb, Kodiaq, Karoq and Fabia Combi – in collaboration with Eurocar. Production is currently suspended at the Solomonovo plant where all production is for Ukrainian customers only. In terms of at-risk sales, the Russian market is one of Skoda’s largest markets globally, the second overall market in 2021 with 90,400 vehicles delivered. Ukraine has also been a stable market, with sales of around 6,000 Skoda vehicles per year. Since 2002, about 190,000 have been produced in Ukraine.

Tesla plans to build a second electric vehicle (EV) factory in China to help it meet growing demand both locally and in export markets, according to reports in China citing sources close to the company. . The electric vehicle (EV) maker planned to double its capacity in China to at least 1 million cars a year in the near term with a second plant to be built near its existing factory in the Lingang Free Trade Zone in Shanghai. Other reports have suggested this will be just the next step in Tesla’s long-term plan to have a capacity of 2 million vehicles per year in China, to increase the company’s exposure to the the country’s rapidly growing electric vehicle market. Sales of new energy vehicles (NEVs), comprising mainly electric and hybrid vehicles, jumped 157% to a record 3,521,000 units in China in 2021, accounting for 13% of total vehicle sales in the country, according to the China Association of Automobile Manufacturers. (CAAM). Battery electric vehicles amounted to 2,990,000 units. The government recently raised its NEV sales target to account for 40% of total vehicle sales by 2030 and 60% by 2035 before internal combustion vehicles are phased out completely in the 2040s. substantial growth opportunity to global manufacturers of electric vehicles.

Also in China – IM Motors, a joint venture between Chinese automaker SAIC Motor, e-commerce giant Alibaba and Shanghai’s Zhangjiang Group, started mass production of its first model at its Shanghai plant this week. The company, established in 2020 with an initial investment of 10 billion yuan ($1.6 billion), focuses on the development and production of high-end electric vehicles (EVs). It is controlled by SAIC Motor, which has a 54% stake, with Alibaba and Zhangjiang each holding 18% of the capital. The joint venture seeks to combine SAIC Motor’s expertise in vehicle production with Alibaba’s big data and artificial intelligence strength, which it sees as an advantage over competitors. Sales of new energy vehicles, primarily comprising battery-powered electric vehicles, jumped 157% to 3.5 million units last year and are expected to reach around 5.5 million in 2022. IM Motors disclosed its first model, the Zhiji L7 battery-powered sedan, at the Shanghai Auto Show in April 2021 and launched pre-production of 200 models in December to identify possible flaws. He found more than 60 body components that needed further improvement, according to local reports.

Panasonic Corporation has announced plans to begin mass production of a new lithium-ion battery in Japan before the end of March 2024 to supply its largest electric vehicle (EV) customer, Tesla. The Japanese electronics giant jointly owns a lithium-ion battery factory in Nevada with Tesla, which is dedicated to supplying batteries to the automaker’s neighboring GigaFactory 1. Panasonic said it will produce its latest lithium-ion battery at its old laptop and cellphone site. battery factory in Kinokawa, Wakayama Prefecture, Japan. Reports suggest the company chose this location because of the availability of qualified engineers, despite the distance from Tesla vehicle factories, after struggling to recruit enough qualified personnel for its existing plant in the United States. Last October, Panasonic unveiled its new 4680 cylindrical battery cell, which is 46mm in diameter and 80mm high, about five times larger than the cells it currently supplies to Tesla. As well as being cheaper to produce, the new batteries will also improve range. The company has announced that it will build two new production lines at Kinokawa, with trial production of the first line expected to begin by the end of 2022. A separate report suggested that Panasonic plans to invest 80nm JPY (692 million) in the plant.

Have a nice week end.

Graeme Roberts, Associate Editor, Just Auto

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