A lack of wiring harnesses from Ukraine has overtaken a shortage of semiconductors as Volkswagen’s biggest supply chain headache as the Russia-Ukraine war clouds its prospects for this year, the carmaker said on Tuesday.

Rising raw material costs would drive up prices for both electric and internal combustion engine vehicles, CFO Arno Antlitz told VW’s annual press conference, according to Reuters. Everything from batteries to catalytic converters was set to become more expensive.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

In light of rising instability in Europe, boosting sales in China was an even higher priority than before, CEO Herbert Diess added.

“The war in the Ukraine has put our existing outlook into question,” Diess said, warning commodity markets were likely to remain volatile until 2026.

Reuters noted Tesla on Tuesday raised prices in China and the US for the second time in days after its CEO noted surging raw materials and logistics costs.

See Also:

Diess said Volkswagen had become more resilient through the coronavirus pandemic and under normal circumstances would have reason for optimism for 2022.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

But a halt in supplies of wire harnesses could force Volkswagen to revise its outlook if alternative sources are not found in three-four weeks, Diess said.

The carmaker is relocating production from Ukraine to North Africa and Eastern Europe, a process which is not complicated but time-consuming, the CEO said.

Reuters added Volkswagen and Toyota had suspended production temporarily at some plants in China amid COVID-related lockdowns, with Toyota warning on Tuesday the suspensions could last several more weeks.