Porsche suspends EV production due to Ukraine War

Production of Porsche’s electric Taycan model at the company’s Stuttgart-Zuffenhausen plant has been halted due to a shortage of components, a knock-on effect of the Russian invasion. According to Reuters, European automakers are having difficulty obtaining critical wire harnesses because suppliers in western Ukraine have been forced to close their doors, causing them to curtail production.

Manufacturing will be halted until the end of next week, according to a statement sent to TheStreet by the company on Wednesday. They stated it was not possible to construct more than 200 Taycan cars per day.

Porsche’s Leipzig plant, which manufactures the Panamera and Macan, has now been suspended from production due to the issues in Ukraine which have caused further part shortages.

The company said that manufacturing will resume in a reduced capacity in the coming week.

Porsche has stated that the build of the 911 and 718 model series in the main plant is not currently affected and that the construction of the Cayenne in Bratislava is also continuing this week.

As a result, “in the coming days and weeks, we will operate on a short-term basis and constantly reassess the situation,” the company stated.

Further delays are compounded by the difficulties faced by automakers as a result of the shortage of semiconductor chips, as well as the coronavirus pandemic, which began in 2020 and is still ongoing.

A ban on Russian oil was recently announced by US President Joe Biden and many companies have paused operations in Russia or pulled out completely. The war is also having an impact on the price of nickel, a critical component of electric vehicles. According to Reuters, carmakers are facing rising metals costs as a result of the disruption of Russian metal supplies. Russian copper production accounts for 3.5 per cent of global copper production, 5.4 per cent of global aluminium production, and 9.4 per cent of global nickel production, according to Nikkei Asia.

Russia is also the world’s leading producer of palladium, accounting for 42.8% of global production. When a European manufacturer sourcing palladium from Russia encountered difficulties in shipping the metal directly from Russia, the company arranged an alternate transport route through the Middle East. “However, due to ethical considerations, it may become more difficult,” a company representative stated.

Russia’s somewhat stranglehold on the palladium market is of note as palladium is used in the creation of catalytic converters, so although a lot of news outlets are reporting that this is an issue for the creation of just the Porsche EVs, it could escalate to generic internal combustion engine models as well.

Prices for alternative materials, which buyers may turn to if supplies from Russia are disrupted, are already rising as demand increases.

Prior to the invasion of Ukraine, platinum, which is used in catalytic converters for diesel vehicles, had been gaining ground as a cost-effective alternative to palladium and investors appear to be expecting this trend to continue accelerating. However, at the New York Mercantile Exchange, platinum futures rose 4% from their previous nine-month high of more than $1,160 per troy ounce. With Russia producing 14.2 per cent of the world’s platinum supply, the market is also vulnerable to Russian risks.

Additionally, the rally in copper prices since last year has pushed manufacturers to lower-cost aluminium, but both metals are now at all-time highs in terms of price. “At some point, there will be no choice but to raise the prices of products like air conditioners,” a copper tubing manufacturer predicted.

Further model lines are said to be affected during the month of March, according to an alleged leaked internal memo, but the authenticity of the memo has not been confirmed or denied by Porsche.

When Russia invaded Ukraine last week, Porsche suspended the delivery of new cars to the country and donated one million euros to humanitarian relief efforts, among other measures.

Admittedly, this is a very “first world problem” in light of the ongoing situation in Ukraine.