BMW, Mercedes, VW prepare for Russian gas supply cutoff amid Ukraine war

BERLIN -- German automakers and suppliers said they are preparing for the possibility that Russia will cut off gas supplies to Europe as a result of the Ukraine conflict.

Gazprom, the Russian state energy company, fired a warning shot on Wednesday toward countries that support Ukraine when it halted gas deliveries to Poland and Bulgaria. The two countries had refused Russia's demand that they pay for natural gas in rubles rather than dollars, a position supported by most European countries.

As a result, natural gas futures were up more than 20 percent on Wednesday.

Germany, Europe's largest economy, is especially dependent on natural gas from Russia, which accounted for 55 percent of its gas imports in 2021 and 40 percent in the first quarter of 2022, according to Reuters.

The German government has activated its energy emergency plan, calling for industry and households to save energy and reduce usage. Rationing could be imposed in the future, with industry first in line for power cuts, the German economic ministry has said.

"We are continuously looking at ways to save energy and are stepping up these efforts in view of the current situation," a Mercedes-Benz Group spokesperson told Automotive News Europe in an email statement Wednesday, noting that gas plays a crucial role in the automotive industry, from heating production halls to manufacturing processes.

"We are monitoring the situation closely and are in close contact with the German government. If gas supplies were to be cut off, this would affect large parts of the economy," the statement said. 

BMW said electricity and gas prices are hedged over the long term through various mechanisms. "We continue to monitor the volatile situation closely and are in exchange with the authorities," the automaker said.

Audi said parent company Volkswagen Group is in regular contact with the authorities, network operators, and suppliers to be able to assess further developments at an early stage and take any necessary measures.

"At present, the supply of gas for the plants of Volkswagen AG and the brands in Germany is secure," Audi said.

"Volkswagen obtains natural gas from the German interconnected grid, which can cover current German demand. Accordingly, the supply of natural gas to the plants and to the power stations and boiler houses is guaranteed until further notice. It is up to the suppliers to decide from which sources they obtain their natural gas," Audi added in a statement.

Robert Bosch said it covers 20 percent of its energy needs with gas, so it does not require very large quantities, but some of its suppliers do, especially in semiconductor production.

"At present, we can supply our manufacturing and operating sites," a spokesman said. "This is due to our forward-looking procurement strategy and the high level of energy efficiency that the Bosch Group has already achieved by becoming climate-neutral worldwide in 2020.”

The supplier is monitoring the market for energy sources such as gas and electricity and examining what precautions it needs to take in Europe for next winter.

Bosch said it would continue to monitor market developments and legislative decisions.

"This also includes preparing for various scenarios and taking precautions to ensure that we can continue to supply our customers in the event of gas supply regulation, or to minimize any potential impact," the company said. "This can be done, for example, by using alternative energy sources, for example using oil instead of gas for heating, and in some cases also for thermal processes.”

ZF Friedrichshafen said it always tries to anticipate possible developments to prepare for them in the best possible way but would not comment on "speculative political issues.”

Continental said a reliable energy supply is an indispensable basis for stable economic conditions. "We are closely monitoring the current situation and continuously evaluating all options available to us," a spokesperson said. 

Reuters and Bloomberg contributed to this report