Per reporter: Dong Tianyi Per reporter Per editor: Sun Lei
The escalating conflict between Russia and Ukraine raises far more concerns than just the people of both countries.
CCTV news reported that on February 24, local time, the Ukrainian military confirmed that Russian tanks had entered the city of Samui in the northeast of Ukraine. That night, the Ukrainian army and the Russian army had a fierce exchange of fire in the center of Samui. Gunfire continued and destroyed tanks set fire to the side of the road. On February 25, local time, Ukrainian President Zelenskiy said that in the past day and night, a total of 137 Ukrainians have died and 316 have been injured.
On February 24, 2022, local time, a military building was attacked in Kiev, the capital of Ukraine. (Source: Visual China)
At the same time, the Russian-Ukrainian conflict has also cast a shadow over the global automotive supply chain system. According to a report released by market research institute TrendForce, the Russian-Ukrainian conflict may affect the supply of inert gas in Ukraine, and the production cost of global chips may rise, while Russia is also the world's largest supplier of a variety of key metal materials, including palladium and nickel, including precious metals exports are extremely high, the above resources are precisely the necessities of the automotive industry in various countries.
Image source: Visual China
Compared with more intuitive resource exports, Russia is also an important manufacturing hub and key market for the automotive industry. Multinational automakers including Volkswagen, Toyota, Renault-Nissan and Stallantis all have factories in the area. Once Russia is sanctioned, both local car manufacturing and sales channels could be hit hard.
The automotive supply chain crisis behind the smoke
At present, the chip shortage problem is still spreading in the global automotive industry. According to data released by Auto Forecast Solutions, a data forecasting company for the automotive industry, as of February 6 this year, the cumulative production reduction in the global automotive market due to chip shortages was about 370,500 units, a significant increase of 61% from the cumulative reduction of global automobile production (230,700 units) as of January 30.
At present, the further escalation of the Conflict between Russia and Ukraine may aggravate this situation. It is understood that inert gases such as neon, krypton and xenon are necessary for lasers used in chip production, and Ukraine is one of the world's largest producers of neon gas. During the 2015 Russia-Ukraine Crimea incident, the price of neon gas soared from the initial 750 yuan per cubic meter that year to a historical peak of 25,000 yuan per cubic meter in mid-July.
According to data provided by Wells Fargo analyst Aaron Raker, 90% of the neon in the United States is produced and supplied by Ukraine, so the Russian-Ukrainian conflict may lead to insufficient supply of inert gas, push up the price of semiconductor wafers, and exacerbate chip shortages. According to the relevant research reports of Guojin Securities, in the Russian-Ukrainian crisis, the probability of 8-inch and 12-inch wafer manufacturers in the United States and Europe being affected is large.
It is understood that the main supply of neon and krypton gas in Ukraine can be used for KrF (248nm excimer laser) laser, the process is mainly used for 8-inch wafer 250 ~ 130nm mature process. At present, 250~130nm process products include PMIC, MEMS and MOSFET components, IGBT and other power semiconductor components.
In fact, many chip manufacturers have felt the supply chain crisis brought about by the Russian-Ukrainian conflict. According to Bloomberg, micron, a major U.S. semiconductor company, recently revealed that some of the inert gases such as neon used by the company come from Ukraine, and the company will pay close attention to the situation in Ukraine and Russia, and hopes that the situation can be eased.
A spokesman for Dutch lithography giant Asmail also said a few days ago that it is looking for other sources of the small amount of neon gas used in its factories to prevent supply from being affected by the Russian-Ukrainian conflict.
In addition, Russia's supply of nickel for lithium-ion batteries for new energy vehicles and precious metal palladium for catalytic exhaust purifiers for purifying automotive exhaust gas accounts for more than 40% of the world's supply. As of Feb. 23 this year, the price of palladium has jumped to more than $2,400 an ounce, nearly doubling from December 2021, the data shows.
"Once the Russian side engages in an economic confrontation with the West and cuts off the supply of palladium exports, automakers will have to find alternative supplies [of palladium] or they will not be able to continue to produce cars with internal combustion engines." Sam Abuelsamid, chief automotive analyst at research firm Guidehouse Insights, said.
Some car companies are preparing to transfer production lines
In fact, the Russian-Ukrainian conflict has also made multinational car companies that have built factories in Russia feel anxious. As tensions in Eastern Europe escalate, the region's auto parts supply and new car production plans may have been affected.
"Protracted political conflicts have had an impact on the cost of car logistics in Eastern Europe. In the past, a large part of the complete vehicles and auto parts were supplied to Russia from Western Europe via Ukraine. It is clear that the situation will now change. Alexandra Dubrovskaya, head of vehicle operation coordination at Chrysler Group Russia, said: "Over the past few years, supply chain adjustments have led to a doubling of parts transportation distances, delivery times and logistics costs, and turmoil in the global logistics market means that the original supply plan has been interrupted, and these problems are now out of control like an avalanche." ”
According to Russian Gazeta.Ru, if Russia is subject to new sanctions, local automakers will have to turn to suppliers elsewhere and could face higher costs.
According to the European Enterprise Association (AEB), in 2021, the Russian automotive market sales increased by 4.3% year-on-year to 1.667 million units. Five of the top 10 models sold are products of the Renault Group, and Renault's Lada Vesta, which ranks first, sells about 114,000 units.
Since December last year, Stellantis Group's plant in Kaluga, Russia, has been increasing production to meet rising export demand from Western Europe. Carlos Tavares, Chief Executive of Stellantis, said it was uncertain how the sanctions would affect Stellantis' Kaluga plant. "If Western sanctions interfere with our production in Russia, the company will be ready to transfer the production of these vehicles to other factories, and we are closely monitoring the situation and will not comment further at this stage," Tang Weishi said.
In addition to the Stellantis Group, multinational car companies including Volkswagen, Toyota, Mercedes-Benz and BMW have factories in Russia. Among them, Mercedes-Benz invested more than 250 million euros (about 1.791 billion yuan) in its plant in northwestern Moscow, responsible for the production of Mercedes-Benz E-Class sedan and some SUVs. The plant, which opened in April 2019, currently employs more than 1,000 people.
Regarding the sanctions that may be brought about by the Russian-Ukrainian conflict, a Mercedes-Benz spokesperson said in an email that Mercedes-Benz will consider possible sanctions in its business activities with Russia. BMW said: "Politics determines the company's operating rules, and if the framework conditions change, the company will evaluate it and decide how to deal with it." ”
"There is no doubt that an escalation of the conflict means that all industries will be affected to a greater or lesser extent, including the automotive industry and logistics. However, the extent of this impact will depend on the scale and depth of the conflict. Anna Derevyanko, executive director of the Ukrainian European Business Association, said the current lingering tensions in the region were affecting business investment flowing into Ukraine, including in the automotive sector.
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