Russia Could Nationalize Automaker Assets as Ukraine Invasion Continues, and VW ID.5 Launch Delayed

Following almost two years of supply-chain problems, Russia’s invasion of Ukraine is causing more problems for automakers in Europe in addition to the terrible human toll the invasion is taking.Ukraine, it turns out, supplies a lot of wiring harnesses, and now the launch of the Europe-market VW ID.5 EV (pictured above) is delayed because of a shortage.Renault, which controls Russia’s largest automaker, suspended operations in the country this week, leading once again to questions about whether the Russian government will simply take control of factories and other assets Western automakers are walking away from.

Russia’s invasion of Ukraine continues to disrupt life well outside the active fighting areas. In the automotive world, European automakers have been forced to reduce production or even delay new models because, as we’ve all learned so well in the past two years, functioning supply chains are not exactly a given.

ID.5 assembly in Germany, January 2022.

Oliver Killig/VW

When the invasion started, the fact that Ukraine supplies a large amount of wiring harnesses to European automakers suddenly became important. Volkswagen said this week that it will push back the launch of the ID.5 by a month because it cannot get enough harnesses to send demonstration vehicles to dealers in Germany. The ID.5 is an SUV “coupe” version of the ID.4 and was supposed to launch in Europe in April. The launch is now scheduled to happen in the first week of May, a VW spokesperson told Automotive News. That’s if enough wiring harnesses can be acquired.

Automakers with partnerships or assets in Russia are being massively affected as well, most notably Renault. AvtoVaz is the largest automaker in Russia, but it’s controlled by French carmaker Renault, which has a 69 percent stake. This week, after plenty of outside pressure, Renault decided to suspend its operations in Russia, saying on Twitter that it is “acting responsibly towards our 45,000 employees in the country” and that the company has “already implemented the necessary measures to comply with international sanctions” before the suspension started.

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Renault’s suspension is the latest, biggest hit to the Russian domestic auto market, which is now facing potentially huge changes if sanctions imposed by Western and Western-aligned countries continue (as they are likely to do, given the fact that Russia does not seem interested in stopping the killing). Reuters reports that Avtovaz said Thursday that it will continue to build vehicles, but the sanctioned supply chain means that will be difficult. “Active work is underway to substitute some critical imported components with alternative solutions,” Avtovaz said in a statement given to Reuters. “The company is also preparing special versions of some Lada models with reduced exposure to imported components. These will be available to our customers in the coming months.”

Lada was forced to stop building cars earlier this month, a big step for a brand that sold 21 percent of all new vehicles in Russia in 2021. With Renault having taken at least the first step towards exiting the company, it brings up a larger question of what happens next. President Vladimir Putin is considering nationalizing the manufacturing plants and other assets global automakers have in Russia, as Automotive News and others have reported. Aside from Renault, Volkswagen, Stellantis, Ford and Mercedes-Benz would be the automakers most affected by any move to nationalize assets, a move sometimes described by Russian government officials as “external administration.”

“If foreign owners close the company unreasonably, then in such cases the government proposes to introduce external administration,” Russian Prime Minister Mikhail Mishustin told CNN earlier this month. “Depending on the decision of the owner, it will determine the future fate of the enterprise.”

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