Volkswagen was hit by a major IT outage on Wednesday, which caused production at the carmaker’s namesake brand in Germany to halt. Volkswagen, Europe’s top carmaker, said the entire group, including the Porsche AG (P911_p.DE) and Audi brands, was affected. A spokesperson for Audi confirmed that production at the division had also been disrupted, adding that the extent of the impact was being analyzed.
The company said that the outage was caused by an unspecified “IT malfunction of network components” at the global headquarters in Wolfsburg. It also impacted offices in Emden, Osnabrueck, Hanover, Dresden, and Zwickau and component factories in Braunschweig, Kassel, Chemnitz, and Salzgitter.
Volkswagen’s German plants produce more than a million cars annually, making it one of the world’s most productive automotive production sites. It is also the company’s biggest electric vehicle production site, making the ID.4 sport utility vehicle exported to the United States.
Like other automakers, VW is pouring tens of billions into its shift towards electromobility. Still, the industry is also dealing with rising semiconductor shortages and the effects of turmoil in Ukraine that has interrupted supplies of critical raw materials.
The IT problems are another setback for VW, which needs to adapt its production systems to a new generation of electric vehicles. It is also facing sluggish demand for its current crop of gasoline and diesel cars, which has hurt sales in China, the world’s largest market.
The latest IT problems will pressure chief executive Herbert Diess, who has struggled to manage the shift to electric vehicles amid rising global competition and slowing consumer demand. Diess had hoped that introducing new EV models would help offset slowing demand, but the recent setback is likely to reinforce the need for a quicker ramp-up in production.
Volkswagen’s shares were down 1.2% in early trade on Thursday, putting the company on course for its worst performance since 1958. It is the latest setback for the carmaker, which is investing tens of billions in its e-car business. The firm also needs help to cut costs while adjusting its supply chain to new production requirements for battery-powered vehicles. Amid those challenges, Volkswagen has struggled to profit in the United States, its biggest market outside China. The company had to temporarily halt production at two of its plants in eastern Germany that make electric vehicles because of shortages of semiconductors and other parts, the Handelsblatt financial daily reported on Friday. The disruptions underscored the risks of the growing turmoil in the country. Fighting in western Ukraine has interrupted deliveries of components from the country to the West. This has exacerbated existing shortages that have already cut production at several plants. The shutdowns in the German cities of Zwickau and Neckarsulm will affect around 1,200 EVs a day. The plant in Zwickau makes up a large proportion of the company’s global EV output.