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Russian invasion of Ukraine will affect auto industry, but workarounds can be found

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Catalytic converters use precious metals, including palladium, which analysts expect will be in short supply if Russia decides to curb its exports of the element.

Russia's invasion of neighboring Ukraine will have an effect on automakers in Michigan and around the world.

Russia is the world's largest producer of palladium, a precious metal used in catalytic converters. 

Analyst Sam Abuelsamid, head of Guidehouse Insights, said there's no sanction in place at present that would keep Russia from continuing to export palladium, but the country could decide to restrict those exports itself in retaliation for other sanctions.

But he said it would not be a crippling move.

"Even without Russian palladium, we can probably still get by," Abuelsamid said. "But what we are likely to see are some increase in costs."

For its part, Ukraine is a top producer of neon, a gaseous chemical used to produce semiconductors. 

Abuelsamid said the war is likely to make an existing pandemic-related shortage of semiconductors worse. That will have ripple effects, he said.

"Anything that potentially disrupts semi-conductor production disrupts not only automotive but almost everything else we use in our modern lives."

Most global automakers have already shut down sales, production, and other operations in Russia in response to its aggression against Ukraine.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.
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