BMW lowered its output forecast and warned of a highly volatile second half on Wednesday, pinpointing supplies of energy in Europe and chips worldwide as the two crucial factors to the carmaker hitting full-year earnings targets.

The premium carmaker expects a solid sales increase in the second half but said total deliveries will fall short of last year’s record highs of 2.52 million across the group.

Tightening sanctions on Russia, interruption of gas supply or the possibility of the war in Ukraine spreading were not factored into its forecast, it added.

Shares were down 2.6% at 0807 GMT.

“Semiconductor supply difficulties remain the dominant and decisive issue for our sales,” chief executive Oliver Zipse said.

“Our EBIT margin in the Automotive Segment should stay within the range of seven to nine percent. The crucial factor will be how the supply situation develops – not just for semiconductors, but also energy supplies in Europe.”

Fears that Russia could further cut or stop altogether supplying gas to Europe in response to Western sanctions over its invasion of Ukraine prompted European Union members, including Germany, to adopt emergency plans to curb gas use.

The company was evaluating whether it could replace the electricity from gas-powered plants by purchasing external power, Zipse said.

“BMW is the first manufacturer to signal caution on the demand front,” analyst Daniel Roeska of Bernstein Research said in a note. “A warning for year-end 2022 likely implies that BMW is already seeing weakening consumer demand today.”

A survey by Germany’s Ifo institute on Wednesday showed German carmakers’ business situation beginning to deteriorate in July, with order backlogs shrinking and price expectations plummeting.

BMW struck a more negative note than competitor Mercedes-Benz (MBGn.DE), which last week raised its earnings outlook for the year after profits and revenues grew in the second quarter despite falling unit sales.

The Munich-based carmaker’s earnings fell 31% in the second quarter to 3.4 billion euros ($3.46 billion) despite growing revenues, still beating a 3.13 billion euro forecast in a Refinitiv poll of eight analysts.

The consolidation of its China joint venture BMW Brilliance Automotive pushed up revenues in the first half but dampened second quarter earnings, BMW said, reporting an automotive margin of 8.2%, down from last year’s 15.8%.

Overall, the reevaluation of the Chinese joint venture shares boosted earnings before tax by 7.7 billion euros in the first half.

BMW increased its stake in its joint venture with Brilliance Auto Group to 75% from 50% in February after securing the necessary license from Beijing to take majority control.