From Exit Fees to Lawsuits: Siemens Mobility’s Costly Divorce from Russia

Siemens Mobility is no longer part of Russia’s rail equation. After selling its Ural Locomotives stake and paying a USD 9 million exit fee, the German giant now faces legal blowback, contract disputes, and reputational fallout across the EU rail landscape.

Siemens Mobility has officially ended its presence in the Russian rail sector, completing the sale of its minority stake in Ural Locomotives, a joint venture previously shared with Sinara Group. The move, made in response to EU sanctions following Russia's full-scale invasion of Ukraine, also included a mandatory USD 9 million payment to the Russian state, as part of the terms set by the Kremlin for foreign divestments.

The transaction was supervised by the Russian Ministry of Trade and approved by the country's Foreign Investment Commission. Siemens offloaded its 50% share in Ural Locomotives Holding B.V., which controls 100% of Ural Locomotives, to the newly established Otavit holding—a Sinara-owned entity created in mid-2024 to facilitate the restructuring. The total transaction value was nearly USD 25.7 million, with Siemens covering a significant portion through the obligatory “exit tax.”

The German company Siemens lost €600 million after selling its business in Russia and ceasing operations in the country

This is stated in the concern’s annual report for the 2022 financial year.

According to the document, such losses were caused by the Mobility division, which… pic.twitter.com/3dCPmDmoeN

— NEXTA (@nexta_tv) December 19, 2023

Siemens Mobility Leaves Behind a Troubled Partnership

Founded in 2010, Ural Locomotives had been a joint venture between Siemens and Sinara, focused on manufacturing electric locomotives and electric multiple units (EMUs) for the Russian domestic market. The German technology group announced its withdrawal from Russia in May 2022, following a series of EU-wide sanctions imposed after the invasion of Ukraine.

While Siemens formally ceased operations, Sinara gradually took over production control, and has since expanded operations independently. The company is now developing high-speed train production, reportedly under government-imposed manufacturing targets. Forecasts from Russian authorities estimate that revenues from Ural Locomotives will exceed USD 1.2 billion by 2027, with the factory maintaining at least 4,000 jobs.

Legal Disputes Intensify Despite Siemens’ Exit

Siemens Mobility’s exit from Russia has not ended its obligations under past contracts. The company is currently embroiled in multiple lawsuits filed by Ural Locomotives, alleging breaches of contract and failure to deliver key components.

In one ruling, the Sverdlovsk Regional Commercial Court awarded USD 9 million to Ural Locomotives, citing Siemens’ failure to fulfil its equipment delivery obligations. More recently, the Moscow Commercial Court ordered Siemens to deliver additional traction components for 11 Lastochka EMUs—high-speed trainsets originally developed under the joint venture—and pay penalties amounting to 25.4 million roubles (approx. USD 300,000).

In a parallel case, Siemens is also facing penalties for failing to comply with contractual obligations with Russian Railways (RZD), further complicating its financial and legal disengagement from the Russian market.

A Costly Exit: Siemens' Strategic Loss in Russia

While the sale of its share in Ural Locomotives marks a final step in Siemens’ strategic withdrawal, the broader consequences are far from over. The German company’s USD 9 million “exit fee” has drawn attention, especially in light of EU and G7 measures discouraging business support to the Russian government. By directly contributing to state revenue, Siemens’ divestment may fuel further debate in policy circles about the long-term effectiveness of sanctions regimes.

At the same time, the ongoing legal challenges signal that Siemens remains financially entangled in Russia, even as it distances itself from direct ownership. With multiple rulings against the company and further disputes possible, the reputational and legal risks surrounding its former partnerships may continue to follow Siemens well into the future.

Source: Rollingstockworld