Chinese EV maker Nio halts production over chip shortage

Electrical vehicle maker Nio will temporarily halt production at one of its factories on Anhui province as a result of a semiconductor shortage, starting to be the first high-profile Chinese car manufacturer to succumb to the chip snarl which has silenced the factory lines of auto companies globally.

Nio’s plant will cease functions for five working days beginning with March 29, the business said in a statement in Friday.

“The entire supply constraint of semiconductors has impacted the company’s production volume in March,” Shanghai-based Nio said. “The business expects to deliver about 19,500 vehicles in the first one fourth, adjusted from previously produced outlook of 20,000 to 20,500 vehicles.”

Auto makers around the world have expanded and extended creation cuts that first began in late December to cope with a good worsening global shortage of semiconductors. The coronavirus pandemic induced a surge in chip orders that happen to be needed for smartphones, TVs and computers as persons try to make extended life at home more bearable, leaving less convenience of a stronger-than-expected rebound in car or truck demand.

Recent weather-related disruptions of petrochemical supplies on the southern US and a fire at a chip building plant in Japan have exacerbated the shutdowns.

The company’s shares climbed a lot more than 1,100 per cent in 2020, pulled higher by excitement around the prospects for growth in China’s EV marketplace, which may be the world’s biggest.

The investor enthusiasm for electric cars comes as Nio, along with Chinese rivals Xpeng and Li Auto consider second listings in Hong Kong, according to persons familiar with the matter.

By January, Nio had delivered 82,866 electric cars in China since its first unit found market in June 2018. Its high-end sport-utility automobiles have proven popular with wealthy consumers, helping to push Nio’s gross margin to 17.2 % in the fourth quarter.

But Nio posted a wider-than-expected loss in the quarter, a year after a government cash injection saved the business from bankruptcy.

LEADER William Li flagged in the let go of the company’s latest effects earlier this month that development capacity could be constrained by the global chip shortage.

While monthly capacity has increased to 10,000 units, production will stay at 7,500 “due to supply-chain limits, like the chip shortage,” he said earlier this month.

“Though we believe we're able to meet expected demand for the second-quarter, there’s indeed an increased risk.”