Shanghai-based electric vehicle manufacturer Nio (NIO) – Get NIO Inc. (China) Report has taken another hit to its production goals as supply chain issues forced the company to suspend production at its Hefei, China, plant.
Nio announced on its mobile app on April 9 that it shuttered the plant after its suppliers in various cities shut down production because of a Covid outbreak lockdown in Shanghai, Reuters reported.
“Since March, due to reasons to do with the epidemic, the company’s supplier partners in several places including Jilin, Shanghai and Jiangsu suspended production one after the other and have yet to recover,” the company said on its mobile app.
Not the First Production Shutdown
The shutdown was the second time Nio has closed production because of supply chain issues as it suspended manufacturing in its Hefei plant for five working days on March 29, 2021, due to a semiconductor shortage.
Nio also shut its plant from Sept. 28 to Oct. 15, 2021, to restructure and upgrade manufacturing lines and prepare to introduce new products. The shutdown resulted in the company delivering only 3,667 vehicles in October 2021, a 27.5% decrease year-over-year.
Several other electric vehicle makers have faced production shutdowns in Shanghai because of a Covid pandemic lockdown. Tesla shut down its Shanghai Gigafactory because of the lockdown on March 28 and has been struggling to reopen operations. Volkswagen and Toyota also shuttered manufacturing in Shanghai in March.
Nio has plenty of goals for its production that might be affected by the shutdown and any future postponement in manufacturing. Nio rolled out its ET7 luxury sedan on March 28, but production will be interrupted during the shutdown.
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The company has big plans for the ET7 as it asserted in its fourth quarter earnings call transcript that it hopes to roll out its version of autonomous driving by the end of the 2022 fourth quarter.
The company also looks to expand EV sales to Europe with plans to introduce Nio to Denmark, Germany, Netherlands, Norway and Sweden this year. It’s uncertain whether production shutdowns will delay rollouts in Europe. It hopes to be selling vehicles in 25 countries by 2025.
How Will Shutdowns Affect Deliveries?
Nio forecasted deliveries in the first quarter of 25,000 to 26,000 vehicles, but it is not known how much this and other potential shutdowns will affect deliveries in the second quarter.
Nio delivered 91,429 vehicles in 2021, for a 109% year-over-year increase. In the fourth quarter, the company delivered 25,034 vehicles, topping analyst estimates of 24,945.
Electric vehicle demand is growing in China with retail penetration rising from 5.9% in January 2021 to 18.6% in December 2021, according to the China Passenger Car Association.
The top selling electric vehicle in China in Hongguan Mini, which is a more affordable EV than most others. BYD’s Quin was the second highest-selling EV, while the Tesla Model Y and Model 3 were the third and fourth highest-selling electric vehicles in China last year, according to the CPCA.
None of Nio’s vehicles made the top 15 in 2021.