Shanghai-based electric vehicle manufacturer Nio (NEVER) – Get NIO Inc. (China) Report has hit its production targets again as supply chain issues forced the company to halt production at its plant in Hefei, China.
Nio announced on its mobile app on April 9 that it had closed the plant after its suppliers in various cities halted production due to a Covid outbreak lockdown in Shanghai, Reuters reported.
“Since March, due to reasons related to the epidemic, the company’s suppliers have stopped production in several places including Jilin, Shanghai and Jiangsu one by one and have yet to recover,” the company said on its mobile app.
Not the first production downtime
The closure marked the second time Nio has shut down production due to supply chain issues, since it suspended production at its Hefei plant for five working days on March 29, 2021 due to a semiconductor shortage.
Nio also closed its plant from September 28 to October 15, 2021 to restructure and upgrade manufacturing lines and prepare for new product launches. The closure resulted in the company delivering just 3,667 vehicles in October 2021, down 27.5% year-on-year.
Several other electric vehicle manufacturers have faced production shutdowns in Shanghai due to a lockdown caused by the Covid pandemic. Tesla closed its Shanghai Gigafactory because of the lockdown on March 28 and is struggling to resume operations. Volkswagen and Toyota also closed production in Shanghai in March.
Nio has many targets for its production that could be affected by the closure and any future postponement of production. Nio launched its ET7 luxury sedan on March 28, but production is on hold during the shutdown.
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The company has big plans for the ET7, as it said in its fourth-quarter earnings report that it hopes to launch its version of autonomous driving by the end of the fourth quarter of 2022.
The company also intends to expand electric vehicle sales to Europe and plans to launch Nio in Denmark, Germany, the Netherlands, Norway and Sweden this year. It is uncertain whether production shutdowns will delay the rollout in Europe. The company hopes to sell vehicles in 25 countries by 2025.
How do shutdowns affect deliveries?
Nio forecast first-quarter deliveries of 25,000 to 26,000 vehicles, but it’s unknown how much this and other potential shutdowns will impact second-quarter deliveries.
Nio delivered 91,429 vehicles in 2021, a 109% increase over the previous year. In the fourth quarter, the company delivered 25,034 vehicles, beating analyst estimates of 24,945.
Electric vehicle demand is growing in China, with retail penetration increasing from 5.9% in January 2021 to 18.6% in December 2021, according to the China Passenger Car Association.
The best-selling electric vehicle in China is the Hongguan Mini, which is more affordable than most. BYD’s Quin was the second best-selling EV, according to the CPCA, while the Tesla Model Y and Model 3 were the third and fourth best-selling EVs in China last year.
None of Nio’s vehicles made the top 15 in 2021.