Nio suspends factory for five days due to semiconductor shortages
Nio suspends factory for fiv...
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Nio suspends factory for five days due to semiconductor shortages

27 March 2021
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2 min.
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Nio suspends factory for five days due to semiconductor shortages

Plant shutdown

China's Nio said on Friday it would suspend production of electric cars at its plant for five days starting Monday due to a shortage of semiconductors. Nio's forecast for deliveries of its electric vehicles in the first quarter of 2021 has been lowered.

Nio (NIO) on Friday said on its official website that it would temporarily suspend production of electric vehicles at its JAC-NIO plant in Hefei, eastern China.

According to the announcement, the Nio plant will be idle for five working days from March 29 due to a shortage of semiconductors. Consequently, Nio has had to reduce its delivery forecast for the first quarter of 2021 from a range of 20,000 to 20,500 vehicles (up 15-18% from the fourth quarter) announced on 1 March to an expectation of delivering around 19,500 vehicles.

In reporting its fourth-quarter results on March 1, Nio's management had already speculated that it would face supply constraints due to a worldwide shortage of semiconductors, which has affected not only electric car manufacturers but also other electrical appliances.

While Nio increased its production capacity to 10,000 electric vehicles per month in February, Nio management suggested that the company would have to return to a supply level of 7,500 per month in the second quarter.

Nio shares reacted to the news with a sharp decline of 6.4% before trading opened on Friday, with shares of rivals Xpeng Motors (XPEV) and Li Auto (LI) also down 1.66% and 0.64% respectively.

Semiconductor shortages potentially threaten them as well, although XPeng Motors vice president Brian Gu said in its March quarterly report that the company did not see any problems with these supplies but would keep a close eye on developments.

Earlier, other major carmakers Volkswagen, Ford (F) and GM (GM) also reported suspensions of their plants for the same reasons of semiconductor shortages.

Nio shares have risen 111% in the past six months and are now trading more than nine times higher than at the start of 2020: from a $4 level, shares in the Chinese automaker jumped to $36.12 at the close of trading on Thursday. However, Nio shares have lost more than 27% in a month, down 47.2% at the time of writing from a high of $67 per share on January 11.

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NIO
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