NIO Electric vehicle manufacturing hit by semiconductor shortage

Chinese electric vehicle manufacturer NIO (NYSE: NIO) said today that it will shut down production at its Hefei plant for five days due to the global shortage of semiconductors. Production will be suspended for five business days from March 29.

The company said the shutdown will reduce first-quarter deliveries to about 19,500 vehicles, from the previous estimate of 20,000 to 20,500. In comparison, the company delivered 17,353 vehicles in the fourth quarter of 2020.

NIO ES8 electric vehicle. Image Source: NIO.

The shortage of semiconductors is affecting many car manufacturers around the world, including Ford (NYSE: F) and General engines (NYSE: GM) Tesla (NASDAQ: TSLA) also took a two-day production break at the California plant last month for what it called parts shortages. Automakers are shuffling available semiconductors through factories to maintain the production of the most profitable vehicles.

Even with the lost production, NIO’s new estimated first quarter production level of 19,500 vehicles would represent a growth of more than 400% over deliveries reported in the first quarter of 2020. NIO more than doubled its production in 2020 compared to the previous year and continues to work towards profitability.

During a presentation in January 2021, the company introduced its new ET7 luxury sedan, the first sedan to be offered by the company. It provides a range of approximately 621 miles, according to the company. That’s beyond Tesla’s Model S maximum range of 402 miles. Competition is increasing as the Chinese electric vehicle market expands. Tesla began shipping its Model Y crossover SUV from its Shanghai plant earlier this year, with other Chinese competitors ramping up production as well.

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