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China’s Nio affected by chip shortage, forecasts cut sales

For a couple of months now, automobile companies seemed to pick up for the damage from semi-conductor shortage. However, the Chinese EV maker Nio says they had to cut short the sales forecast because of the current semi-conductor shortage issues. Nio recently expanded to the European market, with a showroom in Norway.

Chinese Tesla rival Nio: Chip shortage will hit electric car production

Image credit- CNBC

In the third quarter, their sales forecast was 23,000 to 25,000 vehicles. Now the prediction reduced to 22,500 to 23,500 vehicles. It is less by 500 units but it means a huge difference for their profit margins. Last month the company delivered 5,880 electric sports utility vehicles, which was around 48% more than last year’s sales.

The EV market in China is competitive as there is push from the government and EV makers come up with innovative models at cheaper options. Nio is widely popular for being cheap, as the company sells the car without batteries, and customers can replace the batteries each time the car is out of charging. So Nio is widely considered among top players along with Li Auto and Xpeng.

Li Auto sold 9,433 units last month, almost double sales of Nio. Furthermore Li Auto targets a sales unit of 10,000 in September. Whereas Xpeng forecasts to sell 15,000 units monthly by the fourth quarter. And Xpeng sold 7,214 cars last month.

Prolonged chip shortage

Major automakers in the world are hit by chip shortages, like Ford, General Motors, Honda, and Volkswagen. China being the world’s biggest automobile market, saw a dip in sales by 11.9% last month according to the China Association of Automobile Manufacturers (CAAM). It included plug-in hybrids and battery-powered vehicles.  Furthermore, a China CAAM executive, Chen Shihua warned that the chip shortage is unlikely to be solved anytime soon as major parts of the world are still affected by the COVID pandemic.

Meanwhile, the American EV maker in China, Tesla sold 8,621 China-made vehicles last month. As Tesla’s China factory exports its vehicles, the company was able to sell 32,968 units in July. Other automakers besides Nio haven’t reported any dip in the sales forecast. It is known that the company expects revenue of 6.64 billion yuan in the fourth quarter this year.

Last year Nio’s shares soared by more than 1000% as the pandemic hit the country. It was expected that this year the chip shortage issue would slowly be resolved. However, it looks like companies are going to continue to be affected as a result of other countries are hit with the pandemic, resulting in manufacturing facilities being shut down.

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