China’s Nio says supply chain disruption is biggest challenge right now

Chinese electric car maker Nio states that the biggest problem is not the demand. But it is the supply chain stability challenge that is being faced by the automaker right now. Nio’s founder and chairman, Li talks about the challenges the EV maker is facing.

Like most automakers, Nio too had to charge its customers more as the raw material prices keep increasing. In China when the Covid-19 broke out again, the automaker was not able to get parts from suppliers. It had to temporarily suspend production. Despite being able to start production a few days later, it has largely impacted its production rate and sales.

Li further described the situation, where the overall auto industry is still working on recovering in China. Shanghai and other parts of the manufacturing locations in the country still remain under Covid restrictions. On the other hand, the CEO and founder said that he expects consumer demand to persist. Even after the Chinese government reduced the subsidies and other policy support, the demand is expected to be high. In April, Nio was able to deliver 5,000 units amid Covid restrictions. It fell sharply from the 10,000 vehicle deliveries in March. In China, passenger car sales fell by 35.5% in April, compared to last year.

Nio plans

Li, who is also Nio’s founder and chairman, was speaking in an interview with CNBC ahead of the company’s secondary listing in Singapore. On Friday, Nio carried out a secondary listing on the Singapore Stock Exchange by way of introduction — which differs from an initial public offering as no new capital is raised and less paperwork is required.

Instead, the listing primarily allows investors to trade the company’s shares on an exchange other than the main trading venue. In early March, Nio also carried out a secondary listing in Hong Kong by way of introduction. The company’s first and primary listing venue remains the New York Stock Exchange. The auto executive did not elaborate on why the company chose Singapore as the third listing venue but said Nio could reach more investors this way.

But Li said Nio plans to export cars to Southeast Asia and open a research and development center in Singapore in the near future for artificial intelligence and autonomous driving. He did not provide specific dates. So far, the company has focused much of its overseas expansion on Europe, primarily in Norway. The start-up’s main trading venue remains the NYSE, where the company held its initial public offering in 2018.