Tesla’s competitor in China, NIO shut down their Anuhui Province manufacturing factory for five days. The shortage of semiconductor chips used in making EVs lead to a temporary shutdown. However, the company assures that they have enough chips to deliver the expected cars for four months.
Till March, their sales have gone down due to production shortage. They were able to make 19,500 smart EVs, while the target was around 20,500 smart EVs. Though the numbers seem close enough, this is a substantial loss for the Chinese carmaker.
NIO said, “The overall supply constraint of semiconductors has impacted the company’s production volume in March 2021,”
The shares of NIO have gone down by about an 8% decrease. The shut down happened on 26th March, only after a couple of hours the stocks were down by 5%.
Impact on other EV makers
The American automaker, GM, and Japanese conglomerate, Honda are continuing their suspension of EV production in North America. The shutdown is not uncommon for EV manufacturers, as there is a shortage of parts all over the world.
Last month, Tesla shut down its US manufacturing factory for two days, as there was a shortage of parts. Ford and Volkswagen have also decreased their target production because of the very same reason.
Furthermore, another Chinese EV maker, Okinawa halted its manufacturing on 26th march. Okinawa is a bike manufacturer in China, working on making electric two-wheelers.
Working despite the shutdown
Though the factories can shut down for a couple of days, they are still working on maintenance and repair work of the factory. If there is a shortage of chips, preparing beforehand speeds up their process later on.
The global shortage has an impact on every EV manufacturer. According to Ford, the total loss for manufacturers all over would be around $2.5 Billion. And General Motors expects the global profit to reduce up to $2 Billion from their original expected profits.
Can the industry cope up?
EV sector all over the world has futuristic plans to reduce carbon emissions all over the world. If the problem with not having a semi-conductor chip continuous, there is no saying if every common man would be able to own an EV in coming years.
The chip is for the automation process, to run the software in the car or vehicle. Without further innovations on how to fit everything together, there is no saying on developments of production of EV.
Despite the non-availability of chips for software, there are EVs which have been transformed from combustion car to electric car. That requires changing the existing motor to an electric motor and altering the controls as required. In the end, the impact of chip unavailability is mostly on Luxury EVs.