FAST NEWS: Nio Halts EV Manufacturing Due to Covid Disruptions

The latest: Nio Inc. (NIO.US; 9866.HK) said on Saturday it has halted production of its electric vehicles (EV) due to supply chain disruptions, according to a Reuters report citing the company’s mobile app.

Looking Up: Nio isn’t the only major EV maker to halt its car manufacturing operations due to widespread restrictions as China deals with its worst outbreak of Covid-19 to date. The company’s larger rival Tesla (TSLA.US) halted manufacturing at its China plant in Shanghai for similar reasons in late March.

Take Note: The closure is likely to continue for at least a few more weeks as Nio’s suppliers in Shanghai and Northeast China’s Jilin province struggle to maintain operations during citywide lockdowns that often force many of their workers to stay at home.  

Digging Deeper: Nio is one of the best-known among China’s vibrant field of startup EV makers, all hoping to profit from Beijing’s strong promotion of clean-energy cars. The company said in late March it expected to deliver between 25,000 and 26,000 vehicles in this year’s first quarter, up between 25% and 30% year-on-year. While the company should meet that target, it’s likely to have far more difficulty maintaining sales growth in the second quarter due to Covid-related closures. More than 100,000 people have been infected in China’s latest Covid outbreak, prompting the cities of Shanghai and Changchun, capital of Jilin province, to lock down completely. The Shanghai lockdown has been especially difficult for many companies due to the city’s status as China’s commercial capital and a major logistics and manufacturing hub.

Market Reaction: Nio’s Hong Kong-listed shares were down more than 7% in late afternoon trade on Monday. The stock has dropped about 17% over the last week as concerns mounted about a potential halt to its manufacturing.

Reporting by Doug Young

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