NIO Temporarily Suspends Production for Five Working Days Due to Semiconductor Shortage

NIO
The demand for electric vehicles in China this year is expected to be much larger than 2020. (Source: NIO)

Chinese electric vehicle (EV) manufacturer NIO announced last Friday that it would halt production at its JAC-NIO manufacturing plant in Hefei, the capital of the Anhui Province, beginning from today.

NIO has now become the first automaker in China to be dealt a significant blow by the continuing global semiconductor shortage. It is expected that NIO will resume normal production after the Tomb-Sweeping Day holiday and will continue to pay attention to the semiconductor supply of its partners.

The overall lack in supply of semiconductors has impacted NIO’s production volume this month. Based on its 2020 delivery volume, the five day suspension will cause a reduction of approximately 600 vehicles. The auto firm now expects to deliver approximately 19,500 vehicles this quarter, down from its previous outlook of 20,000 to 20,500.

In spite of the global pandemic, NIO was on a roll in 2020. A domestic independent brand of high-end electric vehicles, NIO’s sold 5739 vehicles in February, ranking ninth in the sale list of domestic luxury vehicles, followed closely by Land Rover and Porsche.

Earlier this month, the automaker revealed its financial results for 2020. Its sales volume amounted to 15,182.5 million yuan ($2,326.8 million), a year-on-year increase of 106.1%, and the annual total revenue was 16,257.9 million yuan ($2,491.6 million), a year-on-year increase of 107.8%. The operating loss declined by 58.4% over the previous year.

NIO is not the only victim of the global semiconductor shortage. Many well-known automakers including Volvo, Honda, GM, Ford Motors have previously halted certain production lines in their factories.

The current supply of semiconductor falls short of demand. The COVID-19 pandemic caused a surge in chip orders, which are needed for smartphones, TVs and computers. The demand for electric vehicles in China this year is expected to be much larger than 2020. That left chip makers unable to meet the demands of automakers.

There is no doubt that 2021 will be a very difficult year for the EV industry. Overall coordination and the support of relevant departments are urgently needed.

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In 2021, the Ministry of Industry and Information Technology (MIIT) has organized several seminars on the supply and demand of automotive chips. Last Wednesday, MIIT Vice-Minister Xin Guobin affirmed that automotive chip is an important device related to the core competitiveness of the industry and the building of a vehicle power.

Hopefully, the five-day suspension will give NIO enough time to acquire more of the precious semiconductors. They need to do work hard to catch up throughout the rest of 2021.