Chinese Tesla Nio "Production Disruption Due to Semiconductor Chip Shortage"

Source: CNBC

[Asia Economy Reporter Yujin Cho] The disruption in production caused by the shortage of automotive semiconductor chips is prolonging, increasing confusion in the global automotive industry.

Chinese electric vehicle maker Nio, known as the "Chinese Tesla," has announced production disruptions due to the global semiconductor chip shortage, reported U.S. financial media CNBC on the 2nd (local time).

William Li, CEO of Nio, stated during a conference call after the earnings announcement that the monthly production capacity in the second quarter of this year will be limited to 7.5 million units.

He explained that due to semiconductor and battery supply disruptions, a production cut in the second quarter is inevitable, with a 25% reduction in production volume from the initial target of 10,000 units.

The semiconductor supply shortage is also affecting Nio's global expansion strategy. CEO Li emphasized, "Despite the semiconductor supply shortage, this year's global expansion strategy remains valid. With the upcoming entry into Europe in the second half of the year, we aim to restore annual production capacity to 150,000 to 300,000 units by the end of the year."

Through the earnings announcement, Nio reported a net loss of 1.4 billion yuan in the fourth quarter of last year, significantly below market expectations. Nio's stock, listed on the New York Stock Exchange, fell sharply by over 4% during the trading session due to disappointment over the earnings.

Meanwhile, besides Nio, companies such as General Motors (GM), Stellantis, and Tesla have also initiated intermittent and partial production cuts due to semiconductor chip shortages.

Earlier, Oliver Blume, CEO of Porsche, expressed concern on the 21st of last month (local time), stating, "The impact of production disruptions caused by the global semiconductor shortage is severely affecting operations."

He said, "With high demand maintained in consumer electronics and automobile sales, the semiconductor chip shortage has paralyzed automotive production lines. The semiconductor supply issue is very serious, affecting us daily, and we must closely monitor the situation and devise long-term countermeasures."

As semiconductor shortages and European lockdowns slow global sales, there are forecasts that the first-quarter earnings of finished vehicle manufacturers will be significantly impacted. The industry expects some production cuts in certain models due to the prolonged semiconductor shortage but plans to minimize profit impact by reducing production of less profitable models.