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    Saturday, March 27, 2021

    Tesla's Chinese Rival, Nio Suspends Production on Chip Shortage

    Nio, one the main challengers to Tesla, which dominates the electric vehicle (EV) market in China, said it would halt production for five working days at its Hefei plant and cut its first-quarter delivery forecast by as much as 1,000 vehicles.

    Shares of Nio, which makes the ES8 and ES6 electric sport-utility vehicles, ended the day down 4.8% on the New York Stock Exchange.

    Ford Motor, Honda Motor, General Motors and Volkswagen were among the automakers caught off guard by the shortage, forcing many to hold back production even as car demand picked up during the pandemic.

    Chip shortages have cost the global auto industry 130,000 vehicles in lost production, research firm AutoForecast Solutions estimates, with the heaviest impact in North America, with 74,000 units lost, and Western Europe, with 35,000 lost.

    The chip scarcity is also a result of an increased demand from the consumer electronics industry as people worked from home and played more video games during the crisis. Sanctions against Chinese technology companies have also played a role.

    The Chinese electric vehicle maker, Nio which also faces competition from homegrown rivals such as Xpeng Inc, now expects to deliver 19,500 vehicles in the first quarter, down from a 20,000 to 20,500 range previously.

    Ford had warned the shortage could hit its 2021 profit by up to $2.5 billion, while larger U.S. automaker GM expects the crisis to shave up to $2 billion off its full-year profit.

    Ford, which was until now assembled its highly profitable F-150 without certain parts, said on Thursday it would idle production of the trucks at a plant in Michigan through Sunday.

    GM and Japan's Honda both said this week they would continue production suspension at plants in North America for the coming weeks.

    Swedish truck maker Volvo AB, meanwhile, said on Tuesday the chip shortage would have a "substantial" impact on its second-quarter earnings, and it would implement stop days across its sites globally beginning in April.

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