What happened
Over the past year, sales have accelerated at the Chinese electric vehicle (EV) manufacturer NIO (NYSE: NIO). On Friday, the company announced that production will be affected by the global semiconductor shortages that have affected other automakers.
Investors responded by taking down NIO’s shares. As of 1:25 pm (Brasília time) on Friday, the shares were trading around 8% in the south.
And
NIO said the chip shortage will stop production for five days, starting on March 29. The planned downtime has caused the company to lower its first quarter shipping projections to 19,500 vehicles, down from the previous estimate of 20,000 to 20,500.
NIO ET7 electric luxury sedan, scheduled to launch in early 2022. Image source: NIO.
What now
The growth of NIO has been accelerating. The company delivered almost 44,000 vehicles in 2020, more than double that of 2019. And even with the reduced delivery estimate due to the suspension, its production level in the first quarter of 19,500 vehicles would represent a growth of more than 400% on deliveries reported in the first quarter of 2020.
This level of production would also be higher than the Chinese EV competitor XPeng (NYSE: XPEV) expects for the first quarter. XPeng has not yet said it will be affected by the semiconductor supply problem, but it has already told investors that it estimates deliveries in the first quarter of 2021 will grow by about 450% year-over-year to 12,500 vehicles.
With NIO’s share price having grown nearly 1,200% in the last year, news of the halt in operations was bound to bring a negative response from investors. If the five-day interruption is the extent of the damage, the company’s overall assessment should not be affected in the long run.
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