Nio shares dropped by nearly 10% on Tuesday after the electric vehicle maker said a global chip shortage would reduce the quarterly number of cars it had aimed to produce.
Nio’s projection underscores the tight supply of chips resulting from the COVID-19 pandemic that has affected a range of industries.
The China-based automaker said it reached production capacity of 10,000 units per month in January by having two shifts in some of its workshops. That marked an increase from 7,500 units.
However, “in the second quarter we may only be able to secure overall supply chain production capacity of 7,500 units per month,” because of chipset supply and battery supply constraints, said Nio CEO William Li, during the company’s earnings call on Tuesday.
Nio’s NYSE-listed shares fell as much as 9.9% to hit an intraday low of $44.82. The stock over the past 12 months has surged from less than $4 a share.
Starting from July, Nio expects “to elevate the overall supply chain production capacity,” said Li, adding that its partner, JAC, has already moved on efforts for further capacity expansion.
Li anticipates annual production of 150,000 units under one shift and 300,000 units under two shifts by the end of 2021 or the beginning of 2022.
Other automakers have been affected by the chip shortage. Among them, Ford and Fiat Chrysler reportedly had to cut production.
The shortage is taking place at a time of “modest recovery” for the auto industry, said IHS Market in a report last month, as the coronavirus crisis had forced idling at production plants.
“There are no easy fixes to the capacity constraints owing to the long and complex manufacturing processes of semiconductors, which make new capacity building a capital-intensive and time-consuming affair,” wrote IHS Markit analysts.
They said the shortage is expected to last until the third quarter of 2021.