Nio's fresh halt to EV production could gut April sales, a Wall Street firm said Monday. Nio over the weekend joined Tesla in China by shutting down production of electric vehicles amid a Covid resurgence, and hiking EV prices. Nio stock eased lower.
On Monday, new data showed overall China vehicle sales fell 12% in March from a year ago. And "we currently do not see much improvement in April," a China Association of Automobile Manufacturers executive told Reuters. In March, total China EV sales more than doubled. But analysts at Deutsche Bank warned Monday of a severe April hit as Covid disruptions worsen.
The analysts reportedly expect China EV sales to fall broadly in April and potentially into May, after surging in the first quarter. They added that April EV delivery estimates may need to come down by 60%-65% for Nio and by 25%-35% for Chinese startup peers Xpeng Motors and Li Auto.
"Based on our channel checks and conversation with companies, the Covid situation in China is becoming much more disruptive than we anticipated even just a week ago," DB analyst Edison Yu wrote in a note to investors Monday. Yu linked Nio's stoppage to its running out of "certain parts (mainly traditional components related to exterior and engineering" and possibly some low-end chips as well.
Nio Suspends EV Production, Hikes EV Prices
On Saturday, Nio suspended EV production as Covid-19 hit its supply chain. On Sunday, Nio joined Tesla, as well as Xpeng and Li Auto, by hiking EV prices due to rising material costs. Nio's price increase is set to start in May for new orders.
Nio autos are made in Hefei, a province west of Shanghai and east of Wuhan. The province hasn't been directly affected by recent Covid shutodwns. However, Nio's suppliers in Jilin, Shanghai, Jiangsu and other cities halted operations since March because of the Covid outbreak and have yet to resume, Nio said via its mobile app.
"There will be a delay in the delivery of vehicles for many customers in the near future, and we ask for your understanding," the statement added, according to local media reports.
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Nio stock had taken hits earlier, as the company underwent previous production shutdowns in March and in 2020, due to the global semiconductor shortage. Meanwhile, it planned to launch three new EVs in 2022, doubling its vehicle lineup.
On March 28, Nio launched its first electric sedan, the ET7. It plans to bring out a smaller ET5 and an ES7 SUV later this year. Xpeng, Li Auto and China EV giant BYD also plan to bring out many new electric vehicles.
Several other EV makers in China face production shutdowns because of Covid-19 lockdowns. Tesla shut down its Shanghai March 28 and is struggling to reopen. Volkswagen and Toyota Motor also halted production in Shanghai last month.
Luxury brands Audi, BMW and Mercedes-Benz also took a hit to varying degrees, local reports say.
Covid-19 Hits Nio Stock
Shares of Nio fell 1.5% to 19.70 on the stock market today. But Nio stock pared sharp early losses amid news of Shanghai lockdowns easing.
Tesla stock sank 4.8% to 975.93. The EV giant now has a 1152.97 cup-with-handle buy point on a daily chart, after already having that handle on a weekly chart. That handle entry is right on a trendline entry as well.
Nio stock has been unable to hold support at its 50-day moving average as well as the 21-day exponential moving average.
Shanghai reported more than 26,000 cases on Monday, accounting for the vast majority of China's reported infections. Shanghai is the site of Nio's headquarters and Tesla's China factory.
However, on Monday, Shanghai declared 7,565 areas low risk, easing lockdowns selectively as symptomatic cases dipped. Residents in low-risk areas, with zero cases for 14 days, are allowed to move about and shop, the South China Morning Post said.
