Supply Disruptions Due To COVID Force Nio To Cut Down On Its Delivery Guidance

Even after two years, supply chain disruptions are haunting companies from all over the world. However, it is the Chinese companies that are impacted the most.

In the running year, the entire world seems to have gotten rid of the pandemic due to vaccinations and mass booster shots.

China has been putting in the same efforts but it seems that they are unable to fully control it. The country is facing the worst COVID-19 situation.

It has been fighting it for a couple of years but with no resolution in sight. Despite the attempts, the country finds itself cornered and the government has to make strict decisions to keep COVID-19 contained.

As a result, the country is facing major problems with the production of parts and different kinds of electrical equipment and tools.

One of the major parts used in almost every electric device or a vehicle is the semiconductors and there is a great shortage of them.

Therefore, out of all the companies, it is the electrical device sector that is impacted the most. In the electrical sector fall the electric vehicle manufacturing industry that is also suffering from the same.

Nio Inc. is Facing Major Supply Disruptions

Although electric vehicle manufacturers from all over the world have access to a global market to acquire supplies, Chinese companies are dependent upon their in-country supplies.

Therefore, the majority of the local EV manufacturing companies in China are facing huge supply disruptions. Nio Inc. is also among the major EV makers in China that are facing the same situation.

Nio Inc. is among the Chinese EV makers that have gained so much recognition that it has expanded its vehicle supplies outside of the country.

It is also delivering its manufactured cars outside of China to many countries based in the European region.

Turns out, the company has to lower its guidance for the upcoming quarters due to the shortage of supplies.

Low Outlook for Fourth Quarter

The Nio officials have recently shared the outlook for the company for the fourth quarter of 2022. The shareholders were left devastated as they were informed that the outlook had been lowered.

As per the officials at Nio, it is due to the supply chain disruptions that they have been forced to make such a decision. They were never going to lower their outlook but have been forced to.

Nio has its manufacturing plants based in China and with the COVID outbreak occupying the country, they are facing supply-related issues.

For as long as the Chinese government keeps fighting COVID aggressively, the lockdowns may remain in place. This would eventually cause a major upset for the company as it may fail to meet its demand.

Nio’s Outlook

A few months back, Nio had predicted a higher figure for deliveries in the fourth quarter. At that time, Nio had predicted that they will be delivering 43,000 to 48,000 EVs in the fourth quarter.

However, considering the recent upsets and the market downtrends caused by the supply chains, they have lowered their forecast.

Nio is now looking forward to delivering 38,500 to 39,500 vehicles in the same quarter. This is a huge drop that the company has introduced in the wake of supply chain disruptions.

This would eventually end up impacting the annual delivery, revenue, and earning targets for the company. If the disruptions continue, then the company will continue facing major losses.

Nio’s Stocks have taken a Hit

The company officials already knew that they will be facing a major loss as they make the announcement about the outlook.

Nio shares recorded a 7.98% dip right after announcing the toned-down delivery outlook for the fourth quarter. At the time of publication, Nio’s shares are at $10.10 per share.

From the start of the year until now, Nio’s shares have dipped by 66.29%.

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