Chip Shortage: Nio Temporarily Halts Electric Vehicle Manufacturing


Nio, a Chinese electric vehicle manufacturer, became the latest car manufacturer to halt production on Friday due to a global semiconductor chip shortage. It has resulted in significant losses. The shortage captured Ford Motor, Honda Motor, General Motors, and Volkswagen off guard, prompting many to halt production even as consumption for cars increased during the Coronavirus pandemic.

According to research firm AutoForecast Solutions, chip shortages have cost the global auto industry 130,000 vehicles in lost demand, with the greatest effect in North America (74,000 units lost) and Western Europe (35,000 units lost). Chip shortage is also a result of increased electronics demand from the cutomers from the field as people worked from home and played more video games during the recession.

Situation Of Nio:


Sanctions placed on Chinese technology firms have also played a part. Nio, one of Tesla’s key rivals in China’s EV industry, announced that production at its Hefei plant would be halted for five days and that its first-quarter delivery forecast would be reduced by up to 1,000 vehicles. In mid-afternoon trading in the United States, shares of Nio, which manufactures the ES8 and ES6 electric sport-utility vehicles, were down more than 8%.

How a chip shortage is snarling worldwide auto production


Nio has recently faced competition from within the sector, with companies such as Xpeng from China posing a serious threat to Nio. It now expects to produce 19,500 vehicles in the first quarter, down from a previously stated estimate of 20,000 to 20,500 vehicles. The shortage could cost Ford up to $2.5 billion (roughly Rs. 1.81 lakh crores) in 2021 profit, while GM, the larger US automaker, expects the crisis to cost it up to $2 billion (roughly Rs. 1.44 lakh crores) in full-year profit.

Ford, which had been assembling its highly lucrative F-150 trucks without some parts until now, announced on Thursday that it would halt production of the trucks at a Michigan plant before Sunday. GM and Honda, both of Japan, announced this week that production at their North American plants will be halted for the next few weeks.

Volvo AB, meanwhile, said on Tuesday that the chip shortage would have a “important” effect on its second-quarter earnings, and that it would begin implementing stop days across its global sites in April.

Parth Dubey
I am Parth Dubey, currently an undergraduate. I have been working as a content writer for the past 6 months and have worked in various fields with many people and firms. I firmly believe that writing is not just about money making or attracting people, it's more about knowledge and information, along with feelings.

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