Electric cars: Nio warns of fewer deliveries this quarter as anti-pandemic curbs hit production, weaken sales

The Chinese smart EV maker said deliveries could be down as much as 11 per cent after it fell victim to mainland lockdowns
‘The good news is that arch-rival Tesla was also severely affected by the virus control and prevention measures,’ says analyst

Nio

Daniel Renin Shanghai

Published: 9:18pm, 9 Jun 2022

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Chinese smart electric vehicle (EV) maker Nio estimates deliveries in the second quarter of this year could be down as much as 11 per cent after it fell victim to anti-pandemic curbs across the mainland.

The Shanghai-based company said on Thursday that deliveries between April and June would be somewhere between 23,000 and 25,000 units, representing a quarter-on-quarter decline of 3 to 11 per cent.

Nio is the latest major Chinese electric car manufacturer to forecast a fall in quarterly sales, after Guangzhou-based Xpeng and Beijing-headquartered Li Auto made similar gloomy predictions.

“The second quarter is proving to be a difficult time for Chinese EV companies as both their production and sales are affected by lockdowns in the major vehicle manufacturing bases like Shanghai and northwestern Jilin province,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a consultancy.

05:59

How Covid shut down Shanghai

“The good news is that their arch-rival Tesla was also severely affected by the virus control and prevention measures.”

Shanghai, dubbed “China’s Motown”, and Jilin, a major carmaking base, have spent the last three months in at least partial lockdown to contain the Covid-19 pandemic. The stringent measures strained automotive supply chains and deterred EV fans from buying cars.

Cui Dongshu, general secretary of the China Passenger Car Association (CPCA), said that more than 20,000 car component makers based in Shanghai and its neighbouring provinces were forced to either suspend production or reduce capacity amid a citywide lockdown that lasted from April 1 to May 31 in Shanghai.

In mid-April, Nio temporarily halted production at its factory in Hefei, in East China’s Anhui province, for five days because the lockdowns in Shanghai and Jilin province gummed up the automotive supply chain.

Nio, Xpeng and Li Auto are regarded as Chinese rivals to Tesla, the undisputed global EV leader, in the mainland Chinese market.

Tesla does not publish its monthly sales in China.

In April, it delivered only 1,500 vehicles to Chinese customers, about 98 per cent fewer than a month earlier, according to data provided by the CPCA.

Its Gigafactory in Shanghai, which is located in Lingang and connected to Yangshan port by the 32km Donghai Bridge, lost about 50,000 units in production between March 28 and April 18, as the mainland’s most developed metropolis doubled down on pandemic curbs in its quest to achieve its dynamic zero-Covid goal, a strategy that involves stamping out infections with strict mitigation measures.

Nio said on Thursday that its net loss had narrowed 16.1 per cent from the previous quarter to 1.83 billion yuan (US$274.2 million) in the three months ending on March 31.

The performance beat analysts’ estimates of a net loss to the tune of 2.23 billion yuan, according to a survey by Shanghai-based financial media outlet Jiemian.

However, gross margin fell to 18.1 per cent in the first quarter, compared to 20.9 per cent in the fourth quarter of 2021 a battery costs soared, Nio said in a statement. The gross margin is the gap between the selling price and tangible costs such as raw materials, labour and logistics.

The company reported revenue of 9.91 billion yuan from January to March, up slightly by 0.1 per cent from the previous quarter and beating market expectations of 9.8 billion yuan.

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