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NIO may fail to meet Q2 output goal in its competition with Tesla as global shortage of chips hits home

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minutes 2021/04/08 10:09:36
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Apr 08, 2021 (China Knowledge) - NIO, one of three US-listed Chinese electric car makers that compete with Tesla, said its breakneck growth pace may be held back due to the global shortage of computer chips.

NIO’s founder and chief executive William Li said that the company may lack the semiconductor stockpile to meet its target of assembling 7,500 electric cars in the second quarter, but it will only affect production in the short term.

The global shortage in semiconductor chips has wreaked havoc on the automotive industry, with car makers from Ford Motor to Volkswagen forced to scale back production. IHS Markit estimates that global output of internal combustion engine vehicles would shrink by up to 700,000 vehicles in the first quarter, about 4% of worldwide production.

A report from Bloomberg also shows that the global chips shortage is also affecting other car makers in the country with SAIC Motors, China’s largest carmaker and the local partner to Volkswagen and General Motors, likely having to slash its production by 200,000 vehicles due to the shortage of chips.

Li said NIO had to suspend production for five days at the end of March due to the shortage of chips. However, the shortfall may not be as dire, as the carmaker expects to secure enough chips in the third quarter to ensure the smooth running of its assembly.

China surpassed the United States in 2009 as the world’s largest vehicle market, and already has more electric automobiles than any other country. Tesla is still the clear market leader in this market, as its Gigafactory 3 plant in Shanghai continues to churn out Model 3 and Model Y electric cars for the country’s rapidly expanding middle class and young first-car buyers.

Helped by generous state subsidies and a rapidly expanding infrastructure of charging stations, the trio of US-listed EV makers – NIO, Xpeng and Li Auto – are catching up fast with Tesla. NIO, founded in 2014, reported a fourfold leap in first-quarter deliveries, selling 20,060 vehicles, with 7,257 units delivered in March alone.

Li said that NIO’s ultimate goal is to deliver more than 1 mln electric cars a year to occupy a solid footing in the premium market segment currently dominated by companies like Audi, BMW and Mercedes-Benz.

In the long term, NIO and its Chinese peers still have huge growth potential as an increasing number of young drivers are attracted by their models, said Tian.

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