Nio share price drops 11% after production halted due to COVID-19
- Nio plunged 11% on Monday after the company halted production of its electric vehicles.
- The production halt comes as Nio experiences supply chain disruptions due to citywide COVID lockdowns in China.
- The company will postpone deliveries to its customers as the disruptions occur.
Nio shares fell 11% on Monday after the electric vehicle maker halted production due to continued supply chain disruptions.
The disruptions were caused by COVID-19 shutdowns in cities across China, including Shanghai, where factories of various auto parts suppliers are located. The fast-spreading Omicron variant has challenged China’s zero-tolerance policy against COVID-19 infections in recent weeks.
“Since March, due to epidemic-related reasons, the company’s supplier partners in several places, including Jilin, Shanghai and Jiangsu, have suspended production one after another and have not yet recovered. Due from the impact of this, Nio had to stop the production car,” Nio said in an update on its mobile app, according to Reuters.
Shanghai saw a record 26,000 cases of COVID-19 on Sunday, but the government hints it may start easing its lockdown restrictions as they weigh on the country’s economy and fail to contain the outbreak. disease epidemic.
Nio said it will temporarily halt delivery of vehicles to its customers as it works with suppliers to get production back online while remaining compliant with China’s strict COVID rules.
Nio is not the only automaker to have faced factory closures in recent weeks. Tesla’s Shanghai factory has been closed since late March, while car factories linked to Volkswagen’s joint venture with FAW Group and SAIC Motor have been closed for weeks.
Shares of automakers with operations in China traded lower on Monday. Shares of XPeng, Li Auto and Tesla fell 8%, 6% and 5% respectively.