China’s COVID restrictions hit Nio production

Nio said on Thursday it has resumed production at its two factories in eastern Hefei after COVID-19 restrictions disrupted operations and delayed deliveries.

A company representative said, “We are currently resuming production,” but declined to say whether it would be a full or partial resumption.

China is battling a rising number of COVID cases in several major cities, with lockdowns and harsh restrictions disrupting travel and increasing worker discontent at Apple’s major supplier Foxconn.

Nio said on Wednesday that it had halted production due to COVID controls, delayed deliveries at a time when sales were soaring, and its stock price plummeted.

The latest COVID outbreak in Hefei began in early October, prompting authorities to lock down parts of the city at various times, including the district where Nio’s factory is located.

Nio sold 10,059 cars last month, almost triple the number in October 2021, after introducing new models such as the ET5. In his first 10 months, EV maker sales increased his 32%.

Bloomberg reported, citing people familiar with the matter, that Nio sold thousands of vehicles last month as COVID-19 restrictions halted production at two factories. It was lagging behind in both vehicle production and delivery.

Production at the Hefei plant has also been affected by delays in the supply of some parts, said the people, who asked not to be identified because the details are private.

Nio An attempt at the factory to operate a so-called closed-loop system, which would require workers to stay on site and allow production to continue even with lockdowns in place, failed due to parts shortages. people said.

About 7,000 electric cars in production were lost in the disruption, one of the people said, reducing deliveries by about 5,000.

Nio reported 10,059 deliveries for October on Tuesday, down 8% from the September figure. Production at both plants has now partially resumed, according to people familiar with the matter.

A representative for Nio declined to comment.chinese publications 36kr We previously reported that COVID suppression affected Nio production.

In line with China’s COVID-zero policy, the central Chinese city of Hefei closed many indoor facilities, including cinemas, gyms, internet cafes and bars, when cases of the virus emerged.

In-person classes at middle schools, elementary schools and tutoring institutions have been suspended, and universities are also subject to closed-loop systems.

Nio’s experience shows how China’s zero-tolerance approach to the pandemic is disrupting business and the world’s second-largest economy, impacting factory operations and supply chains. Closed loops allow businesses to continue operating during lockdowns, but severely restrict worker movement and strain workers who may even need to sleep on factory floors.

Workers are departing from the world’s largest iPhone factory in Zhengzhou, central China, after hastily enacted COVID restrictions forced many of its 200,000 staff to grapple with inadequate living conditions.

Tesla has successfully restarted the output using a closed loop. Shanghai’s months-long lockdown Earlier this year.

Based in Shanghai, Nio has two factories in Anhui. The first one is cooperating with Anhui Jianghuai Automobile Group and can produce 240,000 vehicles a year, and the other one started mass production earlier this year, making the company’s latest ET5 model sedan. I’m in the middle of the day.

Bloomberg and Reuters contributed to this report.