Chinese smart electric vehicle start-up NIO said a shortage of chips could affect production in 2022, challenging its efforts to surpass last year’s more than doubling of sales.
“Chip supply is a big challenge [for us],” William Li, co-founder and CEO, said on an earnings call on Friday. “The main challenge is in some common and cheap chips, which will affect our production this year.”
Li said the carmaker uses some 1,000 different chips in each car, and that it faces a shortage of 100 such chips or 10 per cent.
Still, Li said the supply of high-end semiconductors, such as Nvidia’s Orin used to support the driver assistance system, was sufficient since NIO had already formed long-term partnerships with chip makers.
The shortage of semiconductors, which affected global car production last year is likely to continue for the foreseeable future and could prove to be a stumbling block for the buoyant electric-car sector in China this year.
NIO, listed in both Hong Kong and New York, delivered 91,949 vehicles in 2021, a jump of 109.1 per cent increase from a year earlier.
Its fourth-quarter revenues rose 49 per cent to 9.9 billion yuan (US$1.5 billion), beating analysts’ estimate of 9.72 billion yuan in a Bloomberg survey. Factoring out stock-based awards, adjusted quarterly net loss rose 31.5 per cent to 1.75 billion yuan.
While the China Passenger Car Association predicted that EV sales could rise 84 per cent to 5.5 million units in 2022, David Zhang, a researcher at the North China University of Technology, said key car components such as batteries and chips might only be enough for 4.4 million units.
“The supply chain woes will not ease until later this year because component manufacturers will take time to expand production,” Zhang said.
Tesla and Chinese rivals raise EV prices as surging nickel, lithium seep into battery costs
Apart from chip shortages, NIO’s Li also said that rising prices of nickel and lithium could result in higher battery costs and affect its gross profit margin.
Since Russia’s invasion of Ukraine, concerns about supply-chain disruptions have roiled global commodity prices over the past month, propelling prices of nickel to unprecedented levels.
Chinese brokerage TF Securities said in a research note this month that the cost of a car battery could increase by about 10,000 yuan if nickel prices rose from US$20,000 to US$50,000 a ton.
On the London Metal Exchange, the three-month nickel futures contract closed at US$37,235 a ton on Thursday.
NIO plans to deliver the first batch of ET7 luxury sedans on Monday, which has reportedly received huge orders since it debuted in January 2021. The production of the cars, priced between 448,000 yuan and 526,000 yuan, did not begin until late last year.
ET7, NIO’s fourth model since its establishment in 2014, is assembled at the JAC-NIO plant in Hefei, capital of Anhui province in eastern Chinese.
The car’s extended edition, fitted with a 150 kWh battery, has a range of 1,000km on a single charge.