China’s Nio, the EV maker, has suspended manufacturing activities due to Covid restrictions amid the latest flare-up in infections in the country.
"The news that production at Nio's factories has been temporarily suspended is true and this will have an impact on production and delivery schedules," a company representative told Reuters.
The latter cited a Chinese tech media outlet as having reported that Nio had been having difficulties with production since mid-October because of Covid lockdowns.
This is the second time this year Nio is suspending production, after it had to shut down its two factories in April, too, amid lockdowns.
Meanwhile, hopes are growing that the lockdowns will soon end, based on unverified reports on social media. China’s foreign ministry spokesman said Tuesday that he was not aware of any plans to relax Bejing’s zero-Covid policy, which dampened optimism but it appears that the hope remains China will at some point drop the strict measures.
“People may have misunderstood when they see the headline that it is about completely opening up, but in our view it is quite unlikely for China to completely abandon Zero Covid,” Zerlina Zeng, senior credit analyst at CreditSights, told Yahoo Finance. “It is politically sensitive to do away with it because during the party congress, the rhetoric around Zero Covid has been so strong.”
China has the biggest EV manufacturing industry in the world and it is exporting more and more EVs, especially to Europe. Manufacturing halts could hurt this growth market and also interfere with transition plans.
Meanwhile, investor confidence in Nio and the two other U.S.-listed Chinese EV makers, Li Auto and Expeng, is dwindling after years of losses. Bloomberg reported last week that Nio has shed some 69 percent of its market value since the start of the year, with Li Auto losing 56 percent and Expeng plunging by 86 percent due to uncertainty about their profitability.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com