Like many companies across the world that rely on the global supply chain, Chinese electric vehicle maker Nio has revealed that it has been hit hard by the supply chain disruption caused by the coronavirus pandemic. Over the weekend, Nio announced that it would be raising the prices of the three electric SUVs it has on the market and halt production in the meantime. Nio’s shares fell by almost 9% following the announcement.
Beginning May 10, Nio will increase the prices of its EC6, ES6 and ES7 by $1,572 (10,000 yuan). However, the recently unveiled ET5 and ET7 sedans will cost the same. According to NIO’s CEO William Li, raw material prices, especially for the minerals used to build electric vehicle batteries, have increased “too much” in 2021, and the company sees no downward trend in the near future.
Li also said that although the company thought it could weather the supply chain disruption until prices leveled out again, the continuing pandemic has made this increasingly difficult. Coronavirus-related restrictions in parts of China have forced Nio to halt production at its suppliers’ facilities.
For starters, restrictions in Hebei and Changchum have cut off Nio’s supply of auto parts from mid-March. An increase in COVID-19 cases in Jiangsu and Shanghai province has also impacted suppliers’ ability to deliver auto parts to Nio. As a result, Li states, Nio has been forced to rely on its existing inventory of auto parts, which will run out soon.
With the situation becoming more untenable, Nio had no choice but to increase the prices of its electric SUVs, Li said, imploring the public to be understanding of the decision. The announcement underscores just how disruptive the coronavirus pandemic has been, especially for a relatively new company such as Nio, which was just starting to spread its wings.
The Chinese automaker has delivered nearly 170,000 units of the EC6, ES6 and ES8, lagging behind local competitors Xpeng and Li Auto. Additionally, Nio was the last of the three firms to increase prices, with Li Auto bumping up the cost of its cars by $1,851 (11,800 yuan) and Xpeng increasing prices by $1,585-$3,138 (10,100 yuan to 20,000 yuan).
Aside from Nio, Li Auto and Xpeng, several other car makers have increased their prices as raw materials become more expensive and production costs rise. In the last couple of weeks, Tesla, WM Motors, BYD and SAIC-GM Wuling have raised the prices of their electric vehicles. We are yet to hear from other startups such as Mullen Automotive Inc. (NASDAQ: MULN) regarding the way in which they plan to navigate the current supply chain disruption.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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