Nio Confident Its Plant In Hefei Will Restart Production After 5-day Shutdown: Report

NIO Limited (NASDAQ: NIO) on Friday joined a host of automakers that have taken some hits to production from the chip supply shortage. But it now appears that Nio's travails may be short-lived.

What Happened: Nio said its plant in Hefei, China, should be able to resume production at a normal pace after a five-day shutdown, beginning on Monday, comes to an end, the Beijing News reported, citing information provided by Nio.

Meanwhile, ahead of the shutdown the Hefei plant is reportedly continuing to churn out production at a normal pace.

The company in fact told workers at the plant to work overtime Saturday and Sunday ahead of scheduled maintenance of the production line in the coming week and the Ching Ming holiday, the report said, citing a source.

Related Link: Nio's Second-gen Battery Swap Station To Come In Two Versions: Report

Why It's Important: Nio is operating in a crowded EV market in China. After being on the brink of bankruptcy in 2019, the company embarked on a steady recovery route, thanks to its product and service focus.

Just as it was hitting the top gear, the chip shortage forced the company to apply the brakes. Through January, the company reported record monthly deliveries for six straight months before Tesla, Inc.'s (NASDAQ: TSLA) made-in-China Model Y launch and the weeklong Spring Festival holiday in February impeded its sales momentum.

In February, Nio reported a month-over-month decline in deliveries.

The chip crunch, however, is not a company-specific problem. Traditional automakers in North America as well as Europe have disclosed in recent months plans to cut production due to the issue.

Although Tesla has yet to comment on any related adverse developments, analysts expect to hear more when Tesla reports first-quarter results.

Citing the disruption, Nio on Friday trimmed its first-quarter delivery forecast from 20,000-20,500 vehicles to 19,500 vehicles.

In reaction to Nio's announcement concerning the plant closure, Nio shares ended Friday's session down 4.77% to $36.13.

Related Link: Is The Nio Sell-Off Overdone?

Photo courtesy Nio.