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NIO Halts EV Deliveries in China Over Covid-Led Supply Issues
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NIO, Inc. (NIO - Free Report) recently stated that it has suspended vehicle production due to a supply chain hiatus in various cities across the country caused by the pandemic.
The China-based electric vehicle (EV) manufacturer’s factories, test sites and interactive centers are located in Shanghai, and the city is presently facing another onslaught of the virus. To curb the spread, Shanghai has re-imposed lockdown and restrictions, severely affecting every aspect of the supply chain.
NIO’s supplier partners in other cities like Jilin and Jiangsu have been halting production since March and are yet to recover. In light of this, the company has postponed deliveries of EVs to customers and will jointly work with suppliers to clear the bottlenecks and restart operations as soon as possible.
Nonetheless, chip concerns are not likely to abate anytime soon and might lead to revenue loss for the firm. Further, high prices of raw materials like aluminum and copper are expected to clip gross margins.
Recently, Toyota Motor (TM - Free Report) also announced that it is temporarily suspending operations at a joint venture plant with FAW group in Changchun in China after a lockdown was imposed in the city last week due to a surge in COVID-19 infections. Toyota, in January, had halted activities at a joint venture plant in Tianjin, China, following the onslaught of the Omicron variant in the city.
Another auto giant, Volkswagen AG (VWAGY - Free Report) , suspended part of its operations in China amid government restrictions to combat the largest COVID-19 outbreak in the country in two years. Volkswagen also runs a joint venture operation with FAW, and has suspended production at its vehicle and component plants for a short duration.
TM and VWAGY currently carry a Zacks Rank #3 (Hold).
Zacks Rank and A Key Pick
Currently, NIO carries a Zacks Rank #4 (Sell).
Shares of NIO have lost 46.1% over the past year compared with its industry’s 9.8% decline.
LCI Industries has an expected earnings growth rate of 26.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 15% upward in the past 60 days.
LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one. LCII pulled off a trailing four-quarter earnings surprise of 12.9%, on average. The stock has declined 26.5% over the past year.
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NIO Halts EV Deliveries in China Over Covid-Led Supply Issues
NIO, Inc. (NIO - Free Report) recently stated that it has suspended vehicle production due to a supply chain hiatus in various cities across the country caused by the pandemic.
The China-based electric vehicle (EV) manufacturer’s factories, test sites and interactive centers are located in Shanghai, and the city is presently facing another onslaught of the virus. To curb the spread, Shanghai has re-imposed lockdown and restrictions, severely affecting every aspect of the supply chain.
NIO’s supplier partners in other cities like Jilin and Jiangsu have been halting production since March and are yet to recover. In light of this, the company has postponed deliveries of EVs to customers and will jointly work with suppliers to clear the bottlenecks and restart operations as soon as possible.
Nonetheless, chip concerns are not likely to abate anytime soon and might lead to revenue loss for the firm. Further, high prices of raw materials like aluminum and copper are expected to clip gross margins.
Recently, Toyota Motor (TM - Free Report) also announced that it is temporarily suspending operations at a joint venture plant with FAW group in Changchun in China after a lockdown was imposed in the city last week due to a surge in COVID-19 infections. Toyota, in January, had halted activities at a joint venture plant in Tianjin, China, following the onslaught of the Omicron variant in the city.
Another auto giant, Volkswagen AG (VWAGY - Free Report) , suspended part of its operations in China amid government restrictions to combat the largest COVID-19 outbreak in the country in two years. Volkswagen also runs a joint venture operation with FAW, and has suspended production at its vehicle and component plants for a short duration.
TM and VWAGY currently carry a Zacks Rank #3 (Hold).
Zacks Rank and A Key Pick
Currently, NIO carries a Zacks Rank #4 (Sell).
Shares of NIO have lost 46.1% over the past year compared with its industry’s 9.8% decline.
Image Source: Zacks Investment Research
A better-ranked player in the auto space is LCI Industries (LCII - Free Report) , sporting a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
LCI Industries has an expected earnings growth rate of 26.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 15% upward in the past 60 days.
LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one. LCII pulled off a trailing four-quarter earnings surprise of 12.9%, on average. The stock has declined 26.5% over the past year.