As a result of Covid outbreaks in China, NIO has suspended production operations across the country — and has yet to resume. And NIO stock has suffered because of it.
I’ve suspected that China will revise its zero-Covid policies to make sure it meets its economic goals. And as seen with compartmentalized lockdowns in Shanghai, it seems the country is doing just that.
If this evolution in lockdowns persists, as I believe it will, NIO’s situation is quite temporary. It will be back to its normal operating capacity. And the company’s growth narrative will resume firing on all cylinders — and so will NIO stock.
After sinking lower over the past couple of trading days,Nio(NIO-5.51%)stock regained some ground this morning and was trading up 3.3% as of 12:20 p.m. ET.
A mix of macro and company-specific news is sending shares of the China-basedelectric vehicle (EV)manufacturer higher today. Specifically, Nio is trying to gain a foothold in parts of China often ignored by other EV makers -- even as the nation tries to rethink its COVID-19 policies and allow auto companies to resume production. Both developments are important for Nio.
Nio shares plunged last weekafter the company suspended production amid lockdowns in China just days after postponing the launch of its ES7 SUV by a month.
To be fair, this shouldn't have come as a surprise as other automakers including Nio's arch riva lTesla had already suspended operations in Shanghai in late March. Yet, investors feared slow production could hurt Nio's 2022 growth plans.
This morning, though, a local Chinese media outlet confirmed that Tesla has resumed production at its Shanghai Gigafactory, as reported by EV-focused portal CnEvPost.
In a departure from its zero-COVID policy that has crippled manufacturing activity in China, the nation's industrial development authority has drawn "white lists" of 666 companies that it wants to resume production to shore up manufacturing in the nation. Tesla is on the list.
In another equally important development, CnEvPost reports that China's industry regulator has decided to step in to tackle the problem of surging raw material prices that have hit the automotive industry, particularly new energy vehicles (NEVs), really hard. NEV makers including Nio have been forced to delay launches and raise prices of vehicles in recent weeks to combat inflationary pressures.
There's only so much Nio can do about macro challenges like raw material costs and COVID-19 lockdowns, but the company is taking no chances to leave a mark where it matters. Even as it navigates supply chain challenges, Nio's data from April 19 reveals it added 23 battery swap stations in one year in China's northern provinces, according to CnEvPost. EV makers have typically stayed away from the region given its extreme cold weather conditions, but Nio has big plans under the "Power North" plan it launched last year.$NIO Inc.(NIO)$
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