NIO EV Production Halt Not as Bad as Initially Feared – Nomura
2022.04.13 16:31
NIO (NIO) EV Production Halt Not as Bad as Initially Feared – Nomura
Nio (NYSE:NIO) announced a few days ago that it has been forced to halt EV production in China amid fresh COVID-19 lockdowns.
As a result, NIO stock price tumbled on fears that the halt will push the company to miss production and delivery targets.
However, Nomura analyst Martin Heung argues that the overall situation is not as bad as initially feared.
“The market has widely believed that NIO is undertaking a complete production halt. However, according to NIO management, the halt is limited to weekends only, and production lines will still be running on weekdays, albeit on a limited scale. According to management, the affected suppliers are responsible for exterior body parts of vehicles (from Jilin) and engineering components (from Shanghai) that are essential for automotive electrification,” Heung said in a client note.
The analyst added that Nio’s management is hopeful of restarting EV production in the coming days with the normal level of functionality expected to be achieved in 2-3 weeks.
“On the completion and initial production run of the second manufacturing plant in NeoPark, NIO reiterates these remain on schedule (in 3Q22) so long as the pandemic does not spread beyond Shanghai, which is only 470km from Hefei,” Heung added.
The analyst has a Buy rating and a $51.50 per share price target on Nio.
By Senad Karaahmetovic
