Neo said it has suspended production in the past few weeks due to covid-related restrictions that have led suppliers to stop production at the factory.
Long Wei | Visual China Group | Getty Images
BEIJING – Chinese electric car company Neo says it is raising prices over the weekend and halting production as the latest Covid wave supply chain is added to the challenge.
The company’s Hong Kong-listed shares fell nearly 9% in Monday morning trading.
Nio announced on Sunday that it will increase the price of its three SUVs – ES8, ES6 and EC6 by 10,000 yuan ($ 1,572) with effect from May 10. The price of the recently launched ET7 and ET5 sedans will remain the same
Raw material prices, especially for batteries, have risen “too much” this year, with no downward trend for the foreseeable future, CEO William Lee said as part of the announcement, according to a CNBC translation of the Chinese statement.
“Basically [we] I thought we would be able to cope, but now it’s harder to cope with this epidemic, “he said. “We have no choice but to raise prices. Please understand. “
A day earlier, on Saturday, Neo said it had suspended production in the past few weeks due to covid-related restrictions that had halted production at suppliers ’factories.
“Due to the Covid effect in Changchun and Hebei, some of our auto parts have been out of supply since mid-March,” Lee said. The company’s production “has been able to rely on auto parts inventory until last week.”
He added that due to recent Kovid outbreaks in Shanghai and Jiangsu provinces, many suppliers could not even supply parts.
The company began delivering its first sedan, the ET7, in late March. A second sedan, the ET5, will begin delivery in September.
Industry-wide price increases
In terms of monthly deliveries, Nio lags behind rival start-up Xpeng – whose cars are sold at lower prices – and Li Auto – the only model on the market that comes with a fuel tank to charge the battery. All three companies delivered more cars in March than in February, despite supply chain challenges.
Neo was the last of three start-ups to raise prices.
In March, Xpeng raised the price of its car by 10,100 yuan to 20,000 yuan, while Li Auto increased the price by 11,800 yuan. The move follows Tesla and other electric car companies in the country that have raised prices in recent weeks.
Covid-related barriers have also hit traditional carmakers.
Volkswagen said on Thursday that its factories in Anting, on the outskirts of Shanghai and Changchun in the northern province of Jilin, were closed until Friday, April 8.
According to official figures released on Monday, China’s producer price index rose 1.1% in March from a month earlier and 8.3% from a year earlier. A Reuters poll predicts 7.9% growth, topping year-on-year growth expectations.
– CNBC’s Arjun Kharpal contributed to this report.