Nio, Tesla’s Chinese rival, suspends production on chip shortage

Nio Inc, the Chinese electric vehicle maker, temporarily suspends the production of semiconductor chip amid its shortage on Friday.

The chip scarcity is also a result of an increased demand from the consumer electronics industry as people worked from home and played more video games during the health crisis.

Nio, one of the main challengers to Tesla Inc, which dominates the EV market in China, said it would halt production for five working days at its Hefei plant from next week and cut its first-quarter delivery forecast by as much as 1,000 vehicles.

Shares of Nio, which makes the ES8 and ES6 electric sport-utility vehicles, fell more than 7% in U.S. premarket trading. The company also faces competition from homegrown rivals such as Xpeng Inc.

Sanctions against Chinese technology companies have also played a role in the global shortage of chips.