Nio the latest automaker hit by chip shortage

Chinese EV-maker Nio is the latest automaker feeling the pain from the global chip shortage. Yahoo Finance autos reporter Pras Subramanian explains the fallout.

Video Transcript

SEANA SMITH: Nio shares are up just around 6% today. The company suspending production for five days at one of its plants because of the global chip shortage. Pras Subramanian, our producer, our auto reporter, here to break all this down for us. Pras, we've been talking about the fact that it's impacted other auto companies here, other car companies. What's going on with Nio?

PRAS SUBRAMANIAN: You know, Nio, kind of the next domino to fall here, right? So today, they announced that they shut down production at a factory for five days-- this chip shortage-- this ongoing chip shortage. And they also took down their production forecast for the first three months of the year. And just now, right before my hit here, RAM Trucks just now suspend production through mid-April for their very profitable and very high-selling RAM truck. So that's a big deal for them.

This follows news this week from Ford. The F-150-- another huge, high margin, high-profit truck. They're idling that this weekend. And also, GM, too, idling their mid-sized pickup, the Colorado and Canyon. And just want to say, last month, I spoke to one of GM's chief engineers. And they said, hey, we're going to try to shift production of our low-selling sedans, use those chips in our trucks. But it sounds like they just sort of ran out of time and they haven't been able to keep up truck production yet.

ADAM SHAPIRO: So Pras, who are the chipmakers? And do they tell us when things will get back to normal?

PRAS SUBRAMANIAN: So the big chip players in this space are NXP, ON Semiconductor, Te Connectivity, Sensata-- you know, companies that you don't necessarily know about. One big one is Taiwan Semiconductor. They're a big player in the space, and they actually had some supply constraints that analysts say is causing some of the problems here. When you talk about, when are we going to get back to normal, a sense of normalcy?

Morgan Stanley analyst Craig Hattanback in a note recently said that he thinks that we should see increased output by middle of Q2 or around there. So that's another month or two of possible chip shortages. And President Biden also last month signing this executive order, a hundred-day review, trying to see how we can amp up our supply chains, what products need these chips. And you saw Intel, $20 billion investment into new chip plants in Arizona, but that's not coming 'til 2023, so a long way to go.

SEANA SMITH: All right. Pras Subramanian, Thanks so much. Again, Nio shares off just around 6%, and we've seen a number of the other automakers fall as they have suspended production because of the chip shortage.