According to Bloomberg, William Li, CEO at NIO, said the Chinese EV maker may face a challenging first half of 2023. The reduction in government subsidies and the broader economic slowdown are two factors eroding local demand in the world’s largest new-energy vehicle market.

According to Li, customers are likely to order before the year’s end, when the national subsidies for electric vehicles are expected to be phased out. He said it also takes time for the supply chain and consumer confidence to recover from the pandemic.

He expects a full recovery in May or June.

Furthermore, analysts predict EV sales will slow in the months following the phase-out.

According to Technodes, some Chinese EV manufacturers, including NIO, are vying for the last piece of the sales pie before the end of 2022. They’re offering incentives as China prepares to phase out electric vehicle subsidies beginning next year.

COVID’s impact has turned the Shanghai-based automaker’s production upside down. According to Bloomberg, NIO’s annual delivery target is 150,000 units.

To deal with uncertainties, Li told Bloomberg that the company needed to actively strengthen its capabilities in demand forecasting and rapid response. They intend to establish a system with suppliers that include staffing, equipment investment, and production capacity.

According to Bloomberg, by the end of the year, China is expected to have delivered 6.5 million new-energy vehicles to dealerships, including pure electric and hybrid vehicles. China’s Passenger Car Association said it might touch 8.4 million in 2023.

According to Li, the company has taken precautions. They’re stockpiling more parts, increasing orders from original chip manufacturers, and exchanging semiconductors with other automakers. He urged automakers and suppliers to “reasonably place orders for chips” in anticipation of possible panic buying.

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