It's déjà vu all over again, as China reported a renewed outbreak of COVID-19, forcing new lockdowns primarily in the northeastern regions of the country.
As the nation grapples with the worst outbreak in two years, here's a look at how EV makers and their production plans and sales will be impacted.
Nio Has The Highest Exposure Among EV Makers: New COVID-19 cases are soaring to more than 3,000 per day in China, with Jilin, Shandong, Guangdong and Shanghai having been the worst affected, Bernstein analyst Eunice Lee said in a note. The governments in these provinces have imposed various degrees of lockdown, the analyst noted.
State-owned automaker GAC, Nio Inc - ADR (NYSE: NIO) and General Motor Company's (NYSE: GM) Chinese joint venture partner SAIC Motor Corporation have more direct volume exposure to COVID-19 impacted regions, the analyst said.
GAC's manufacturing base produces Chinese market versions of cars by Japanese automakers such as Toyota Motor Corp (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC).
The Jilin, Shandong and Guangdong provinces and Shanghai together accounted for 26% of China's auto sales and 32% of EV sales by volume in 2021, Lee said.
Among EV makers, Nio has the highest exposure to these four regions, the analyst said. Nio's 42% exposure is higher than the 36% for Tesla Inc (NASDAQ: TSLA), 26% for XPeng Inc - ADR (NYSE: XPEV) and 23% for Li Auto Inc. (NASDAQ: LI), she added.
Taking into account the ICE (NYSE:ICE) (internal-combustion engine) companies, the four affected regions account for 37% of GAC's passenger vehicle sales volume, 33% of GAC Honda's volume and 30% of GAC Toyota's volume, Lee said. The analyst also noted that SAIC has 26% exposure.
Related Link: Raw Material Shortages May Not Be Hurting Tesla Right Now, But This Other Shortfall Might
Why It's Important: The return of COVID-19 in China, despite the strict protocols followed by local administrations, comes at a time when the world is limping back to normalcy from the impact of the novel coronavirus that first appeared in China in late 2019 and then emerged as a pan-global crisis.
Additionally, the world economy is currently facing multiple shocks, including monetary policy normalizations by major central banks and the Ukraine-Russia war.
In response to the fresh outbreak in China, Tesla reportedly shuttered production at its Giga Shanghai for two days.
More information on the potential impact could emerge over the coming weeks when the U.S.-listed Chinese EV makers report their financial results.
Related Link: Nio Reverses Course After Sell-Off: Will EV Stock Rally Ahead Of Earnings?
Photos: Courtesy Tesla, Xpeng (NYSE:XPEV) (top row), Li Auto and Nio (bottom row)
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