NIO Inc. announced that a shortage of a rear‑seat entertainment system chip is temporarily halting production of its third‑generation ES8 SUV, a flagship model that began deliveries on September 21, 2025.
The shortage has forced the company to implement a temporary workaround that disables certain video playback features while preserving wireless screen mirroring and music playback. Customers who lock in ES8 orders by December 31 and opt for the workaround will receive a one‑time bonus of 15,000 Nio points, roughly 1,500 CNY, as a goodwill gesture. NIO plans to restore the full feature set once the chip supply normalizes.
In Q3 2025, NIO reported revenue of 21.8 billion RMB (US$3.06 billion) and delivered 87,071 vehicles, a 40.8% year‑over‑year increase. The ES8 contributed significantly to the 13.9% gross margin, which was the highest among all models and helped lift the company’s overall margin to 13.9% from 10.7% in Q3 2024. The strong performance underscored the ES8’s role in driving profitability.
The current production slowdown threatens the company’s Q4 2025 guidance, which projected a vehicle gross margin of about 18% and an ES8 margin exceeding 20%. A sustained reduction in ES8 output could compress these targets, as the model accounts for a large share of high‑margin revenue. Management has signaled that it is closely monitoring supply‑chain disruptions and is working with suppliers to accelerate chip delivery.
CEO William Li emphasized that the company remains committed to achieving profitability in Q4 and beyond. He highlighted cost‑control initiatives and the expansion of in‑house component development as key levers to mitigate supply‑chain risk. Li also noted that the temporary incentive is designed to keep order momentum while the company resolves the chip issue.
The incident illustrates broader supply‑chain vulnerabilities in the automotive sector, particularly for specialized electronic components. While the short‑term headwind could delay deliveries and pressure margins, NIO’s strong demand for the ES8 and its focus on operational efficiency position it to recover quickly once the chip shortage is resolved.
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