China's NIO eyes overseas expansion, flagging memory chip shortage

SHANGHAI, March 11 (Reuters) - Chinese electric vehicle maker NIO 9866.HK aims to sell thousands of its cars overseas this year, as part of a plan to expand abroad over the next two to three years, President Qin Lihong said on Wednesday.

The comments came after NIO reported its first-ever quarterly net profit and forecast it will break even in the full year of 2026.

NIO shares ended 14% higher on Wednesday.

Chief Executive William Li said costs had risen due in part to a memory chip shortage, estimating that total costs would rise by up to 10,000 yuan ($1,455.69) per vehicle.

But Li said the company did not plan to raise prices as it could absorb cost pressures.

"Memory chip is indeed a problem that in worst cases can lead to production suspension," Li said.

"Overall, together with raw materials, premium EVs could see 6,000 yuan to 10,000 yuan increases in costs per car," he added.

Analysts have warned of a memory chip crunch in the automotive sector, especially for smart, high-end EVs, which could worsen this year and potentially squeeze the margins of Chinese carmakers.

While it expects the domestic passenger car market to experience a fall in overall sales, NIO wants to build a good reputation among overseas users, with top executives personally reviewing consumer complaints, Qin said.

However, the European market poses growing challenges as government EV incentives decline and electricity costs increase, according to the 11-year-old Chinese automaker.

Chinese automakers are looking to get tariff waivers from the European Commission in exchange for an agreed minimum price and a sales quota.

The European Union introduced tariffs against China-based EV makers in 2024, but recently launched a scheme where carmakers can negotiate tariff exemptions for individual electric models imported from China.

($1 = 6.8696 Chinese yuan renminbi)