Nio now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter, down 4,500-8,500 units from its previously issued guidance of 43,000-48,000 vehicles.

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Nio (NYSE: NIO) has lowered its guidance for fourth-quarter deliveries, blaming the Covid outbreak that has created delivery and production challenges.

The company now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter, down 4,500-8,500 units from its previously issued guidance of 43,000-48,000.

Considering that Nio delivered 10,059 and 14,178 units in October and November, respectively, the latest guidance means it expects December deliveries to be 14,263-15,263 units, still a record high.

In December, Nio has been facing delivery and production challenges, coupled with certain supply chain constraints, caused by an outbreak of Omicron coronavirus variants in major Chinese cities, it said in a statement today.

"While our teams have strived to maintain continuous operations on all fronts, we were not able to reach our full capacities, particularly when there have been disruptions on delivery and registration procedures involving users," the statement said.

Earlier today, data showed that Nio vehicles had 2,690 insurance registrations in the fourth week of December. The number was 3,141, 2,982 and 3,464 for the first three weeks of December, respectively.

Considering that three days of the first week of December were in November, these numbers imply that Nio vehicles have registered about 10,900 insurance units so far this month.

Insurance registrations for Nio vehicles this week are expected to be in the range of 3,360 to 4,360 based on the company's lowered fourth-quarter deliveries. Past data show that Nio's monthly delivery figures do not differ significantly from its insurance registration figures.

Nio guided for fourth-quarter deliveries of 43,000 to 48,000 units when it reported its third-quarter earnings last month, meaning it would have to deliver at least 18,763 units in December to reach the lower end of the guidance range.

Notably, Nio saw its 300,000th production vehicle roll off the line on December 12. The company's co-founder and president, Qin Lihong, said at an event that day that delivery of Nio's 300,000th vehicle is expected to be around January 1.

Considering that Nio's cumulative deliveries reached 273,741 units as of November 30, Qin's remarks implied that the company's management was then expecting deliveries to reach near 26,000 units in December.

However, the day after Qin's remarks, major cities, including Shanghai, began adjusting their Covid controls on December 13.

As of now, China has essentially abandoned the zero-Covid policy and a wave of infections is sweeping the country.

On December 22, BYD executive vice president Lian Yubo said in a speech that the company had produced 2,000 to 3,000 fewer vehicles per day in recent days because many workers were infected with Covid.

In a research note earlier today, Chinese investment bank CICC said that new energy vehicle (NEV) companies are not likely to see widespread work stoppages and production shutdowns come, as people maintain normal work, except for those infected who are forced to rest.

In terms of demand, the team believes that the Covid infection since December did have some impact on sales of NEVs, mainly in terms of consumer visits to stores.

But mainstream car companies such as BYD, Tesla, Nio and Li Auto have some level of order backlog that can still support sales in January and February or even the first quarter of 2023, according to the team.