Nio CEO William Li said Tuesday an industry-wide shortage of electric vehicle batteries and semiconductor chips will continue to hamper production for the next few months. The EV maker is planning a significant acceleration in manufacturing in the second half of 2021 as it gears up for an aggressive sales and service expansion to complete coverage of its home market.

Nio had achieved a production rate of 10,000 vehicles in its Hefei plant during the Chinese New Year in February, Li said during the company’s fourth quarter earnings call on Tuesday. However, the company expects monthly output to remain at around 7,500 units through the second quarter due to “lower-than-estimated” battery supply and a global chipset shortage.

With supply chain restrictions expected to ease in July, Li said the company does expect to have sufficient parts to meet its needs. This, along with a significant expansion of its retail footprint and recharging network, is forecasted to help reach “a much higher sales performance in the second half of the year,” according to Li, who did not further elaborate. Nio guided up to 20,500 deliveries for Q1, compared with Li Auto’s forecasted ceiling of 11,500 units.

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“China is a very big market… We are quite confident this should be able to help us to achieve our sales target,” Li said.

Nevertheless, it fell short of generating profits in Q4, reporting a wider-than-expected net loss of RMB 1.39 billion ($212.8 million), double analyst estimates, according to Bloomberg. Aggressive geographic expansion plans this year could limit its positive cash flow from operations in Q4 to a one-off, Jefferies analysts said in a Tuesday report.

Nio is pursuing an ambitious timetable to unlock growth in China’s booming EV market, the world’s biggest. It aims to open another 20 clubhouse-style showrooms called Nio Houses and 120 of its smaller Nio Spaces by year-end. The company is focusing efforts to expand in lower-tier cities where EV penetration is low. “In all the cities where Mercedes-Benz, BMW, and Audi have sales presence, we will also be there this year,” Li said (our translation). Nio has operated 226 sales locations across 121 major cities as of February.

The company is planning to more than double the number of its battery swap stations to upwards of 500, along with quadrupling the number of its supercharging stations to over 600 in the same time period. The seven-year-old EV upstart has become Tesla’s most prominent challenger in China, delivering 43,728 vehicles last year using a war chest of around $4.8 billion made by selling additional shares, and scoring a $1 billion cash injection.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen