NIO Inc Q1 2026 Earnings Call - Vehicle Margins Hit Record 18.8% as ES9 Launch Drives Volume Surge

Translator/English Speaker, Conference Call Translator: Hello, ladies and gentlemen. Thank you for standing by for NIO Inc.’s first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. Today’s conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, Head of Investor Relations and Corporate Finance of the company. Please go ahead, Rui.

Rui Chen, Head of Investor Relations and Corporate Finance, NIO Inc.: Good morning, and good evening, everyone. Welcome to NIO’s first quarter 2026 earnings conference call. The company’s financial and operating results were published in the press release earlier today and are posted on the company’s IR website. On today’s call, we have Mr. William Li, Founder, Chairman of the Board, and Chief Executive Officer, and Ms. Danny Zhu, Chief Financial Officer. Before we continue, please be kindly reminded that today’s discussion will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in the certain filings of the company with the U.S. Securities and Exchange Commission, The Stock Exchange of Hong Kong Limited, and the Singapore Exchange Securities Trading Limited.

The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that NIO’s earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to NIO’s press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 大家好，非常感谢各位参加蔚来2026年第一季度的业绩沟通会议。

Translator/English Speaker, Conference Call Translator: Hello, everyone, and thank you for joining NIO Inc.’s 2026 Q1 earnings call.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 2026年第一季度，公司共计交付83,465辆智能电动汽车，同比增长98.3%。其中，蔚来品牌交付新车58,543台，稳居中国成交价30万以上纯电市场销量冠军。乐道品牌交付新车13,339台，持续释放增长潜力。萤火虫品牌交付新车11,583台，在高端小车市场排名第一。

Translator/English Speaker, Conference Call Translator: In Q1 2026, the company delivered a total of 83,465 smart EVs, representing a year-over-year increase of 98.3%. Breaking it down by brand, the NIO brand delivered 58,543 vehicles, maintaining its leadership in China’s BEV segment priced above CNY 300,000. The ONVO brand delivered 13,339 vehicles, continuing to unlock its growth potential. The Firefly brand delivered 11,583 vehicles, ranking number one in China’s high-end small car segment.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 2026年4月，公司交付了29,356辆智能电动汽车，同比增长22.8%。从二季度开始，三大品牌进入新产品密集发力和交付期，将驱动总体交付量保持高速增长。我们预计第二季度的总交付量将在11万到11.5万辆之间，同比增长52.7%至59.6%。

Translator/English Speaker, Conference Call Translator: In April, the company delivered 29,356 vehicles, up 22.8% year-over-year. Starting Q2, the three brands have entered an intensive product launch and delivery cycle, which is expected to support continued rapid delivery growth. We expect the total deliveries in Q2 to range between 11,000 and 11,500 units, representing year-over-year growth of 52.7%-59.6%.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 财务表现方面，第一季度公司综合毛利率达19%，其中得益于高毛利车型占比提升，整车毛利率达18.8%，实现连续四个季度环比增长。服务与社区相关业务的其他销售毛利率达到20.6%，创下四年来新高，规模及盈利表现全面提升。

Translator/English Speaker, Conference Call Translator: On the financial side, the company’s gross margin was 19% in Q1. Driven by a higher contribution from higher margin products, vehicle margin came in at 18.8%, improving quarter-over-quarter for the 4th consecutive quarter. Margin for other sales, mainly services and community-related businesses, reached 20.6%, the highest level in the past 4 years, with both business scale and profitability achieving improvement.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 一季度公司再次实现Non-GAAP经营利润的盈利，并实现正向经营现金流，现金储备进一步提升至482亿元。

Translator/English Speaker, Conference Call Translator: In Q1, the company maintained positive non-GAAP operating profit and positive operating cash flow, where cash reserves further increased to CNY 48.2 billion.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 蔚来坚持纯电技术路线，持续强化体系创新能力，已通过技术产品服务社区构建差异化的竞争优势。基于此，三大品牌产品竞争力和综合体验受到各自目标用户群体的广泛认可。

Translator/English Speaker, Conference Call Translator: NIO has remained committed to the BEV roadmap while continuously strengthening its systemic innovation capabilities. Over the years, the company has built distinctive competitiveness across technology, products, services, and user community operations. Supported by these capabilities, the products and overall experiences of NIO, ONVO and the Firefly have gained broad recognition among their respective target users.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 蔚来品牌方面，全新ES8自2025年9月底开启交付以来，历时215天即完成第10万台的交付，刷新中国乘用车市场40万以上车型的最快交付纪录。截至今年4月，全新ES8已经连续五个月获得大型SUV和40万以上车型不分能源形式的销量冠军。4月初，2026款ES6、EC6、ET5、ET5T正式上市并交付，以更全面的产品力满足用户多样化的需求。4月9日，我们进行了科技行政旗舰SUV蔚来ES9的产品和技术发布。ES9搭载众多行业领先首发技术，同级领先配置，将重新定义行政旗舰SUV的标准，引领该细分市场进入纯电时代。ES9将于5月27日上市交付。我们有信心ES9能够引领50万元以上科技行政旗舰SUV市场。

Translator/English Speaker, Conference Call Translator: For the NIO brand, since delivery began in late September 2025, the all-new ES8 reached its 100,000th delivery milestone in just 215 days, setting a new delivery record among passenger vehicles priced above RMB 400,000 in China. As of April this year, the all-new ES8 had remained number one in both the large SUV segment and the passenger vehicle segment priced above RMB 400,000 for five consecutive months, regardless of powertrain type. In early April, the 2026 ES6, EC6, ET5 and ET5T were launched and delivered, further addressing evolving user needs through enhanced product offerings. On April 9, we officially unveiled the NIO ES9, our flagship executive SUV. The ES9 integrates multiple industry first technologies and class leading features, redefining the standards of executive flagship SUVs and leading the segment into the BEV era.

The ES9 will officially launch and begin deliveries on May 27, and we are confident that the ES9 will set a new benchmark in the flagship executive SUV market, priced above CNY 500,000.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 乐道品牌方面，L90在一季度市场表现持续优异，稳居成交价20到30万元区间大型SUV的销量冠军。今年，乐道品牌将在产品迭代核心技术上实现全面进阶。目前，2026款乐道L90已上市交付。升级后，L90搭载蔚来自研自家芯片神机NX9031、蔚来智能模型，以及自研整车全域操作系统SkyOS·天枢。5月15日，智能双舱大五座旗舰SUV乐道L80正式上市并开启交付。乐道L80是大五座SUV市场的革新之作，是目前国内装载空间表现最强的五座SUV。凭借技术与空间场景创新，将满足大五座用户的多元化场景需求。另外，新款L60也将于五月底亮相，新款将在外观设计、智能化配置等方面进行升级，实现车型产品力的进一步提升。

Translator/English Speaker, Conference Call Translator: For the ONVO brand, the L90 continued its strong market momentum in Q1 2026, ranking number 1 in the large SUV segment priced between CNY 200,000 and CNY 300,000. This year, ONVO will achieve comprehensive upgrades in both products as well as core technologies. The 2026 L90 has already been officially launched and delivered. The upgraded L90 now features NIO’s in-house developed Shenji NX9031 smart driving chip, NIO World Model, and the SkyOS full-domain operating system. On May 15, the Onvo L80, a flagship large 5-seat SUV with an innovative frunk and trunk layout, was officially launched and delivered. The L80 is a breakthrough product in the large 5-seat SUV market, and currently offers the largest cargo capacity among 5-seat SUVs in China. Through innovative space and scenario based lifestyle solutions, the L80 supports a wide range of scenarios for large 5-seat SUV users.

The new L60 will make its debut in late May. The updated model will feature upgrades in exterior design and smart features, further enhancing its competitiveness.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 萤火虫品牌方面，2026焕新升级款已在二季度开启交付，在动力配置及智能体验上全面优化。萤火虫品牌将持续通过推出限量特别版车型，强化独特的品牌调性。

Translator/English Speaker, Conference Call Translator: For the Firefly brand, the refreshed model has already started deliveries in Q2, bringing comprehensive upgrades in powertrain performance and smart experiences. Going forward, Firefly will continue to introduce limited edition models to further strengthen its distinctive brand identity.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 智能驾驶技术及体验方面，今年初我们正式向用户推送了蔚来智能模型NWM的全新版本，通过世界模型NWM加闭环强化学习的领先技术架构，显著优化全域领航辅助体验。蔚来世界模型的最新版本推送后的一个季度，城区领航辅助的行驶里程环比提升92%，使用时长的占比环比提升116%。目前，该技术架构也赋能了乐道新产品的自驾体验。六月，蔚来和乐道都将迎来蔚来世界模型NWM新版本升级，包括行车、泊车、主动安全在内的全场景自驾体验将继续得到显著提升。

Translator/English Speaker, Conference Call Translator: On smart driving: earlier this year, we officially rolled out a major new version of NIO World Model, or NWM. Powered by the advanced architecture featuring the World model and closed-loop reinforcement learning, the new version significantly enhanced the full-scenario Navigate on Pilot experience. Within one quarter of the rollout, urban NOP mileage increased by 92% quarter-over-quarter, while the proportion of smart driving usage time increased by 116%. So far, the smart driving system powered by NWM has been introduced across all NIO products. In June, both NIO and ONVO users will receive the next major NWM upgrade, bringing noticeable improvements across driving, parking, and active safety scenarios.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 销售网络方面，截至目前，我们开设了168家蔚来中心和389家蔚来空间，乐道门店数量达430家。服务网络方面，我们已开设了408家服务中心和90家交付中心。我们正持续优化销售服务网络布局，依托三品牌高效协同的Sky门店模式，扩大市场覆盖范围，增强渠道布局深度与密度。

Translator/English Speaker, Conference Call Translator: In terms of sales and service networks, the company now operates 168 NIO Houses, 389 NIO Spaces, 430 ONVO stores, as well as 408 service centers and 90 delivery centers. We continue to optimize our sales and service network layout through the highly coordinated Sky Store model, expanding market coverage while strengthening local presence and increasing network density.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 充电网络方面，截至目前，我们全球已经累计布局3916座换电站，且已累计建成超过28000根超充桩和目的地充电桩。5月10日，蔚来ES9顺利完成1万公里最短用时挑战，全程仅耗时94小时19分41秒，成功刷新行业纪录，充分验证了换电模式可靠、高效和便捷的核心优势。

Translator/English Speaker, Conference Call Translator: As of now, the company has 3,916 Power Swap Stations worldwide, along with more than 28,000 Power Charger and destination charging. On May 10th, the NIO ES9 successfully completed the 10,000 km challenge in just 94 hours, 19 minutes and 11 seconds, setting a new record among BEVs in China. This further demonstrated the reliability, efficiency, and convenience of battery swap.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 5月20日，蔚来发布2025年环境、社会及公司治理报告，并披露温室气体减排目标，以2023年为基准，至2035年单车全生命周期的碳足迹目标降低43%。我们将继续通过提供高性能智能电动汽车与极致的用户体验，与用户、合作伙伴共创可持续和更美好的未来。

Translator/English Speaker, Conference Call Translator: On May 20th, the company released its 2025 Environmental, Social and Governance report and announced its greenhouse gas emissions reduction target, aiming to reduce the carbon footprint per vehicle by 43% by 2035 from the 2023 baseline. By delivering the high performance smart EVs and exceptional user experiences, we aim to build a sustainable and brighter future together with our users and partners.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 经过11年长期投入与坚持，公司围绕智能电动汽车核心技术构建了十二大全栈自研体系，并逐步形成了覆盖研发、供应链、制造、质量、能源和服务等领域的体系创新能力。这不仅标志着公司已具备持续推出创新产品的能力，引领行业发展能力，更是品牌持续向上、保持长期竞争力的核心来源。目前，蔚来、乐道、萤火虫已树立清晰的市场定位，核心产品在各自细分市场占有率稳步提升。我们对达成今年的经营目标，并实现更长期的持续发展充满信心。

Translator/English Speaker, Conference Call Translator: After 11 years of long-term investment and persistence, the company has built whole full stack technology capabilities around the core technologies of smart EVs. At the same time, we have gradually established a systemic innovation capability spanning R&D, supply chain, manufacturing, quality, power services and user services. These capabilities not only enable us to continuously launch innovative products and lead industry development, but also serve as the core foundation for our continued brand development and long term competitiveness. Today, NIO, ONVO and Firefly have each established clear market positioning with their core products steadily increasing market share in their respective segments. We are confident in achieving our business targets for the year and delivering sustainable growth beyond 2026.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 感谢大家的支持。现在 Stanley 将为大家介绍 2026 年第一季度的财务业绩。有请 Stanley。

Rui Chen, Head of Investor Relations and Corporate Finance, NIO Inc.: Thank you for your support. With that, I will now turn the call over to Stanley for Q1 financial details. Over to you, Stanley.

Stanley, Chief Financial Officer, NIO Inc.: Thank you, William. Let’s now review our key financial results for the first quarter of 2026. Our total revenues reached RMB 25.5 billion, up 112.2% year-over-year, and down 26.3% quarter-over-quarter. Vehicle sales were RMB 22.8 billion, up 129.2% year-over-year, and down 27.9% quarter-over-quarter. The year-over-year growth was mainly due to increased deliveries and a higher average selling price, driven by positive product mix effect. The quarter-over-quarter decrease was mainly due to fewer deliveries. Other sales were RMB 2.7 billion, up 31.2% year-over-year, and down 9.7% quarter-over-quarter. The year-over-year growth was driven by increased sales of parts, accessories, and after-sales vehicle services, and provision of power solutions, along with a rise in sales of auto financing services.

The quarter-over-quarter decrease was due to decreasing revenues from technical R&D services and used car sales. Looking at margins, vehicle margin was 18.8% compared with 10.2% in Q1 last year and 18.1% last quarter. The year-over-year and quarter-over-quarter improvements were driven by a more favorable product mix. Other sales margin reached a record high of 20.6% in recent four years, reflecting the continuing profitability improvements in our user-based driven service and community-related businesses. With the improvements in both vehicle and other sales margin, overall gross margin increased to 19%, compared with 7.6% in Q1 last year and 17.5% last quarter. Turning to OPEX. R&D expenses were CNY 1.9 billion, decreased 40.7% year-over-year and 7% quarter-over-quarter.

The year-over-year decrease was mainly driven by lower personnel costs in R&D functions due to organizational optimization, reduced design and development costs from different development stages, and improved operational efficiency. The quarter-over-quarter decrease was also mainly due to lower design and development costs from different development stages and improved operational efficiencies. SG&A expenses were CNY 3.5 billion, decreased 20.5% year-over-year and 1.1% quarter-over-quarter. The year-over-year decrease was mainly driven by lower personnel costs and related expenses in marketing and other supporting functions due to organizational optimization, as well as reduced sales and marketing activities. The quarter-over-quarter SG&A expenses stayed stable. Loss from operations was CNY 0.3 billion, compared with loss from operations of CNY 6.4 billion in Q1 last year, and profit from operations of CNY 0.8 billion last quarter.

Excluding share-based compensation expenses, adjusted profit from operations was RMB 66.8 million. Net loss was RMB 0.3 billion, compared with net loss of RMB 6.8 billion in Q1 last year and net profit of RMB 0.3 billion last quarter. Excluding share-based compensation expenses, adjusted net profit was RMB 43.5 million. Furthermore, we generated positive operating cash flow this quarter and ended the quarter with RMB 48.2 billion in total cash and cash equivalents, with restricted cash, short-term investments, and long-term time deposits. That wraps up our prepared remarks. For more information and the details of our unaudited first quarter financial results, please refer to our earnings press release. Now, I will turn the call over to the operator to start our Q&A session. Operator, please.

Operator, Conference Call Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today’s call, please limit yourself to two questions, and if you have additional questions, you can re-enter the queue. The first question today comes from Bin Wang with Deutsche Bank. Please go ahead.

Bin Wang, Analyst, Deutsche Bank: Thank you. Congratulations for the great result. I got two questions. The first one is about ES9. ES9 will launch next week. Can you share with the color for the order flow during the pre-sale period? Do you think the ES9 monthly volume in the next several months, what’s the roughly monthly volume guidance? Can ES9 impact the ES8 order flow? That’s my first question. Second question is about the gross margin. Can you provide a second quarter gross margin guidance given you have a better volume? Based on the cost increase such as memory. How to look for the gross margin in the next several quarters? Thank you.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 好，谢谢。ES9我们在27号会正式地开上市发布会，然后我们会启动开启交付。那目前来讲，因为ES9它是从技术含量，还有我们整个的设计，不管是造型还是内饰，都得到了用户的一个高度认可。我们5月11号已经开启了全国的试驾。订单应该说还是非常强劲的，特别是开启试驾后，日均的预订单，较试驾前又上了一个台阶。谢谢王彬。

Translator/English Speaker, Conference Call Translator: Thank you for the question. Regarding your question on the ES9, we will officially launch and deliver the new ES9 on May 27th. Since the pre-launch of the ES9, its technology as well as its exterior and interior design are well recognized and well received by the market and our users. We started the test drive of ES9 from May 11th, and after the test drive, we also witnessed the growing momentum of the order intake on the model.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 当然我们因为不太会对具体的每个月的销量给那么细的一个指引，但是我们对于它在50万以上的行政SUV的市场，这个表现是非常有信心的。那从一个沉淀的市场的角度，毫无疑问它会改变整个50万以上的市场的SUV的竞争的格局，对它的销量我们都非常有信心。

Translator/English Speaker, Conference Call Translator: Of course, for us, we seldom disclose the specific order momentum or order intake for the new models. However, we do have confidence in its overall performance in the executive flagship SUV segment above 500,000 RMB in China, and we also believe that it is going to change the landscape of the battery electric vehicle segment above 500,000 RMB. Overall speaking, we are confident in its competitiveness.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 另外，我们很高兴看到ES9发布后，从4月9号我们产品技术发布后，它不仅是没有分流ES8的订单，反而是给ES8带来了非常正面的影响。ES9预售和开启试驾以来，我们整个的到店客流是增加了很多，很多以前对蔚来没有了解的用户，因为ES9到店了，这些用户在体验比较两款车以后，有一些用户会认为ES8的尺寸和用车的场景更符合自己的需求，所以我们ES8近期的订单表现是非常好的。ES9亮相以后，ES8平均的周度订单比前几周增长接近30%。5月11号ES9开启试驾后的一周，ES8的订单的环比是进一步增加了20%。

Translator/English Speaker, Conference Call Translator: Since the pre-launch of the ES9, we actually didn’t see that the launch of the ES9 diluting or cannibalizing the focus or even the attention to the ES8. Instead, it is generating positive impact on the attention and the order intake of the ES8. Especially after we had the pre-launch and also test drive started for the ES9, we have welcomed a lot of in store visits and traffic. Many of them maybe didn’t know about the new brand or our products, and after they were in the store by experiencing and comparing between the ES9 and the ES8, some of them find that the dimensions and also the use cases of the ES9 may be a better match for them. In that case, we have actually witnessed an increase in the order intake of the ES8 after the pre-launch of the ES9. One week after the ES9 launch, actually the order intake for the ES8 increased by 30%. Since the test drive started from May 11th, within one week, the week-over-week ES8 order intake increased by 30%.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 那5月份至今的20天的话，我们ES8的订单是去年10月份以来的新高，可以说ES8跨越了这个新车效应的死亡谷，因为我们前期的存量订单销完了以后，我们新增的订单能够保证它仍然在一个非常高的销量的位置。当然这个前提是在ES9本身的订单非常强劲的情况下实现的。所以也能看出来，我们这两款车的这种定位，它这个区隔还是非常成功的。ES9这个科技行政旗舰SUV，它核心是对标像宝马的X7、奔驰GLS这样一些传统的燃油的行政SUV。那么ES8它这个全场景的SUV的旗舰，它面向的场景是更加的丰富，既能商务使用，也能够家庭出行，所以这两款车的定位是非常互补的，它的价格也有一定的区隔。所以我们还是非常欣喜地看到，这两款车在各自的细分市场，都吸引了它们的目标的用户。

Translator/English Speaker, Conference Call Translator: In the first 20 days of May, actually the order intake on the ES8 has created a new history high since October, which is the ES8 launch last year. As we have been digesting the order backlogs on the ES8, we have also maintained a pretty stable and strong order intake on the ES8 without compromising on the strong order intake for the ES9. By having this strong order performance for both models, we can see the positioning of these two products are quite distinguished or differentiated from each other. ES9 is more of a flagship executive SUV, while it is more competing with the conventional combustion engine executive flagship SUVs like BMW X7 or Mercedes-Benz GLS. For the ES8, it is more of an all-around SUV that is catering both business scenarios as well as family purposes.

These two products are complementing each other, while price-wise, they are well differentiated. We are happy to see that both products are well received in their respective segments.

Danny Zhu, Chief Financial Officer, NIO Inc.: 我们在第一季度实现了18.8%的整车毛利率，跟同比和环比相比都还是一个不错的成绩。当然这里面主要是我们在一季度高毛利车型的占比还是非常高的，尤其是ES8，整个的占比超过了50%。ES8的毛利率还是维持在比较高的水平，在一季度也还是超过了20%。那第二个就是我们在一季度材料成本上涨的因素带来的风险还没有完全显现，因为我们还有一部分的材料的库存来抵消了这样的上涨的风险。当然我们从二季度和全年来看，其实从今年，我相信大家也都注意到，从年初开始的这样一个大宗材料的涨价，其实带来的成本压力还是非常大的。这里面包括内存的价格的上涨，以及电池的主要原材料，碳酸锂、镍钴锰的价格的上涨，以及说我们整车会用到的比较多的铜和铝，其实都会有或多或少的上涨。综合来看，平均下来每一台车的成本的压力其实是超过了一万元。当然从我们整个的公司来讲，我们还是目标希望能够把整车的综合的毛利维持在17%到18%。那这里面呢——

Translator/English Speaker, Conference Call Translator: Thank you for the question. Regarding your question on the gross margin, in Q1, we have achieved the vehicle margin of 18.8%, achieving quite good increments from both year-over-year as well as quarter-over-quarter. In Q1, the increase in the vehicle margin is mainly because of the higher contribution by the higher margin models, especially the ES8 contributing 50% of the margin, where ES8 itself has over 20% vehicle margin in Q1. In the meantime, although there are rising cost pressure because of the rising material costs, however, our advanced inventories on such parts and components have partially offset such pressure in Q1.

In terms of the Q2 and the full year, as you may have noticed that there is the rising material cost pressure facing by the entire industry, including the memory chips, battery materials like the lithium carbonate, as well as NCM, and also copper and aluminum raw materials. Starting Q2 and beyond, on average, the cost impact per unit is around more than CNY 10,000. For the full year, the company still aims to achieve a vehicle margin of around 17%-18%.

Danny Zhu, Chief Financial Officer, NIO Inc.: 这里面我们会有以下的这些工作去做。一个就是刚刚William介绍我们的这个高价格、高毛利的车型ES8、ES9，在整个的销售里面的占比还是会保持比较高的水平，会带来一个比较高的这样的毛利的占比。第二个就是其他车型，我们也会确保促销政策的稳定，我们不会简单地去做以价换量的这个工作。那第三个方面，我们也还是会持续地协同我们供应链的合作伙伴，采取包括像工程优化、效率提升、商务谈判等各种方式，来对冲刚刚讲的各种成本上涨带来的影响。所以总体来说，我们整个的Q2和全年的目标还是要希望能够实现17%到18%综合的整车毛利率。

Translator/English Speaker, Conference Call Translator: To achieve a Q2 and a full year vehicle margin of 17%-18%, we will be taking these several actions. The first is to further increase the product mix of products with higher prices and also higher margin contributions, like the ES8 and ES9. For other products with moderate margin, we will also maintain a stable pricing and also promotional policies. We will not compromise on the margin performance of such cars for the sake of a volume contribution. Thirdly, we will also work closely with our supply chain partners to promote on the engineering improvement, efficiency improvement, as well as commercial negotiations to together mitigate the cost pressure. With that, we will target for a Q2 and full year vehicle margin of around 17%-18%.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 谢谢王斌。谢谢。

Bin Wang, Analyst, Deutsche Bank: Thank you very much.

Operator, Conference Call Operator: The next question comes from Tim Hsiao with Morgan Stanley. Please go ahead.

Tim Hsiao, Analyst, Morgan Stanley: Hi, this is Tim Hsiao from Morgan Stanley. Thanks for taking my questions and congratulations on another solid quarter. I have two questions. The first question is about the vehicle sales, because we noticed that sales of the 8 and 9 series large SUV are expected to likely more than triple year-over-year this year, while the rest of the lineup is likely to see a roughly 20% year-over-year decline under our 40%-50% full year volume guidance. Once the growth of the 8 and 9 series is fully unfolded, and the groups total volume might approach like a 500,000 units target, how does NIO plan to reboost the growth of the subsequent models, for example like a 5, 6, 7 series, which are likely to face greater competition in the market? That’s my first question.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 谢谢Tim。今年我们的整个的增长，大家也看到了，我们从新产品，特别是高价的新的产品，我们对于全年的增长还是非常好的一个支持。量的增长以及毛利的增长，我们都是非常有信心的。当然我们还有ES8的五座版，马上交付的ES9，那我们现在的ES8还是保持了非常稳健的这样一个销量。那么L90和L80，我们相信在20到30万的这个市场也会继续保持它的一个领先的一个市场份额。那么从明年开始，我们当然会进入到一个新的这样一个产品周期，就是我们从ET5、ET5T、ES6、EC6，后续我们当然都会进行迭代，基于我们最新的智能平台。那么从ONVO的角度来讲的话，我们也会有新的产品的计划。所以现在我们总体的策略就是每年大体上会有三到五款比较新的产品去推向市场。当然我们并不会去追求绝对的数量，新车的这个新车型的数量，我们还是保证每一款车型在细分市场都能够有一个领先的份额。

Translator/English Speaker, Conference Call Translator: Thank you for the question. As you can see, the overall volume growth this year is mainly driven by the models with high price and also high margin. They are playing an important role in supporting both our volume growth as well as our vehicle margin improvement. For the ES8, we will maintain its stable and strong market performance, while very soon we are going to start to deliver the ES9, and later we will also introduce the 5-seater of the ES8 as they were all playing such a role. For the ONVO brand, we have L90 and L80 continue to lead the market share and sales in the price segment between CNY 200,000-300,000. Also starting next year, our entire product portfolio will enter into a new phase of development, where we are going to upgrade our ET5, ET5T, ES6 and EC6 also to the latest technology platform and digital architecture, while the ONVO brand next year will also have new products. In general, we are going to maintain a pace of around 7 to 5 new or relatively new products every year. Of course, with the launch of such new products, we don’t pursue absolute increase in the volume of the cars. Instead, we would like to achieve a leading market share in each of their respective segments.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 我们相信现在的这个产品规划是能够支持公司在这个市场上一个竞争力的。今年1到4月份，NIO公司现有的这些产品，我们在上海，在所有汽车公司里面，我们在上海的销量是位居第一位，占整个上海的乘用车市场8%这样的一个份额。所以我们非常有信心，现有的产品随着我们的渠道的进一步的覆盖，随着我们换电网络的进一步的扩展，随着三四线城市、四五线城市用户开始越来越接受纯电产品，我们现有的这个产品序列，包括接下来的这些产品，能够让公司在中国的乘用车市场获得一个显著的一个份额。

Translator/English Speaker, Conference Call Translator: We also believe that our existing product portfolio and offering can support and sustain our competition and competitiveness in the market. In the first four months, the total sales of the company actually helped the passenger vehicle market in Shanghai. We’ve achieved 8% of the market share among Shanghai’s passenger vehicle market. As we continue to expand our channels and the network coverage, as we continue to deploy Power Swap Stations and facilities, as the users in the lower tier cities open up their mind for the battery electric vehicle product, we believe that our existing product lines, as well as our upcoming products, will help us to achieve a reasonable market share within the passenger vehicle market in China.

Tim Hsiao, Analyst, Morgan Stanley: Thank you, William. Thank you. My second question is about the profit and OPEX, because NIO has posted 2 consecutive non-GAAP profitable quarters. Do you anticipate maintaining the quarterly non-GAAP profit target throughout 2026? In the meantime, can the current OPEX parameters, i.e., SG&A ratio below 10% and the quarterly R&D spendings at CNY 2 billion-CNY 2.5 billion, be adequate to support robust business growth moving forward? When is the next R&D investment upcycle expected to begin? That’s my second question. Thank you.

Danny Zhu, Chief Financial Officer, NIO Inc.: Team，首先第一个，我们从目标上来讲，2026年我们还是维持全年non-GAAP运营利润这个盈利的这样一个目标。所以具体到刚刚你讲的这个OPEX的一个指引上，我们先看研发费用，我们依然还是维持这个20到25亿这样的一个季度研发费用，non-GAAP的季度研发费用的这样一个指引。当然我们觉得这样的一个投入呢，实际上首先第一个能够确保我们在关键技术领域的这样的一个投入，让公司的包括像芯片，像很多底层的这样的一个操作系统，这样的一些方面的能力，能够保持公司在核心技术上的竞争力。这样一个投入也能够保证我们每年都会有相应竞争力的产品的投放，像刚刚William给大家介绍。另外就是，其实20到25亿，我们在提效方面做了很多的工作。我们从去年开始实施这样一个CBU机制以后，其实我们是用了更少的钱来做了更多的事情。其实从总效的费用上来讲，我们觉得20亿其实是跟以前的30亿的这个成果——

30亿到35亿。

30到35亿是相当的，对。当然还有一个很重要的方面，就是研发费用，我们觉得从技术路线上来讲，因为蔚来一直是坚持纯电的技术路线，我们没有增程，也没有混动，我们一直是坚持可充、可换、可升级的纯电路线。那与其他的友商相比，我们在这个技术路线上是比较聚焦的。这样的话，在研发效率各方面都比较高。那别的友商在推出车型的时候，他如果两种能量形式，那这个投入肯定是比我们要高很多。

Translator/English Speaker, Conference Call Translator: Thank you for the question. For the full year 2026, our financial target is to achieve positive non-GAAP operating profit. In terms of the OPEX guidance for the R&D expenses, we target to maintain our non-GAAP R&D investment or expenses to be around CNY 2 billion-CNY 2.5 billion per quarter. For this level of spending, we believe that it will be enough to sustain and support our investments into the key technologies such as chips, operating systems and etc., to make sure that we have strong competitiveness and also technical leadership. Secondly, such investment will also support the launch and the rollout of new models every year as introduced by William. In the meantime, as we keep the expenses flat, we are also putting efforts in improving the overall efficiency and utilization of such resources.

Last year we rolled out the CBU mechanism, where under that mechanism we are now using less money to yield more R&D results. As mentioned, the productivity or the yield of CNY 2 billion R&D investment as of today is equivalent to maybe the results of CNY 3.5 billion R&D investment in the past years. For the entire company, we’ve been staying with the battery electric vehicle roadmap, which can make us more focused than spreading our efforts for range extended vehicles or PHEV. In that case, we can be more efficient in making our investments, which is different from some of our peers where they have to split their efforts for different powertrain systems.

Danny Zhu, Chief Financial Officer, NIO Inc.: 关于SG&A，总体来说，我们还是希望能够达到10%销售收入这样的一个目标。但是从季度来说，确实会有一些flux，比如说在二季度，我们主要的今年的新车型的launch和marketing的activity其实都是在二季度。所以在二季度的这个从绝对金额上来讲，尤其是selling的expense会比一季度有一个比较大的上涨。当然从三到四季度，因为我们的新产品上市的活动基本都结束了，就比较少，所以三四季度可能从绝对金额上又会有一些下降，所以从季度来看会有一些这样的一个波动。

Translator/English Speaker, Conference Call Translator: Regarding the SG&A expenses, in general, we hope that the SG&A as a percentage of the revenue is around 10%, but it can be different from quarter to quarter. For example, in Q2, we have a quite intensive product launch and delivery cycle, where the corresponding marketing and the launch expenses are actually higher than the previous quarter. The absolute amount in Q2 had a surge, especially the selling expenses in Q2 surged a lot from the Q1 baseline. In Q3 and Q4, as most of the new products will be already in the market by then, the absolute amount in the second half will also be relatively lower. There will be also differences from quarter to quarter.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Tim.

Tim Hsiao, Analyst, Morgan Stanley: Thank you, Stanley. Thank you, William. Thank you.

Operator, Conference Call Operator: The next question comes from Paul Gong with UBS. Please go ahead.

Paul Gong, Analyst, UBS: Thanks, everyone. Thanks for taking my questions and congrats on this quarter. I have two questions. The first question is regarding the competition in the nine series or large SUV segments. I think the success of the ES8 since late last year has attracted competitors launching the large SUVs, as we see in this Beijing Auto Show. Quite a few of them are even priced with very aggressive pricing. How do you think about the competition in this segment? What is the moat for NIO? How can NIO stay ahead in this segment as the sales leader champion in this high-end large SUV segment? That is my first question.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 好，谢谢Paul。确实，ES8是创造了非常多的记录，我们用215天就完成了10万台的交付，是40万以上中国品牌单款车型最快的交付记录。而且我们已经连续五个月在40万以上的车型和大型的SUV的市场里面获得了销量的冠军，是不分能源型的销量的冠军。确实它是非常成功的，40万以上的大三排SUV里面，我们大概占了一半的份额，是49.7%。那我想这个成功是体现了我们未来11年持续进行体系能力建设的这样一个优势，现在是通过ES8这个产品全面反映出来。

Translator/English Speaker, Conference Call Translator: Thank you for the question. It’s true that the NIO ES8 has created many records. It has achieved 100,000 delivery milestone in just 215 days, which is the fastest among all the cars priced above CNY 400,000 in China. For 5 consecutive months, it has been the sales champion in the price segment above CNY 400,000 as well as in the large SUV segment, regardless of the powertrain types. Looking at the sales of the large three-row SUV priced above CNY 400,000, ES8 has achieved a 49.7% market share. The reason for its success is because itself is the embodiment of our 11 years of systematic capability and innovation development.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 这个体系当然包括我们全栈的这样一个技术的研发的能力，还有我们的创新供应链。为什么在这里面要强调创新供应链？因为我们很多的技术都是行业里面第一个使用的。那么怎么样去管理这个创新供应链，其实是非常大的一个挑战。还有包括我们的先进制造，产品生命周期的质量，我们在这个第三方的这样一些质量的排名里面，一直都是数一数二的。还有我们的社会能源的充换电网络。还有很重要的一点，特别是对于高端用户来说，我们覆盖全国的这样一个全场景的用车服务体系。所以这六个体系的创新支撑了我们NIO品牌，现在在高端市场有一个领先的这样市场优势。

Translator/English Speaker, Conference Call Translator: In terms of such systemic capabilities and innovation, it includes our in-house capabilities for full stack technologies, as well as our capabilities for the innovative supply chain. The reason I would like to highlight the innovative supply chain is that on the ES9, we have applied a lot of industry first technologies, where we need to work hard with our supply chain partners to mass produce and make these advanced technologies happen. We also have leading capabilities for the advanced manufacturing life cycle quality, which is well recognized by many authorities in the automotive industry. We also have our smart power systems, our charging and swapping network, and also we have established a nationwide premium and holistic car user scenarios and holistic experience for our users. With these 6 system capabilities established in the past 11 years, we now are establishing ourselves as a premium brand and also leading in the premium segment.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 除了这些体系能力以外，我觉得有两点也是最近我们从市场上的这样一个用户的选择我们这个原因里的一个发现，第一个就是，我们认为现在确实中国的智能电动汽车、新能源汽车的竞争，就从品牌的一个混沌期开始进入到了一个品牌的澄清期。那么我们还是非常高兴看到，蔚来作为一个高端品牌，已经被用户所认可和接受。用户其实已经有一个说BBA的下一辆选蔚来，越来越多的人有这样一个共识。那么我们一季度蔚来品牌的平均成交价是来到了39万，是超过宝马5万元，超过了奥迪，差不多是奥迪的1.5倍。那么我觉得这个是非常好的一个例子。我在上海，在长三角，我们在一线城市，我们都已经超过了传统的这样一些豪华品牌的市场份额，跟他们的油车比的话，也超过了这个市场份额。那我觉得这些都是说明，蔚来已经比较初步成功地建立了一个在用户心中高端的品牌的这样一个新字。

Translator/English Speaker, Conference Call Translator: In addition to these systemic capabilities, we also have spotted 2 findings among NIO users who have chosen our products.

The first is that the competition landscape of China’s new energy vehicle market is now transitioning from a chaotic brand competition with a more clarified competition where the clarity has been introduced to the overall brand and competition landscape for the new energy vehicle market in China, where among all these competitors, NIO is widely recognized as a premium brand and also well accepted by the public as a premium brand. Among many users, they have already established a consensus where NIO will be the next car after Mercedes-Benz, BMW, and Audi. In Q1, the NIO brand has the average selling price of CNY 390,000. That is around CNY 50,000 higher than that of BMW and 50% higher than that of Audi. These are lively examples. In cities like Shanghai or around the Yangtze River Delta area or in the first tier cities in China, actually our market share has already surpassed the market share of the ICE models from all those traditional luxury brands. In general, in the Chinese market, NIO has already established or is starting to establish itself as a well-recognized premium brand.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 包括乐道，乐道的平均售价也是24万人民币，其实也比很多二线豪华品牌的平均单价还要高。虽然它已经成为很多家庭用户的一个高品质的这样一个选择。那么Firefly在高端小车市场也是成功地获得了超过三分之二的这样一个市场份额。它比中国一般的别的小车，别的品牌的小车，大概它的平均的价格要高50%左右。当然它的品质、它的安全、它的设计是给用户提供了很好的这样的一些用户价值。所以总的来说，NIO还是坚持这样一些高端的定位，不管是在蔚来品牌，还是乐道品牌，还是Firefly这个品牌，都是让用户已经逐步地形成了用户的一个共识。

Translator/English Speaker, Conference Call Translator: For the ONVO brand, its average selling price is around CNY 240,000, which is also comparable with many Tier 2 luxury brands. Now ONVO is also the go-to option for many families pursuing high quality and also premium car usage experience. For Firefly, it has achieved 2/3 of the market share in the high-end small car market. Its average selling price is around 50% higher than other small car competitors. In terms of its design, safety, and also build quality, it is providing our users with sufficient value and also creating sufficient user value for them. For the entire company, be it the NIO brand or ONVO brand or the Firefly brand, we are positioning ourselves as premium in general, and this is also a consensus among our users.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 第二点就是我们蔚来、乐道、萤火虫三个品牌一直都坚持着原创设计，还有长期主义的这样一些，包括我们的公司的一些企业的使命，这样的一些价值观，确实跟我们的目标用户群有很好的这样一个精神的共鸣。那么我觉得这也是很多用户他选择车的时候，除了看这些功能和配置以外，很多用户也在乎的地方。所以我们这种情感体验，包括我们的社区带来的这些情感体验，也成为我们的一个竞争优势，这个也支撑了我们并不需要简单地去比价格，怎么样去定价激进。因为在今天这个成本压力这么大的情况下，过低的定价其实并不带来规模优势。因为今天很多的成本是规模不经济的，比如说电池的材料，比如说铜、铝这些大宗的材料，大宗商品，它是规模不经济的，所以其实你单纯的、简单的追求量，并不能带来毛利的显著的改善。所以我们在这一点上，我们还是非常坚持品牌的定位和用户的情感价值和情感体验的创作。

Translator/English Speaker, Conference Call Translator: Also in addition, for the NIO, ONVO, and the Firefly brand, we have been insisting on the original design, we have been making long-term dedication and a commitment to our products. We also have the corporate missions and values where our users find themselves, can really identify with and resonate with all this mindset and mentality. Many users actually pursue beyond simple functions or configurations. They are more seeking for the emotion, connection, and resonance. We also have the community to create them such emotion experience. When it comes to competition, such emotion touchpoints can really create us a unique competitive edge where we don’t need to be overaggressive with the prices. Not to mention that when the entire industry is under heavy cost pressure, a low price point may not generate you scale effect or economies of scale. In that case, a low price may not necessarily translate into an advantage, especially for the rising raw material costs on the memory chips, batteries, copper, aluminum. There is no economy of scale for such components, which means that a higher volume does not translate into a good margin performance of the car.

In that case, for us, we will insist on our premium brand positioning and insist on providing our users good emotional experience.

Paul Gong, Analyst, UBS: Thanks, and well understood. My second question is regarding the potential indirect price risk under the challenge of the raw material cost inflation. Just now, Stanley mentioned cost inflates by about more than CNY 10,000. I think it’s not only your challenge, but it’s an even bigger challenge for your competitors who price their products at a cheaper price level. Under this competition and the cost inflation challenge, do you think there is any opportunity to cut some of the incentives, and indirectly raise a little bit of pricing for the industry and for yourself?

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 确实，今年整个原材料涨价，芯片，特别是内存芯片的涨价，对整个行业还是非常大的一个压力。前面Stanley也讲到了，我们其实每一辆车平均下来有1万以上的一个涨价。我们一方面保持价格的稳定，另外一方面我们确确实实也在一些折扣方面收了很多的折扣。那我想对于整个行业来说，可能都会面临同样的一些压力，而每家公司的竞争策略可能会有些不一样。前面我也讲到了，我们总体来说是保持价格稳定，保持产品服务的一个综合的竞争力。那我们可能不会把量作为最主要的这样一个经营的特点，我们会保持一个合理的量的增长，但我们更看重毛利和EBIT总体的这样一个经营的目标。所以我们会balance，但是确实每家的经营理念会有一些区别，但我们会坚持我们自己的这样一个应对材料涨价的一些方法，我们经营的这样一些模式。

Translator/English Speaker, Conference Call Translator: Thank you for the question. It’s true that the entire industry is facing the cost pressure, mainly driven by the raw material costs as well as the prices of the semiconductors, especially the memory chips. As mentioned by Stanley, the cost impact is over CNY 10,000 per car for our company. Our overall strategy is still to stabilize our prices, while in the meantime, we are also dialing back on some discounts and promotions. Facing the same pressure, different companies may have different coping mechanisms. For us, it’s about stabilizing the prices while maintaining and improving our overall competitiveness on the products and the services than just sacrificing on the margin for the sake of the volume. Our strategy is to maintain a reasonable volume increase, while keep improving our margin and the EBIT performance as those are our key business targets.

Overall speaking, different companies have different coping mechanisms and strategies. For us, we will be insisting on our philosophy and to mitigate the impact.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 在供应链方面，从去年开始，我们已经启动了一些新的合作模式，我们叫透明供应链和首选优选的合作模式。其实就是和我们供应链的partner一起去找出这种没有给用户创造价值的成本。就是我们一起去降低这样一些不创造价值的成本，还有包括一些流程。那么我们认为这里面的空间也是非常大的，在这中间去发掘出来5%到10%的这样一些没有创造用户价值的成本空间，也是完全有机会的。所以总的来说，我们今年就是通过精细化的运营，和合作伙伴一起去降低整个的成本。我们认为这个应该是可以对冲材料成本上涨带来的毛利提升。

Translator/English Speaker, Conference Call Translator: In the meantime, on the supply chain, since last year, we’ve been promoting some new models, working with our partners. One is transparent supply chain, and another is a mechanism or a principle called primary and preferred partners. In general, we work closely with our partners to identify costs and processes that are not creating user value, and we work with them to lower such costs or optimize such processes. In general, we believe that on the supply side, there should be around 5% to 10% opportunities driven by such optimization. For this year on the supply chain, we will be focusing on doing meticulous operations and management together with our partners to identify opportunities that can offset or mitigate the impact on the rising raw material cost.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Paul.

Paul Gong, Analyst, UBS: Thank you very much. That’s quite helpful. Thank you.

Operator, Conference Call Operator: The next question comes from Nick Lai with JPMorgan. Please go ahead.

Nick Lai, Analyst, JPMorgan: Okay, thank you William [Foreign language]. Thank you for taking my question. This is Nick from JPMorgan. Two simple questions. The first question is, can you give us a quick recap and quick update of our ADAS strategy?

你 earlier at the call 提到，我们的 in-house 芯片已经开始被应用在我们的部分车型上。我想了解如何快速将我们的 in-house 芯片部署到更多车型上，以及这一 ADAS 战略将如何让我们的产品在竞争中更具优势。同时，我也注意到我们的 in-house 芯片子公司在第一季度完成了 2 亿元的融资，这对于我们的财务和 R&D 有何帮助？Thank you。那是第一问题。

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 谢谢。我们NIO从芯片来讲的话，是基于我们自己的芯片。我们现在神机9031这颗芯片，它是全球第一颗特规5纳米芯片。它的推理的算力，内层带宽，ISP的能力，还有包括芯片间的互联的能力，应该说都是行业领先的。而且这颗芯片从去年3月底量产，在ET9上量产，到现在已经交付了超过25万颗了，其实它也是非常成熟的一颗芯片。所以我们现在把这颗芯片，大家也看到了，我们会用到乐道的车上面。这样的话，它的应用的范围会更加广，也对于我们去把我们整个AD的基线统一，提高我们AD的研发效率和数据闭环的能力，是非常有用的。

Translator/English Speaker, Conference Call Translator: Thank you for the question. For NIO’s in-house developed intelligent driving chip Shenji NX9031, it is the world’s first automotive-grade chip of a five nanometer process. It comes with the industry leading capabilities in inference, data bandwidth, ISP performance as well as the interchip communications. It was first mass produced on the NIO ET9 in last March. To date, we have already shipped more than 250,000 pieces of these chips to our products. The chip solution itself is already pretty mature. Earlier, we have also introduced this chip to the ONVO NIO products starting with L90S. By introducing this to the ONVO brand, we can also merge the autonomous driving or ADAS software baseline, improving the overall R&D efficiency, as well as enhance their data closed loop capabilities.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 我们目前来看的话，下半年应该80%或者80%以上，我们的车都会搭载我们自己的芯片。那么从AD的特点角度来讲的话，我们现在看到了我们的世界模型，加上闭环强化学习的这个方式，它的上限是非常高，而且它的效率也是非常高的。事实上我们仅用了同行可能20%左右的这种云端的训练的算力，就实现了比现在绝大部分的同行都更好的这样一个自驾的体验。从我们最新的版本的角度来讲，现在用户的口碑非常的好。那么我们今年还有两次比较大的迭代，所以方向上来讲，我们现在对我们整体上AD的这个技术路线还是非常有信心的，它的上限还是非常高的。那当然从商业模式上来讲，我们还是会坚持订阅的这个模式，我们也非常高兴地看到，其实从这两年吧，我们在ADAS的订阅方面的收入还是持续地在上涨，所以在我们的服务与社区收入里面，它长期来说会成为我们非常重要的一个增长点。所以我们现在虽然对于新的用户，首任车主，我们有五年或者说更多的时间的赠送，但是我们对于二手车的用户，我们是在收取他的订阅的费用，所以这方面的收入其实也是在持续地在增长。所以总体上AD我们已经完成了从芯片、模型、数据闭环到商业模式总体的这样一个闭环。我们还是非常高兴看到这个方向是对的。当然这个神机的融资也非常地顺利，它当然会给我们研发下一代的芯片，或者说成本更低的芯片，那肯定是有帮助的，能对我们的研发费用是非常好的一个刺通。

Translator/English Speaker, Conference Call Translator: In the second half of this year, we believe that more than 80% or 85% of our cars will be equipped with our in-house developed smart driving chip. In terms of our AD solution and AD roadmap, as you see that starting this year, we are moving to the architecture featuring our new World Model plus the closed loop reinforcement learning, it has great potential for the continuous development and iterations as well as good efficiency, because we are only using 20% of the cloud computing power in comparison to our competitors or peers to achieve the same level or even better smart driving experience and performance. With this major version and upgrade, our users actually all speak highly of the smart driving experience. Later this year we will have another 2 major upgrades.

We are quite confident with the overall AD performance as well as its growth potential. In terms of the business model for the ADAS, we will continue our subscription services and the business model on the ADAS, as it will also become a very important revenue driver among our other sales revenue, mainly based on the services and also community related businesses. Right now we are offering free subscriptions to some early users or new users, but for the used cars, they will have to pay for the ADAS subscription. For the long term, we see the potential in that. In terms of our AD solution, we have already completed the entire chain from the chip to the model and architecture to the closed-loop data as well as the business model.

In terms of the Shenji and the recent financing, of course, a smooth financing driven by the Shenji chip business can also give us more resources and the flexibility in developing our upcoming chip products, especially chips that are more affordable.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Nick.

Operator, Conference Call Operator: Next question comes from Xueqing Zhang with CICC. Please go ahead.

Xueqing Zhang, Analyst, CICC: Hi. Thank you for taking my question. Congratulations on our robust profit in the first quarter. My first question is about ONVO. We see that L80 has officially launched this month. How do you see from the market feedback on the orders? We see competition currently. How will the L80 overcome the new vehicle effect? Which means we see some new models have quite large orders in the beginning, but later they will encounter a sharp decrease. What’s our expect on the L80’s sustainable monthly sales performance? For the overall ONVO brand, what’s our strategy to be employed to enhance the brand awareness for ONVO in total?

Translator/English Speaker, Conference Call Translator: Thank you for the question. For the Onvo L80, we believe it’s a defining and also revolutionary product in the large five-seater SUV segment. In general, the market size for the five seat SUV is three times of that for the three-row SUV segment, which means that for the L80, it is being able to tap into a greater and broader market than the L90. Since the official launch of the Onvo L80 on April 29th, we actually have received the positive feedback both from the media as well as from the users who test drove the vehicles, and its order intake is also meeting our expectations. Regarding the target users of the Onvo L80, actually, the car can cater to a pretty wide range of user groups, including young couples with one kid, families with pets, or families with kids that are already grown up.

For the Onvo L80, we believe that its core competitiveness still is powered by the technology as well as its overall product performance, including how it has reimagined the space and as well as all this lifestyle and scenario based solutions. We believe that the Onvo L80 will drive the entire large five-seater SUV segment into the BEV era, just like how L90 and the ES8 did with the large three-row SUV segment.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 对于乐道的品牌知名度提升还是非常有用的。另外我们也还是在我们一线的同事更积极更主动地去拓展客户，走出门店去拓展客户，更多地去让用户来试驾，通过这样的一些看起来比较笨，但是也是我们在推行的那些方法，让更多的用户了解我们。所以这确实需要一个过程。好的地方就在于一旦了解乐道，它的转化率还是非常高的。

Translator/English Speaker, Conference Call Translator: Right now for the ONVO brand, the major challenge is still because of its overall brand awareness. Since after all, ONVO has just started its delivery for around 20 months. We’ve also done this study on the ONVO’s awareness. Its current awareness is basically on par with the awareness of a new brand in the year of 2020. To raise its brand awareness, we are also taking different approaches so that more people will be able to know about the brand. For example, we have collaborated and invited some celebrities to promote our products and events, where many of the celebrities have good reach among the target users of ONVO. We are also asking our frontline colleagues and teams to really go into the fields to go door to door to promote our products and invite users for the test drives.

It takes a lot of effort, but it is also taking effect. Overall speaking, it takes time to really establish and build the brand awareness on the ONVO. The good thing is that once the public or the users know about the brand, we have a pretty efficient conversion from knowing about the brand all the way to the order placement.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you.

Xueqing Zhang, Analyst, CICC: Thank you. Thank you. My second question is regarding to the other sales. We have seen that the gross profit margin of other sales has a significant improvement in the first quarter to above 20%, which I think is a historical high. Could you quantify the main drivers behind this margin growth? Is there any one-off effect? Provide us maybe some outlook on the trend this year.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 其他业务包含我们售后、维保、车商城、能源、金融、NIO Life，所有在内的服务和社区的相关的业务。其实从去年四季度开始，我们服务和社区相关的业务在经营结果上其实有了大幅度的提升。在一季度，我们实现了超过20%的这些其他业务的毛利率，这里面基本上没有乐道的影响。那主要的提升的因素一个方面是因为蔚来也是一直致力于我们的品牌建设，给我们的用户带来超越期待的全程体验，所以这样高的用户粘性和付费意愿，其实让这里面包括我们的售后服务，包括我们的车商城，包括NIO Life等业务，其实用户的付费意愿是非常高的，然后利润也在持续地提升。另一方面，我们也在持续地去提升我们的效率，尤其是能源业务，我们单站运营的成本也在不断地优化。另外，像能源方面的效益，包括像错峰、电网服务、电力交易等方面的这样的效益也开始显现。

Translator/English Speaker, Conference Call Translator: Thank you for the questions. Regarding other sales, it mainly includes after-sales services, service and maintenance, accessory e-shop, power services, and also NIO Life merchandise. We’ve been witnessing significant improvement in the after-sales performance and also financial since Q4 last year. In Q1 this year, we have achieved over 20% other sales margin. With this result, there was no one-off impact. The key drivers of the improvement in other sales margins, mainly because first of all, NIO the entire company has been committed to establishing these brand connections with our users and to deliver holistic experiences throughout the life cycle of the products that can go beyond their expectations. With that, we have a very strong user stickiness and also a strong willingness to pay for these premium services.

For example, after sales services, the accessory e-shop, and the NIO Life products all have actually are popular among our users, and they also generate good results. Secondly, we’ve been improving the overall efficiency of such services, especially power services for the operating CAPEX, where operating cost per station, we’ve actually achieved quite significant improvement. Thirdly, we are also leveraging our energy and power services by doing off-peak charging and also great interactions and also electricity trading to be able to also generate good results.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 这是我们其他业务的一个转折点，也意味着我们服务和社区相关的业务进入到一个新的阶段。那从一个全年的目标上来讲，我们也是希望今年整体能够保持在一个20%左右的一个毛利水平。

Translator/English Speaker, Conference Call Translator: With that, we believe that our other sales, mainly our services and community-related businesses, are also embracing an inflection point and entering into a new phase of development. For the full year 2026, we have the target for a 20% other sales margin.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 当然从一个更长的时间来看，随着我们的用户保有量的持续上升，随着我们这个效率的提升，那我相信我们其他业务，也就是我们这个服务和社区的相关的业务的这个盈利能力也会持续的提升，也会成为我们未来在除了新车之外的一个重要的增长点。

Translator/English Speaker, Conference Call Translator: Going into a longer term, as we continue to increase our user base and also the efficiency of such services, we believe that the profitability of other sales, as mentioned, services and the community related businesses, will also continue to improve. In the long run, in addition to the new car sales, other sales will also become a very important and the key driver for our sustainable growth.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Changneng.

Translator/English Speaker, Conference Call Translator: Thank you.

Operator, Conference Call Operator: The next question comes from Yuqian Ding with HSBC. Please go ahead.

Yuqian Ding, Analyst, HSBC: Thank you. Qian here. Conscious of the time, I’ve just got one question. Regarding the second half, could you talk a bit more about the new car plan other than the current new models ramp up into second half? What’s the biggest expectation in second half? Could you share the ES7’s timeline and position among the current big-sized premium SUV pack you have? Thank you.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 下半年我们主要要上市的产品，新产品就是我们这个全新ES8的五座版，这就是我们最主要的产品。所以下半年我们主要的精力都是好好卖车，好好服务用户。

Translator/English Speaker, Conference Call Translator: Thank you for the question. In the second half of this year, the major new product we are going to launch will be the five-seater version of the all new ES8. In addition to that, our primary focus in the second half will be dedicated to selling cars and also serving our users well.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Yuqian Ding.

Operator, Conference Call Operator: Operator, next in the line, please. The next question comes from Joey Yang with Bank of America. Please go ahead.

Joey Yang, Analyst, Bank of America: Thank you management for taking my questions. I also have one question on your Battery Swap Station. Can you talk about what are the target number of your Battery Swap Stations and also the targeted utilization rate by end of this year? When will the Battery Swap Business achieve profitability on a standalone basis? Thank you.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: 所以就是换电，我们现在的话，高峰期的话呢，大概平均一个站可以到四十五次左右吧，高峰的时候，单站每天。像节假日的时候，但平日要少一些，平日大概三十多次。那么短期内我们还是会把网络的布局做成高的优先级，所以今年我们全年还是会部署超过一千座换电站。那么我们的五代站，在不远的在三季度就开始大批量地开始部署。从方向的角度来讲的话呢，我们换电站的这个盈利能力啊，这个经营状况肯定是在持续在改善，但是短期内我们还是会保持一个超前的、提前的投入。短期内盈利还不是我们的主要目标。那另外我们还是也强调一下，我们包括换电站在内的服务与社区收入是已经实现了盈利，所以总体上来讲呢，我们是有足够的这个资源去支持换电网络的建设。

Translator/English Speaker, Conference Call Translator: Thank you for the question. For our Power Swap Stations, at its peak, mainly during the holidays or busy hours, on average, each station can deliver around 45 swaps per day. On the average days, it’s around 30 swaps per day. For the short term, our focus will still be on rolling out and expanding our power swap network. This year, our target is to build a total of more than 1,000 Power Swap Stations. Especially starting Q3, we will be able to roll out our fifth generation Power Swap Station at the scale. In the meantime, we are continuously improving the operational efficiency of our Power Swap Stations. For the short term, we will still need to make up front investment and early deployment of Power Swap Stations. For the short term, the profitability of the power swap network is not our primary focus.

I would like to mention that for the services and community related businesses, basically other sales, it has already achieved profit. The power swap business is also included in that part of the profit, which means that we will have resources to sustain the continuous expansion of our swap station network.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you, Joey.

Joey Yang, Analyst, Bank of America: Thank you very much. That is very helpful. Thank you.

Operator, Conference Call Operator: There are no further questions. I’d like to turn the call back over to the company for closing remarks.

William Li, Founder, Chairman of the Board, and Chief Executive Officer, NIO Inc.: Thank you again for joining us today. If you have further questions, please feel free to contact NIO’s IR team through the contact information on the website. This concludes the conference call. You may now disconnect your line. Thank you.

Operator, Conference Call Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.