Q2 2023 NIO Inc Earnings Call

August 29, 2023

Hello, ladies and gentlemen, and thank you for standing by for the Neo Incorporated's first quarter 2023 earnings conference call.

Speaker 1: Hello ladies and gentlemen and thank you for standing by for the Neo Incorporated First Quarter 2023 Erning's Conference Call.

Speaker 1: At this time, all participants are in a listen only mode. Today's conference call is being recorded.

At this time all participants are in a listen only mode.

Today's conference call is being recorded.

Speaker 1: I will now turn the call over to your host, Ms. Eve Tang, from Capital Markets. Please go ahead.

I will now turn the call over to your host Ms Chang from capital market.

Please go ahead.

Speaker 2: Good morning and good evening, everyone. Welcome to the news of second quarter, 2023, earnings conference call. The company's financial and operating results were published in the press release earlier today, and I posted at the company's I.O. Web.

Good morning, and good evening, everyone welcome to the news of second quarter 'twenty two 'twenty three earnings conference call. The company's financial and operating results were published in the press released earlier today and are posted at the company's IR website.

Speaker 2: On today's call, we have Mr. William Lee, founder chairman of the booth and chief executive officer, Mr. Steven Bon, chief financial officer, Mr. Stanley Trude, senior VP of Finance, and the Miss Jade Guay VP of Captain Mark.

On today's call we have Mr. William Li founder Chairman of the Board and Chief Executive Officer, Mr. Steven Boal, Chief Financial Officer, Mr. Stunning Truitt senior VP of finance and MS. Jade Wei VP of capital markets before we continue please be kindly reminded that today's discussion.

Speaker 2: Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements that made under the safe harbor provisions of the U.S. Private Security's litigation reform act of 1995.

<unk> will contain forward looking statements that are 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.

Speaker 2: 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 certain filings of the company with the U.S. Securities and Exchange Commission's

The views expressed today.

Information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and Exchange Commission.

Speaker 2: The stock exchange of Hong Kong limited and the Singapore exchange of securities trading limit.

Top exchange off of Hong Kong Limited and the Singapore Exchange of Securities Trading limited the company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Speaker 2: The company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Speaker 2: Please also note that news earnings price release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

Please also note that new the earnings press release and this conference call includes a discussion of all audited GAAP financial information as well as all audited non-GAAP financial measures. Please refer to our news press release, which contains a reconciliation of the unaudited non-GAAP measure.

Speaker 2: Please refer to the news press release, which contains a reconciliation of the unordered non- GAAP measures to comparable gap-

<unk> to comparable GAAP measures with that I will now turn the call over to oversee OOO. Mr. Windley William Please go ahead.

Speaker 2: With that, I will now turn the call over to Overseo, Mr. William Lee. William, please go ahead.

Speaker 3: Dear viewers, I appreciate your quienes rebet you had 2020.

Idaho is sometimes it turns out we like all in my opinion, yes, keto diets he couldnt Lee.

Hello, everyone. Thank you for joining meals 'twenty two 'twenty three Q2 earnings call.

Speaker 3: In the second quarter of 2023, NEO delivered a total of 23,500 and 20 smart electric leads.

Yes.

Yeah, well I think it's helpful. Young one sentence about Atlanta bolt on for them getting them. She took in the second quarter of 'twenty to 'twenty three nil delivered a total of 23500 on the 20th Smart electric vehicles.

Speaker 3: with China CyberERO-BSCI Research clients. Ok, turn it back over to me. and I hope to see you in the next session.

So it's all good.

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What do you like that to go out and Georgia, Pennsylvania Sound, a golden Tyndall she's supposed with them I mean do you see the time from the adult patterns almost a joke.

Speaker 4: In July 2023, as we started mass production and the ramp up of more new models, new monthly delivery volume grew rapidly to 20,462 units, representing a year-over-year growth of 104% and a new monthly high. According to the retail statistics,

In July 'twenty to 'twenty, three as we started mass production and the ramp up of more new models, New York, mostly delivery volume grew rapidly to 20462 units representing a year over year growth of 100, and a 4% and a new monthly high.

Crawled into the retail statistics off called Park in July you know it was the best selling brand in the premium electric vehicles stockman, whereas our transaction price of over RMB 300000, claiming a 15% market share.

Speaker 2: In July , NIO was the best-selling brand in the premium electric vehicle segment, with a transaction price of over B300,000, claiming a 59% discount.

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Speaker 2: As NIO completes its product lineup, further expands the self and service network and the power network, enhances its all-round self capability and rolls out self and the marketing plans. The competitiveness of the NT2 products have been further unleashed. The delivery volume in the third quarter of 2023 is expected to be between 55,000 and 57,000 units.

As new completes its product lineup for their expense, the south and service networks and the power of network enhances its all around self capability and the rolls out the south and the marketing plans. The competitiveness of the untreated product has been further unleashed the delivery volume in the third.

Order of 'twenty to 'twenty three is expected to be between 50050 5050 thousand installed in units.

Speaker 3: Thank you for your attention.

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Speaker 2: And now I would like to share with you the recent highlights of our products, R&D and operations.

And now I would like to share with you the ways and highlights of our product R&D and operations.

Speaker 3: We saw emptied out all the information, cable gardening Type 1 matters. In March, 18 ph antagonists introduced dance dance heavy hype activity During May, theyFeatured the SD Ah s Hero X Thank you.

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Speaker 2: Following the delivery of the flagship COOPETSUV EC7, the flagship sedan 2023 NEO ET7, and the all-round SUV on-your-yes-6 earlier this year, we started to deliver the smart electric tour ET5 touring or ET5T for short, and the flagship SUV on-your-yes-8 in June .

Following the delivery of the flagship Coupe SUV you see seven the flagship sedan in 'twenty to 'twenty, three new E T seven and to be all around as you'll be all new yes. Six earlier. This year, we started to deliver the smart Electric tour E. T five touring or E. T. Five T for short and the flagship.

I used to be all new yes, eight enjoy it in.

Speaker 2: In the second quarter, new achieved high quality delivery of five new models with user satisfaction exceeding our expectations.

In the second quarter, new achieved high quality delivery of five new models, but you also satisfaction exceeding our expectations.

Speaker 2: This also proves new capabilities of conducting first product iteration and the managing product complex.

This also proves newest capability of conducting fast product iteration and the managing product complexity.

Speaker 3: Well I do my video. We far her jobful changes and give the Jun job how I you you, Ser o went. We took him had a chambl time in chap at well, at a backward time in junp chaens will go down. Dances are home and to go down. How you put a to watch we show, don't he, Jo put the wood.

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Speaker 2: In September , we plan to launch and deliver the new Meetify's Coupe As UV EC6, which marks the completion of our project transition to the NG2 class.

In September we plan to launch and deliver the new meat. Besides Coupe SUV, you say six which marks the completion of our product transition should be until two platform with that news entire entry to product lineup featuring eight different models will have entered the premium VEB Mark.

Speaker 2: With that, news entire NT2 project line up featuring eight different models will have entered the premium BED marketing.

To better cater to the diverse needs of the users in the premium segment and to drive the steady growth of deliveries.

Speaker 2: to better cater to the diverse needs of the users in the premium segment and drive the static growth of delivery.

Speaker 3: The future of the product-based security system is the high-end market market. In February of 2023, the Chinese New Year's Eve is the first to be launched. The first to be launched in China, the S.U.V.E.L.T. in the Chinese market called ESC. The S.U.V.E.L.T.S. will be able to secure the security level of the European Union and will be able to secure the U.S.N.C.P. and the U.S.N.C.P. The U.S.N.C.P. will be able to secure the U.S.N.C.P and the U.S.N.C.P and will be able to secure the U.S.N.C.P. and the U.S.N.C.P.

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Speaker 2: Newt's product safety has been highly recognized by authoritative institutions worldwide.

News product safety has been highly recognized by all sorts of institutions worldwide on July 12, 2023, new smart electric meter sites sit down and eat your five and the meat a large SUV E. All southern which is called E. S. Southern in China, both obtained the five star safety rating.

Speaker 2: On July 12, 2023, news smart electric mid-flight sedan ET5, and the mid-large SUV EL7, which is called ES7 in China, both obtained the five-star safety rating from Euro and Cap.

King from Euro and cap, making you the first part Bryant receiving the five star rating since Youre uncapped adopted the new testing protocols for 'twenty two 'twenty three so now so the phone yet she trends on C&I bundle done them near close to GBP, one without using too much into that.

Speaker 2: Making new the first car brand receiving the five star rating since Euro NCAP adopted the new testing protocols for 2021.

Speaker 3: Development lessons with power and canal input Multi- ? liberation assessment plants

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Speaker 3: Ennemies selfishity had a long network of emission-houses on the health programs. The Internet source of streaming income from a needs warning.

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Speaker 2: Enabled by the FUSTAG technologies developed in-house and the closed-loop data management, NIO has made significant progress in the assisted and intelligent driving. User-based and engagement continue to grow. At present, over 100,000 new users have activated Medicaid-unpilot plus or NOPE plus and have driven on it for over 80 million kilometers.

Enabled by the full stack technology developed in house ended up close to loop data management. Neil has made significant progress in the assisted and intelligent driving user base and engagement continue to grow.

At present over 100000, new users have activated navigate them pilot plus or no P plus and habit driven on it for over 80 million kilometers.

Speaker 2: The mileage penetration rate of NOP plus has reached 53%.

<unk> penetration rate of N O P. Plus has reached 53% in the meantime, we have carried out multiple rounds of early bird program in Beijing, and Shanghai for N O P plus in all operational domains, including urban environment, So those who I love them, yet here's the more churn boho quite well known kyprolis.

Speaker 2: In the meantime, we have carried out multiple rounds of early bird program in Beijing and Shanghai for NLP plus in all operational domains, including in urban environments.

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I believe you got something to tell.

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Okay. So well continue to pull down your old school, yet because it's also true, though continue because I'm sure I'm going to show to a put and take the hit you took down some of them they chose to pay them and show them that themselves.

Speaker 2: In terms of the SELC and service network, so far we have 420 new house, new space, and pop-up stores in 143 cities and 304 service centers, as well as 58 delivery centers in 211 cities worldwide.

In terms of the Salt and service network. So far we have 420, new house, new space and the pop up stores in 100, and a 44 cities and 304 service centers as well as 58 delivery centers in 201 cities worldwide.

Speaker 2: Since July , we have started to take a more active manner in expanding the user touchpoints and sales channels and enlarging the sales team in China.

Since July we have started to take a more access manner in expanding the use of touch points and sales channels and enlarging the south team in China. This action as well for the increase our self capabilities and proposing south growth someone else all of them yet he has them on churn well then shouldn't do you didn't lose you put your your chance.

Speaker 2: This actions will further increase our self-capabilities and the propelling

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Well I'm, an attorney and Heath, who touch and show you some pause on the 20th Gung Ho about your bets on the long term.

Speaker 2: As for the charging and swapping network, to date, we have installed 1,747 power swap stations worldwide and provided more than 27 million battery swaps. Our Expressway battery swap network in China consists of 476 swap stations along the 10 major Expressways connecting 68 major CD.

As for the charging and swapping network to date, we have installed 1740 southern power swap stations worldwide and provided more than 27 million Bachelorette swaps. Our expressway battery not battery swap network in China consists of 476 swap station along the <unk>.

Major expressways connecting 68 major cities.

Speaker 2: We've also deployed over 7,000 and my 100 power chargers and the my thousand and the 700 destination chargers.

We've also deployed over 7000 and in my Hunter Power Chargers, and then I saw that in its 700 destination charges Neil has become the automotive Brian that the most public charters and the most of the charterers along suppress waste in China.

Speaker 2: NIO has become the automotive brand with the most public chargers and the most chargers along expressways in China.

Speaker 2: In the meantime, News Charging Map has connected with over 1.36 million third-party chargers worldwide.

Meantime, Niels charging them up has connected with over one 6 million third party charters worldwide. She honestly the way that country cancelling claussen, who.

Cool, Okay younger children couldn't even put against somebody who manto conclusion.

Speaker 2: On July 20, NIO announced the flexible battery upgrade service by day, providing users with more options and fulfilling more use cases.

On July 20th you announced the flexible battery upward serviced by day, providing users with more options and fulfilling more use cases.

Neil.

Somebody like US you won't see I don't see annual whaler young children somewhere near the Sunday ticket.

Sure.

Speaker 2: In July , we organized the host city election for New Day 2023, and the city of CN was voted by new users as the host city this year.

In July we organized the host city election for Neo during 2023, and the city of Xian was voted by new users as the whole of the C. D. This year by us as well on the shares of tableau Tableau F. She didn't suncor doesn't run nordson Sentosa Coyote once we turned that it would be somewhere around 20 and trunk and then launch.

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Speaker 3: ?National Government Administration Station 3 Meetings Level 16 forpaying andaperENT?

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Who knows we'll work on putting some time some will go down but we can do so without going into until you see the churn so wouldn't communication blue Sky Communist country.

Speaker 2: On August 20th, we partnered with Worldwide Fund for Nature and Gilea Mountain National Park in installing the world's first photovoltaic self-consumption system with V2G capability. It features solar power stations, V2G chargers and battery electric leads.

On August 20th we partners, whereas worldwide font for nature, and Chilean Mountain National Park in installing the wards first photovoltaics self consumption system, whereas b to G capability, if be trusted solar power stations, which would you Chargers and battery electric vehicles. Moreover, we initially.

Speaker 2: Moreover, we initiated the Clean Parks Citizen Scientist Program to engage more users and the public in conserving biodiversity and supporting the establishment of a volunteer system for national parks in hope of striving for a shared vision.

The Queen Parks citizen scientists program to engage more users and the public in conserving biodiversity and supporting the establishment of a volunteer system for National Parks in hope of striving for a shared a vision of Blue skies, Southern Sudan from here out into out exactly who she's had a totally G go see but.

Speaker 3: Students am ia ent show out she to go say by she things, youngh parts localgood nan of F. my ton of giveia three may run TA to pin down like what with ING H an.

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So let them do it see maybe I understand it who's been downside, we like what deal without incentives.

In July you'll receive the strategic equity investments from five on holdings.

Speaker 2: In July , Neil received the strategic equity investment from Simon Holdings.

Speaker 2: an investment vehicle majorly owned by the Abu Dhabi government. The investment package totaled $1.1 billion. In addition, we will also cooperate with a new strategic investor to jointly pursue opportunities in our international business.

Investment vehicle, but majorly owned by the arbitrage because much of the investment package totaled $1 1 billion in U S. Dollars. In addition, we will also cooperate with the new strategic investor to jointly pursue opportunities in our international business.

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Southern yellow suit hump yards, yet to see that.

Speaker 2: Although the smart EV market is full of challenges and the competition is increasingly fierce, with our continuous efforts in core technology.

Although the smart EV market is full of challenges and the computation is increasingly fierce with our continuous efforts in core technologies product portfolio, south capabilities manufacturing and logistics, we are fully ready to rise to the challenge, we believe that with focused marketing and social strategy.

Speaker 2: Project portfolio, self-cababilities, manufacturing and logistics, we are fully ready to rise to the challenge.

Speaker 2: We believe that with focus to marketing and the self-strategy as well as the execution, Neil can drive the static growth of self and the deliveries. Well, for their optimizing the cost structure and enhancing operating efficiency on all fronts.

As far as the exact fusion Neil can drive the steady growth of south and the deliveries well further optimizing the cost structure and enhancing operating efficiency on all fronts. We look forward to New York strong market performance in the second half.

Speaker 2: We look forward to a new strong market performance in the second half.

Speaker 3: Thank you for your support. Now rising.

Yeah.

And that's stephen's done with that yet.

Oh yeah.

Steven.

Speaker 2: As always, thank you for your support. With that, I will now turn the call over to Steven, who will provide the financial details for the second quarter. Over to you, Steven. Thank you, we did. I will not go over our key and I will resolve. But the second call draw of the industry.

As always thank you for your support with that I will now turn the call over to Stephen who will provide the financial details for the second quarter over to you Steve It doesn't get rid of them.

I mean I'll go over our key financial results for the second quarter of industry.

Speaker 5: And to remind for the lens of the call, as a reference to R&B only in my discussion.

And to be mindful of the length of the coal.

Reference to RMB only in my discussion today.

Speaker 5: are in carriage dismissed to refer to our audience press release, which is post online for additional details.

I encourage listeners to refer to my priorities press release, which is supposed to online for additional details.

Speaker 5: Our total revenues in technical quarter were 8.8 billion R&B represented the increase of 40.8% over a year, and a decrease of 70.8% the quarter of quarter. Our total revenue was made up two parts.

Our total revenue you're taking the cold hard work.

He'd been the RMB, representing a decrease of 48% over a year and a decrease of 78% of culture.

Our total revenue would have been up to par.

Yes.

In other sales.

Speaker 5: We can see all the technical quarter were 7.2 billion RRB represented the increase of 24.9% year over year and 22.1% of quarter over quarter.

The second quarter were $7 2 billion RMB represent a decrease of 24, 9% year over year, and 22, 1% quarter over quarter.

Speaker 5: that decreed in vehicle sales over a year, while the minute due to lower average selling price, the result of higher proportion of the five, and 75 kilowatt hour standard range battery pack deliveries, and decreed in delivery volume.

Crane and vehicles.

A year like if you didn't do too well.

Selling price are the result of a higher proportion of two five.

And 75, because a lot of our worst than the range battery pack deliveries and the crane and deliberate boardroom.

Speaker 5: The Decraight in Vehicle Sears Cauter of a Quotra has a minute due to a decrease in Deliver Boyle.

The decrease in vehicle sales.

Culture.

Mainly due to a decrease in deliver boardroom.

Speaker 5: Cutter sales in the second quarter were 1.6 billion RBs, revisiting a craze of 1.199% over a year, and 9.3% the quarter of a quarter.

I don't see them in the second quarter were <unk>.

But 6 billion RMB.

Or if there's an increase of 191, 9% year over year and 3% quarter over quarter.

Speaker 5: The increased sales over a year, while the minute you do the increase in sales of use cards, accessories, and professional power solutions, are the result of continuing to grow.

The encouraging honest tea all year over year market due to the increased sales of used car extra three and provisional popular shows otherwise.

God of continued growth of our users.

Speaker 5: The increased other sales quarter of a quarter was a minute due to the increase in sales of youth cars and for very powerful solutions as a result of continuing new growth of our youth.

The inquiries now how does feels quite of a coker was mainly due to the increase in sales of just cost and provision of power solutions. As a result of continued growth of our users.

Partially offset by decreased revenue from provision of auto finance and therapies.

Speaker 5: partially offset but decreed in revenue from provision of auto-financiate service.

Speaker 5: Broad smart in second quarter of consumer three was 1.0%. Compared with 3.0% in the second quarter of consumer two and 1.5% in the first quarter of consumer three. 2.0% in the second quarter of consumer three.

Gross margins, taking a courthouse continues three months.

One 1% compared with.

All persons in the second quarter of two and a warm Fox spanning first called her off continues III.

Legal Marty in the second quarter was.

Six 2% comparable was 16, 7% as Texas corridor, the tea and the final 1% and for us caught up to the mystery.

Speaker 5: compared with 16.7% in second quarter of continued 2, and 5.1% in first quarter of continued 2.

Speaker 5: the decrees in vehicle margin over year. While the many attributed to changes in product mix.

That's crazy vehicle margin year over year.

One of the many attributed to changes in product mix.

Speaker 5: time for the rest of the course. Plays

Cost offset by the crazy about freight cost per unit.

Speaker 5: The increased in vehicle margin in part of plotter are diminu posible to decrease promotion outcome.

Increase in vehicle margin quarter on quarter.

He went there to Detroit promotion discount.

Speaker 5: Pre-verse generation of S8, S6, and it is...

The previous generation.

Hey, yeah. Thanks.

And if it sticks.

Speaker 5: Are an extension in second quarter were 3.3 billion RMB, which is an increase of 55.6% over a year, an increase of 8.7% of quarter of a quarter.

Arnie.

In the quarter were three soybean there wont be refused.

So if there's an increase of two.

It was five 6% a year over year.

Increase of eight 7% quarter over quarter.

Speaker 5: The increase in research and development expenses year over year and quarter of a quarter, while the meeting actually gets to first, the increased personal cost.

Increasingly research and development expenses year over year and quarter over quarter like I mean, I forget too.

The increase in personal cost.

Speaker 5: Armly functions and increased share debates and massaging consensus recogular in the technical order of?omy.

Our R&D function and increased share based compensation expenses.

Launched in the second quarter often dmitry.

Speaker 5: and second, the incremental design and development cost for new products and technology.

Second the incremental design and development costs for new products and technologies.

Speaker 5: S Genics and Sets in Section Quarter were to put non-mini-rb, represented an increase of 25.2% over a year, and increased up 16.8% of quarter-court.

SG&A expenses in second quarter were.

No I'm, you know lumpy represent an increase of 22% year over year, an increase of <unk>.

68% quarter on quarter.

Speaker 5: The increase in estgenics has been over a year and a quarter. But the primary is to first, the increase in personal costs related to sales functions. Second, the increase in sales and marketing activities. Increase the launch of new products.

The increase in SG&A expenses year over year and call. It a culture, that's primarily due to.

First the key.

Grace you personal cost related to cell function second the increase in sales and marketing activities, including the launch of a new Park <unk>.

Speaker 5: At third, increased rental and related expenses, related companies, sales, and service, now working expand.

Third increase of rental and related expenses related to the company's sales and service expansion.

Speaker 5: Plus, the operation in the second quarter was 6.1 BNRB, which is an increase of 17.5% in your year, an increase of 18.8% of the quarter quarter.

Loss from operation in the second quarter was $6, one b not b or even increase.

100.

Fox spending year over year increase of eight 8% a quarter of a culture.

Speaker 5: Let last, in a second quarter was 6.1 billion RB, revealing increase of 119.6% over year, and increase of 27.8% quarter of a quarter. Our...

La.

Second quarter was $6, one being a hobby lobby and an increase of 119, 6% year over year, an increase of 27, 8% quarter over quarter.

Our bass cash and cash equivalents restricted cash short term investment lung coupons all day long.

Speaker 5: Restrict cash, short-term investment, and long-term fund for the world.

Yes.

Speaker 5: . Now, this concludes...

I mean, one thing Bob you know I'll be.

As of June two Sarkies mystery.

Now this concludes our prepared remarks.

Speaker 5: I was now trying to pull over to the operating chart to first meditate our current A session.

Now I'll turn the call virtually all pretty talk to facilitate our kind of discussion.

Yeah.

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Okay.

Speaker 1: And the first question will come from Ben Wong of Credit Suites. Please go ahead.

And the first question will come from Ben Wong of Credit Suisse.

Please go ahead.

Speaker 5: Thank you. My question about your sales network structure. Recently, I heard you hire a few of the sales persons from other luxury brands such as the BMW, Mercedes and Audi. So what's the reason you hire the non-neil sales person recently and how is the impact so far for your sales model increase?

Thank you my question is about yours.

Network structure recently I saw you had a few.

The person from our luxury brand conscious that didn't stop there.

Unknown Executive: Hello, ladies and gentlemen, and thank you for standing by for the NIO Incorporated First Quarter 2023 Erning's Conference Call. At this time, all participants are in a listen only mode. Today's conference call is being recorded.

So what's the reason you Howard.

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Impactful from oil sales volume increase we also oh not in your third quarter guidance, you're actually employ it in the August September September will be lower compared to Tonight, So kind of what's the lead time just.

Speaker 5: We also found that in your civil court guidance, you actually improve in August and September , September will be lower compared to July . So, Kendall, what's the reason behind this because any departure issue? Thank you so much.

Eve Tang: I will now turn the call over to your host, Ms. Eve Tang, from Capital Markets. Please go ahead.

Because I mean, the pace issue. Thank you so much.

Eve Tang: Good morning and good evening, everyone. Welcome to the NIO's second quarter 2023 Erning's Conference Call. The company's financial and operating results were published in the press release earlier today and posted at the company's IR website.

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Eve Tang: On today's call, we have Mr. William Lee, founder Chairman of the Boat and Chief Executive Officer, Mr. Steven Feng, Chief Financial Officer, Mr. Stanley Trude, Senior VP of Finance and the Miss Jade Guay VP of Capital Markets. Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements that made under the say-pubber provisions of the U.S. Private Security's Litigation Reform Act of 1995, forward-looking statements involve inherent risks and uncertainties.

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Eve Tang: As such, the company's actual results may be materially different from the views expressed there today. Further information regarding risks and uncertainties is included in certain filings of the company with the U.S. Securities and Exchange Commission. The stock exchange of Hong Kong limited and the Singapore exchange of securities trading limited. The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that news earnings of press release and this conference call include discussions of un-audited gap financial information as well as un-audited non-gap financial measures. Please refer to news press release which contains a reconciliation of the un-audited non-gap measures to comparable gap measures.

Speaker 3: If this has no robbers understanding these complaints, it is consideredtaailleurs based on other suburbages whose arinoid mansweise, that has gained no interest in the government, even if we didn't balancer directly into public mass media...

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William Li: With that, I will now turn the call over to Overseo, Mr. William Lee. William, please go ahead. Hello, everyone.

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William Li: Thank you for joining Neil's 2023 Q2 earnings call. In the second quarter of 2023, Neil delivered a total of 23,500 and 20 smart electric vehicles. In July, more new products and products are being sold out. In July, 2,462,000 electric vehicles can be sold out of 1004,000 electric vehicles. In July, 30,000 electric vehicles can be sold out of 1004,000 electric vehicles. In July 2023, as we started mass production and the ramp up of more new models, Neil's monthly delivery volume grew rapidly to 20,462 units, representing a year-over-year growth of 100 and 4% and a new monthly high.

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Speaker 2: Well, thank you, Bingwang, for your first question, actually around June , we have realized that inside of the company, in terms of the number of ourselves persons, as well as the capabilities of the selling products, we are locked behind by the competitors in the market. For example, for those luxury brands like BMW or Mercedes, the size of their sales team is six to seven times of hours.

Well. Thank you well for your first question actually a round two and we have a real life. That's inside of the company in terms of the number of hours South person and that's why I asked the capability yourself to selling products. We are left behind by the competitors in the market for.

For example for those luxury brands like BMW and Mercedes are the size of their sales team is six to seven times off hours without sufficient in person our touch point, we cannot the real life as I read through that you'll start satisfaction real life Barracuda test it drives or high conversion rates from leads to orders so starting from June.

Speaker 2: Without sufficient personnel or touchpoint, we cannot realize a very good user satisfaction, realize very good test drives, or high conversion rate from these two orders. So starting from July and August , we have taken a more active manner in improving our self-capability.

One and July and August we have taken a more active miners in improving ourself capabilities and a way that we hope that the company will be able to support the new orders of 30000 units per month.

William Li: According to the retail statistics of Koutark, in July, Neil was the best selling brand in the premium electric vehicle segment with a transaction price of over on the 300,000, claiming a 59% market share. [inaudible] As NIO completes its product line-up, further expands the self-and-service network and the power network, enhances its all-round self-capability and the growth of self-and-market implants. The competitiveness of the NG2 products has been further unleashed. The delivery volume in the third quarter of 2023 is expected to be between 50,000, 55,000 and 57,000 units.

Speaker 2: And with that, we hope that the company will be able to support the new orders of 30,000 units per month. That will be contributed by our self-network as well as the personnel increase.

That will be contributed to by our south not work as well as the personnel increase so that by the end of September we won't be able to real life that targets of course, it takes time for us to really train the personnel and also to find at the locations. So that we won't have that can be built initial cause that they look at rite aid.

Speaker 2: so that by the end of September , we will be able to realize that targets. Of course, it takes time for us to really train the personnel and also to find the location.

Speaker 2: So we will have that initial capability ready by the end of September and then the real effect will kick in from October . That is our existing plan for the improvement. This is also why starting July and August we've been taking some active measures and actions in expanding our soft network and the touchpoints, especially in lower tier cities where we don't have a full-fledged facilities or stores, we hope to really secure and higher experience than the citizen softsperses who have their networks and user bases already to help us with the-

By the end of September and then they won't you factor will kicking from October that is already existing flying for the improvement. This is also why starting in July and August we've been taking active measures and actions in expanding our sales network and the touch points, especially in lower tier cities, where we don't have a full fledged.

The facilities were stores, we hope to really secure and hire experienced understated in itself persons who have their networks and user basis already to help us with the south tasks.

Speaker 3: If ancall number two in relationship departure is 0.ead and isaurus far below the row ahead.

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William Li: And now, I would like to share with you the recent highlights of our products, R&D, and operations. [inaudible] of five new models with user-self-action, exceeding our expectations. This also proves news capabilities of conducting first-product iteration and managing product complexity. In September, we plan to launch and deliver the new mid-size Coupe SUV-E6, which marks the completion of our product transition to the NG2 platform. With that, news-entire NG2 project line-up featuring eight different models will have entered the premium BEV market, to better cater to the diverse needs of the users in the premium segment and drive the static growth of delivery.

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William Li: NG2 project safety has been highly recognized by authoritative institutions worldwide. On July 12, 2023, NG2's smart electric mid-size sedan ET5 and the mid-large SUV-E67, which is called ES7 in China, both obtained the five-star safety rating from EuroNCAP, making NG2 the first car brand receiving the five-star rating since EuroNCAP adopted the new testing protocols for 2023. Yes, enabled by the full stack technologies developed in-house and the closed loop data management. NIO has made significant progress in the assisted and intelligent driving.

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Speaker 2: And regarding your second question, in July we have delivered more than 20,000 vehicles and as shown by our guidance, our delivery volume in August and September are lower than that in July . Of this is mainly because by the end of July we have announced the adjustments to our power swap user benefits.

And regarding your stock kind of questions in July we have delivered more than 20, you saw them vehicles and as shown by our garden items, our delivery volume in August and September are lower than that in July. This is mainly because that by the end of July we have Oh, we have announced adjustments to our pop.

Our swap it you'll say benefits before you would start to enjoy or are entitled to two four or six gray swaps per month, but starting from August. The first all the new orders are not entitled to Fray swaps anymore. This also help us to put a hat some orders where users with a strong demand for power swap two in July.

Speaker 2: Before users enjoy or are entitled to 4 or 6 free swaps per month, but starting from August 1st, all the new orders are not entitled to free swaps anymore.

Speaker 2: This also helped us to put a hat, some orders were users with strong demands for power swap to interlite. And this has also affected the delivery volume in July . In terms of the August , we believe that it will take some time for the order, momentum, and intake to be back to the normal track. But in the meantime, in August , we've also witnessed the new high of the numbers of passenger drives.

And this has also affected the delivery volume in July in terms of the August with a view that it will take some time for the order momentum that it takes to be back to the normal truck, but in the meantime in August we've also witnessed our new high off the numbers off the plastic lives athletes Oh average speaking during the weekends, we have more than.

Speaker 2: or average speaking on during the weekends we have more than 10,000 test drives. This represents a significant growth from the past.

Hence I'll then I'll past it drives this represents a significant quote from the past months and in the meantime, we also understand that it will take some time for the task to try to be truly converted into orders and we will wait for that but overall speaking we are very confident instead of watching the order intake as well as debt.

Speaker 2: And in the meantime, we also understand that it will take some time for the test drive to be truly converted into orders. And we will wait for that, but over speaking, we are very confident in stabilizing the order intake as well as the delivery volume.

William Li: User base and engagement continue to grow. At present, over a hundred thousand new users have activated Medicaid Unpilot Plus or NLP Plus and have driven on it for over 80 million kilometers. The mileage penetration rate of NLP Plus has reached 53%. In the meantime, we have carried out multiple rounds of early bird program in Beijing and Shanghai for NLP Plus in all operational domains, including in urban environments. In terms of the self and service network, so far we have 420 new house, new space and pop-up stores in 143 cities and 34 service centers, as well as 58 delivery centers in 21 cities worldwide.

The degree of volume.

Speaker 2: In the meantime, we also needed to understand the external challenges, especially the challenges and the pressure from the micro-economic environment.

In time, we also needed to understand that the external challenges, especially the challenges and the pressure from the microeconomic environment. So our fair costs down.

Speaker 2: So our fair cost and guidance have also considered that those external factors that overall speaking, we are confident in the delivery volumes we provided.

Also consider that ex those external factors, but overall speaking we are confident in the delivery volumes we are provided.

Speaker 2: Also, we must understand that in July , inside of the

Also we must understand that that's in July inside of the <unk>.

Speaker 2: Premium battery electric vehicle segment priced over 300,000 RV. We have already realized 59% market share. This has pulled in a very solid food hold of new in this segment. And we will continue to make efforts in transforming and converting ICE users into buying EVs in the premium segments. In this case, we will also make one effort in spending our channels at touchpoint.

Premium battery electric vehicle segment priced over 300000 argue we have already realized 59% market share. This has pulled in a very solid foothold off Neil in.

In this segment and we will continue to make efforts in transforming and converting I say users into buying E. DS in the premium segment. In this case, we will also make more efforts in expanding our channels at the touch points.

It won't be.

Thank you.

Yeah.

Okay.

The next question comes from Tim <unk> of <unk>.

Speaker 1: The next question comes from Tim Hesayo of Morgan Stanley . Please go ahead.

Morgan Stanley. Please go ahead.

William Li: Since July, we have started to develop a new network of services in the city of NLP Plus. We have started to take a more active manner in expanding the user touch points and sales channels and enlarging the self-teen in China. This actions will further increase our self capabilities and the propelling self growth. As for the charging and sloping network, to date, we have installed 1,000,000 systems in the city of NLP Plus in the city of NLP Plus in the city of NLP Plus.

Speaker 7: Hi, thanks for taking my question. So my first question basically just want to follow up regarding the sales volume in just a second half. Because we're in just mention, we successfully upgraded our sales team and sales network. So we came to force quarter. I recall that we expect our multi sales can state about 20,000.

Hi, Thanks for taking my question. So my first question basically I just want to follow up regarding to satisfy all of them seem to second half.

Because I swear I just mentioned, we successfully upgraded our sales team themselves right. So it came to fourth quarter I recall that we expect our Buffy South Kent State about 20000.

Speaker 7: So if that's a case, look into fourth quarter. Should we expect Neo to grow the sales further to about 20,000 or even like 25,000? And what could it be contributions on the four ball and driving models covering like EG5, ES6? So could you just provide some update on ball and. And my second question is about the gross profit margin.

So if that's the case looking into fourth quarter should we expect New York to grow themselves better to about 20020.

5000, and what could it be a contribution from the four ball and drive your models.

Hovering like E T five P T E.

We have six odd so could you just provide some update on collecting fallen and my second question is about the gross profit margin because according to the management's previous guidance.

Speaker 5: Because according to the measurements, previous guidance, I think the recall gross part margin could be to back to double digit in second half. So after the $30,000 big cost in May June .

Record gross profit margin could it get back to double digit in second half <unk>.

So after June 30000, that'd be coffee in late June.

Speaker 3: Do you still stick to your previous view on sequential margin expansion into second half? What would be the pay-in in the quarter and fourth quarter respectively? That's my second question.

Do you still stick to your previous view on sequential margin expansion into second half what would be the pace at the quarter and fourth quarter, respectively. That's my second question. Thank you.

William Li: We have installed 747 power-swap stations worldwide and provided more than 27 million battery-swaps. Our Expressway battery-swap network in China consists of 476 swap stations along the 10 major expressways connecting 68 major cities. We have also deployed over 7,900 power chargers and 9,700 destination chargers. NLP has become the automotive brand with the most public chargers and the most chargers along Expressways in China. In the meantime, NLP Plus has connected with over 1.36 million third-party chargers worldwide.

Speaker 8: Thank you, Tim. The first question. Our target is still the sales of each month is at 2,000,000. This is a service. This is our target. We are also doing Q4. This target is hard to get. From the current point of view, I have talked about our sales ability. Although the sales ability to prepare our sales ability is not only the current situation that the sales department is willing to do.

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William Li: On July 20th, we have started to use the battery-swap network-swap network to provide more battery-swap network-swap network with more information, on July 20th, NIO announced the flexible battery upgrade service by day, providing users with more options and fulfilling more use cases.

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William Li: In July we organized the host city election for NIO Day 2023, and the city of CN was voted by new users as the host city this year. On August 20th, we partnered with Worldwide Fund for Nature and Gilean Mountain National Park in installing the world's first photovoltaic self-consumption system with V2G capability. It features solar power stations, V2G chargers and battery electric vehicles. Moreover, we initiated the Clean Parks Citizen Scientist program to engage more users and the public in conserving biodiversity and supporting the establishment of a volunteer system for national parks in hope of striving for a shared vision of blue skies.

Speaker 3: In 2021, we released ASMR 6 again. In 2021, each share is Tw?Q Shu?Taili Keast root anoh Katie Duyat Doukai anyway! It means that links are spectrum-wise.

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Speaker 3: Today's webinar will conclude today's session.

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Thank you.

Speaker 2: Thank you, team, for your question. Regarding your first question, of course, we target to realize and stabilize our monthly delivery to be about 20,000 units starting Q4 this year. But in the meantime, we are also preparing our resources to the ability so that we can support the new orders of 30,000 units per month.

Thank you team for your question regarding your first question of course, we target to real life and to stabilize our monthly delivery to be above 20 pharma units starting Q4 this year, but in the meantime, we are also preparing ourselves capability. So that we can support that then your orders of 30000 a unit per month.

Speaker 2: In this case, we are expanding our channels and also personnel. As mentioned, we will be occurring this initial capabilities by the end of September , and we will take some time for the preparation and the ramp up. We believe that the effect of our self-tribility improvement will be kicking in from October and November with positive progress from...

This case, we are expanding our channels and also our personnel as I've mentioned, we will be occurring this initial capabilities by the end of September and we will take some time for the preparation and the ramp up we believe that the effect of our self capability improvement will be kicking in from October and November.

William Li: In July, NIO received the strategic equity investment from Simon Holdings and investment vehicle majorly owned by the Abu Dhabi government. The investment package totalled 1.1 billion US dollars. In addition, we will also cooperate with the new strategic investor to jointly pursue opportunities in our international business. Although the smart EV market is full of challenges and the competition is increasingly feared with our continuous efforts in core technologies, project portfolio, self-cababilities, manufacturing and logistics, we are fully ready to rise to the challenge. We believe that with focused marketing and self-strategy as well as execution, NIO can drive the static growth of self and the deliveries, well further optimizing the cost structure and enhancing operating efficiency on all fronts.

With the positive progress from that time point in terms of the reference to the N. Two wind projects will be experienced normally we would like that able to it will take around one to two years for the new product to reach a sound and stable volume on a monthly basis for example for our first generation, yes six towards launching.

Speaker 2: In terms of the reference to the NT1 project with experience normally, we realize that it will take around one to two years for the new project to reach a sound and a stable volume on the monthly basis. For example, for our first generation, yes, six, it was launched in 2019 and it was not until 2021 that it has a rather stable and sound monthly delivery. So we are very confident with our new products. In terms of the volume projects including ET5, ET5.

2019, and it was not until 2021 that it has a rather stable and modestly delivery. So we are very confident with our new products in terms of the volume products, including E. T. Five E. Two five T. Yes. It takes on it you said six this are for water and products for the Easter sucks it won't be if there's ever it starts.

Speaker 2: Yes, six and E6, this are four volume products. For the E6, it will be delivered starting September and it will take some time for the production and the delivery ramp up. But within its own segment, it will be dominating the major market share. So with this four models combined, we believe that its monthly volume will be stabilized at around 15 to 20,000 units.

In September and it will take some time before the production and delivery ramp up but one thing is on Sacramento, which won't be dominating the major market share. So what this score models combined we believe that it's mostly volume will be stabilized at around 15 to 20000 units in terms of higher a higher service part.

Speaker 2: In terms of higher, a higher serious product like UC7, E27, yes, seven, SOS, yes eight, we are expecting also increments on their self-volume.

That's like you said southern eat yourself and you have to southern F. O S. Yes, we are expecting also unclear months on their softball them.

Yeah, so anyway.

Yeah, Hi, Tim regarding the gross profit margin are showing a year over our Q2 financials are the vehicle margin a 6.2% similar with Q1. The key reasons are are the sales and production volume at a lower level are driving a higher man.

Speaker 8: Yeah, hi team, regarding the growth growth margin. As shown in our Q2 financials, the vehicle margin is 6.2%. Similar with Q1. The key reasons are sales and production volume at lower level, driving higher manufacturing cost and other cost allocation, and also more promotions to the users and also marketing efforts, during the production transition.

William Li: We look forward to new strong market performance in the second half. As always, thank you for your support.

William Li: We look forward to new strong market performance in the second half.

William Li: As always, thank you for your support.

Steven Feng: With that, I will now turn the call over to Steven, who will provide the financial details for the second quarter. Over to you, Steven. Thank you, Rui Chen.

Do you factor in cost and other cost allocation and also more promotions to the users and also marketing efforts.

Steven Feng: I will now go over our key and I will resolve for the second quarter of the industry and to remind for the lens of Paul as a reference to R&B only in my discussion today. I encourage listeners to refer to our audience press release, which is posted online for additional details. Our total revenues in technical quarter were 8.8 Bin R&B represented the craze of 40.8% over a year and a decrease of 70.8% the quarter of quarter.

During the transition periods.

Speaker 3: but along with our seals and volume wrap up of our all-hour entity product.

But along with our sales and volume ramp up of our all other MTT product Oh, we're targeting to achieve the double digit gross profit margin in Q3, and a 15% in Q4, if we can control the.

Speaker 3: Our target to achieve the double digit growth profile margin in Q3 and 15% in Q4 if we can control the battery cost and and other cost well, so Yeah, yeah, yeah, yeah So we have already digested the impact of the

Battery cost and other costs are well so.

Step two sevens outage and some Saturdays in Shanghai.

Steven Feng: Our total revenue was made up two parts, vehicle sales and other sales. Vehicle sales in technical quarter were 7.2 Bin R&B represented the craze of 24.9% the over a year and 22.1% the quarter of quarter. The decrease in vehicle sales the over a year was made due to lower average selling price, the result of higher proportion of the five and 75 kilowatt hour standard range battery pack deliveries and the craze in delivery volume.

Yeah.

So we have already digested the impact of the price reduction.

Got it thank you very much reliant in Stanley. Thank you.

And her team to team.

Yeah.

The next question comes from you can think of HSBC.

Speaker 1: The next question comes from you, Condeing of HSCC. Please go ahead.

Please go ahead.

Speaker 9: Thanks, Dean. You can hear I got two. First question is, we practically have all the models are now refraggin' and then really launched a bit on 2.0 platform. Eight model is the pretty comprehensive coverage. We will be expecting strong ramp up in a coming six months in a visible way, but how do we expect the key growth drivers, if we're looking at 12 to 18 months, especially in terms of new product? How do we feeling the already comprehensive portfolio or the software going to be with the next like a growth?

Thanks, Dean are you, saying here I go to our first question is we practically have all the models and all with fashion and then newly launched a based on two point out hustling in Novato is the plan.

Steven Feng: The decrease in vehicle sales quarter of a quarter was made due to a decrease in delivery volume. Other sales, the second quarter were 1.6 billion R&B represented the craze of 1.19% the over a year and 3% the quarter of a quarter. The increase in other sales the over a year was a minute due to the increase in sales of use cars, accessories and provisional power solutions. The result of continuing the growth of our users.

She comprehensive coverage.

We will be expecting strong ramp up in like six months in a visible way, but how do we expect to see gross drivers. If we're looking at 12 to 18 months, especially in terms of new product, how do I filling the already a comprehensive product portfolio or the software is going to be the next leg of growth.

Speaker 9: The second question is on the OPEX side. So this year we have new model launchers and we have the sales channel upgrade. But next year, when we're rolling to next year, could we see the absolute OPEX value dial down a little bit?

Oh. The second question is on the OPEC side. So this year, we have new model launches that we have the south China upgrade but next year. When we're rolling into next year next year could we see the absolute opec's value dialed down a little bit.

Steven Feng: The increase in other sales quarter of a quarter was made due to the increase in sales of use cars and provisional power solutions as a result of continuing the growth of our users. Partially offset by the increase in revenue from provision of auto-financing subsidies. The growth margin second quarter of consumer three was 1.0%. Compare with 7.0% in the second quarter of consumer two and a 1.5% in the first quarter of consumer three.

Thank you.

Yeah.

Speaker 3: Okay. Thank you, Yu Qian. The first question is, if we are in September , the 8-core product of NT2 has been launched.

Okay.

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Speaker 3: We all need a good China contacts through Eventsherm, Thank you very much.

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Steven Feng: Vehicle margins in the second quarter was 6.2%. Compare with 16.7% in the second quarter of consumer two and a 1.1% in the first quarter of consumer three. The decrease in vehicle margin over a year was many attributed to changes in product mix. Passed offset by the craze battery cost per unit. The increase in vehicle margin quarter quarter was a minute due to the craze promotion discount for the previous generation of S8, S6 and S6.

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Tell me what the total lifetime.

In Q2, the figure right agenda and do it as something that is almost upon us.

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Steven Feng: Our extension in second quarter was 3.3% in the R&B, which is an increase of 55.6% in the year over a year, an increase of 8.7% in the quarter of a quarter. The increase in research and development expenses over a year and a quarter of a quarter was actually to first, the increased personal cost. It already functions and increased share based conversation expenses. We are co-clarged in second quarter of the mystery. And second, the incremental design and development costs for new products and technologies.

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Steven Feng: S Genic Census in second quarter were to put non-mini-rb, represented an increase of 25.2% year over a year and increased up 16.8% a quarter of a quarter. The increase in S Genic Census over a year and a quarter of a quarter was primarily due to first, the increase in personal cost related to sales functions. Second, the increase in sales and marketing activities increased the launch of new products. Third, increased rental and related expenses, related company sales and service, low working expansion.

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Yeah.

Thank you for your question regarding your first question as you May know that starting from September we will launch our you said six into the market and where that's all it's models on the engine platforms will be launched into the market and over the past several months, we have launched a five brand new models plus a facelift them in.

Speaker 2: Thank you for your question. Regarding your first question, as you may know that starting from September , we will launch our EC6 into the market. And with that, all its models on the entity platforms will be launched to the market. And over the past several months, we have launched a five brand new models plus a phase lift. In such a short time frame, we are able to realize the high quality deliveries of this model has also demonstrated our R&D efficiency as well as the strong executions.

Such a short timeframe, we are able to realize the high quality delivery yourself. This model has also demonstrated our R&D efficiency as well as the striking that Houston, but in the meantime, we also need to realize that it's a challenge brought by the smart electric vehicles to the entire industry as in a very short timeframe, we needed to catch up to the changes of all the smart Tech.

Steven Feng: Plus, the operation in the second quarter was 6.1 bnrb, the increase in increase of 17.5% a year and increase of 18.8% a quarter of a quarter. Last, in the second quarter was 6.1 bnrb, the increase of 19.6% a year and increase of 27.8% a quarter of a quarter.

Speaker 2: But in the meantime, we also need to realize that it's a challenge brought by the smart electric vehicles to the entire industry. As in a very short time frame, we need to catch up to the changes of all the smart technology.

Apologies, but in the meantime, before all the entry to products. We're looking at more software features to be updated antibodies. For example, our new assistant and intelligence I'm driving for the coming months, we wont be rolling out some new features and also services. This will help us to improve the competitiveness of the project and also ask.

Speaker 2: But in the meantime, for all the NG2 projects, we're looking at more self-worth features to be updated and released. For example, our new assisted and intelligence driving for the coming month, we will be rolling out some new features and also services. This will help us to improve the competitiveness of the project.

Steven Feng: Our batch of cash and cash equivalents, registered cash, short term investment and long term time deposits was 31.5 bnrb as of June 2030's 20th mystery.

Speaker 2: And also, as we've mentioned, we are developing the self-tabability using side of the company so that we can reach out to broader channels with more self-persons and support the new orders of 30,000 units per month. This will also be a very concrete foundation for the continuous growth of the self and the deliveries in the coming months.

With my shouldn't we are developing the self capabilities inside of the company. So that we can reach out to broader channels, where some more self person.

Steven Feng: Now, this concludes our prepared remarks.

Unknown Executive: I will now turn the call over to the operator to first facilitate our Q&A session. Thank you. If you wish to ask a question, please press star of an one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. We ask that you please limit yourself to two questions. If you are on a speaker phone, please pick up the hand set to ask your question.

And the support that the new orders of 30000 units per month. This will also be a very concrete foundation for the continuous rolls off the south end of deliveries in the coming months. If you look at our eight models on the ante to a platform. They are already covering 80% of the needs in the premium market and.

Speaker 2: If you look at our eight models on the NT2 platform, they are already covering 80% of the needs in the premium market. And also, we have also adjusted our organizational structure starting from the third quarter, so that from the headquarters to the regional companies, we will be having dedicated teams managing and responsible for each of the model across the lifecycle. This is also the efforts we've made to really make the growth possible when you educate the customers at the producers and acquaintances first.

And also we have also adjusted our organizational structure starting from the third quarter. So that's from the headquarters to the original companies, we won't be having dedicated teams managing and a responsible for each of the model across the lifecycle. There's also this is also the efforts with made.

Ben Wong: And the first question will come from Ben Wong of Credit Suits. Please go ahead. Thank you.

Ben Wong: And the first question will come from Ben Wong of Credit Suits. Please go ahead. Thank you. My question about your sales network structure. Recently, I heard you hire a few of your sales persons from other luxury brands such as the BMW, Mercedes and Audi. So, what's the reason you hire a non-new sales person recently? And how is the impact so far for your sales model increase?

William Li: My question about your sales network structure. Recently, I heard you hire a few of your sales persons from other luxury brands such as the BMW, Mercedes and Audi. So, what's the reason you hire a non-new sales person recently? And how is the impact so far for your sales model increase?

Oh from the South end marketing perspective.

Hi regarding the Opex of a next year are you know are the next year are the budgets are for smoking ready. So at this moment I mean, not a be able to give you the precise number but I can give you some feeling.

Speaker 3: Hi, regarding the opax of next year, you know, the negative deposits for us has not been ready. So at this moment, I may not be able to give you the precise number, but I can give you some feeling regarding the R and D expense. As introduced in last quarter.

William Li: We also found that in your civil court guidance, you actually improv in the August and September, September will be lower compared to July. So, kind of what's the reason because any departure issue. Thank you so much.

Ben Wong: We also found that in your civil court guidance, you actually improv in the August and September, September will be lower compared to July. So, kind of what's the reason because any departure issue. Thank you so much.

Regarding the R&D expense Ah is introduced in last two quarters, our average AR each quarter. This year are the non-GAAP R&D investment will be RMB 3235 billing are for this year I think for next year are the.

Speaker 3: On average, each quarter of this year, the non-GAP R&D investment will be R&B 3.5 billion. For this year, I think for next year, we will keep similar like investment, investment R&D activities. And regarding the SGM,

Ah Ah Ah Ah, we will keep a similar like the investment our investment R&D activities and regarding the SG&A expense.

Speaker 3: explained by Willem we have the relatively more aggressive target for the second half this year I think.

Ah explained by William we have that are relatively more aggressive target for the second half of this year I think it should be for next year. So are the absolutely value for S. J will grew accordingly seems to be we need.

Speaker 3: should be for next year. So the absolute value for SGA will go accordingly since we need more market activities and events.

William Li: [inaudible] of the theme of the theme The second question is, if we look at the value of the value, 7月份 we have already paid over 2,000, but if we look at the value of the value, 8月份, 9月份 and 7月份, there are some differences in the number of numbers. [inaudible] we believe that it will take some time for the order momentum and intakes to be back to the normal track, but in the meantime, in August, we've also witnessed the new high of the numbers of passage drives, at least.

More market activities and our events, but the percentage of our total sales revenue I think we will decline compared to compared with the first half of this year and also the whole I think the whole year 'twenty 'twenty.

Speaker 3: But the percentage of total sales revenue, I think, will decline compared with the first half of this year and also the whole year of 2023. Because of the improvements in both the delivery volume and also operating efficiency.

'twenty three because of the improvements in both I think the delivery volume and also operating efficiency. Thank you Chad.

Okay.

The next question comes from Josh Chan of Citi. Please go ahead.

Speaker 1: The next question comes from Jess Chong of City. Please go ahead.

Yeah.

Speaker 10: Any halido, I have two questions. First question is our refinancing plan going forward. And the second question is our cash flow projection into the third quarter and fourth quarter. So why I am asking this.

Hello, I have two questions first question is our refinancing plans going forward.

And the second question is.

Our cash flows our projections into the third quarter and fourth quarter. So why I'm asking this.

Speaker 10: because we saw the first quarter, the net cash outflow was 10.6 billion.

It's because.

We saw the first quarter the.

The net cash outflow was a $10 6 billion.

Speaker 10: but improved to a cash outflow of $5.9 billion in the second quarter.

But improve to a cash outflow of $5 9 billion in the second quarter.

And we've seen the second quarter. We also saw the inventory Q on Q2.

Speaker 5: And within the same quarter, we also saw the inventory Q&A Delta of around 5 billion.

<unk> of around 5 billion.

Speaker 5: while the account receivable remains stable. So that said, if the third quarter inventory came down, plus an operating leverage with a volume hike, whether we should see the cash outflow should be significantly narrowing further. This is my first question.

While the account payable account receivable remains stable.

So that said if the third quarter the inventory came down.

The operating loss ratio with a volume hike, whether we should see the cash outflow should be significantly narrowing further. This is my first question.

Speaker 5: My second question is about the third quarter and fourth quarter GP margin guidance. When can we return to a 10 percent of the budget level as well as the third quarter, fourth quarter, S-GNA as a percentage of the revenue guidance. That's all from me. Thank you.

And my second question is about the third quarter and fourth quarter G. P margin guidance.

When can we return to a 10% or double digit level.

As well as the third quarter fourth quarter SG&A Hum.

[noise] sanish over revenue guidance.

It's all for me thank you.

Okay. Thank you Geoff Stanley piece.

That's the question.

Yeah.

Okay.

Yeah.

Speaker 3: Regarding the cash flow and also the refinancing plans, I think several points about this. When is regarding all purchasing cash flow? I think as the delivery volume ramp up from Q3 this year, our all purchasing cash flow will be significantly improved compared with Q1 and Q2 of this year.

Oh, sorry, yeah regarding the.

Cash flow and also the refinancing plans I think Ah Ah Ah Ah Ah several points about this one is oh approaching cash flow I think as the delivery world and wrap up from Q3. This year, our approaching cash flow will be significantly improved.

Compared with Q1 and Q2 of this year.

Speaker 3: And we also carried out a series of measures to control the cat-backed investment and also manage the other investment cadence presently like delay or cancel of certain cat-backed investment.

And we also carried out a series of measures to control the capex investments at all.

Also manage the investment cadence per density like delay okay. So a certain type of investments are this will also help us to manage are not in the house healthy cash flow.

Speaker 3: This will also help us to manage the healthy cash flow. And additionally, as explained in Williams.

Additionally, our plants are in Williams comments, we received a seven points.

Speaker 3: comments we received 7.740 million US dollars strategic investment from CYVN. And we also completed the offering of our first off-balance sheet EBS in Q3.

$740 million stretch to Jackie investments from so you're right we are in.

And we also completed the offering of our first off balance sheets E. B as in Q3 I think both are ever are you a U S. Dollar and also RMB financing channels remain ups drug page and all of those will enable us to keep a healthy.

Speaker 3: I think both our US dollar and also R&B financing channels remain on up drugtades.

Speaker 3: And all those will enable us to keep healthy, test position and support on going business development of the company.

Attached tests attached position.

And supported the on going finished development of.

The company.

Speaker 3: And regarding the financing plan, we will disclose our plan accordingly if there is any capital market-related updates. But at this moment, I think we don't have the precise information to comment with you.

And Ah Ah regarding the financing our refinancing plan, we will disclose a our plan. Accordingly, if there are there is any capital market related updates, but at this moment I think we we don't have the precise information too.

I think it was you yeah. That's the first question regarding the cash flow and also refinancing plan.

Speaker 3: That's the first question regarding the cash flow and also refinancing plan.

The.

Speaker 3: Second, it's for these years.

S. So kind of a it's for these years are merging yep.

Speaker 3: Yeah. For this year's margin, I think we have...

For this year's margin I think we have.

Speaker 3: explained in the previous questions. And for Q3, our target is to achieve the double digits was probably margin and Q4 is 15%. 15%.

I explained that in the pervious questions and so for Q3.

Our target is to achieve the double digit gross profit margin and Q4 is that 15 a 15%.

Speaker 3: And for SGA guidance, I think the absolute value will grow, along with our delivery volume and sales growth, but the percentage...

And for SG&A guidance Ah I think see a absolute value will will will grow along with other delivery volume and sales growth, but the as percentage of total revenue.

Speaker 3: for total revenue will decrease. But according to the market situation, the adjustment and change of our marketing strategy will be quite dynamic. So at this moment, I cannot give you any precise guidance about the percentage of S-P-A-A over sales revenue.

Chris that's.

According to the market situation the <unk> adjustment at a change of our marketing strategy will be part dynamic. So at this moment I cannot give you a precise guidance about the percentage of SG&A over our sales revenue.

Thank you Jeff.

Speaker 5: Thank you. Just a correction here. I mentioned the inventory Q-on-Q. Delta was a five billion, which was wrong. I just checked that the Q-on-Q Delta was only two billion. That's it from my side. Thank you. Thank you very much.

Thank you just just a correction here I mentioned, our inventory Q on Q. So it was a 5 billion, which was wrong I'll just check the Q on Q. There was only 2 billion. That's it from my side. Thank you. Thank you very much.

Yeah welcome. Thank you.

Okay.

Yeah.

Speaker 1: The next question comes from Ming Hun Lee of Bank of America. Please go ahead.

The next question comes from Min Li of Bank of America. Please go ahead.

Speaker 11: Thank you, Gwan-ni. So I have two questions. The first question is, currently you have eight products to cover the majority of the luxury car segment. So could you give more guidance on any of the new product plant next year, under the new brand as well as the Albus brand?

Oh <expletive>, they're going to use their network. So I have a two question. The first question is.

Currently you have eight a product to cover the majority are often a luxury car segment.

So could.

Could you give.

Give us more guidance on any of the new product plant next.

Next year.

Under the Neil Brent as well as the.

El Pas are Brent.

Speaker 11: And the second question is, what is your latest business progress for the mobile business? Thank you.

The second question is what's your latest Oh business progress for them our mobile pieces. Thank you.

Sit here and say to me.

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Speaker 3: When woman near male change the, I mean ful, change time a momentum way, but saying that they hand intobut how I have had to down when would ingly hold the Chair? man. Pat, show that to be option. So if you not that a geoated, you show all Union a mail for ition that I mean better on the show. Young MAI go from into the young. This is PAT. How is uststated? So it's just, you found me.

William Li: Average speaking on during the weekends, we have more than 10,000 test drives. This represents significant growth from the past month. And in the meantime, we also understand that it will take some time for the test drive to be truly converted into orders. And we will wait for that, but over speaking, we are very confident in civilizing the order intake as well as the delivery volume. In the meantime, we also needed to understand the external challenges, especially the challenges and the pressure from the micro-economic environment.

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Speaker 3: In the second half of next year, we will release the first product of our macro market brand, Atos.

The outlet so they'll find the woman the massive market brand opinion say southern yellow before you take a deep ones I mean with Apple.

William Li: So our fair cost and guidance have also considered those external factors that overall speaking, we are confident in the delivery volumes we provided. Also, we must understand that in July, inside of the premium battery electric vehicle segment priced over 300,000 RMB, we have already realized 59 percent market share. This has pulled in a very solid foothold of NIO in this segment, and we will continue to make efforts in transforming and converting ICE users into buying EVs in the premium segment. In this case, we will also make more efforts in expanding our channels at touchpoint. Thank you, Wang Bi. Thank you.

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Speaker 2: Thank you for your question. For new brand, actually, we don't plan to launch any new products in the year of 2024. Of course, we will still roll out some routine-based lifts or product upgrades, but we haven't planned any new products for next year, because we think that it's more important for us to stay focused on our existing eight products on the NT2 platform to continuously improve its qualities and also market performance.

Thank you for your question for Neil brand actually we don't plan to launch any new products in the year of 'twenty 'twenty four of course, they will still roll out some routine facelifts or product upgrades, but we haven't planned any new products for next year, because we think that it's more important for us to stay focused on our existing eight products.

I N T two platform to continuously improve its qualities and also market performance.

Tim Hsiao: The next question comes from Tim Hesayo of Morgan family. Please go ahead. Hi, thanks for taking my question. So my first question basically just want to follow up regarding sales volume in just a second half, because we have just mentioned we successfully upgraded our sales team and sales network. So we came to force quarter. I recall that we expect our monthly sales can state about 20,000. So if that's a case, look into fourth quarter.

Speaker 2: Just like in 2021, we didn't launch any new models, but still we have realized a very good growth margin, self-volume as well as quality performance.

Like in 2020, one we didn't launch any new models, but still we have a real life I've ever good gross margin south volume as well as quality performance. So that's the plan for the brand of Neil in terms of our mass market brand ups. We plan to launch at the very first model farm outs in the second half of next year right now.

Tim Hsiao: Should we expect NIO to grow the sales further to about 20,000, or even like 25,000? And what particular contributions on the four volume driving models covering like ED5, ES6? So could you just provide some update on the volume?

Speaker 2: So that's the plan for the brand of NEO. In terms of our mass market brand, Alps, we plan to launch the very first model from Alps in the second half of next year. Right now the R&D activities are proceeding according to the plan. Actually, we have just the road out the verification build of the first model from Alps. And this model will be highly competitive in its project segments.

R&D activities are proceeding according to the plan and actually we have just there goes out to the verification build off the first model from out and did the this model will be highly competitive price each product segment.

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Steven Feng: And my second question is about the growth profit margin. Because according to the management's previous guidance, I think the recall growth part margin could be to back to double digit in second half. So after the 30,000 already caught and laid you, do you stick to your previous view on sequential margin expansion into second half? What would be the pay for the quarter and force quarter respectively? That's my second question. Thank you.

Tim Hsiao: And my second question is about the growth profit margin. Because according to the management's previous guidance, I think the recall growth part margin could be to back to double digit in second half. So after the 30,000 already caught and laid you, do you stick to your previous view on sequential margin expansion into second half? What would be the pay for the quarter and force quarter respectively? That's my second question. Thank you.

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Speaker 3: Unfortunately, whether India is focused on?assa, then India is more focused on the region. This space comes to an understanding ofidentified food products, but they don't know much about it.

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Uh huh.

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Unknown Executive: The good news is that we have been in the car for about a year and a half. So in 2021, compared to the year of 2019, we released ES6, and in 2021, the sales volume reached a relatively good state. So we think that this波's product, its sales volume, we think it's very interesting. [inaudible] Thank you. Thank you. [inaudible] Thank you. Thank you. [inaudible] Thank you. Thank you. [inaudible] Thank you. Thank you.

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Yeah.

Speaker 2: And also for the brand of Alps, its R&D philosophy is different from that of NIO. Alps is targeting at the mass market, and we will not have many products in the lineup for Alps. But for NIO, it's different. It is targeting at the premium segment, where we care more about the personalization and also the differentiations of the product.styled

And also for the brands of Alps, It's R&D philosophy is different from that of Smeal Alps is targeting at the mass market and we will not have many products in the lineup for <unk>, but for now it's different it is targeting ads to the premium segment, where we care more about the personalization and also that your friendship Asian itself the potash.

Just like Mercedes and BMW in China, they're selling 40. Your favorite came out of a that is a unique catheter off the premium segment, but for Alps for the mass market. It will be more family oriented and we were also care more on the south volume of each model loss to find out in terms of our phone business.

Speaker 2: just like Mercedes and BMW in China, they're selling 40, 15 models. That is a unique capture of the premium segment.

Speaker 2: But for ELP, for the mass market, it will be more family oriented and we will also care more on the self-volume of each model launched by ELP. In terms of our phone business, our mobile phone will be developed mainly for our new users, especially the users of our NT2 products. And the phone results is developed centering on vehicles, but with better mobility and connectivity experience.

Our mobile phone will be developed mainly for our new users, especially they used herself and keto products and finally solstice develop the centering on the vehicles, a bunch with better mobility and connectivity connectivity experience, we are actually believing that's weird stuff.

Speaker 2: We are actually believing that with the phone business it can help us to improve the competitiveness of our vehicle products Because our phone business is not to compete with those phone makers. Instead we would like to use the phone as a carrier to provide The best experience for our vehicle users

One business it can help us to improve the competitiveness of our vehicle products because our phone business is not to compete with those the phone makers instead, we would like to use the phone as a carrier to provide the best experience for our vehicle users well over the underlying software and the underlying logic.

Speaker 2: Moreover, the underlying software and the underlying logic between the phone and the car is sure quite a lot of similarities.

Between the Fone and of course share quite a lot of similarity in terms of the launch planned for the fall we plan to introduce our first iPhone product in the second half or in the late September.

Speaker 2: In terms of the launch plan for the phone, we plan to introduce our first phone project in the second half or in the late September .

Yeah.

So I'm going to use it with them.

Okay.

Speaker 1: The next question comes from Paul Gong of UBS. Please go ahead.

The next question comes from Paul Gong of UBS. Please go ahead.

Speaker 13: Thanks for taking my questions. So two questions here. The first questions regarding the self-channel. You mentioned that you are going to expand it. You fail it behind of the BMW methods and in terms of the the channel as well as a self-person. But how does it compare to other EV startups? How much do you think about the extension of the?

Thanks for taking my questions. So two questions here.

First question. So we've got in the sales channel.

You're welcome to expand yes.

What is behind the BMT on methods.

In terms of the the channel as well as a sales person.

How does it compare to other startups all wheel, that's all I'll leave behind and.

How much do we think about the expansion of the de stocking that for cancer cells personnel versus T cell efficiency improvement.

Speaker 13: this.net work and the self personnel versus the self efficiency improvement. And you also mentioned you are going to reach 30,000 monthly sales capability. How does that compete today? Is that fair to assume currently we have the capability to sell 20,000 monthly sales given we are to achieve that in July and the expanding would be about 50% competitive today to 30,000. How does this mathematics work? This is my first question. The second question is regarding the battery swap versus fast charging given the battery, the semiconductors as well as even the charging piles, DC charging stations. All these things to be loading out with an industrial effort. I understand it's good to have both the battery swap as well as the fast charging. But would you consider the loading out of the fast charging kind of weak and the battery swap convenience and competitive edge of a new ourselves cars? Thank you.

And you also mentioned you are going to reach 30000 small for yourselves beauty, how does that compare to today.

Is that fair to assume current so they would have the capability to sell it.

Most of the housekeeping will shift up in July and so you would.

It would be about 50% compared to Q.

So just all of them how does this work.

This is my first question. The second question is regarding the battery swap versus fast charge and given the.

The batteries the semiconductor colors as well as even the charging Oh, sorry D. C. Charging stations are there seems to be eroding out we say industrial Air Force.

I understand the school dropped both the battery swap fossil while also fast charging but touch wood.

As you can see it on the road towards the fast charging kind of fall our.

Well you can't the battery swap convenience ends up.

I'll send you off course, thank you.

Yuqian Ding: [inaudible] The next question comes from Yuqian Ding of HSCC. Please go ahead. Thanks, Dean. Yuqian here. I got two. The first question is, we practically have all the models on our refraction and then really launched a bit on 2.0.5. The model is a pretty comprehensive coverage. We will be expecting strong ramp up in the coming six months in a visible way. But how do we expect the key growth drivers, if we're looking at 12 to 18 months, especially in terms of new products?

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Yuqian Ding: But how do we expect the key growth drivers, if we're looking at 12 to 18 months, especially in terms of new products? How do we fill in the already comprehensive portfolio or the software going to be the next like a growth?

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Yuqian Ding: How do we fill in the already comprehensive portfolio or the software going to be the next like a growth? The second question is on the OPEX side. So this year, we have new model launchers and we have the sales channel upgrade. But next year, when we're rolling into next year, could we see the absolute OPEX value dialed down a little bit? Thank you. Okay. Thank you, Yuqian.

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William Li: The second question is on the OPEX side. So this year, we have new model launchers and we have the sales channel upgrade. But next year, when we're rolling into next year, could we see the absolute OPEX value dialed down a little bit? Thank you. Okay. Thank you, Yuqian. The first question is, if we're in September, we already have all the models on the NT2. If we look at it, we can see that in the past few months, we can have all the models launched in a few months.

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William Li: The first question is, if we're in September, we already have all the models on the NT2. If we look at it, we can see that in the past few months, we can have all the models launched in a few months. In addition to the design of the model, we can see that the efficiency and the direct efficiency are very high. This is also a challenge for the car to bring the entire car to the market.

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William Li: In addition to the design of the model, we can see that the efficiency and the direct efficiency are very high. This is also a challenge for the car to bring the entire car to the market. You need to be in a relatively short time window to make this car. The change in the car can be very fast. In addition to talking about the NT2, there are a lot of top-notch functions in the organization.

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William Li: You need to be in a relatively short time window to make this car. The change in the car can be very fast. In addition to talking about the NT2, there are a lot of top-notch functions in the organization. For example, in AD, there are a lot of functions, and in the future, there will be a lot of local services in the future. Of course, we will promote the development of the products and products.

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William Li: For example, in AD, there are a lot of functions, and in the future, there will be a lot of local services in the future. Of course, we will promote the development of the products and products. In addition, if we talk about it, our sales ability will expand. We hope that we can, for example, go through 3,000 sales capabilities to prevent us from going to the river and the south. These things can also bring a good foundation for our future growth.

Oh. Thank you for your questions. If you look at the size of the sales teams income Paracentral other EV startups in China actually by the end of July and the size of our soft teams is the only half of those of other companies of course in terms of the service network, we have the specialties and the team's work.

Speaker 2: If you look at the size of the South teams in comparison to other EV startups in China, actually by the end of June , the size of our South team is only half of those of other companies.

William Li: In addition, if we talk about it, our sales ability will expand. We hope that we can, for example, go through 3,000 sales capabilities to prevent us from going to the river and the south. These things can also bring a good foundation for our future growth. So, if we look at it, we have already paid the basic cost of this high-end market, 80% of such a user demand. Now, we need to do something very important.

Speaker 2: Of course, in terms of the service network, we have specialties and teams working for the power of stations, road select services as well as the new houses.

<unk> for the power swap stations, well site services as well as add new houses so for their service and community Park, we have a bigger team now other EV startups, but when it comes to the actual sales person.

Speaker 2: So for the service and the community part, we have a bigger team than other EV startups, but when it comes to the actual salesperson, in our company we call them fellows, in terms of the number of fellows, we are actually have a much smaller team than all the other companies in the industry.

William Li: So, if we look at it, we have already paid the basic cost of this high-end market, 80% of such a user demand. Now, we need to do something very important. The task is that we have completed a organization, and we need to take every car from the whole area to the region. We need to have our team to take every car to the market. This is also a very important information of our sales ability. Thank you for your question.

In our company, we call them silos in terms of the number of Fellows. We are actually have a much smaller team that all the other companies in the industry in April and in May This year, our delivery volume was not very high.

Speaker 2: In April and May this year, our delivery volume was not very high.

William Li: The task is that we have completed a organization, and we need to take every car from the whole area to the region. We need to have our team to take every car to the market. This is also a very important information of our sales ability. Thank you for your question.

Speaker 2: By then, we didn't really realize the importance of the self capabilities or taking any actions. But starting from June , as we ramped up our delivery volumes, we gradually realized that the insufficient self-teams has affected the satisfaction and also the executions of many things, including test drives and also order conversions. That's why starting from July , we have started to develop our self channels as well as the self teams.

Then we didnt really realize the importance of the south can abilities were taken any actions, but starting from two and as we ramp up our delivery volumes. We gradually we all lives. That's the insufficient south teams has affected their satisfaction and also the exact huish ourselves many things, including pass to drive and also order conversion that's.

Why starting from July we have started to develop ourself on channels as well as the south scheme.

William Li: Regarding your first question, as you may know that starting from September, we will launch our EC6 into the market, and with that, all its models on the NT2 platforms will be launched to the market. And over the past several months, we have launched a five brand new models plus a facelift. In such a short time frame, we are able to realize the high quality deliveries of this model has also demonstrated our R&D efficiency as well as the strong execution.

Speaker 2: In for comparison to ramp up to the comparable sites, we believe that we need around 5,000 people working on the self-teen. But of course, it take time for us to have that many people on the team and also to train them with the corresponding capabilities.

Oh, yeah for comparison to ramp up to the comparable sites Oh, we believe that we need around 5000 people working on the south team, but of course, it take time for us to have that many people on the team and also to train them with the corresponding capabilities in terms of searching every volume Inc.

Speaker 2: In terms of the delivery volume in July , we have delivered more than 20,000 cars, but that demonstrated our capability in terms of the deliveries, which is relatively easier than realizing self-capability.

Since July we have delivered more than 20000 cars, but that demonstrated our capability in terms of the deliveries, which is relatively easier than real lysine south capabilities.

William Li: But in the meantime, we also need to realize that it's a challenge brought by the smart electric vehicles to the entire industry. As in a very short time frame, we need to catch up to the changes of all the smart technologies. But in the meantime, for all the NT2 projects, we're looking at more soft work features to be updated and released. For example, our new assisted and intelligence driving. For the coming month, we will be rolling out some new features and also services.

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I mean, when I say only downtown Dallas, such adult woman would shanda telomere lifetime behind the woman Jiangsu So down her sunrise some goodness Thunder woman show down in your body shop.

Speaker 3: will do what he did to her.

I'm a woman sorry, if I'm crazy on these yet so most people there's something we're missing.

William Li: This will help us to improve the competitiveness of the project. And also, as we've mentioned, we are developing the self-tabability inside of the company so that we can reach out to broader channels with some more self-persons and support the new orders of 30,000 units per month. This will also be a very concrete foundation for the continuous growth of the cells and the deliveries in the coming month. If you look at our eight models on the NT2 platform, they are already covering 80% of the needs in the premium market.

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Speaker 3: in terms of flagship, so the quake would be the basis of ournanvarying back to? the american g in terms of flagship, so the quake would be the basis of ournanvarying back to? the american g

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Speaker 3: ? patch ?ol ?? some cut wire to make sure they are like 66 cc pertheon??

So there's still a mcmansion put it because room no.

William Li: And also, we have also adjusted our organizational structure starting from the third quarter so that from the headquarters to the regional companies, we will be having dedicated teams managing and responsible for each of the model across the lifecycle. This is also the efforts we've made from the self and marketing perspective.

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Steven Feng: Hi, you can. Regarding the impacts of next year, you know, the next year, the budget for us has not been ready. So at this moment, I may not be able to give you the precise number, but I can give you some feeling. Regarding the R&D spends as introduced in last quarters, on average, each quarter this year, the non-GAP R&D investment will be R&B 3.5 billing. For this year, I think for next year, we will keep similar like investment R&D activities.

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Social social to commission.

Speaker 2: And another thing is about the channels. If you look at our source distribution, Jiangsu, Zhejiang, and Shanghai, these three places basically contribute half of our sales volume. But for other provinces like in Anhui, the capital city itself is contributing around 80% to 90% of the sales volume. If we take Anhui as an example, for other brands like BMW or Mercedes, half of their sales volume in Anhui province, we are going to have a lot of sales volume.

And another thing is about the channels. If you look at our self distribution junk food youre down on the Shanghai. This sort of places basically contributed half off ourselves volumes at four other provinces like in outweighed the capital C. Tiede felt this country the team around 80% to 90% of the South ballroom.

If we take all the way as example for other brands like Dms out there when the city hop off their south ballroom in Alberta Province.

Speaker 2: is contributed to by cities outside of Anhui, sorry, all sides of the Jose. And they basically have dealerships to work in all the cities in Anhui province.

This country, both testify cities outside of Oh, sorry, I'll cite is the whole thing and they basically have the ownership stores, Inc. All the cities and provinces and for US. We are open and we've just opened our new house in a second largest the C. D E F. A province that is in.

Steven Feng: And regarding the SGA spends explained by Willem, we have relatively more aggressive sales target for the second half of this year. I think it should be for next year. So the absolute value for SGA will grow accordingly since we need more market activities and events but the percentage of total sales revenue I think will decline compared with the first half of this year and also the whole year of 2023 because of the improvements in both delivery volume and also operating efficiency.

Speaker 2: And for us, we've just opened our new house in the second largest city in annual problem that is in Wuku. In this case, we really need to take efforts in increasing our panel tritians into the lower tier cities.

In this case, we will need to take efforts in increasing our penetration into the lower tier cities are in addition to the south channels. We are also developing and expanding our power swap networks into more cities for the past several months looping our we've been developing our power swap stations in a much faster manner.

Unknown Executive: Thank you.

Speaker 2: In addition to the South channels, we are also developing and expanding our power swap networks into more cities.

Speaker 2: For the past several months, we've been developing our power swap stations in a much faster manner. And in August , we expect that we will deploy and install more than 100 power swap stations. Of course, it will take time for all these measures to take in, but this investment will be very important for our launch.

In August we expect that we will deploy and install more than 100 power swap stations of course, it will take time for all of their smashes to picking up that this investment will be very important for our long term capability Tiago and can you just one then.

Speaker 3: We just use storage and zumgy backages to appear in such a smart TV set

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Joseph Chong: The next question comes from Joseph Chong of City. Please go ahead. I have two questions. First question is our refinancing plan going forward. And the second question is our cash flow projection into the third quarter and fourth quarter. So why I am asking this is because we saw the first quarter. The net cash outflow was 10.6 billion, but improved to a cash outflow of 5.9 billion in the second quarter. And within the second quarter, we also saw the inventory Q and Q delta of around 5 billion.

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Speaker 3: From the other side, we, as people,ashes are mostly strategic, so it's a party of tackle. Technological ? tackle we are lightly placing it as a deal.

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A woman, let me say that pushes that pop up in the do it yourself instead of having somebody who can call you got a huge hill. That's why it went down so total guidance yet just the mill can do to take a bigger and.

Speaker 3: Say the talo woman to would light down down. pundamity again can be indium. They has a haw daughter ated antil to another.

Got it.

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Joseph Chong: So that said, if the third quarter inventory came down plus an operating leverage with a volume hike, whether we should see the cash outflow should be significantly narrowing further. This is my first question. And my second question is about the third quarter and fourth quarter GP margin guidance. When can we return to a 10% of the digit level as well as the third quarter, fourth quarter SGNA as a percentage over revenue guidance.

Regarding those that kind of question about power swap paying versus faster charging them as we've always mentioned that the charter boat Swappable and Upgradable have been the philosophy of our power solutions and the west being choosing the optimal solutions and also the past experience for our users based on the actual.

Speaker 2: Regarding your second question about power swapping versus faster charging. As we've always mentioned that chargeable, swappable, and upgradeable have been the philosophy of our power solutions. And with being choosing the optimal solutions and also the best experience for our users, based on the actual scenarios and the use cases.

Joseph Chong: And my second question is about the third quarter and fourth quarter GP margin guidance. When can we return to a 10% of the digit level as well as the third quarter, fourth quarter SGNA as a percentage over revenue guidance. That's all from me. Thank you.

Scenarios and use cases.

Speaker 2: And as we are developing our power swapping network, we are also the automotive brand with the most public chargers in China, as I've mentioned in my opening remarks.

And as we are developing a repower swapping network. We are also the automotive brand with the most of the public Chargers in China as I've mentioned in my opening remark of course, we believe that with the development of the fast charging technology will also help us with the power swap operations at as if kind of improve the service.

Speaker 2: Of course, we believe that with the development of the first charging technology, it will also help us with the power swap operations at this kind of improved service capacity of these swap stations. Not to mention that many of the stations we've installed as of today are integrated stations featuring both chargers as well as power swap.

Joseph Chong: That's all from me. Thank you. Okay. Thank you, Jeff. I think about this one is regarding operating cash flow. I think as the delivery volume wrap up from Q3 this year, our operating cash flow will be significantly improved compared with Q1 and Q2 of this year. And we also carried out a series of measures to control the cat-backed investment and also manage the other investment cadence, presently like delay or cancel certain cat-backed investment.

Paucity of the swap stations not to mention that many of the stations we've installed as of today, our integrated stations featuring pulse charters as well as power swap.

Speaker 2: So in terms of the power swapping and the faster charging we've also had the many discussions between those two technologies, but we believe that so far power swapping is still having a much better experience than faster charging and it will continue to be a very unique advantage and competitiveness of new.

So in some sense the para swapping and faster charging we've also had many discussions between those two technologies, but we believe that so far how we're swapping and so you are having a much better experience than faster charging and it will continue to be a very unique advantage and the competitiveness of new.

Steven Feng: Okay. Thank you, Jeff. I think about this one is regarding operating cash flow. I think as the delivery volume wrap up from Q3 this year, our operating cash flow will be significantly improved compared with Q1 and Q2 of this year. And we also carried out a series of measures to control the cat-backed investment and also manage the other investment cadence, presently like delay or cancel certain cat-backed investment. This will also help us to manage the health healthy cash flow and additionally, as explained in Williams comments, we received 7.740 million US dollars strategic investment from CYVN.

[noise]. Thank you very much that's very helpful.

Speaker 13: Thank you very much, that's very helpful. Thank you. Thank you.

Thank you.

Thanks Irina.

Okay. Okay.

Yeah.

Speaker 1: The next question comes from Jing Cheng of CIC. Please go ahead.

The next question comes from Joon Chang of Ci D. C. Please go ahead.

Speaker 6: Okay, thank you for your sharing. I have two foreign up questions. The first is about

Okay. Thank you for your sharing Oh I have two follow up questions. The first is about Oh other south scrap in view and a profit margin and as we can see that after our our policy adjustment what what has our expectation for the future revenue and also.

Speaker 6: our other sales revenue and the profit margin. As we can see that after our policy adjustment, what is our expectation for the future revenue and also profit margin for other sales.

Joseph Chong: This will also help us to manage the health healthy cash flow and additionally, as explained in Williams comments, we received 7.740 million US dollars strategic investment from CYVN. And we also completed the offering of our first off balance sheet, EBS in Q3. I think both our US dollar and also RMB financing channels, we meet on obstructive and all those will enable us to keep healthy cash, cash position and support the ongoing business development of the company.

Our profit margin fall other cells are after our battery swap are starting to started starting to.

Speaker 6: after our battery swap started to gain profit. And in particular, do we have any internal calculation of the profitability of the battery swapping business?

Steven Feng: And we also completed the offering of our first off balance sheet, EBS in Q3. I think both our US dollar and also RMB financing channels, we meet on obstructive and all those will enable us to keep healthy cash, cash position and support the ongoing business development of the company. And regarding the financing, refinancing plan, we will disclose our plan accordingly if there is any capital market related updates. But at this moment, I think we don't have the precise information to comment with you. That's the first question regarding the cash flow and also refinancing plan.

<unk> started to try to gain money kicking puppies perfect and in particular do they have I know any internal calculation not E. A tougher trilogy off the battery swap heat business.

Speaker 6: So what is the upward trend of our growth profit margin for other cells in the following few cultures?

So what is the upward trend of our gross profit margin.

All other self female if all the two cultures and when will it turn positive. This is my first question and my second is about yeah. A technology improvements we have always been a focus to small R&D investment and also technology accumulation or looking forward.

Speaker 6: and one will it turn public. This is my first question. And my second is Bob.

Speaker 6: technology improvement. We have always been focused on R&D investment and also technology accumulation, so looking forward regarding to our next generation platform and this rate. So what's improvement can we expect or what are the major areas of our effort to so can you just share a few insights on the formation of that? This is my two questions.

Joseph Chong: And regarding the financing, refinancing plan, we will disclose our plan accordingly if there is any capital market related updates. But at this moment, I think we don't have the precise information to comment with you. That's the first question regarding the cash flow and also refinancing plan. Second is for this year's margin. Yeah. For this year's margin, I think we have explained in the previous questions. And for Q3, our target is to achieve the double digits, cross-proc margin and Q4 is 15%, and for SGA guidance, I think the absolute value will grow along with our delivery volume and sales growth, but it's percentage of total revenue will decrease.

Regarding to our next generation platform and suite. So what improvement can we expect Oh, what what are the major areas of our effort.

Two.

That's okay can you share a few insights all information.

This is my two questions. Thank you.

Steven Feng: Second is for this year's margin. Yeah. For this year's margin, I think we have explained in the previous questions. And for Q3, our target is to achieve the double digits, cross-proc margin and Q4 is 15%, and for SGA guidance, I think the absolute value will grow along with our delivery volume and sales growth, but it's percentage of total revenue will decrease. But according to the market situation, the adjustment and change of our market strategy will be quite dynamic, so at this moment, I cannot give you any precise guidance about the percentage of SGA over sales revenue. Thank you, Jeff. Thank you.

Speaker 8: Hi, this is Danny regarding your first question about the other other sales revenue and the margin As I mentioned we can saw the free battery swap policies In Q3 so therefore there will be more users to pay for battery swap service

Hi, Jami. This is Danny regarding your first question about the other other shows revenue and margin.

As he mentioned we can store the free battery swap policies are in Q3. So therefore, there will be more users to pay for battery swap services.

Speaker 8: And as the sales keep growing, we think more battery self service revenue can be realized. But you know, since it's only one month from the policy adjustments, so we still need some time to observe and assess the impact of this policy change. And second.

And as the sales keep growing Oh, we think more battery self service revenue can be realized.

But since it's only one month from the policy adjustments. So we still need some time to observe and assess the impact of this policy change.

So it kind of is with the power swap station that said generation putting into operation starting from.

Speaker 3: With the power swap station, the third generation put into operation starting from this April , we will accelerate the deployment of the power swap station in the following quarters. And for this year, our plan is to build 1,000 stations. But at current stage, the capacity

Joseph Chong: But according to the market situation, the adjustment and change of our market strategy will be quite dynamic, so at this moment, I cannot give you any precise guidance about the percentage of SGA over sales revenue. Thank you, Jeff. Thank you. Just a correction here. I mentioned the inventory Q1Q Delta was a 5 billion, which was wrong. I just checked that the Q1Q Delta was only 2 billion. That's it from my side. Thank you. Thank you very much. Welcome.

This April we will accelerate the deployment of Ah Ah Ah Ah Ah Ah power substation in the following quarters and for this year. Our plan is to build 1000 stations, but are at current stage.

Unknown Executive: Thank you.

Steven Feng: Just a correction here. I mentioned the inventory Q1Q Delta was a 5 billion, which was wrong. I just checked that the Q1Q Delta was only 2 billion. That's it from my side. Thank you.

Unknown Executive: Thank you very much.

The capacity one to be fully utilized so are the losses from the accelerated construction of a power substation.

Speaker 3: So the losses from the accelerated construction of a power source station will increase.

Unknown Executive: Welcome. Thank you.

Will increase.

Speaker 3: So I think that's basically the guidance for the other sales revenue. Yeah.

So I think that's the basically the guidance for the other sales revenue.

Ming Han Lee: The next question comes from Ming Han Lee of Bank of America. Please question. Currently, you have eight products to cover the majority of the luxury car segment. So could you give more guidance on any of the new product plans next year under the new brand as well as the Alpus brand? And the second question is what is your latest business progress for the mobile business? Thank you. Thank you, Ming. Ming Han Lee of the brand will not offer new products, but we will have a few years to change the products.

Ming Han Lee: The next question comes from Ming Han Lee of Bank of America. Please question. Currently, you have eight products to cover the majority of the luxury car segment.

Yeah.

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Speaker 3: If you are your first evangelist, you can look into it. Maybe even before we got to Smash Bros equipped, We did not offer any talent here.

Speaker 3: You woman found that Eagle chongfuful fed outb to jakana mission, the one then.

William Li: So could you give more guidance on any of the new product plans next year under the new brand as well as the Alpus brand? And the second question is what is your latest business progress for the mobile business? Thank you. Thank you, Ming. Ming Han Lee of the brand will not offer new products, but we will have a few years to change the products. This is just a few long-term changes in the future.

And then for the financing so it sounds about changes of the pool with a woman to fulfill fund in the BD.

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Speaker 3: when the whole world becomes apart robustly and energically, you get what your hurts can take to rebuild, and finally a cultural career gets it. In fact,

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Speaker 3: Something that I short a her woman do you one day a year would curs issue. So an feel how you.

So it's something that I saw at Ohio women do you want to yeah would've cause issue Saddam Hussein how you've changed.

Ming Han Lee: This is just a few long-term changes in the future. But we do not have a new product, a new product, a new product. We think that the current products are going to sell it well. The quality of the product will be stable. After the sales performance of this product, it is a very large opportunity. Just like I said, we haven't received any new products in 2021, but our sales efforts and various aspects have reached a very good level of level. So this is a one-way.

Speaker 3: He went have cardge fulll and the famies are sure to the year will more. Should be the quicken coes.

You would have called it wouldn't cause of some of these issues.

And what should be the hook in college.

William Li: But we do not have a new product, a new product, a new product. We think that the current products are going to sell it well. The quality of the product will be stable. After the sales performance of this product, it is a very large opportunity. Just like I said, we haven't received any new products in 2021, but our sales efforts and various aspects have reached a very good level of level. So this is a one-way.

Actually the inherent efficiency.

I'm actually the inherent efficiency of the power swap business is pretty high before we have an active margin on this part it's mainly because when we were offering spray para swaps. The electricity costs were also included in that offering and now we are charging that separately and in addition, we are also charging our sorts of 30 RMB per swap as a service.

Speaker 2: Actually, the inherent efficiency of the power swap business is pretty high. Before, we have negative margin on this part. It's mainly because when we were offering free power swaps, the electricity costs were also included in that offering. But now we are charging that separately. In addition, we are also charging our users 30 RMB per swap as the service fee. Actually, we are seeing growing demand for such charged power swap services, especially many used car users.

And actually we are seeing growing demand for such charged power swap services, especially many used car users. They are they are actually using that service. So the percentage for the users to use to pay our swap service is also growing its business for the existing users and existing population.

William Li: But the Alpus, our Matthew Mark Brann, in the next half a year, we will have this baby car. We have already seen it. The current development progress is very important. This car is very close to the Alpus. We believe that it is very Thank you for your question.

Speaker 2: They are actually using this service, so the percentage for the users to use the paid swap service is also growing. It's meaning of business for the existing users and existing population.

Speaker 2: For the third generation power swap stations, we've also done a rough calculation. When it completes 60 swaps per day, it basically can be breaking even. And its service revenues will be covering its operating costs.

For the third generation power swap stations, we've also thought it rough calculation when it completes fixture swaps per day basically can be breaking even and its service revenue was going to be covering its operating costs right now around the 20% of our starting to generation stations are able to realize such a couple of months and capability. So for the long run with them.

Speaker 2: Right now around 20% of our certain generation stations are able to realize such proponents and capability. So for the long run, we believe that PowerSwap is also a sustainable business. And in addition to offering PowerSwap services, we also have other diversified business models like we can leverage the energy storage.

William Li: For new brand, actually, we don't plan to launch any new products in the year of 2024. Of course, we will still roll out some routine sales leads or product upgrades, but we haven't planned any new products for next year, because we think that it's more important for us to stay focused on our existing eight products on the NT2 platform to continuously improve its qualities and also market performance. Just like in 2021, we didn't launch any new models, but still we have realized a very good growth margin, sales volume as well as quality performance. So that's the plan for the brand of NIO.

Leave that to power swap is also a sustainable business and in addition to offering parasol services. We also have other diversified business models like we kind of average the energy storage.

Speaker 3: Not they are going give your understand young father the life G if I he gonment figure.

So they are going to get some idea Sunday you haven't father, so the lifetime that you found meant you're going to get some good trends on the knee. So they could see some well I mean, the time shouldn't that yen political Italian pins into human can use to mingle.

Speaker 3: and good good good good

Speaker 3: Work Italian thingsins in the humanman commun. goats number go two years a go. Woman N that ensure you get changed the oan.

Oh, yes, well.

And then they'll kill them intelligently shoulder you attempt to negotiate but it's something where if I'm an edge on the hot Nuomi sure Cushing that you sort of young thought you didn't go up all of them to choose them to go Molly Oh, that's a good thing.

William Li: In terms of our mass market brand, Alps, we plan to launch the very first model from Alps in the second half of next year. Right now, the R&D activities are proceeding according to the plan. Actually, we have just rolled out the verification build of the first model from Alps, and this model will be highly competitive in its project segment. [inaudible] Just like Mercedes and BMW in China, they are selling 40, 15 models.

Speaker 3: Now something my permealized J an no ayia question in that you should a young fire and go poweround. jituation trigger, MAI triigger trigger, should no kind of maudi equ.

So I'm Gonna go kind of multi if I showed you to tease him to take a Michel you that Houston, a bulk of your impartiality, let's touch Michel if I'm gonna teach him. He was a good answer.

Speaker 3: In the lotus dongcheng daisimas,

Yeah.

Regarding those that kind of question about our next generation technology and of course, we will be leveraging our full stack capabilities developed in house with that we will continue to improve the experience and also the performance of our products and we believe that this will give us a.

Speaker 2: Regarding your second question about our next generation technology.

Speaker 2: Of course, we will be leveraging our first deck capabilities developed in-house. With that, we will continue to improve the experience and also the performance of our projects. And we believe that this will give us a strong product competitiveness worldwide. And also, the continuous investment into the research and the development of the core technologies will also help us to optimize and improve the vehicle margin, as well as the efficiency of our operations and R&D.

From product competitiveness worldwide and also the continuous investment into the research and developments off the core technologies will also help us to optimize and improve the vehicle margin as well as improving the efficiencies of our operations and R&D.

Thank you Jim.

Speaker 6: Okay, thank you. That's all for my question. Thank you.

Okay. Thank you that's.

That's all for my question. Thank you.

Speaker 1: The next question comes from Edison, you of Deutsche Bank. Please go ahead.

The next question comes from Edison you of Deutsche Bank. Please go ahead.

Speaker 7: I think you have one question. I'm wondering what is the management team's openness to embarking on some more strategic action?

I think you had one question I'm I'm wondering what is the management teams' openness to embarking on some more strategic actions.

Speaker 7: We've obviously seen a lot of activity from the European OEM in China trying to revive or restructure their efforts.

We've obviously seen a lot of activity from the European Oems and in China trying to revive or restructure their efforts.

Speaker 7: And I also think in the context of, I think NIO has made some some mistakes. You know, we talked a lot about sales, the sales force today. We had a lot of supply inches last year. Many of which are related actually to more traditional auto side. But we perhaps benefit actually from having some more closer strategic relationships with some of the, the only end up there. Thank you.

And I also think in the context of.

I think Neil has made some mistakes you know we talked a lot about sales. The sales force today, we had lots of pilot last year, many of which are related actually to more traditional auto side can we perhaps benefit actually from having some more closer strategic relationships with with somebody.

Yeah oriented up there I guess.

Okay.

Speaker 3: Thank you, Mr. Li. The cooperation between us is very different. We don't have any information about the current situation. We need to communicate with them.

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Speaker 3: On the website, attentions in the IG allow for expression, how to control ???in disaster half-winner today. On the IG, throughout China, the result was consistent with the storm.remos We highly recommend this so that we can have the opportunity to discuss

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You don't want to go because I was in Pittsburgh, Yeah Toshi.

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Speaker 3: question. and I hope to see you again soon.

William Li: That is a unique character of the premium segment. But for Alps, for the mass market, it will be more family oriented. And we will also care more on the sales volume of each model launched by Alps.

Tommy I'll bundle them talking about doing at home no one doing one more home did you changed on the timing of shelter at home that's heard you Chi seizure.

Ginger is yet to go too much into it sounds like you get them fast.

William Li: In terms of our phone business, our mobile phone will be developed mainly for our new users, especially the users of our NT2 products. And the phone itself is developed centering on the vehicles, but with better mobility and connectivity experience, we are actually believing that with the phone business, it can help us to improve the competitiveness of our vehicle products, because our phone business is not to compete with those phone makers. Instead, we would like to use the phone as a carrier to provide the best experience of our vehicle users. Moreover, the underlying software and the underlying logic between the phone and the cars share quite a lot of similarities.

So that's good.

Speaker 3: Big decisions are also very important for them.

So you could pick up attitude indeed, how nice it shows as Jim said, it's something that I saw them do you treat them Single-hung Yale one getting them out once and I'm getting something for me to judge England. So if they don't open.

Speaker 3: So it something that I show there. Freedoms in the Honey: one kandom PA once soon on andom from interaction also will fed.

Thank you Edison for your question overall speaking we are very open to all kinds of cooperations with I'm curious in the industry, but so far we don't have much information to update we'll share with you, but if you look at our smart technologies. That's what I saw were charging and swapping networks actually we aim to.

Speaker 2: Thank you, Edison, for your question. All while speaking, we are very open to all kinds of corporations with the peers in the industry. But so far, we don't have much information to update. We're sure with you. But if you look at our smart technologies, as well as our charging and swapping networks, actually, we aim to use this technology to catalyze the transformation of the entire industry.

We used this technology to catalyze the transformation of the entire industry as we also announced at the power at day 2023, we are willing to open up our next generation battery technologies as well as our charging and swapping networks to the entire industry right now where in some initial communications.

Speaker 2: As we've also announced at the Power Day 2023, we are willing to open up our next generation battery technologies as well as our charging and swapping networks to the entire industry. Right now, we're in some initial communications with a certain OEM.

Paul Gong: In terms of the launch plan for the phone, we plan to introduce our first phone project in the second half, or in the late- The next question comes from Paul Gong of UBS, please go ahead. Thanks for taking my questions, so two questions here. The first question is regarding the self-channel. You mentioned that you are going to expand it, you fail it behind of the BMW methods and in terms of the channel as well as a self-person.

Certain Oems.

Speaker 2: They are also thinking about using our battery technologies for swapping networks. But to use that technology, they need to adapt their products to our standards, which can take some time for them to make the final decisions. But overall speaking, we are very open to all kinds of

They are also thinking about using our battery technologies, we're swapping networks, but to use that technology, they need to adapt to their products to our standards, which can take some time for them to make the final decisions, but overall speaking we are very open to all kinds of populations that what's important to me to ask Susan that's out there today.

Speaker 3: want to do some Bloomberg version of our time

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Paul Gong: But how does it compare to other EV startups, how much do you think about the extension of the stock network and the self-personnel versus the self-efficiency improvements? And you also mentioned that you are going to reach 30,000 monthly self-capability. How does that compare to today? Is that fair to assume currently we have the capability to sell 20,000 monthly self-given will achieve that in July and the expanding would be about 50% compared to today to 30,000?

Speaker 3: battery heroin garlic spicy doughnut powder oil victims oil palm?as oil sprayful oil oil."

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Speaker 3: You Sha that Maj probabary. That's only what I fam diian and rol and some good trigger F? Ity who bunsort of phr? The trigger, she young fam me, me to.

And when she was a young man with Meso Sofia sometimes.

And in terms of our existing charging network, so far 80% of our electricity are actually charged before the now new users and maybe you've also got this our newest resin. We are inching Johnson Southern Lake Oh, because it's just such a popular tourist spot we have to limit access.

Speaker 2: And in terms of our existing charging network, so far 80% of our electricity are actually charged for the non-new users.

Paul Gong: How does this mathematics work? This is my first question. The second question is regarding the battery swap versus fast charging given the battery, the semiconductors as well as even the charging piles, DC charging stations. All this seems to be rolling out with an industrial effort. I understand it's good to have both the battery swap as well as the fast charging, but would you consider the rolling out of the fast charging kind of weak and the battery swap convenience and the competitive edge of new cars?

Speaker 2: Maybe you've also got this news written in Xinjiang's Serum Lake, because it's such a popular tourist spot we have to limit access to our public chargers for the now new users at certain time frames and that costs some complaints by the now new users. But overall speaking is also a very good example showing our existing charging and and swapping facilities are helping many easy users, not just the users on the new.

Two our public Chargers for the now new users at a certain time frames and that caused some complaints by the now new users, but Oh speaking. It's also a very good example of showing already existing charging on a swapping facilities are helping many users not just to use or something else.

Yeah.

Okay.

Thank you.

Thank you Edison.

Speaker 1: I'd say no further questions now. I'd like to turn the call back over to the company for any closing remarks.

As there are no further questions now I'd like to turn the call back over to the company for any closing remarks.

Yeah.

Thank you once again for joining US today. If you have further questions. Please feel free to contact the Investor relations team to the contact information provided on our website. This concludes the conference call. You May now disconnect. Your line. Thank you.

Speaker 14: Once again, for joining us today. If you have further questions, please feel free to contact the News Investor Relations team. The contact information provided down over Web.

Speaker 14: This concludes the conference call. You may now disconnect your line. Thank you.

Yeah.

Okay.

Thank you.

Okay.

Speaker 15: Music Music Music Music

[music].

Paul Gong: Thank you. Okay, thank you, Paul. Well, this is actually a problem, because in April and May, our sales speed is less, so we are actually not very fast at this time. Until June, after we started the car, we realized that the cost of the market and the cost of the market are all because of the human rights issue. We received a lot of influence from the efficiency of the industry, so we started from July.

Yes.

[music].

Uh huh.

Okay.

[music].

Paul Gong: Let's start with the real hands. Including the real hands. These are the elements of the door. This is actually what we are doing. So, whenever we talk about it, we think that we are going to reach about 5,000 people, and that's possible that now, compared to our relatively high levels of communication, it's almost like this. We still need some time to improve the quality of each person's level of communication. But when we see about 2,000 people in a number, it means that our efficiency has reached.

Yes.

Okay.

[music].

Paul Gong: Because the efficiency of each person is better, but if it's actually from a relatively low level of communication, we are now able to achieve our plan. So, this is the current situation. Thank you for your questions. If you look at the size of the South Team's in comparison to other EV startups in China, actually by the end of June, the size of our South Team is only half of those of other companies.

Paul Gong: Of course, in terms of the service network, we have specialists and teams working for the power swap stations, road flight services as well as the new houses. So, for the service and the community part, we have a bigger team than other EV startups. But when it comes to the actual South person, in our company we call them fellows, in terms of the number of fellows, we actually have a much smaller team than all the other companies in the industry.

Paul Gong: In April and May this year, our delivery volume was not very high. By then, we didn't really realize the importance of the South capabilities were taken any actions. But starting from June, as we ramped up our delivery volumes, we gradually realized that the insufficient South Team has affected the satisfaction and also the execution of many things, including test drive and also order conversions. That's why starting from July, we have started to develop our South channels as well as the South teams.

Paul Gong: In four comparison to ramp up to the comparable sites, we believe that we need around 5,000 people working on the South team. But of course, it takes time for us to have that many people on the team and also to train them with the corresponding capabilities. In terms of the delivery volume in July, we have delivered more than 20,000 cars, but that demonstrated our capability in terms of the deliveries, which is relatively easier than realizing South capabilities.

Paul Gong: [inaudible] And another thing is about the channels. If you look at our self-distributions, Zhang Fu Zhuoduan and the Shanghai, this replaces basically contribute half of our self-volume. But for other provinces like in Anhui, the capital city itself is contributing around 80 to 90% of the self-volume. If we take Anhui as an example for other brands like DMJ or Mercedes, half of their self-volume in Anhui province, it's contributed by cities outside of the whole state and they basically have dealerships stores in all the cities in Anhui province.

Paul Gong: [inaudible] the South and the South And another thing is about the channels. If you look at our self-distributions, Zhang Fu Zhuoduan and the Shanghai, this replaces basically contribute half of our self-volume. But for other provinces like in Anhui, the capital city itself is contributing around 80 to 90% of the self-volume. If we take Anhui as an example for other brands like DMJ or Mercedes, half of their self-volume in Anhui province, it's contributed by cities outside of the whole state and they basically have dealerships stores in all the cities in Anhui province.

Paul Gong: And for us, we've just opened our new house in the second largest city in Anhui province that is in Wuku. In this case, we really need to take efforts in increasing our panel traditions into the lower tier cities. In addition to the self-channels, we are also developing and expanding our power swap networks into more cities. For the past several months, we've been developing our power swap stations in a much faster manner.

Paul Gong: And in August, we expect that we will deploy and install more than 100 power swap stations. Of course, it will take time for all these measures to take in, but this investment will be very important for our long-term capability. The second problem is the relationship between exchange and charging. At the same time, we have always been able to change and upgrade our power supply. We are using the long-term and long-term experience to give it the best charging experience.

Paul Gong: We are also a Chinese technology. The most recent brands in charge of charging have been introduced. We believe that the fast charging technology is the right thing to talk about, because it is always the right thing to mention the speed of our charging service. In addition to that, the main step is to change the station. It is to change the station. We are now in a large part of the station. In this case, it is better to use a better demand.

Paul Gong: The relationship between exchange and charging is that we have a lot of experience. In the past, when we talked about the exchange experience, it is much better than the experience experience. Of course, it is very important for us to use the long-term. Regarding your second question, about power swapping versus faster charging. As we have always mentioned that chargeable, swappable, and upgradeable have been the philosophy of our power solutions. We have been choosing the optimal solutions and also the best experience for our users, based on the actual scenarios and the use cases.

Paul Gong: As we are developing our power swapping network, we are also the automotive brand with the most public chargers in China, as I have mentioned, in my opening remark. Of course, we believe that with the development of the first charging technology, it will also help us with the power swap operations, as it can improve the service capacity of these swaps stations. Not to mention that many of the stations we have installed as of today are integrated stations featuring both chargers as well as power swaps.

Paul Gong: In terms of the power swapping and the faster charging, we have also had many discussions between these two technologies, but we believe that so far power swapping is still having a much better experience than faster charging, and it will continue to be a very unique advantage and competitiveness, of New. Thank you very much. That's very helpful. Yeah, thank you. Thank you, William. Thank you, Paul.

William Li: Thank you, Paul.

Jing Chang: The next question comes from Jing Chang of CICC. Please go ahead. Okay, thank you for your sharing. I have two following up questions. The first is about our other sales revenue and the profit margin. As we can see that after our policy adjustment, what is our expectation for the future revenue and also profit margin for other sales after our battery swap started to started to gain profit and in particular do we have any internal calculation of the profitability of the battery swap business.

Jing Chang: So what is the artwork trend of our growth profit margin for other sales in the following few cultures and when will it turn positive. This is my first question. And my second is about the technology improvement. We have always been focused on R&D investment and also technology accumulation. So looking forward regarding to our next generation platform and this rate. So what's the improvement can we expect or what are the major areas of our effort to be so can you just share a few insights on the formation of that.

Jing Chang: This is my first question. And my second is about the technology improvement. We have always been focused on R&D investment and also technology accumulation. So looking forward regarding to our next generation platform and this rate. So what's the improvement can we expect or what are the major areas of our effort to be so can you just share a few insights on the formation of that.

Stanley Qu: This is my two questions. Thank you. Hi Jing, this is Stanley regarding your first question about the other sales revenue and the margin. As you mentioned, we can saw the three battery swap policies in Q3. So therefore there will be more users to pay for battery swap services. And as the sales keep growing, we think more battery swap service revenue can be realized. But since it's only one month from the policy adjustments, so we still need some time to observe and assess the impact of this policy change.

Stanley Qu: Second is with the power swap station, the third generation put into operation starting from this April, we will accelerate the deployment of the power swap station in the following quarters. And for this year, our plan to build 1,000 stations, but at current stage, the capacity won't be fully utilized. So the losses from the accelerated construction of power swap station will increase. So I think that's basically the guidance for the other sales revenues. [inaudible] Thank you, Jing. Okay, thank you. That's all for my question. Thank you.

Jing Chang: So I think that's basically the guidance for the other sales revenues. [inaudible] Thank you, Jing. Okay, thank you.

Unknown Executive: That's all for my question. Thank you.

Edison Yu: The next question comes from Edison, you of Deutsche Bank, please go ahead. I think you have one question. I'm wondering, what is the management team's openness to embarking on some more strategic action? We've obviously seen a lot of activity from the European OEMs in China trying to revive or restructure their efforts. And I also think in the context of, you know, I think NIO has made some some mistakes. You know, we talked a lot about sales, the sales force today.

Edison Yu: The next question comes from Edison, you of Deutsche Bank, please go ahead. I think you have one question.

Edison Yu: I'm wondering, what is the management team's openness to embarking on some more strategic action? We've obviously seen a lot of activity from the European OEMs in China trying to revive or restructure their efforts. And I also think in the context of, you know, I think NIO has made some some mistakes. You know, we talked a lot about sales, the sales force today. We had a lot of supply inches last year, many of which are related actually to more traditional autoside. But we perhaps benefit actually from having some more closer strategic relationships with some of the the OEMs out there. Thank you. Thank you, Jason. But we are open to all kinds of cooperation.

Edison Yu: We had a lot of supply inches last year, many of which are related actually to more traditional autoside. But we perhaps benefit actually from having some more closer strategic relationships with some of the the OEMs out there. Thank you. Thank you, Jason. But we are open to all kinds of cooperation. This is a good question. We haven't had any information before. We need to communicate with them. From a direction perspective, let's talk about the current technology, our innovation network.

William Li: This is a good question. We haven't had any information before. We need to communicate with them. From a direction perspective, let's talk about the current technology, our innovation network. Of course, we believe that the whole industry is able to help the whole industry to quickly evolve. Then we, in fact, in our field team, we already talked about our next generation of electronic bags and our entire network network. We are willing to open up the whole industry.

Edison Yu: Of course, we believe that the whole industry is able to help the whole industry to quickly evolve. Then we, in fact, in our field team, we already talked about our next generation of electronic bags and our entire network network. We are willing to open up the whole industry. There are also some interesting companies that are talking about us in a very unusual way. Because if they want to change our, if they want to use our network network and our technology, if they want to change their strategy, they need to change their development and their changes.

William Li: There are also some interesting companies that are talking about us in a very unusual way. Because if they want to change our, if they want to use our network network and our technology, if they want to change their strategy, they need to change their development and their changes. This is also a big decision. We also need some time to do so. So, in any case, we would like to promote the whole industry and the electronic network. The electronic network is very open. Thank you, Edison, for your question.

Edison Yu: This is also a big decision. We also need some time to do so. So, in any case, we would like to promote the whole industry and the electronic network. The electronic network is very open. Thank you, Edison, for your question. Overall speaking, we are very open to all kinds of cooperation with the peers in the industry, but so far we don't have much information to update or share with you. But if you look at our smart technologies, as well as our charging and swapping networks, actually, we aim to use this technology to catalyze the transformation of the entire industry.

William Li: Overall speaking, we are very open to all kinds of cooperation with the peers in the industry, but so far we don't have much information to update or share with you. But if you look at our smart technologies, as well as our charging and swapping networks, actually, we aim to use this technology to catalyze the transformation of the entire industry. As we've also announced at the Power Day 2023, we are willing to open up our next generation battery technologies, as well as our charging and swapping networks to the entire industry.

Edison Yu: As we've also announced at the Power Day 2023, we are willing to open up our next generation battery technologies, as well as our charging and swapping networks to the entire industry. Right now, we are in some initial communications with certain OEMs. They are also thinking about using our battery technologies for swapping networks. But to use that technology, they need to adapt their products to our standards, which can take some time for them to make the final decisions.

William Li: Right now, we are in some initial communications with certain OEMs. They are also thinking about using our battery technologies for swapping networks. But to use that technology, they need to adapt their products to our standards, which can take some time for them to make the final decisions. But overall speaking, we are very open to all kinds of cooperation. I would like to add, in fact, to our charging and swapping networks, 80% of these devices will be used in the future.

Edison Yu: But overall speaking, we are very open to all kinds of cooperation. I would like to add, in fact, to our charging and swapping networks, 80% of these devices will be used in the future. In front of us, there is also a new series of content in the network media, which has been mentioned. Because the charging process of that purpose is too hot, we sometimes have some time limit to the service of our users.

William Li: In front of us, there is also a new series of content in the network media, which has been mentioned. Because the charging process of that purpose is too hot, we sometimes have some time limit to the service of our users. There are a lot of other users in the network. But we are not able to do that. But from the other side, we can also see that our entire transformation technology has helped a lot of the users in the network. On the other hand, we have been... And in terms of our existing charging network, so far, 80% of our electricity are actually charged for the now-new users.

Edison Yu: There are a lot of other users in the network. But we are not able to do that. But from the other side, we can also see that our entire transformation technology has helped a lot of the users in the network. On the other hand, we have been... And in terms of our existing charging network, so far, 80% of our electricity are actually charged for the now-new users. Maybe you've also got this news recently in Xinjiang's Serum Lake, because it's such a popular tourist spot we have to limit access to our public chargers for the now-new users at certain time frames and that costs some complaints by the now-new users. But overall speaking, it's also a very good example showing our existing charging and swapping facilities are helping many EV users, not just the users on the new. Thank you. Thank you, Edson.

William Li: Maybe you've also got this news recently in Xinjiang's Serum Lake, because it's such a popular tourist spot we have to limit access to our public chargers for the now-new users at certain time frames and that costs some complaints by the now-new users. But overall speaking, it's also a very good example showing our existing charging and swapping facilities are helping many EV users, not just the users on the new. Thank you. Thank you, Edson.

Unknown Executive: As there are no further questions now, I'd like to turn the call back over to the company for any closing remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact the News Investor Relations team through the contact information provided on our website.

Unknown Executive: This concludes the conference call. You may now disconnect your line. Thank you. Bye.

Q2 2023 NIO Inc Earnings Call

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