Q1 2024 NIO Inc Earnings Call
Operator: Hello ladies and gentlemen, thank you for standing by for NIO Inc.'s first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode.
Hello, Ladies and gentlemen, thank you for standing by and Neo Incorporated's first quarter 2020 full earnings conference call.
Speaker Change: At this time, all participants are in listen only mode.
Operator: Today's conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, Head of Investor Relations of the company. Please go ahead, Mr. Chen.
Speaker Change: Today's conference call is being recorded.
Speaker Change: I will now turn the call over to your host Mr. Louis Chen head of Investor Relations of the company.
Rui Chen: Please go ahead really.
Rui Chen: Morning and good evening, everyone. Welcome to NIO's first quarter 2024 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. On today's call, we have Mr. William Li, Founder Chairman of the Board and the Chief Executive Officer.
Speaker Change: Good morning, and good evening, everyone welcome to Neal's first quarter of 2024 earnings Conference call.
Speaker Change: Company's financial and operating results were published in the press release earlier today and posted on the company's IR website.
On today's call we have Mr. William Li founder Chairman of the Board and the Chief Executive Officer, Mr. Stephen Stone, Chief Financial Officer, and Mr. Danny Chu Senior Vice President of Finance.
Rui Chen: Mr. Stephen Fung, Chief Financial Officer, and Ms. Stanley Qu, Senior Vice President of Finance. Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainty. 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, the Stock Exchange of Hong Kong Limited, and the Singapore Exchange Security Trading Limited. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Speaker Change: Before we continue please be kindly reminded that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker Change: Forward looking statements involve inherent risks and uncertainties.
Speaker Change: The company's actual results may be majority different from the views expressed today.
Speaker Change: Further information regarding risks and uncertainties is included in its 30 filings of the company with the U S Securities and Exchange Commission.
Speaker Change: Stock exchange of Hong Kong Limited and the Singapore exchange of security trading limited the.
Speaker Change: The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Rui Chen: Please also note that NIO's early press release and this conference call include discussions of unaudited non-gap financial information as well as unaudited non-gap financial measures. Please refer to NIO's press release, which contains a reconsideration of the unaudited non-gap measures to comparable gap measures. With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead.
Speaker Change: Please also note that <unk> earnings press release, and this conference call include discussions of unaudited non-GAAP.
Speaker Change: <unk> financial information as well as unaudited non-GAAP financial measures. Please refer to our newest press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures with that I will now turn the call over to our CEO Mr. William Li William Please go ahead.
William Li: Hello everyone. Thank you for joining NIO's 2024 Q1 earnings call. In Q1, NIO delivered 30,053 premium smart EVs. In Q2, thanks to the launch of all the model year products, unleashed sales capabilities, together with a more flexible sales policy, news deliveries started to pick up month by month. In April, NIO delivered 15,620 vehicles.
William Li: Hello, everyone. Thank you for joining Neil it's 'twenty 'twenty four kilowatt onions call in.
William Li: In Q1.
William Li: We're deliberate so to yourselves and safety suite premiums might be.
William Li: In Q2 tends to the launch of all the model year product.
William Li: On a leash of SaaS capabilities together with a more flat sports that's policy.
William Li: Nielsen deliveries starts the kickoff month by month.
William Li: April New York, Geely, but 15620 vehicles and they can make.
William Li: [inaudible] 20,544 vehicles Our market share in the premium BEV segment continued to grow, with year-over-year growth far above the segment. The total deliveries in Q2 are expected to be between 54,000 and 56,000 units, up 129.6% to 138.1% year over year. In terms of NIO's financial performance, during the model year product transition in Q1, the vehicle margin was 9.2%. In the meantime, with the improvements in the utilization of the charging and the swapping facility and in the portability of the after-sales service, Gold's loss on other shares was greatly reduced, quote, unquote.
William Li: <unk> thousand 544 vehicles.
William Li: Our market share in the premium be based segments continued to grow as the year over year. It goes from a populist sentiment beach.
William Li: Total deliveries in Q2 is expected to be between 54050 6000 to O&M.
William Li: One country and a 29%.
William Li: As I said to 138, 1% year over year.
William Li: In terms of financial performance.
William Li: Most of you have heard that 10 10.
William Li: Transitioning into what the vehicle margin was nine 2%.
William Li: In the meantime, when you say improvement on the internalization opened a charging in the swaps and facilities.
On the portable cooperative.
Ability over there up to set up just as subsidies.
Speaker Change: Look I'm going to ask this it was a great deal of course Oprah caught up.
William Li: Now I would like to share with you the recent highlights of our products, R&D, and operations. On April 25, the 87th Executive Edition was launched at the Beijing Auto Show. The delivery of this Executive Sedan started in late April, with all one app quiz. The 2024 NIO 827 BAT, which caters to the needs of the business community, is well placed to compete with the premium executive models, especially ICE models such as BMW 5 Series, Audi A6, and the Mercedes E-Class, in terms of NAD on April 30.
Speaker Change: No I would like to share with you the base and the highlight of our product.
Speaker Change: Ah patients.
Speaker Change: On April 25th now.
Speaker Change: <unk> seven is that to be addition was launched at Beijing Auto show that.
Speaker Change: The deliberate or at least cause that to sit them has dispatched in late April.
Speaker Change: Well, it's all lumped optically the.
Speaker Change: The 'twenty 'twenty, four and you eat yourself in pet.
Speaker Change: Caters to the needs of the business community.
Speaker Change: It's a web placed to compete with the payment because that's the model.
Speaker Change: Especially I see models, such as BMW five series, Oh, Dear Asics and the Mercedes E class.
Speaker Change: In terms of D.
Speaker Change: On April 30.
William Li: We started to push OpenNOP Plus to all end-to-use, making it the largest release of its kind, accessible by more than 260,000 users, on over 1.4 million kilometers of highways and urban streets, and in 726 cities in China. NLP Plus has been an industry leader in terms of its user base and coverage during the Labor Day holiday.
Speaker Change: We started to push up a little peak pass to all and to use this.
Making it the largest the release of these cuts.
Speaker Change: Okay, that's bought by more than 250000 Skus.
Speaker Change: Over one 4 million kilometers of a highway and the open pit.
Speaker Change: And then.
Speaker Change: 700, and the 26 cities in China.
Speaker Change: Unlucky Pos has it been an industry leader in terms of its user base and the coverage.
Speaker Change: Do you have in the Labor day holiday.
William Li: 48.1% of the total mileage was driven with NLP Plus, making user journeys safer and more relaxed. Since day one, NIO has developed a clear brand road map, starting from the premium segment to build up skills and experience. And then introducing a mass market brand to reach and serve more users; with that, they will be able to make greater contributions to a more sustainable future. On May 15, on the International Day of Family, they introduced Envo, a new brand for the mainstream family market. Ang Vo is from Ang Voyage, and it's a Chinese name, Le Dao, which translates into the path to heaven on a mission to make family life better.
Speaker Change: Eight <unk> to 1% of the total mileage well briefing with Nokia plot may.
Speaker Change: Can you also journeys sable and the more relaxed.
Speaker Change: Since day, one Neil has your basketball Clearpoint brand roadmap start.
Speaker Change: Starting from the premium segment, so built up skills and they can spend.
Speaker Change: And then introducing a mass market brand to gauge and there's still for more users.
Speaker Change: With that we will be able to make greater contributions to a more sustainable future.
Speaker Change: On May 15.
Speaker Change: But the international day of February.
Speaker Change: They introduced uncle, a new brand for the mainstream family market.
Speaker Change: Well, he's a phone on voyage and.
Speaker Change: It's a Chinese name the adult translate into path to happiness.
Speaker Change: On a mission to make family life Betcha.
William Li: Envoy is committed to bringing products with the ultimate experience value and optimal ownership cost. The pre-order for its first product, the L60, was started. LCC is a smart electric mid-size SUV.
Speaker Change: Uncle is committed to bringing products, whereas the automate even better than that.
Speaker Change: Up tomorrow ownership costs.
Speaker Change: Although it's a forced to put out our 16, what's the start it.
Speaker Change: Since there is a smaller electric midsize jets will be.
William Li: The official product launch and delivery will begin in September. The launch of Envoy has shaped us into higher skills, expanding our reach to a wider youth base. As more people are aware of our technologies and the product, we will bring closer our vision of a blue sky country.
Speaker Change: A feature of pulled out to lunch and the deliberate will begin in September.
Speaker Change: Lunch of uncle had those shipped off into Ohio.
Speaker Change: Expanding our reach to a wider user base.
Speaker Change: As more people are aware of all technologies and the product.
Speaker Change: At close of our vision of a blue Sky economy.
William Li: As for the sales and service network, so far, NIO has 154 NIO houses and 388 NIO spaces, as well as 344 service centers and 64 delivery centers. For the charging and swapping network, so far, NIO has 2,472 possible stations worldwide, and has provided over 45 million swabs. He said NIO has also installed over 22,000 power chargers and the destination charger. In the meantime, more industry players have joined NIO's charging and swapping network.
Speaker Change: I just put it says in the service and that's what drove up nearly 154, new houses and the 388 net new basis.
Speaker Change: As well as a 344 service center.
Speaker Change: And 60 40 live more deliberate.
Speaker Change: Yes.
Speaker Change: About about the charge and the swaps in networks. So Paul Neil had 2400 out of necessity to pulse work stations worldwide.
Speaker Change: Has it provided over 45 maintenance work.
Speaker Change: Besides <unk>.
Speaker Change: <unk> has also installed over.
Speaker Change: 22000, the power charger and the destination charge offs.
Speaker Change: In the meantime.
Speaker Change: More industry players have joined New York charging in the swaps and that's work that.
William Li: As of now, we have partnered with Chang'an, Geely, JAC, Cherry, Lotus, GAC, and FAW to jointly expand and standardize the battery swapping network. More investors have taken notice and recognized the value of NIO's charging and swapping business. On May 30th, NIO Power signed a strategic investment agreement of RMB 1.5 billion with the support of strategic investors.
Speaker Change: Oh, no we have partners with a tongue on G. D. J S. A cherry Lottos D E and F pace tableau.
Speaker Change: So jointly spent and the standard there.
Speaker Change: Batteries to what's network.
Speaker Change: Moya investors have taken notice and they recognize the value of our Nielsen hygiene and the swaps business.
Speaker Change: Third people.
Speaker Change: Neil Power center strategically invest them, an acquaintance of RMB one five pilot.
Speaker Change: What's the support help a strategical investors Neil will it be able to further get bad it's caught her knowledge and expand that network.
William Li: NIO will be able to further develop its core technologies and expand the network after May 13. NIO was named in the 2024 Fortune China ESG impact list. We have continued to show social responsibility and lead by example in the ESG domain to further contribute to sustainable development worldwide. Despite fierce competition, NIO's continued investment in technology, products, service services, and the community is paying off, and that has set it apart from other NIO's premium brand precision, Industry-leading technologies, and innovative, chargeable, swappable, and upgradable And the last treatment study is CSV bond.
Speaker Change: On may 13th.
Speaker Change: Neil was named in the 'twenty four fortune, China ESG impact.
Speaker Change: They have continued to show those social based bunker abilities and lead by example in that yes, it's a man to further contribute to the pin Nepal Tibet women worldwide.
Speaker Change: Despite the fierce competition.
Speaker Change: All continues.
Speaker Change: In technologies product service services, and the like community starts to pay off and that's that pause.
Speaker Change: Apart from others.
Speaker Change: Neil its premium brand position.
Speaker Change: Industry, leading technologies and innovate charger Bosch whirlpool and the upgrade the ball Park experience.
Speaker Change: Being recognized by more people.
Speaker Change: And does that drip instead, they assess the baby bonds.
William Li: We will continue to speed up software integration, optimize products and experiences, and improve system capabilities and operational efficiency to gain a larger market share. In the meantime, as the company unfolds its multi-brand strategy and enters a bolder market, we expect to bring out more potential for growth. As always, thank you for your support. With that, I will now turn the call over to Stephen for Q1's financial details.
Speaker Change: So as that continues to be a top software integration opt.
Speaker Change: Optimize pullbacks.
Speaker Change: These.
Speaker Change: And poof system capabilities, and the operational efficiency to gain a larger market share.
Speaker Change: In the meantime.
That's a company unfolds, its a multi brand strategy and inputs.
Speaker Change: The bucket.
Speaker Change: <unk> expects to pin out more potential for Kohl's.
Speaker Change: As always.
Speaker Change: Thank you for support with that I will now turn the call over to Steven for two of the financial details.
Speaker Change: Over to you Steven.
Stephen Fung: Thank you, William. I will now go over our key financial results for the first quarter of 2020. So, keep this brief. I will only refer to a month in RMB today.
Steven: And here with an IV.
Steven: I have a long over all about keeping our results for the first quarter also tends to lead to.
Steven: I'll keep this brief.
Steven: I only refer to among C arms each day.
Stephen Fung: Encourage listeners to refer to our earliest press release, which is posted online for additional details. Let's begin with, for the first quarter of 2024, total revenues were 9.9 billion RMB, down 7.2% year over year and 42.1% quarter over quarter.
Steven: I encourage listeners to refer to our earnings press release, which is supposed to be online for additional details.
Steven: Beginning with revenue for.
Steven: For the quarter for the first quarter, often pool total revenues were 9.9, Biamby's Dom 10, 2% year over year, and 42, 1% quarter over quarter.
Stephen Fung: 85% of revenue comes from vehicle sales in Q1, totaling 8.4 billion RMB, down 9.1% over a year and 45.7% The decrease year over year was mainly attributed to lower average selling price as a result of user rights adjustments from 5th June 2023 and a decrease in deliverables, that decreased quarter over quarter was mainly attributed to a 40% decrease in digital volume, which was affected by seasonal factors. According to other sales, the sales were 1.5 billion RMB, showing a 5.2% increase year-over-year and an 8.2% decrease quarter-over-quarter.
Steven: 85% of revenue comes from people, she asking Q1 totally eight 4 billion RMB.
Nine 1% of yoga ear, and 45, 7% quarter over quarter.
Steven: The decrease year over year was mainly attributed to lower average selling price or the result of use of rights adjustments fifth June 223.
Steven: Decrease in delivered for you.
Steven: The decrease quarter over quarter was mainly attributed to a 40% decrease in to do for you.
Steven: Which was affected by seasonal factors.
Steven: Turning to Odyssey sales, let's.
Speaker Change: Let's see I'll just one quick follow up you know our MP showing a five 2% increase year over year.
Speaker Change: Eight 2% decrease quarter over quarter.
Stephen Fung: The year over year growth was mainly due to the increase in sales of parts, after sales vehicle services, and the provision of power solutions, which grew with our user base, and partially offset by a decrease in revenue from sales of used cars and auto finances. The decreased quarter of a quarter was mainly attributed to a decrease in revenue from sales of used cars. Now, let's have a look at the gross margin.
Speaker Change: The year over year girls was many due to the increase is sales of parts. After so it's the core services and the provision of possible shoes, which grew with our user base and then partially offset by the crazy revenue from sales of used cars and auto financing services.
Speaker Change: Crazy quarter for culture was mainly attributed to a decrease in revenue from sales of used cars.
Speaker Change: Then yes, you have a look at the gross margin.
Stephen Fung: Overall gross margin was 4.9%, compared with 1.5% in the same period of last year and 7.5% in the last quarter. Changes in gross margin were primarily driven by vehicle margin. Fiscal Margin was 9.2% in this quarter, compared with 5.1% in Q1-3 and 11.9% in Q4-3. The year-over-year increase was mainly due to the decreased material cost per unit in Q1 2004.
Speaker Change: Overall gross margin was four 9% compared with one 5% in the same period of nausea at simple, 5% in the last quarter.
Speaker Change: <unk> gross margin.
Speaker Change: Primarily driven by vehicle marches.
Speaker Change: Margin was nine 2% in this courtroom comparable was five 1% in Q1, two three and 11, 9% in Q4 drinks industry.
Speaker Change: The year over year increase was mainly due to the decrease in material cost per unit in Q1 two.
Stephen Fung: The quarter of a quarter decrease was mainly due to lower advertising prices as a result of increased promotion during product transitioning changes in product mix, and the past was offset by the decreased material cost per unit. Next, moving on to the operating exchange. R&D expenses for 2.9 billion RMB declined 6.9% year-over-year and 27.9% quarter-over-quarter, which was driven by decreased design and development costs and decreased personnel costs in research and different functions in the first quarter of 2024.
Speaker Change: They caught up a quarter decrease was mainly due to a lower average selling price or the result of increased promotions jewelry product transitioning changes in product mix and partially offset by decreased material cost per unit.
Speaker Change: Next moving onto the operating expenses.
Speaker Change: R&D expenses.
Speaker Change: To Phnom Binney RMB declined six 9% year over year.
Speaker Change: And at 27.9% column culture.
Speaker Change: Which has been driven by decreased design and development costs and be crazed personnel costs in research and different functions in the first quarter of principally school.
Stephen Fung: S-Gen 8 X-Sensors with 3 Beating Arms increased by 22.5% year over year and decreased by 24.6% quarter over quarter. The year over year increase was mainly due to First, an increase in personal costs related to the sales function. Second, the increase in expenses related to the company's sales and services network expansion, and third, the increase in sales and marketing. The quarter of a quarter decrease was mainly due to first, the decrease in sales and marketing activities and professional satisfaction, and second, the decrease in personal costs related to sales and general corporate functions.
SG&A expenses.
3 billion RMB increased by 22, 5% year over year and decreased by 24, 6% for the quarter.
Speaker Change: The year over year increase was mainly due to.
Speaker Change: First the increase in personnel costs related to sales functions.
Speaker Change: Second the increase in expenses related to the Companys skills and extensive network expansion.
Speaker Change: And third the increased sales and marketing activities.
Speaker Change: Quarter over quarter decrease was mainly due to first the decrease in sales and the marketing activities kind of professional services.
Speaker Change: And second the decrease in personnel costs related to sales and general corporate functions.
Speaker Change: Now we proceed to the bottom line.
Stephen Fung: Now, we proceed to the bottom line. The plus for operations was 5.4 billion RMB, which is an increase of 5.5% over a year and a decrease of 18.6% quarter of a quarter. The net loss was 5.2 billion RMB, representing an increase of 9.4% year-over-year and a decrease of 3.4% quarter-to-quarter.
Speaker Change: Loss from operations was four opinion RMP will cause an increase of five 5% year over year, and a decrease of 18, 6% quarter over quarter.
Speaker Change: Net loss was $5 2 billion RMB represent an increase of 19, 4% year over year, and a decrease of three 4% quarter to quarter.
Speaker Change: And finally, our balance of cash cash equivalents restricted cash short term investment and longtime time deposits was 45.
Speaker Change: Farquhar three BD hobby.
Mark: Mark So the first two literally.
Mark: For more information and details of our first quarter financial results. Please refer to our earnings press release.
Stephen Fung: And finally, our balance of cash and cash equipment, restricted cash, short-term investment, and long-term time deposits was 45.3 billion RMB as of March 31, 2025. For more information on our first quarter 2024 financial results, please refer to our early press release. Now, this concludes our prepared remarks. I will now turn the call over to the operator to proceed with our Q&A session. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Speaker Change: Now this concludes our prepared remarks, I will now turn the call over to the operator took prostate our kunai session.
Mark: Yes.
Speaker Change: Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
Operator: If you are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can re-enter the queue. Your first question comes from Tim Hsiao from Morgan Stanley. Please go ahead. Envo and those are some strategic priorities for NIO Power. I have two questions.
Speaker Change: If you're on a speakerphone please pick up the handset to ask your question.
For the benefit of all participants on today's call. Please limit yourself to take questions and if you have additional questions you can re enter the queue.
Tim Hsiao: The first question is about the gross profit margin because, as we remember, the company previously guided the co-gross profit margin would be back to the mid-teens as the strategic focus of the NIO brand is profitability and cash generation while Envo would be the one going for volume. However, we saw increasing promotion for the NIO brand in April and May, which worked pretty well actually and successfully boosted volume. Will management consider continuing this kind of more aggressive promotion on the NIO brand for better volume in the upcoming months, and do we need to revise down our vehicle margin expectation? That's my first question. Thank you, Tim.
Speaker Change: Your first question comes from Timothy out from Morgan Stanley. Please go ahead.
Timothy Morgan: Hum and thanks for taking my questions and congratulations on the good feedback on humble and because there's some strategic breakfast for your power.
Timothy Morgan: I have two questions. The first question is about and of course puppy margins.
Timothy Morgan: Because that's I mean.
Speaker Change: That's what I can remember the comps you previously guided the coker as part of the margin would.
Speaker Change: We'd be back to mid teens, I say that.
Speaker Change: Strategic focus of neoprene is profitability and the cash generation well on though would be the one going to lobby. However, we saw increasing promotion for new Green in April really high which worked pretty well actually high success successfully boosted walden.
Speaker Change: Will management consider to continue these client a more aggressive promotion on your brand.
Speaker Change: Best of all in the upcoming months and do we need to revise down the Coe margin expectation that that's my first question.
Stanley Qu: I will ask Stanley. Yeah. Regarding the gross margin, actually, we upgraded our NT2 product to the 2023-2024 version in March. During the transition period of the model year product change, more promotions were offered to the old models, leading to a decrease in our average selling price in Q1. And additionally, more lower-margin models like ET5 and ET5T were sold in Q1. All those factors led to a decrease in our gross margin
Speaker Change: Thank you Kim Oh, Oscar send it to us.
Speaker Change: Okay.
Speaker Change: Uh huh.
Speaker Change: Got it.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah regarding the gross margin.
Speaker Change: Actually we upgrade data our antitrust paradox to 10 through to the full version in Oh from a March during the transition periods.
Speaker Change: If the modal model year product change Oh promotions offered to the OTA model, leading to the decrease of our average selling price in Q1.
Speaker Change: And Additionally, more lower margin models like 85, and 85 T.
Speaker Change: It was sold in Q what are all those factors are are.
Speaker Change: At least to the decrease of our gross margin are as you mentioned, we delivered over to these thousands of vehicles to users in a in may.
Stanley Qu: As you mentioned, we delivered over 20,000 vehicles to users in May. With the recovery of sales volume, we will further optimize our product mix and negotiate with our supply chain partners for more cost efficiency in the following months. So we expect the vehicle margin to return to double digits in Q2 and continue to improve in Q3 and Q4. Yeah, but considering the intensifying retail market competition, we will also be more flexible on sales policy to make sure our market position is secure. Thank you. Thank you, that's very clear. Thanks for sharing all the details.
Speaker Change: The recovery of our sales volume, we will further optimize our product mix and negotiated with our supply chain partners for more cost our efficiency in the following months. So we expect to the vehicle margin will oh, they tend to double digits.
Speaker Change: In Q2 and continue to improve in Q3, and Q4, yeah, but consider anything intensifying marketing market competition. We will also be a more flexible also its policy to make sure our market position is secure.
Speaker Change: Thank you team.
Tim Hsiao: My second question is about NEO Power. As William just mentioned, I think NEO Power secured the first external strategic investment of $1.5 billion, or around $200 million. So looking forward, will NEO Power get and accept more funding support from other card makers in the battery swap alliance? And separately, in addition to NEO Power, are there any other take-horns or business units within the group that could follow suit to seek external capital injections and be gradually carved out? Could the management team give us some examples?
Speaker Change: Thank you that's very clear thanks for sharing sharing the details on my second question is value power. So really just mentioned I think the real power secure the first external strategic investment at $1 5 billion or around 200, and I think they saw there so looking for well Neil powered gassy and accept.
Speaker Change: More funding support.
Speaker Change: From audio carmakers in the battery swap aligns and separately.
Speaker Change: Centennial power is there any other take corn soy business units within the group that the policy to external capital injection and be gradually cop out.
Speaker Change: Management team give us some examples.
Speaker Change: That's my second question. Thank you.
Speaker Change: Oh <expletive> hits him.
William Li: That's my second question. Thank you. Okay, thank you, Tim. Yes, NIO Power, after we made the first financing, we are still maintaining a net profit of about 90%. Sponsored ADR Class A,, But in general, its profitability is [inaudible] Sponsored ADR Class A of fundraising. And after this round of financing, NIO still has around 90% of equity in NIO Power. And NIO Power is now open to external investors; be it investment from investors or from car companies; we are open to that.
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Speaker Change: Two quick questions for me I wouldn't call. It a lot of topside equipment combination so rule.
Speaker Change: Question for you if I'm in Asia.
Speaker Change: It happened in Sydney.
Speaker Change: You shouldn't when there's a hub wide.
Speaker Change: Thank you for the question for the New York Harbor, originally would have just completed the first round of fundraising and after this round of financing you'll still have around a 90% of the equity in your power and your power is not open for the external investors Beach in Mustang investment from the investors.
William Li: Of course, for the longer term, we do believe that NIO Power has financial sustainability because we do have a promising and positive outlook for that. At the starting stage, as we needed to build up the network for the power swap facilities, the upfront investment is relatively heavy. However, we do see a clear roadmap for profitability with NIO Power. Let me share with you a number.
Speaker Change: We're from the car companies are we are open for that of course for the longer term. We do believe that newer power. It has a financial sustainability because our we do have a problem, it's a promising and a positive outlook for that and you're starting to stage as we needed to build up the network for the power swap facilities, the upfront investment as well.
Speaker Change: To be hobby. However, we do see a clear roadmap for the profitability with no power, let me share with you a number right now for the break even point of a single power swap station. It's around 60 swabs per day and if you look at our current power swap service every day on average we offer around 100000 hour swaps.
William Li: Right now, for the break-even point of a single power swap station, it's around 60 swaps per day. And if you look at our current power swap service, every day, on average, we offer around 100,000 power swaps with around 2,000 stations. It means that for each station, on average, they are already providing around 30 swaps per day. So, for the longer term, we do see a viable roadmap for the sustainability and also the profitability of our power swap business, not to mention that we can also leverage the revenues contributed by the energy storage and also the flexible battery upgrade of the power swap. Thank you, team.
Speaker Change: It's around 2000 stations it means that for each station of Irish they're already providing 30 30 around 30 swaps per day. So for the longer term, we do see a viable road map for their sustainability and also the profitability of our Polish business not to mention that we can also leverage the revenues contributed by the energy storage and.
Speaker Change: Also the flexible battery operate off the power swap.
Speaker Change: And her team.
Speaker Change: [noise].
Ming Chung: Thank you. Your next question comes from Ming Sun Li from Bank of America. Please go ahead.
Speaker Change: Thank you. Your next question comes from being sung Lee from Bank of America. Please go ahead.
Ming Chung: Hi, I'm William on the management team. This is Ming from Bank of America. So my first question is regarding the Anmol brand. So right now, we are close to the end of the second quarter. So could you give us some guidance regarding your sales channel expansion and also CAPEX related to the Anmol brand? And also, could you give us a rough product pipeline for the Anmol brand? Thank you. That's my first question.
Hi, William and the management team at least to me.
Speaker Change: So I don't think of them in concert with my first question is from.
Speaker Change: Garden I'm open.
Speaker Change: So right now we are close to the second quarter so could.
Speaker Change: Could you people have some guidance regarding on your own sales channel.
Speaker Change: And the old school Okay.
Speaker Change: Expenses related to ongoing right now.
Speaker Change: So could you give us some rough.
Speaker Change: Our product pipeline.
Thank you that's my first question.
Speaker Change: Oh, thank you.
Speaker Change: Gentlemen, a woman wants Shen Jia pass a little outside Europe, and Joe for their Soho are mostly a U pack them in good shape.
Speaker Change: Doug are you backwards, what you would've been down pretty badly.
Speaker Change: I'm, a too much and some capex, but there's a lead time when you look at all of them.
Speaker Change: Can I push you always young.
Neil Neil How's that sound holds it would be a stock. So you had some data that show that Pepe Joe showed you 100 different Calder. So Ya man he Goldman did that towards the tablets that you buy it though that about one that maybe you could give me.
Speaker Change: Okay. That's helpful.
Speaker Change: And we're gonna waited to the states and governments Nashville, a placebo.
Unknown Executive: Thank you. Sponsored ADR Class A, Thank you for your question. Our current plan is that when we start to launch and deliver the first product of Anwo in September this year, we're going to open up around 100 stores in China. Capex West, as Anwo's point of sales, does not come with NIO Health, which does not require heavy investment in that case.
Speaker Change: Thank you for your question. Our current plan is that when we started to launch and deliver the first the product I'll note in September this year, we're going to open up around 100 stores in China Capex last as almost all stores with point of sales does not come with a new house, which does not require a heavy investment in that.
Unknown Executive: The overall Capex will be pretty efficient, around 1 to 2 million RMB per store. It won't be a very heavy burden from the Capex perspective. Thank you. Sponsored ADR Class A, [inaudible] Yeah, the first product we have is the L60, a mid-size SUV competing with the Model Y. We will launch the second model next year. This is a mid-size SUV for larger families.
Speaker Change: The overall capex will be pretty efficient around the one to 2 million RMB per store it wont be I've ever heavy burden from the Capex perspective.
Speaker Change: Yeah.
Unknown Executive: We will launch it next year. Sponsored ADR Class A, Unknown Executive, Tim Hsiao, William Li, Bin Wang, Paul Gong, Yuqian Ding, Rui Chen, Edison Yu, Tina Hou, Ming Chung, Jason Getz, NIO Inc. Sponsored ADR Class A Regarding Anvil's product line, actually, the first product, L60, will be directly competing with Model Y. It's a mid-size SUV for family users, and the next year, we're going to introduce the second product from Anvil. It will be a mid-large SUV for bigger families.
Speaker Change: Oh I'm sorry.
Speaker Change: Yeah.
Speaker Change: Yeah, sorry about that.
Speaker Change: Right. So I'm all good. So example.
Speaker Change: And then maybe how to model next year.
Speaker Change: Yeah.
Speaker Change: Well, then shouldn't that little so consumption. This 60.
Speaker Change: Thanks, Pete to go through some other way computer you quite an assumption that you'll be number of southern Union to go what Mohit lungs. She did a good job.
Speaker Change: So no material you Clinton, Oh, gosh and does so to a degree.
Speaker Change: Sorry, you said attaching to J S.
Speaker Change: Dominion lunch.
Speaker Change: On the whole she does happen does that quick last one from the last short Oh boy or tide Dawn of Titans done woman starring Maggie I mean from in those few of them had to shut down and go outside shipping sometimes those batteries they'll go that you got from the tussle with that is it just shows how it sets us apart and she shouldn't that changyou. So there's initiatives.
Speaker Change: So bad right now.
Speaker Change: No no way, it's I'd say that even when the Hatfield fifth ambassador.
Speaker Change: Oh boy a tape type order timing can you quantify them in.
Speaker Change: Air travel habits in the Nielsen.
Speaker Change: Regarding the almost products to flying actually the first of products to our 60, it won't be directly competing with model Y. It's a mid sized SUV for family users and then next year, we're going to introduce the second product from anvil. It won't be a large SUV for a bigger families well.
Unknown Executive: We also have other products in the pipeline, but overall, speaking for Anvil, we will not have many products in its offering. We will be focusing on enhancing the market share and also the sales volume of each product in its respective segment. Overall speaking, the total sales volume for Anvil's segment, which is a family car market with a starting price of around 200,000 RMB, the total size is around 4 million, and we do believe that we have a good opportunity and room for growth in that segment. Thank you, Ming. Yeah, thank you, William. Thank you, William.
Speaker Change: Also have other products in the pipeline, but overall speaking for onboard we will not have many products. It's offering a we will be focusing on enhancing the market share and also the south part of each product in their respective segment. Overall speaking the total sales volume for almost a segment, which is our family car market.
Speaker Change: With a starting price of around 200000 RMB. The total size is around 4 million and we do believe that we have a good opportunity in the room for growth in that segment.
Speaker Change: Yeah.
Unknown Executive: And my second question is related to your third brand, because we read in the news today that the five brands could be launched or shown to the market probably by the end of this year. And could you also give us some latest updates on the third brand? And the last time during the opening call, you mentioned that probably five brands of products could be sold in new households, new space. So could you confirm this network share?
Speaker Change: Thank you Amin.
William Li: William Thank you William.
Speaker Change: Second question.
Speaker Change: Q2, you said brand it becomes Oh, we read the news today.
Speaker Change: The final slide.
Speaker Change: Could be lunch or show to the market and probably by the end of this year and Oh could you also give us some vicki talked to on the sort of the.
Speaker Change: Lots of times during the call you mentioned that.
Speaker Change: Probably fired side then.
Speaker Change: That could be sell in new households space. So could you confirm on these.
Speaker Change: Oh, Yeah sure. Thank you.
Unknown Executive: Thank you. Thank you. FiveFly's development is going well overall. I drove this car a few months ago.
Speaker Change: Yeah, that's it Firefly, telling me you haven't found it and done so once it goes to the production number pick a time you can see that's what they seem.
Speaker Change: You can imagine she was or what you can call out to the slope.
Unknown Executive: It performed very well. Thank you. Sponsored ADR Class A, Thank you for the question regarding our third brand Firefly. The R&D activities are in good progress. Several months ago, I tried one of the early builds of their first model, and it's pretty good.
Speaker Change: Oh sure.
Speaker Change: Yeah that is giving way to harness that jumbo that's a good thing way behind us to get tuition vishal.
Speaker Change: I'm tired of Chagas.
Speaker Change: So if you're one of the main piece that happens and so you've got the firsthand go to Belgium Untrimmed Belgian code you quoted the Belgian City do you Kwon particular, there you go to shelf.
Speaker Change: I'm a woman somewhat and are focused on the shorter lead times that doomed walkways lineage, who should take Oh, yeah, that'd be the social one law to hook up.
Speaker Change: Many of her smart Armenia hook BMW. The claims it's hard to tell them to put you guys point might it be media weight don't want me to I mean can indeed Uh huh.
Speaker Change: The took a third that minions somebody outweigh some of the Gulf who are fabulous agenda, while I'm a high tide I mean, it's typical J D. That's only that's what Joe or something like that.
Speaker Change: Yeah.
Speaker Change: Somebody in soft tissue.
Speaker Change: Thank you for the question regarding our third Brian Firefly. The R&D activities are in good progress several months ago I have already tried one of the early builds off their first model and its pretty good where gardening that firefly product in the Chinese market it won't be target it won't be a boutique compact to vehicle.
Unknown Executive: Regarding the Firefly product in the Chinese market, it will be a boutique compact vehicle. Although its price segment is around 100 to 200,000 RMB, it will meet a very high standard for safety and quality. So it will be a well-designed boutique car for the Chinese market. In terms of the sales channel, it will also share the point of sales with NIO, just like how MINI is sharing its dealership network with BMW. We will be using a similar approach. However, the selling price of Firefly will not be as expensive as MINI, but product-wise, it is definitely a very good product.
Speaker Change: Although it's probably second mandates around 100 to 200000, RMB, but it will follow a very high standards for the safety and the quality. So it will be a well designed boutique car for the Chinese market in terms of the sales channel. Each will also share the point of southwest Neal just like how many sharing it's dealerships.
Speaker Change: Of course with a b M. W. We won't be using a similar approach. However, they saw them twice that firefly will not be as expensive as many product wise. It is definitely a very good project, we will start that the product delivery from the first half of next year.
Unknown Executive: We will start product delivery in the first half of next year. The brand launch and the product launch, we don't have a specific date for that, but the delivery date is already more or less defined. That is the first half of next year. Thank you, William.
Speaker Change: Brand launch and the product launch we don't have the specific date for that but the Detroit that is already more or less defined that as the first half of next year.
Speaker Change: Yeah.
Speaker Change: Thank you William.
Bin Wang: Thank you. Thank you. Thank you. Your next question comes from Bin Wang from Deutsche Bank. Please go ahead.
William Li: Thank you.
William Li: Gentlemen.
Speaker Change: Thank you. Your next question comes from bin Wang from Deutsche Bank. Please go ahead.
Bin Wang: My question is about margin, because you will migrate to NT 3.0 this year. So assume all the NIO brand products migrate from NT 2.0 to 3.0. How much margin improvement can we achieve through a technology upgrade? At the same time, based on NT 3.0 technology, can you provide a volume assumption to reach the overall company market event? That's my first question.
Speaker Change: Thank you my question Martin.
Speaker Change: Mike.
Speaker Change: <unk> reported good obviously.
Speaker Change: Oh, no deal Glenn pulled off.
Microphone two.
Speaker Change: 2.0 to three zero, how much margin.
Speaker Change: We cannot cheap through technology upgrades.
Speaker Change: At the same time.
Speaker Change: And do you feel that technology can provide the volume assumption toward reaching the oboe company breakeven.
Speaker Change: That's my first question. Thank you.
Speaker Change: Oh, I'm being a non cig woman Neil the cigarettes hadn't kicked off on the homing in case, a big tongue eat Tonight, and Typhoon persons Sogou Chairman do you find that in time.
Unknown Executive: Thank you. NIO products will be available next year. This one starts at ET9 and gradually switches to G3.
Unknown Executive: Sponsored ADR Class A: We still aim to maintain a business of 30,000 units and 20% of the gross profit margin. As for Anvo, we have announced a pre-sale price, but this is not our final price. From the current pre-sale price perspective, we still have a very good profit margin. As you know, the competition in Anvo is very intense. But we will not sacrifice; we will not trade at a very low profit margin. This is not our direction.
Speaker Change: You send that person had someone just when I saw what Matthias do you want.
Speaker Change: Pete I'll call them. All you do that you don't have dipole things with home Digger, how you can do that through yet the dummies, yeah. Its usual be resourcing kit.
Speaker Change: Now the time to launch into the T. Goldman them, how do you do Oh, how are you set up on a current dollar you should take a take a beautiful that's a good thing so 10 minutes or.
Speaker Change: So you had some delays for women womens home and consolidate you come out he just.
Speaker Change: I will miss it in your mouth or you can give us your argument that up and actually sit down and show them and they go mogul digital Hyperphrase Honeywell.
Speaker Change: No no no.
Speaker Change: It's a big doesn't really take a well known we'll go to the store count went down a claim or not somebody do that don't go to a question you wouldn't go near the pause and then go to the elite took a took a.
Speaker Change: I'll sit down and useless Union mobile.
Speaker Change: I'm a little on the Oh, what happens and that's all in Michigan that couldn't believe they use those yard pushed all let me say something that ends up not so much I know you just switch out each other let John Mcdonald.
Speaker Change: How should I know you always go for it hung will toward a multi do not done.
Speaker Change: Without cigarettes, I suppose I guess Jujamcyn engine builds a few time, but she did that wasn't a good wage.
Speaker Change: Choose Houston, they've got one boy uncovered dita moldy true.
Speaker Change: So to go out and do a shout out to a bushel amigo.
Unknown Executive: We believe that Anvo should maintain a profit margin of more than 15% in the long term. Of course, this is our business goal. If we look at it from the perspective of Tesla, today, its profit margin is about 16%. So from the perspective of Anvo, we must pursue a profit margin of more than 15%. This is currently our goal.
Speaker Change: Oh, what sometimes you that so far.
Speaker Change: So you go through with you some of them already so that'll show them. They got Union moved out a couple of them could test side, you would come to cut in Nevada, and then put them all at the top of its actually which is why you'll see a woman that I don't want to do it.
Speaker Change: It sounds the nacelle to our th will show you sound like them all.
Speaker Change: So when they go mobile somebody eclipsing collateral.
Unknown Executive: From the perspective of profit margin balance, Anvo can produce about 20,000 to 30,000 units a month of our products to the third generation, and the first product on NT3 will be ET9. And for the third-generation product, we will also take different approaches to improve the vehicle margin. For example, we will start to put more in-house technologies into our vehicles, like chips, for better vehicle margin performance. We also see some opportunities with battery cost reduction. So overall, speaking, our target for the NT3 product margin will be around 20% on average. And we do have a confidence of realizing that average margin of 20% from NT3.
Speaker Change #100: Oh yeah.
Speaker Change: So that's what I can say.
Speaker Change #101: Makes sense.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change #102: Thank you for the question regarding your brand starting from next year, we will gradually upgrade our products to the third generation and the first product in Q3 will be each night.
Speaker Change #102: For the third generation product.
Speaker Change #102: Well also take different approaches to improve the vehicle margin. For example, we will start to chew put more in house technologies into our vehicles like chips I slept better vehicle margin performance. We also see some opportunities with the battery cost reductions. So overall speaking our target for the interest rate product margin will be around the 20%.
Speaker Change #102: Our on average and we do have a confidence also realizing that average margin of 20% from interest rate and regarding the breakeven target for the new front. Our target is still the same that is to realize the mostly softball game of 30000 units with a vehicle margin of around 20% and then we won't be breaking even.
Unknown Executive: And regarding the break-even target for the new brand, our target is still the same, that is to realize a monthly sales volume of 30,000 units with a vehicle margin of around 20%. And then we will be breaking even with the core business of the new brand in China. And regarding our second brand, Envelope, we have announced the pre-sale price during the product launch – during the brand launch, but we haven't released the final price yet.
Speaker Change #102: With the core business off a new brand in China.
Speaker Change #102: Regarding our second brand uncle we.
Speaker Change #102: And after the pre sell twice during the product launch during the French launch, but we Havent released the final price yet even with the pre sell price we can realize the pretty good to be co margin of course, we also understand that the competition in all those segments is more intense than Neil in that case, we will also strike a balance.
Unknown Executive: Even with the pre-sale price, we can realize a pretty good vehicle margin. Of course, we also understand that the competition in the Envelope segment is more intense than for NIO in that case. We will also strike a balance between volume and margin. We will not boost the sales volume at a cost to our vehicle margin.
Speaker Change #102: Between the volume and the margins they were not supposed to the soft volume at a cost of our vehicle margin and for the longer term our target for almost products are our margin target for almost products were also above or even around or above 15% because looking at tests not their current product margins are about 16000.
Unknown Executive: And for the longer term, our target for Envelope's products – our margin target for Envelope's products will also be above or even – around or even above 15%. Because looking at Tesla, their current product margin is around 16% to 17%. And for Envelope, realizing a margin of above 15% is also a reasonable and achievable target for us in the longer term. For the Envelope brand to break even, its monthly sales volume should be at least 20,000 to 30,000 units per month.
Speaker Change #102: 17% and before uncle, realizing a margin above 15% is also a reasonable and achievable target for us in the longer term before I'm, a branch or to break even and it's miles to the south volume should it be a at least a 20 to 30000 units per month.
Speaker Change #102: Okay.
Unknown Executive: Thank you. My second question is about the audio backlog for OVO. You actually, in an interview, said that you were very satisfied with the Envelope's initial order backlog. The San Marquis talk is that you already have 60 or 60,000 cancelable orders right now. Can you tell me your number and how satisfied you are about the Envelope's order so far?
I think in my second question.
Speaker Change #102: Oh.
Speaker Change #102: Oh no.
Speaker Change #103: You actually have you set out to you a very excellent.
Speaker Change #103: Almost all the backlog that's a mark.
Speaker Change #104: Key points that you already have 60 or 60000 canceled about older right. Now can you comment on that number and call Center section, you'll find a omar hotels, so far thank you.
Unknown Executive: Thank you. Yes, as you know, we never announce the number of pre-orders. Because pre-orders can be canceled at any time, we don't think it's very helpful. But indeed, the number of on-board orders exceeds our expectations. This is what our on-board CEO said in the interview. But we will not announce the number of pre-orders. We can only say that, in the case that we haven't opened a store yet, the number of pre-orders has exceeded our expectations. We can only say that now.
Speaker Change #105: They need to do a minister.
Speaker Change #106: Looking forward to get everything done that slowdown take a wait we didn't answer.
Speaker Change #106: It's basically a paid them pulling away a pet that has hung called E element chest onward, and done the slowdown Pogo women.
Speaker Change #106:
Speaker Change #107: One onwards, and as I say have honestly I saw that you did well.
Speaker Change #107: Woman shows that once you're going to get them done this what elements and I'm sure that that would mean you could tell me okay. That's from home shop Eugenio down the guts.
Speaker Change #107: How about maybe she died within that there's a mix element vehicles.
Unknown Executive: As you know, for us, we never disclose any pre-order intake or numbers as the pre-orders are refundable, and we don't think it's a very solid reference for us to look at the actual performance of the product. However, it is true that with the pre-order intake, it has surpassed our expectations, as also mentioned by the president of Anwo L&I in some interviews. So overall speaking, without opening up any stores or having products on the market, we have already received pre-orders that are beyond our expectations. That's the information we can provide. Thank you very much.
Speaker Change #108: As you know that for us, we never disclose any pre order intake or numbers.
Speaker Change #108: Preorders are refundable and we don't.
Speaker Change #109: I resolved at the reference was to go capture the actual performance of the product. However, it is true that with the pre order intake. It has surpassed our expectation as also mentioned by the president of Ala and I are in some interviews. So overall speaking without opening any stores or having products to the market. We have already received.
Speaker Change #109: The preorder that's beyond our expectation that's information we can share.
Speaker Change #110: Thank you very much thank you.
Unknown Executive: Thank you. Thank you. Thank you all.
Speaker Change #111: And you don't go up then.
Unknown Executive: Thank you. Your next question comes from Paul Gong from UBS. Please go ahead.
Speaker Change #112: Thank you. Your next question comes from Paul Gong from UBS. Please go ahead.
Paul Gong: Thanks for taking my questions. Two questions. The first question is, you mentioned that right now you have 2,400 swap stations. To my best understanding, only the third generation and latest battery swap stations could help Anvil to swap the batteries.
Speaker Change #113: Thanks for taking my questions two questions. The first question you.
Speaker Change #114: You mentioned so as of right now you have to solve for hunk to swap stations tomorrow.
Speaker Change #115: My best understanding.
Speaker Change #116: Generation and latest possibly swap stations.
Unknown Executive: Could you please remind us how many units of the later generation battery swap stations could help with the Anvil swap? Thank you. Our third-generation station will undergo some modifications, but the amount of work will not be very large. It will be an investment of about 200,000 to 300,000 RMB. After the modification, it will be used by Leidao. But our third-generation station has more than 1,000 seats. So the third-generation station itself has more than 1,000 seats.
Speaker Change #117: Hello, Paul harmful to swap the batteries.
Speaker Change #118: Could you please remind us harmony.
You'd itself.
Speaker Change #118: On lead generation battery swap stations with help football unfolds swap.
Speaker Change #118: Yeah.
Speaker Change #119: Oh sure Yeah, well and then somebody had signed off on Oh, yeah. It.
Speaker Change #119: It didn't go you said guy so I don't think I saw the commentary on the uncle with Abaloparatide, so while it won't be there either.
Speaker Change #119: Okay.
Speaker Change #119: How do I find somebody who maybe they're towards the tellers educate until you can't live without you got on the Sunday, the Pogo tens or so Sunday, sometimes windows, how well you shouldn't do it.
Unknown Executive: Sponsored ADR Class A, The four-generation station will be compatible with NIO and Envo. This year, according to the market plan, we will see how many power stations we need to deploy. But all four-generation stations can be used by NIO.
Speaker Change #119: I mean somebody would have in case of just a pullback.
Speaker Change #119: Okay, some things to the portfolio.
Speaker Change #119: No most of that's been done to sort of tie it sounds like it typically like a clean so generally take a little at all so that's the good uncle.
Neil Clearpoint: Neil Hi.
Speaker Change #121: Dan single women Jinyan figure I click and just and this is how much do you want to call them, a dirty shelf, which was both a finding that that sort of through that at that time.
Unknown Executive: According to this year's progress, the number of power stations for NIO users will exceed 1,000 by the end of the year. For our third generation power swap station to be compatible with all those products, we do need to make some necessary modifications. It is not a very expensive one, around 200,000 to 300,000 RMB per station for the modification.
Speaker Change #121: Without you see junior and you'll go a conflict with tender you go tender and they go right down the hall.
Speaker Change #122: Well, there's no way it Don Tania, Indeed, Ohio mingle get little dog on this outcome.
Speaker Change #122: They don't really want it done can you talk about your Chengdu.
Speaker Change #123: That's helpful for sure.
Speaker Change #124: Thank you for the question for our third generation power swap station to be compatible with all of those products, we do need to make some necessary modification. It just not a very expensive one around 202 or three of Huntsville about RMB presentation for the marketing function.
Unknown Executive: So far, we have already installed more than 1,000 third-generation power swap stations. So that will be a base. In the meantime, actually next week, we will start to install our fourth generation power swap stations, and these stations will be compatible with both on-wall and NIO products. And also later this year, depending on the market and the demand, we will also see and decide how many fourth-generation stations we need to deploy for NIO and on-wall products so that all fourth-generation stations can be accessed by on-wall products.
Speaker Change #124: So far we have already installed in more than one saw that and start to generation power compensation, so that won't be a base.
Speaker Change #125: Meantime, let me say I'm actually next week, we will start to install our first generation power swap stations and at this stage I said won't be compatible with both envelope and the new products and also later this year, depending on the markets and the demand. We will also see and decide how many fourth generation station, we need to deploy.
Speaker Change #125: For our new and our products. That's all fourth generation stations can be accessed by uncle, Bob that's probably where that by end of the year are in the market that they won't be more than what I saw that station that can be compatible with our products.
Unknown Executive: Probably with that, by the end of the year, there will be more than 1,000 stations that can be compatible with on-wall products. But we won't modify all the third-generation stations, because not every station needs them.
Speaker Change #126: We are well me a bit about sort of the Sunday ban okay. So you.
Speaker Change #127: Yeah of course, the main thought sun the sugar.
Unknown Executive: Sponsored ADR Class A, [inaudible] Of course, it doesn't mean that we will modify or open up all the 4th generation stations to Anvo users, as not every station needs to be modified or opened up to the second brand. Not to mention that, to start with, Anvo will not have a very big user base for the current year. In that case, the experience of those brands will be pretty good. We can still clearly see the relevance of sales growth in an area after the construction of a power station.
Speaker Change #126:
Speaker Change #126: Up even a little down.
Speaker Change #128: You sound like me when I'm, a dormouse eats when he got going for getting it done right down the hall.
Speaker Change #128: Can you have you don't want to go as it appears on coal.
Speaker Change #129: Of course, it doesn't mean that we will notify were open all the fourth generation stations to anvil users as not every station needs to be modified or open up to does that kind of brand not to mention that to start with AMA will not have a very big user base for the current year and that tastes experience says that those brands will be.
Speaker Change #130: Pretty good how well known Hudson condo, Shin, Florida condo Giga fundings on tenants that you thought that you could shoot and they pay you.
Speaker Change #131: They're doing a shutdown that's been done because somebody says Oh I'm sorry, It sounds then don't matter.
Unknown Executive: We are selling very well in Tangshanjiao, which accounts for more than half of our total sales to Anvo users. We also have 800 power stations in Tangshanjiao. Sponsored ADR Class A, In the meantime, we also see some correlations between the number of power swap stations or the density of the power swap stations in certain regions and the salt performance in that region. For example, in the Yangtze River Delta area, basically half of our users are based in that area.
Speaker Change #132: <unk> been talking about settlements and cooking for the show's who took a poll of umicore. So hopefully you find yourself, knowing that sometimes that that yield I bet. It's the opinion that would.
Speaker Change #132: Could you quite did enjoy basketball, especially up in Canada I see some questions. So you want me yeah. It sounds that come and go there you go Allied motion just like Google Finance on a bushel and though you thought then.
And then of course from Saudi meant that I suppose shutdown that yeah.
Speaker Change #132: Well I would say you take the.
Speaker Change #132: In New York City, well Messiah poodle.
Speaker Change #132: Bushel or minimum element that I'm gonna want weight and shipping functions sue them at Shire, but a one and done a push or some sort of compute they shutdown that's fujian.
John Mcdonald: John what you call them that holds it up where you thought where you can download Sundays.
John Mcdonald: So it's a combination of things.
John Mcdonald: Let me hold off on and then of course, you'll have been got to something like one in Florida right now we couldn't always.
John Mcdonald:
Speaker Change #134: In time, we also see some correlation between the number of power swap stations, where the density of our power substations in certain regions and that's all from US not to beat you. For example are in the Yangtze River Delta area basically half of our users are based out in that area and in this area. We have already installed in nearly 900 palace.
Unknown Executive: And in this area, we have already installed nearly 900 power swap stations. So there is a correlation between the number of stations and the number of cells. In that case, we are also developing an ROI model to calculate the return on the power swap station investment. In that case, our deployment of the power swap station and the decision on the deployment will also be relevant to their contributions to the cell volume, be it cells of NIO or cells of the Anvil brand. As right now, we have already initially established a charging and swapping network for China to cover most of the basic needs.
Speaker Change #134: Stations. So there is a correlation between the number of stations and the number of cells in that case. We are also developing a or I'm auto to calculate the return on that highway swap station investment in that case, our deployment of the power substation and a decision on the deployment will be also relevant is true there.
Speaker Change #134: Our contributions to the South ballroom B cells, often you know, we're south of the Anvil brand as.
Unknown Executive: For the next step, we will look closely at the return on the investment of all the power swap stations, especially the return on the cells volume. In that case, our next deployment will also be more targeted. Thank you. So my second question is regarding the level 3 license permit.
Speaker Change #134: Right now we have already initially established a charging and swapping network. We're trying not to cover most of the basic needs for the next stop we will look closely at the return on the investment also all the power swap stations, especially the return on the South ballroom in that case I'll, let deployments next to stop they'll also be more targeted.
Speaker Change #135: Thank you so much for the second question. So regarding the <unk> suite license permit I think you are among the first batch to receive the number three autonomous driving testing on license permit.
Unknown Executive: I think you are among the first batch to receive the level 3 autonomous driving testing license permit. How do you plan to utilize this opportunity and how should you further develop the autonomous driving technology? Thank you.
Speaker Change #136: Do you plan to utilize this opportunity and so how should.
Speaker Change #136: Further develop on the autonomous driving technology.
Unknown Executive: Two days ago, we just got the approval from the four departments of the Ministry of Industry and Industry Development for a four-point enterprise in L3. Sponsored ADR Class A. Thank you for the question. Yes, two days ago, we received the L3 testing permit issued by four ministries, including MIT.
Speaker Change #137: Sushi Teardown Kinsey I know women come down quite a lot comes importance to go boy that Dan.
Speaker Change #138: Can you go with that L. Three if I'm in there you go sit in it she get the you got to do.
Speaker Change #137: Cool.
Speaker Change #137:
Speaker Change #139: Hello, Tien Toyota you can sell them yes.
Speaker Change #137: They seem tornadoes in the city of Med D. Puget.
Speaker Change #137: If I may at times to do I'm going to take a tissue.
Speaker Change #137: It's a really good oh.
Speaker Change #137: Okay. If I may on milk or do you want to go to college, who come out and say can go cheap yeah. That's a good sometimes that again tweak a trigger to go a tweak or two good adult dual super boom unclear can bodies I told you. The two quick known facilitates and the hunger that's what does it say something like that.
Speaker Change #140: Thank you for the question I guess two days ago. We haven't received the illustrated costume permits issued to buy for a minister ministers, including M. I T.
Unknown Executive: And also, among all the startups, we are one of the earliest to receive the first batch of permits issued by the government. This also represents a recognition of our technology. For the next step, with the permit and the testing capability, we will be able to keep in more frequent communication with the government regarding the application and also the testing of higher levels of autonomous driving technologies, which will also be very important for the entire industry.
Speaker Change #141: Also among all the startups, we are one of the earliest to receive the first the Bachelor issued by the government. This also represents a recognition of our technology for the next to stop with the permit with the testing capability, we will be able to keep more frequent communications with the government regarding the uptick.
Speaker Change #141: And also the cost went off the higher levels of autonomous driving technologies, which will also be very important for the entire industry.
Speaker Change #141: Yeah.
Speaker Change #142: Thank you.
Unknown Executive: Thank you. Thank you. Your next question comes from Yuqian Ding from HSBC. Please go ahead.
Speaker Change #143: Thank you. Your next question comes from you can Ding from HSBC. Please go ahead.
Yuqian Ding: Thank you, Tim. My first question is probably still an extra mile on the margin and pricing. So second quarter, probably we're going to see higher economic scale, almost a double versus the first quarter. Yet the promotion and also lower mix are likely to remain as dilution. So you talked about flexible pricing earlier. So could you give us a bit more context about how we prioritize pricing mix and volume and each of them's weighting on the margin side? Thank you, Yuqian.
Speaker Change #144: Thank you team. My first question is probably its doing an extra mile on the margin and pricing. So second quarter, probably we're going to see higher economic of scale almost doubled versus the first quarter. You had the promotion and also lower mix likely to remain as that dilution. So you talked about the flexible on pricing earlier, so could you.
Speaker Change #145: Answer in a bit more context about how we prior prioritize pricing mix and volume and and each of them are waiting on the margin side.
Speaker Change #146: It says that you can take a well it sounds like a woman a.
Unknown Executive: The growth in sales in April and May is a comprehensive result. First of all, we have completed product switching. We have switched to 2024 models. The competitiveness of the entire product has definitely increased. Secondly, I think the Batch as a Service strategy is very important. In March, we released the long-life battery strategy.
Speaker Change #147: To go with Oh.
Speaker Change #148: So down it's about so you've got some of them. So that you could call out.
Speaker Change #148: They go down so we can sell well know when some of the time in Chile than they are telling the hunting is still quite a lot and good times and the tendency of consistent dialogue.
Unknown Executive: At the same time, we have adjusted the price of battery rental. Based on the extension of battery life, we have a better agreement with battery suppliers on battery quality assurance. So, in general, the adjustment of the price of Batch is very important for users to accept the subscription model. Currently, the percentage of users who use the battery rental has exceeded 80%.
Speaker Change #149: I'll, let John or gender women. Some good that's a good path because the battery as a service.
Speaker Change #149: Women's and good to put it so the faith and coming out of that woman sign me up and they're so popular time show me against where does it stand yet, but almost all of them.
I'm told them to go up a turn so you get to the Chancellor to you I mean do you against the Soviet they're getting hung.
Speaker Change #149: Convenient layer and hunting for the show me, Ohio, amongst little against clean or something like that then the downfall something from you and you're good.
Speaker Change #149: Consolidating so you're just in the last sort of a passive as it goes out to the couch.
Speaker Change #149: You take a young who tears so figure a thing we had to take.
Speaker Change #149: Most of those have been out doing out on this inside the good thing about a BD to the Toyota Highlander and Statoil I'm confident as it could be just how good the bus. So you can figure out some good as it could take rate is the central doesn't dalla Oh elements in their pass at a home yet Kelly's Yeah may scenario, something you'd think that it sounded you share to go up.
Unknown Executive: So, the take-away has increased significantly. Of course, we have also given some discounts for Batch for one month every four months. Thirdly, I think it is very important to expand our sales network. Since the second half of last year, we realized that the number of our sales network and sales personnel is not enough.
Speaker Change #149: Figure out you said swoosh elder families yet.
Speaker Change #149: But do your sunglass down when we used to pay down some of the outages on the social what water to go quote that don't Union that shows on the meter to use them tune yen Siobhan you in case, well me, yes adult woman the social the Wow look hook selling them to a social and you got a slowdown should go down just the two of them just once you're in yen to the sensitivity.
Unknown Executive: So we started to build on this in the third and fourth quarters of last year. The number of qualified fellows has increased significantly. They have also started to contribute to sales orders, so this is also very important. Of course, we have also seen an increase in the number of our power stations and everyone's recognition of our power supply and our recognition that it can be replaced and upgraded, as well as the reputation of our product retention rate. Because we just, I saw two days ago, and I think you're good.
Okay. So to say so it doesn't mean, it's yet.
Speaker Change #149: Juniors, who took the essentially different types of no more qualified as they're doing a fellow of the slowdown associated with in Dallas, Texas.
Speaker Change #150: Considering that the social good and done so I'd say its the first time, Toyota and she's either high or I mean, I kind of love to get a sense.
Speaker Change #151: Oh my.
Speaker Change #152: Yeah, I thought that they were more funding that they're doing it doesn't do a book to go cold foam cold foam cushions to they're going to quote you you wonder about the news I've been about Davita, Kobe gone down or kind of play out as him.
Speaker Change #153: I'll take a so much Italy with Michelle whether you go post columnist yes by on pushing those that she didn't even the sandoz for those pop. So yeah. Just to go sit on someone critical Michelle C. Well certainly suggest that there you got a pricing.
Speaker Change #154: Hey, good kelsen Susana wouldn't be a female one function booted that's out there that tells them that Boston, Ohio, ECA, you'll put on 10 for the damn careful I'll be able to clearly show you that she likes she thought it wouldn't be me okay.
Unknown Executive: Sponsored ADR Class A, Thank you for the question. In April and also May, we witnessed an increase in our sales volume, but such an increase is actually due to multiple factors. The first is that we have just completed our model year phase lift in the first quarter of this year. With that, it has significantly improved the competitiveness of our products. And secondly, we have adjusted our bus policy. This March, we announced our long-life battery strategy and also the changes to the bus monthly subscription fee.
Speaker Change #154: Okay.
Thank you for the question in the April and also May we have witnessed the increase in our sales volume by such increases actually go to multiple factors. The first is we have just completed our motto here, especially in the first quarter of this year with that it has significantly improved the competitiveness of our products.
Speaker Change #154: Secondly, we have adjusted our first policy. This March we have announced our long life battery strategy and also the other adjustments to the past monthly subscription fee by optimizing our operations and also working with our supply battery suppliers for longer battery warranty, we can prolong the lifetime of the battery and the lorry them off.
Unknown Executive: By optimizing our operations and also working with our battery suppliers for longer battery warranty, we can prolong the lifetime of the battery and lower the monthly fee for our users. This is actually a very important approach to boost the take rate of the bus service.
Speaker Change #154: The fee for our users. This is actually a very important approach to boost their take rates off the fastest service after the announcements and the adjustments that take rate is the battery as a service has raised more than 80% are also we are offering some time limited promotions on the passive service right now our users can.
Unknown Executive: After the announcements and adjustments, the take rate of the battery as a service has raised to more than 80%. Also, we are offering some time-limited promotions on the bus service. Right now, our users can buy four months of the bus pass and enjoy one month for free. The third reason is regarding the improvement in our self-capabilities and capacity. In the second half of last year, we realized that we didn't have enough self-capacities and capabilities, which means we didn't have enough points of self or self-centered persons on the team.
Speaker Change #154: Five four months as that fast and enjoy your time off for free.
Unknown Executive: In that case, we started to build our self-capacity and capabilities. And starting March and April this year, we are seeing more and more qualified fellows contributing self and also orders to the company. So these are several major reasons that are boosting our self volume in the past two months. In addition to that, there are several other reasons.
Speaker Change #154: The third reason is regarding the improvement on our ourselves capabilities and capacity in the second half of last year. We all like that that we didn't have enough south capacities and capabilities, which means we didn't have enough point up so whereas the salesperson is on king in that case, we started to build out yourself capacity and capabilities.
Speaker Change #154: Our team March April this year, we are seeing more and more qualified fellows to contribute this house south and also orders to the company. So there are several major reasons that are pushing ourselves follow me in the past two months. In addition to that there are several other business. For example, we're deploying and the opening up more and more power swap station.
Unknown Executive: For example, we are deploying and opening up more and more power swap stations. Additionally, more and more people are also getting to know and starting to recognize the value of a chargeable, swappable, and upgradeable solution. Sponsored ADR Class A Sponsored ADR Class A, Sponsored ADR Class A, In the meantime, we also will continue to improve our vehicle margin. So, starting in June, we are taking several actions. The first is to keep improving our product mix. We started to deliver our ET7 in late April. ET7, ES8, and EC7; they are pretty competitive in their respective segments.
Speaker Change #154: More and more people are also getting to know and are starting to recognize the value of a chargeable swappable and upgradable solution and also we have a pretty stable with citral value on Arbor used to vehicles. It wasn't really there was a evaluation coming from the industry institutions and the yes, eight and several other new model.
<unk> actually have the pastor RV performance among all the VEB products. So it is not just about the adjustments on the price that's not to mention that we haven't announced any price reductions on our products. We are offering some promotions like battery as a service policy promotions, where some trading incentives what I say.
Speaker Change #154: Your car users that's no price reductions on the products not just in Ireland and Poland.
Speaker Change #155: Hey, good for sure that she she around them getting moldy, if I'm an appeal of shipments you don't control. The older you get you saw them until new opinion that they're attempting to make fun of me and well may I truthfully say youll.
Speaker Change #155: Telling me you T. Cheeto arguments theory, you can put a dollar Oh man Dai Ichi Hydro and yes, Bob you said, she timelines that Hudson that are shipping sometimes feels like it's in them either no or minimal Quaker he said that stuff I'm empathetic and Buda tell me sheer young children, the things I said Comolli times.
Speaker Change #155: Come on lead times in the southeast here D D.
Speaker Change #155: She's not here with me as I continue to see that you saw it tick up variable marketing I mean did you ship Wendy well misses on Saturday with and one each in Queens.
Speaker Change #155: Well meet them so they lease yet.
Speaker Change #155: So you should see a sudden she does so we showed attendance abuse or well known funding a fund in trying to sort out a dozen of them family issue. So that as you said some the last short Oh.
Speaker Change #155: Oh, it's only show them when pool, Houston merchant long shot Yokohama, only leave Tesla, besides gearbox and familiarity with them.
Speaker Change #155: Yeah.
Speaker Change #156: In the meantime, we also well continue to improve our vehicle margin. So starting to and we are taking several actions. The first is to keep improving our product mix. We have started to deliver our E. T. Southern in late April it piece I don't yes, H and you said seven they're pretty competitive in their respective segments and we will also.
Unknown Executive: And we will also encourage our frontline teams and our fellows to put more focus on this high-margin product to help us optimize product mix. And secondly, we are also optimizing our variable marketing expenses. Starting June, we are also dialing back on our time-limited offers and promotions on the products. For example, we are reducing the number of free power swap brochures we gave out to our users.
Speaker Change #156: Encourage our frontline teams and all of our silos to put more focus on there's a high margin product to help us optimize product mix and secondly, we are also optimizing our variable marketing expenses starting to and we are also told them back on our time limited offers and promotions on a product for example, where we do.
Speaker Change #156: The number of us are very poor restaurants brochure, we gave out to our users. So overall speaking, we will keep improving our south volumes that'd be well optimizing the vehicle margin.
Unknown Executive: So overall speaking, we will keep improving our self-volume steadily while optimizing the vehicle margin. Thank you. That's very comprehensive.
Speaker Change #156: Yeah.
Speaker Change #156: Yeah.
Speaker Change #157: Thank you that's very comprehensive and next question is be oversee business. The Europe Union N T subsidy investigation towards China E V might come out as a preliminary reads out next week. So Greg could we have an update refresh our neil's oversee footprint, including Europe.
Unknown Executive: The next question is on overseas business. The European Union anti-subsidy investigation towards China EV might come out as a preliminary result next week. So could we have an update, or refresher, on NIO's overseas footprint, including Europe and also the Mideast? Of course, our entire industry is waiting for some of their announcements. Of course, we think this is a very wrong direction.
Speaker Change #158: And I also met east.
Speaker Change #159: Yeah that women are so high is that in day, it's a good time in Asia.
Speaker Change #160: Hey, good to go Shimbun.
Speaker Change #161: No way to get the well, but that's the way it doesn't fit so whether you go you go until the Oh way to go.
Unknown Executive: Because of global sustainable development, we think that increasing tariffs on new energy-related products is against the goals of the global sustainable development of human co-operation. Sponsored ADR Class A, But in the long run, whether it's Envoy or Firefly, we will, of course... Sponsored ADR Class A, Thank you for the question. It's true that the entire industry is waiting for the preliminary announcement on the anti-subsidy probe in Europe. From our perspective, we don't think such a probe is in the right direction.
Speaker Change #161: 10 showed our to go cups, we ship out that Ah well minimum wage to go I'd say similar in Shanghai.
Speaker Change #161: So I'm gonna turbulent times, we think that climate change is a torture.
Speaker Change #161:
Speaker Change #161: Some of the change of cause to you about that and that's because then they can come to move out those that paid off.
Speaker Change #162: So it sounds like.
Speaker Change #162: That sounds like it's yet another let down one Mcdonald's, which you can choose either terminated station that you hit your I didn't could you tell someone they should oh something called Proteus.
Speaker Change #163: Uh Huh that's out on the New York State also to show them and sell them a computer show them used to the data.
Speaker Change #164: The women's in glucose that opinion, but she said to me in Guizhou somebody in yourself, that's hung Sheila is sure, but why does the envelope Firefly.
Speaker Change #164: Wasn't done until they couldn't do it.
Speaker Change #164: Like a time window side, what do you see a quite and say if I'm going to use yet because the towels and sheets. So it didn't really go up.
Speaker Change #164: Yeah.
Speaker Change #165: Thank you for the question. It is true that the entire industry's waiting for the preliminary announcement on the anti subsidy pulp mm off you're right from our perspective, we don't think such a focus in the right direction imposing tariffs on the new energy vehicles is actually going Augusta B R E.
Unknown Executive: Imposing tariffs on new energy vehicles is actually going against the initiative of the sustainable development of all humankind. Of course, we will also adjust our directions and strategies according to the latest changes in tariffs on the products. Overall speaking, at the moment, sales in our European market are still quite moderate in comparison to our total vehicle sales, so the impact on our short-term operations is limited.
Speaker Change #165: Initiatives off the sustainable development of all humankind of course, we will also adjust our directions on the strategies. According to the latest change.
Speaker Change #165: On the tariffs.
Speaker Change #165: Overall speaking at the moment to European the South in our European market is still quite tomorrow, which are in comparison to our total vehicles house. So the impact on our short term accretion is limited for the longer term beat for new work for our Firefly product, we will also develop and make necessary adjustments to our strategy.
Unknown Executive: For the longer term, be it for NIO or for Envoy and Firefly products, we will also develop and make necessary adjustments to our strategies according to the latest tariffs. Sponsored ADR Class A, Regarding the Middle East market entry later this year, we are going to start to offer our products and services in the UAE market. We are making market entry preparation right now. Thank you. Thank you, Yuqian.
Speaker Change #165: According to the latest tariff policies.
Speaker Change #166: So I told him that the write down of women say junior why it's just the whole I mean athletes at UAE a ticker.
Speaker Change #167: That's almost the two of them that are with me someone at the Midland sourced today seem that Nichols.
Speaker Change #167: Regarding the middle East the market entry later this year, we are going to start to offer our products and services in the UAE market.
Speaker Change #167: We're making a market entry preparation right now.
Speaker Change #167: Okay.
Speaker Change #168: Thank you.
Speaker Change #169: Thank you chip.
Jing Chang: Thank you. Your next question comes from Jing Chang from CICC. Please go ahead.
Speaker Change #170: Thank you. Your next question comes from Gene Chang from C. I C. C. Please go ahead.
Speaker Change #169: Yes.
Jing Chang: Hi, thank you for taking my questions. My first question is a quick follow-up question about, so can we share with us more information on the financial impact of the major, especially best policy adjustment for, you know, the first quarter, such as our best rental fee adjustment and also our 401 battery rental and also our, like, battery swap coupons, these financial impacts, especially on our income statement? And this is my first question, about the price adjustment. There are two parts.
Gene Chang: Oh, hi, Thank you for taking my questions. My first question.
Speaker Change #172: Thanks, Tony.
Speaker Change #173: Question about so can be sure sure we saw small information on the.
Speaker Change #174: Financial impacts hockey major.
Speaker Change #174: Internationally, our policy adjustments you know first culture, such as our.
Speaker Change #174: Oh, gosh rental fee adjustment and also AMR.
Speaker Change #174: One definitely rental and also our battery swap coupons.
Speaker Change #174: These financial impacts, especially Oh, yeah, you see centrally for all income statement.
Speaker Change #175: And this is my first question.
Speaker Change #174: Yeah.
Unknown Executive: First, is about the price reduction from like 980 to 728. Currently, no major impact on NIO's revenue and gross profit margin. I think, as mentioned by William, we make this adjustment based on the assumptions that the battery can be used for a longer time and also some optimization of the battery life operations.
Speaker Change #174: Yeah about the bus a price adjustment.
Speaker Change #176: I think two parts. The first one is about the price.
Speaker Change #176: Price reduction from from like 982.
Speaker Change #176: Hydra and a T H.
Speaker Change #177: [noise], apparently no material impact to <unk>.
Speaker Change #177: Revenue and gross profit margin.
Speaker Change #178: As mentioned by William.
Speaker Change #178: We are making this adjustment is based on assumptions that are the battery pack.
Unknown Executive: So that's first. Secondly, about the promotions used for months and one month for free. We granted this equity to the users for five years. So, generally, the financial impact of this promotion is about below 6,000 per car. So that's the general impact of this policy. Yes, thank you.
Speaker Change #178: To find a longer time and also some optimization I see the battery ice operations. So that's the first secondly above the promotions.
Speaker Change #178: Use for Mars, and why Mossville free we granted this equity to the users for five years. So generally the financial impact of this promotion Ah Ah is about below 6000.
Speaker Change #178: A car so that's a general impact that that's the.
Speaker Change #178: It's a policy.
Speaker Change #178: Yeah.
Unknown Executive: My second question is about our online platform FiveFlight. So this year we will have our first car, and next year we will have FiveFlight be launched. And our three sub-brands, including NIO, will form a quite complex product matrix next year. So can you share more information on these different positions and also the different relationships between these three brands and also in what aspects can we collaborate? Yeah.
Speaker Change #179: Yeah. Thank you.
Speaker Change #180: My second question is that right.
Speaker Change #181: I also thought farmer, Oh, I know suffice right. So this year, we'll have Oh first car and next year, we'll have SIFI to be launched.
Speaker Change #181: And our sweet suffering equally you with pharma are quite complex.
Speaker Change #181: Product matrix.
Speaker Change #182: In next year, so can you share more information on.
Speaker Change #181:
Speaker Change #181: Different positions and also the different relationships between our three brands.
Speaker Change #183: What's the cash tax can we elaborate.
Speaker Change #183: Yeah.
Unknown Executive: Sponsored ADR Class A, [inaudible] The Unknown Executive, Tim Hsiao, William Li, Bin Wang, Paul Gong, Yuqian Ding, Rui Chen, Edison Yu, Tina Hou, Ming Chung, Jason Getz, NIO Inc. Regarding the positioning of our three different brands, actually, they are very clearly differentiated. For NIO, it is a premium brand that targets business-oriented users, and business communities also have a spillover to the family-oriented users. For Anvo, it targets the premium family market, and the mass market. So its target user is very clear: family users.
Speaker Change #184: Not only are well my son got competitive edge on the same way it has fit unchanged.
Speaker Change #184: So you've got to nail that down the same.
Speaker Change #184: So I took a golden systems few minutes ago.
Speaker Change #184: A Sunday the Yo Yo.
Speaker Change #184: Who has the song with Jim good job for them to think big.
Speaker Change #184: Hum take a five Florida.
Speaker Change #184:
Speaker Change #184: Toyota took the Italian due to Oh, I'm going to take a dwell has a toyota.
Speaker Change #184: No. It stayed unchanged tied to mobile which does attacking right cool.
Speaker Change #184: Now what that Firefly, which I mean that sounds bullets hot hottest dim weight, but.
Speaker Change #184: Don't go to find out I'm going to say you got a particular you could sell it could attack the entry level of bankruptcy.
Speaker Change #184: I'm a tie.
Speaker Change #184: Figure out hunting, where there's a lead time on our part tied to ticketing wages.
Speaker Change #184: So who you're judging that Sami to shoot you a basic tier that would put it down in the future.
Speaker Change #185: Ah so Sundance standup some hydrating their husbands.
Speaker Change #185: Number two I just want to have a positive outcome.
Speaker Change #185: So without a doubt the city wide since you last spoke with you.
Speaker Change #185: Goodbye.
Speaker Change #185: That's a good segue to Tien shipping change doesn't have end up going home could you address that doesn't have one yet.
Thank you for the question regarding the positioning of our three different fronts actually they are very clearly differentiate it for Neal. It is a premium brand target business oriented users and business communities also have that still over to the family oriented users for anvil it targets the premium family.
Speaker Change #185: <unk> market mass market also it's targeted user it's very clear family users for Firefly as I've mentioned in China. It will be a affordable boutique compact car, we target the family oriented users.
Unknown Executive: For FarFly, as I've mentioned, in China, it will be an affordable boutique compact car. We target family-oriented users, especially those families who are buying FarFly as their second vehicle. That's about the positioning of these three brands. Price-wise, it is also pretty clear. The starting prices of all three brands will be around 100,000, 200,000, and 300,000 RMB. That is also clearly differentiated. However, these three brands do share a similarity, that is, the power swap.
Speaker Change #185: Especially those families who are buying firefly starts that kind of a vehicle that's about the positioning of their brands price wise. It is also pretty clear that starting price. That's starting prices also Austria, France will be around 100000, 200000, and 300000 RMB that is also clearly differentiate it however this.
Great brands do share a similarity that is parish lop off your brands kind of support power swap.
Unknown Executive: All three brands can be supported. Sponsored ADR Class A, From the point of view of the exchange station, we can see that UNGO and NIO's exchange station can be shared. Sponsored ADR Class A, In addition to PowerSwap, the three brands also share the fundamental capabilities for smart technologies, electrification, and also vehicle engineering capabilities. For example, when it comes to smart technologies, software-wise and hardware-wise, the three brands can share quite a lot of synergies. For the PowerSwap stations, as we've already mentioned, NIO and Envoy will be sharing the same PowerSwap station and also its structure.
Speaker Change #186: I know you didn't know how much is filling.
Speaker Change #187: Wow, that's getting the platform in the Republicans are going to come in before you get to the place on Calder.
Speaker Change #188: As you know there's been a lot of debates out behind the woman to trigger sort of whether you can see and hear about Jim Cummins agenda, depending on these go to for your own.
Speaker Change #188: Turning to the finance and the dollar don't kind of uncle. So that's at the New York agenda put inside a car you can shop with us.
Speaker Change #188: So going from.
Speaker Change #188: So we don't want them to go sure this isn't hard.
Speaker Change #188: On the whichever woman, our duty and you'll lose out of D. When somebody.
Speaker Change #189: Yeah. So good is that near the F. Two I'm kind of missing.
Speaker Change #189: The woman and condo, Samsung patches and negotiate it.
Speaker Change #189: So the ticket and then Lee Hood figure out the total ports.
Speaker Change #190: In addition to power swap the three brands also shares the fundamental capabilities for smart technologies electrification and also vehicle engineering capabilities and for example, when it comes to Smart technologies software wise hardware why third brands kind of share of quite a lot of synergies for the power swap stations as you.
Speaker Change #190: Already as we've already mentioned in you and although we'll be sharing the same power swap station and also structure for the vehicle engineering. There are also quite a lot of capabilities that can be shared across all three brands.
Unknown Executive: For vehicle engineering, there are also quite a lot of capabilities that can be shared across all three brands. In terms of manufacturing and production, the first model of the Anvil L60 will be manufactured at NIO's second factory, the NIO F-150.
Speaker Change #190: In terms of manufacturing and production of the first Amato of Allah 60 will be manufactured in New York is that kind of factory new after so from this perspective your control and how much of synergies, we can leverage and how much investment we can share across your brands.
Unknown Executive: So from this perspective, you can see how much synergies we can leverage and how much investment we can share across peer brands. Thank you. Thank you. Your next question comes from Tina Hou from Goldman Sachs. Please go ahead.
Speaker Change #190: Yeah.
Speaker Change #190: Okay.
Speaker Change #191: I don't care, what time frame.
Speaker Change #192: Thank you. Your next question comes from Tina <unk> from Goldman Sachs. Please go ahead.
Tina Hou: Thank you for taking my question. So my first question is regarding actually just now William mentioned keeping the volume steadily increased and then to improve the growth margin. So can we interpret this as for the upcoming month, we do expect the vehicle volume to be above 20,000 units per month? That's my first question.
Tina Hou: Thank you for taking my question. So my first question is regarding I actually just now William mentioned to keep the volumes steadily increase and then to improve gross margin. So they started out I think we shouldn't they can't tease out teach them already so.
Speaker Change #194: So can we interpret this as for the for the upcoming months, we do expect the vehicle volumes to be up to 20000 units per month. That's my first question. Thanks.
Unknown Executive: Thanks. Thank you, Tina. From what we've seen so far, our demand is very stable. Of course, we are facing some small troubles recently. In May, our demand for orders actually exceeded our production capacity. So basically, the delivery volume in May is the maximum we can produce per month. Sponsored ADR Class A, Um, it's true that we do see a pretty stable demand for our products. Recently, we do have several small headaches.
Tina Hou: Oh sure Yeah Tina.
Speaker Change #195: And then how much of that kind of a woman a kind of all of them. The shoe show the harness Oh has it fifth on wouldn't deem the AUM in Taiwan.
Speaker Change #196: Didn't you have me a minute.
Speaker Change #197: So they'll find out just as a woman.
Speaker Change #197: I live in I thought with the woman.
Woman that Didnt done the St. Joseph out so that you can tell them that well so your women's children's out take a weapon itself without until sort of been talking with them. Some time to say that yeah. The.
Speaker Change #197: So we should assume for the Pheno and some delays sort of on the macondo the to get them done it themselves.
Speaker Change #197: Baytown to go wouldn't deem coface hung to goods for sure that that's in the sea.
Speaker Change #197: Ah So international women's day to sell either the.
Speaker Change #197: To the shutdown itself with Yamana has a few things.
Speaker Change #198: It's true that we do see a pretty stable demand on our products recently, we do have several small headaches. For example are in May actually the order demand has exceeded our production capacity. So the actual deliveries we achieved in may basically means the maximum vehicle maximum.
Unknown Executive: For example, in May, actually, the order demand actually exceeded our production capacity. So the actual deliveries we achieved in May basically mean the maximum number of vehicles we can produce for that month. So we do see a steady and sustainable growth momentum in our on our intake, and we have confidence in success.
Speaker Change #198: Number of vehicles, we can produce for that's mouth. So we do see a study and a sustainable growth momentum on our mark on our order intake and we have a confidence that continuing that.
Speaker Change #198: Yeah.
Unknown Executive: And thank you. Can I just have a quick follow-up on this. I think, starting from September, you will start to deliver Envelopes. So does the 20,000 units sort of forecast or target include Envelopes or excludes them? After Ledao was released, we saw that it was also a positive push for the NIO brand, so we did not see the demand for NIO being released by Ledao.
Speaker Change #199: And thank you can I just have a quick follow up for snow for the I think starting from September you will start to deliver uncle. So does the 20000 units a sort of forecast or target include or exclude uncle.
Speaker Change #200: Oh, and then think a little though thoughtful of your whole women's so sometimes the candle a heartbeat.
Speaker Change #201: Hi, Yeah. So you got it doesn't mean that you don't see a woman male condom nyota shoot shows so theyre a little about poverty in themselves.
Unknown Executive: Sponsored ADR Class A, After the launch of the Anvil brand, we actually saw a positive impact on the sales of the new product. It hasn't affected the demand for the new product. In the meantime, we are also training the operators and also the frontline teams so that we can get ready for the production of Anvil's product. We may also arrange dual shifts in certain production lines or sections to fulfill the demand for those brands and products. Regarding whether this number you've just mentioned is correct, well, if it is, if it has included the volume assumptions for Anvil, actually, it does not.
Sometimes the lead time that will meet the patient take a call on what Michelle.
Speaker Change #201: I Tango, K swung back and forth and you're talking about enough hours to let them down.
Speaker Change #201: They are well I'm gonna town that unprovoked handle Dol took a physical content. She doesn't go showdown opinions of coupon Lauder or can I ask what it is in New York City.
Speaker Change #202: That's a good shout out.
Speaker Change #203: After the launch of our Anvil brand, we actually see positive impact on the sell off in your product it hasn't affected the demand on the Neal project in the meantime, we are also training the operators and also with our frontline teams. So that we can get ready for the production of almost product.
Speaker Change #203: We may also arrange two shifts in certain production lines, where sections to fulfill the demand or is it those brands and products.
Speaker Change #204: Regarding whether this number you've just mentioned well.
Speaker Change #205: It is if it has included the volume assumptions for a well actually it does not that is only the assumption for then you're back.
Unknown Executive: That is only the assumption for the new brand. Thank you; that's very clear. Thanks, William.
Speaker Change #205: Yeah.
Unknown Executive: And then my second question is regarding operating expenses. So first, on SG&A, in the first quarter, we see SG&A actually increased by 22% year over year. So should we expect a similar type of increase in the following three quarters? And also, actually, starting from September since there will be 100 new stores for Envelope Edit.
Speaker Change #205: Thank you that's very clear thanks, William and then my second question is regarding the operating expenses. So first time on SG&A in the first quarter, we see SG&A actually increased by 22% year over year. So should we expect a similar type of increase in the following three quarters and also actually starting from September.
Speaker Change #206: <unk> person there will be 100, new stores for uncle at it so Ah in that like the last quarter should we expect SG&A expense to to grow even higher and then in terms of R&D on the other hand, I see it's down 7% year over year. So.
Unknown Executive: So in that, like the last quarter, should we expect SG&A expenses to grow even higher? And then, in terms of R&D, on the other hand, I see it down 7% year over year. So for the overall R&D expense, what kind of annual spending level do you think will be a sustainable or steady state kind of expense for us to keep competitive in terms of our hardware and software technology? Thank you.
Speaker Change #207: For like overall R&D expense.
Speaker Change #208: What kind of annual spending level do you think you will be like a sustainable or a steady state kind of expense.
Speaker Change #209: For us to keep some package in terms of our hardware and software technology. Thank you.
Unknown Executive: Yeah, regarding the operating expense, the first is about selling expenses. Yeah, actually, in Q1, our marketing activities decreased considering the impact of the Chinese New Year festival and also the seasonal change. Starting from Q2, we are expecting that the percentage of set expense against the vehicle revenue will be improved if our sales growth quarter over quarter can be achieved as planned. So that's about setting prices. Along with the launch of Envol, we don't think the efficiency will be damaged.
Speaker Change #210: Yeah regarding operating expenses first it's about setting expense yeah actually in Q1, our market activities decreased considering the impact of Chinese New year Festival and also the seasonal change.
Speaker Change #210: Starting from Q2.
Speaker Change #210: We are expecting that the percentage of our selling expense against the weak coal revenue.
Speaker Change #211: Will be improved if ourselves a growth quarter over quarter can be achieved with a friend. So ah that's about setting price along with the launch of all are we don't think the efficiency will be like Uh huh.
Unknown Executive: With the volume increase of Envol, we will have a larger sales revenue, so this is about the efficiency of setting expenses. For the R&D expense, the fluctuation in Q1 is in line with the cadence of our R&D activities, especially the development of new vehicle models and core tech.
Speaker Change #211: The damaged things are we waste waste volume increase of on what will happen there.
Speaker Change #212: No no no larger like a sales revenue so the they say it's about the efficiency of our selling expense for the R&D expense are the fluctuation in Q in Q1 is in line with the cadence of our R&D activities, especially the development and testing.
Unknown Executive: Generally, the forecast for R&D expense in 2024 will be consistent with 2023. That is to say, the non-gap quarterly spending will be around 3 billion RMB. We, I think this, this outlook is consistent with our prior quarters' like statement. Thank you, Tina. Thank you. Yeah, I understand that in terms of SG&A as a percentage of revenue is going to decline. But just in terms of the year over year growth for SG&A, should we expect it to grow more than 22% this year? Yeah. I think based on our current forecast, we don't think it will exceed 20% in 2024.
Speaker Change #211: New vehicle models and the cortex.
Speaker Change #211: The generally the forecast for R&D expense in 2024, well be consistent with 2023 that is to say the non-GAAP.
Speaker Change #211: Quarterly spending will be around a three building R. M. B a we are I think these oh this outlook is consistent with our prior quarters like statements.
Unknown Executive: Okay, that's very clear. Thank you. Thank you. Thank you. As there are no further questions now, I'd like to turn the call back over to the company for closing remarks. Thank you for joining us today. If you have further questions, please feel free to contact NIO's IR team through the contact information provided on our website. This concludes the conference call. You may now disconnect your line. Thank you. Sponsored ADR Class A Sponsored ADR Class A, Sponsored ADR Class A
Speaker Change #211: Tina.
Speaker Change #211: Yeah.
Speaker Change #213: Thank you yeah, I understand that in terms of.
Speaker Change #214: SG&A as a percentage of revenue, it's going to decline, but just in terms of that year over year growth for SG&A shall we expect it to grow more than 22% this year.
Speaker Change #214:
Speaker Change #214: Yeah.
Speaker Change #214: Yeah.
Speaker Change #215: I think based on our current forecast that we don't think is well exceed 20% E F. 'twenty 'twenty four yeah.
Speaker Change #216: Okay, that's very clear thank you.
Speaker Change #217: Thank you.
Speaker Change #218: Thank you as there are no further questions now I'd like to turn the call back over to the company for closing remarks.
Speaker Change #219: Thank you for joining us today, if you have further questions. Please feel free to contact Neal IR team through the contact information provided on our website. This concludes the conference call. You May now disconnect. Your line. Thank you.
Speaker Change #219: Okay.
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