Q2 2025 NIO Inc Earnings Call

Speaker #2: Hello, ladies and gentlemen. Thank you for standing by for NIO Inc.'s second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode.

Rui Chen: Hello, ladies and gentlemen. Thank you for standing by for NIO Inc.'s second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, Head of Investor Relations and Corporate Finance of the company. Please go ahead, Rui.

Speaker #2: Today's conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, head of Investor Relations and Corporate Finance of the company.

Speaker #2: Please go ahead, Rui.

Speaker #3: Good morning and good evening, everyone. Welcome to NIO's second quarter 2025 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.

Stanley Qu: Good morning and good evening, everyone. Welcome to NIO Inc.'s second quarter 2025 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 CEO, and Mr. Stanley Qu, CFO. Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the view 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.

Speaker #3: On today's call, we have Mr. William Li, founder, chairman of the board, and CEO, and Mr. Stanley Chu, CFO. 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 #3: Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the view 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 Securities Trading Limited.

Speaker #3: The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that NIO's earnings press release and this conference call include discussions of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures.

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

Speaker #3: Please refer to NIO's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our CEO, Mr. William Li.

Speaker #3: William, please go ahead.

Speaker #4: 大家好, 非常感谢各位参加未来2025年第二季度业绩沟通会议。

Operator: 大家好, 非常感谢各位参加未来2025年第二季度业绩沟通会议。

Speaker #2: Hello everyone, thank you for joining NIO's Q2 2025 earnings call.

Rui Chen: Hello everyone, thank you for joining NIO Inc.'s 2025 Q2 earnings call.

Speaker #4: 2025年第二季度, 公司共计交付了72,056辆智能电动汽车, 同比增长25.6%。

Operator: 25.6% year-over-year increase.

Speaker #2: In Q2, the company delivered 72,056 smart EVs, up 25.6% year-over-year.

Rui Chen: In Q2, the company delivered 72,056 smart EVs, up 25.6% year over year.

Speaker #4: 在今年二季度, 未来品牌四款车型, 已经完成2025款换新升级, 产品竞争力得到进一步提升。乐道品牌通过组织效能以及品牌口碑是能提升, 逐步释放在主流家庭市场的增长潜力。云谷虫品牌凭借对高端小车市场的精准用户需求洞察, 产品定位获得目标用户的高度认可。

Operator: 在今年二季度，NIO Inc.品牌四款车型已经完成2025款换新升级，产品竞争力得到进一步提升。Onvo品牌通过组织效能以及品牌口碑势能提升，逐步释放在主流家庭市场的增长潜力。Firefly品牌凭借对高端小车市场的精准用户需求洞察，产品定位获得目标用户的高度认可。

Speaker #2: The NIO brand refreshed four products for model year 2025, further enhancing its product competitiveness. With improved organizational efficiency and growing brand awareness, the onboard brand is gaining momentum in the mainstream family market.

Rui Chen: The NIO brand refreshed four products to model year 2025, further enhancing its product competitiveness. With improved organizational efficiency and growing brand awareness, the Onvo brand is gaining momentum in the mainstream family market. Thanks to the clear product positioning and deep market insight into the high-end small car market, Firefly has been well received by the target audience.

Speaker #2: And thanks to the clear product positioning and deep market insight into the high-end small car market, the Firefly has been well received by the target audience.

Speaker #4: 2025年7月和8月, 公司分别交付了21,047辆和31,305辆智能电动汽车, 自7月底乐道L90上市和8月下旬未来全新ES8发布后, 市场需求强劲, 也同时大幅增强用户信心并带动公司整体销量的提升。我们预计第三季度的总交付量为87,000至91,000万辆, 91,000辆, 同比增长40.7%至47.1%, 将创历史新高。

Operator: which will set a new historical high.

Speaker #2: The company delivered 21,017 vehicles in July and 31,325 in August. The launch of the onboard L90 in late July and the pre-launch of the all-new ES8 in late August drove strong market demand, boosted user confidence, and lifted overall sales.

Rui Chen: The company delivered 21,017 vehicles in July and 31,305 in August. The launch of the Onvo L90 in late July and the pre-launch of the all-new ES8 in late August drove strong market demand, boosted user confidence, and lifted overall sales. We expect total deliveries in Q3 to range from 87,000 to 91,000, representing a new high of 40.7% to 47.1% growth year over year.

Speaker #2: We expect total deliveries in Q3 to range from 87,000 to 91,000, representing a new high of 40.7% to 47.1% growth year-over-year.

Speaker #4: 财务表现方面, 公司总体毛利率保持稳健, 其他业务的毛利率实现显著突破。费用方面, 通过基于基本经营单元机制的全面降本增效举措的落地, 成本优化效果显著, 二季度non-gap经营亏损环比收窄超过30%。

Operator: by more than 30% quarter-over-quarter.

Speaker #2: On the financial side, vehicle gross margin remained stable, while other sales saw significant margin improvements. Moreover, the implementation of the sales business unit mechanism has begun to yield tangible cost reductions and efficiency gains.

Rui Chen: On the financial side, vehicle gross margin remained stable, while other sales saw significant margin improvements. Moreover, the implementation of the sell business unit mechanism has begun to yield tangible cost reductions and efficiency gains. In Q2, the non-GAAP operating loss narrowed more than 30% quarter over quarter.

Speaker #2: In Q2, the non-GAAP operating loss narrowed more than 30% quarter over quarter.

Speaker #4: 未来品牌方面, 旗舰车型ET9至二季度全面开启交付以来, 在行政旗舰轿车市场表现亮眼, 基于持续研发投入, 我们率先在旗舰车型ET9上搭载自研的神机芯片与整车全域操作系统。2025款ET5, ET5T, ES6, EC6也同步实现该芯片的稳定搭载与流畅应用, 同时未来事件模型于6月底全量推送至搭载神机芯片的车型上。基于全新自研的芯片平台, 我们仅用五个月便实现五款产品的功能量产, 完成了核心模型与功能应用的迁移部署。这也是中国全行业首次在自研旗舰自驾芯片上实现完整功能交付。

Operator: full-feature delivery has been achieved on a self-developed flagship autonomous driving chip.

Speaker #2: Since the start of deliveries in Q2, the NIO ET9 has performed strongly in the executive flagship sedan market. Building on continuous R&D investment, NIO was the first to bring the in-house developed smart driving chip and full-domain vehicle operating system to production models.

Rui Chen: Since the start of deliveries in Q2, NIO ET9 has performed strongly in the executive flagship sedan market. Building on continuous R&D investment, NIO was the first to bring the in-house developed smart driving chip and full-domain vehicle operating system on production models, such as ET9, as well as the 2025 ET5, ET5T, ES6, and EC6. In late June, we rolled out the NIO World model across all NIO vehicles equipped with our proprietary smart driving chip. Within just the five months, this in-house developed chip enabled the mass release of functions and the seamless migration of core models and applications across five vehicle models, representing China's and also the industry's first full function delivery on a self-developed flagship smart driving chip.

Speaker #2: Such as ET9, as well as the 2025 ET5/ET5T, ES6, and EC6. In late June, we rolled out the NIO World Model across all NIO vehicles equipped with our proprietary smart driving chip.

Speaker #2: Within just five months, this in-house developed chip enabled the mass release of functions and the seamless migration of core models and applications across five vehicle models.

Speaker #2: Representing China's and also the industry's first full-function delivery on a self-developed flagship smart driving chip.

Speaker #4: ??????????????????——????? ES8 ??????????? ES8 ?????????? SUV??????????????????????????????????? ES8 ????????????????????????????????????????????????????????? SUV ???????????????????????????????? ES8 ?????????????????????? NIO Day ??????????

Operator: the official launch at NIO Day in late September, deliveries will commence.

Speaker #2: On August 21st, NIO hosted the product and technology launch of its core strategic model: the all-new ES8. As an all-around tech flagship SUV designed for the success of business, family, and individuals, the third-generation ES8 is an epitome of NIO's tech innovation.

Rui Chen: On August 21, NIO Inc. hosted the product and technology launch of its core strategic model, the all-new ES8. As an all-around tech flagship SUV designed for the success of business, family, and individuals, the third-generation ES8 is an epitome of NIO Inc.'s tech innovation. The all-new ES8 features original and distinctive design language, class-leading cabin and storage space, premium features, and comfort experience. Flagship safety, as well as smart driving and cabin experience, are ahead of its time. It is the most competitive model in the premium large three-row SUV segment, receiving significant attention and recognition from both media and users. Pre-orders have started, with test drives starting in mid-September, followed by the official launch at NIO Day in late September and deliveries afterward.

Speaker #2: The all-new ES8 features original and distinctive design language, class-leading cabin and storage space, premium features and comfort experience, flagship safety, as well as smart driving and cabin experience ahead of its time.

Speaker #2: It is the most competitive model in the premium large zero SUV segment, receiving significant attention and recognition from both media and users. Pre-orders have started, with test drives beginning in mid-September, followed by the official launch at NIO Day in late September and deliveries afterward.

Speaker #4: 乐道品牌方面, 7月31日, 家庭大三排SUV的革新之作乐道L90正式上市, 乐道L90凭借超凡的空间设计与舒适性, 全域智能安全防护, 极具竞争力的产品定价, 完善的充换电服务体系等核心优势。重新定义了家庭大三排SUV的标准, 很好满足了大家庭用户的用车需求。

Operator: needs of large family users.

Speaker #2: On July 31st, the onboard L90, again changing product among large zero family SUVs, was launched. With ingenious space and comfort design, all-around smart safety, competitive pricing, and comprehensive charging and swapping services, the L90 redefines the large zero SUV experience.

Rui Chen: On July 31, the Onvo L90, a game-changing product among large three-row family SUVs, was launched. With ingenious space and comfort design, all-around smart safety, competitive pricing, and comprehensive charging and vlogging services, the L90 redefines the large three-row SUV experience, making it a good fit for large families.

Speaker #2: Making it a good fit for large families.

Speaker #4: 家庭乐道L90的订单情况超过预期, 在交付首月即达到创纪录的10,575辆。我们正与供应链合作伙伴一起继续提升产能, 以尽快满足强劲的市场需求。

Operator: soon as possible.

Speaker #2: The onboard L90's self-performance exceeds our expectations. In its first full delivery month, its deliveries reached a historic high of 10,575! We are working closely with our supply chain partners to further ramp up production capacity and keep pace with the strong market demand.

Rui Chen: The Onvo L90's self-performance exceeds our expectations. In its first full delivery month, its deliveries reached a historic high of 10,575. We are working closely with our supply chain partners to further ramp up production capacity and keep pace with the strong market demand.

Speaker #4: 乐道L90的热销提升了乐道品牌的势能, 也促进了L60的需求增长。八月份, L60的订单创造了今年新高。

Operator: 乐道L90的热销提升了乐道品牌的势能, 也促进了L60的需求增长。8月份L60的订单创造了今年新高。

Speaker #2: L90's strong market performance has also boosted onboard's brand awareness and the demand for the L60. In August, the L60's order intake also hit a new high this year.

Rui Chen: L90's strong market performance has also boosted Onvo brand awareness and the demand for the L60. In August, the L60's order intake also hit a new high this year.

Speaker #4: 云谷虫品牌方面, 自开启交付以来仅三个月, 云谷虫便实现了超一万辆新车的正式交付, 已经成为高端纯电小车市场的第一名。云谷虫的原创设计、旗舰安全、灵动驾驶体验受到用户的高度认可。尤其在安全方面, 近期云谷虫与乐道L60一起获得了中保研历史最高安全评级。我们很欣喜地看到随着品牌知名度的增加, 云谷虫的市场需求在稳定增长。

Operator: increases, market demand for Firefly is steadily growing.

Speaker #2: As for Firefly, since deliveries began, over 10,000 Firefly units have been delivered within just three months. It's already the best-selling model in the high-end small-cap market.

Rui Chen: As for Firefly, since deliveries began, over 10,000 Firefly have been delivered within just three months. It's already the best-selling model in the high-end small EV market. Its novel design, flagship-level safety, and agile driving dynamics have been well received. Notably, in recent CIASI tests, Firefly, together with the Onvo L60, achieved the highest safety rating ever. We are pleased to see the growing brand awareness is driving growing demand for Firefly.

Speaker #2: Its novel design, flagship-level safety, and agile driving dynamics have been well received. Notably, in recent CIASI tests, Firefly, together with the onboard L60, achieved the highest safety rating ever.

Speaker #2: We are pleased to see that the growing brand awareness is driving increasing demand for Firefly.

Speaker #4: ??????, ???????ET5/ET5T??JD Power??????????????????????EC6?ES6?????????????????????????????????????????????2019???????????JD Power????????????

Operator: segment for seven consecutive years since 2019.

Speaker #2: In terms of product quality, in June, the NIO ET5 and ET5T ranked first in their segment in JD Power's NEV IQS study, while the EC6 and ES6 ranked top two in the premium brand segment in JD Power's NEV Appeal study.

Rui Chen: In terms of product quality, in June, NIO ET5 and ET5T ranked segment first in JD Power's NEV IQS study, while the EC6 and ES6 ranked top two in the premium BAZ segment in JD Power's NEV Appeal study. With outstanding product quality, NIO has been the segment leader in JD Power's quality study for seven consecutive years since 2019.

Speaker #2: With outstanding product quality, NIO has been the segment leader in J.D. Power's quality study for seven consecutive years since 2019.

Speaker #4: 销售网络方面, 截至目前, 我们开设了176家未来中心和416家未来空间, 乐道门店数量达到414家。服务网络方面, 我们已经开设了388家服务中心和68家交付中心。我们的销售与服务网络具备同时服务三个品牌的高效协同运营能力, 并持续获得广泛用户好评。

Operator: and continues to receive widespread user praise.

Speaker #2: As of now, the company operates 176 NIO Houses, 416 NIO Spaces, and 414 onboard stores. On the service side, the company has 388 service centers and 68 delivery centers.

Rui Chen: As of now, the company operates 176 NIO Houses and 416 NIO Spaces, as well as 414 Onvo stores. On the service side, the company has 388 service centers and 68 delivery centers. Our sales and service network now operates efficiently and cohesively across all three brands, earning recognition from our users.

Speaker #2: Our sales and service network now operates efficiently and cohesively across all three brands, earning recognition from our users.

Speaker #4: 充换电网络方面, 截至目前, 我们全球已经累计布局3,542座换电站, 包括突破1,000座中国高速的换电站, 并且已经累计为用户提供超过8,400万次换电服务。七月, 我们已经完成全国主要城市间高速公路换电网络的深度覆盖, 全国550座城市都能通过三分钟换电连通直达。彻底消除用户长途出行的补能焦虑。八月, 我们还完成了中国标志性的318国道的换电线路建设, 未来和乐道的用户可以通过换电服务直达珠峰大本营。此外, 未来已累计建成超过27,000根超充桩和目的地充电桩, 也是中国自建充电桩最多的车企。

Operator: making us the automaker with the most self-built charging piles in China.

Speaker #2: Regarding charging and swapping, the company has 3,542 power swap stations worldwide, including over 1,000 stations on highways in China, and has provided over 84 million swaps to users.

Rui Chen: Regarding charging and swapping, the company has 3,542 power swap stations worldwide, including over 1,000 stations on highways in China, and has provided over 84 million swaps to users. By July this year, the battery swap network had thoroughly covered the highways between major cities in China, connecting 550 cities with three-minute swaps and eliminating users' range anxieties on long trips. In August, we completed the power swap route along China's iconic G318 Sichuan-Shizang Highway. NIO and Onvo users now can drive their cars and swap all the way to the base camp of Mount Komorama. Besides, the company has built over 27,000 superchargers and destination chargers. So far, NIO is the car company with the most chargers in China.

Speaker #2: By July this year, the battery swap network had thoroughly covered the highways between major cities in China, connecting 550 cities with three-minute swaps and eliminating user range anxieties on long trips.

Speaker #2: In August, we completed the power swap route along China's iconic G318 Sichuan-Xizhang Highway. NIO and onboard users can now drive their cars and swap all the way to the base camp of Mt.

Speaker #2: Komolama. Besides, the company has built over 27,000 superchargers and destination chargers. So far, NIO is the car company with the most chargers in China.

Speaker #4: 从二季度开始, 未来开始进入新的周期, 我们过去几年持续地研发投入, 基建投入和多品牌布局开始展现出市场竞争力。

Operator: 从二季度开始，NIO Inc. 开始进入新的周期，我们过去几年持续的研发投入、基建投入和多品牌布局开始展现出市场竞争力。

Speaker #2: In Q2, NIO has entered a new cycle where its continuous investment in technological innovation, infrastructure, and the multi-brand strategy over the past decade has begun to translate into market competitiveness.

Rui Chen: In Q2, NIO has entered a new cycle where its continuous investment in technology, innovation, infrastructure, and the multi-brand strategy in the past decade began to translate into market competitiveness.

Speaker #4: 未来全新ES8和乐道L90的热销, 充分证明了我们在过去十年坚持的可充可换可升级纯电技术路线, 能够创造超越期待的用户价值, 并越来越被用户所感知和认可。我相信全新ES8和乐道L90将引领大三排SUV进入纯电时代, 也将带动其他车型的销量增长。

Operator: of other models.

Speaker #2: The strong sales momentum of the NIO all-new ES8 and onboard L90 proves that our decade-long commitment to the roadmap with chargeable, swappable, and upgradeable technologies can create user value beyond expectations.

Rui Chen: The strong sales momentum of the NIO all-new ES8 and Onvo L90 proves that our decades-long commitment to the BaaS roadmap, with chargeable, swappable, and upgradable technologies, can create user value beyond expectations, increasingly recognized and embraced by a growing base of users. We believe the all-new ES8 and L90 will drive the transition of the large three-row SUV market toward full electrification and boost sales growth across other models.

Speaker #2: Increasingly recognized and embraced by a growing base of users, we believe the all-new ES8 and L90 will drive the transition of the large zero SUV market towards full electrification and boost sales growth across other models.

Speaker #4: 未来持续进行充换电基础设施的建设, 随着高速换电网络的建成, 以及换电先前通的持续推进, 换电的网络效应逐步显现。随着时间的推移, 用户将越来越体会到未来换电网络的体验优势。

Operator: future swap station network.

Speaker #2: At the same time, with NIO's continued efforts in the charging and swapping infrastructure, its power swap network now covers major highways and expands into more counties in China.

Rui Chen: At the same time, with NIO's continued efforts in the charging and swapping infrastructure, its power swap network now covers major highways and expands into more counties in China. As the network effect of power swap is becoming more evident, over time, more users will experience and understand the unique benefits of NIO's power swap.

Speaker #2: As the network effect of power swap becomes more evident, over time, more users will experience and understand the unique benefits of NIO's power swap.

Speaker #4: 在共享未来12全站的技术创新以及覆盖全国的充换电网络基础之上, 我们通过三个品牌服务更广泛的用户群体, 从三季度开始, 我们销量的增长将来源于多品牌战略的落地和实施。多品牌战略将助力我们提升在各个细分市场的份额, 实现可持续和更美好的未来的企业使命。

Operator: sustainable and better future.

Speaker #2: Built on the company's 12 full-stack technological capabilities and the nationwide charging and swapping network, the three brands are reaching a broader user base. Starting in Q3, the multi-brand strategy will drive our sales growth and capture greater market shares across various segments.

Rui Chen: Built on the company's tough full-stack technological capabilities and the nationwide charging and swapping network, the three brands are reaching a broader user base. Starting in Q3, the multi-brand strategy will drive our sales growth and capture greater market shares across various segments, helping to advance our mission of shaping a sustainable and brighter future.

Speaker #2: Helping to advance our mission of shaping a sustainable and brighter future.

Speaker #4: 今年以来, 我们聚焦运营效率与执行力提升的组织能力建设, 研发与销售服务的体系化效率显著优化。随着销量、毛利率和费效的提升, 将大大改善公司的财务表现, 推动公司进入新一轮发展周期。

Operator: into a new development cycle.

Speaker #2: Since the beginning of this year, the company has focused on systematically enhancing operational efficiency and execution, leading to significant improvements in both R&D as well as sales and service.

Rui Chen: Since the beginning of this year, the company has focused on systematically enhancing operational efficiency and execution, leading to significant improvement in both R&D as well as sales and service. With rising sales, improving gross margin, and more efficient cost control, we expect to see a substantial improvement in the company's financial performance, paving the way for the next phase of rapid growth.

Speaker #2: With rising sales, improving gross margin, and more efficient cost control, we expect to see a substantial improvement in the company's financial performance, paving the way for the next phase of rapid growth.

Speaker #4: 感谢大家的支持, 现在Stanley将为大家介绍2025年第二季度财务业绩, 有请Stanley。

Operator: 感谢大家的支持，现在Stanley Qu将为大家介绍2025年第二季度财务业绩，有请Stanley。

Speaker #2: Thank you for your support. With that, I will now turn the call over to Stanley for Q2's financial details. Over to you, Stanley.

Rui Chen: Thank you for your support. With that, I will now turn the call over to Stanley for Q2's financial details. Over to you, Stanley.

Speaker #3: Thank you, William. Let's now review our key financial results for the second quarter of 2025. Our total revenues reached ¥19 billion, an increase of 9% year-over-year and 57.9% quarter-over-quarter.

Yu Qu: Thank you, William. Let's now review our key financial results for the second quarter of 2025. Our total revenues reached ¥19 billion, increased 9% year over year, and 57.9% quarter over quarter. Vehicle sales were ¥16.1 billion, up 2.9% year over year and 62.3% quarter over quarter. The year-over-year growth was mainly due to higher deliveries, partially offset by a lower average selling price from product mix changes. The quarter-over-quarter increase was mainly from higher deliveries. Other sales were ¥2.9 billion, grew by 62.6% year over year and 37.1% quarter over quarter. The annual growth was driven by increased sales of used cars, technical R&D services, sales of parts, and after-sales vehicle services at Nio Power Solutions, while the quarter-over-quarter increase was mainly due to the increase in revenues from used cars, technical R&D services, parts, accessories, and after-sales vehicle services.

Speaker #3: Vehicle sales were $16.1 billion RMB, up 2.9% year-over-year, and 62.3% quarter-over-quarter. The year-over-year growth was mainly due to higher deliveries, partially offset by the lower average selling price.

Speaker #3: From product mix changes, the quarter-over-quarter increase was mainly from higher deliveries. Other sales were $2.9 billion RMB, growing by 62.6% year-over-year and 37.1% quarter-over-quarter.

Speaker #3: The annual growth was driven by increased sales of used cars, technical R&D services, sales of parts and after-sales vehicle services, and power solutions. While the quarter-over-quarter increase was mainly due to the increase in revenues from used cars, technical R&D services, parts accessories, and after-sales vehicle services.

Speaker #3: Looking at margins, vehicle margins were 10.3%, compared with 12.2% in Q2 last year and 10.2% last quarter. The year-over-year decline was mainly due to changes in product mix.

Yu Qu: Looking at margins, vehicle margin was 10.3% compared with 12.2% in Q2 last year and 10.2% last quarter. The year-over-year decline was mainly due to changes in product mix, partially offset by lower material cost per unit, while quarter-over-quarter vehicle margin remained stable. Overall gross margin was 10%, which is 9.7% in Q2 last year and 7.6% last quarter. The year-over-year gross margin stayed stable, and the quarter-over-quarter increase was mainly attributable to positive mix effects driven by the increase in revenue from used cars and technical R&D services. Turning to OpEx, R&D expenses were ¥3 billion, decreased 6.6% year over year and 5.5% quarter over quarter. The decreases year over year and quarter over quarter were mainly driven by lower design and development costs from different development stages, with the year-over-year also reflecting reduced depreciation and amortization expenses.

Speaker #3: Partially offset by lower material cost per unit, while quarter-over-quarter vehicle margin remained stable. Overall gross margin was 10%, up from 9.7% in Q2 last year and 7.6% last quarter.

Speaker #3: The year-over-year gross margin stayed stable, and the quarter-over-quarter increase was mainly attributable to positive mix effects, driven by the increase in revenue from used cars and technical R&D services.

Speaker #3: Turning to OPEX, R&D expenses were $3 billion RMB, decreased to 6.6% year-over-year, and 5.5% quarter-over-quarter. The decreases year-over-year and quarter-over-quarter were mainly driven by lower design and development costs from different development stages, with the year-over-year also reflecting reduced depreciation and amortization expenses.

Speaker #3: SG&E expenses were ¥4 billion RMB, up 5.5% year-over-year, and down 9.9% quarter-over-quarter. The year-over-year increase was mainly driven by higher personnel costs and rental-related expenses associated with the expansion of the sales and service network.

Yu Qu: SG&A expenses were ¥4 billion, up 5.5% year over year and down 9.9% quarter over quarter. The year-over-year increase was mainly driven by higher personnel costs, rental, and related expenses associated with the expansion of sales and service network, partially offset by decreased sales and marketing activities. The quarter-over-quarter decrease was mainly due to the decrease in personnel costs and marketing and promotional expenses, primarily driven by the company's comprehensive organizational optimization efforts in marketing and other supporting functions. Loss from operations was ¥4.9 billion, down 5.8% year over year and 23.5% quarter over quarter. Excluding share-based compensation expenses and organizational optimization charges, adjusted loss from operations was ¥4 billion, representing a decrease of 14% year over year and 32.1% quarter over quarter. Net loss was ¥5 billion, showing a decrease of 1% year over year and a decrease of 22% quarter over quarter.

Speaker #3: Partially offset by decreased sales and marketing activities. The year-over-year quarter-over-quarter decrease was mainly due to the decrease in personnel costs and marketing and promotional expenses.

Speaker #3: Primarily driven by the company's comprehensive organizational optimization efforts in marketing and other supporting functions, the loss from operations was ¥4.9 billion, down 5.8% year-over-year and 23.5% quarter-over-quarter.

Speaker #3: Excluding share-based compensation expenses and organizational optimization charges, adjusted loss from operations was $4 billion RMB, representing a decrease of 14% year-over-year, and 32.1% quarter-over-quarter.

Speaker #3: Net loss was ¥5 billion, showing a decrease of 1% year-over-year and a decrease of 22% quarter-over-quarter. Excluding share-based compensation expenses and organizational optimization charges, adjusted net loss was ¥4.1 billion, representing a decrease of 9% year-over-year and a decrease of 34.3% quarter-over-quarter.

Yu Qu: Excluding share-based compensation expenses and organizational optimization charges, adjusted net loss was ¥4.1 billion, representing a decrease of 9% year over year and 34.3% quarter over quarter. That wraps up our prepared remarks. For more information and details about our unaudited second quarter 2025 financial results, please refer to our earnings press release. Now I will turn the call over to the operator to start our Q&A session. Thank you.

Speaker #3: That wraps up our prepared remarks. For more information and details of our unaudited second quarter 2025 financial results, please refer to our earnings press release.

Speaker #3: Now I will turn the call over to the operator to start our Q&A session. Thank you.

Speaker #5: Thank you. If you wish to ask a question, please press *1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press *2.

Stanley Qu: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speaker phone, 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. If you have additional questions, you can re-enter the queue. Your first question comes from Jeff Chung from CITI. Please go ahead.

Speaker #5: 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.

Speaker #5: And if you have additional questions, you can re-enter the queue. Your first question comes from Jeff Chung from Citi. Please go ahead.

Speaker #6: Hi, this is Jeff from Citi. Thank you, Li Bin Zhong and Stanley Zhong. Congratulations on a good result. My first question is about ES8.

Analyst (various): Hi, this is Jeff from CITI. Thank you, William Li and Stanley Qu, and congratulate with a good result. My first question is about ES8 and the L90's capacity ramp-up pace and the delivery target for the rest of the year. Due to the strong order backlog, can we expect the December single-month run rate for the group to hit 55,000 units or above? This is my first question.

Speaker #6: And the L90's capacity, rammer pace, and the delivery target for the rest of the year. And due to the strong order backlog, can we expect the December single-month run rate for the group to hit 55,000 units or above?

Speaker #6: This is my first question.

Speaker #3: I'll assume it's yes. 我们确实现在L90和ES8整个的需求是非常强劲的。那么, 这个单产能的应该说比我们原来预计的确实要这个整个的需求要更强劲一些。所以我们也和供应链的这个合作伙伴一起在全面提升这个产能。目前我们的计划目标是L90的目标是希望十月份能够做到全供应链15,000台的这样的一个产能。然后在ES8的话有一个产能爬升的过程, 我们希望在十二月份能够做到这个15,000台的这样的一个单月的这个全供应链的产能。所以结合今年的这些需求和这个供应的这个情况吧, 我们目前的目标是今年的四季度平均每个月能做到五万台的交付量, 也就是说这个四季度能够超过15万台的整个三个品牌加起来总计超过15万台的交付量, 这个目前是我们整个公司的一个目标。谢谢Jeff。

Yu Qu: 12 月份能够做到这个 15,000 台的这样的一个单月的这个全供应链的产能。结合今年的这些需求和这个供应的这个情况吧, 我们目前的目标是今年的四季度, 平均每个月能做到 5 万台的交付量, 也就是说这个四季度, 能够超过 15 万台的整个三个品牌加起来, 总计, 超过 15 万台的交付量, 这个目前是我们, 整个公司的一个目标。谢谢 Jeff。

Speaker #2: Thank you for the question. It's true that with the launch of the onboard L90 and also the NIO all-new ES8, we are actually seeing a stronger market demand higher than what we had expected before the launch.

Rui Chen: Thank you for the question. It's true that with the launch of the Onvo L90 and also the all-new ES8, we actually see a stronger market demand, higher than what we've expected before the launch. In that case, we've been working closely with our supply chain partners to improve and enhance the production capacity throughout the value chain and also the supply chain. Our target is that in October, the full supply chain capacity for the Onvo L90 can achieve and reach 15,000 units a month. For the ES8, as the ramp-up of production takes slightly longer, we hope that the full supply chain capacity can achieve 15,000 units in December.

Speaker #2: In that case, we've been working closely with our supply chain partners to improve and enhance the production capacity throughout the value chain and also the supply chain.

Speaker #2: Our target is that in October, the full supply chain capacity for the onboard L90 can achieve and reach 15,000 units a month. For the ES8, as the ramp-up of production takes a slightly longer time, we hope that the full supply chain capacity can achieve 150,000 units in December.

Speaker #2: With that, by looking at both the demand and the supply availabilities and capacity, our Q4 target is to achieve an average of 50,000 units delivered per month for all three brands. This means that in Q4, our quarterly delivery target, combining all three brands, is 150,000 units.

Rui Chen: With that, by looking at both the demand and the supply availabilities and capacity, our Q4 target is to achieve an average of 50,000 units deliveries per month for all three brands, which means that in Q4, our quarterly delivery target, combining all three brands, is 150,000 units.

Speaker #3: Thank you. Thank you, Li Bin Zhong. So, my second question is about the gross profit margin and where the fourth quarter can break even.

Analyst (various): Thank you. Thank you, Rui Chen. My second question is about the gross margin and whether the fourth quarter can break even at the bottom line level. If we look at the second quarter, our revenue is up 58%, but our gross profit is up more than 100% Q on Q. Could you give us more color on the second half vehicle gross margin trend and the non-vehicle gross margin trend? Also, to be specific, how do you see the Onvo L90 and the ES8 gross margin independently? Thank you very much.

Speaker #3: At the bottom line level, if we look at the second quarter, our revenue is up 58%, while our gross profit increased by more than 100% quarter-over-quarter.

Speaker #3: So could you give us more color on the second half vehicle GP margin trend and the non-vehicle GP margin trend? And also, to be specific, how do you see the L90 and the ES8 GP margin independently?

Speaker #3: Thank you very much. Hi, Jeff. 我把整个公司从二季度的这个毛利的趋势跟大家讲一下。二季度整个整车的这个毛利是在10.3%, 主要的原因是二季度我们在产品的切换期, 那我们2025款的5566是在五月中下旬逐步完成切换的。从整个销量占比上来讲, 整个72,000多台的这个二季度销量里面, 5566的占比大概只占到交付的20%。所以在二季度的这个整车毛利里面, 相应的比一季度的提升没有那么多。如何?

Yu Qu: the improvement compared to Q1 was not that much. How about that?

Speaker #2: Thank you for the question. I would like to walk you through our Q2 product margin. In terms of the vehicle margin in the second quarter of this year, it was 10%, 10.3%.

Rui Chen: Thank you for the question. I would like to walk you through our Q2 product margin. In terms of the vehicle margin in the second quarter of this year, it was 10.3%. As in the second quarter, we have conducted the model year upgrades on the ET5, ET5T, EC6, and ES6. As the product upgrades happened in mid and late May, in that case, among the 72,000 units we've delivered in Q2, only around 20% was contributed by the model year 25 products. In that case, the actual margin improvement contributed by these four models is not that significant in comparison to Q1.

Speaker #2: As in the second quarter, we have conducted the model year upgrades on the ET5/ET5T, EC6, and ES6, as the product upgrades happened in mid and late May.

Speaker #2: In that case, among the 72,000 units we've delivered in Q2, only around 20% was contributed by the model year 25 products. Therefore, the actual margin improvement contributed by these four models is not that significant in comparison to Q1.

Yu Qu: Q4, our overall vehicle gross margin target is between 16% and 17% to achieve our overall breakeven goal.

Speaker #3: Star三季度呢, 随着我们的未来品牌的5566完成切换, 以及在三季度L90开始交付呢, 我们的整车的毛利率将会逐步的提升。那到四季度呢, 刚刚William也提到我们ES8从九月下旬开始交付, 那四季度的L90和ES8都是一个全季度的交付。那我们的这个毛利目标呢, 还是会在进一步这个提升。整个的整车毛利率, 就刚刚你也问到, 到四季度盈亏平衡的时候, 我们的整车的整体毛利率的目标是在16%到17%之间。来达成我们这个整个盈亏平衡的这个目标。

Speaker #2: And then in the third quarter, as we have the full quarter deliveries for the model year 25 products, as well as the start of deliveries of the L90, which will further help improve the vehicle gross margin.

Rui Chen: In the third quarter, as we have the full quarter deliveries for the model year 25 products, as well as the start of deliveries of the L90, this will further improve the vehicle gross margin. In Q4, as William mentioned, starting late September, we are going to start the deliveries of the ES8 with respect to the vehicle margin to further grow. Q4 also represents the first full quarter for the deliveries of both L90 and the ES8. With that, we expect the Q4 vehicle gross margin to be around 16% to 17% for the entire group to be able to achieve break even.

Speaker #2: And then in Q4, as William mentioned, starting late September, we are going to start the deliveries of the ES8, weeks back to the vehicle margin to further growth, to further growth.

Speaker #2: So Q4 also represents the first full quarter for the deliveries of both L90 and the ES8. With that, we expect the Q4 vehicle gross margin to be around 16% to 17% for the entire group to be able to achieve break-even.

Speaker #3: 对, 过去十年的这个纯电技术积累, 关键零部件的自研, 以及我们持续的这个采购和成本控制的措施, 使得我们在像L90和ES8这样的新车型上, 不仅能够做到有竞争力的产品, 还实现了这个系统性的全面降本。到四季度, 我们在L90和ES8的这个毛利目标呢, 我们是希望能够做到20%。

Yu Qu: for the L90 and ES8 is to reach 20%.

Speaker #2: As based on the decade-long battery bad tech innovation, the in-house development of core parts and components, as well as the continuous efforts in cost control and savings on the supply side, as well as the product cost structure, we achieved not only competitive product performance for the L90 and the all-new ES8, but also a very competitive cost structure.

Rui Chen: As based on the decades-long battery BaaS tech innovation, the in-house development of core parts and components, as well as the continuous efforts in the cost control and the savings on the supply side, as well as the product cost structure, we achieved not only competitive product performance for the L90 and the all-new ES8, but also a very competitive cost structure and the pricing point. With that, in Q4, our gross margin target for the L90 and ES8 is 20%.

Speaker #2: And the pricing point, with that in Q4, our gross margin target for the L90 and ES8 is 20%.

Speaker #3: 其他业务的利润呢, 在今年的二季度实现了8.2%的正向的毛利率。当然这里面主要得益于呢, 一个是我们存量用户带来的, 包括我们的售后服务, 和金融服务的这样的一个利润的提升。能源服务的这个亏损的收窄, 当然更重要的还有就是我们在二季度呢, 也在对外的技术服务上也实现了这个一块较大的这个利润。所以呢, 整个的综合来看呢, 二季度实现了一个就跟以前季度相比一个比较大的提升。

Yu Qu: previous quarters, Q2 saw a relatively large improvement.

Speaker #2: In terms of the gross margin of other sales, it's 8.2% in Q2, and it's mainly contributed by two factors. The first is regarding the revenues contributed by our existing users.

Rui Chen: In terms of the gross margin of other sales, it's 8.2% in Q2, and it's mainly contributed by two factors. The first is regarding the revenues contributed by our existing users, including via our aftermarket services, our auto financing business, as well as the net loss on the power services. The second factor is regarding the margin contributed by our technological service provided to our partners. With this combined, we've achieved a good and positive gross margin on other sales in Q2.

Speaker #2: Including, via our aftermarket services, our auto financing business, as well as the narrowed loss on the power services. The second factor is regarding the margin contributed by our technological services provided to our partners. With these two combined, we've achieved a good and positive gross margin on other sales in Q2.

Speaker #3: 当然考虑到刚刚提到的对外技术服务呢, 它有一些跟着车型的周期走的这样的一些趋势。所以不是每个季度都是相对稳定的。在整个的季度把一季度的预期里面呢, 我们对于其他业务的毛利呢, 希望是能够实现盈亏平衡或者保持一个微亏的状态。

Yu Qu: or maintain a slightly loss-making status.

Speaker #2: In terms of the revenues or margins contributed by the technological services we provide to the partners, as it is highly dependent on the product and the product stage, the actual revenues contributed may not be consistent from quarter to quarter.

Rui Chen: In terms of the revenues or margin contributed by the technological services we provide to the partners, as it is highly dependent on the product and the project stage, the actual revenues contributed may not be consistent from quarter to quarter. In that case, excluding that part, our expectation for the gross margin on other sales is to be break even or slightly with a slight loss quarter over quarter.

Speaker #2: In that case, excluding that part, our expectation for the gross margin on other sales is to be break even or slightly with a slight loss quarter over quarter.

Speaker #3: Thank you, Jeff.

Yu Qu: Thank you, Jeff.

Speaker #6: Yes, thank you for the new guidance. Looking forward to the fourth quarter. Thank you.

Analyst (various): Thank you for the new guidance. Looking forward to the fourth quarter. Thank you.

Speaker #3: Thank you.

Analyst (various): Thank you.

Speaker #5: Thank you. Your next question comes from Bin Wang from Deutsche Bank. Please go ahead.

Stanley Qu: Thank you. Your next question comes from Ben Wang from Deutsche Bank. Please go ahead.

Speaker #6: Thank you. I just want to ask for more detail about the number four quarter break even. Number one is, what was your R&D expense for the number three and number four quarter?

Analyst (various): Thank you. I just want to ask for more detail about the Q4 break even. Number one is that what's your R&D expense for the Q3 and Q4? I think you actually got close to ¥2 billion R&D in the Q4. Do you still maintain the same R&D guidance for the Q4? Secondly, is the same for SG&A? Lastly, what's the break even mean? Do you break even in the OP level or net profit level? Is GAAP or non-GAAP? Thank you very much for my question.

Speaker #6: I think you actually got close to $2 billion in R&D in the number four quarter. Do you still maintain the same R&D guidance for the number four quarter?

Speaker #6: And secondly, is the same for SG&E? Lastly, what does break even mean? Do you break even at the operating profit level or at the net profit level?

Speaker #6: Is it GAAP or non-GAAP? Thank you very much for my question.

Speaker #3: Thank you, Armin. 关于这个整个的盈亏平衡的目标, 我们还是维持是 non-GAAP 的口径盈亏平衡, 这个我虽然提前说一下。然后回到你讲的这个两个问题, 一个是 R&D 的这个指引, 我们其实从二季度开始呢, 我们在研发费用上, 我们做了其实蛮多的这个工作结合我们的基本经营单元的机制。我们整个的目标呢是在不影响我们组线产出的情况下, 呃, 逐步去提升研发效率。所以呢, 我们一个方面呢, 我们整个的产出上, 呃, 就是意味着说我们接下来的这个产品的规划、产品的研发, 其实是不会受到影响的。但第二个呢, 我们还是要 push 整个团队去提升效率。所以从整个研发的 guidance 上, 我们还是希望在三季度和四季度呢, 实现季度 non-GAAP 20 亿的这样的一个目标。

Yu Qu: guidance, we still hope to achieve a quarterly non-GAAP target of ¥2 billion in both Q3 and Q4.

Speaker #2: Thank you for the question. Regarding the break-even target, our quarterly break-even target is based on a non-GAAP basis. And regarding the R&D and SG&A guidance, starting Q2 this year, we have conducted a series of measures combining our CPU mechanism to control our R&D expenses.

Rui Chen: Thank you for the question. Regarding the break even target, our quarterly break even target is based on the non-GAAP basis. Regarding the R&D and SG&A guidance, starting Q2 this year, we have conducted a series of measures combining our CBU mechanism to control our R&D expenses. Our principle is that without compromising on the major and core R&D activities and also product planning, we will keep improving the R&D efficiency, which means that without compromising or affecting our major product planning and R&D, we will push for higher efficiencies in the R&D activities. With that, our target for the Q3 and the Q4 R&D expenses on the non-GAAP basis will be ¥2 billion per quarter.

Speaker #2: Our principle is that, without compromising on the major and core R&D activities and product planning, we will keep improving the R&D efficiency.

Speaker #2: Which means that, without compromising or affecting our major product planning and R&D, we will push for higher efficiencies in the R&D activities. With that, our target for Q3 and Q4 R&D expenses, on a non-GAAP basis, will be $2 billion per quarter.

Speaker #3: 关于 SG&A, 公司也会结合基本经营单元的经营机制去逐步提升这方面的效率。从二季度来看呢, , 因为销量还是在 7 万台, 整个的这个 SG&A 占的销售的比例呢, 还是会高一点。但是随着销量和销售收入的提升呢, 这方面的这个效率呢, 会逐步的提升。当然三季度呢, 因为有我们很多新车型的这个上市, 整个还这个整个市场活动啊, 市场费用会多一点, 还达不到我们的整个的这个要完成盈亏平衡的这个目标。但是四季度呢, 我们还是希望说能够希望实现 non-GAAP 口径的 SG&A 占到销售的比例的 10% 以内, 这样呢以帮助我们来实现四季度 non-GAAP 盈亏平衡的目标。

Yu Qu: help us achieve the non-GAAP breakeven target for the fourth quarter.

Speaker #2: And in terms of the SG&A expenses, also based on our CPU mechanism, we've conducted measures to improve the overall SG&A efficiency. In the second quarter, our sales volume is at the magnitude of around 70,000 units.

Rui Chen: In terms of the SG&A expenses, also based on our CBU mechanism, we've conducted measures to improve the overall SG&A efficiency. In the second quarter, our sales volume is at the magnitude of around 70,000 units. The SG&A ratio to the sales revenue still accounts for a relatively high percentage. As in Q3 and Q4, we grow our sales volume and also sales revenue, we expect the percentage of SG&A in the sales revenue to actually come down to a more reasonable range. As in Q3, we are planning several new product launches. There will also be corresponding marketing and go-to-market expenses. In that case, in Q3, we are still not able to achieve a break even on the SG&A expenses. In Q4, the non-GAAP target for the SG&A expenses will be within 10% of the sales revenue.

Speaker #2: So the SG&A ratio to the sales revenue still accounts for a relatively high percentage. But, as in Q3 and Q4, we grow our sales volume and also sales revenue, we expect the percentage of SG&A in the sales revenue to actually come down to a more reasonable range.

Speaker #2: But as in Q3, we're planning several new product launches; there will also be corresponding marketing and go-to-market expenses. In that case, in Q3, we are still not able to achieve a break-even on the SG&A expenses.

Speaker #2: But in Q4, the non-GAAP target for the SG&A expenses will be within 10% of the sales revenue.

Speaker #3: Thank you. Armin.

Yu Qu: Thank you, Rui Chen.

Speaker #5: Thank you. Your next question comes from Tim Huzia from Morgan Stanley. Please go ahead.

Stanley Qu: Thank you. Your next question comes from Tim Huzia from Morgan Stanley. Please go ahead.

Speaker #6: Hi. This is Tim from Morgan Stanley. Thanks for taking the question. So, after two questions, the first one is about the new model pipeline.

Analyst (various): Hi, this is Tim from Morgan Stanley. Thanks for taking my question. I have two questions. The first one is about the new model pipeline. Given the robust demands of L90 and ES8 that occupied our capacity, will the company adjust the launch schedule for the upcoming models? We noticed that the new days have notably moved forward to late September. Could management also share more insight into the updated model pipeline in the following quarters? That's my first question. Thank you.

Speaker #6: Given the robust demand for the L90 and ES8, which is occupying our capacity, will the company adjust the launch schedule for the upcoming models? We also noticed that the new dates have notably moved forward to late September.

Speaker #6: Could the management team also share more insight into the updated model pipeline in the following quarters? That's my first question. Thank you.

Speaker #3: This is Tim. 确实现在从产能上来讲, 我们肯定是优先保障 L90 和这个全新 ES8。那如果大家去看的话呢, 我们在乐道上面, 事实上连 L60 的这个产能都是给 L90 要去做一些浪道。那我们现在乐道也已经乐道 L60 也已经成为我们这个需要按照 OTP 去等的这样的一款产品。所以我们现在整个公司有四款车, 是这个订单在等这个生产和交付的这个 L90 全新 ES8。还有这个 L60 包括这个 FY 鹦鹉虫, 其实这四款车这个都在都是这个有订单等着生产。但这个乐道这边的情况在十月份会得到比较大的这个缓解, 因为主要是电车的产能, 这个从十月份开始应该是能够增加到了一个比较合理的一个水平。在过去几个月, 我们和电车的合作伙伴一起在增加这个供应。

Yu Qu: 05 重。这四款车都是有订单等着生产。乐道这边的情况在 10 月份会得到比较大的缓解，主要是电池的产能，从 10 月份开始应该是能够增加到一个比较合理的水平。在过去几个月我们和电池的合作伙伴一起在增加供应。

Speaker #2: Thank you for the question. It's true that, at the moment, we actually prioritize the production of the L90 and also the all-new ES8 from the production capacity perspective.

Rui Chen: Thank you for the question. It's true that at the moment we actually prioritize the production of the L90 and also the all-new ES8 from the production capacity perspective. For the Onvo brand, we even have to really give way to the L90 production and compromising on the production of L60. You will find that our L60 users are also waiting up to pick up their cars. Right now we actually have four models with order backlogs accumulated, and users will need to wait for the new car pickup, including L90, all-new ES8, L60, and also Firefly. Regarding the production capacity for the Onvo product, starting October, we expect the capacity to come back to a normal range, mainly supported and fueled by the production capacity of the batteries. In the past several months, we've been working closely with our battery partners to ramp up the production capacity.

Speaker #2: For the onboard brand, we even have to really give way to the L90 production, compromising on the production of L60. So that it will find that our L60 users are also waiting to pick up their cars.

Speaker #2: So right now, we actually have four models with order backlogs accumulated, and users will need to wait for the new car pickup. Including L90, all-new ES8, L60, and also Firefly.

Speaker #2: And regarding the production capacity for the onboard product, starting in October, we expect the capacity to return to a normal range, mainly supported and filled by the production capacity of the batteries.

Speaker #2: As in the past several months, we've been working closely with our battery partners to ramp up the production capacity.

Speaker #3: 总的来说, 四季度我们是希望把乐道的全供应链产能提升到每个月 2.5 万辆。那么在未来品牌方面的话呢, 这个现在主要的挑战也是这个全新 ES8 的这个 102 度的电池, 因为全新 ES8 的这个需求确实比我们原计划的要好。所以在最初我们的电池的供应方面确实也预估了保守了一些。但是这个我们和电池的合作伙伴也在这个全力以赴的这个题材。所以从四季度来讲, 这个整个的产能方面在未来的这个品牌的产能方面, 我们目前也是按照这个每个月 25,000 去做努力的目标。

Yu Qu: 总的来说，四季度我们是希望把乐道的全供应链产能提升到每个月2.5万辆。在未来品牌方面，现在主要的挑战也是全新ES8的102度的电池，因为全新ES8的需求确实比我们原计划的要好。在最初我们的电池的供应方面确实也预估的保守了一些，但是我们和电池的合作伙伴也在全力以赴地提产。从四季度来讲，整个的产能方面，在未来品牌的产能方面，我们目前也是按照每个月2.5万辆去做努力的目标。

Speaker #2: With that, in Q4, for the onboard brand, we expect the full supply chain production capacity to be around 25,000 units a month. Regarding the new brand, for the launch of the all-new ES8, we also have challenges regarding the supply of the brand new 102 kilowatt-hour battery.

Rui Chen: With that, in Q4, for the Onvo brand, we expect the full supply chain production capacity to be around 25,000 units a month. Regarding the new brand, for the launch of the all-new ES8, we also have challenges regarding the supply of the brand new 102 kilowatt-hour battery. As the demand of the ES8 is actually stronger than we expected, we, at the beginning, underestimated the demand for the ES8 and also the volume assumption for the battery packs. We've been working closely with the battery suppliers and partners to secure the supply of this new battery pack. With that, in Q4, we expect the full supply chain capacity for the new brand can also achieve 25,000 units monthly capacity.

Speaker #2: As the demand for the ES8 is actually stronger than we expected, we initially underestimated the demand for the ES8 and also the volume assumption for the battery packs.

Speaker #2: We've been working closely with the battery suppliers and partners to procure the supply of this new battery pack. With that, in Q4, we expect the full supply chain capacity for the new brand to achieve a monthly capacity of 25,000 units.

Speaker #3: Now, FY. Firefly方面的话呢, 它的产能是相对来说比较目前也是一个稳步提升吧。我们在四季度希望它能够在高峰的产能能够做到每个月 6,000 台左右。所以这样的话, 三个品牌加起来的产能的 peak 差不多在 5.6 万辆, 支持我们每个月 5 万的这样一个交付量。所以目前整个的产能这个和交付方面的一个计划。

Yu Qu: plan for capacity and deliveries.

Speaker #2: And regarding Firefly, we are also steadily increasing its production and supply capacity. In Q4, we expect the production capacity to ramp up to 6,000 units a month at its peak.

Rui Chen: Regarding Firefly, we are also steadily increasing its production and supply capacity. In Q4, we expect the production capacity to ramp up to 6,000 units a month at its peak. This means that in Q4, the combined production capacity of all three brands will be as high as 56,000 units a month to be able to support our demand.

Speaker #2: So it means that in Q4, the combined production capacity of all three brands will be as high as 56,000 units a month to support our demand.

Speaker #3: 考虑到这个产能, 目前主要是要满足我们现在的这个强劲的需求。所以我们今年不会有这个新的这个产品去进行交付。原来我们的原来我们最早的计划是今年这个要发布这个 L80, 但从目前来讲, 这个确实是没有额外的产能去交付这个 L80。所以这个所以今年不会在今年交付, 但是是不是发布我们还要根据市场的情况去看。那后续的话呢, 这个产品计划的话呢, 接下来除了 L80, 乐道的 L80 以外呢, 我们还有这个未来的这个两款大的 SUV 在明年会推出。当然一个是大家也知道的 ES9, 还有一个大五色的 SUV ES7。所以这个明年我们还有这个三款这个大的车型去交付, 大的 SUV 去交付。

Yu Qu: 考虑到这个产能，目前主要是要满足我们现在的这个强劲的需求，所以我们今年不会有新的产品去进行交付。原来我们最早的计划是今年要发布这个L80，但从目前来讲，确实是没有额外的产能去交付这个L80。所以今年不会在今年交付，但是是不是发布我们还是要根据市场的情况去看。后续的话，这个产品计划的话，接下来除了L80，Onvo L80以外，我们还有未来的两款大的SUV在明年会推出，当然一个是大家也知道的ES9，还有一个大五座的SUV，ES7。明年我们还有三款大的车型去交付，大的SUV去交付。

Speaker #2: As we have already dedicated our full capacity to the production of the existing models in the market, we will not have any new models launched or delivered to the market this year.

Rui Chen: As we have already dedicated our full capacity to the production of the existing models in the market, for this year, we will not have any new models launched or delivered to the market. Previously, we've mentioned that we plan to also launch the L80 of the Onvo brand, but as now we have run out of all the capacities available, we actually have decided to delay the deliveries of this new model. In terms of the launch or the go-to-market cadence for the L80, that's to be decided. In addition to the Onvo L80, next year in the coming quarters, we also have another two new models coming under the new brand, also two large SUVs. One is the ES9, as many of the users and the public already know about it, and also ES7, a large five-seater SUV model.

Speaker #2: Previously, we've mentioned that we plan to also launch the L80 of the onboard brand. However, as we have now run out of all the capacities available, we actually have to decide to delay the deliveries of this new model.

Speaker #2: But in terms of the launch or the go-to-market cadence for the L80, that's to be decided. In addition to the onboard L80, next year, in the coming quarters, we also have another two new models coming under the new brand, which will also be large SUVs.

Speaker #2: One is the ES9, as many of the users and the public already know about it. And also the ES7, a large five-seater SUV model.

Speaker #3: ?? ES8 ????????? ES8 ????????? ES8 ?????????? ES8 ? ES8 ???????????? ES8 ????

Yu Qu: is the launch of the ES8.

Speaker #2: As for the new day this year, as it is happening in September, the protagonist of this event will be definitely the all-new ES8.

Rui Chen: As for the NIO Day this year, as it is happening in September, the protagonist of this event will be definitely the all-new ES8.

Speaker #3: 好, 谢谢 Tim。

Yu Qu: 好, 谢谢Tim。

Speaker #6: Thank you, William. My second question is about the pricing strategy and also just a quick follow-up on the margin side. We noticed that both the L90 and the new ES8 have launched with aggressive pricing strategies.

Analyst (various): Thank you, William. My second question is about the pricing strategy. Also, just a quick follow-up on the margin side. We noticed that both the L90 and the new ES8 have launched with aggressive pricing strategies. I just want to know if this pricing strategy will be extended to all the upcoming models under both brands. If that's the case, how should we think about NIO's gross profit margin trajectory into next year? What would be a more sustainable and ideal vehicle margin level once all the new models are upgraded next year? That's my second question. Thank you.

Speaker #6: So, I just want to know, will these pricing strategies be extended to all the upcoming models of both brands? And if that's the case, how should we think about the new gross profit margin trajectory into next year?

Speaker #6: What would be a more sustainable and ideal equal margin level once all the new models are upgraded next year? That's my second question. Thank you.

Speaker #3: Hi, Tim. So未来公司来讲, 我们长期的努力的目标还是毛利实现20%。那按照我们之前讲的分品牌的这个毛利目标, 那未来呢, 我们还是实现要实现20%甚至往25%去努力。然后呢, 乐道呢, 是在维持在15基础之上去实现更高的毛利。鹦鹉虫是10%左右。所以这个是整个公司长期来说的这个目标。刚刚你提到在我们已经上市的ES8和L90以及包括我们明年的这些新车型上来说呢, 我们还是希望说能够这个我们在产品定义的时候其实就已经做好了充分的准备, 希望能够呢, 就是给到激进的定价一个比较强的成本的支撑。所以这个呢, 我觉得不用太担心, 就是跟我们前一代的产品相比呢, 我们这一代的产品还是有充分的这个成本竞争力了。当然这个也是基于我刚刚提到的, 就是我们的一个技术积累、自研以及说我们成本的控制的这些措施, 然后来达到这样一个降本的这个目的。好, Tim。

Yu Qu: measures I just mentioned, in order to achieve this cost reduction goal.

Speaker #1: Thank you for the question. For the entire company, as we've also previously mentioned, our group-level product margin for the long term is actually 20%.

William Li: Thank you for the question. For the entire company, as we've also previously mentioned, for the long term, our group-level product margin is actually 20%. That's our target. More specifically on the gross margin by brand, for the new brand, our target is to achieve 20% vehicle gross margin and even target a higher margin of 25%. For Onvo, no lower than 15% for the long term, and for Firefly, around 10%. For the ES8 and the L90 newly launched this year, as well as the new models coming up next year, we also have this, we'll also contribute to this target, as at the product definition and design stage, we have already prepared for an aggressive pricing strategy, and our cost structure can also support such strategy to be able to achieve more competitive pricing of our products without compromising on the product's competitiveness itself.

Speaker #1: That's our target. More specifically, on the gross margin by brand for the new brand, our target is to achieve a 20% vehicle gross margin, and even target a higher margin of 25%.

Speaker #1: And for onboard, no lower than 15% for the long term, and for Firefly, around 10%. For the ES8 and the L90, newly launched this year, as well as the new models coming up next year, we also have this. W-we're also contributing to this target, as at the product definition and design stage, we have already prepared for an aggressive pricing strategy, and our cost structure can also support such a strategy.

Speaker #1: To be able to achieve more competitive pricing of our products without compromising on the product competitiveness itself. This is actually driven and enabled by our decade-long tech innovation, technology accumulation, in-house developed parts and systems, and also stringent cost control.

William Li: This is actually driven and enabled by our decade-long tech innovation, technology accumulation, in-house developed parts and systems, and also stringent cost control.

Speaker #2: Thank you, Kim.

Rui Chen: Thank you, team.

Speaker #3: Thank you, Yu. Thanks a lot.

Stanley Qu: Thank you, Yu. Thanks a lot.

Speaker #4: Thank you. Your next question comes from Jing Cheng from CI/CC. Please go ahead.

Operator: Thank you. Your next question comes from Jing Cheng from CICC. Please go ahead.

Speaker #5: Thank you for taking my question. My first question is still about our L90 and also ES8. We have already seen that these two new models have demonstrated our enhanced product capability and also very competitive pricing.

Yu Qu: Thank you for taking my question. My first question is still about our L90 and also ES8. We have already seen that these two new models have already demonstrated our enhanced product capability and also very competitive pricing, still with a very solid gross profit margin. Besides, previously, Stanley has already told us of the technology and also the platform upgrades. Could you share more about the underlying successful experience about these two new models, such as our changes on maybe supply chain, maybe the dealer networks? This is my first question.

Speaker #5: Still, with a very solid gross profit margin. So, besides, previously, Stanley has already told us about the technology and also the platform upgrades. Could you share more about the underlying successful experience regarding these two new models, such as our changes in maybe supply chain?

Speaker #5: Maybe the dealer, dealer's networks. This is my first question.

Speaker #2: Stay here. Take a cheers to the...

Stanley Qu: 谢谢。确实，我们新一代产品的竞争力是非常强的，非常综合的一个竞争力。我觉得从产品能力和定成本的竞争力的角度，首先还是来自于我们的技术创新。如果大家去看的话，我们900V的整个高压平台，能够把我们不管是从电驱，还是从整个高压的部件，能够做得非常集成，能够从轻量化，从它的性能各方面来讲，我觉得都是减了很多的重量。其实在很多方面来讲，这些轻量化的技术也能带来成本的优势，所以在这方面，这些集成的设计和技术创新能够带来非常好的竞争力，成本的竞争力，也能带来体验的竞争力。大家也看到了，我们不管是Onvo L90还是全新ES8，不管是前备舱还是后备箱，整个储物空间是非常大的，这也是来自于我们集成的研发能力。 在智能化方面，我们其实整个全新的数字架构其实是做得非常集成，中央计算单元加上区域控制器的架构，其实既支撑了丰富的智能功能，也能够在成本还有在重量方面有很多的优势。举个例子，像我们的智能保险丝，其实它的集成度非常高，原来车上的这些保险丝可能要用到接近10公斤到8升多的体积，我们现在把它集成到主板上去，而且能够对全车的电力进行功耗，非常细致的管理，这其实既提升体验，也降低了成本。

Speaker #1: Thank you for the question. Regarding the overall product competitiveness in the third generation, it is actually getting stronger and better. This also allows for more competitive product competitiveness, as well as the cost structure.

William Li: Thank you for the question. Regarding the overall product competitiveness on the third generation, it is actually getting stronger and better, and this also allows for more competitive product competitiveness as well as the cost structure. As we've mentioned, this is enabled by our continuous tech innovation. Let's say the 900V high voltage architecture, this platform actually allows for more integrated and lightweight design that is not only in the powertrain system as well as the high voltage architecture throughout the vehicle to be able to achieve high performance and the lightweight design. Such lightweight design also allows for improved cost structure and also experience competitiveness. For example, on the ES8 and also L90, we've achieved a huge frunk and also trunk space. Such huge storage space is also enabled by the high integration level of our architecture and systems. Another example is regarding the smart technologies, the digital architecture.

Speaker #1: And as we've mentioned, this is enabled by our continuous tech innovation. Let's say the 900-volt high-voltage architecture; this platform actually allows for a more integrated and lightweight design of not only the powertrain system but also the high-voltage architecture throughout the vehicle to be able to achieve high performance and a lightweight design.

Speaker #1: Such a lightweight design also allows for an improved cost structure and increased competitiveness. For example, on the ES8 and L90, we've achieved a huge frunk and trunk space.

Speaker #1: Such huge storage space is also enabled by the high integration level of our architecture and systems. Another example is regarding the smart technologies.

Speaker #1: The digital architecture, in the third generation, we adopted the innovative digital architecture with the central computing cluster plus the zonal controllers. This can help achieve a better cost as well as the mass performance and the management.

William Li: On the third generation, we adopted the innovative digital architecture with the central computing cluster plus the zonal controllers. This can help achieve a better cost as well as the mass performance and the management. Let me take e-fuses as an example. Previously, on other older models, there are physical fuse boxes, which are as heavy as 10 kilos per car, and it can take up 8 liters of space. With e-fuses, we are able to integrate them into the master board that can actually manage the power supplies throughout the vehicle at a very detailed and precise level, but still contributing to the mass reduction and cost improvement.

Speaker #1: Let me take e-fuels as an example. Previously, on other older models, there are physical fuse boxes which are as heavy as 10 kg per car, and it can take up 8 liters of space.

Speaker #1: But with e-fuels, we are able to integrate them into the master board that can actually manage the power supplies throughout the vehicle at a very detailed and precise level.

Speaker #1: But still contributing to the mass reduction and cost improvement.

Speaker #2: Say,

Stanley Qu: 从这些简单的对比例子能够看到，以技术创新既能带来用户体验的提升，也能带来成本的竞争优势。当然还有包括我们的芯片，当然这个芯片的投资非常大，但我们的这个旗舰芯片XPT 1931，一颗能够比四颗行业的其他自家的旗舰芯片，毫无疑问成本也降低了不少。我们研发费用虽然投入了很多，但是反映到BOM上，它的成本也降低了很多。

Speaker #1: This improvement in both cost structure as well as user experience is enabled by the tech innovation. Another example is regarding our proprietary smart driving chip.

William Li: These improvements in both cost structure as well as user experiences are enabled by the tech innovation. Another example is regarding our proprietary smart driving chip. Of course, we've made the major upfront investment in the chip development, but the performance of our in-house developed smart driving chip, an XPT 1931, can achieve the performance that is on par with four flagship chips in the industry. R&D-wise, we made investment upfront, yet BOM cost-wise, this smart driving chip can also achieve savings.

Speaker #1: Of course, we've made a major upfront investment in chip development, but the performance of our in-house developed smart driving chip NX9031 can achieve performance that is on par with four flagship chips in the industry.

Speaker #1: So, R&D-wise, we made an investment upfront, yet, in terms of cost, this smart driving chip can also achieve savings.

Speaker #2: So,

Stanley Qu: 在技术路线方面, 我还想特别强调一下, 就是我们这个可充可放可升级的这个技术路线, 让我们可以选择最合适用户的这样的一个大小的这样一个电池包, 那我们这个, 我们的这个, 如果你去看我们同行通行的做法, 他们为了提高续航里程, 他们做一个, 非常大的用磷酸铁锂去做一个特别大的电池包, 比如说有的甚至用磷酸铁锂做到90多度电, 100度电。那么因为磷酸铁锂你要兼顾成本的话, 你想用成本低的话, 你只能用磷酸铁锂, 但是它带来了一个问题, 就是它的重量是非常重的。那如果去看我们的, 比如说102的电池包或者85的这样一个电池包, 其实和, 别的能做600公里、700公里续航的这样一些电池包比的话, 我们最新的这样一些电池包都比别人要轻大概200公斤左右。你像我们的这个Onvo的85度电池包, 它只有400多公斤, NIO Inc.新的这个全新ES8的102的电池包只有500多公斤。如果大家可以去看一看的话, 行业里面别人如果做到90度电、100度电的电池包基本上都是600到700公斤。我只是举这么一个例子, 这里面当然背后它就反映了很多我们这个可充可放可升级的这样一个技术架构在重量和成本方面的优势。

Speaker #1: And another thing is regarding the technology roadmap, mainly the chargeable, swappable, and upgradable technologies for our products. With this, we are able to select the most suitable and optimal battery pack, including its capacity and the size.

William Li: Another thing is regarding the technology roadmap, mainly the chargeable, swappable, and upgradable technologies for our products. With this, we are able to select the most suitable and optimal battery pack, including its capacity and the size for our users. For example, for some of our peers and competitors, they actually need to strike a balance between the battery cost and also the battery range. They choose the LFP as the chemical system, and they make a battery pack of around 90 or 100 kilowatt-hour capacity. With that, the battery pack is actually very big and heavy. If you look at our battery packs, for the Onvo L90, we put an 85 kilowatt-hour battery inside, and for the ES8, 102 kilowatt-hour battery inside.

Speaker #1: For our users, for example, some of our peers and competitors actually need to strike a balance between battery cost and also battery range.

Speaker #1: Then they choose the LFP as the chemical system, and they make a battery pack of around 90 or 100 kilowatt-hours capacity. However, with that, the battery pack is actually very big and heavy.

Speaker #1: If you look at our battery packs for the onboard L90, we put an 85 kilowatt-hour battery inside, and for the ES8, a 102 kilowatt-hour battery inside.

Speaker #1: They can achieve the driving range and performance on par with their peers, but in terms of mass, the 85 kWh battery pack is only around 400 kilos, and the 102 kWh battery pack is only around 500 kilos.

William Li: They can achieve the driving range and performance on par with those peers, but in terms of the mass, the 85 one is only around 400 kilos, and the 102 kilowatt-hour battery pack is only around 500 kilos. It is actually around 200 kilos lighter than many of our peers' solutions. This is also another mass and cost optimization enabled by our chargeable, swappable, and upgradable tech solutions.

Speaker #1: So it is actually around 200 kilos lighter than many of our peers' solutions. This is also another mass and cost optimization enabled by our chargeable, swappable, and upgradable tech solutions.

Speaker #2: 从汽车行业的这个产品竞争力的角度来看, 啊, 呃, 这个当然包括体验和成本, 那基本上是取决于三个层次的这样的一个能力。首先是这个技术路线, 啊, 刚才其实我讲到了我们, 呃, 很多技术路线方面的一些优势。但第二个就是这种产品的规划, 就是我们针对哪些目标市场提供, 要有哪些产品提供给用户。那么, 呃, 第三个的话呢, 是产品的定义。那, 呃, 从总的我们自己的一个这个, 呃, 总结和一个, 呃, 反思的角度来讲, 这个我们认为我们在产品的这个, 呃, 我们在技术路线和产品规划方面, 啊, 比如说我们多品牌服务不同的用户, 比如说我们坚持可换可升级, 需要一个全站的研发, 在那个技术路线, 呃, 我们认为这些在过去我们一直做的都还是, 呃, 从方向上来讲都还是非常好的。在产品定义方面, 我们确确实实过去有很多的经验教训。那我们在新的这样的一个产品上, 比如说L9002 ES8上, 我们也去, 啊, 学习到了很多行业里面一些好的做法, 也改善了我们自己的一些过去的一些错误, 啊, 那我们基于我们非常有竞争力的产品路线和一个合理的产品规划, 啊, 同时在产品定义方面, 啊, 符合了中国用户的这个需求, 啊, 所以就取得了像L90和ES8最近的这样, 啊, 受到欢迎的这样一个市场的这样一个表现。

Stanley Qu: improved on some of our past mistakes. Based on our highly competitive product route and reasonable product planning, and at the same time, in terms of product definition, meeting the needs of users in China, we have achieved recent market success with products like the Onvo L90 and ES8.

Speaker #1: And in terms of a competitive product, in both cost as well as the user experience, I think three things will define the competitiveness of a product.

William Li: In terms of a competitive product, in both cost as well as the user experience, I think three things will define the competitiveness of a product. The first is regarding the technology roadmap, the second is regarding the product planning, and the third is regarding the product definition itself. Our past practice and experiences prove that our technology roadmap, including our multi-brand strategy, our chargeable, swappable, upgradable solutions, our 12 full stack tech capabilities developed in-house, as well as our product planning, are in general in the right direction. Yet when it comes to the product definition, we did have some lessons learned from the previous generations and platforms.

Speaker #1: The first is regarding the technology roadmap, the second is regarding the product planning, and the third is regarding the product definition itself. Based on our past practices and experiences, we have proof that our technology roadmap, including our multi-brand strategy, our chargeable, swappable, upgradable solutions, and our top full-stack tech capabilities developed in-house, as well as our product planning, are generally in the right direction.

Speaker #1: Yet, when it comes to the product definition, we did have some lessons learned from the previous generations and platforms. With that, on the third generation, with our all-new ES8 and L90, we not only draw the best practices from the industry and peers, but also make corrections from within to be able to achieve better product performance and success with the ES8 and L90, as it is actually drawing on the effort of our competitive technology roadmap, reasonable product planning, as well as more precise product definition and market insights that can fit the user's needs in the Chinese market.

William Li: With that, on the third generation, with our all new ES8 and L90, we not only draw the best practices from the industry and peers, but also make corrections from within to be able to achieve a better product performance and the success with the ES8 and L90, as it is actually drawing the effort of our competitive technology roadmap, reasonable product planning, as well as more precise product definition and the market insights that can fit for the users' needs in the Chinese market.

Speaker #2: Dan, the 贵链方面, 呃, 毫无疑问, 这个和供应链有一个共赢的这样一个长期合作关系, 这个也是对于这个, 呃, 增加这个, 呃, 成本的竞争力是非常重要的。我们在这个过去的一两年, 我们也这个在供应链策略方面, 我们也进行了比较多的调整。我们会更加专注于去和那些相信未来的技术路线和我们的长期发展的这样的一个, 呃, 这个可能性的这样的一些合作伙伴去建立更紧密的关系。啊, 这个在这方面的话, 我们也在推进一个, 就是这个基于合作伙伴这样的一个, 呃, 一个理念的这样一个供应链的这样一个, 呃, 定点的一个策略。啊, 在我们接下来一些全新平台的定点方面, 我们会更加, 更加这个坚决地去推行这样一个理念, 啊, 和我们的合作伙伴一起去设立这个成本的目标, 和我们各方面的这样的一个, 呃, 共同的目标。

Stanley Qu: 当然在供应链方面，毫无疑问，这个和供应链有一个共赢的这样一个长期合作关系，这个也是对于这个，增加这个成本的竞争力也是非常重要的。我们在过去的一两年，我们也在供应链策略方面，我们也进行了比较多的调整，我们会更加专注于去和那些相信未来的技术路线和我们的长期发展的这样一个可能性的一些合作伙伴去建立更紧密的关系，在这方面的话，我们也在推进一个就是基于合作伙伴这样一个理念的供应链的定点策略，在我们接下来一些全新平台的定点方面，我们会更加坚决地去推行这样一个理念，和我们的合作伙伴一起去设立成本的目标和我们各方面的共同目标。

Speaker #1: And in terms of the supply chain, this is also playing a very important role in achieving the long-term competitiveness of our product cost structure by establishing a win-win cooperation with our partners.

William Li: In terms of the supply chain, this is also playing a very important role in achieving the long-term competitiveness of our product cost structure by establishing a win-win cooperation with our partners. In the past one or two years, we've also made adjustments to our supply chain and the partner strategy. In general, we look for the partners who believe in the roadmap technology decisions of the company, as well as believe in the long-term potentials of the company. We work closely with these partners to jointly define the cost targets and all types of targets. For the existing products and also the coming platforms, we will also adopt this principle in our nomination and the sourcing strategy to be able to work with our partners closely.

Speaker #1: And in the past one or two years, we've also made adjustments to our supply chain and the partner strategy. In general, we look for partners who believe in the roadmap, technology decisions of the company, as well as believe in the long-term potentials of the company.

Speaker #1: And we work closely with these partners to jointly define the cost targets and all types of targets. For the existing products and also the coming platforms, we will also adopt this principle in our nomination and sourcing strategy to be able to work with our partners closely.

Speaker #2: Thank you. Thank you.

Rui Chen: Thank you. Thank you.

Speaker #4: Thank you. Your next question comes from Nixon Lee from Bank of America. Please go ahead.

Operator: Thank you. Your next question comes from Ming Xun Li from Bank of America. Please go ahead.

Speaker #3: Thank you, William, and congratulations on the result. I also have two questions. So my first question is, could you confirm your new model pipeline for 2026?

Stanley Qu: Thank you, William Li, and congrats for the good result. I also have two questions. My first question is, could you confirm your new model pipeline for 2026? Can I confirm there will be at least five new cars, which include ES6, ES7, ES9, L80, and also the second model under the Firefly brand? 谢谢。那个26年的产品其实前面也讲过了, 我们主要还有三款大车, 会推向这个市场, 其他的产品, 在 ET5, ET5T, ES6, EC6 这四款今年刚刚换新的, 这四款产品, 明年并没有新的新款的计划, 那因为这四款产品今年其实它的整个的智能化的系统我们已经提升到了, 已经升级到了 S, 就是比如说芯片, 还有我们的操作系统, 这已经全面切换成了雪松的平台。我们前几天也刚刚宣布了 100 度电的标配, 所以也能够进一步提高他们在续航方面的竞争力。我们认为他们的竞争力在可见的将来仍然是非常强的, 我们在内饰在外观方面也进行了很多的升级, 所以明年我们在这四款产品方面并没有升级的计划。当然有一些阅历, 我们现在叫一些小的这样的一些版型, 这个我们会, 这个会定期的会有, 就像我们前面刚刚推的冠军纪念版一样, 这种层面的产品的更新, 还是会有的。

Speaker #3: Can I confirm there will be at least five new cars, which include the ES6, ES7, and ES9? L80, and also the second model under the Firefly brand.

Speaker #2: 谢谢。那个26年的产品其实前面也讲过了, 这个, 呃, 我们主要还有三款大车, 呃, 会推向这个市场。呃, 其他的产品, 呃, 在, 呃, ET5, ET5G, ES6, EC6, 这四款今年刚刚换新的这个, 这个四款产品, 呃, 明年并没有这个, 呃, 新的这个新款的计划。呃, 因为这四款产品今年其实它的整个的智能化的这个, 这个, 呃, 系统, 我们已经提升到了, 已经升级到了这个C的S, 就是比如说芯片, 啊, 还有我们的操作系统, 啊, 这已经全, 全面切换成了这个雪松的这个平台。那, 呃, 我们前几天也刚刚宣布了100度电的标配, 啊, 所以也能够进一步提高他们在续航方面的竞争力。我们认为这个他们的竞争力在可见的将来仍然是非常强的, 啊, 呃, 我们在内饰, 在外观方面也进行了很多的升级。所以, 呃, 明年我们在这四款产品方面并没有这个, 呃, 升级的计划。当然有一些阅历, 啊, 我们现在叫对一些小的这样的一些版型, 这个我们会, 呃, 这个会定期的会有, 就像我们前段时间刚刚推的这个冠军纪念版一样。啊, 这种, 这种层面的这个产品的更新, 嗯, 还是会有的。

Speaker #1: Regarding our product strategy for 2026, as we've mentioned, we will focus on three large SUV models for the onboard and also the new brand.

William Li: Regarding our product strategy for 2026, as we've mentioned, we will focus on three large SUV models, for the Onvo and also the new brand. Regarding the ET5, ET5T, ES6, and EC6, as this year we have just upgraded these four models to the model year 2025, for next year we don't have major plans to upgrade or facelift these four models. As on the model year 2025, we've already upgraded interior, exterior, the smart system is also upgraded to the latest Cedar S platform with both, upgrades in the smart driving chip as well as the operating system. Recently, we have also announced to make the 100 kilowatt-hour battery as a standard configuration on these four models. We believe that with all these changes, the competitiveness of these four models will continue to be strong in the coming quarters.

Speaker #1: Regarding the ET5, ET5T, ES6, and EC6, we have just upgraded these four models to the model year 2025. For next year, we don't have major plans to upgrade or facelift these four models.

Speaker #1: As of the model year 2025, we've already upgraded the interior and exterior. The smart system is also upgraded to the latest Cedar ARS platform, with both an upgrade in the smart driving chip as well as the operating system.

Speaker #1: And the reason we have also announced to make the 100 kilowatt-hour battery a standard configuration on these four models is that we believe that with all these changes, the competitiveness of these four models will continue to be strong in the coming quarters.

Speaker #1: Of course, it doesn't mean that we will make zero changes to these models. We will still roll out some product calendars. Earlier this year, we released the Champion Edition for the 5 and the 6 series.

William Li: Of course, it doesn't mean that we will make zero changes to these models. We will still roll out some product calendars, as this year, earlier this year, we have released the Champion Edition for the 5 and the 6 series. In the coming year, we will also have such special versions and additions for these models.

Speaker #1: And in the coming year, we will also have special versions and editions for these models.

Speaker #2: Yeah, that, Firefly. ??????????, ?, ? thank you.

Stanley Qu: 但是，明年我们没有第二款车，也也也也也。

Speaker #1: And also for the Firefly brand, we don't have a plan for the second model next year.

William Li: For the Firefly brand, we don't have a plan for the second model next year.

Speaker #3: thank you, William, and, my, second question is, regarding to the, operating expense control. So, in 2026, what level do you expect, for your, R&D, expense per quarter, are you, do you think you can maintain around, R&D 2 billion, non-GAAP R&D expense per quarter?

Stanley Qu: Thank you, William Li. My second question is regarding the operating expense control. In 2026, what level do you expect for your R&D expense per quarter? Do you think you can maintain around RMB 2 billion non-GAAP R&D expense per quarter? Also, could you guide your latest CapEx plan for 2025 and 2026? Thank you. 总的来说, 我们研发这个, 从今年来讲, 我们做了非常多的提效的工作, 我们基于这个CBO的机制, 我们现在研发的这种效率还是提高了很多, 产出这个整个的ROI提高了很多。所以, 从明年来讲, 从明年来讲吧, 我们基本上会保持每个月, 每个季度吧, 两个billion到2.5个billion这样的一个研发的支出, 这个我们认为是能够保证我们长期的竞争力的。当然, 主要的这个变动还是这个车型, 新车型的开发的这么一个变动, 我们基础的研发, 我们认为这个已经, 这个在一个合理的这样一个投入的水平上。

Speaker #3: And also, could you guide your latest CAPEX plan for 2025 and 2026? Thank you.

Speaker #2: 总的来说, 我们研发这个从今年来讲, 我们, 呃, 做了非常多的绩效的工作, 啊, 我们基于这个CBO的机制, 我们现在研发的这种效率, 啊, 还是提高了很多, 啊, 产出这个整个的ROI提高了很多。所以, 呃, 从明年来讲, 从长, 从明年来讲吧, 我们基本上会保持每个月, 呃, 每个季度吧, 两个billion到2.5个billion这样的一个研发的支出, 啊, 这个我们认为是能够保证我们长期的竞争力的。当然, 呃, 主要的这个变动还是这个车型, 新车型的开发的这么一个变动, 我们基础的研发, 我们认为这个已经这个在一个合理的这样一个投入的水平上。

Speaker #1: Regarding the R&D expenses, starting this year we've made major efforts based on the CBO mechanism, improving our R&D efficiencies and the overall ROI of our R&D activities and investment.

William Li: Regarding the R&D expenses, starting this year, we've made major efforts based on the CPU mechanism, improving our R&D efficiencies and the overall ROI of our R&D activities and investment. For the next year, our quarterly R&D expense non-GAAP will be around ¥2 billion to ¥2.5 billion per quarter. That is a reasonable range for us to also maintain our long-term competitiveness from the technology perspective. The major viabilities come from the new model development, as we believe that the investment for the foundational level R&D activities and technologies are mostly finished.

Speaker #1: For the next year, our quarterly R&D expense non-GAAP will be around $2 to $2.5 billion R&D per quarter. That is a reasonable range for us to also maintain our long-term competitiveness from the technology perspective.

Speaker #1: The major viability comes from the new model development, as we believe that the investment for the foundational level R&D activities and technologies is mostly finished.

Speaker #2: 关于明年的CAPEX, 呃, 因为现在明年的经济计划还没有做, 啊, 所以这个具体的一个规模现在还没有一个太多的这个展望。但我觉得有两点可以, 呃, 呃, 提供的, 就是一个呢, 我们明年的关键战建设还是希望能够依赖这个社会的资源来帮我们去建设更多的这个关键战, 还有第二个呢, 就是, 呃, 呃, 当然整个的CAPEX还是取决于说, 呃, 尤其是我们新车型的一个, 呃, 上市和开发的一个节奏。但整个的这个car fitting来说呢, 可能明年, 呃, 我们希望维持在跟今年差不太多的这样的一个水平。当然我们说看看有没有机会能够, 呃, 控制的比今年还要更低一些, 啊, 但当然这也取决于就刚刚我说, 尤其是我们新车型的这个开发的节奏和产能的一些节奏, 对。

Stanley Qu: 关于明年的CapEx，因为现在明年的经济计划还没有做，所以这个具体的一个规模现在还没有一个太多的展望。我觉得有两点可以提供的，就是一个呢，我们明年的换电站建设还是希望能够依赖社会的资源来帮我们去建设更多的换电站。还有第二个呢，当然整个的CapEx还是取决于说，尤其是我们新车型的一个上市和开发的节奏。整个的scale fitting来说呢，可能明年我们希望维持在跟今年差不太多的这样的一个水平。当然我们说看看有没有机会能够控制得比今年还要更低一些，但这也取决于就刚刚我说，尤其是我们新车型的开发的节奏和产能的一些节奏。

Speaker #1: And also regarding the CAPEX, as we haven't started the operational target discussion and the setting for the next year, I may not have a very clear or precise outlook regarding the CAPEX for 2026. However, I can share with you two principles we have.

William Li: Regarding the CapEx, as we haven't started the operational target discussion and the setting for next year, I may not have a very clear or precise outlook regarding the CapEx for 2026, but I can share with you two principles we have. The first is regarding the power swap network. In general, we still hope to leverage as much as possible the partners' resources for the power swap network construction. Regarding the R&D CapEx, regarding the CapEx on the product, it's mainly dependent on the overall R&D cadence and also go-to-market strategies of the new models. Overall speaking, for next year, we hope the CapEx can be similar to the level of this year, or if possible, achieve an even better result next year. As I've emphasized, it's highly dependent on the overall launch cadence and also R&D cadence of the new models.

Speaker #1: The first is regarding the power swap network. In general, we still hope to leverage as much as possible the partner's resources for the power swap network construction.

Speaker #1: Regarding the R&D CAPEX, its meaning is well-defined. The CAPEX on the product mainly depends on the overall R&D cadence and the go-to-market strategies of the new models.

Speaker #1: Overall speaking, for next year, we hope the CAPEX can be similar to the level of this year, or if possible, achieve an even better result next year.

Speaker #1: But, as I've emphasized, it's highly dependent on the overall launch cadence and also R&D cadence of the new models.

Speaker #3: 谢谢, William, 谢谢Stanley, that's all my questions.

Stanley Qu: 谢谢, 谢谢, Stanley, that's all my questions.

Speaker #4: Thank you. Your next question comes from Fei Gong from UBS. Please go ahead.

Operator: Thank you. Your next question comes from Feng Long from UBS. Please go ahead.

Speaker #5: Thanks, William, for taking my question. My first question is regarding the impact of the 100 kilowatt-hours of the battery that you are going to adopt across new brands.

Stanley Qu: of the battery that you are going to adopt across new brands. Can you share with us the financial impacts of this strategy? Definitely, we can see that the competitiveness of the vehicles are getting enhanced because of this 100 kilowatt-hours of the battery. What would be the incremental cost on your front? Thank you. This is my first question. Hi, hi, Paul, the impact of the 100 kilowatt-hour standard battery, actually, we have mentioned in previous policy announcements and communications with users. For 5566, when the 2025 model was launched, we already offered users quite a few promotions. This time, the price adjustment will actually take back the corresponding promotions, for example, the ¥38,000 promotion will be taken back, and then we will make it the standard configuration price.

Speaker #5: Can you share with us the financial impacts of this strategy? Definitely, we can see that the competitiveness of the vehicles is getting enhanced because of this 100 kilowatt-hours of the battery.

Speaker #5: But what would be the incremental costs on your front? Thank you, this is my first question.

Stanley Qu: Basically, from the final user transaction price, there is not much change. So, for our transaction price and for the gross margin of 5566, there is not much impact. This is the impact of making the 100 kilowatt-hour long-range battery pack standard for 5566.

Speaker #2: Hi, hi Paul. 100度电标配的这个影响呢, 其实我们在之前的政策宣布和跟用户的沟通里面也都提到了。在5566上呢, 我们, 呃, 在, 呃, 2025款上市的时候, 其实已经给用户offer了不少的这种促销。那我们这次的价格调整呢, 实际上是会把这个对应的这个促销收回来。比如说, 呃, 这个3.8万的促销收回来, 然后呢, 我们变成是标配的这样的一个, 一个价格。所以呢, 基本上从一个最终用户到手的这个TP上来说呢, 就是这个交易价, 成交价格上来说呢, 基本上没有太大的这个变化。所以基本上对我们的这个成交价以及对于这个5566的这个毛利来讲呢, 没有什么太大的这个影响, 就是这次我们5566标配100度长续航电池包的这个影响。

Speaker #1: Thank you for the question. When we announced the policy changes on the 100-kilowatt-hour battery pack, we had already introduced the potential impact or implications on the financials of the product.

William Li: Thank you for the question. When we announced the policy changes on the 100 kilowatt-hour battery pack, we already introduced the potential impact or implications on the financials of the product. As when we launched the model year five and model year 2025 product, we offered a series of special offers and discounts to our users together with the product. This time, when we make the 100 kilowatt-hour battery a standard configuration of the five and the six series, we actually withdraw many of these offers we provided at the launch of the product. In exchange, we offered the 100 kilowatt-hour battery as a standard configuration. From the transactional perspective, there is no major change. From the user's perspective, as well as from the vehicle margin perspective, there is also no major impact.

Speaker #1: As we launched the Model Year 5 and Model Year 2025 product, we offered a series of special offers and discounts to our users, together with the products.

Speaker #1: And this time, when we make the 100 kilowatt-hour battery a standard configuration of the 5 and 6 series, we actually withdrew many of the offers we provided at the launch of the product.

Speaker #1: And in exchange, we offered the 100 kilowatt-hour battery as a standard configuration. So, from the transactional perspective, there is no major change. From the user's perspective, as well as from the vehicle margin perspective, there is also no major impact.

Speaker #2: 我说一点就是, 从一个, 呃, 这个100度电标配以后的这个影响上来看呢, 对我们的销售的开口还是有蛮大的这个帮助。当然呢, 这个长期的这个影响因为也是刚刚改政策没几天嘛, 所以我们还需要观察。目前看呢, 还是一个积极的这个改变。

Stanley Qu: 补充一点就是从一个这个100度电标配以后的这个影响上来看呢，对我们的销售的开口还是有蛮大的这个帮助。当然呢，这个长期的这个影响呢，因为也是刚刚改政策没几天嘛，所以我们还需要观察，目前看来还是一个积极的这个改变。

Speaker #1: And another, the impact is more on the sales and the upper funnel of our sales leads for the 5 and 6 series. After announcing the change on the 100 kilowatt-hour battery, we actually observed an increase in the upper funnel, incoming leads.

William Li: Another impact is more on the south and the upper funnel of our south leads for the five and the six series. After announcing the change on the 100 kilowatt-hour battery, we actually observed increases in the upper funnel, incoming leads. Of course, this is a newly launched policy. In terms of the long-term implication, we will still need some time to observe, but overall impact is more positive than negative.

Speaker #1: Of course, this is a newly launched policy. In terms of the long-term implications, we will still need some time to observe, but overall, the impact is more positive than negative.

Speaker #3: Oh, okay. So my second question is regarding the impact of switching to your self-developed chips. Just now, I think William mentioned that it is saving cost and is also depending on the volume because of the fixed cost versus the volume.

Stanley Qu: Oh, okay. My second question is regarding the impact of switching to your self-developed chips. Just now, I think William Li mentioned that it is a saving cost, and it is also depending on the volume because of the fixed cost versus the volume. Can you give us some color that, for example, if you are delivering 20,000 per month with a new self-developed chip, what would be the cost saving on the per car basis? If this volume is coming to 50,000 per month, what would be the positive impacts from the cost-saving angle due to the switching of the self-developed chips? Just want to have the better estimate and sensitivity on that. Thank you. 我们这个其实从芯片的角度来讲的话, 这个我们因为, 呃, 大家也都清楚我们的研发费用都是进到当期费用里面, 所以其实现在这个量, 它的这个量和我们单片的这个价格之间的这个关系没有特别大的关系。我们因为这个从芯片这个制造代工企业那边, 我们都是买的这个, 买的这个微博, 就是按微博来寄的, 所以其实和我们自己交付多少量这个之间的关系没有那么个大。

Speaker #3: so can you give us some color that, for example, if you are delivering 20,000 per month, with a new, self-developed chip, what would be the cost saving on the per car basis, if this, volume is coming to 50,000 per month?

Speaker #3: What would be the positive impacts from the cost-saving angle due to the switching of the self-developed chips? I just want to have a better estimate and sensitivity on that.

Speaker #3: Thank you.

Speaker #2: 我们这个其实从芯片的角度来讲的话, 这个我们因为, 呃, 大家也都清楚我们的研发费用都是进到当期费用里面嘛, 所以其实现在这个量, 它的这个量和我们单片的这个价格之间的这个关系没有特别大的关系。我们因为这个从芯片这个制造代工企业那边, 我们都是买的这个, 买的这个Weibo, 就是这个按Weibo来计的。所以其实和我们自己交付多少量这个之间的关系没有那么大。

Speaker #1: Thank you for the question. Regarding the chip R&D expenses and investment, we actually recognize that in our immediate financials and the P&Ls. So, the actual cost savings per unit is not really closely tied to the actual volume we sell.

William Li: Thank you for the question. Regarding the chip R&D expenses and investment, as we actually recognize that in our immediate financials and the P&Ls, it's actual cost savings per unit is not really closely tied in the actual volume we sell, or actual number of pieces we sell. In terms of the production of these chips, we purchase the wafers directly from our chip manufacturing partners. In that case, the cost saving per unit through the in-house developed chip is not tied into the delivery volumes we achieve.

Speaker #1: We're actually talking about the number of pieces we sell. In terms of the production of these chips, we purchase the wafers directly from our chip manufacturing partners.

Speaker #1: So, in that case, the cost saving per unit through the in-house developed chip is not tied into the delivery volumes we achieve.

Speaker #2: 当然如果和这个同样的算力和我们这个, 呃, 二代的这个比的话呢, 当然降了非常多, 啊。但如果是和现在, 呃, 外采的这个旗舰, 差不多性能的, 呃, 全球旗舰的性能的这样的一些自家芯片比也是降了非常的多。但是具体的这个就, 就这个成本我就不说那么细了, 反正肯定是降了很多的。

Stanley Qu: 当然如果和这个同样的算力和我们这个二代的这个比的话，那当然降了非常多。当然如果是和现在外采的这个旗舰差不多性能的，全球旗舰的性能的这样的一些自家芯片比也是降了非常的多，但是具体的这个就，这个成本我就不说那么细了，反正肯定是降了很多的。

Speaker #1: But, in comparison to the chip solution we used on the second-generation products, achieving the same level of computing performance, the cost is actually more advantageous and competitive with our own solution.

William Li: In comparison to the chip solution we use on the second generation products, achieving the same level of computing performance, the cost is actually more advantageous and competitive with our own solution. Even on the third generation, in comparison to the industry flagship smart driving chips, we still have a cost advantage and competitiveness with our in-house solution. Here I will not elaborate on the specific savings achieved per piece.

Speaker #1: And even on the third generation, in comparison to the industry flagship smart driving chips, we still have a cost advantage and competitiveness with our in-house solution.

Speaker #1: But here I will not elaborate on the specific savings achieved per piece.

Speaker #3: I can understand that. This is very helpful. Thank you.

Stanley Qu: I can understand that. It's very helpful. Thank you.

Speaker #4: Thank you. Your next question comes from Yu Qian Ding from HSBC. Please go ahead.

Operator: Thank you. Your next question comes from Yu Qu from HSBC. Please go ahead.

Speaker #1: Thank you, team. The first question would be more exploration on the pricing side. So, ES8, I'll, I'll, L90 attractive pricing, good volume traction. So, how does management evaluate the potential internal categorization to the existing portfolio such as the ES6 or L60 and the potential splash impact into next year's new model pipeline?

Yu Qu: Thank you, team. The first question would be more exploration on the pricing side. ES8, L90, attractive pricing, good volume traction. How does management evaluate the potential internal capitalization to the existing portfolio, such as the ES6 or L60, and the potential splash impact into next year's new model pipeline?

Speaker #2: so general, 觉得这个从定价的角度来讲, 当然是要基于市场和成本, 呃, 以及这个量价关系去综合考虑。如果我们去看, 呃, L90推出之后, 呃, 我其实也讲到了, 我们其实对L60它其实销量是有正面的影响的。那我们在8月份的话, L60的订单也创造了今年的新高, 啊, 这个和7月份比这个订单其实是好了不少。所以现在L60我们也是用户也需要这个等这个OTD的, 就是这个, 这个订单, 啊, 所以它, 呃, 所以从这个来看的话呢, 是这个是, 是正面的影响的。那, 呃, ES8全新ES8的推出呢, 呃, 加上我们最近对, 呃, 100度在5566我们都100度进行了标配。那我们觉得这样的一个这个组合, 我们把整个的价格体系也梳理的比较清晰。那我们觉得未来品牌的这个智能的提升也会对这个现有的5566的销量也会是正面的一个影响。其实我们也在几天吧, 我们也看到了一些积极的市场的这样的一些信号。那, 呃, 可能在这个一开始的几天呢, 会因为一线fellow的经历的原因, 也许会有点影响。啊, 但是总的来说, 长期的肯定是非常正面的一个影响。

Stanley Qu: market signals. Maybe in the first few days, due to the experience of frontline follow, there might be some impact, but overall, in the long term, it is definitely a very positive impact.

Speaker #1: as we've mentioned, the pricing of the pricing strategy for a product is highly dependent on the market competition, the cost structure of the product, as well as the volume and the price insensitivity.

William Li: As we've mentioned, the pricing strategy for a product is highly dependent on the market competition, the cost structure of the product, as well as the volume and the pricing sensitivity of the product in the segment. For the L90, as we've mentioned, with its launch, it has helped boost the sales volume of L60. Right now, even for the L60 users, they will have to wait for the new cars, deliveries, and the pickup. Actually, in August, we even achieved a new high for the order intake of L60 for this year. The overall impact from L90 on L60 is positive. Regarding the all-new ES8, as we've also mentioned, we have now made the 100 kilowatt-hour battery a standard configuration on the five and the six series.

Speaker #1: Of the product in the segment, for the L90, as we've mentioned, its launch has actually helped boost the sales volume of the L60.

Speaker #1: Right now, even for the L60 users, they will have to wait for the new cars, deliveries, and the pickup. Actually, in August, we even achieved a new high for the order intake of L60.

Speaker #1: For this year, the overall impact from L90 on L60 is positive. Regarding the all-new ES8, as we've also mentioned, we have now made the 100 kilowatt-hour battery a standard configuration on the 5 and 6 series.

Speaker #1: So, the attractive pricing of the ES8 is helping boost the brand awareness of the new brand, which can also introduce more attention to the 5 and the 6 series.

William Li: The attractive pricing of ES8 is helping boost the brand awareness of the new brand, which can also introduce more attention to the five and the six series. With this logical and clear pricing system set up for the brand, we believe that the overall impact will also be positive on the new brand. Maybe at the beginning, our fellow will struggle with how to allocate their focuses and time across different products, but for the long term, we believe that the impact of these two models and the new models will be positive across the brand and the products.

Speaker #1: So with this logic and a clear pricing system set up for the brand, we believe that the overall impact will also be positive on the new brand.

Speaker #1: Maybe at the beginning, our fellow will struggle with how to allocate their focus and time across different products, but for the long term, we believe that the impact of these two models and the new models will be positive across the brand and the products.

Speaker #2: That That wasn't强调一下, 就是说其实最近这个, 呃, L90和全新ES8的热销以及我们也有现在市场上其实也有不少的这个非常不错的这样一些纯电的大三排SUV的推出, 啊, 有很多来自于增程的这样一些汽车厂商。那对市场的用户的心智的影响还是非常大的。就是, 呃, 如果我们去看数字, 其实最近我觉得这个数字肯定会, 呃, 更进一步加速, 只是看上半年的数字的话, BEV的增长是39%, 啊, 这个年对年的增长。RAVE的增长是14%。那我, 我相信如果去把7月份、8月份的数字, 呃, 再考虑进来, 这个差距会变得更大一些。所以我觉得这个trend, 这个趋势其实是非常清晰的, 就是, 呃, 我们看到这个纯电这个SUV的, 特别是在大的这个, 呃, 这种大SUV, 啊, 中大型和大型SUV的这个, 呃, 纯电的这样的一个, 呃, 竞争力开始显现, 啊。所以这就为什么我们最近也经常讲这个纯电大三排SUV的这种, 呃, 时代呢, 正在到来。那这其实是市场的一个, 呃, 一个, 一个变化, 这个也会对我们现有的这些产品, 不管是ES6还是L60, 它的销量的这个, 这个影响也是非常正面的, 这样的一个用户心智的改变。

Stanley Qu: SUVs arriving. This is a change in the market, and it will also have a very positive impact on the sales of our existing products, whether it is the ES6 or the L60. This change in user perception is very positive.

Speaker #1: And also, as we see strong demand for the all-new ES8 and the L90, we have also observed the successful product or great product, great large thorough battery electric SUV models launched not only by NIO but also by our competitors who used to have only one product in the market.

William Li: As we see strong demand for the all-new ES8 and L90, we have also observed the successful product or great product, great large three-row battery electric SUV models launched not only by NIO Inc., but also by our competitors who used to have only ICE products in the market. With all these large three-row SUVs coming into the market, we also observed a market trend. In the first half of this year, the growth rate of the BEV segment increased by 39% year over year, and for ICE, that's only 14%. If we consider the sales volume in July and August for the BEV and ICE respectively, I believe that the growth rate of the BEV will be even faster than that of ICE.

Speaker #1: So, with all these large, thorough SUVs coming to the market, we also observed a market trend. In the first half of this year, the growth rate of car segments increased by 39% year over year.

Speaker #1: And for RAVE, that's owning 14%. If we consider the sales volume in July and August for the BAV and the RAVE respectively, I believe that the growth rate of the BAV will be even faster than that of RAVE.

Speaker #1: In that case, we are observing growing competitiveness of the products in the mid and mid-large battery electric SUV segments, as this is more well-received and also evident to the public.

William Li: In that case, we are observing growing competitiveness of the products in the mid and the mid-large battery electric SUV segment, as this is more well-received and also evident to the public. This is why we say that the golden era of the large three-row battery electric SUV is arriving, as with more mature user mindset and also stronger competitiveness of the product, the market is shifting towards that direction. This will also help the long-term competitiveness and the popularity of our existing SUV models, including ES6 and L60.

Speaker #1: This is why we say that the golden era of the back of the large, thorough battery electric SUV is arriving. With a more mature user mindset and stronger competitiveness of the product, the market is shifting in that direction.

Speaker #1: This will also help the long-term competitiveness and the popularity of our existing SUV models, including ES6 and L60.

Speaker #2: Thank you, Yu Qian.

Stanley Qu: 感谢, 谢谢。

Speaker #1: Yeah, got it. Thank you. The second question is a little bit more exploration on the opaque side. You touched upon the innovation redesign and R&D commitment.

Yu Qu: Got it. Thank you. The second question is a little bit more exploration on the OpEx side. You touched upon the innovation, redesign, and R&D commitment. Could you give us a little bit more quantification and the breakdown in terms of the OpEx cuts target, if there is any, or just break down the cost optimization initiatives in a little bit more detail? Thank you.

Speaker #1: So could you give us a little bit more quantification and breakdown in terms of the opaque cuts target, if there is any? Or just break down the cost optimization initiatives, seeing a little bit more details?

Speaker #1: Thank you.

Speaker #2: Yu Qian, going to the opaque's government也提到, 就是, 呃, 我们对于今年四季度, 呃, non-GAAP盈亏平衡的这样的一个背景下面, 我们对R&D的这个目标是在不影响主线产出, 就是我们将长以及我们长远的竞争力的情况下, 我们希望能够把这个研发费用控制在20亿左右。然后, 呃, SG&A呢, 呃, 是希望能够占到控制在, 呃, 整个销售收入的10%以内。这个是我们作为四季度 non-GAAP盈利的这个目标。对, 那长期来说呢, 呃, 其实刚刚, 呃, 呃, 呃, 这个未来没提到26年呢, 我们是希望说在, 呃, 研发费用, 呃, 20到25亿每个季度之间, 呃, 取决于我们的新产品的这样的一个推出的这个节奏。那SG&A呢, 当然我们还是希望说能够持续的去往说更高的这个效率目标去努力了。对, 大概是这样。

Stanley Qu: product launches. For SG&A, of course, we still hope to continue striving for higher efficiency targets. That's about it.

Speaker #1: Thank you for the question. As we've introduced, towards the Q4 non-GAAP break-even target, our overall principle is that for the R&D expenses, without compromising on the major R&D activities and also long-term competitiveness, we would like to control the quarterly R&D expenses to be within $2 billion for this year.

William Li: Thank you for the question. As we've introduced towards the Q4 non-GAAP break-even target, our overall principle is that for the R&D expenses, without compromising on the major R&D activities and also long-term competitiveness, we would like to control the quarterly R&D expenses to be within ¥2 billion for this year. For SG&A ratio to the sales revenue, around 10% this year. That's our target for this year towards the quarterly break-even. For the long term, as we've also mentioned, for the year of 2026, our R&D expenses will be around ¥2 to ¥2.5 billion per quarter, depending on the product's go-to-market and also development cadence. As for the SG&A expenses, we would like to continue to achieve higher efficiency and utilization of expenses. That's the overall principle.

Speaker #1: And for SG&A, the ratio to the sales revenue is around 10% this year. That's our target for this year, towards the quarterly break-even. For the long term, as we've also mentioned, for the year 2026, our R&D expenses will be around $2 to $2.5 billion R&D per quarter, depending on the product's go-to-market and also development cadence.

Speaker #1: As for the SG&A expenses, we would like to continue to achieve higher efficiency and utilization of expenses. That's the overall principle.

Speaker #2: Thank you, Yu Qian.

Stanley Qu: Thank you, Rui Chen.

Speaker #1: Thank you.

Yu Qu: Thank you.

Speaker #4: Thank you. Your next question comes from Tina Howe from Goldman Sachs. Please go ahead.

Operator: Thank you. Your next question comes from Tina Howe from Goldman Sachs. Please go ahead.

Speaker #1: Thank you, management, for taking my question. Just a very quick one. So, in the longer term, how should we think about the stabilized sales volume of L90 as well as ES8 on our average monthly basis?

William Li: Thanks, management, for taking my question. Just a very quick one. In the longer term, how should we think about the stabilized sales volume of L90 as well as ES8 on an average monthly basis? Thank you.

Speaker #1: Thank you.

Speaker #2: 谢谢Tina. 中国现在整个市场竞争确实是非常激烈的, 就是, 呃, 而且我们也看到智能电动汽车, 它现在整个的这个销售的这个趋势啊, 确确实实都是, 呃, 一上来新车发布的效应比较强。然后, 呃, 然后会进入到一个稳交期。其实在市场上去看, 我们确实也很难看到一款车能够长期的在一个比较大的量上去畅销。啊, 其实这个还是挺挑战的。我们很难去给一个长期稳态到底是多少, 当然我们肯定要去, 呃, 去朝这个更高的一个一个比较高的目标去努力吧。啊, 从今年的这个今年开始, 我们其实一直在建设, 呃, NIO的team和这个安抚的team的这个我们叫做新的一个营销的范式。啊, 那么这个新的营销范式是能够尽可能的去把这种新车的效应能够延长, 能够保证, 呃, 能够在一个比较高的这么一个稳销的水平。呃, 但是实事求是的来讲, 这个挑战仍然是非常大的。所以我们还需要, 还需要一段时间才能看清楚这个我们的这个营销范式到底能不能帮助像L90和ESA的这样非常有竞争力的产品, 它的稳销的水平能够在一个long市场和long投资人满意、long用户满意的一个水平。啊, 还需要一些时间才能看清楚。

Stanley Qu: 谢谢, Tina。中国现在整个市场竞争确实是非常激烈的，而且我们也看到智能电动汽车它现在整个的这个销售的这个趋势，确确实实都是一上来新车发布的效应比较强，然后会进入到一个稳销期。其实在市场上去看，我们确实也很难看到一款车能够长期的在一个比较大的量上去畅销，其实这个还是挺挑战的。我们很难去给一个长期稳态到底是多少，但我们肯定要去朝这个更高的一个比较高的目标去努力吧。从今年开始，我们其实一直在建设NIO的team和Onvo的team的这个我们叫做新的一个营销的范式，那么这个新的营销范式是能够尽可能的去把这种新车的效应能够延长，能够保证能够在一个比较高的这么一个稳销的水平。实事求是的来讲，这个挑战仍然是非常大的，所以我们还需要一段时间才能看清楚我们的这个营销范式到底能不能帮助像Onvo L90和ES8的这样非常有竞争力的产品，它的稳销的水平能够在一个让市场和让投资人满意，让用户满意的一个水平，还需要一些时间才能看清楚。

Speaker #1: thank you for the question. Are there clear automotive industry, thank you for the question. As the automotive industry here in China is a highly competitive and if you look at the sales trend of the smart electric vehicles, you seldom see any new model that can capture a very stable market share and a very, major trend or popularity in the market for a very long time.

William Li: Thank you for the question. As the automotive industry here in China is highly competitive, and if you look at the sales trend of the smart electric vehicles, you seldom see any new model that can capture a very stable market share and a very major trend or popularity in the market for a very long time. In that case, it is also difficult for us to really share with you a clear outlook regarding what the stabilized sales volume of the ES8 and L90 will be for the long term. Definitely, we set ourselves a higher target, and we will also try the best. Starting this year for the new Onvo brand, we also started to build up the team capabilities by implementing a completely new sales and marketing paradigm.

Speaker #1: In that case, it is also difficult for us to really share with you a clear outlook regarding what the stabilized sales volume of the ES8 and L90 will be.

Speaker #1: For the long term, we have definitely set ourselves a higher target, and we will also try our best. Starting this year for the new and onward brand, we have begun to build up the team's capabilities by implementing a completely new sales and marketing paradigm.

Speaker #1: We hope that through this new sales and marketing paradigm, we can actually help us to maintain and capture the market share of our new models as long as possible to prolong their impact and influence in the market. We also aim to stabilize their reasonable and satisfying sales volume in the market against the fierce competition for as long as possible.

William Li: We hope that through this new sales and marketing paradigm, it can actually help us to maintain and capture the market share of our new models as long as possible to prolong their impact and influence in the market and also to stabilize their winnable and satisfying sales volume in the market against the fierce competition as long as possible. As we have just implemented this paradigm, it will also take time for us to understand if it is truly helping us with the stabilization of these two great models, ES8 and L90. Overall, we hope that this can achieve a good result that is satisfying to the market, investors, and also our users.

Speaker #1: But, as we have just implemented this paradigm, it will also take time for us to understand if it is truly helping with the stabilization of these two great models: the ES8 and the L90.

Speaker #1: But overall, we hope that this can achieve a good result that is satisfying to the market, investors, and also our users.

Speaker #2: Thank you.

Stanley Qu: Thank you, Tina.

Speaker #1: Thank you, William.

Yu Qu: Thank you, William Li.

Speaker #4: Thank you. As there are no further questions now, I'd like to turn the call back over to the company for closing remarks.

Operator: 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 #2: Thank you again for joining us today. If you have any further questions, please feel free to contact NIO's investor relations team through the contact information on the website.

Stanley Qu: Thank you again for joining us today. If you have any further questions, please feel free to contact NIO Inc.'s investor relations team through the contact information on the website. This concludes the conference call. You may now disconnect your line. Thank you.