Q2 2026 NIO Inc Earnings Call

September 1, 2026

Operator 2: Hello, ladies and gentlemen. Thank you for standing by for NIO Inc. second quarter 2026 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, AVP and Head of IR, Corporate Finance, and Strategic Investment of the company. Please go ahead, Rui.

Speaker #1: Today's conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, AVP and Head of IR, Corporate Finance and Strategic Investment of the company.

Speaker #1: Please go ahead, Rui.

Speaker #2: Good morning and good evening, everyone. Welcome to NIO's second quarter 2026 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website.

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

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

Speaker #2: On today's call, we have Mr. William Li, Founder, Chairman of the Board, and Chief Executive Officer, and Ms. Danny Chu, Chief Financial Officer. Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S.

Speaker #2: The Private Securities Litigation Reform Act of 1995: Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today.

Speaker #2: 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 #2: 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.

Rui Chen: 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 earning press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to NIO's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead.

Speaker #2: 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 #2: William, please go ahead.

Speaker #3: 大家好，非常感谢各位参加未来2026年第二季度业绩沟通会议。

William Li: 大家好，非常感谢各位参加蔚来2026年第二季度业绩沟通会议。

William Li: [Foreign language]

Speaker #4: Hello everyone, and thank you for joining NIO Inc.'s Q2 2026 earnings call.

Danny Chu: Hello, everyone, and thank you for joining NIO Inc.'s 2026 Q2 earnings call.

Speaker #3: 2026年第二季度，公司共计交付107,658辆智能电动汽车，同比增长49.4%。

William Li: 2026年第二季度，公司共计交付107,658辆智能电动汽车，同比增长49.4%。

William Li: [Foreign language]

Speaker #4: In Q2, the company delivered a total of 107,658 smart EVs, achieving year-over-year growth of 49.4%.

Danny Chu: In Q2, the company delivered a total of 107,658 smart EVs, achieving year-over-year growth of 49.4%.

Speaker #3: 二季度，未来乐道银虎虫三大品牌同比环比均实现量价提升，其中未来品牌交付新车60,945台，在中国成交价345万元以上的乘用车市场中不分能源形式排名第一。乐道品牌交付新车29,124台，持续释放增长潜力。银虎虫品牌交付新车17,589台，继续领跑高端小车市场。

William Li: 二季度，蔚来、乐道、萤火虫三大品牌同比、环比均实现量价齐升。其中，蔚来品牌交付新车60,945台，在中国成交价35万元以上的乘用车市场中，不分能源形式排名第一。乐道品牌交付新车29,124台，持续释放增长潜力。萤火虫品牌交付新车17,589台，继续领跑高端小车市场。

William Li: [Foreign langauge]

Speaker #4: In Q2, the NIO, Onboard, and Firefly brands all achieved year-over-year and quarter-over-quarter growth in both sales volume and average transaction price. More specifically, the NIO brand delivered 60,945 vehicles, leading China's passenger vehicle market with transaction prices above RMB 350,000 across all powertrain types.

Danny Chu: In Q2, the NIO, ONVO, and Firefly brands all achieved year-over-year and quarter-over-quarter growth in both sales volume and average transaction price. More specifically, the NIO brand delivered 60,945 vehicles, leading China's passenger vehicle market with transaction prices above RMB 350,000 across all powertrain types. The ONVO brand delivered 29,124 vehicles, demonstrating strong growth momentum. The Firefly brand delivered 17,589 vehicles, maintaining its leadership in the high-end compact car market.

Speaker #4: The Onboard brand delivered 29,124 vehicles, demonstrating strong growth momentum. And the Firefly brand delivered 17,589 vehicles, maintaining its leadership in the high-end compact car market.

William Li: [Foreign language]

Speaker #3: 2026年7月和8月，公司分别交付35,934辆和35,836辆智能电动汽车，展望三季度，我们预计总交付量将在10.8万至11.1万辆之间。

William Li: 2026年7月和8月，公司分别交付35,934辆和35,836辆智能电动汽车。展望三季度，我们预计总交付量将在108,000至111,000辆之间。

Speaker #4: In July and August, the company delivered 35,534 and 35,836 vehicles, respectively. In Q3, the total deliveries are expected to range between 108,000 and 111,000 units.

Danny Chu: In July and August, the company delivered 35,534 and 35,836 vehicles respectively. In Q3, the total deliveries are expected to range between 108,000 and 111,000 units.

Speaker #3: 财务表现方面，第二季度公司综合毛利率18.4%，其中得益于高毛利车型持续热销和成本结构进一步优化，尽管面临行业原材料和芯片成本大幅上涨的压力，整车毛利率仍保持在18.5%，其他销售毛利率达到17%，服务与社区相关业务持续贡献利润。

William Li: 财务表现方面，第二季度公司综合毛利率18.4%，其中得益于高毛利车型持续热销和成本结构进一步优化，尽管面临行业原材料和芯片成本大幅上涨的压力，整车毛利率仍保持在18.5%，其他销售毛利率达到17%，服务与社区相关业务持续贡献利润。

William Li: [Foreign language]

Speaker #4: On the financial side, in Q2, the company's gross margin stood at 18.4%, driven by continued strong performance from higher-margin products and ongoing cost optimization, despite pressure from sharply rising raw material and chip costs.

Danny Chu: On the financial side, in Q2, the company's gross margin stood at 18.4%, driven by continued strong performance from the higher-margin products and ongoing cost optimization. Despite pressure from sharply rising raw material and chip costs, the vehicle gross margin remained solid at 18.5%. The gross margin of other sales was 17%, with services and community related businesses continuing to contribute to profitability.

Speaker #4: The vehicle gross margin remained solid at 18.5%. The gross margin of other sales was 17%, with services and community-related businesses continuing to contribute to profitability.

Speaker #3: 二季度，公司保持non-gap经营利润盈利，并达成正向经营现金流和自由现金流，现金储备进一步提升至567亿元人民币，经营基本面进一步夯实，为公司长期可持续增长提供了更强的资金保障。

William Li: 二季度公司保持non-GAAP经营利润盈利，并达成正向经营现金流和自由现金流，现金储备进一步提升至567亿元人民币，经营基本面进一步夯实，为公司长期可持续增长提供了更强的资金保障。

William Li: [Foreign language]

Speaker #4: In Q2, the company continued to generate non-GAAP operating profit, as well as positive operating cash flow and free cash flow, further increasing its cash reserves to RMB 56.7 billion.

Danny Chu: In Q2, the company continued to generate non-GAAP operating profit as well as positive operating cash flow and free cash flow, further increasing its cash reserves to RMB56.7 billion. This helped strengthen the company's business fundamentals while laying solid groundwork for its long-term sustainable development.

Speaker #4: This helped strengthen the company's business fundamentals while laying a solid groundwork for its long-term sustainable development.

Speaker #3: 接下来我跟大家交流一下公司产品研发和运营方面的进展。

William Li: 接下来我跟大家交流一下公司产品研发和运营方面的进展。

William Li: [Foreign language]

Speaker #4: Now, turning to our product R&D and operations.

Danny Chu: Now, turning to our product R&D and operations.

Speaker #3: 未来品牌方面，7月9日全场景科技旗舰SUV ES8大五座版正式上市，并随后开启交付，以大五座空间优势更好地满足用户多元化全场景的出行需求。全新ES8上市以来，市场表现持续强劲，上市335天即实现第14万辆新车交付，在40万级乘用车市场以及大型SUV市场均保持领先。在捷缆路用户进推荐值的研究中，未来ES8位列纯电车型第一，实现销量与用户口碑的双冠军。与此同时，科技行政旗舰SUV ES9五月底开始交付，在逐步转化传统豪华燃油SUV的用户群体，6月及7月在中国成交价50万以上的乘用车市场销量位居第一。旗舰车型的持续放量进一步巩固未来品牌在高端纯电市场的领先优势。

William Li: 蔚来品牌方面，7月9日全场景科技旗舰SUV ES8大五座版正式上市，并随后开启交付，以大五座空间优势更好地满足用户多元化全场景的出行需求。全新ES8上市以来，市场表现持续强劲，上市335天即实现第14万辆新车交付，在40万级乘用车市场以及大型SUV市场均保持领先。在杰兰路用户净推荐值研究中，蔚来ES8位列纯电车型第一，实现销量与用户口碑的双冠军。与此同时，科技行政旗舰SUV ES9五月底开始交付，在逐步转化传统豪华燃油SUV的用户群体。六月及七月在中国成交价50万以上的乘用车市场销量位居第一。旗舰车型的持续放量，进一步巩固蔚来品牌在高端纯电市场的领先优势。

William Li: [Foreign language]

Speaker #4: For the NIO brand, on July 9, the flagship SUV ES9 launched and began deliveries of the five-seat version, catering to more diverse user needs and scenarios with its five-seat layout and spacious interior.

Danny Chu: For the NIO brand, on 9 July, the flagship SUV ES9 launched and began deliveries of the five seat version, catering to more diverse user needs and scenarios with its five seat layout and spacious interior. The ES8 has maintained strong momentum since launch and achieved the 140,000 units delivery milestone in just 335 days, leading China's passenger vehicle segment in the RMB400,000 price range and the large SUV segment. In the Net Promoter Score survey by 杰兰路, the new ES8 achieved the highest NPS among BEVs, ranking first in both sales volume and product reputation. In the meantime, the flagship executive SUV ES9, which began deliveries in late May, has started winning over users from traditional luxury fuel-powered SUVs, leading in sales volume among passenger vehicles with transactional prices above RMB500,000 in June and July.

Speaker #4: The ES8 has maintained strong momentum since launch and achieved the 140,000-unit delivery milestone in just 335 days, leading China's passenger vehicle segment in the ¥400,000 price range and the large SUV segment.

Speaker #4: In the Net Promoter Score survey by Land Route, the NIO ES8 achieved the highest NPS among BEVs, ranking first in both sales volume and product reputation.

Speaker #4: In the meantime, the flagship executive SUV ES9, which began deliveries in late May, has started winning over users from traditional luxury fuel-powered SUVs. It led in sales volume among passenger vehicles with transaction prices above 500,000 RMB in June and July.

Speaker #4: The continued strong performance of NIO brand's flagship models has further strengthened its leading position in the premium BEV market.

Danny Chu: The continued strong performance of NIO brand's flagship models has further strengthened its leading position in the premium BEV market.

Speaker #3: 乐道品牌方面，L90交付满一周年累计销量突破6万台，在30万级纯电大型SUV市场位列第一。乐道L80持续稳定交付，依托出色的装载空间与场景化的产品力，获得用户的广泛认可。二季度，依托L90和L80突出的产品优势，乐道品牌在成交价30万以内的大型SUV中位居第一，同时更新迭代后的L60实现了全面的升级，精准匹配目标用户需求，对乐道整体销量形成了有力的支撑。

William Li: 乐道品牌方面，L60交付满一周年，累计销量突破6万台，在30万级纯电大型SUV市场位列第一。乐道L80持续稳定交付，依托出色的载空间与场景化的产品力，获得用户的广泛认可。二季度依托L60和L80出色的产品优势，乐道品牌在成交价30万以内的大型SUV中位居第一。同时，更新迭代后的L60实现了全面的升级，精准匹配目标用户需求，对乐道整体销量形成了有力的支撑。

William Li: [Foreign language]

Speaker #4: For the AMWO brand, the L90 surpassed 60,000 deliveries within its first year since launch, ranking number one among large battery electric SUVs priced around 300,000 RMB.

Danny Chu: For the ONVO brand, the L9 surpassed 60,000 deliveries within its first year since launch, ranking number 1 among the large battery electric SUVs priced around CNY 300,000. The L80 continued to see steady deliveries, winning broad recommendations with its exceptional cargo space and the scenario based functionality. In Q2, leveraging the outstanding product strengths of the L9 and L80, the ONVO brand became the sales leader among large SUVs priced below CNY 300,000. In addition, the upgraded L60 better meets the needs of its target users, further strengthening ONVO sales momentum.

Speaker #4: The L80 continued to see steady deliveries, winning broad recognition with its exceptional cargo space and scenario-based functionality. In Q2, leveraging the outstanding product strengths of the L90 and L80, the AMWO brand became the sales leader among large SUVs priced below RMB 300,000.

Speaker #4: In addition, the upgraded L60 better meets the needs of its target users, further strengthening AMWO's sales momentum.

Speaker #3: 萤幕成品牌方面，萤幕成已经连续15个月位居中国高端小车市场占有率第一，稳固细分市场的龙头地位。凭借精准的产品定位与独特的品牌调性，持续获得目标用户的认可。

William Li: 萤火虫品牌方面，萤火虫已经连续15个月位居中国高端小车市场占有率第一，稳固细分市场的龙头地位，凭借精准的产品定位与独特的品牌调性，持续获得目标用户的认可。

William Li: [Foreign language]

Speaker #4: The Firefly brand has been number one in market share among high-end compact cars for 15 consecutive months, maintaining its leadership in the segment. Its precise product positioning and unique brand identity continue to win the hearts of target users.

Danny Chu: The Firefly brand has been number 1 in market share among high-end compact cars for 15 consecutive months, maintaining its leadership in the segment. Its precise product positioning and unique brand identity continue to win the hearts of target users.

Speaker #3: 智能驾驶方面，6月18日我们向超过70万的未来及乐道用户推送了未来世界模型全新版本。此次升级继续深挖未来世界模型加闭环强化学习技术架构的潜力，功能体验大幅迭代。今年经过两次大版本更新后，整体用户使用率不断提高，升级后至今未来品牌用户的城区领航辅助的行驶里程环比提升了92.8%。乐道的全量用户也迎来全面体验升级，升级后乐道用户城区领航辅助的行驶里程环比提升了127.8%。

William Li: 智能驾驶方面，6月18日，我们向超过70万的蔚来及乐道用户推送了蔚来世界模型全新版本。此次升级继续深挖蔚来世界模型加闭环强化学习技术架构的潜力，功能体验大幅迭代。今年经过两次大版本更新后，整体用户使用率不断提高。升级后，至今，蔚来品牌用户的城区领航辅助的行驶里程环比提升了92.8%。乐道的全量用户也迎来全面体验升级。升级后，乐道用户城区领航辅助的行驶里程环比提升了127.8%。

William Li: [Foreign language]

Speaker #4: In terms of smart driving, on June 18, the latest version of NIO World Model was rolled out to over 700,000 NIO and AMWO users.

Danny Chu: In terms of smart driving, on 18 June, the latest version of NIO World Model was rolled out to over 700,000 NIO and ONVO users. As the second major release this year, the new version further leveraged the world model architecture and closed loop reinforcement learning, delivering significant enhancements in functionality and user experience. User adoption has continued to grow. Since the upgrade, new users mileage with urban NOP has increased by 92.8%. The upgrade also covered all ONVO users whose mileage with urban NOA increased by 127.8% following the upgrade.

Speaker #4: As the second major release this year, the new version further leveraged the World Model architecture and closed-loop reinforcement learning, delivering significant enhancements in functionality and user experience.

Speaker #4: User adoption has continued to grow. Since the upgrade, new users' knowledge with urban NOP has increased by 92.8%. The upgrade also covered all AMWO users, whose knowledge with urban NOA increased by 127.8% following the upgrade.

Speaker #3: 依托顶尖的模型算法、系统架构与工程落地能力，未来是行业首家实现通用芯片平台与自研芯片平台系统共线开发、同步发版的车企。我们实现了跨平台、跨品牌用户都能获得全生命周期持续领先的自驾体验，为用户带来常用常新的智能出行体验。

William Li: 依托顶尖的模型算法、系统架构与工程落地能力，蔚来是行业首家实现通用芯片平台与自研芯片平台系统共线开发，同步发版的车企。我们实现了跨平台、跨品牌用户都能获得全生命周期持续领先的自驾体验，为用户带来常新常新的智能出行体验。

William Li: [Foreign language]

Speaker #4: Powered by leading model algorithms, systematic architecture, and strong engineering capabilities, NIO is the industry's first car company to develop and roll out smart driving systems in parallel across general purpose and proprietary chip platforms.

Danny Chu: Powered by leading model algorithms, systematic architecture, and strong engineering capabilities, NIO is the industry's first car company to develop and roll out smart driving systems in parallel across general purpose and proprietary chip platforms, with a common software branch and synchronized releases. Users across different technology platforms and brands can enjoy a continuously evolving, industry leading smart driving experience throughout the vehicle lifecycle.

Speaker #4: With a common software branch and synchronized releases, users across different technology platforms and brands can enjoy a continuously evolving, industry-leading smart driving experience throughout the vehicle lifecycle.

Speaker #3: 销售服务网络方面，截至目前，我们开设了165家未来中心、376家未来空间。乐道门店441家，服务中心420家，交付中心93家。在2026年的JD Power售后服务满意度研究中，未来同时获得豪华品牌、中国品牌售后服务满意度第一，是搒单设立以来未来品牌持续保持这一成绩。我们的高品质服务得到了用户和行业的认可。

William Li: 销售服务网络方面，截至目前，我们开设了165家蔚来中心，376家蔚来空间，乐道门店441家，服务中心420家，交付中心93家。在2026年的J.D. Power售后服务满意度研究中，蔚来同时获得豪华品牌、中国品牌售后服务满意度第一。自榜单设立以来，蔚来品牌持续保持这一成绩，我们的高品质服务得到了用户和行业的认可。

William Li: [Foreign language]

Speaker #4: On the sales and service front, so far the company has 165 NIO Houses, 376 NIO Spaces, 441 AMWO stores, as well as 420 service centers and 93...

Danny Chu: On the sales and service front, the company has 165 NIO Houses, 376 NIO Spaces, 441 NIO Power stores, as well as 420 service centers and 93 delivery centers. In J.D. Power's 2026 Customer Service Index study for NEVs, the NIO brand ranked number one among both premium brands and Chinese brands, maintaining its top position since the rankings were first introduced. Our high-quality services have earned widespread recognition from both the industry and users.

Speaker #1: Delivery centers in J.D. Power's 2026 Customer Service Index Study for NEVs. The new brand ranked number one among both premium brands and Chinese brands, maintaining its top position since the rankings were first introduced.

Speaker #1: Our high-quality services have earned widespread recognition from both the industry and users.

William Li: 充换电网络方面，截至目前，我们在全球已累计布局4123座换电站，建成超过30,294根超充桩和目的地充电桩。8月7日，蔚来第4000座，同时也是首座第五代换电站正式落成。第五代换电站可以实现蔚来、乐道、萤火虫三品牌全车型兼容，覆盖从小型车到大型SUV全尺寸车型。五代站运营和服务效率显著升级，进一步强化对外服务与开放运营能力。同时，依托标准化、规模化的能源运营体系，我们也在积极布局电力交易等衍生服务，持续拓宽并释放换电模式的商业化价值。

William Li: [Foreign language]

Speaker #2: By Rui Chen. Chung, 20. Two, she. That.

Speaker #1: In terms of the power network, at present, the company has 4,123 power swap stations and 30,294 power chargers and destination chargers worldwide.

Danny Chu: In terms of the power network, at present, the company has 4,123 power swap stations and 30,294 power chargers and destination chargers worldwide. On 7 August, NIO's 4,000th power swap station went live, marking the launch of its first fifth-generation station. The fifth generation can support battery swaps for all models of NIO, ONVO, and Firefly, covering a wide range of vehicle sizes from compact cars to full-size SUVs. With significantly enhanced operational and service efficiency, the fifth-generation station is able to provide enhanced external services and support open operations. Leveraging standardized power operations at scale, the company is also exploring value-added businesses such as electricity trading, further unlocking the commercial value of battery swapping.

Speaker #1: On August 7th , news 4000 Power Swap Station went live , marking the launch of its first fifth generation station The fifth generation can support battery swaps for all models of new normal and Firefly , covering a wide range of vehicle sizes from compact cars to full size SUVs with significantly enhanced operational and service efficiency .

Speaker #1: The fifth generation station is able to provide enhanced external services and support , open operations , leveraging standardized power operations at scale . The company is also exploring value added businesses such as electricity trading for the unlocking the commercial value of battery swapping .

William Li: 7月23日，蔚来入选《时代周刊》全球最具可持续发展力企业榜单，也是本次唯一上榜的中国车企。我们将继续坚持纯电发展路线，与用户一起共创可持续和更美好的未来。

William Li: [Foreign language]

Speaker #2: As well. I'm Rui Chen. It's for Rui Chen.

Speaker #1: On July 23rd, NIO was named by Time magazine as one of the world's most sustainable companies of 2026, becoming the only Chinese automaker on the list.

Danny Chu: On 23 July, NIO was named by Time Magazine as one of the world's most sustainable companies of 2026, becoming the only Chinese automaker on the list. We will continue to advance our BEV roadmap, shaping a more sustainable and brighter future with our users.

Speaker #1: We will continue to advance our BEV roadmap, shaping a more sustainable and brighter future with our users.

William Li: 当前，中国汽车市场竞争进入了新的阶段，竞争格局迎来几大核心的变化。纯电渗透力持续快速提升，纯电已经成为市场主流的动力形式，行业从品牌混沌期进入品牌澄清期，品牌成为用户选择产品的重要考量因素，竞争也从单点的产品比拼转向企业综合体系化能力竞争的决赛阶段。长期以来，我们始终专注纯电，专注高端，专注体系能力建设的努力，契合了行业的最新发展趋势。蔚来正进入新的高质量增长周期，我们对实现既定的经营目标充满信心。

William Li: [Foreign language]

Speaker #2: In LA , the 20th century To 20 . Yu Qu in the The champion in The 2021 two Golden 20 . Two . Cycle Will

Speaker #1: As China's automotive market enters a new phase of competition, the landscape is undergoing several important changes. First, with the rapid growth of BEV penetration...

Danny Chu: As China's automotive market enters a new phase of competition, the landscape is undergoing several important changes. First, with the rapid growth of BEV penetration, BEVs have become a mainstream powertrain in the market. Second, the industry is moving from a period of brand ambiguity towards greater brand clarity, with brand becoming an increasingly important factor in consumers' purchasing decisions. Third, the final round of competition is shifting from product-level competition to competition in comprehensive system capabilities. For years, we have remained committed to the premium BEV strategy and have been building our system capabilities. This puts us well-aligned with the industry's evolution and positions us for a new phase of high-quality growth. We are confident in achieving our operating targets.

Speaker #1: BEVs have become a mainstream powertrain in the market Second , the industry is moving from a period of brand ambiguity to greater brand clarity , with brand becoming an increasingly important factor in consumers purchasing decisions Third , the final round of competition is shifting from product level competition to competition in comprehensive system capabilities .

Speaker #1: For years, we have remained committed to the premium BEV strategy and have been building our system capabilities. This puts us well aligned with the industry's evolution and positions us for a new phase of high-quality growth.

Speaker #1: We are confident in achieving our operating targets. Thank you for your support. With that, I will now turn the call over to Stanley for Q2 financial details.

William Li: 感谢大家的支持。现在Stanley将为大家介绍2026年第二季度的财务业绩。谢谢Stanley。

William Li: [Foreign language]

Danny Chu: 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 #1: Over to you , Stanley

Speaker #3: Thank you . William . Let's now review our key financial results for the second quarter of 2026 . Our total revenues reached 32.1 billion RMB , up 69.1% year over year at 25.9% quarter over quarter Vehicle sales were 29.1 billion RMB , up 80.1% year over year , and 27.5% quarter over quarter .

Stanley Yu Qu: Thank you, William. Let's now review our key financial results for the second quarter of 2026. Our total revenues reached RMB 32.1 billion, up 69.1% year over year, and 25.9% quarter over quarter. Vehicle sales were RMB 29.1 billion, up 80.1% year over year, and 27.5% quarter over quarter. The year-over-year growth was mainly due to the increased deliveries and a higher average selling price, driven by a more favorable product mix. The quarter-over-quarter increase was driven by higher deliveries. Other sales were RMB 3.1 billion, up 7.2% year over year, and 12% quarter over quarter. The year-over-year growth was driven by increased sales of parts, accessories, and after-sales vehicle services, partially offset by decreased sales of used cars and technical research and development services. The quarter-over-quarter increase was due to increase in revenues from used car sales and parts, accessories, and after-sales vehicle services sales.

Stanley Yu Qu: Thank you, William. Let's now review our key financial results for the second quarter of 2026. Our total revenues reached RMB 32.1 billion, up 69.1% year over year, and 25.9% quarter- over quarter. Vehicle sales were RMB 29.1 billion, up 80.1% year over year, and 27.5% quarter over quarter. The year-over-year growth was mainly due to the increased deliveries and a higher average selling price, driven by a more favorable product mix. The quarter-over-quarter increase was driven by higher deliveries. Other sales were RMB 3.1 billion, up 7.2% year over year, and 12% quarter over quarter. The year-over-year growth was driven by increased sales of parts, accessories, and after-sales vehicle services, partially offset by decreased sales of used cars and technical research and development services. The quarter-over-quarter increase was due to increase in revenues from used car sales and parts, accessories, and after-sales vehicle services sales.

Speaker #3: The year over year growth was mainly due to the increased deliveries and a higher average selling price , driven by a more favorable product mix .

Speaker #3: The quarter over quarter increase was driven by higher deliveries . Other sales were 3.1 billion RMB , up 7.2% year over year and 12% quarter over quarter .

Speaker #3: The year over year growth was driven by increased sales of parts , accessories and after sales . Vehicle services partially offset by decreased sales of used cars and technical research and development services .

Speaker #3: The quarter over quarter increase was due to increase in revenues from used car sales and parts , accessories , and aftersales vehicle services sales Looking at margins , vehicle margin was 18.5% compared with 10.3% in Q2 last year , and 18.8% last quarter .

Stanley Yu Qu: Looking at margins, vehicle margin was 18.5% compared with 10.3% in Q2 last year, and 18.8% last quarter. The year-over-year improvement was driven by a more favorable product mix, while quarter-over-quarter vehicle margin remained stable. Overall gross margin was 18.4% versus 10% in Q2 last year and 19% last quarter. The year-over-year increase was mainly due to the increased vehicle margin and the quarter-over-quarter slight decrease was mainly due to gross margins from vehicle sales, provision of power solutions and sales of parts, accessories, and after-sales vehicle services. Turning to OPEX, R&D expenses were RMB 2.1 billion, decreased 28.7% year-over-year, and increased 13.8% quarter-over-quarter. The year-over-year decrease was mainly driven by lower personnel costs in R&D functions due to organizational optimization, reduced design and development costs from different development stages, and improved operational efficiency.

Speaker #3: The year over year improvement was driven by a more favorable product mix , while quarter over quarter vehicle margin remained remained stable Overall , gross margin was 18.4% versus 10% in Q2 last year , as 19% last quarter .

Speaker #3: The year over year increase was mainly due to the increased vehicle margin and the quarter over quarter slight decrease was mainly due to gross margins from vehicle sales Provision of power solutions and sales of parts , accessories and aftersales vehicle services Turning to OpEx .

Speaker #3: R&D expenses were 2.1 billion RMB . Decreased 28.7% year over year and increased 13.8% quarter over quarter The year over year decrease was mainly driven by lower personnel costs in R&D functions due to organizational optimization , reduced design , and development costs from different development stages , and improved operational efficiency .

Speaker #3: The quarter over quarter increase was mainly due to the incremental design and development costs for new products , and technologies , as well as the increased personnel costs in research and development functions .

Stanley Yu Qu: The quarter-over-quarter increase was mainly due to the incremental design and development costs for new products and technologies, as well as the increased personnel costs in research and development functions. SG&A expenses were CNY 4.4 billion, increased 11.6% year-over-year and 22.5% quarter-over-quarter. The year-over-year increase was mainly driven by increase in sales and marketing activities associated with new product launches, while the quarter-over-quarter increase also reflected increased sales and marketing activities associated with new product launches, as well as higher personnel and related costs for marketing functions and share-based compensation for general corporate functions. Loss from operations was CNY 0.3 billion, down 92.9% year-over-year and up 12.4% quarter-over-quarter. Excluding share-based compensation expenses, adjusted profit from operations was CNY 0.2 billion. Net loss was CNY 0.5 billion, showing a decrease of 89.4% year-over-year and an increase 59% quarter-over-quarter. Excluding share-based compensation expenses, adjusted net profit was CNY 26.1 million.

Speaker #3: As a . Expenses were 4.4 billion RMB increased 11.6% year over year and 22.5% quarter over quarter . The year over year increase was mainly driven by increase in sales and marketing activities associated with new product launches , launches .

Speaker #3: While the quarter over quarter increase also reflected increased increased sales and marketing activities associated with new product launches . As well as higher personnel and related costs .

Speaker #3: For marketing functions and share-based compensation for general corporate functions, loss from operations was RMB 0.3 billion, down 92.9% year over year and up 12.4% quarter over quarter. Excluding share-based compensation expenses, adjusted profit from operations was RMB 0.2 billion.

Speaker #3: Net loss was 0.5 billion RMB , showing a decrease of 89.4% year over year and an increase . Of 59% quarter over quarter Excluding share based compensation expenses , adjusted net profit was 26.1 million RMB .

Speaker #3: Furthermore, our positive operating cash flow grew substantially, and we achieved positive free cash flow. Our cash position strengthened further, with RMB 56.7 billion in total cash and cash equivalents and restricted cash.

Stanley Yu Qu: Furthermore, our positive operating cash flow grew substantially, and we achieved positive free cash flow. Our cash position strengthened further with CNY 56.7 billion in total cash and cash equivalents, restricted cash, short-term investments and long-term time deposits. That wraps up our prepared remarks. For more information and the details of our unaudited Q2 financial results, please refer to our earnings press release. Now, I will turn the call over to the operator to start our Q&A session. Operator. Thank you.

Speaker #3: Short term investments and long term time deposits . That wraps up our prepared remarks . For more information and details of our unaudited second quarter financial results , please refer to our earnings press release Now , I will turn the call over to the operator to start our Q&A session .

Speaker #3: Operator thank you .

Speaker #4: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

Operator 2: 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. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you can reenter the queue. Your first question comes from Bin Wang with Deutsche Bank.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you can reenter the queue. Your first question comes from Bin Wang with Deutsche Bank.

Speaker #4: If you wish to cancel your request, please press star two. For the benefit of all participants on today's call, please limit yourself to two questions.

Speaker #4: And if you have additional questions, you can re-enter the queue. Your first question comes from Ben Wang with Deutsche Bank.

Speaker #5: Thank you. My question is about the order flow sustainability, about your ES8 and ES6 SUV. We don't fight in the premium SUV market.

Bin Wang: Thank you. My question is about the order flow sustainability about your ES8 and ES9 SUV. We noticed that in the premium SUV markets, some of your peers, competitor, although show live only a few several months. Can you explain why is that and how NIO differentiate to facing the competition in the high-end premium SUV market? Thank you.

Speaker #5: Some of your peers competitor , although shown live only a few several months . So can you explain why and how new . Differentiate to facing the competition in the high end premium SUV market ?

Speaker #5: Thank you

Stanley Yu Qu: Thank you, Wang Bin. Our main flagship products, ES9 and ES8, are still in very strong demand. If you look at it, our ES8 delivered 10,999 units in August, almost 11,000 units. In these 11 months, we delivered 140,000 units. In the coming September, we will definitely welcome the delivery of the 150,000 units. In a year's time, we will deliver more than 150,000 units. The demand is still very strong. I have also said before that the Chinese automobile industry, because new products are updated too frequently, there are very few cars that can continue to sell well. ES8, our brand-new ES8, has broken this.

Speaker #2: Wang Bin woman . The Yes . Yes . For the Woman . Yes . For yuan . Ming Hi . I I Want .

Speaker #2: They are women who have a strong

William Li: 这个行业的这样的一个现状，成为了一个持续热销的这么一个车。现在来看，需求这边是非常强劲的。

William Li: [Foreign language]

Speaker #1: Thank you for the question regarding NIO's flagship models, including the — yes, and the S9. They will continue to see strong demand for the S8.

Danny Chu: Thank you for the question. Regarding new flagship models, including the ES8 and ES9, they will continue to see strong demand. For the ES8, in August, we delivered around 10,099 units. In 11 months, we have delivered more than 140,000 ES8. In September, it is going to witness its next milestone of 150,000 deliveries, which means that in less than one year since its launch, it has already surpassed 150,000 unit delivery. The demand for the models are pretty strong. As previously we have talked about how the products are quickly iterated and introduced in the Chinese automotive market, where for a new model in the market, it is normally difficult or having difficulty to last its popularity and attention by the market. But for the ES8, it may be the first model that is breaking away from this market trend.

Speaker #1: In August we delivered around 10,099 units and in 11 months we have delivered more than 140,000 . Yes , eight . And in September it's going to witness its next milestone of 150,000 deliveries , which means that in less than one year since its launch , it has already surpassed 150,000 units delivery .

Speaker #1: So the demand for the models are pretty strong . And as previously we've talked about , how the products are quickly iterated and introduced in the Chinese automotive market , where for a new model in the market , it's more difficult .

Speaker #1: We're having difficulty as the market has lost its popularity and attention. But for the S8, it may be the first model that is breaking away from this market trend.

Speaker #2: Now The SUV yes The are definition for the a a Has I can you can be the Comparison to the Yes . The

William Li: 我们的科技旗舰SUV ES9上市以后，交付到现在的话，需求仍然是非常强劲的。我们的地平线特别版和我们的签名版，目前的等待周期还是要超过三个月，接近四个月，三个多月了，需求还是非常强劲。从目前来看的话，我们如果去看八月份和七月份相比，因为七月份我们有一些以前的预订金的订单，那如果我们看八月份的话，我们都没有预订金订单了，我们新增的订单和七月份相比的话，其实增长得还是比较多的。所以我们对于ES9的持续的热销还是非常有信心的。

William Li: [Foreign language]

Speaker #1: And regarding our flagship executive SUV . Yes . My . It also sees strong demand since its launch , especially for the horizon edition and the Signature Edition .

Danny Chu: Regarding our flagship executive SUV ES9, it also sees strong demand since its launch, especially for the Horizon Edition and the Signature Edition. Right now, for users placing an order, they will need to wait for three months or nearly four months to pick up a new car. If we look at the sales number of the ES9 in August and July, as in July we were still consuming some preorders. But if we are making a comparison between the incremental orders in July and August, we actually have seen a growth from July to August. So we are also confident in the continuous popularity and also demand for the ES9.

Speaker #1: Right now, for users placing an order, they will need to wait for three months or nearly four months to pick up a new car.

Speaker #1: And if we look at the sales numbers of the S9 in August and July, I think in July, we were still consuming some pre-orders.

Speaker #1: But if we are making a comparison between the incremental orders in July and August, we actually have seen a growth from July to August.

Speaker #1: So we are also confident in the continuous popularity and demand for the S9.

Speaker #2: Now, today, yes, I just had a—

William Li: 特别想强调的是，我们的ES9，四分之三以上的用户都是来自于蔚来社群以外的新增的用户，也就是说它的破圈的效应还是非常明显。

William Li: [Foreign language]

Speaker #1: And also , one thing worth noting is that around three quarters of the S9 users are actually from non existing new users , from users outside of the new user community .

Danny Chu: Also one thing worth noting is that, around three quarters of the ES9 users are actually from non-existing new users, from users outside of the new user community. This also shows that the ES9 has successfully reached out to a broader user base.

Speaker #1: This also shows that the U.S. has successfully reached out to a broader user base.

Speaker #2: Now within the Xiaomi. So far, tissue in the, in the...

William Li: 那这个原因的话，我觉得是这几个方面。首先还是我们的技术领先，从技术创新的角度来讲，像我们ES9有几十项行业首发的技术，和领先同级的技术。那技术创新还是我们非常坚持的一个产品的竞争力的基础。

William Li: [Foreign language]

Speaker #1: And there are several reasons for the popularity and the demand for the S9. The first is the technology innovation on the S9.

Danny Chu: There are several reasons for the popularity and the demand for the ES9. The first is the technology innovation. On the ES9, we have introduced or debuted several thousands of industry first or industry leading technologies. Tech innovation is still so far a very important competitiveness and also differentiation of our products.

Speaker #1: Yes , my . We have introduced or debuted several thousands of industry firsts or industry leading technologies and tech innovation is still so far a very important .

Speaker #1: Competitive competitiveness and also differentiation of our products.

William Li: 第二个就是我们产品的定义是精准满足了在高端市场的商务兼顾家庭的用户，或者商务需求的用户这样的一些情感和功能的体验的需求。这方面的话，用户的满意度是非常高的。

William Li: [Foreign language]

Speaker #2: In the Jingyi Yu, Qu, the...

Speaker #1: And secondly, the product definition has precisely catered to the needs of users in the premium segment, especially users who buy the car for their business needs and also for their family occasions.

Danny Chu: Secondly, the product definition has precisely catered to the needs of the users in the premium segment, especially users buying the car for their business needs and also for their family occasions, where our cars have catered to both their emotional as well as functional needs. Our users also speak highly of the product experience.

Speaker #1: Our cars have catered to both the emotional as well as functional needs of our customers, and our users also speak highly of the product experience.

William Li: 第三个的话，还是我们的充换电服务网络，充换电网络，还有我们售后服务的体系，带来了非常难以复制的一个体系化的优势。那么根据杰兰路的报告，我们的售后服务在新能源汽车品牌中是连续三期夺冠。那么我们也在J.D.

William Li: [Foreign language]

Speaker #2: Soho for the The . For the user . A women are The JD power . The So-Called The . Audi The . Golden .

William Li: Power 的 2026 年的售后服务满意度的研究中，是豪华品牌和中国品牌的双料第一，这个也持续好几年了。所以这也是对高端市场来说，服务的体系，服务的体验是非常重要。

William Li: [Foreign language]

Speaker #2: Or the T, all T and...

Speaker #1: And the third is the holistic and . One of a kind . Experience enabled by our charging and swapping network as well as our .

Danny Chu: The third is the holistic and one of a kind experience enabled by our charging and swapping network, as well as our after sales services, which are actually a systematic capability difficult to replicate by the competitors. According to the 杰兰路 recent study on the aftermarket satisfaction on the new energy vehicles, we have been topping the list for three times consecutively. Also in J.D. Power's recent research in terms of the post-market satisfaction on the new energy vehicles, we are also ranking the first for several years in a row. For the premium segment, such experience centering on the services and post-market services are also very important.

Speaker #1: After sales services , which are actually a systematic capability . Difficult to replicate by the competitors . According to the land , recent study on the aftermarket satisfaction on the new energy vehicles .

Speaker #1: We've been topping the list for three times consecutively , and also in J.D. Power's recent research . In terms of the post-market satisfaction on the new energy vehicles , we're also ranking the first for several years in a row .

Speaker #1: So for the premium segment, such experiences centering on services and post-market services are also very important.

Speaker #2: Now, on the energy, by the—you can take a... take a—

William Li: 那最后一点也是非常重要的一点，我也多次讲到，中国新能源汽车的市场从品牌的混沌期进入到了品牌的沉淀期。那么用户的购车决策从过去几年比参数，现在已经转向了选品牌，先选品牌。那我们在高端的纯电的市场已经建立了一个品牌的新字。那用户其实也广泛地形成了一个BBA的下一辆选蔚来，高端的纯电选蔚来，这样的一个市场的共识。如果去看我们蔚来的用户，在购车决策的原因里面，品牌的原因占比已经超过了30%。那也是印证了我们蔚来在高端市场已经建立了一个深入人心的品牌的形象。

William Li: [Foreign language]

Speaker #1: And the fourth one is as. Also, as previously talked about, the entire automotive market is now shifting from a period of brand ambiguity to a period of brand clarity, where users' purchasing decisions were previously largely based on the specifications of a product, and now their decision is mostly driven by the brand.

Danny Chu: The fourth one, as also previously talked about, the entire automotive market is now shifting from a period of brand ambiguity to a period of brand clarity, where users' purchasing decisions was previously largely based on the specifications of a product, now their decision is mostly driven by the brand. In that case, NIO has also established a pretty solid foothold and a clear brand awareness in the premium battery electric vehicle market. Among many users, they naturally believe that if they are going to choose a car to replace their existing Mercedes-Benz, BMW, and Audi, then NIO will be their natural choice. If they are looking for a premium BEV model, then NIO is also their go-to car.

Speaker #1: And in that case, NIO has also established a pretty solid foothold and a clear brand awareness in the premium battery electric vehicle market.

Speaker #1: Among many users , they naturally believe that if they are going to choose a car to replace their existing Mercedes , BMW , and Audi , and Nio will be their natural choice .

Speaker #1: And if they're looking for a premium , Bev model , then NIO is also their go to car . Among our existing new users , we have also studied their purchasing decision where we find that the brand reputation and awareness is already accounted for .

Danny Chu: Among our existing NIO users, we have also studied their purchasing decision, where we find that the brand reputation and awareness is already accounted for more than 30% of their purchasing decision. This has further proven our solid foothold in the premium BEV market.

Speaker #1: More than 30% of their purchasing decision. This has further proven our solid foothold in the premium BEV market.

Speaker #2: Now The NIO brand Will

William Li: 那我们从终端的上险的数据去看的话，二季度NIO brand在中国市场的平均的成交价是CNY 406,000元。那么全面超越了传统豪华品牌BBA，在主流高端品牌中排名第一。7月份，蔚来品牌的平均成交价也进一步来到了CNY 43万以上。

William Li: [Foreign language]

Speaker #1: And if we further look at the numbers by the insurance associations in Q2 , the average selling price of the new brand was 406,000 RMB , far higher than the prices of Mercedes , BMW and Audi and ranking the first among all the mainstream premium brands .

Danny Chu: If we further look at the numbers by the Insurance Association, in Q2, the average selling price of the NIO brand was CNY 406,000, far higher than the prices of Mercedes, BMW, and Audi, and ranking the first among all the mainstream premium brands. In July, the average selling price of the NIO brand was over CNY 430,000.

Speaker #1: And in July, the average selling price of the new brand was over RMB 430,000.

Speaker #2: Well, the situation for the We... women will—

William Li: 我们相信品牌的稀缺性和它的这样的一个竞争力，会成为我们未来这三个品牌在长期参与市场竞争非常重要的一个基础。

William Li: [Foreign langauge]

Speaker #1: And we believe that the scarcity of such premium . Of our brands , as well as the competitiveness of our brands across all three brands , will also become a long term foundation for our competitiveness going into the future .

Danny Chu: We believe that the scarcity of such a premiumness of our brands, as well as the competitiveness of our brands across all three brands, will also become a long-term foundation for our competitiveness going into the future.

Speaker #2: Thank you

Bin Wang: Thank you, Wang Bin.

Speaker #5: Thank you

[Analyst]: Thank you.

Speaker #4: Your next question comes from Tim Su with Morgan Stanley.

Operator 2: Your next question comes from Tim Hsiao with Morgan Stanley.

Operator: Your next question comes from Tim Hsiao with Morgan Stanley.

Speaker #5: Hi .

Tim Hsiao: Hi, this is Tim from Morgan Stanley. Thanks for taking my questions during the Congress on the third consecutive profitable quarter. I have two questions. The first one is about ONVO, because compared to the robust growth of the NIO and the Firefly brands, we noticed ONVO's customer conversion and order momentum have been relatively moderate to ramp since launch. Just want to know how is the progress in addressing the adjustment to customer incentive and the selling strategies, and looking for what further changes would management plan to effectively improve ONVO's order momentum? That's my first question. Thank you.

Speaker #6: This is Tim from Morgan Stanley. Thanks for taking my questions, and congrats on the third consecutive profitable quarter. I have two questions.

Speaker #6: The first one is about Onvo because, compared to the robust growth of the NIO and Firefly brands, we noticed that both customer conversion and auto momentum have been relatively moderate to ramp since launch.

Speaker #6: So I just want to know that . How's the progress in recent adjustment to to customer incentive and selling strategies and looking forward , what further changes with management plan to effectively improve on both older momentum ?

Speaker #6: Yeah, that's my first question. Thank you.

William Li: 好，谢谢Tim。ONVO所在的市场的竞争确实要激烈很多。和NIO还有Firefly相比的话，它确实在参与的是一个市场竞争非常激烈的一个市场，不管是从品牌的数量还是从车型的数量都要多很多。那如果我们去看的话，ONVO从品牌发布到现在取得的成绩，其实也还是从一个细分市场去看的话，也是非常的不错的。

William Li: [Foreign language]

Speaker #2: Tim. Under the Your Neo, Firefly—the, the. Our...

Speaker #1: Thank you for the question . It's true that envoy is actually in a more competitive market than neo and Firefly , where the level of competition , the intensity level of competition in terms of the number of grants and also the number of models are also much more intense than that of Neo and Firefly .

Danny Chu: Thank you for the question. It's true that ONVO is actually in a more competitive market than NIO and Firefly, where the intensity level of competition in terms of the number of brands and also the number of models are also much more intense than that of NIO and Firefly. But if we look at the ONVO's overarching performance since its launch, especially from its specific segment and market, it has actually done some good progress and achievements.

Speaker #1: But if we look at the almost overarching performance since its launch, especially from its specific segment and market, it has actually made some good progress.

Speaker #1: And achievements .

Speaker #2: So the one, the number that goes into the... the...

William Li: 首先我们还是看它的成交均价，就是今年上半年，大家都知道中国的乘用车这个大盘挑战很大，但乐道品牌的平均成交单价是超过了24万，和去年同比是增长的，还是比较多的。那么其实中国今年上半年只有八个品牌实现了量价提升，那么乐道就是其中之一。所以从这个角度来讲的话，它的平均单价、成交均价超越了部分的传统豪华品牌。所以我觉得作为一个高品质的家庭用车的品牌，从品牌的打造方面应该设立了一个比较好的基础。

William Li: [Foreign language]

Speaker #1: In terms of the . If we look at the average selling price of the products . As . We all know that the passenger vehicle market .

Danny Chu: In terms of the, if we look at the average selling price of the ONVO products, as we all know that the passenger vehicle market in the H1 of this year was a bit challenging. Even amid these challenges, ONVO still achieved an average selling price of CNY 240,000, achieving also significant growth year-over-year. In the H1 of this year in the China's automotive market, only 8 brands managed to achieve increase both in their sales volume as well as the average selling price, where ONVO is one of these 8 brands. In terms of the average selling price, ONVO is even outperforming some traditional luxury brands. If we perceive ONVO as a premium family-oriented brand, it is actually achieving a pretty good baseline from this brand definition perspective.

Speaker #1: In the first half of this year was a bit challenging and even amid this . Challenges almost still achieved an average selling price of 240,000 RMB , achieving also significant growth year over year .

Speaker #1: And in the first half of this year , in the China's automotive market , only eight brands managed to achieve increase , both in their sales volume as well as the average selling price , where annual is one of these eight brands .

Speaker #1: So in terms of the average selling price is even outperforming some traditional luxury brands . So if we perceive envoy as a premium family oriented brand , it is actually achieving a pretty good baseline as a as from this brand definition perspective .

Speaker #2: Yeah, so Yu Qu, champion, touched on that compared to the... the...

William Li: 第二个就是乐道的产品的综合竞争力还是非常强的。我们如果去看它从销售线索到订单的转化率，在行业里面是非常领先的。也就是说，用户一旦接触到了乐道的产品，他其实最后买我们车的成功率是比较高的。这个也能够看出来，我们现在主要的一个挑战还是品牌的知名度。现在乐道的品牌知名度确实要相当于五六年前的蔚来的品牌。所以接下来我们希望能够通过更多更积极更主动的方式，通过跨界合作、线下活动、深挖社群这样的一些方式，让更多的人能够接触到乐道的品牌。这个就是我们目前主要的一个工作目标。

William Li: [Foreign language]

Speaker #1: And in terms of the overall product competitiveness , we also see some good progress and also foundation . Especially a good conversion rate from up to sell leads and opportunities all the way to orders , which means that when users get to know about the brand and products .

Danny Chu: In terms of the overall product competitiveness, we also see some good progress and also foundation, especially a good conversion rate from sales leads and opportunities all the way to orders. Which means that when users get to know about the brand and products, it is also more possible and likely for them to place an order on the ONVO product. Right now for the ONVO brand, the challenge is more about its overall brand awareness, where its current brand awareness is maybe comparable with NIO's awareness around 5 to 6 years ago. Right now our focus is also to enlarge the brand awareness and also the popularity through different collaborations, offline activities and also engagements with more targeted communities.

Speaker #1: It's also more possible and likely for them to place an order on the envoy product . So right now , for the brand , the challenge is more about its overall brand awareness , where its current brand awareness is maybe comparable with Neo's awareness .

Speaker #1: Around 5 to 6 years ago . So right now , our focus is also to enlarge the brand awareness and also the popularity of through also different collaborations .

Speaker #1: Offline activities, and also engagement with more targeted communities.

William Li: 第二个举措就是我们会加快未来乐道、萤火虫三个品牌共用的Sky门店的布局，持续加强销售网络的建设，能够让乐道的品牌更多地触达三四线城市的家庭用户群体。

William Li: [Foreign language]

Speaker #2: We, I mentioned also to the

Speaker #1: And the second action we're taking is to keep rolling out our Sky stores, where we can host the new Envoy and Firefly brands under the same roof.

Danny Chu: The second actions we are taking is to keep rolling out our Sky stores, where we can host the new ONVO and the Firefly brands under the same roof. With that, we are able to further expand our sales network and also to really introduce our ONVO brand to more users in the lower tier cities.

Speaker #1: With that, we are able to further expand our sales network and also really introduce our brand to more users in the lower-tier cities.

William Li: 第三个的话，接下来我们还是会持续地推出新的产品，去服务更广泛的家庭用户群体。当然方向上来讲，我们还是会保持乐道作为一个高品质家庭用车品牌的定位。我们不会进到太低的价格市场，还会平衡量和毛利的关系。总的来说，我们认为中国市场现在是缺乐道这样一个定位在传统的像丰田、大众他们的高线的产品的品牌的。我觉得这对乐道来说是非常好的一个机会。

William Li: [Foreign language]

Speaker #2: The true To the Way The The way I see The The . The . The Way

Speaker #1: And the third action is to also introduce new, honorable products so that we can also reach out to a broader family user base.

Danny Chu: The third action is to also introducing new ONVO products so that we can also reach out to broader family user base. But in the meantime, we will still maintain ONVO's positioning as a premium high quality, family-oriented brand. So we will not be very aggressive in entering into the entry level segment. We will still strike a balance between the sales volume and also the vehicle growth margin. Right now in the Chinese automotive market, we actually see a vacancy where there is no such brand that is comparable with the upscale product lines of Toyota or Volkswagen that can serve the needs of the family users. This is where we see the opportunity for ONVO to develop its awareness in that specific segment.

Speaker #1: But in the meantime , we will still maintain almost positioning as a premium , high quality family oriented brand . So we will not be very aggressive in entering into the entry level segment .

Speaker #1: We will still strike a balance between the sales volume and also the vehicle gross margin . Right now in the Chinese automotive market , we actually see a vacancy where there is no such brand that is comparable with the upscale product lines of Toyota or Volkswagen that can serve the needs of the family users .

Speaker #1: This is where we see the opportunity for Angle to develop its awareness in that specific segment.

Speaker #2: Tim , thank you .

William Li: Tim, thank you.

Speaker #6: Thank you for sharing the details. My second question is a quick one. I just want to know if management can share next year's new model refresh and the key launch milestones for the new Envoy and the Firefly, the three brands under the group?

Tim Hsiao: Thank you, William, for sharing the details. My second question is a quick one. Just want to know that if management can share next year's new model refresh and the key launch milestones for the NIO, ONVO, and the Firefly, the three brands on the group. Yeah, that's it. Thank you.

Speaker #6: Yeah, that's it. Thank you.

William Li: 谢谢Tim。从蔚来品牌的角度来讲，当然我们五系、六系的产品会有一些新的产品的计划，这个其实市场也应该都能了解得到。

William Li: [Foreign language]

Speaker #2: Thank you. I'll go now to Firefly, to the Firefly brand. Firefly, the brand, I formed the...

William Li: 那乐道的话，ONVO的话，我们明年还会有战略级的新的产品上市，会进一步地去丰富我们的产品线。从Firefly的角度来讲，我们Firefly brand就是这一款车型。我们当然包括特别版，包括后续的一些技术的迭代，我们都会持续地去进行。总的来说，Firefly有点像iPhone这样，会持续地有一些新的特别版去推出。

William Li: [Foreign language]

Speaker #1: Thank you for the question about the new brand for next year. We will be introducing new products coming from the 5 and 6 series product lines.

Danny Chu: Thank you for the question. For the NIO brand, for next year, we will be introducing new products coming from the five and the six series product lines. I believe that the market is also aware of some of our latest plans. For the ONVO brand, next year we are going to introduce a major strategic new product that will also help to enrich our existing product lineup. For the Firefly brand, we will keep this single model strategy, but keep rolling out special editions and also technology upgrades. So for Firefly, it's a bit like taking the iPhone approach, where it will stay in this same product but with new additions.

Speaker #1: I believe that the market is also aware of some of our latest plans. For the brand, next year we're going to introduce a major strategic new product that will also help to enrich our existing product lineup.

Speaker #1: And for the Firefly brand, we will keep this single model strategy, but continue rolling out special editions and technology upgrades.

Speaker #1: So for Firefly, it's a bit like taking the iPhone approach, where it will stay in the same product, but with new additions.

Speaker #2: Thank you Tim .

William Li: Thank you, Tina.

William Li: Thank you, Tim.

Speaker #6: Thank you really

Tim Hsiao: Thank you, William.

Speaker #4: Your next question comes from Paul Gong with UBS.

Operator 2: Your next question comes from Paul Gong with UBS.

Operator: Your next question comes from Paul Gong with UBS.

Speaker #5: Hi, thanks for taking my question. My first question is regarding your vehicle gross margin outlook for the next two quarters.

Paul Gong: Hi, William, thanks for taking my question. My first question is regarding your vehicle gross margin outlook for the next two quarters, amidst the ongoing cost inflation. We are aware that the memory costs continue to go up. I just want to listen to your thoughts. How does that impact the vehicle gross margin? Thank you.

Speaker #5: Amid the ongoing cost inflation. We're well aware that memory costs continue to go up, and I just want to listen to your thoughts.

Speaker #5: How does that impact the vehicle gross margin? Thank you.

Stanley Yu Qu: 你好，Paul。确实，今年整个的成本端的压力趋势比较大。按照我们之前所讲，对于蔚来来说，今年3月份开始，从内存到大宗材料到电池的成本，其实都有所上升。从整个二季度来看，如果跟去年年底相比，整个单车成本平均来看的上涨大概在单车CNY 1.4万左右。所以这个其实给我们的毛利带来的压力还是比较大的。

Stanley Yu Qu: [Foreign language]

Speaker #3: Tao Sheng I The I

Speaker #1: Thank you for the question . It's true that since this year , the cost structure of . Of our of the automotive industry has been under pressure .

Danny Chu: Thank you for the question. It is true that since this year, the cost structure of the automotive industry has been under pressure. For the company, we have been facing pressure coming from the rising material costs, including memory chips, batteries, and also other bulk materials. If we look at the cost in Q2 as well as the cost in late Q4 last year, the average cost impact or cost increase is around CNY 14,000 per car.

Speaker #1: And for the company we've been facing pressure coming from the rising material costs , including memory chips , batteries , and also other bulk materials .

Speaker #1: And if we look at the cost in Q2 as well as the cost in late Q4 last year, the average cost impact, or cost increase, is around 14,000 RMB per car.

Stanley Yu Qu: 所以当然，在二季度公司也是做了大量的工作，来稳住我们的毛利，来对冲成本上涨的压力。这里面就包括一个，我们是维持了三个品牌的这个价格的稳定，我们没有通过单纯的降价来换取销量。另外，我们在成本端也通过我们的供应链的优化、商务的谈判、VA/VE等措施。总体来讲，我们基本上实现了一个整车18.5%，一个相对稳定的毛利率。

Stanley Yu Qu: [Foreign language]

Speaker #3: When You a woman , a . The one thing . That the That we've

Speaker #1: And also in Q2 , we've taken a series of efforts to stabilize our vehicle margin and . Under the rising cost of pressure And as previously mentioned , we've been actually using .

Danny Chu: And also in Q2, we have taken a series of efforts to stabilize our vehicle margin under the rising cost of pressure. As previously mentioned, we have been taking a very stable pricing strategy for our products. We did not really lower the price in exchange for the sales volume. Secondly, on the supply side, we have been working with the supply chain to take a series of optimization measures, VA/VE efforts, as well as commercial negotiations. With all these efforts combined, we managed to stabilize our vehicle margin at 18.5% in Q2.

Speaker #1: We are taking a very stable approach to pricing strategies for our products. We didn't really lower the price—lower the price in exchange for the sales volume.

Speaker #1: And secondly, on the supply side, we've been working with the supply chain to take a series of optimization measures. These efforts, as well as commercial negotiations, have been ongoing.

Speaker #1: With all these efforts combined, we managed to stabilize our vehicle margin at 18.5% in Q2.

Stanley Yu Qu: 当然在下半年，我们也看到材料成本有继续上涨的风险，我们预计可能会在CNY 2,000到CNY 3,000元平均下来每车。那公司当然也会继续采取相应的措施。总的目标是希望Q3和Q4整个的vehicle的margin能够维持跟Q2差不多的水平。

Stanley Yu Qu: [Foreign language]

Speaker #3: Q1. Q3. Q, a vehicle. The margin, which can cure the shipping...

Speaker #1: And going into the second quarter, we expect the material cost to continue to increase by another RMB 2,000 to 3,000. But we will also take a series of measures to mitigate these risks in Q3 and Q4.

Danny Chu: Going into the second quarter, we expect the material cost to continue to increase by another CNY 2,000 to CNY 3,000. But we will also take a series of countermeasures to mitigate this risk. In Q3 and Q4, we hope to still stabilize our vehicle growth margin at the same level as in Q2.

Speaker #1: We hope to stabilize our vehicle gross margin, and keep it at the same level as in Q2.

Stanley Yu Qu: 好，谢谢Paul。

Stanley Yu Qu: [Foreign language]

Speaker #5: So my second question is , yeah , despite of all this cost pressure , you have done significant improvements in terms of profitability over the past one year , my question is , what gives you a management that this improvements are sustainable rather than , say cyclical

Paul Gong: My second question is, despite all this cost pressure, you have done significant improvements in terms of profitability over the past one year. My question is: What gives you management confidence that these improvements are sustainable rather than, say, cyclical?

Stanley Yu Qu: 对，确实。这里面当然这个是一个综合的措施。一方面，其实刚刚William也提到，整个的汽车市场也进入到一个品牌的竞争。那刚刚我们也提到，我们蔚来的品牌，我们ES8和ES9的销量还是非常稳定的。然后在高端市场里面的占有率也非常高。这两款车型在我们整个portfolio里面的占比还是非常可观的。这两款车型的毛利也是超过20%，所以它是我们整个毛利的基石。

Stanley Yu Qu: [Foreign language]

Speaker #3: I We like the woman . Yes , yes . I Portfolio and I should , I should Take a

Speaker #1: Thank you for the question to that . We need to take a comprehensive measure towards that . The first is that , as also mentioned by William , the automotive competition in now shifting to more brand driven .

Danny Chu: Thank you for the question. To that, we need to take a comprehensive measure towards that. The first is that as also mentioned by William Li, the automotive competition in China is now shifting to more brand driven, and for the NIO brand, our ES9 and ES8 are still seeing pretty stable demand, and also with significant market share in their respective segments. These two models, they are also making major contribution in our product mix as well as vehicle margin, as both of them have over 20% vehicle margin, and this will be our foundation for the overall performance.

Speaker #1: And for the new brand , our yes nine and S eight are still seeing pretty stable demand . And also with significant market share in their respective segment .

Speaker #1: These two models, they are also making a major contribution to our product mix, as well as vehicle margin, as both of them have over 20% vehicle margin.

Speaker #1: And this will be our foundation for the overall performance.

William Li: 当然第二点，我们还是会持续地去优化我们的成本结构，把我们的产品定义做得更精准，跟我们的合作伙伴一起去寻找降本的措施。所以这个其实从过去几个季度开始，都已经在深入地进行，也结合我们内部叫原子化的研发和供应链的这样一个能力，我们其实在这方面也已经找到了非常多的这样的机会，那我们在接下来也会持续地去进行这样的工作。

William Li: [Foreign language]

Speaker #3: To you, go to push on. I should say, the woman, the... the...

Speaker #1: And the second is to keep rolling out optimizations towards our cost structure by making more accurate product definitions, and also by working on cost reduction opportunities together with our supply chain partners.

Danny Chu: And the second is to keep rolling out optimizations towards our cost structure by making more accurate product definition and also by working on the cost reduction opportunities together with our supply chain partners. These are the efforts that we have been working on in the past several quarters. Internally, we have been doing all this decoupling and analysis of our R&D and also supply chain capabilities, putting them into the atomic granularity, identifying also opportunities for continuous cost reduction. We will also keep up this good work.

Speaker #1: These are the efforts that we've been working on in the past several quarters, and internally, we've been doing all this decoupling and decoupling analysis of our R&D and also supply chain capabilities, putting them into the autonomic granularity, identifying also opportunities for continuous cost reduction.

Speaker #1: And we will also keep up this good work.

William Li: 那我想补充一下，今年确实中国的汽车市场的压力是非常大的。但如果你去看未来整个公司的增长的质量还是非常的高。刚才Stanley也讲到了我们一些长期盈利能力的持续性。今年上半年我们的销量是涨了67%，但是我们的营收是高于这个销量的增长，我们营收是同比增长了86%。如果我们看到毛利额，就毛利的总额，我们同比增长了是282%，这个增速是比营收的增长还要更快。那么这个成绩是在今年的原材料和存储芯片这样的一些成本大幅上涨的情况下实现的。那因为我们二季度，刚才Stanley也讲了，我们二季度的成本平均到每辆车上去和去年年底是涨了14,000。那么今年下半年呢，还要再增加两三千，也就是说要涨到16,000到17,000之间，和去年年底相比。但是我们仍然是有信心实现这个毛利额的总额的这样一个高速的增长。所以这一点也是充分证明了我们整个公司从技术到产品，到供应链的管理，到销售，还有各方面的管理，还有品牌的定位的一个体系的竞争能力。

William Li: [Foreign language]

Speaker #2: On the Xiaoliang high, this—I mean, the... the... the... are... so...

Speaker #1: And as mentioned , the Chinese automotive industry has been under cost pressure . But even amid all these challenges , the company has still managed to achieve high quality growth as shared by Stanley .

Danny Chu: As mentioned, the Chinese automotive industry has been under cost pressure. But even amid all these challenges, the company has still managed to achieve high quality growth as shared by Stanley. Some of the efforts we have been taking to secure the long term and sustainable growth of our business. I would like to also share some numbers. In the H1 of this year, our sales volume increased by 67% year over year, where our total revenue increased by 86% year over year. That is faster than our volume increase. In terms of our gross profit, it increased by 282% year over year, much faster than the growth of our revenue. This is amid all the challenges coming from the supply side, the rising raw material costs on the chips and on everything. As mentioned, also in Q2, the impact on the vehicle is around CNY 14,000 on average, where compared from late last year, where in the H2 of this year, such impact will continue to enlarge by another CNY 2,000 to 3,000, which means that in the H2 of this year compared with Q4 last year, our cost structure will be burdened by another CNY 16,000 to 17,000. But even against this backdrop, we still aim to achieve a steady growth in our gross profit. This is also a demonstration of our system capabilities and also competitiveness in terms of our technology, products, supply chain, sales and also brand management.

Speaker #1: Some of the efforts we've been taking are to secure the long-term and sustainable growth of our business. I would also like to share some numbers. In the first half of this year, our sales volume increased by 67% year over year, while our total revenue increased by 86% year over year.

Speaker #1: That is faster than our volume increase. And in terms of our gross profit, it increased by 282% year over year, much faster than the growth of our revenue.

Speaker #1: And this is amid all the challenges coming from the supply side, the rising raw material costs on the chips and on everything.

Speaker #1: And as mentioned also in Q2 , the impact on the vehicle is around 14,000 RMB on average , where compared from late last year , where in the second half of this year , such impact will continue to enlarge by another 2 to 3000 RMB , which means that in the second half of this year , compared with Q4 last year , our cost structure will be burdened by another 16 to 17 .

Danny Chu: As mentioned, also in Q2, the impact on the vehicle is around CNY 14,000 on average, where compared from late last year, where in the H2 of this year, such impact will continue to enlarge by another CNY 2,000 to 3,000, which means that in the H2 of this year compared with Q4 last year, our cost structure will be burdened by another CNY 16,000 to 17,000. But even against this backdrop, we still aim to achieve a steady growth in our gross profit. This is also a demonstration of our system capabilities and also competitiveness in terms of our technology, products, supply chain, sales and also brand management.

Speaker #1: Thousand RMB . But even against this backdrop , we still aim to achieve a steady growth in our gross profit . This is also a demonstration of our system capabilities and also competitiveness in terms of our technology products , supply chain , sales and also brand management

Speaker #2: Thank you Paul .

William Li: Thank you, Paul.

Speaker #5: Thank you very much. We, Stanley, and congratulations for the achievements.

Paul Gong: Thank you very much, William, Stanley, and congratulations for the achievement.

Speaker #2: Thank you .

William Li: Thank you.

Speaker #4: Your next question comes from Nick Lai with Morgan.

Operator 2: Your next question comes from Nick Lai with JP Morgan.

Operator: Your next question comes from Nick Lai with JP Morgan.

Speaker #5: Thank you for taking my question. My first question is, is the financial related with very strong operating cash flow and free cash flow generation by the first half?

Nick Lai: Thank you for taking my question. My first question is financial related, with very strong operating cash flow and free cash flow generation by H1, can you remind us our cash burn, including CapEx and R&D, and what the level of free cash flow can we anticipate by year-end? With very strong cash position right now, can you remind us where do we plan to invest or spend our cash in terms of CapEx and R&D? That's my first question. Thank you.

Speaker #5: Can you remind us of our cash burn, including CapEx and R&D, and what's the level of free cash flow? Can we anticipate this by year-end?

Speaker #5: And with a very strong cash position right now, can you remind us where we plan to invest or spend our cash in terms of CapEx and R&D?

Speaker #5: That's my first question. Thank you.

Speaker #3: Nick: Well, CapEx, and sorry, the through...

Stanley Yu Qu: 谢谢Nick。我分几块来讲，一个是我们CapEx。我们今年的资本性开支，基本上我们会维持跟去年差不多的水平。按照之前也跟大家沟通过，基本上是在全年60到70亿这样一个水平。主要的用途也基本上是我们的车型的研发投入，然后我们的销售服务网络的建设这方面。因为基本上工厂相关的应该相对没有那么多了，在今年。

Stanley Yu Qu: [Foreign language]

Speaker #1: Thank you for the questions . I will answer to your question in through several major aspects . The first is regarding CapEx for this year , we expect our full year CapEx to be relatively flat from last year , roughly 6 to 7 billion RMB per year .

Danny Chu: Thank you for the question. I will answer to your question through several major aspects. The first is regarding CapEx. For this year, we expect our full year CapEx to be relatively flat from last year, roughly 6 to 7 billion CNY per year. Such investment is mainly used for basically product research and development, as well as the rollout of our sales and the service network. Not much investment going into the capacity and also factory side.

Speaker #1: And such investment is mainly used for product research and development, as well as the rollout of our sales and service network.

Speaker #1: Not much investment is going into the capacity and also the factory side.

Stanley Yu Qu: 第二个方面，就是我们将持续高强度地去建设我们的充换电网络。今年的目标也依然是1000个换电站。当然这个跟我们之前不一样的地方就是从24年，我们开始我们的加电合伙人的计划以来，今年我们应该取得了一个长足的进步。我们也在全国25个省市，与超过40家的地方国资和机构展开合作。从目前来看，我们全年的充换电网络的建设计划，整个的目标都来自于我们合作伙伴的基金。

Stanley Yu Qu: [Foreign language]

Speaker #3: It, the I, you, or can so, though you.

Speaker #1: And the second is that we will continue to roll out and expand our charging and also swapping network for this year. We still plan to build 1,000 new power swap stations, but different from previous years, where in 2024...

Danny Chu: The second is that we will continue to roll out and expand our charging and also swapping network. For this year, we still plan to build 1,000 new Power Swap Stations. But different from previous years, in 2024 we have introduced the power up partner plan, where through the plan, we would like to collaborate with different partners for the construction of our charging and swapping infrastructure. This year, we have made major progress in this plan where we have partnered with over 40 state-owned enterprises, platforms, and also financial institutions across 25 provinces and cities in China in constructing our charging and swapping infrastructure. For this year, we expect all the newly built infrastructure will be sponsored or funded by our power up partners.

Speaker #1: We've introduced the Power Up Partner Plan, where, through the plan, we would like to collaborate with different partners for the construction of our charging and swapping infrastructure.

Speaker #1: And this year , we've made a progress in this plan where we've been partnered with 20 with over 40 state owned enterprises , platforms and and also financial institutions across 25 provinces and cities in China , in constructing our charging and charging and swapping infrastructure .

Speaker #1: And for this year, we expect all the newly built infrastructure will be sponsored or funded by our power partners.

Stanley Yu Qu: 第三点，就是我们的BaaS模式越来越被用户认可。与BaaS模式相关的电池资产，其实也取得了我们金融机构，还有各种合作伙伴的认可和支持。所以从蔚来的融资角度来讲，今年上半年各方面的融资渠道也基本上完全打通，大家也看到蔚来对于未来的欠款，从年初的160亿，下降到二季度末的150亿不到。所以在投放增加的情况下，其实绝对金额还是出现了下降。这个对于蔚来的回款，对于未来现金流的改善和支撑也是非常重要。

Stanley Yu Qu: [Foreign language]

Speaker #3: This past year, we launched the RG, and RG two more.

Speaker #1: And the third is that our battery as a service business model is also earning more recognition from . Also , more users . This is also helping our battery asset management and the battery asset management company getting stronger support from the financial institutions and also different partners .

Danny Chu: The third is that our Battery as a Service business model is also earning more recognition from more users. This is also helping our battery asset management and the battery asset management company getting stronger support from the financial institutions and also different partners. In H1 of this year for the battery asset management company, we know as we also see some good progress regarding the fundraising across different channels. In terms of the amount due from the battery asset management company, it is also reduced from over CNY 16 billion earlier this year to less than CNY 15 billion in end of Q2. Considering that we are also enlarging the user base and also the business side of the battery asset management. The increase in the absolute term is also relatively proportionally. So this is also a good sign.

Speaker #1: In the first half of this year for the battery asset management company, we also saw some good progress regarding fundraising across different channels. In terms of the amount due from the battery asset management company, it has also reduced from over RMB 16 billion earlier this year to less than RMB 15 billion at the end of Q2.

Speaker #1: Considering that we are also enlarging the user base and the business size of the battery asset management, the increase in absolute terms is also relatively proportional.

Speaker #1: So, this is also a good sign.

Stanley Yu Qu: 所以总的来说，随着销量的持续增长，以及包括我们经营的逐步改善，我们整个三、四季度的目标，对于现金流来说，依然是我们希望能够实现经营现金流和自由现金流正向的一个目标。总的来说，整个现金储备的余额在这样的一个背景下面，在三季度和四季度应该还可以持续提升。

Stanley Yu Qu: [Foreign language]

Speaker #3: That sign in the by the...

Speaker #1: With the increase in sales volume, as well as ongoing efforts in improving our operational performance, we expect that in Q3 and Q4, we can maintain positive free cash flow as well as operating cash flow.

Danny Chu: With increase in sales volume as well as ongoing efforts in improving our operating performance, we expect that in Q3 and Q4, we can maintain the positive free cash flow as well as operating cash flow. With that, we also believe that in H2 of this year, our cash position will continue to enhance.

Speaker #1: With that, we also believe that in the second half of this year, our cash position will continue to enhance.

Speaker #3: Thank you Nick

Stanley Yu Qu: Thank you, Nick.

Speaker #5: Thank you. My second question is AIDS-related. The market is indeed very, very competitive. Every period, there are updates to the autopilot function or features.

Nick Lai: Thank you. My second question is ADAS related. The market is indeed very, very competitive. Every peer offers the autopilot function or features. I am wondering from user standpoint, how do we differentiate ourselves from peers across our product offering from higher end to entry level? At the same time, given high adoption or penetration right now, will we consider different payment options such as pay as you go or subscription option in the future? Thank you.

Speaker #5: So I'm wondering, from a user standpoint, how do we differentiate ourselves from our peers across our product offering, from high-end to entry-level?

Speaker #5: And at the same time, given the high adoption and penetration right now, would we consider different payment options, such as Google or a subscription option, in the future?

Speaker #5: Thank you

William Li: 谢谢Nick。我们AD的话，我们的自动驾驶在今年让大家看到了世界模型加闭环强化学习，再加上群体智能的这样一个技术路线的优势。应该说我们的云端的训练的算力投入远低于我们同行的情况下，我们其实取得了一个非常不错的用户的体验的结果，充分证明了我们技术路线的优势。

William Li: [Foreign language]

Speaker #2: Eddie A in the woman, the woman. Woman.

Speaker #1: Thank you for the question . This year , people actually start to see the benefits and also the advantage of our overall architecture featuring the New World model , plus the reinforcement closed loop reinforcement learning , and also collective intelligence .

Danny Chu: Thank you for the question. This year, people actually start to see the benefits and also the advantage of our overall architecture featuring the NIO World Model plus the closed loop reinforcement learning, and also collective intelligence. Especially considering that the actual computing investment and the computing power we use for the co-op training for the autonomous driving and smart driving functionalities, relatively small, achieving such good experience with our latest release. This has also proven the advantages of our technology roadmap.

Speaker #1: Especially considering that the actual investment, computing investment, and the computing power we used for the cloud training for the autonomous driving and smart driving functionalities were relatively small, achieving such a good experience with our latest release has also proven the advantages of our technology roadmap.

William Li: 前面我讲到了我们的新版本，在今年6月18号，几个品牌、几个平台新版本同步推送给70万用户。这个也是证明了我们技术架构的一个先进性。

William Li: [Foreign language]

Speaker #2: The the Whole I

Speaker #1: And also , as mentioned earlier today , on June 18th , we actually have pushed our latest New World model version to . Over 700,000 users across different brands and also technology platform simultaneously .

Danny Chu: As mentioned earlier today on 18 June, we actually have pushed our latest NIO World Model version to over 700,000 users across different brands and also technology platform simultaneously. This has also proven the advances of our technology and architecture.

Speaker #1: This has also proven the advances of our technology and architecture.

William Li: 有一个数据也可以分享一下，像我们搭载了我们自己芯片的P1X，我们的NX9031X的芯片的，我们的Cedar雪松的这样一些用户的话，58%的用户，接近六成的用户，他日常使用智能辅助驾驶的里程是超过一半以上。

William Li: [Foreign language]

Speaker #2: The P1XX and the Young

Speaker #1: And also, I would like to share some numbers with you for the Cedar user. That's our third-generation platform equipped with an X90 31 smart driving chip.

Danny Chu: I would like to share some numbers with you, for the Cedar user that is our third generation platform equipped with NX9031 smart driving chip, where among this group of users, around 58% of them have been engaging smart driving functionalities for more than half of their trips.

Speaker #1: Where among this group of users around 58% of them have been engaging , smart driving functionalities for more than half of their trips .

Speaker #2: Now, the women who— they... So, so far, the only— Yu Qu, are...

William Li: 在收费模式方面，我们现在对于蔚来和乐道这些新车的用户，我们都是在上市的时候给五年的免费的订阅。但对于二手车的用户，或者说超过了五年的这样的用户，当然现在他们还没有到五年了。对于二手车的用户，比如说这个用户如果首轮车主把车出售了，我们会对这些二手车的用户提供这种订阅服务。我们现在CNY 380一个月，我们能够收到的订阅费，订阅的比例接近20%，这个还是非常正向的一个说明，我们这样的产品的竞争力，我们体验的竞争力。当然现在用户收费的基数还比较少，今年我们也有几千万人民币的一个订阅收入。我想随着用户基数的增加，我们相信长期来说，订阅收入会成为我们公司非常重要的一个服务的收入。

William Li: [Foreign language]

Speaker #1: And regarding the business model for the smart driving service . Well , right now for the new new users and users , we offer them five year complimentary subscription to our smart driving capabilities and systems .

Danny Chu: Well, right now for the NIO users and ONVO users, we offer them a five-year complimentary subscription to our smart driving, capabilities and systems. But for the used car users or when they expire on this five-year complimentary service, they will have to definitely pay for the subscription. For the used car users, they are paying CNY 380 per month for the smart driving subscription, where we now see a penetration rate of around 20% among these used car users. This is also a pretty sizable amount, showing also the competitiveness of our product and experiences. Of course right now this is just a small user base, but for the longer term, we believe that this will also be a quite sizable source of revenues for our business.

Speaker #1: But for the used car users or when they expire on this five year complimentary service , they will have to . Definitely pay for the subscription for the used car users they are paying 380 RMB per month for the smart driving subscription , where we now see a penetration rate of around 20% .

Speaker #1: Among these used car users, this is also a pretty sizable amount, showing also the competitiveness of our products and experiences.

Speaker #1: And of course, right now, this is just a small user base. But for the longer term, we believe that this will also be a quite sizable source of revenue for our business.

Speaker #1: Right now, every year, the revenue from that part of the business is around several thousand millions of RMB.

Danny Chu: Right now every year the revenue from that part of the business is around, several thousands of millions of CNY.

Speaker #5: Thank you . Thank you

Nick Lai: Thank you.

Speaker #4: Your next question comes from Ming Soon Lee with BofA.

Operator 2: Your next question comes from Ming Lee with BofA.

Operator: Your next question comes from Ming Lee with BofA.

Speaker #7: Hi , William , this is Ming . So I also have two questions . So first question is related to your fifth generation battery substation with more expansion of your new substation .

Ming Lee: Hi William, this is Ming. I also have two questions. First question is related to your fifth generation battery swap station. With small expansion of your new swap station, this can accommodate all of your three brands. Could you give us more details regarding the CapEx per station and also maintenance cost compared to your previous generation swap station? Besides that, right now you also open to some other auto OEM for your battery service. Could you elaborate your pricing strategy and also your unique economy model? Thank you. That is my first question.

Speaker #7: And this can accommodate all of your three brands. Could you give us more details regarding the CapEx per station, and also the maintenance cost compared to your previous generation swap station?

Speaker #7: Besides that, right now you are also open to some other auto OEMs for your battery service. Could you elaborate on your pricing strategy, and also your unique economic model?

Speaker #7: Yeah. Thank you. That's my first question.

Speaker #3: Okay. Me, Tong. So I, Chong, I—your, your behind the...

Stanley Yu Qu: 关于第五代换电站，从兼容度上，我们用了一个柔性的解决方案，所以未来乐道、萤火虫三个品牌不同尺寸的车型都可以在一个换电站里面进行换电。从成本上来讲，第五代站在第四代站的基础上，其实还是有进一步的下降。所以从一个换电站的材料成本上来讲，其实是有进一步的优化的。从总的来讲，目前如果不含电池和我们说的高压包装的一个建设成本，五代站大概在CNY140万，其实比四代站大概降低了十万左右。

Stanley Yu Qu: [Foreign language]

Speaker #1: Thank you for the question regarding the fifth-generation power substation. We have adopted a flexible design where the station can accommodate all models from New Angle and the Firefly.

Danny Chu: Thank you for the question. Regarding the fifth generation Power Swap Station, we have adopted a flexible design where the station can accommodate all models from NIO, ONVO, and Firefly. Basically, it can be compatible with cars of different dimensions and sizes. In terms of the cost, we have also achieved continuous improvements on top of the Gen4, where in terms of the material costs, we have achieved also optimization and reduction in cost. For per station cost, if we excluding batteries in the station as well as all the costs related to the high voltage power supply and the energy preparation, if you only look at the station itself, it is around CNY 1.4 million per station. That is around CNY 100,000 cheaper than the fourth generation.

Speaker #1: So basically, it can be compatible with cars of different dimensions and sizes. And in terms of the cost, we've also achieved continuous improvements on top of the Gen Four, where the—

Speaker #1: In terms of the material costs , we've achieved , the also , optimization and reduction in cost and for per station cost , if we .

Speaker #1: Excluding batteries in the station, as well as all the costs related to the high-voltage power supply and the energy preparation, if you only look at the station itself, it's around 1.4 million RMB per station.

Speaker #1: That is around RMB 100,000 cheaper than the fourth generation.

William Li: 从运营上来讲，分两个层次，一个是我们所有的换电站其实都在做持续的运营优化。尤其是这里面值守的人效，随着我们换电站故障率的提升，随着我们软件能力的提升，整体的人效，今年我记得跟去年年初相比，其实已经提升了有50%。从五代站上来讲，我们是有机会。当然五代站现在的故障率还在一个爬坡的过程，从目前的表现来看，其实是比同期的前面几代站要优化的，而且从技术上来讲，它能够比前面几代站应该能够做得更好。所以我们相信五代站的运营效率会比前面几代站还要再进一步提升。

William Li: [Foreign language]

Speaker #3: You, Xiao Jing Yang or a woman you can. Should be so.

Speaker #1: And in terms of the operations of the swap stations, we've also been making continuous improvements in terms of the actual people efficiency of supporting them.

Danny Chu: In terms of the operations of the swap stations, we have been also making continuous improvements in terms of the actual people efficiency of supporting the operations of all stations. We have also made improvements in terms of the first time through of the power swaps as well as the software features. Between current performance as well as the performance earlier last year, it is already improved by 50%. Of course, for the fifth generation as they are new to the field, we are still ramping up its first time through. But comparing with the previous generations around the same time frame, we already see quite significant improvement in terms of the success rate of our power swaps among the fifth generation station. Overall speaking, we also believe that the efficiency of fifth generation will be much better than the previous ones.

Speaker #1: The operations of all stations . We've also made improvements in terms of the first time through of the power swaps , as well as the software features between current performance as well as the performance .

Speaker #1: Earlier last year . It's already improved by 50% . Of course , for the fifth generation , as there are new to the field .

Speaker #1: So we are still ramping up; it's the first time through. But comparing with the previous generations around the same time frame, we already see quite significant improvement in terms of the success rate of our power swaps among the fifth generation station.

Speaker #1: Overall speaking, we also believe that the efficiency of the fifth generation will be much better than the previous ones.

Speaker #3: Okay . Thank I Robotaxi . The robotaxi So Can In Shanghai , you You You The . You should On On the Do you want to go Jump

William Li: 关于第三个，我们的对外合作。其实我们跟多家主机厂在前两年也签署了换电联盟的协议。当然这段时间，一些落地的一些项目，或者是沟通和谈判也在持续的进行过程当中。也随着这两年Robotaxi的发展，其实Robotaxi和换电其实也是非常匹配的一个基础设施的支撑。所以这些工作都还在进行当中。从刚才你提到的一个合作和收费的框架上来讲，我们基本上会是用一个接入费的这样一个形式，当然这个还有待于后面的具体落地。等实际落地之后，我们再跟大家具体去披露这样的一些细节。当然这些对外合作，其实大家也是随着这两年新能源的发展，进入到一个新的阶段，大家也逐步认识到换电的这样一个优势，所以越来越多的主机厂其实也是希望加入到这样的一个队伍当中来。单纯从对未来能源来讲，我觉得对于我们摊薄我们的运营成本，对于我们去通过统一电池包来提升我们在电池上的效率、降本，其实都是非常有帮助的。

William Li: [Foreign language]

Speaker #1: And the third is regarding the partnership and also alliance with other OEMs regarding power swap . As . Several years ago , we've signed up with several OEMs regarding this power Swap alliance , and we still have this ongoing communications and also collaborations on some projects .

Danny Chu: And the third is regarding the partnership and also alliance with other OEMs regarding power swap. Several years ago, we signed up with several OEMs regarding this power swap alliance, and we still have this ongoing communications and also collaborations on some projects. In the meantime, as Robotaxis becoming a very popular area where we see power swap station and power swap service in general can be a good infrastructure support for the Robotaxi business. So we are also exploring opportunities with our partners from that perspective.

Speaker #1: And in the meantime, as robotaxi is becoming a very popular area, we see power swap stations and power swap service in general can be a good infrastructure support for the robotaxi business.

Speaker #1: So we are also exploring opportunities with our partners . From that perspective . In terms of the cooperation framework and also how we charge them on such , we basically will charge them for the admission fee for the use of our for the use and access to our power swap network .

Danny Chu: In terms of the cooperation framework and also how we charge them on such services, we basically will charge them for the admission fee for the use and access to our power swap network. But more details are still being discussed and are to be closed when we have the actual projects in the implementation. Also for the entire new energy vehicle industry, it has been entering into this new stage where more and more people start to realize the benefits of a power swap. More OEMs are also embracing the idea of swappable vehicles, where for the new power, the advantages with more partners joining this effort, it can help us to optimize and amortize our operating costs. By standardizing the battery packs, we can also improve the efficiency as well as optimize the cost structure.

Speaker #1: But more details are still being discussed and are to be closed when we have the actual projects in the in the implementation and also for the entire new energy vehicle industry .

Speaker #1: It has been entering into this new stage where more and more people start to realize the benefits of a power swap, and more OEMs are also embracing the idea of swappable vehicles, where...

Speaker #1: For the new power , the advantages . With more partners joining this effort , it can help us to optimize and amortize our operating costs .

Speaker #1: And by standardizing the battery packs, we can also improve efficiency as well as optimize the cost structure.

Speaker #3: Thank you . Ming .

Stanley Yu Qu: Thank you, Ming.

Speaker #7: Yeah . I thank you , Stanley My second question is related to your operating expense , especially . We notice that your sales and marketing expenses in second quarter is higher .

Ming Lee: Thank you, Stanley. My second question is related to your operating expense. Especially we notice that your sales and marketing expense in Q2 is higher. Is it because you launch more new models during the quarter? Could you give more guidance for your 2026 operating expense? Thank you.

Speaker #7: Is it because you launched more new models during the quarter? Could you give more guidance for your 2026 operating expense? Thank you.

Speaker #3: Okay. Me? Yeah, the woman. On the non-GAAP in the early—

Stanley Yu Qu: OK，Ming。我们也分两块来讲，一个是我们研发费用。研发费用我们跟之前几个季度跟大家讲的基本也一样，我们会维持在non-GAAP季度在25亿的这个水平，根据我们的研发项目和业务的进展动态调整支出水平和节奏。所以从2026年每一个季度来说，基本上是在这样的一个水平上下来浮动。

Stanley Yu Qu: [Foreign language]

Speaker #1: Thank you for the question. I will still share the information. According to two types of overall expenses, the first is regarding the R&D expenses.

Danny Chu: Thank you for the question. I will still share the information according to two types of overall expenses. The first is regarding the R&D expenses. As mentioned, we will basically be staying flat with our R&D expenses non-GAAP around CNY 2.5 billion, and we will also make dynamic adjustments according to the actual cadence and the pace of our projects and the business. But for this year, it will be roughly CNY 2.5 billion per quarter in terms of the R&D investment.

Speaker #1: As mentioned , we will basically be staying flat with our R&D expenses . non-GAAP . Around 2.5 billion , and we will also make adjustments .

Speaker #1: Dynamic adjustments , according to the actual cadence under the pace of our projects and the business . But for this year , it will be roughly 2.5 billion per quarter in terms of the R&D investment

Stanley Yu Qu: 当然大家也看到，研发费用跟我们未来公司历史上的投入相比，以及跟我们的一些友商相比，出现了一定程度的减少。但是我觉得我们的研发效率其实是更高的。这里面我们分两方面，一方面我们还是专注在纯电路线，没有去在纯电，包括混动等多条路线上去发力，所以这样的话，我们的研发会更加聚焦，核心技术可以在不同品牌、不同车型上复用，所以效率会更高。第二个部分也随着从去年开始的我们整个CBU的经营机制，我们内部的研发的体系和组织的效率也不断地优化。所以总的来说，在这样的一个投入强度下面，依然能够保证我们在核心技术和关键产品上的竞争力。

Stanley Yu Qu: [Foreign language]

Speaker #3: On the will Be the Woman Male . To Woman . The The Woman . CPU . The Woman . In . For . The Woman .

Speaker #3: That

Speaker #1: And . In terms of the R&D expenses . Maybe . Some will . Compare our current expenses with our previous level or with our competitors where .

Danny Chu: In terms of the R&D expenses, maybe some will compare our current expenses with our previous level or with our competitors, where definitely our expenses is relatively low. But we also need to really pay attention to the utilization of such expenses and also the efficiency of our R&D activities. First of all, NIO has been staying committed to the BEV roadmap. With that, we can be more focused on the technologies and the products related to the BEV roadmap without spreading our efforts across BEV, PHEV, or EREV. Secondly, as we have been rolling out this CBU mechanism internally, with the CBU mechanism, we can also better measure and improve the efficiency of our R&D systems as well as our R&D organizations. So even with a relatively moderate investment into the R&D activities, we can still maintain our leadership and advancements in the technologies and also products.

Speaker #1: Definitely. Our expenses are relatively low, but we also need to really pay attention to the utilization of such expenses and also the efficiency of our R&D activities.

Speaker #1: First of all, NIO has been staying committed to the battery electric vehicle roadmap. With that, we can be more focused on the technologies and products related to the BEV roadmap.

Speaker #1: Without spreading our efforts across . Bev P hive or with . And secondly is that as we've been rolling out this CPU mechanism internally with the CPU mechanism , we can also better measure and improve the efficiency of our R&D systems , as well as our R&D organizations .

Speaker #1: So, even with a relatively moderate investment into the R&D activities, we can still maintain our leadership and advancements in the technologies and also products.

Stanley Yu Qu: 第二个方面，从SG&A角度来讲，首先我们来看SG&A占销售收入的一个比例。从non-GAAP的角度来说，我们一季度和二季度这个比例基本上都是在13%上下，整个的比例上来讲是符合我们的预期的。其次，尤其在销售费用上，有很多在二季度一次性的投入。因为我们今年二季度所有的新的产品，基本上都集中在二季度发布。包括我们的ES9，包括我们乐道的今年的一些换代，大部分都集中在二季度里面。这样的一次性的影响，给二季度的SG&A带来大概5亿的增长。所以这个在后面的两个季度，应该不会有这么多的这样的一次性的影响发生。最后，从三、四季度的展望来讲，SG&A我们整个的控制目标还是希望能够实现non-GAAP的SG&A占整个收入的比例在10%到11%，这个目前来看应该也是一个可控，也能够通过努力实现的这个目标。

Stanley Yu Qu: [Foreign language]

Speaker #3: So The The The The . In the . Na . The . Yes . Or the The The Fashion As a woman She .

Speaker #3: non-GAAP . Make

Speaker #1: And . Regarding the . A . Expenses . If we look at the S G and a s percentage to the south . Revenue in the first and the second under the non-GAAP standard , it's around 13% in the first half and also in the second half , as we see a slight increase in terms of the sales expenses , it's mainly driven by some one off expenses , as we have most of our new products for this year were launched in second quarter , including our S nine and also some face models for angle so that one of the impact is roughly 500 million majorly happened in Q2 , where in the second half we don't expect to have such oneness impact in terms of the sales expenses .

Danny Chu: Regarding the SG&A expenses, if we look at the SG&A as percentage to the sales revenue in the H1, under the non-GAAP standard, it is around 13% in the H1. Also in the H2, as we see a slight increase in terms of the sales expenses, it is mainly driven by some one-off expenses as most of our new products for this year were launched in Q2, including our ES9 and also some facelift models for Onvo. So that one-off impact is roughly CNY 500 million, majorly happened in Q2, where in the H2 we do not expect to have such one-off impact in terms of the sales expenses. So in terms of the H2 outlook, in terms of the SG&A expenses as percentage to the sales revenue under the non-GAAP standard, we expect it to be around 10% to 11%. This is also a controllable as well as an achievable target for us.

Speaker #1: So in terms of the second half outlook , in terms of the S , G expenses , as per percentage to the South , revenue under the non-GAAP standard , we expect it to be around 10 to 11% .

Speaker #1: This is also a controllable, as well as an achievable, target for us.

Speaker #3: Thank you Ming

Rui Chen: Thank you, Ming.

Speaker #7: Stanley

William Li: 谢谢Stanley。谢谢。

Speaker #4: Your next question comes from Jing Chang with CICC.

Operator 2: Your next question comes from Jing Chang with CICC.

Operator: Your next question comes from Jing Chang with CICC.

Speaker #8: Thank you for taking my question . I the time is limited . I have only one question . We we I know that our senior Vice President , president , Mr. Xiaoqing , has founded an embodied AI startup company in which we have made a strategic investment .

Jing Chang: Thank you for taking my question. As time is limited, I have only one question. We know that our Senior Vice President, Mr. Ren Shaoqing, has founded an embodied AI startup company in which we have made a strategic investment. What are the long-term cooperation potentials between this new company and NIO? Also, what long-term value can it bring to our company?

Speaker #8: So, what are the long-term cooperation potentials between this new company and NIO? And also, what long-term value can it bring to our company?

William Li: 对，大家也看到这个消息，我们智驾的负责人Shaoqing他会开始在物理AI领域的创业，但未来会作为一个战略股东去支持他这个创业。当然同时，Shaoqing仍然也会作为未来智能驾驶部门的负责人，他还是会有这样一个负责这个智能驾驶的技术方向和长期的战略，当然也会参与这个智驾方面的工作。我们相信这样的一个安排对于未来来说，在我们现在聚焦我们自己的核心业务的基础上，仍然能够保持对具身智能和物理AI领域的这样一个战略的投入，又不会影响我们的P&L，也能把我们的一些资源利用好，同时也能够吸收到更多的外部的战略性的股东和战略性的投资人。我们认为这个是一个比较好的安排。

William Li: [Foreign language]

Speaker #2: I I I Q2 So we will I Do Can . I'm not you Chitosan go to the The PNL Go c y

Speaker #1: Thank you for the question . Yes . Mr. Xiaoqing , the head of our smart driving department , is now also setting up a new business regarding physical AI and also embodied intelligence and the NIO is supporting his business as a strategic shareholder .

Danny Chu: Thank you for the question. Yes, Mr.

Danny Chu: Ren Shaoqing, the head of our smart driving department, is now also starting up a new business regarding physical AI and also embodied intelligence. NIO is supporting his business as a strategic shareholder. In the meantime, he will still be the head of our smart driving department, responsible for the overarching technology as well as the long-term tech roadmap for our products. We also think that such arrangement is necessary and also meaningful, as right now NIO is staying focused on our core business. In the meantime, through this startup by Mr. Ren, we can also keep tracking of the latest developments in the physical AI and also embodied intelligence without diluting our focus, affecting our P&L. In the meantime, such startup can also help to make full use of our resources as well as attracting external strategic shareholders and investors. We think this is a good arrangement.

Speaker #1: But in the meantime, he will still be the head of our Smart Driving department, responsible for the overarching technology as well as the long-term tech roadmap for our products.

Speaker #1: And we also think that such an arrangement is necessary and meaningful, as right now NIO is staying focused on our core business.

Speaker #1: But in the meantime , through this startup , by Mr. Zhang , we can also keep tracking of the latest developments in the physical AI and also embodied intelligence without diluting our focus , affecting our P and L .

Speaker #1: But in the meantime, such startups can also help to make full use of our resources, as well as attract external strategic shareholders and investors.

Speaker #1: So, we think this is a good arrangement.

Speaker #2: The Physical AI The

William Li: 对。另外还有一点也想补充一下，大家知道非AI领域，人才竞争是非常激烈的。那么我们认为用一个创业公司的那一个架构的角度来讲，去吸引行业里面最优秀的人才是能够更保证这样一个创业方向的成功。当然长期来说，我们相信这两个公司之间，我们和这个具身智能的创业公司之间会有非常多的战略性的合作，业务的合作，战略业务的合作。

William Li: [Foreign language]

Speaker #1: And also , as we all know that the competition for the AI talent within the arena of AI is also quite intense . So through such startup , we can also better capture the top notch talents in the industry .

Danny Chu: As we all know that the competition for the AI talent within the arena of physical AI is also quite intense. Through such startup, we can also better capture the top-notch talents in the industry. That will also be beneficial to the long-term development of both this startup as well as for our AI related business. For the long term, we believe that we will have a lot of strategic collaborations and projects between NIO and also this AI startup.

Speaker #1: And that will also be beneficial to the long-term development of both this startup, as well as for our AI-related business, and for the long term.

Speaker #1: We believe that we will have a lot of strategic collaborations and projects between you and this AI startup.

Speaker #8: Yeah . Thank you

Jing Chang: Yes. Thank you.

Speaker #2: Thank you. You're next.

Rui Chen: Thank you.

Operator 2: Your next question comes from Yuqian Ding with HSBC.

Operator: Your next question comes from Yuqian Ding with HSBC.

Speaker #4: The question comes from you, Ding, with HSBC.

Speaker #9: Thank you team . Hi , Stanley . So my question is what is your volume outlook for the this year ? And Maybe strong and healthy cell .

Yuqian Ding: Thank you team. Hi, Stanley. My question is, what is your volume outlook for Q4 this year and maybe strong and healthy sell into Q4 and also our new model 2027? That is all.

Speaker #9: And also, our new model that

Speaker #2: I think your voice is breaking. Can you repeat your question? Thanks.

Rui Chen: I think your voice is breaking. Yuqing, can you repeat your question? Thanks.

Speaker #9: Yeah , sure . So

Yuqian Ding: Yeah, sure.

Speaker #2: Can we still hear you?

Rui Chen: Yuqing, we still cannot hear you.

Speaker #9: Yeah. Can you hear me now?

Yuqian Ding: Yeah. Can you hear me now?

Speaker #2: Yes . Much better .

Rui Chen: Yes, much better.

Speaker #9: Hello ? Okay . Yeah . Yeah . So I'll just repeat my question is about the volume outlook in fourth quarter . And 27 .

Yuqian Ding: Hello. Okay, yeah. I just repeat. My question is about the volume outlook in Q4 and 2027, given maybe strong seasonality and the backdrop of new model cycle next year.

Speaker #9: Given the possibility of strong seasonality and the backdrop of a new model cycle next year,

William Li: 对四季度，我们相信，今年的话，整个市场在四季度还是会有所恢复。我们认为平均来说，我们每个月实现4万以上的，这个平均4万以上的交付量，这个是我们的目标。当然从中长期来讲，我们还是认为我们每年40到50的这样一个年销量的增长，从我们目前的产品的布局，还有从我们的销售能力的布局的角度这样的话，仍然是我们的目标。

William Li: [Foreign language]

Speaker #2: So we can take a young woman. We can take a woman. The social, mobile...

Speaker #1: We expect that the passenger vehicle market to be able to recover in Q4 this year . With that , our target for Q4 is achieving an average volume of over 40,000 units per month and for the mid and long term , with our product lineup , as well as our sales and service network coverage , we expect our annual volume growth to be around 40 to 50% , and we will maintain that for the mid and long term

Danny Chu: We expect that the passenger vehicle market to be able to recover in Q4 this year. With that, our target for Q4 is achieving an average volume of over 40,000 units per month. For the mid and the long term, with our product lineup as well as our sales and service network coverage, we expect our annual volume growth to be around 40% to 50%, and we will maintain that for the mid and the long term.

Rui Chen: Thank you, Yuqing.

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

Operator 2: As there are no further questions now, I'd like to turn the call back over to the company for closing remarks.

Operator: 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 further questions, please feel free to contact our IR team through the contact information on the website.

Rui Chen: Thank you again for joining us today. If you have further questions, please feel free to contact our IR team through the contact information on the website. This concludes the conference call. You may now disconnect your line. Thank you.

William Li: 再见。

William Li: [Foreign language]