Q2 2026 NIO Inc Earnings Call

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 US 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。

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

[Company Representative] (NIO): 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%。

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

[Company Representative] (NIO): 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齐升，其中未来品牌交付新车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。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、环比均实现量价提升。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。

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 350,000 RMB across all powertrain types.

[Company Representative] (NIO): 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 350,000 RMB across all powertrain types. The ONVO 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.

Speaker #4: The Onboard 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 #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.

[Company Representative] (NIO): 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。

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.

[Company Representative] (NIO): 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。

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.

[Company Representative] (NIO): 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 56.7 billion RMB. 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。

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

[Company Representative] (NIO): 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 5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。在君迪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 5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，进一步巩固蔚来品牌在高端纯电市场的领先优势。

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.

[Company Representative] (NIO): 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 400,000 RMB price range and the large SUV segment. In the Net Promoter Score survey by J.D. Power, the NIO 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 self-volume among passenger vehicles with transactional prices above 500,000 RMB 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 RMB 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 is leading in sales volume among passenger vehicles with transaction prices above RMB 500,000 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.

[Company Representative] (NIO): 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，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。

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

[Company Representative] (NIO): For the ONVO brand, the L90 surpassed 60,000 deliveries within its first year since launch, ranking number 1 among the large battery electric SUVs priced around RMB 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 strength of the L90 and L80, the ONVO brand became the sales leader among large SUVs priced below RMB 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 Enel 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 Enel'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。

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.

[Company Representative] (NIO): 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%。

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 ENEL users.

[Company Representative] (NIO): 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 NOP 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 NLP has increased by 92.8%. The upgrade also covered all Enel users, whose knowledge with urban NLA 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，同步发版的科技。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，为用户带来崭新的智能出行体验。

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, with a common software branch and synchronized releases.

[Company Representative] (NIO): 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 life cycle.

Speaker #4: 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。

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

[Company Representative] (NIO): On the sales and service front, so far, the company has 165 NIO Houses, 376 NIO Spaces, 441 ONVO 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 #4: In JD 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.

Speaker #4: Our high-quality services have earned widespread recognition from both the industry and users.

Speaker #3: 充换电网络方面，截至目前，我们在全球已累计布局4,123座换电站，建成超过30,294根超充桩和目的地充电桩。8月7日未来第4,000座同时也是首座第5代换电站正式落成，第5代换电站可以实现未来乐道萤幕成三品牌全车型兼容，覆盖从小型车到大型SUV全尺寸车型。5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增值服务，持续拓宽并释放换电模式的商业化价值。

William Li: 充换电网络方面，截至目前，我们在全球已累计布局4,123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4,000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。

Speaker #4: 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 August 7, NIO's 4,000th power swap station went live, marking the launch of its first fifth-generation station.

[Company Representative] (NIO): 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 #4: The fifth generation can support battery swaps for all models of NIO, Enel, and Firefly, covering a wide range of vehicle sizes, from compact cars to full-size SUVs.

Speaker #4: With significantly enhanced operational and service efficiency, the fifth-generation station is able to provide improved external services and support open operations. Leveraging standardized power operations at scale, the company is also exploring value-added businesses, such as electricity trading.

Speaker #4: Further unlocking the commercial value of battery swapping.

Speaker #3: 7月23日未来路线时代周刊全球最具可持续发展力企业搒单，也是本次唯一上搒的中国车企。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: 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。

Speaker #4: On July 23, 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.

[Company Representative] (NIO): 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 #4: We will continue to advance our BEV roadmap, shaping a more sustainable and brighter future with our users.

Speaker #3: 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。纯电渗透率持续快速提升，纯电已经成为市场主流的动力形式。行业层品牌混动期进入品牌成型期，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。未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: 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胜阶段。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。

Speaker #4: 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.

[Company Representative] (NIO): 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 #4: Second, the industry is moving from a period of brand ambiguity toward greater brand clarity, with brand becoming an increasingly important factor in consumers' purchasing decisions.

Speaker #4: 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.

Speaker #4: 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 #3: 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。 We can Stanley.

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。有请 Stanley。

Speaker #4: 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.

[Company Representative] (NIO): 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: 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.

Stanley Yu Qu: 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, and 25.9% quarter-over-quarter. Vehicle sales were 29.1 billion RMB, 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 3.1 billion RMB, 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.

Speaker #1: 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 increased deliveries and a higher average selling price, driven by a more favorable product mix.

Speaker #1: 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 #1: 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 #1: The quarter-over-quarter increase was due to an increase in revenues from used car sales, parts, accessories, and after-sales vehicle services. Looking at margins, vehicle margin was 18.5%, compared with 10.3% in Q2 last year and 18.8% last quarter.

Stanley Yu Qu: The quarter-over-quarter increase was due to increase in revenues from used car sales and parts, accessories, and after-sales vehicle services sales. 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.

Speaker #1: The year-over-year improvement was driven by a more favorable product mix, while quarter-over-quarter vehicle margins remained stable. Overall gross margin was 18.4%, versus 10% in Q2 last year and 19% last quarter.

Speaker #1: 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.

Speaker #1: 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, down 28.7% year over year, and up 13.8% quarter over quarter.

Speaker #1: 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.

Stanley Yu Qu: The year-over-year decrease was mainly driven by lower personnel costs in R&D functions due to organizational optimization, reduced design and development costs from different development stages, and improved operational efficiency. The quarter-over-quarter 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 RMB 4.4 billion, increased 11.6% year-over-year and 22.5% quarter-over-quarter. The year-over-year increase was mainly driven by an 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 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 #1: 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 cost in research and development functions.

Speaker #1: SG&A expenses were RMB 4.4 billion, an increase of 11.6% year over year and 22.5% quarter over quarter. The year-over-year increase was mainly driven by increased 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.

Speaker #1: 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. Net loss was RMB 0.5 billion, showing a decrease of 89.4% year over year and an increase of 59% quarter over quarter.

Stanley Yu Qu: Net loss was RMB 0.5 billion, 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 RMB 26.1 million. 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, restricted cash, short-term investments, and long-term time deposits. That wraps up our prepared remarks. For more information and the details of our audited 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 #1: Excluding share-based compensation expenses, adjusted net profit was RMB 26.1 million. Furthermore, our positive operating cash flow grew substantially, and we achieved positive free cash flow.

Speaker #1: Our cash position strengthened further, with RMB 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.

Speaker #1: For more information and details about 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 #1: Operator. Thank you.

Speaker #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.

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, and if you have additional questions, you can reenter the queue. Your first question comes from Bin Wang with Deutsche Bank.

Speaker #2: For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you may re-enter the queue.

Speaker #2: Your first question comes from Bin Wang with Deutsche Bank.

Speaker #3: Thank you. My question is about the order flow sustainability of your ES8 and ES7 SUVs. We noticed in the premium SUV market that some of your peer competitors only show life for a few months.

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, competitors, although show live only a few several months. So can you explain why is that and how NIO differentiate to facing the competition in the high-end premium SUV market? Thank you.

Speaker #3: So, can you explain why that is and how NIO differentiates to fit in the competition in the high-end premium SUV market? Thank you.

William Li: Thank you, Wang Bin. Our main flagship products, the ES9 and ES8, are still in very strong demand. If we look at it, our ES8 delivered 10,999 units in August, almost 11,000 units. Over the course of 11 months, we delivered 140,000 units. In September, we will certainly reach our 150,000th delivery. So, over the course of a year, we expect to deliver more than 150,000 units. So the demand is still very strong. I have also mentioned before that China's automobile industry, because new products are updated so frequently, it is rare for a car to maintain sustained popularity. The ES8, our brand-new ES8, has broken this industry trend and become a car that has consistently remained popular. Currently, demand is very strong.

Speaker #1: Oh, thank you, Wang Bin. 我们的这个主力旗舰产品 ES9 ES8 的需求是还是非常强劲的。现在去看的话，我们 ES8 在 8 月份交付了 10,999 台，接近 11,000 台。那我们在这个 11 个月的时间吧，交付了 14 万台。那么在接下来的 9 月，就这个 9 月吧，我们肯定会迎来第 15 万台的交付。那么在一年的时间里边吧，我们下一次交付会交付超过 15 万台。所以它这个是需求还是非常 strong 的。那我以前也讲过这个中国的这个汽车产业，因为这个新产品迭代太快，就很少有车能持续热销。那么 ES8 应该说我们全新 ES8 是打破了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。现在来看需求仍然是非常强劲的。

Speaker #4: Thank you for the question. Regarding NIO's 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.

[Company Representative] (NIO): Thank you for the question. Regarding NIO's 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 deliveries. So 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 somewhat 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 #4: And in 11 months, we have delivered more than 140,000 ES8. 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 unit deliveries.

Speaker #4: 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 somewhat difficult.

Speaker #4: We're having difficulty as we've lost popularity and attention from the market. But for the ES8, it may be the first model that is breaking away from this market trend.

Speaker #1: 那我们的科技旗舰 SUV ES9 上市以后交付到现在的话呢，需求仍然是非常强劲的。那我们的这个低频线特别版和我们的这个签名版，那目前的等待周期还是要超过三个月。那么接近四个月，三个多月吧。那需求还是非常强劲。那么从这个目前来看的话呢，我们如果去看 8 月份和 7 月份相比，我们的因为 7 月份我们有一些以前的这个意向金的订单，那么如果我们看 8 月份的话，我们这个都没有意向金订单了。我们新增的这个订单的话和 7 月份相比的话呢，其实增长的还是比较多的。所以我们对于 ES9 的持续的这个热销还是非常有信心的。

William Li: 我们的科技旗舰SUV ES9上市以后，到现在的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意向金的订单，那如果我们看八月份的话，都没有意向金订单了，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。

Speaker #4: And regarding our flagship executive SUV, the ES9, it has also seen 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.

[Company Representative] (NIO): 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 3 months or nearly 4 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 #4: And if we look at the sales number of the ES9 in August and July, as in July we were still consuming some pre-orders, 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 #4: So we are also confident in the continued popularity and strong demand for the ES9.

Speaker #1: 那特别想强调的是我们的 ES9 四分三以上的用户都是来自于蔚来社群以外的这个新增的这个用户，也就是说它的破穿的效应还是非常明显。

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。

Speaker #4: And also, one thing worth noting is that around three-quarters of the ES9 users are actually non-existing NIO users, from users outside of the NIO user community.

[Company Representative] (NIO): 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 #4: This also shows that the ES9 has successfully reached out to a broader user base.

Speaker #1: 那这个原因的话呢，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这个技术和领先这个同级的技术。那这个技术创新我们的还是我们的一个非常坚实的一个产品的竞争的竞争力的一个基础。

William Li: 那这个原因我觉得是有几个方面，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。

Speaker #4: And 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 thousand industry-first or industry-leading technologies.

[Company Representative] (NIO): 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 #4: And tech innovation is still, so far, a very important competitiveness and also a differentiation of our product.

Speaker #1: 那第二个就是我们产品的定义是精准满足了这个在高端市场的家庭商务兼顾家庭的用户或者这种商务需求的用户的这样的一些情感和功能的这样的一些体验的需求。这方面的话呢，这个用户的满意度是非常高的。

William Li: 那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。

Speaker #4: And secondly, the product definition has precisely catered to the needs of users in the premium segment, especially users buying the car for their business needs and also for their family occasions.

[Company Representative] (NIO): 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 #4: 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.

Speaker #1: 第三个的话呢，还是我们的这个充换电服务网络。充换电网络，还有我们售后服务的这个体系，带来了非常难以复制的一个体系化的优势。那么我们根据这个 General 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 JD Power 的这个 2026 年的售后服务满意度的研究中呢，是豪华品牌和中国品牌的双料第一，这个也持续好几年了。所以这个也是对高端市场来说，这个服务的体系、服务的体验是非常重要的。

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。那么我们根据《杰出领导力》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: Power 的 2026 年 的 售 后 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 个 也 是 对 高 端 市 场 来 说 ， 服 务 的 体 系 ， 服 务 的 体 验 是 非 常 重 要 。

Speaker #4: And 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 that is difficult to replicate by the competitors.

[Company Representative] (NIO): 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 Land Road recent study on the aftermarket satisfaction on the new energy vehicles, we have been topping the list for 3 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 #4: According to the Land Road recent study on aftermarket satisfaction for new energy vehicles, we've been topping the list for three times consecutively.

Speaker #4: And also in JD 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.

Speaker #4: So, for the premium segment, such experience centering on the services and post-market services is also very important.

Speaker #1: 那最后一点也是非常重要的一点，就是我也多次讲到中国汽车市场在这个新能源汽车的市场中成这个品牌的混沌期进入到了品牌的成型期。那么用户的购车决策从这个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这个市场已经建立了一个这个建立了一个品牌的新字。那用户其实也形成了广泛的形成了一个 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。如果去看这个我们蔚来品牌在购车在我们蔚来的用户在购车的这个决策的原因里面，品牌的原因占比已经超过了 30%。那也是印证了我们的这个蔚来在高端市场已经建立了一个深入人心的一个品牌的形象。

William Li: 那最后一点也是非常重要的一点，我也多次讲到，中国汽车市场，在新能源汽车的市场，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。那我们在高端的沉淀的市场已经建立了一个品牌的信任，那用户其实也广泛地形成了一个BBA的下一辆选蔚来，高端的沉淀选蔚来，这样的一个市场的共识。如果去看我们蔚来的用户，在购车的决策的原因里面，品牌的原因占比已经超过了30%，那也是印证了我们的蔚来在高端市场已经建立了一个深入人心的品牌的形象。

Speaker #4: And the fourth one, as also previously mentioned, is that the entire automotive market is now shifting from a period of brand ambiguity to a period of brand clarity.

[Company Representative] (NIO): The fourth one is, 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 were 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 #4: Where users' purchasing decisions were 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 clear brand awareness in the premium battery electric vehicle market.

Speaker #4: Among many users, they naturally believe that if they are going to choose a car to replace their existing Mercedes, BMW, and Audi, NIO will be their natural choice.

Speaker #4: And if they are looking for a premium BEV model, then NIO is also their go-to car. Among our existing NIO users, we've also studied their purchasing decisions.

[Company Representative] (NIO): 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 #4: We find that brand reputation and awareness already account for more than 30% of our customers’ purchasing decisions. This further proves our solid foothold in the premium BEV market.

Speaker #1: 那我们这个从这个终端的上显的数据去看的话，二季度呢，NIO brand 在中国市场的平均的成交价是 40.6 万元。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。七月份蔚来品牌的平均成交价呢，也进一步来到了 43 万以上。

William Li: 那我们从终端的风险的数据去看的话，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。七月份，蔚来品牌的平均成交价也进一步来到了43万以上。

Speaker #4: And if we further look at the numbers by the insurance associations in Q2, the average selling price of the NIO brand was 406,000 RMB, far higher than the prices of Mercedes, BMW, and Audi.

[Company Representative] (NIO): If we further look at the numbers by the insurance association, in Q2, the average selling price of the NIO brand was 406,000 RMB, far higher than the prices of Mercedes-Benz, 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 430,000 RMB.

Speaker #4: And ranking first among all the mainstream premium brands. In July, the average selling price of the NIO brand was over 430,000 RMB.

Speaker #1: 我们相信这个品牌的稀缺性和这个品牌的这个这个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: 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长期参与市场竞争非常重要的一个基础。

Speaker #4: And we believe that the scarcity and preeminence 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.

[Company Representative] (NIO): 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 #1: Thank you, Wang Bin.

William Li: Thank you, Wang Bin.

Speaker #3: Thank you.

Tim Hsiao: Thank you.

Speaker #2: Your next question comes from Tim Sao with Morgan Stanley.

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

Speaker #3: Hi, this is Tin from Morgan Stanley. Thanks for taking my questions, and congratulations on the third consecutive profitable quarter. I have two questions, though.

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 Firefly brands, we noticed ONVO's customer conversion and order momentum have been relatively moderate to vain since launch. I just want to know how is the progress in regards to adjustments, to customer incentive and the selling strategies, and looking for what further changes would management plan to effectively improve ONVO's order momentum? That is my first question. Thank you.

Speaker #3: The first one is about Onvo. Because, compared to the robust growth of the NIO and Firefly brands, we noticed Onvo's customer conversion and order momentum have been relatively moderate to ramp since launch.

Speaker #3: So I just want to know, how is the progress on the rest and adjustment to customer incentives and the selling strategies? And looking forward, what further changes would management plan to effectively improve Onvo's order momentum?

Speaker #3: Yeah, that's my first question. Thank you.

Speaker #1: 谢谢，Tin。Onvo 所在的市场竞争确实要激烈很多。这个和 NIO 还有 Firefly 相比的话，那确实它参与的是一个非常激烈的市场竞争。不管是从品牌数量还是车型数量，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，其实从细分市场来看，还是非常不错的。

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

Speaker #4: Thank you for the question. It's true that Onvo is actually in a more competitive market than NIO and Firefly, where the level of competition—the intensity level of competition in terms of the number of brands and also the number of models—is much more intense than that of NIO and Firefly.

[Company Representative] (NIO): Thank you for the question. It is 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 ONVO's overarching performance since its launch, especially from its specific segment and market, it has actually done some good progress and achievements.

Speaker #4: But if we look at Onvo's overarching performance since its launch, especially from its specific segment and market, it has actually made some good progress and achievements.

Speaker #1: 那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呢，是挑战很大。但乐道的品牌的平均的成交单价呢，是超过了 24 万。这个和这个去年同比是增长的还是比较多的。那么其实中国的这个今年上半年只有 8 个品牌实现了量价提升。那么乐道就是其中之一。那所以从这个角度来讲的话呢，它的平均单价成交均价超越了部分的传统的豪华品牌。所以我觉得作为一个高品质的家庭用车的品牌，那它应该说从品牌的打造的方面，那你应该说是设立了一个比较好的一个基础。

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齐升，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。所以我觉得做一个高品质的家庭用车的品牌，它应该说从品牌的打造方面，设立了一个比较好的基础。

Speaker #4: 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 first half of this year, was a bit challenging.

[Company Representative] (NIO): 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 240,000 RMB, achieving also significant growth year-over-year. In the H1 of this year in China's automotive market, only 8 brands managed to achieve an 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 #4: And even amid this challenges, Onvo still achieved an average selling price of 240,000 RMB, achieving also significant growth year over year. 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 Onvo is one of these eight brands.

Speaker #4: So, in terms of the average selling price, Onvo is even outperforming some traditional luxury brands. So, 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: 第二个就是乐道的这个产品的综合竞争力还是非常强的。那么我们如果去看它从这个销售线索到订单的转化率，这个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，那么它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。那么现在乐道的品牌知名度确实要是相当于五六年前的未来的品牌。那所以接下来呢，这个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，那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的一个目标。

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，他最后买我们车的成功率是比较高的。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比五六年前的蔚来的品牌知名度低。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。

Speaker #4: And in terms of the overall product competitiveness, we also see some good progress and a solid foundation. Especially, there's 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's more likely for them to place an order for the Onvo product.

[Company Representative] (NIO): 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 engagement with more targeted communities.

Speaker #4: So 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 five to six years ago.

Speaker #4: So, right now our focus is also to enlarge brand awareness and increase popularity through different collaborations, offline activities, and engagements with more targeted communities.

Speaker #1: 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这个 Sky 门店的布局。持续加强这个销售网络的建设，能够让乐道的品牌更多的触达这个三四线城市的家庭用户群体。

William Li: 第二个举措就是我们会加快未来乐道萤火虫从三个品牌共用的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。

Speaker #4: And the second action we are taking is to keep rolling out our Sky stores, where we can host the new Onvo and Firefly brands under the same roof.

[Company Representative] (NIO): The second actions we are taking is to keep rolling out our Sky stores where we can host the new ONVO and 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 #4: With that, we are able to further expand our sales network and also really introduce our ONVO brand to more users in the lower-tier cities.

Speaker #1: 第三个的话呢，我们还是接下来呢，还是会持续的推出这个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这样的一个定位。我们不会进到太低的这样一个市场。还是会保还会平衡量和这个毛利的关系。总的来说的话呢，我们乐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、大众他们的高线的这样一个产品的这样一个品牌的这样的一个品牌的。我觉得乐道就是对于乐道来说是非常好的一个机会。

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一个市场，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。

Speaker #4: And the third action is to also introduce new Onvo products so that we can reach out to a broader family user base. In the meantime, we will still maintain Onvo's positioning as a premium, high-quality, family-oriented brand.

[Company Representative] (NIO): The third action is to also introducing new ONVO products so that we can also reach out to broader family user base. In the meantime, we will still maintain ONVO's positioning as a premium high quality family oriented brand. 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 #4: So we will not be very aggressive in entering into the entry-level segment. We will still strike a balance between sales volume and vehicle gross margin.

Speaker #4: Right now in the Chinese automotive market, we actually see a vacancy where there is no brand that is comparable with the upscale product lines of Toyota or Volkswagen that can serve the needs of family users.

Speaker #4: This is where we see the opportunity for ONVO to develop its awareness in that specific segment.

Speaker #1: Tim, thank you.

William Li: Tim, thank you.

Speaker #3: Thank you very much 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 NIO, Onvo, and Firefly—the three brands within the group.

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

Speaker #3: Yeah, that's it. Thank you.

Speaker #1: 谢谢 Tim。从未来品牌的角度来讲，当我们五系、六系的产品当然会有一些新的产品的计划。这个当然其实市场也应该也都大概也能够也能够了解得到。那乐道的话呢，Onvo 的话我们明年还会有战略级的新的产品上市。会进一步的去丰富我们的产品线。从 Firefly 的角度来讲，我们还是这个 brand 的 Firefly brand 就是在一款车型。我们当然这个包括这个特别版，包括后续的一些技术的迭代，我们都会持续的去进行。总的来说 Firefly 就是这个有点像 iPhone 这样，会持续的都会有一些新的这样的一些特别版去推出。

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。当然其实市场也应该能够了解得到。那乐道的话，ONVO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，Firefly brand就是这一款车型，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就是有点像iPhone这样，会持续地推出一些新的特别版。

Speaker #4: Thank you for the question. For the NIO brand, next year we will be introducing new products coming from the five and six series product lines.

[Company Representative] (NIO): Thank you for the question. For the NIO brand, for next year, we will be introducing new products coming from the 5 and 6 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. For Firefly, it's a bit like taking the iPhone approach where it will stay in this same product but with new additions.

Speaker #4: 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 major strategic new products.

Speaker #4: That will also help to enrich our existing product lineup. And for the Firefly brand, we will keep this single-model strategy but continue rolling out special editions and also technology upgrades.

Speaker #4: So, for Firefly, it's a bit like taking the iPhone approach, where it will stay as the same product but with new additions.

Speaker #1: 谢谢 Tim。

William Li: Thank you, Tim.

Speaker #3: Thank you really.

Tim Hsiao: Thank you, Rayley.

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

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

Speaker #3: I waited. Thanks for taking my question. My first question is regarding your vehicle gross margin outlook for the next two quarters. It's about ongoing cost inflation.

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

Speaker #3: We are aware that the memory costs continue to go up, and I just want to hear your thoughts. How does that impact the vehicle gross margin?

Speaker #3: Thank you.

Speaker #1: 你好 Paul。确实今年呢，整个的成本端的这个压力确实比较大。我们按照我们之前所讲啊，我们对于未来来说呢，今年三月份开始，从内存到大宗材料到电池的成本呢，其实都有所上升。整个从整个二季度来看呢，如果跟去年年底相比啊，整个的单车成本平均来看呢，这个上涨大概在单车 1.4 万左右。所以这个其实给我们的这个毛利啊，带来的压力还是比较大的。

Stanley Yu Qu: 你好，Paul。确实，今年整个的成本端的压力确实比较大。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。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。

Speaker #4: Thank you for the question. It's true that since this year, the cost structure of the automotive industry has been under pressure. For the company, we've been facing pressure from rising material costs, including memory chips, batteries, and other bulk materials.

Rui Chen: 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 14,000 RMB per car.

Speaker #4: 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 RMB 14,000 per car.

Speaker #1: 对，当然那个在二季度公司也是做了大量的工作来稳住我们的这个毛利。来对冲这个成本上涨的压力。那这里面就包括一个呢，我们是维持了我们从三个品牌的这个价格的稳定。我们没有通过这个单纯的降价来换取这个销量。另外呢，我们在成本端也通过我们的这个供应链的优化、商务的谈判、VVE 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这个毛利率。

Stanley Yu Qu: 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，我们是维持了我们从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。

Speaker #4: 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 a taken a very stable pricing strategies for our products.

Rui Chen: 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 actually taking a very stable pricing strategies 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 #4: We didn't really lower the price in exchange for the sales volume. And secondly, on the supply side, we've been working with the supply chain to take a series of optimization measures.

Speaker #4: The 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: 当然在下半年呢，我们也看到这个材料成本有继续上涨的这个风险。我们预计啊，可能会在 2,000 到 3,000 元平均下来每车。那公司呢，当然也会继续采取相应的这个措施。总的目标呢，是希望 Q3 和 Q4 整个的这个 vehicle 的 margin 能够维持跟 Q2 差不多的这个水平。

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2千到3千元，平均下来每辆车。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整个的这个vehicle的margin能够维持跟Q2差不多的这个水平。

Speaker #4: And going into the second quarter, we expect material costs to continue to increase by another RMB 2,000 to 3,000. But we will also take a series of countermeasures to mitigate this risk.

Rui Chen: Going into the second quarter, we expect the material cost to continue to increase by another 2,000 to 3,000 RMB. We will also take a series of countermeasures to mitigate these risks. In Q3 and Q4, we hope to still stabilize our vehicle growth margin at the same level as in Q2.

Speaker #4: In Q3 and Q4, we hope to still stabilize our vehicle gross margin at the same level as in Q2.

Speaker #1: 好，谢谢 Paul。

Stanley Yu Qu: 好，谢谢 Paul。

Speaker #3: So my second question is, despite all this cost pressure, you have made significant improvements in terms of profitability over the past year.

Paul Gong: My second question is, despite all this cost pressure, you have done significant improvement 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?

Speaker #3: My question is, what gives you, management, confidence that this improvement is sustainable rather than, say, cyclical?

Speaker #1: 对，确实，这里面当然是一个综合的措施了。一方面呢，其实刚刚 William 也提到，整个汽车市场现在也进入到一个品牌的竞争阶段。刚刚我们也提到我们未来的品牌，我们的 ES8 和 ES9 的销量还是非常稳定的。在整个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 里面的占比较大，而且这两款车型的毛利也都超过 20%，所以它们是我们整个毛利的基石。

Stanley Yu Qu: 对，确实。这里面当然这个是一个综合的一个措施。一方面，其实刚刚William也提到，就是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，在整个的高端市场里面的占有率也非常高。那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这一个基石。

Speaker #4: Thank you for the question. It's true that we need to take a comprehensive measure towards that. The first is that, as also mentioned by William, the automotive competition in China has now shifted to being more brand-driven.

Rui Chen: Thank you for the question. True 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. 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. This will be our foundation for the overall performance.

Speaker #4: And for the new brand, our ES9 and ES8 are still seeing pretty stable demand, and also with significant market share in their respective segments.

Speaker #4: These two models are also making major contributions to our product mix as well as vehicle margin, as both of them have over 20% vehicle margin.

Speaker #4: And this will be our foundation for the overall performance.

Speaker #1: 当然第二点呢，我们还是会持续的去优化我们的成本结构，把我们的产品定义啊做得更精准，跟我们的合作伙伴一起呢去寻找这个降本的措施。所以这个呢其实从过去这个几个季度开始都已经在深入的进行，也结合我们内部叫这个原子化的这个研发和供应链的这样的一个能力，我们其实在这方面也已经找到了非常多的这样的一个机会。那我们在接下来呢也会持续的去进行这样的工作。

Stanley Yu Qu: 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这个降本的措施。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这个

William Li: 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机会，那我们在接下来也会持续地去进行这样的工作。

Speaker #4: 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.

[Company Representative] (NIO): The second is to keep rolling out optimizations towards our cost structure by making more accurate product definition, 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, also supply chain capabilities, putting them into the automatic granularity, identifying also opportunities for continuous cost reduction. We will also keep up this good work.

Speaker #4: These are the efforts that we've been working on in the past several quarters. Internally, we've been doing all the decoupling and decoupling analysis of our R&D and also supply chain capabilities.

Speaker #4: Putting them into the autonomic granularity, identifying also opportunities for continuous cost reduction. And we will also keep up this good work.

Speaker #1: 那我想补充一下，今年确实中国的这个汽车市场的这个压力是非常大的。但如果你去看未来整个公司的增长的质量，这个还是非常的高啊，这个刚才 Stanley 讲到了我们一些这个长期盈利能力的这个持续性。今年上半年我们的销量呢是涨了 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%。如果我们就看到毛利额啊，就毛利的总额，我们同比增长了是 282%。这个增速呢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这个和这个存储芯片啊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，我们二季度的这个成本呢，这个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。所以这一点呢也是充分证明了我们整个公司从技术到产品，那么到供应链的管理啊，到这个销售啊，还有这个各方面的管理啊，持续的这个还有品牌的定位的一个体系的这么一个竞争能力。

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，我们的营收是同比增长了86%。如果我们看到毛利额，就毛利的总额，我们同比增长的是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。那因为刚才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。

Speaker #4: 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, some of the efforts we've been taking are to secure the long-term and sustainable growth of our business.

[Company Representative] (NIO): As mentioned, the Chinese automotive industry has been under cost pressure. 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 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.

Speaker #4: And I'd like to also 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 #4: That is faster than our volume increase. And, in terms of our gross profit, it increased by 282 percent year over year, much faster than the growth of our revenue.

Speaker #4: And this is amid all the challenges coming from the supply side, the rising raw material costs on the chips and on everything. And as mentioned also in Q2, the impact on the vehicle is around RMB 14,000 on average, compared to late last year. In the second half of this year, such impact will continue to increase by another RMB 2,000 to 3,000.

[Company Representative] (NIO): 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 H2 of this year, such impact will continue to enlarge by another 2,000-3,000 RMB. Which means that in H2 of this year, compared with Q4 last year, our cost structure will be burdened by another 16,000 to 17,000 RMB. 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, also competitiveness in terms of our technology, products, supply chain, sales, and also brand management.

Speaker #4: Which means that in the second half of this year, compared with Q4 last year, our cost structure will be burdened by another ¥16,000 to ¥17,000.

Speaker #4: But even against this backdrop, we still aim to achieve steady growth in our gross profit. This is also a demonstration of our system capabilities, as well as our competitiveness in terms of our technology, products, supply chain, sales, and brand management.

Speaker #1: Thank you, Paul.

William Li: Thank you, Paul.

Speaker #2: Thank you very much, William and Stanley. And congratulations on the achievement.

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

Speaker #1: Thank you.

William Li: Thank you.

Speaker #3: Your next question comes from Nikolai with JP Morgan.

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

Speaker #5: Thank you for taking my question. My first question is a financial-related one. With very strong operating cash flow and free cash flow generation in the first half, can management remind us about our cash burn, including CapEx and R&D? Also, what level of free cash flow can we anticipate by year-end?

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? What 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 is my first question. Thank you.

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 #1: 谢谢 Nick。我分几块来讲呢，一个呢是我们的这个 CapEx，那我们今年的这个资本性开支呢基本上我们会维持跟去年差不多的这个水平，按照之前也跟大家沟通过，基本上是在季度 60 到 70 亿的这样的一个，全年 sorry，不是季度啊，全年 60 到 70 亿这样的一个水平。主要的这个用途呢也基本上是我们的这个车型的研发投入，然后我们的这个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。

William Li: 谢谢Nick。我分几块来讲。一个呢，是我们的CapEx。那我们今年的资本性开支呢，基本上我们会维持跟去年差不多的这个水平。按照之前也跟大家沟通过，基本上是在全年60到70亿这样的一个水平。Sorry，不是季度，是全年60到70亿这样的一个水平。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。

Speaker #4: Thank you for the questions. I will answer 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 RMB per year.

[Company Representative] (NIO): Thank you for the questions. I will answer 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 RMB per year. Such investment is mainly used for basically product research and development, as well as the rollout of our sales and service network. Not much investment is going into the capacity and also factory side.

Speaker #4: And such investment is mainly used for products, research and development, as well as the rollout of our sales and service network. Not much investment is going into the capacity and factory side.

Speaker #1: 第二个方面呢就是我们将持续高强度的去建设我们的充换电网络。那今年的目标也依然是 1,000 个换电站。当然这个跟我们之前不一样的地方就是从 24 年我们开始我们的这个家电合伙人的这样的一个计划以来，今年呢我们应该取得了一个长足的这个进步。我们也在全国 25 个省市与超过 40 家的这个地方国资和机构展开合作。那从目前来看呢，我们全年的这个充换电网络的建设计划应整个的目标是都来自于我们合作伙伴的资金。

William Li: 第二个方面，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，我们开始我们的家电合伙人的这样的一个计划以来，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资金。

Speaker #4: 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, in 2024 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.

[Company Representative] (NIO): The second is that we will continue to roll out and expand our charging and swapping network. For this year, we still plan to build 1,000 new power swap stations. Different from previous years, in 2024, we have introduced the Power Up Partner Plan. 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 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 #4: And this year we've made the major progress in this plan where we've been partnered with 20, 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.

Speaker #4: And for this year, we expect all the newly built infrastructure will be sponsored or funded by our Power Up partners.

Speaker #1: 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，其实也获得了金融机构和各类合作伙伴的认可与支持。所以，从蔚能的融资角度来看，今年上半年，各方面的融资渠道也基本完全打通。大家也可以看到，蔚能的欠款从年初的 160 亿元，其实下降到了二季度末不到 150 亿元。所以，在整体投放增加的情况下，绝对金额反而出现了下降。这个对于蔚能的回款、未来现金流的改善和支撑，也是非常重要的。

Stanley Yu Qu: 第三点，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。所以从蔚能的融资角度来讲，今年上半年各方面的融资渠道也基本上完全打通，大家也看到蔚能对于未来的欠款，从年初的160亿，其实下降到二季度末的150亿不到。所以整个是在投放增加的情况下，其实整个的绝对金额还是出现了下降。蔚能的回款对于未来现金流的改善和支撑也是非常重要。

Speaker #4: And 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 is getting stronger support from financial institutions and different partners.

[Company Representative] (NIO): 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 different partners. In H1 of this year, for the battery asset management company, Weineng, 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 16 billion earlier this year to less than 15 billion in end of Q2. Considering that we are also enlarging the user base and the business size of the battery asset management, the increase in the absolute term is also relatively proportionally. This is also a good sign.

Speaker #4: In the first half of this year, for the battery asset management company Wei Neng, we also saw some good progress regarding fundraising across different channels. In terms of the amount due from the battery asset management company, it was also reduced from over RMB 16 billion earlier this year to less than RMB 15 billion at the end of Q2.

Speaker #4: Considering that we're also enlarging the user base and the business size of the battery asset management, the increase in absolute terms is also relatively proportional.

Speaker #4: So, this is also a good sign.

Speaker #1: 对，所以总的来说呢，随着销量的持续增长，以及包括我们经营的这个逐步的这个改善，我们整个三四季度的这个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这个自由现金流的这样的一个正向的这个目标。总的来说呢，整个的这个现金储备的这个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: 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地改善，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的这样的一个正向的目标。总的来说，整个的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。

Speaker #4: With the increase in sales volume, as well as ongoing efforts to improve our operational performance, we expect that in Q3 and Q4 we can maintain positive free cash flow as well as operating cash flow.

[Company Representative] (NIO): 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 #4: With that, we also believe that in the second half of this year, our cash position will continue to improve.

Speaker #1: Thank you, Nick.

Stanley Yu Qu: Thank you, Nick.

Speaker #2: Thank you. My second question is ADAS-related. The market is indeed very, very competitive, every period over city autopilot function or features. So I'm wondering, from a user standpoint, how do we differentiate ourselves from peers across our product offering, from hiring to entry level?

Nick Lai: Thank you. My second question is ADAS related. The market is indeed very, very competitive. Every peer offers city autopilot function or features. So 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 #2: And at the same time, given the high adoption or penetration right now, will we consider different payment options such as pay-as-you-go or a subscription option in the future?

Speaker #2: Thank you.

Speaker #1: 谢谢 Nick。那么我们 AD 的话，我们的使徒驾驶在今年这个让大家看到了这个事件模型加闭环强化学习，加上群体智能的这样一个技术路线的这样的一个优势。那么从这个我们的应该说我们的云端的训练的算力投入，远低于这个我们同行的情况下呢，我们其实取得了一个非常不错的这样一个用户的体验的这样的一个结果，充分证明了我们这个技术路线的一个优势。

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。那么从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，充分证明了我们这个技术路线的优势。

Speaker #4: Thank you for the question. This year, people actually started to see the benefits and also the advantages of our overall architecture, featuring the new world model plus the closed-loop reinforcement learning and also collective intelligence.

[Company Representative] (NIO): 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 reinforcement, closed-loop reinforcement learning, and also collective intelligence. Especially considering that the actual investment, computing investment and the computing power we used 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 #4: Especially considering that the actual investment—computing investment and the computing power we use for the cloud, UD training for the autonomous driving and smart driving functionalities—is relatively small, achieving such good experience with our latest release has also proven the advantages of our technology roadmap.

Speaker #1: 前面我们讲到了这个我们的这个新版本在今年这个 6 月 18 号几个品牌几个平台新版本同步推送给 70 万用户。那么这个也是证明了我们技术架构的一个先进性。

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。那么这个也是证明了我们技术架构的一个先进性。

Speaker #4: And also, as mentioned earlier, today on June 18, we actually have pushed our latest new world model version to over 700,000 users across different brands and technology platforms.

[Company Representative] (NIO): Also, 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 #4: At the same time, this has also proven the advances of our technology and architecture.

Speaker #1: 那么再有一个数据也可以分享一下，像我们这个搭载了我们自己芯片的 P1X，我们 9031X 芯片的 Cedar（雪松） 这一些用户的话，他们在日常有 58% 的用户，接近六成的用户，日常使用智能使徒驾驶的里程是超过一半以上。

William Li: 有一个数据也可以分享一下，像我们发展了我们自己芯片的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。

Speaker #4: And also, I would like to share some numbers with you. For the Cedar users—that's our search generation platform equipped with the NX9031 smart driving chip—among this group of users, around 58% of them have been engaging smart driving functionalities for more than half of their trips.

[Company Representative] (NIO): Also, 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: 那在模式收费模式方面，我们现在是对于新的新车的这个用户，蔚来和乐道对于新车的用户，我们都是 5 年在上市的时候给他 5 年的这样一个免费的这样一个订阅。那对于二手车的用户，或者说超过了这个这个 5 年的这样的用户呢，当然现在还他们还没有到 5 年了，就是对二手车的用户，比如说这个用户如果熟人车主把他车出售了，我们呢是会对这些二手车的用户提供这种订阅服务。那我们现在能够收，我们现在 380 一个月，我们能够收到的订阅费，订阅的这个比例啊，就是接近 20%。那么这个还是非常正向的一个说明我们的这样的一个产品的竞争力啊，我们的体验的竞争力。当然现在用户收费的基数还比较少了，今年我们也有几千万人民币的一个订阅收入。我想那个从随着用户这个基数的增加啊，那我们相信这个也会长期来说订阅收入会成为我们公司非常重要的一个服务与服务的收入。

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呢？当然现在他们还没有到五年了，比如说这个用户，如果首任车主把车出售了，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，我们的这样的产品的竞争力，我们的体验的竞争力。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。

Speaker #4: And regarding the business model for the smart driving service, right now, for new users and onboard users, we offer them a five-year complimentary subscription to our smart driving capabilities and systems.

[Company Representative] (NIO): Well, regarding the business model for the smart driving service, 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 380 RMB 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. Right now, every year the revenue from that part of the business is around several thousands of millions of RMB.

Speaker #4: 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 RMB 380 per month for the smart driving subscription, where we now see a penetration rate of around 20% among these used car users.

Speaker #4: This is also a pretty sizable amount, showing the competitiveness of our product and experiences. 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 #4: Right now, every year, the revenue from that part of the business is around several thousand million RMB.

Speaker #1: 但对不起，可以 clear。

William Li: Thank you.

Nick Lai: Thank you. Thank you.

Speaker #2: Thank you.

Speaker #3: Your next question comes from Ming Sunli with BofA.

Operator 2: Your next question comes from Ming Hsun Lee with Bank of America.

Speaker #2: Hi, this is Ming. So, I also have two questions. The first question is related to your fifth-generation battery substation. With more expansion of your new substations, and as these can accommodate all three of your brands, could you give us more details regarding the CAPEX per station and also maintenance cost compared to your previous-generation substations?

Ming Hsun 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 #2: 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 #2: Yeah, thank you. That was my first question.

Speaker #1: Okay. Ming, 关于第五代换电站呢，从兼容度上就是我们用了一个柔性的这个解决方案，所以蔚来、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来进行换电。那从成本上来讲呢，第五代站在第四代站的基础上其实还是有进一步的这个下降。所以从一个单体的这个换电站的一个这个材料成本上来讲，其实是有进一步的这个优化的。那从总的来讲呢，目前如果不含电池的一个和这个就是我们说那个高压爆装的一个建设成本，五代站大概在 140 万，其实比四代站大概有降低了 10 万左右。

William Li: Ming，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，所以蔚来、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来进行换电。那从成本上来讲，第五代站在第四代站的基础上，其实还是有进一步的下降，所以从一个单体的换电站的材料成本上来讲，其实是有进一步的优化的。那从总的来讲，目前不含电池和一个高压包装的建设成本，五代站大概在140万，其实比四代站大概有降低了10万左右。

Speaker #4: Thank you for the question. Regarding the fifth-generation power substation, we have adopted a flexible design where the station can accommodate all models, both new and the Firefly.

[Company Representative] (NIO): 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 the Firefly, so basically 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 optimization and reduction in cost. For per station cost, if we exclude 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 1.4 million RMB per station. That is around 100,000 RMB cheaper than the fourth generation.

Speaker #4: 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 4.

Speaker #4: Where the in terms of the material costs, we've achieved also optimization and reduction in cost. And 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's around 1.4 million RMB per station.

Speaker #4: That is around RMB 100,000 cheaper than the fourth generation.

Speaker #1: 对，从运营上来讲呢，分两个层次吧，就是一个呢，我们所有的换电站其实都在做持续的这个运营的优化。那整个的这个，尤其是这里面的这个值守的人校，其实随着我们换电站的这个故障率的这个提升，随着我们软件能力的提升，整体的这个人校其实今年我记得跟去年年初相比呢，其实已经提升了有 50%。然后呢，从五代站上来讲呢，我们是有机会，当然五代站现在的这个故障率还在一个爬坡的过程哈，我们的目标从目前的表现来看呢，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呢，它的运营效率会比前面几代站还要再进一步提升。

Stanley Yu Qu: 从运营上来讲，分两个层次，一个，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，其实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，其实今年我记得跟去年年初相比，已经提升了有50%。然后从五代站上来讲，我们是有机会。当然五代站现在的故障率还在一个打磨的过程，从目前的表现来看，其实是比同期的前面几代站要优化。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它的运营效率会比前面几代站还要再进一步提升。

Speaker #4: And in terms of the operations of the substations, we've also been making continuous improvements in terms of the actual people efficiency supporting the operations of all stations.

[Company Representative] (NIO): 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. 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 #4: 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 earlier last year, it's already improved by 50%.

Speaker #4: Of course, for the fifth generation, as they are new to the field, we are still ramping up as it’s their 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 stations.

Speaker #4: Overall speaking, we also believe that the efficiency of the fifth generation will be much better than the previous ones.

Speaker #1: 对，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，一些落地的项目也在沟通和谈判的持续进行过程中。随着这两年 Robotaxi 的发展，其实 Robotaxi 和换电也是非常匹配的基础设施支撑。所以这些工作都还在进行中。 从目前你刚刚提到的合作和收费框架上来说，我们基本上会采用接入费这样的形式。当然，这还要等后面具体落地，等实际落地之后我们会再跟大家披露一些细节。当然，这些对外合作也是随着这两年新能源的发展进入到新的阶段，大家也逐步认识到换电的优势。所以，越来越多的主机厂希望加入到这个队伍当中来。 从蔚来能源自身来讲，我觉得对于我们摊薄运营成本，以及通过统一电池包提升电池效率、降低成本，都是非常有帮助的。

Stanley Yu Qu: 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。从目前刚刚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。

Speaker #4: 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 ongoing communications and also collaborations on some projects.

[Company Representative] (NIO): 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, 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. 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.

Speaker #4: In the meantime, as Robotaxi is becoming a very popular area, we see that power swap stations and power swap services in general can provide good infrastructure support for the Robotaxi business.

Speaker #4: 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 services, we basically will charge them for the admission fee for the use of our for the use and access to our power swap network.

Speaker #4: But more details are still being discussed and are to be closed when we have the actual projects in the implementation. And 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 and the more OEMs are also embracing the idea of a swappable vehicles where for the new power, the advantage is with more partners joining this effort, it can help us to optimize and amortize our operating costs and the by standardizing the battery packs, we can also improve the efficiency as well as optimize the cost structure.

[Company Representative] (NIO): 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 and more OEMs are also embracing the idea of swappable vehicles, where for the new power, the advantage is 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: Thank you, Mi.

Stanley Yu Qu: Thank you, Mi.

Speaker #3: Yeah, thank you, Stanley. My second question is related to your operating expense. Specifically, we noticed that your sales and marketing expense in the second quarter is higher.

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

Speaker #1: Okay, Mi. 我也是分两块两块来讲，一个呢是我们的研发费用。研发费用的话，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来动态调整这样的一个支出水平和节奏。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浮动。

Stanley Yu Qu: 我们也是分两块来讲，一个是我们研发费用。研发费用，跟我们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来动态调整这样一个支出水平和节奏。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。

Speaker #4: 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.

Rui Chen: 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 RMB 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 RMB 2.5 billion per quarter in terms of the R&D investment.

Speaker #4: As mentioned, we will basically be staying flat with our R&D expenses, non-GAAP, around $2.5 billion. We will also make dynamic adjustments according to the actual cadence and pace of our projects and business.

Speaker #4: But for this year, it will be roughly $2.5 billion per quarter in terms of R&D investment.

Speaker #1: 当然大家也看到就研发费用跟我们的蔚来这个公司历史上的这个投入相比，以及说可能跟我们的一些友商相比，出现了一定程度的这样的一个减少。但是呢，我觉得我们的研发效率其实是更高的。那这里面我们分两方面，一方面呢就是我们还是专注在这个纯电路线，没有去在纯电，包括混动增程多条路线上去发力。所以这样的话，我们的研发会更加聚焦，核心技术呢可以在不同品牌、不同车型上复用。所以效率会更高。第二个部分呢，也随着从去年开始的我们整个 CPU 的这样的一个经营机制，我们内部的这个研发的这个体系和组织的效率也不断的优化。所以总的来说呢，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这样的一个竞争力。

Stanley Yu Qu: 当然大家也看到，就是研发费用跟我们未来公司历史上的投入相比，以及可能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。那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、增程多条路线上去发力，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的这样的一个经营机制，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这样的一个竞争力。

Speaker #4: And 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 are relatively low.

Rui Chen: In terms of the R&D expenses, maybe some will compare our current expenses with our previous levels or with our competitors, where 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. 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 the products related to the BEV roadmap without spreading our efforts across BEV, PHEV, or EREV. Secondly, as we've 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.

Speaker #4: 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 battery electric vehicle roadmap.

Speaker #4: With that, we can be more focused on the technologies and the products related to the BV roadmap, without spreading our efforts across BV, P5, or RIS.

Speaker #4: And secondly, 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 #4: 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.

Rui Chen: 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: 第二个方面呢，从这个 SG&A 角度来讲，首先我们来看它这个 SG&A 占销售收入的一个比例。从 non-GAAP 的角度来说呢，我们一季度和二季度这个比例基本上都是在 13% 上下。那这个呢，整个的比例上来讲，是符合我们的预期的。其次呢，就是我们二季度，尤其在销售费用上有很多在二季度一次性的投入，因为我们二季度所有的新的产品基本上都集中在今年二季度发布。包括我们的 ES9，以及乐道今年的一些换代产品，大部分都集中在二季度里面。这样一次性的影响，给二季度的 SG&A 带来了大概 5 亿元的增长。所以在后面的两个季度，应该不会有这么多一次性的影响发生。最后，从三四季度的展望来看，SG&A 我们整体的控制目标还是希望能够实现 non-GAAP 的 SG&A 占整个收入比例在 10% 到 11%。目前来看，这也是一个可控并且能够通过努力实现的目标。

Stanley Yu Qu: 第二个方面，从SG&A角度来讲，首先我们来看它这个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。那这个整个的比例上来讲是符合我们的预期的。其次，就是我们二季度，尤其在销售费用上，有很多在二季度一次性的投入。因为我们二季度的所有的新的产品，今年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。那这样的一次性的影响，给二季度的这个SG&A带来大概5个亿的增长。所以这个在后面的两个季度，应该不会有这么多的这样一个一次性的影响发生。那最后，从这个三四季度的一个展望来讲，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。

Speaker #4: And regarding the SG&A expenses, if we look at the SG&A as a percentage of sales revenue, in the first and second quarter, under the non-GAAP standard, it's around 13%.

Rui Chen: Regarding the SG&A expenses, if we look at the SG&A as percentage to the sales revenue in the first and the second quarter. Under the non-GAAP standard, it's around 13% in the H1. Also in the H2, 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 Q2, including our ES9 and also some facelift models for ONVO. That one-off impact is roughly RMB 500 million, majorly happened in Q2, where in the H2 we don't expect to have such one-off impact in terms of the sales expenses.

Speaker #4: In the first half, and also in the second half, as we see a slight increase in terms of sales expenses, it's mainly driven by some one-off expenses, as most of our new products for this year were launched in the second quarter, including our ES9 and also some facelift models for Envol.

Speaker #4: So that one-off impact is roughly $500 million, and it mainly happened in Q2. In the second half, we don't expect to have such one-off impact in terms of sales expenses.

Speaker #4: So, in terms of the second-half outlook for SG&A expenses as a percentage of sales revenue, under the non-GAAP standard, we expect it to be around 10% to 11%.

Rui Chen: 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 #4: This is also a controllable variable as well as an achievable target for us.

Speaker #1: Thank you, Ming.

Stanley Yu Qu: Thank you, Ming Hsun Lee.

Speaker #2: 谢谢 Stanley，谢谢。

Ming Hsun Lee: 谢谢 Stanley。谢谢。

Speaker #3: Your next question comes from Jing Cheng with CICC.

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

Speaker #5: Thank you for taking my question. Time is limited, so 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.

Jing Chang: Thank you for taking my question. 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 #5: 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?

Speaker #1: 对，这个对大家也看到这个消息，就是我们自驾的负责人邵青呢，他会这个开始在这个物理这个非这个 AI 领域的创业。但未来会作为一个战略股东啊，去支持他这个创业啊。当然同时呢，邵青呢仍然也会作为未来智能驾驶部门的负责人啊，这个他的还是还是会有这样的一个负责这个智能驾驶的技术方向和和长期的这个战略啊，但是会参与这个自驾方面的工作。那我们相信呢，这样的一个这样的一个安排呢，对于未来来说的话呢，呃，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 领域的这样的一个战略的这样一个投这个投入吧，又不会影响我们的 PNL，也能把我们一些资源也能用好啊。同时也能够吸收到更多的这个外部的这个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这样的一个安排。

William Li: 对，大家也看到这个消息，我们智驾的负责人绍清，他会开始在这个物理非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，绍清仍然也会作为未来智能驾驶部门的负责人，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。我们认为这是一个比较好的安排。

Speaker #4: Thank you for the question. Yes, Mr. Ren Shaoqing, the head of our Smart Driving department, is now also starting up a new business regarding physical AI and embodied intelligence.

[Company Representative] (NIO): Thank you for the question. Yes, Ren Shaoqing, the head of our smart driving department, is now also starting up a new business regarding physical AI and 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 meaningful. As right now, NIO is staying focused on our core business. In the meantime, through this startup by Ren, we can also keep tracking of the latest developments in the physical AI and embodied intelligence without diluting our focus, affecting our P&L.

Speaker #4: And 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.

Speaker #4: And we also think that such an arrangement is necessary and also meaningful, as right now NIO is staying focused on our core business. But in the meantime, through this startup by Mr. Ren, we can also keep track of the latest developments in physical AI and also embodied intelligence, without diluting our focus or affecting our P&L. But in the meantime, such a startup can also help to make full use of our resources, as well as attract external strategic shareholders and investors.

[Company Representative] (NIO): 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 #4: So, we think this is a good arrangement.

Speaker #1: 对，另外还有一点也想补充一下，大家知道这个非这个 AI 领域这个人才竞争是非常激烈的。那么我们认为呢，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这样的一些人才是能够更能保证这样一个创业方向的一个成功。而长期来说，我们相信这两个公司之间我们和这个这个这个具身智能的这个创业公司之间会有非常多的这样一个战略性的合作，业务的业务的合作，战略业务的合作。

William Li: 对。另外还有一点也想补充一下，大家知道这个非AI领域，人才竞争是非常激烈的。那么我们认为，用一个创业公司那样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这个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。

Speaker #4: And also as we all know that the competition for the AI talent within the arena of a physical AI is also quite intense. So through such startup, we can also better capture the top-notch talents in the industry 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 we believe that we will have a lot of strategic collaborations and projects between NIO and also this AI startup.

[Company Representative] (NIO): Also, as we all know, the competition for the AI talent within the arena of physical AI is also quite intense. Through such a 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 this AI startup.

Speaker #5: Yes, thank you.

Jing Chang: Yes, thank you.

Speaker #1: Thank you.

Rui Chen: Thank you.

Speaker #3: Your next question comes from Yuking Ding with HSBC.

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

Speaker #5: Thank you, team. Hi, Stanley. So my question is, with your volume outlook for the year, and maybe strong and healthy sell-in to Q4, and also our new model 27.

Yuqian Ding: Thank you. Hi, Stanley. My question is, what is your volume outlook for this year and maybe some into Q4? Also, what is the outlook for the new model in 2027? That is all.

Speaker #5: That's all.

Speaker #1: I think your voice is breaking. Could you repeat your question? Thanks.

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

Speaker #5: Yeah, yeah, sure. So

Yuqian Ding: Yeah, sure.

Rui Chen: Yuqing, we still can't hear you.

Speaker #1: You can. We still can't hear you.

Yuqian Ding: Yeah. Can you hear me now?

Speaker #5: Yeah. Can you hear me now?

Speaker #1: Yes, much better.

Rui Chen: Yes, much better.

Speaker #5: Hello. Okay, yeah. So, I'll just repeat: my question is about the volume outlook in the fourth quarter and 2027, given maybe strong seasonality and the backdrop of a new model cycle next year.

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

Speaker #1: 对，四季度我们相信的话呢，这个今年的话呢，整个市场在四季度还是会有所恢复啊。那我们认为这个平均来说的话呢，这个我们每个月实现4万以上的这个平均实现4万以上的这个交付量啊，这个是我们的目标。咱从呃中长期来讲，我们还是认为这个我们每年40-50的这样的一个呃年销量的增长啊，这个从我们目前的呃产品的布局，还有从我们的销售呃能力的布局的角度讲的话，仍然是我们的目标。

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。那我们认为平均来说，我们每个月实现4万以上的平均交货量，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。

Speaker #4: We expect that the passenger vehicle market will 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.

[Company Representative] (NIO): We expect 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%. We will maintain that for the mid and the long term.

Speaker #4: And 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%.

Speaker #4: And we will maintain that for the mid and long term.

Speaker #1: Thank you.

Rui Chen: Thank you, Yuqian.

Speaker #3: 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 would like to turn the call back over to the company for closing remarks.

Speaker #1: 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. 再见

Speaker #1: This concludes the conference call. You may now disconnect your line. Thank you.

Browse all earnings call transcripts