- Earnings call transcript Q3 2022

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Operator

Hello, ladies and gentlemen, thank you for standing by NIO Inc.

Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host Ms. Eve Tang from Capital Markets. Eve. ahead, go Please

Eve Tang

and call, good conference On Welcome and call. of in earlier Chief Founder, Stanley and have were Mr. and Officer; the quarter operating NIO's Qu, Officer; XXXX Finance. Mr. Mr. Steven Senior company's Chairman today's published today release William the press President of Earnings The the posted IR evening, morning, we at website. to everyone. Financial Vice third Board results are Executive Good company's Li, Feng, financial Chief

Before discussion Reform we of made safe that continue, please Litigation be provisions of Act kindly under will reminded today's the harbor Securities statements contain Private XXXX. U.S. forward-looking the

involve and uncertainties. inherent statements risks Forward-looking

as unaudited rules. financial this conference of release also information note and to ahead. applicable includes measures. unaudited discussions go as Stock and release, that press expressed call which forward-looking over please Singapore in Limited. today. Securities is to information Please call financial Trading the measures contains and Please Mr. the NIO's the Exchange uncertainties Hong obligation filings Commission, unaudited With Securities update the and well risks does refer press to non-GAAP any certain Further the Kong such, required actual Limited Li. GAAP under Exchange be reconciliation except will of William, now assume as to turn company's non-GAAP materially that, views company As regarding Exchange our included the a the comparable news may U.S. The I of GAAP results not company measures. statements, of William with different any the from CEO,

William Li

XXXX call. in third year-over-year overcoming production all XX,XXX our a setting product launched for aspects total platform, the premium which Thank volatility, third latest on continuous joining everyone. October, delivered smart we to chain quarter three XXX.X% technology a electrical quarter enter XXXX more Hello, XX.X% supply competitiveness In catalyzing earnings delivered NIO's quarterly and and has new Based segments, up year-over-year. XX,XXX the products, of of NIO Language] high. and NTX.X, improved a representing increase In new vehicles, enabled line-up you the vehicles, NIO have [Foreign our we delivered growth. demand

continue We accelerate partners stabilize our will supply the closely further and collaborate components delivery. to to vehicle with chain and production the supply

number of quarter total the of XX,XXX in between expect fourth be We XXXX the deliveries to XX,XXX. to

recent Store to traffic electric Next, stores. and cars reached delivery as a I In record highlights be intake rate we some began exceeded September high preliminary kicked the would show officially user ETX momentum. witnessed like its September XX, growth the satisfaction and display midsize to the off and sedan in our on smart R&D expectations. a order strong On of ETX, share operations. our our of of

couple Over digital continuous of NTX multiple the improvement. upgraded the months, Banyan, times with system user past of and has iterated experience

spaces delivery on network, in strong have in We have and XXX XXX centers new XXX and houses we market cities. based to confidence centers new respect now sales and of the the service NTX models the platform. new in service the cities XXX competitiveness and With the

market entry the On swaps competency In in October XXX,XXX X,XXX user map a products power in a X by and to Since provided X,XXX installed in received destination NIO Europe. has chargers the solid XXX,XXX has foundation party for [ph] Germany, and in services installed last than been Denmark rapidly, X,XXX services market swapping swap for Berlin over from we charging we and entered products our of third China Norwegian connected in introduced boosted more drew users terms we charging power have our for users in official Europe, September, and our of auto the to with has has Netherlands, place. well meantime, comprehensively In Europe. and chargers which more of million stations industry network, year, laid power XXXX community stations Europe. the in chargers and and the users of this total the a XX Sweden. and and and has local battery recommendation held NIO X,XXX users. our lot NIO and markets marking growing while been in attention our NIO entering Berlin chargers

and our products major European cities experts and such highly To professional Magazine users, in Europe, in serve recognized Wheel been drives we and to Auto houses upper ETX Steering industry delivery spaces open innovative Europe. are user NIO Europe. in communities Stockholm. the Both and the Berlin, new the category. organizing kicked was XX prestigious granted as ETX and best off Yesterday, by the plan German in Bild, Rotterdam, XXXX media Golden of in car voted new larger Copenhagen technology now We scale Frankfurt, and won class test the award user by median better have as

power XXXX. also another plan year end XX XXX by and install We to the the - stations by the by in Europe end swap end of

users that chargeable, system upgradable swappable in more experience and power Europe. new So can

In forward responsibilities On cooperation R&D its ESG and Berlin the for the XXXX. of foundation the us in jointly Governance where run. challenges future. development engage solid hopes communities, of and and NIO in and Society report share product NIO and for NIO to Sky well continuously service network, the experience for XXXX, initiative. have Danish in In aspiration well optimizing September compete laid the capability as worldwide. September as and by In experience Parks global sustainable more charging of Coming, Natural NIO NIO digital the beyond spite brought a On focused XX, is the to Conservation addition, further changing more under XXXX, actively practices for Clean Danish released while the service users. as improving with the XX, cost and operation we users products we local shared announced and to localized further upholding of believe core first micro Social news as on staying established operational cockpit and deployment structure technology to services Nature an Foundation ADAS technologies, fully management [indiscernible] contributions local with NIO and its which center Environment, to the long make do of has innovations, intelligent and environment, that Blue the capable advanced swapping in performance a to efficiency product for have NIO improve sales their digital improvement, network market

for will over call I to to details quarter now turn the your for financial to As third provide always, Over With you that, thank the Steven. XXXX. Steven you you support. the

Steven Feng

key to our in I you. discussion for to XXXX. quarter additional I'll is RMB to will be earnings [Technical online my Thank Difficulty] now call, which And details. I mindful today. of posted encourage the only of our this go reference the third to release, refer length over for listeners of press

in total representing increase billion, year-over-year, revenues the and XX.X% XX.X were third RMB quarter-over-quarter. quarter Our an XX.X% of

of year-over-year operations of billion, representing R&D quarter-over-quarter. in SG&A activities personnel which in quarter-over-quarter. our the and income were in representing quarter to sales in as the RMBX.X an was third in second sales Vehicle higher the X.X% margin million, users. the of credits, Company’s quarter-over-quarter were automotive corporate quarter-over-quarter quarter in mainly made increase margin, third and the The The margin, third derived user to, and products representing third XX.X% in XX.X% XX.X% with the regulatory XX.X% quarter of representing losses quarter quarter-over-quarter. the increase an losses, of quarter RMBXXX.X result was to second, mainly decreased sales XX.X% XXXX the expenses subsidization and in XXXX. high the and the in was mainly second the from sales. in other in from in was network representing the RMBXX.X in loss other and XX.X% general to are the an the design other from the and third was increase as of margin from was the in a RMBX.X billion, was costs increase attributed SG&A quarter increase stable sales related sales sales gross service other of quarter-over-quarter. margin. of third revenues was compared and increase sales depreciation of loss sales. resulting incremental power revenues decrease mainly The our per increase and RMBX.X The sales expenses of gross in of billion, related margin XXXX million revenues Loss derived was mainly quarter from shareholders were the with promote total XXXX. RMB the quarter of U.S. functions regulatory to ordinary RMBX.X million of vehicle of expenses in the from from against The with the third to increase cost XXXX was automotive and mainly year-over-year offset billion, XXXX. representing first, and an to vehicle sales revenue quarter-over-quarter representing increased in was third automotive of decrease in incremental the in The decrease XXX.X% XXXX increase year-over-year year-over-year research margin third quarter second margin Net costs XX.X% and quarter parts: and sales of other due and product attributed of increase sales. vehicle credits as quarter and quarter-over-quarter was attributed XXXX. XX.X%, XX.X revaluation year-over-year with Europe. remained were in promotional an of for compared XX.X% representing increased over of of offered was XX.X% RMBXXX.X vehicle of increase sales of The RMB RMB a quarter financing increase third other loss of quarter-over-quarter. RMB-related in service billion, year-over-year and expansion, attributed margin third billion, and Net XX.X% credits other to increase the China quarter quarter primarily XXX.X% R&D Vehicle the XX.X% of sales of attributable was of in third the NIO’s arrangements. year-over-year year-over-year XX.X%, of of was year-over-year result revenue to the incremental the other third development of with and vehicle with increase quarter second of the mainly diversified sales quarter-over-quarter. overseas quarter of partially the two network. and year-over-year margin technologies. the more decrease RMBXXX.X the a in from credits personnel due decrease attributed third the third in dollars in XXX.X% quarter The vehicle XXXX billion, assets The vehicle vehicle year-over-year automotive quarter-over-quarter. sales XX% to quarter revenue in the derived offset increased XX.X% in in marketing increased decrease third third, the the was XXXX mix increase More deliveries, increase the in to and first, well mainly year-over-year investment increase regulatory functions, the XXXX XX.X% due sales to million Other of quarter-over-quarter. quarter costs and decreased increase year-over-year reduction expanding quarter-over-quarter and X.X of battery of high Other an of and second, in line in net attributed in our increase expenses an to RMBX.X to Our in vehicles by by as unit, development regulatory specifically, and of an new Gross line

deposits time Our balance equivalents, short-term of long-term cash cash, restricted as of RMBXX.X investment September billion were XX, XXXX. cash and and

prepared turn now over will Thank facilitate Now, I operator the you. session. remarks. call our to to our concludes Q&A this the

[Operator ahead. We question Instructions] with and will comes go now first answer from Ming of Please session. begin the Bank Our America. Lee question

Ming Lee

capped the supply, Language] as well William, Steven, especially welding by [Foreign your part, the component as chips. Previously hi.

Thank So your latest If is control, capacity no you. capacity? impact. component could update also you there COVID

William Li

of the [ph] operation II that is high. pump. [Foreign of have pumps the and several EDS production the overall Yes, Due XX,XXX impact expect ETX, factor because around Language second October, our you third EDS has question. factor some been a production We believe for subframe of production for reason the of around situation. EDS affected only the next to very one is need the we around will several like this And these the mentioned, thousand. X in Thank is you, has there have around for we reasons pump to actually the support volatilities And automation people the the impacted EDS November. the COVID-XX just due is this to I XXXX. new then ramp-up Ming level the be over impact the to and new the is but new EDS to the new resolved week. is to by One regarding in reason

now, October, we we the production the probably and for line can production up affected ready end production So have week to the new expect overall this EDS a new month and EDS have speaking, next by normal have all production. the line and of we this be those in will resumed factors but new ramp

We production believe not will there will the be ETX issue. is a I now, already subframe we And ESX. solved I as And issue December, any believe - of the production in the don't probably and for XX issue. have

Ming Lee

U.S. autonomous this currently and the also for if you will progress the XXX, to training? Language] semi see impact driving to how development to [Foreign [ph] compared of our do the industry NIO. how Nvidia can impact chips Besides XXX the sell China The band

William Li

question. your for you Thank Language] [Foreign

believe that in run. Regarding opportunities. I believe at training affected to But the like are this chips satisfy different need same Act. Right the the for the the for training. now, we cloud have many chip a also I exploring sufficient the long time, used the AD Chip we AXXX

some solutions of we cloud For with long-term also providers, evaluating AD to and are the working support together example, solutions. we're considering some integration our service

As on operations. overall impact of now, I any don't actually see

William Li

you, Thank Ming.

Operator

from go comes Paul next Our UBS. question ahead. Please Gong with

Paul Gong

Language] regarding the my first question [Foreign So order. is ETX

launched your in Just level my did This the late first do do beat expectations. see of orders But the any and satisfaction you orders see now after impact from after mentioned you the the that - price especially has some way months been. question. you is you how the How has cut, intake October Tesla another mention there? intake

William Li

you, Paul, question. Thank [Foreign your Language] for

is The to the ETX important regarding now deliver Of and find more waiting ways time the I course, understand the ETX users to users. orders. us shorten thing for right for

So generally speaking, order is not an issue for us regarding ETX.

stages, of strong demand pay ETX early is a we as this Regarding improvement to can the quality because to ramp-up is still we of at very ETX. make for the sure attention stabilize like relatively quality the The we and more would so expected. the ETF

the at back don't the the we it's better. wait even long If often prices. order stronger, course, we But - for if Tesla, come want to cut strong Of user a a its but can really if - same stronger time, to Tesla be time. the the

regarding user there And Model with the at look are big product. actually other affected same If that Y products, like is the gap in segment. ESX, Model we believe don't competing So specific don't press the over actually we X, we think new a compared demand if we the compare this the products. with we

strictly that's with and our segment. at look products So of pricing if the product, same speaking, positioning of the in Tesla competing not our we the we're

Paul Gong

just in And going my more your trying both Is you So is have Europe? SG&A. expectation if explore the temporary be seems new is Or so, it Language] quarter. a the for up products expenses, Q-on-Q forward? [Foreign what and regarding this climbing like to market structural? second to lot because including its and It R&D trends is question that

Stanley Qu

QX network marketing Paul, increase as quarter QX. more of of is also also Hi, be SG&A can QX, check in we in with this you because country in QX efficiency. continue service our in think I the operation activities this since sales percentage Europe check From - and more from activities The a with this Stanny. SG&A optimized entered marketing long third China promotion compared is revenue compared also with will along with and you sales the promotion in - to result of some improvement and QX Europe and market can and term, our

also coming XXXX stable in think I further this and the ratio. see you years, for a will to - improvement trend of

William Li

as the [Foreign quarter is quarter. because third Language] increase the initiatives as the validations with second that additional the Regarding that and think This yes, our is test well expenses This development of ETP expenses, chipsets when the over some enter we as like out is the the we in of actually don't and and do cost. mainly we part new company. the any cost is our of cadence, and well new other as product battery employee see R&D other R&D of markets, the planning plan, there compared the

William Li

a the development Language] have regarding operations. work, I the relative stable [Foreign R&D as operations, now, R&D believe entered well right phase Regarding the we as

for So stable we when will comes including it relatively resources human R&D cost, level. the stay to expenses, believe at a the us, it

it For example, quarter, be X RMB probably billion. every around should

stay time, for will - users. and the time from of same experience but R&D for to provide have course, the believe make to more to sure product efficiency our technology innovations at can some Of at continue I now, efforts we this system it improve will and level the we better

Paul Gong

quarter ratio [Foreign Language] of session? roughly Europe this So the for accounts is what

Stanley Qu

Yes. Hi, Paul.

quite You know, initial Europe stage. is at now

percentage expense the currently, SG&A. is of a the not overall big overall So

- Now Europe about and the our marketing headcount. XXX team the is for sales mark business

for our information business. Europe the basically yes, So that's

Paul Gong

Okay. Language] Thank you very much. [Foreign

Operator

from Stanley. go ahead. comes Please Hsiao next Morgan with Our question Tim

Tim Hsiao

delivery. question production about the [Foreign and is Language] my first So

guidance, around be basically, could delivery fourth average in to December So I November, XX,XXX quarter based think the on the XX,XXX.

be is output peak With supply would what by reach NIO the chain how of So first into next half year? the And trajectory end the year? can monthly like looks this bottleneck their kind suppliers production yield? of and COVID for more expand new and improve longer a they their policy, to structure issue, new model, given likely the time players unchanged capacity

William Li

of if Language] chain constraints About be vehicle challenges, we of vehicle face capabilities operation chain, measures talk [Foreign the and for capacity some should we impact But about prevention has quite for to target on some And the up set silicon do we company. the if meet in the delivery we we meet the it's But to speaking, that supply see demand the ourselves. of example, corporate the the XXXX, regarding and we estimation supply and the line. the year. us believe next make and the production chain December, control I difficult able capability of supply production, for speak production the I the the believe top the for will look set supply at target we if regarding to the

William Li

have sufficient one meet XXX,XXX if be out for production I capacity the vehicle will shift, carried a For capacity demand. the Language] to of can production [Foreign on manner. very XXXX, we have in we will the I smooth a we production, And the achieve believe - will relatively be a production - vehicle believe

Tim Hsiao

own profitability Language] life observation, about second with [Foreign rather traditional EV question than longer my on actually in So noticed shorter, because we getting the smart is cycle cars. the China is in our based

margins? and intense? manufacturing know, reasonable for, investment, competition more the be in getting should I we your we sizable more And think very considering growth would you. – is should the operating look Thank you R&D the especially what So terminal

William Li

question. your Language] you [Foreign for Thank

should NIO. years, is cycle our faster electric a with vehicles. iteration how we Regarding be around much X believe we the smart And this I in the that and iterating technologies have the smart we traditional vehicles, cycle believe iteration compared

hardware companies Of same at cycles. the we look all course, platform, platforms. the iteration NIO, we platforms, data for and our have have different technology vehicles technology But different and actually and software with different kind in technology one strategies based on we if of believe so

we have we X.X. NIO and previously, example, Technology For X.X Technology the explained, NIO have the

commonalities have and NIO share the technologies, the X.X. Technology the we products smart same pack hardware based X.X. the same are to a the on and for have unified to when the kind we all it vehicle time, comes lot of battery also also They it Technology problems. when same the comes of that's and NIO software So At

we different like demands would offer diversified Of top for users. course, to meet to the head and kind previously, we different of mentioned take

XX% So a strategy, is if XXXX, the platforms look we think I specifically, margin battery at about we the us. But cost of rocketed. technology very and of vehicle the vehicle sky challenge to platform for gross XX% think big if not

at this have course, achieved gross of the time, also And the have the I believe, backdrop, the our margin. XX% products. increases. battery didn't in relatively vehicle in So cost Previously, same against reasonable past, gross have, even Like past. a increased we of margin the we we we achieved price a vehicle have

So come us this vehicle our the – margin a our can for is possible XX% a products. cost the relatively reasonable regain products. vehicle gross level, battery if future, I with gross to it's margin think the XX% reasonable to down In for to

to possible at combine the if challenge companies in I much I vertical is If margin. that, the market mass XX% margin, we us we margin overall and have vehicle the vehicle including look more the is the gross actually XX% believe it's to achieve will for right we integration, vehicle to bigger believe chipset, our negative. market, the addition the room think mass I improve with battery, for to In now, gross the all technology, gross because

is BYD the other have exception an because they and integration batteries technologies. the course, vertical Of of

achieve the in not to us mass place, products. in with So we have also market. vertical be XX% possible capabilities we other do will market have challenging integration it market, this to I XX% think the quite to in if mass it's But the capabilities if provide mass for

Tim Hsiao

Thank you, team.

Operator

Bin from question comes Suisse. next ahead. Our with Wang Credit go Please

Bin Wang

about is question, My guidance. Language] one your first [Foreign

number X in higher at were quarters gross then XX% start, two guidance, three, you next Number asking volume series. actually the know, than And BMW you Did four to guidance And You this the start number vehicle. year you orders? these ETX an maintain Thank breakeven one, for you. things. for have guidance this will year. to XX% be three margin

William Li

aiming NIO, aiming [Foreign speaking, plan. strategic we in the still About question. different achieve you, quarter is direction working the Thank that's new core and for Bin, also for Language] still to are – for same still we're the At the business. breakeven of your of business XXXX, this our we're time, on third

and For the example, battery new have time. we same two the brands chipset and the at smartphone business

look So billion billion. those strategic RMB new X probably confident still if core quarter all in breakeven XXXX. to of we for means to at aside, are going If investment we very RMB achieve those XXXX, around the quarter. billion new RMB we every is strategic fourth business new take business business for the be to around X X It that

William Li

going ETX [Foreign better Bank the Language] to AE mentioned volume cofounder of BMW So not exceed is for mentioned the in course, but the of second X the question previously much, regarding believe of that I guidance, a much because is BMW [ph] is volume ETX, - you than ETX And X-Series. Series this one the

So this to are confident we target. achieve very

William Li

quarter RMBXXX,XXX reached carbonate there's now, cost. back Language] margin battery that is and going out vehicle lithium level. and is comes high at in predict to XXXX, a quarter. our especially is to now fourth us, control, gross margin, third Right significantly around the still a This RMBXXX,XXX. for it carbonate I of lithium the the I gross still us a relatively the challenges believe still But many affected stays Previously, very with cost for has stable can [ph] actually the us, very it actually . has or we [Foreign when for vehicle it's believe in remain cost to and dropped around difficult high new For compared the this

carbonate lithium to the like would some probably cost, For impacts. I share

at car that think the the battery you price or the is because if the think don't the the don't that carbonate cost supply companies deliver due I now, car in their situation. China, is companies look of shortage. Because that right to of products there lithium So any cannot I

lithium the our the to we we for in capacity. Averagely all each This have big impact speaking, relatively we relatively XX vehicles, kilowatt down, predict carbonate believe products go cannot future, course, because hours. on the when. XX a will for of batteries but So has of cost high of us around battery a

cost lithium stays a if the this gross So a to the very high have margin. big impact going level, is on at carbonate vehicle

For by us, situation. about some the probably for our give which understand to maybe think can actually this is will carbonate, numbers, you RMBXXX,XXX lithium affecting we I help margin if see XXX,XXX by cost If the margin vehicle to gross then our around going you around X%. XXX,XXX, this And from carbonate vehicle X.XX%. cost to gross drops we can the improve lithium is

the that can lithium X%. around probably probably gross around is improve a by for So means it our carbonate margin reasonable if the even then RMBXXX,XXX, lithium carbonate cost to price lower, which can drop vehicle

is this facing. So the are we reality

Bin Wang

you. [Foreign this in be And is see [indiscernible] we ETX, Tesla. Y showcased my Language] question about what’s Thank upcoming date year? Model in the to year So December the going this

William Li

So going we're probably quarter first [Foreign one products. to next the we the the in on the like of line Y us, next And up. of I overall of them have the volumes year, focus to in But - first like year of more you the is mentioned. Tesla the for line be to product Model for going up believe five Language] new product half all

We market segment. premium are in the

the demand diversified XXX,XXX, the demand to to is range satisfy to from with product XXX,XXX different user price and diversified the In philosophy the we our efficiency. high taste. So a user satisfy will provide

achieve what – units to up, product in should fill expectations. XXX,XXX able be can So I volume don't or can delivery we one sell meet can all around China. our over product believe with that expect around our actually line probably good a over of I that

good example, For this sell This XX,XXX think the is I can a common ETX straight be ETX, or over probably month. and for it units for for per car, don't going NIO. very to is

William Li

for And us, units -- probably mass the segment different month, a believe and different story. team. the massive the mass one product [Foreign with groups. is XX,XXX mass in is different Language] target market, model just meeting user over for the We per market because we today a can sell for market had the For this market this

William Li

you, Thank Bin.

Operator

Our Please Chung go with next Jeff comes from Citi. question ahead.

Jeff Chung

So the volume sales question and Language] November growth about into [Foreign my is December.

meet run around reaching improvement we to at our monthly be to target, in XX,XXX rate around month-on-month So order quarterly be XX,XXX And by units XX%, if units. medium linear the December. should

ETX? down the ramp-up of the the So if most this going nonlinear you question volume happening from to pace which second concentrated December. in is And of with break could weight be is

So could November? will what run in December, be you of determined kind our you. rate us not in Thank tell overshot but elements

William Li

Language] you, I Jeff, the like with including just November. will ETX, of we for EDS. we some mentioned, to the up the factors Thank compared have production considering mentioned In just time need In question. [Foreign November, carbine December, ramp still the production believe more except your production, silicon the I will I

we over December, in hope course, that can XX,XXX production still achieve we rate. Of run

Jeff Chung

more No you. [Foreign questions. Thank Language]

Operator

comes go Please The next from question JPMorgan. ahead. Nick Lai with

Nick Lai

the of and into question, CapEx question can burn first my take expectation AI about dilution. take me you Really, the shift strategy talk on investment also and the as cash is price potential move two account 'XX and 'XX second [indiscernible]? opportunity the about if simple to just we and into Let Language] the is [Foreign questions. The again, incremental

of they stock to [indiscernible] looking car chip and was that's Thank but solution, algorithm, you. what for use about XXXX related chip that the in car? the have We

Stanley Qu

Hi, Nick, Stanny. is this

relatively with operating will will As stable with keep stable XXXX. efficiency. And further introduced compared - SG&A improve R&D compared we William by and myself, our furthermore, our expense

So operating cash flow operating positive I working achieve think quite in wise, like years. to we - optimistic cash are flow future

So on capital our mainly investment. burn cash depends the

Now and planning we are year we segue planning year. compared this And production CapEx our also of more are think next we and with so year's are network. not chain more the generally, - from also, capacity. planning budget. sales the significantly service supply in next I increase But total And will like

confident also guidance. breakeven give won't that on is our finally clear operation cash at And you are supply this the achieved. hand So I can until we ongoing our moment,

Nick Lai

Yeah. Thank [Foreign Language] you.

William Li

uncertainties understand we operation until current But still facilities, cash bank the to believe I speaking, in About with reserves Language] and we are we be support breakeven. the also the should market. there [Foreign company's many our able

this think challenge huge to the So a be company. we for is don't going

William Li

have onboard Language] AI like chipset Regarding the I would training AXXX. on is the now the already we chipset. chipset, more elaborate [Foreign to NVIDIA previously, addressed probably And the that

other of We with in which world first NVIDIA a that equipped earlier X than to already, months company the products launch actually is companies. is are the

gross that have contribute design very AD margin. algorithm. the people a acknowledged commonly at team. collaboration the with have I time, same If is we the with of Right it kicked chipset, have around can chipset the off the the also can and the track our NVIDIA. seen working R&D use to The last we on the to R&D year, But XXX vehicle already AD improved, have define on chipsets. efficiency we be from now, some closely algorithm our significantly AD achievement is AD also is We progress AD AD positive we of overall which chipset believe AD the of close the chipset. overall coupled can

Nick Lai

[Foreign Language] you. Thank

Operator

Please The next Chang Jane comes from with ahead. go question CICC.

Jane Chang

is of So the Language] a my difficulties [Foreign environment, in in production. encountered external lot first question current about everyone

ramp-up obtaining manufacturing And the term, speed the it our there boundary or longer and question of R&D. we optimize OEM switching R&D from CapEx about consider will to will Are in-house to cost? regarding in and is production? investment mode my qualification the product, our any difficulties second self-build So in new

to we expense the further - quarter can third X.X see RMB that As billion. extent R&D in

is a about market current competition environment adjust? CapEX? And much will what current question under is So market mentioned EV flexible Chinese address just PV and the capital in we organization So to the years. and intense a in more we and And strategy? of strategy whether will more circumstances, few conservative our consider But the R&D last models. adopt our enough

we in the That's in launch three future? product market? this So all the MTD my think pipeline what Will new do questions. the of segment we

William Li

[Foreign our corporation II, with been Language] believe has JSE. still quite working are joint we For together positive. the I manufacturing Factory

already the the vehicle be I we that company's achieve capacity plat it production supply then for vehicle are mentioned If production XXX,XXX course, production support term. production, the the I've delivery be some of industry, the units. can the supply the this able and need Previously, not we if up delivery, the that we mitigate can and there volatilities so we capacity But Regarding and one XXX,XXX to chain. capacity to doubled.\ in the capability capacity double be two short you the target we one I the achieve When chain, one believe also to comes plants our of together, two shifts, of we believe then shift, for production should have units combine just to whole Factor I under shift NIO. as a ramp Factory II, under able should for to risk the

boundaries sufficient investment to of the to RMB support have regarding it to to mentioned, for years. reserve question around investment, X second catch actually the operations. XXX,XXX we comes R&D, overall have already And the - expect a - for previously our do when company's we for invest every For XXX,XXX have quarter, the

- efforts. billion RMB around every we quarter, sorry, billion R&D invest X to expected Sorry,

initiatives R&D explained includes this So we the have previously. all

investment, we For very strict improve the the do CapEx the and and regarding CapEx we the a management company. on finance efficiency of investment will have the the

Stanley Qu

the term, market, our model. regard plan very launch simple. to Okay. MPV to no In is short And with strategy have MPV we the

look we'll at also term, the long very course, we keep staff, believe monitoring this Of market market, big hot. is

that's model, but get right the remains but why at launched from do the in Chinese have we the like clean to to years. MPV several side, now, a demand and segment PV then their several For side, set would least rich what still supply more high-end next market, brands the

Operator

Our go with ahead. Please from comes next question Yuqian HSBC. Ding

Yuqian Ding

[Foreign got I've questions. two Language]

is the to on side. follow margin up First

the that quantification or economic Could we Because we year's in XX we little over gross more from that some coming And our assumption [ph] breakeven current second selling on what's on do the time on materially breakeven, down price? the the basically margin QX will from And City coming baking scale? does the our be normalizing from And they're ask, autonomous we could price the our next bit. Pilot. mix to of side? there? - items autonomous lithium also, profit margin capability be lithium support vehicle when improve expect our line QX see to increasing Pilot assumption talked the to City based So driving with [ph] was mainly in have the side improvement, to about a the mix driving it side, part the is push for

William Li

for [Foreign Thank Language] question. your Yuqian, you,

I carbonate fourth of cost the now, at is as quarter. actually is batteries. a like don't the expected of the previously, look because right point we course, this the sufficient going in now, down lithium can we market all companies of supply supply if I believe this not get - As car But the issue

the probably to it past course, resources, we around cost some the we expect is conservative. would XXX,XXX. For market and like the us the the of enter comes RMB be going RMB of lithium XXX,XXX company, planning year budget lithium be year, regarding more we of the past the lithium next so When to seen in resources the in - it carbonate to to have

is RMB the assumption carbonate year. around basically probably This for is judgment XXX,XXX. over regarding our next lithium cost So the

William Li

see need because to driving, are front. because gross several the margin. the vehicle margin believe the positive gross some to will The Language] parties contributions Recently, we some on legislations. the part [Foreign the factors. is do see we and the There of I feature the function and of development progress autonomous their autonomous and of For overall time legislation

And it need and pilot it to get we to years X launched MIT driving still legislations. mature us, has when programs for also some believe will to X the driving. example, probably autonomous For for comes technologies the autonomous

see So short the gross in expect the term, not they contribution the margin. from driving margin probably will gross vehicle and overall autonomous we to any significant the

Operator

comes ahead. question go Please Securities. Our next from [indiscernible] CITIC

Unidentified Analyst

[Foreign Language] first about inventory. So is my question

with is inventory on billion X. X. RMB quarter the compared around It doubled quarter is X.X So nearly

was comments So and ETX. poor does balance on cars efficiency. on It September. around imply number the we recently, performance on its because of on media negative inventory is this about energy some sheet? more hot XX,XXX question second social news really My But your see

next for wondering taking Thank the move I questions. with So was consumers' concerns. what to your my you deal

Stanley Qu

This is Stanny.

reasons. mainly One For in think of about the inventory inventory increase in our is QX, cars two I increase QX.

our in by QX. impacted Our production was [indiscernible] negatively

the ECX ECX, increased we of So production QX. and in

more inventory raw of the like component key other the increase also QX. production the materials coming because chips months, in stored of in the we to it's materials Secondly, secure and

factors inventory our all those So lead increase of stock. to the

William Li

the or power higher. the different it for power different [Foreign better. have be Yes, long is a choose performance the performance tire range ECX, But low the may users than tire the comes impact choose than going Language] if a the consumption. to tire and user tires resistance be much performance consumption to the the when consumption different will power If the

users, range, acceleration with the if within all course, remind of to you go really the better seconds, long-range drive rent. you the of care and a the like performance to would for then can X to if much like also go have would we So experience and performance ECX the comes it will you which more you when it's tire. with enjoy to But driving then better about tire, you handling the

William Li

[Foreign Language]

Operator

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

Eve Tang

once today. again Thank for you joining us

further you contact website. This through feel the information have If team Relations please the call. our concludes to the questions, on contact conference Investor free new provided

you. your now lines. Thank You disconnect may

Operator

has now concluded. for today's conference attending Thank The presentation. you

now disconnect. all You may

NIO (NIO) 10 Nov 222022 Q3 Earnings call transcript