NIO Inc.

Good morning and good evening, everyone. Welcome to NIO's first quarter 2025 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. On today's call, we have Mr. William Lee, founder, chairman of the board and CEO, and Ms. Danny Chu, chief financial officer. Before we continue, please be kindly reminded that Today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security 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. 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. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that new earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. Please refer to new press release which contains a reconciliation of the unaudited non-gap measures to comparable gap measures. With that, I will now turn the call over to our CEO, Mr. William Lee. William, please go ahead.

Hello, everyone. Thank you for joining NIO's 2025 Q1 earnings call. In Q1, the company delivered 42,094 smart EVs, up 40.1% year-over-year. This includes 27,313 deliveries from NIO and 14,781 deliveries from Envo. Since Q2, the company's deliveries have picked up pace month-over-month, supported by a solid start of delivery 89,500 and a growing demand for angle L60. In April and May, the total deliveries were 23,923,231. In late May, We successfully launched and delivered the new ES6, EC6, ET5, and ET5P. We expect total deliveries in Q2 to be between 72,000 and 75,000, representing 25.5% to 30.7% growth year-over-year. On the financial side, The company continues the cost reduction efforts on all fronts, achieving year-over-year growth in both vehicle gross margin and overall gross margin. Now, I'd like to share some updates on our products and operations. For the new brand, the delivery of ET9, NIO's executive flagships then surpassed BMW 7 Series and Audi A8 L in China in the first four delivery months. This marks the first time that our Chinese brand has made a breakthrough in the premium executive segment long led by BBA. On May 16, we launched the new ES6 and EC6 and started delivery on May 20. On May 25, the new ET5 and ET5T were launched and the delivery started on May 27. These upgraded models deliver greater perceived value and product strength, along with major improvements in cost. For the new brand, for the Anva brand, since April, Anva has rolled out a series of operational and organizational adjustments, significantly improving the productivity and operation efficiency of the sales force. Such a change also shifted Anvo towards a positive cycle of brand awareness and product reputation. With that, Anvo's orders have been rising steadily since late April. Anvo's second product, L90, a smart large-space flagship SUV, made its debut on Shanghai Auto Show. With a class-leading space, ultra-low energy consumption, and the extensive charging and swapping network. Anpo L90 has drawn strong interest from three-row SUV buyers. This model will be launched and delivered in Q3. The smart electric high-end small car brand Firefly has started product delivery in late April. Engineered for the five-star safety in China and Europe and with a thoughtful space, smart digital experience, and vivid driving dynamics, Firefly stands out in its segment. In terms of tech innovation, NIO's smart driving chip NS9031 has been deployed in the flagship model 89, as well as the new ES6, EC6, ET5, and ET5T, and will be rolled out on more new models of NIO. These new models are also equipped with near-to-full-domain vehicle operating system SkyOS and the intelligent chassis system. Such innovations not only enhance the product competitiveness and also improve the vehicle cost structure. As for smart driving, the first near-world mode-based version has been rolled out to vehicles on the Banyan platform since late May. The New World Model, or NWM, provides full upgrades in active safety, urban and highway driving, as well as parking, especially in key areas of active safety. NWM brings enhancements in handling driver emergency, mitigating and preventing rear collisions, and recognizing general objects Based on NWM's comprehensive understanding and reasoning of much model information in real time, Navigate on Pilot Plus or NOP Plus can guide cars through toll gates across China with automatic navigation to frequent parking spots, as well as map-less and non-memory-based wayfinding in parking lots. NOP Plus also delivers a seamless point-to-point smart driving experience. NIO's world model will continue to iterate, bringing safer and smarter driving costs to all scenarios. So far, NIO operates 184 NIO houses and 461 NIO spaces, and ANVIL has and 45 stores in China. On the service side, the company operates 391 service centers and 66 delivery centers. We will continue to improve efficiency and resource allocation through better operations and performance evaluation across the sales network. As of now, the company has 3,408 power source stations worldwide. including 989 stations on highways in China, and has provided over 75 million swaps to users. Besides, NIO has installed over 26,000 power chargers and destination chargers. To date, Niel's post-war network has achieved country-level coverage in Beijing, Shanghai, Jiangsu, Zhejiang, Guangdong, and Tianjin. Next, we will continue to expand the coverage through partnerships with site operations, great companies, and capital investors. In international expansion, NIO has partnered with more than 10 local partners in over 15 core markets worldwide, and is onboarding more partners. In Q3, Firefly will roll out in various markets, delivering global user experience beyond expectations. On April 7, NIO completed a share offering in Hong Kong, Raising over 4 billion Hong Kong dollars, this financial round was over-subscribed multiple times and has brought in a number of global long-term investors. 2025 is the harvest year for products. As multiple core models are to be launched in the second half, The company's deliveries are set to accelerate from Q3 with stronger sales, lower supply chain costs, and better boom efficiency from new products and technologies. Both vehicle and the overall cost margin will keep improving. In improving operational efficiency since Q1, they've implemented strict investment and return reviews of costs on the supply chain, SaaS, and service functions under the SaaS business unit mechanism. We have set clear goals for operationals and ROI. We structure the organization and consolidate teams, prioritize high-value projects, and introduce plans to improve productivity and cost efficiency. Measures have taken hold in Q2 and will continue through the year. With growing sales, improving margins, and better cost control, we are confident in improving the company's financial position starting Q2 and meeting our four-year business targets. Thank you for your support. With that, I will now turn the call over to Stanley for Q1 financial details.

Over to Stanley. Thank you, William. Let's now review our key financial results for the first quarter of 2025. Our total revenues reached 12 billion RMB, increased 21.5% year-over-year, and decreased 38.9% quarter-over-quarter. Legal sales were 9.9 billion RMB, up 18.6% year-over-year and down 43.1% quarter-over-quarter. The year-over-year growth was mainly due to higher deliveries, partially offset by a lower average selling price from product make changes. The quarter-over-quarter decrease was mainly attributable to fewer deliveries impacted by seasonality. Other sales were 2.1 billion RMB, grew by 37.2% year-over-year, and decreased 5.9% quarter-over-quarter. The annual growth was from increased sales of parts after sales of vehicle services and provision of power solutions, along with a rise in sales of used cars and technical R&D services. The decrease quarter over quarter was due to decreased sales in technical R&D services and auto financing services. Looking at margins, vehicle margin was 10.2%. compared with 9.2% in Q1 last year and 13.1% last quarter. The year-over-year increase was mainly due to lower material costs per unit, partially offset by changes in product mix. The quarter-over-quarter decline was mainly due to the increased manufacturing cost per unit from lower production volume. Overall gross margin was 7.6%, compared with 4.9% in Q1 last year, and 11.7% last quarter. The year-over-year increase was mainly driven by, first, higher sales of parts, accessories, after-sales vehicle services, and technical R&D services, which carry relatively higher margins. Second, higher vehicle margin. And third, the reduced gross loss rates from power solutions as our user base grew. the decrease quarter-over-quarter was mainly attributable to lower vehicle margin. Turning to OPEX, R&D expenses were 3.2 billion RMB, increased 11.1% year-over-year, and decreased 12.5% quarter-over-quarter. The year-over-year increase was mainly due to the incremental design and development costs for the new products and technologies. as well as the increased personnel cost in R&D functions. The quarter-over-quarter decrease was mainly driven by decreased design and development costs resulting from different stages of development, partially offset by increased personnel costs. SG&E expenses were 4.4 billion RMB, up 46.8% year-over-year. at a down 9.8% quarter-over-quarter. The year-over-year increase was mainly driven by the increase in personnel costs related to sales functions and the increase in sales and marketing activities. The quarter-over-quarter decrease was mainly due to the decrease in sales and marketing activities and professional services partially offset by the incremental personnel costs. Loss from operations was 6.4 billion RMB, up 19% year-over-year and 6.4% quarter-over-quarter. Net loss was 6.8 billion RMB, showing an increase of 30.2% year-over-year and a decrease of 5.1% year-over-quarter. That wraps up our prepared remarks. For more information and the details of our audited first quarter 2025 financial results, please refer to our earnings press release. Now I will turn the call over to the operator to start our Q&A session. Thank you.