NIO Inc Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Chung - Citi - Analyst : (Spoken in Chinese). So, I have two questions. One is the second quarter GP margin outlook. It looked like the high margin products as a percentage of sales in second quarter reach about 37% versus 17% in the first quarter. I think this one of the positives that may potentially lift up the GP margin trend. Secondly, there has been some MSRP hike recently and we would like to know how much of the sales volume from the second quarter has been price hikes versus the first quarter. Obviously, this the first question. The second question is that our new model cycle suggests that our current aging products, three products is going to turn into six new products into the next 6 or 12 months. So, my question is whether the third quarter production capacity can reach above 48,000 units since by referring to Tesla we saw a strong week-on-week and month-on-month recovery from the past weeks. My understanding is that a lot of our suppliers overlap with Tesla, so if Tesla recover fast, would that mean that we are going to enjoy the similar pace into June and the third quarter? Thank you. Xie xie.

Question: Tim Hsiao - Morgan Stanley - Analyst : (Spoken in Chinese). Let me translate my questions. The first question is about orders. Could you please provide further details (inaudible). The orders of ET7 dominate the current order intake, while the demand for incumbent SUV are falling more meaningfully and are we going to have facelift of our current SUV margin in time soon. And you mentioned the back-order book, does that include orders of ET5? My second question is about inventories. In the presentation, I think William mentioned NIO now has more than 400 really good battery-related technology, covering cell, pack, BMS and more. Will NIO consider developing more in battery production, or seek professional battery OEM vendors' help to produce the battery based on NIO's own patents and the technology? Those are my two questions, thank you.

Question: Bin Wang - Credit Suisse - Analyst : (Spoken in Chinese). I actually want to quantify the margin, because you actually said our second quarter will be a low margin. Can you say what's the level of the decline in margin, because you actually raise the price for current products by around RMB10,000. Can I assume that is the decline in the gross profit margin, a gross profit of RMB10,000. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 09, 2022 / 12:00PM, NIO.N - Q1 2022 NIO Inc Earnings Call You also mentioned that in the third quarter, we're back to normal. What's the back to normal that you're referring to? Are you referring to the 18% gross margin in the first quarter, or the last peak level of 21%? Meanwhile, I suppose you will further increase the price for the upcoming battery semiconductor (inaudible) cockpit version of current product. Is there going to be another increase in the cost margin? Thank you.

Question: Ming-Hsun Lee - Bank of America - Analyst : (Spoken in Chinese). My first question, could you also give us some guidance regarding your potential product pipeline for 2023? Especially for the 866, will you consider to launch the new generation in next year. Second question is regarding your services and other business. First, revenue slightly declined QoQ. Is it because of the COVID impact? Secondly, the gross margin of this business is also not very good for the quarter. Is this because of the lower utilization when you build a new battery swap station. What do we expect the margin improvement for this business?

Question: Nick Lai - JP Morgan - Analyst : (Spoken in Chinese) Let me explain very quickly my two questions. First is related to supply chain. Can you give an update on chip supply condition in June as well as second half as well as the pricing with battery supplier? Has the recent price hike reflected the cost increase in the first half and will battery cost continue to rise in the second half? Are we going raise our price again in second half as well? Secondly a quick update on mass market brand strategy, thank you.

Question: Paul Gong - UBS - Analyst : (Spoken in Chinese). Let me translate my questions. The first question is related to ES7. Why from unveiling launch until delivery it seems to be a lot faster than the previous ET7 or ET5 and how do you think about the cannibalization versus ES8, ES6 and EC6 given they are all SUVs of similar size? My second question is regarding the supply chain preparation for the NT2.0 Platform. Currently it seems that the ET7 production remains to be relatively slow in terms of ramp up and with pretty long waiting periods. In view, we're going to have ET5 with larger volume and ES7 in the pipeline, have we done enough work to ensure the key component supply to enable the ramp up of the overall NT2.0 platform models? Thank you.

Question: Yuqian Ding - HSBC - Analyst : (Spoken in Chinese). So I've got two questions. The first is to ask about whether our price hike in May is enough to cover the cost headwind from the battery side, aluminum body and also the chips alignment in the channel and what's the management thought about the actual cost and also the pricing strategy coming forward. The second question is to ask about ET5 volume and the margin conviction. We know there's a bit of (inaudible) splash on the entry luxury, which currently ET7 has been located within the segment and also previously we have designed 20% above margin, but back in time we haven't considered -- we might not consider the cost headwind coming from the commodity side might persist longer.

Question: Vijay Rakesh - Mizuho Securities - Analyst : Yes, hi, I have a quick two questions. On your in-house capacity with Hefei, you have talked about 240,000 annual capacity. Do you think you will get to that 20,000 a month run-rate by end of Q3 of this year, Q3 '22? The second question is on the NEO Park. That obviously has an incremental additional 300,000 per year capacity. You talked about ramp -- starting that in Q3. Can you walk through how that ramp should look? Will it be like 10,000 a month exiting this year and then gradually increase next year? That's it. Thank you very much.

Question: Jing Chang - CICC - Analyst : (Spoken in Chinese) My first question is about it was reported in May that we have relevant recruitment information in the United States, so can you share more details about it? How do you see the breakthroughs in overseas market? Which potential market we think has more potential for us to deployment and what are the difficulties? My second question is about NAD. Can you share more details about the current testing progress? Thank you.