NIO Inc Q2 2022 Earnings Call Transcript

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

Question: Tim Hsiao - Morgan Stanley - Analyst : (Spoken in Chinese). So, I've got two questions. The first one is about the component supply crunch, because the supply bottleneck continuously capped the sales outside of the models like ET7. Should we be concerned about any potential hiccups to the production of models like ES7 and ET5 in upcoming months? In light of fresh round of COVID outbreak in China, what has NIO team done so far to hedge the risk of potential disruption to the Company's upcoming models and even for next years that we are going to have the NT 2.0 upgrade for ES8, ES6 and EC6? So, what have we done to avoid this collateral risk to our production? The second question is about the chip set. Just want to learn that what's your take on the restriction to the export of high-end GPU from companies like NVIDIA and AMD to China? While near term the impact to auto industries should be pretty limited but would that accelerate NIO's plan of semiconductors, the localization in the upcoming models or even speed up the inhouse development of our own chips for functions like autonomous driving in the future? Thank you.

Question: Tim Hsiao - Morgan Stanley - Analyst : (Spoken in Chinese). REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 07, 2022 / 12:00PM, NIO.N - Q2 2022 NIO Inc Earnings Call

Question: Tim Hsiao - Morgan Stanley - Analyst : (Spoken in Chinese).

Question: Ming Hsun Lee - Bank of America - Analyst : (Spoken in Chinese) What is your latest guidance in SG&A and R&D ratio considering more industry competition and also overall slower sales for the industry? Do you have any new targets for your points of sale? Second question, your ET5 and ET7 had very good feedback during the Chengdu Auto Show, but currently there is more competition and product iteration in the industry. Will you speed up the new product launch? Also, could you give some guidance regarding your 2023 new model plan? Can you also share do you have any plans for a third brand? Thank you.

Question: Ming Hsun Lee - Bank of America - Analyst : (Spoken in Chinese)

Question: Bin Wang - Credit Suisse - Analyst : (Spoken in Chinese) My first question is about the full-year volume guidance. As per your earlier previous guide second half of year, the volume guidance will be 100,000 units. If you're considering third quarter guidance, that means that in that last quarter, number 4 quarter, your volume will be roughly around 68,000 units. Is that true or roughly say in October 20,000, in November 22,000 and December 24,000 to 25,000? Is that the right way to think about your volume progress? That's number 1 question. Number 2 is about the order backlog. We actually do some dealer check to call dealers. They told me that they've got three to four months' waiting list for all the new products, ES7, ET7 and ET5. So can I assume you got 15,000 orders for ES7, 15,000 for ET7 and roughly 55,000 for ET5, so together you got an 80,000 order backlog. Is that the right way to think about the auto backlog? That's the second question. The last one is about margin outlook in number 3 quarter. Based on second quarter guidance, previously you guide decline 4% q-on-q but right now the margins could be better than your guidance. What is your outlook for the number 3 quarter? You actually have increased the price two times for the old products. Should the third quarter gross margin return to a level in the first quarter this year? Thank you.

Question: Bin Wang - Credit Suisse - Analyst : (Spoken in Chinese)

Question: Jeff Chung - Citi - Analyst : (Spoken in Chinese) My first question is about the ET5 production capacity. How many ET5s can we produce in December? What is the pace on ET5's ramp-up from October to December? This is the first question. The second question is about the overall production ramp-up from September to December. Our third quarter guidance implied the September run rate should accelerate by 15% month on month. In order to meet our full-year's target, the October to December month-on-month run rate has to be at least 30% month-on-month every month. So, should we expect a straight-line ramp-up or accelerating pace, that December/November's portion could be more critical compared to October? Thank you. ***

Question: Jeff Chung - Citi - Analyst : (Spoken in Chinese). So my question is, if the production capacity reaches 10,000 units a month - okay, initial (spoken in Chinese).

Question: Jeff Chung - Citi - Analyst : (Spoken in Chinese).

Question: Edison Yu - Deutsche Bank - Analyst : Hey, thanks for taking the questions. First one, we noticed that William visited the US last month, and we're wondering what kind of decisions or perhaps considerations were taken while he was there, perhaps earlier entry into the US? Then the second question is, the original plan was to introduce a solid hybrid battery pack, I believe in the fourth quarter. Is there any updates to this? Is it still on track? (Spoken in Chinese).

Question: Edison Yu - Deutsche Bank - Analyst : Thank you.

Question: Paul Gong - UBS - Analyst : (Spoken in Chinese). So two questions from me. The first one is, have you realized that there might be some orders that have been placed by certain people who is not really intending to get the vehicle but just to jump the queue and try to sell the order to someone else for profit, which might inflate the orders and give some misleading information for your production plan? How do you prepare for that? My second question is regarding your secondary and [third](corrected by company after the call) brand preparation, ALPS and Firefly. We noticed that there are some orders have been entered with some suppliers, especially from the batteries and other components. Is there more color management can share compared to, let's say, two quarters ago?

Question: Paul Gong - UBS - Analyst : (Spoken in Chinese) Thank you so much.