NIO Inc Q2 2024 Earnings Call Transcript

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

Question: Tim Hsiao - Morgan Stanley - Analyst : Hi, management team, and thanks for taking my question. I have two questions. The first question is about our new model, L60, because L60 started presale in mid-May. And since then, I think the model has received tens of thousands of preorders, which is very robust compared to all the new launches lately. But how could you also ensure a high conversion rate this time after the official launch on September 19? Would the company consider getting more aggressive with the official pricing given the competition? And in the meantime, what client and supply chain preparation the team has done to avoid any potential supply disruption after the delivery starts? That's my first question. Thank you.

Question: Tim Hsiao - Morgan Stanley - Analyst : Sure. Thank you, William, for sharing the details. My second question is about the NIO brand, vehicles under NIO brand. Because we noticed the monthly sales of models on the NIO brand have stabilized at the 20,000 levels in second quarter. So looking forward, would there be any further upside to the vehicle sales and the gross profit margin based on the current product portfolio? If yes, please share with us where would be the upside to the volume and the margin of NIO-branded vehicles are coming from? That's my second question. Thank you. 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 05, 2024 / 12:00PM, NIO.N - Q2 2024 NIO Inc Earnings Call

Question: Tim Hsiao - Morgan Stanley - Analyst : Thank you very much, William and Stanley. Thanks for the audience, and looking forward to the L60 launch. Thank you.

Question: Bin Wang - Deutsche Bank - Analyst : Okay. Thank you so much. My first question is also about ONVO L60. Previously, you mentioned that this year, your volume target is about 20,000 units. Given the strong order, do you still maintain such a volume target? And if you could break down by month because we are not exactly in the end of the month, so what's the progress for October, November, December? So that is my first question. 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 05, 2024 / 12:00PM, NIO.N - Q2 2024 NIO Inc Earnings Call And second question is about the expense, SG&A expense. It seems like expenses keep increasing. What's your targets for this quarterly SG&A expense? Do you have guidance for each quarter in the upcoming second half? Thank you.

Question: Bin Wang - Deutsche Bank - Analyst : Thank you.

Question: Tina Hou - Goldman Sachs - Analyst : Thanks for taking my question. So my first question is also regarding on ONVO L60. So just wondering at, let's say, 10,000 volume in December this year and 20,000 volume next year, what kind of gross margin should be reasonable for this model? Also, as we are ramping up to higher and higher volume, what is our capacity expansion plan and also CapEx plan for 2025 and maybe 2026? Should we expect CapEx to become higher versus 2024? So that's the first question. 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 05, 2024 / 12:00PM, NIO.N - Q2 2024 NIO Inc Earnings Call The second question is also regarding the sales and marketing expense. So we had over 30% SG&A expense growth in the second quarter. Wondering, could you give more details on the sub-items, which is the one that's growing the fastest? And also, is any of the sales policy recorded in the SG&A expense? Yeah, so that's my second question. Thanks.

Question: Tina Hou - Goldman Sachs - Analyst : Thank you so much. Can I have a very quick follow-up? So in terms of ONVO store, do you have the average store rental cost versus NIO store? And also, how many employees do you plan to deploy in an ONVO store versus that of a NIO store? Thank you. 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 05, 2024 / 12:00PM, NIO.N - Q2 2024 NIO Inc Earnings Call

Question: Tina Hou - Goldman Sachs - Analyst : (spoken in Chinese)

Question: Yuqian Ding - HSBC - Analyst : Thank you, team. Yuqian Ding here. I've got two questions. First is about autonomous driving programs, and second is about market and competition dynamics. First question, could you share the NIO NOP progress? Especially, could you break down in terms of the consumer take rate, our disengagement rate, scenario coverage, the regional expansion, these aspects? The second question is to ask -- against the backdrop of -- in the premium EV segment, there's a couple of new models coming, especially in the coming months until the end of the year. And also, we noticed the high-tier city versus the low-tier city, the consumer consumption is sliding in general and more so than the low-tier city. So could you help us to get comfortable and a conviction on NIO and ONVO's portfolio product technology and service expansion could counter these macro headwinds and still book growth quarter-on-quarter perspective, maybe in an aspect of channel order momentum and the latest consumer feedback? Thank you.

Question: Yuqian Ding - HSBC - Analyst : Awesome. Thank you.

Question: Paul Gong - UBS - Analyst : Hi, William. Thanks for taking my questions. Two questions here. The first one is regarding the flagship sedan, ET9. I think it was announced to schedule for launch in Q1 next year. Is that still on schedule? And can you give some updates regarding this model in terms of the position in new technology adoption as well as, say, the target volume outlook? Yeah. The second question is regarding the overseas expansion. You are going to open the store in UAE and start delivering there. Is that a signal of the change of a direction as a result of the EU tariff that you are switching the direction from Europe into Middle East? Also, one of your peers has nowadays been delivering over 10% of their volume into the overseas markets. Do you think this serves as a benchmark for your overseas expansion over the next one or two years? Thank you.

Question: Paul Gong - UBS - Analyst : Thank you. That's quite helpful.

Question: Ming-Hsun Lee - Bank of America - Analyst : Hello. William and Stanley, I also have two questions. So my first question is more related to the overall macro. So in your view, what is the potential growth rate for the China EV market in the next few years? Because I think recently, some investors expect that the EV penetration will slow down because right now, the EV penetration is already very high. So yeah, just in your view, what is the EV penetration in the next three years? Yeah. That's my first question. And my second question is regarding the Firefly pipeline. So right now, will you launch one or two models in 2025 for Firefly? Yeah, thank you. That's my two questions.

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

Question: Jing Chang - CICC - Analyst : Okay, thank you for taking my questions. I have two questions. The first is in regard to our NIO operating system, SkyOS, which has been released in July. So it has shown very comprehensive and invest our software self-development ability. So can you just introduce -- and ask more details -- so what are the technical challenges we have faced and what advantages and also the improvement of our product can be brought by the new system? So this is the first question. The second is with regard to the other income, gross profit margin. We have seen the second -- in the second quarter, the gross profit margin has improved significantly. So how to understand these major drivers? And also what's our forecast for the trend and the continuity of the margin improvement in the future? So also, with our growth of our sales volume, can we see that our -- especially charging and battery swap business can turn to profit in future? 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 05, 2024 / 12:00PM, NIO.N - Q2 2024 NIO Inc Earnings Call