NIO Inc Q4 2021 Earnings Call Transcript

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

Question: Tim Chau - Morgan Stanley - Analyst : Hi, William and Steven and Stanley. Congratulations on this early result and thanks for taking my questions. Basically, I have two questions. The first question is about the cost and margin. Because we know that NIO is better positioned to cope with the battery cost inflation even without a price hike, but may I know if the rising mix of the high-margin 100-kilowatt hour, 75-kilowatt hour hybrid battery pack, or other initiatives could have sufficiently offset a margin [prior to] this year? Separately, if any, or only if we need to raise the prices one day, could NIO increase the price to the consumers who bought the batteries and also the battery asset management companies simultaneously, or it would take longer to renegotiate a (inaudible) contract with the battery asset management company as it's more like a [2B] business. That's the first question. Second question is about the model. Currently, I think ES6 and ES8 have comprehensively covered the SUV market with pricing range from RMB350,000 to RMB600,000. Since we will soon launch ES7, as William just mentioned, how could we effectively differentiate ES7 from incumbent SUV models without [a fall in] dilution and are we going to adjust the pricing strategy or reposition current SUV models along with the launch of ES7? Those are the two questions from my side. Thank you.

Question: Tim Chau - Morgan Stanley - Analyst : Thank you.

Question: Bin Wang - Credit Suisse - Analyst : I actually have got a question about the ET7 service because recently there was a media call. First one, [EV] they say that ET7 received very good order flow, about 15,000 order backlog, which indicate monthly volume could be around 5K. What's your comment about this? Second thing is about the margin, because we've seen in the fourth quarter last year that service actually had very big negative cost margin, more than 30%. What's the reason behind that and what's the outlook of this fixed margin going forward? Meanwhile, you just provided 18% to 20% margin guidance. Is this just the vehicle gross margin or actually including the service margin already? Thank you.

Question: Bin Wang - Credit Suisse - Analyst : Okay.

Question: Ming Hsun Lee - Bank of America - Analyst : (Interpreted) So my question is regarding the capacity in lidar hybrid battery and also the chip especially if (inaudible) SHS also announced the chip shortage will cause the price hike. So, I also want to know whether the (inaudible) chip will constraint your vehicle delivery this year? (Spoken in foreign language)

Question: Ming Hsun Lee - Bank of America - Analyst : Thank you.

Question: Jeff Chung - Citi - Analyst : I've got three questions. So number one is should we consider any MSRP hike in the near term to offset potential battery and aluminum cost hike? If yes, how and if no, why not? The second question is about the existing [EC6] product sales volume visibility over the next few months. Any confidence we can maintain 10,000 units a month as well as the -- could you give us more color on the ET7 ramp-up pace in the second quarter? Last but not least is the lithium spot price in China. Do you think it has already peaked due to the recent government intervention? Thank you.

Question: Jeff Chung - Citi - Analyst : (Spoken in a foreign language)

Question: Nick Lai - J.P Morgan - Analyst : Yes, thank you for taking my question. Two simple questions. First on margin and the second on [export] business. I mean, William and [inaudible] talk about the GP margin already. Let me switch focus to the OP margin. Yes. Last year, we understand the R&D spend and assume an increase, a lot, in part, largely part due -- largely due to the top line increase. So, looking to 2022, how should we think about SG&A and R&D expense in terms of either dollar terms or percentage to revenue? Is it fair to state RMB percentage to revenue should increase - should drop meaningfully while SG&A should move more or less in tandem with the top-line sales? The second question is regarding [ASPOR]. I understand it's probably not a big portion of auto total sales but considering the latest dynamic in Europe and advising stronger revenue against either dollar or Euro, any update on ASPOR front? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2022 / 1:00AM, NIO.N - Q4 2021 NIO Inc Earnings Call

Question: Fei Fang - Goldman Sachs - Analyst : (Interpreted) Let me just quickly translate for myself. Can management talk a little bit about the utilization metrics of your infrastructure, battery swap stations, and Supercharger stations, how often people use it, what's the unit economics, or what's the difference between top cities versus lower-tier cities? Thank you.

Question: Edison Yu - Morgan Stanley - Analyst : Thank you for taking our questions. First one, can you give us some sense of the feature rollout cadence in the autonomous driving? What kind of features do you think the LiDAR will enable and when can we expect those to arrive on the car? And then the second question is about the NIO ecosystem more broadly speaking. There are reports that you're working on a smartphone. How do we think about what's going on beyond the car? I know there's - VR could be a big part. Any (inaudible) would be appreciated. Thank you. Unidentified Company Representative (Interpreted) Thank you for your question. Of course, and the timing of the delivery of the ET7 we are going to start to provide the enhanced [ADMS] features first to the users. But on top of that, we have already queued up the full stack of autonomous driving capabilities from the perception to the controlling strategy. We target to start providing the AD as a service probably in the fourth quarter of this year with our NAD technology. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2022 / 1:00AM, NIO.N - Q4 2021 NIO Inc Earnings Call Of course we have always been actively -- explore the possible connections and the synergies between the vehicle and smart phones and other mobile terminals because we believe there are lots of synergies between these two products in terms of the fundamental technologies, the supply chain and the software. At the launch of the ET5 at the NIO Day, we have also introduced some AR and VR technologies as well and we believe there should be lots of room for innovation and we can also think about some innovative applications in the vehicles.

Question: Xue Deng - CICC - Analyst : (Interpreted) So my next question is, what's the CapEx budget in 2022 and will you please introduce the detail about the main directions and the exact amount of money? Thank you. Unidentified Company Representative (Spoken in foreign language).

Question: Paul Gong - UBS - Analyst : Yes, hi, thanks for taking my question. Glad I still have a chance to ask how you went at this late moment. Let me just limit my question to one. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2022 / 1:00AM, NIO.N - Q4 2021 NIO Inc Earnings Call I want to know more about your thoughts about the mass market brands. Obviously, you have to compromise some of the features that NIO has for more attractive pricing points or some cost comparatives. So, the amount of the features for the new offering including say the exterior, the interior, the advanced driving features, the acceleration, the driving range, the battery swap stations, as well as let's say the digital experience and also the service. So, what do you think is the things that you are waiting to compromise on your mass market brands that would be reserved exclusively for the NIO brands and you're not expecting from the mass market brands? Just this question. Thank you.