During the first quarter of 2025, Neo Incorporators saw a 4.1% year-over-year increase in smart electric vehicle deliveries, with a total of 42,094 units. The company expects Q2 deliveries to grow by 25.5% to 30.7% year-over-year, driven by the successful launch and growing demand for new models such as the E6, E5, and E5P. Financially, the company reported cost reduction efforts and growth in vehicle and overall gross margins. The company also highlighted the debut of several new models at the Shanghai show, including a smart large flagship SUV and a smart small car brand, which have drawn strong interest and are expected to contribute to future growth.

By June 04, 2025, the company has deployed new smart driving chips and systems in flagship models, enhancing product competitiveness and vehicle cost structure. Innovations include upgrades in active safety, urban and highway driving, and parking, with a focus on real-time comprehensive understanding and reasoning of model information. The company has also significantly expanded its service network, including over 3400 power stations and partnerships in 18 core markets worldwide, aiming to deliver a seamless and smart driving experience globally.

On April 7, Nio completed a significant share opening in Hong Kong, raising over HK$4 billion, with the financial round heavily oversubscribed by global long-term investors. Anticipating challenges in 2025, particularly in the latter half with core model releases, the company aims to accelerate deliveries from Q3. This acceleration is expected to be driven by stronger sales, reduced supply chain costs, and enhanced operational efficiency from new products and technologies. Since Q1, Nio has implemented state investment and return reviews, optimizing service functions and business unit mechanisms, setting clear operational and ROI goals. The organization has undergone restructuring and team consolidation, focusing on value-driven projects to boost productivity and cost efficiency. These measures began taking effect in Q2 and are projected to continue improving margins and cost control throughout the year, with confidence in enhancing the financial position by Q2 and achieving full-year business targets.

Total revenues reached 12 billion RMB, marking a 21.5% year-over-year increase but a 38.9% quarter-over-quarter decrease. Sales saw an 18.6% year-over-year rise and a 43.1% quarter-over-quarter fall. Other sales grew by 37.2% annually and dropped 5.9% sequentially. Vehicle margin stood at 10.2%, up from 9.2% YoY but down from 13.1% QoQ, while overall gross margin was 7.6%, up from 4.9% YoY but down from 11.7% QoQ. Revenue growth was attributed to higher deliveries and sales of parts, services, and used cars, while margin changes were influenced by material costs, product mix, and manufacturing costs.

The year-over-year financial growth was driven by increased sales in parts, accessories, vehicle services, and technical energy services, higher vehicle margins, and reduced growth loss rates from power solutions. However, quarter-over-quarter decreases were attributed to lower vehicle margins and decreased design and development costs. SG&A expenses saw significant year-over-year increases due to higher personnel costs and sales activities, while quarter-over-quarter decreases were mainly due to reduced sales and marketing activities. The company faces challenges in achieving previous sales targets despite the launch of new models, prompting inquiries into strategies for boosting sales of existing series.

NIO anticipates delivering around 25,000 to 28,000 units in June 2025, with the core volume driven by newly launched models. Despite a 10% price increase from the previous generation, the company aims for a balance between sales volume and selling prices to improve gross profit. Operational efficiency improvements and the introduction of the next-generation ES 8 in Q4 are expected to boost monthly deliveries to around 25,000 units with a 20% vehicle gross margin. Cost-cutting measures implemented over the past six months are expected to contribute significantly to financial improvements in the second half of the year.

Since March, the company has implemented various cost control and efficiency improvement measures. Key aspects include reviewing and sorting out all major projects and organizations, optimizing RD resources through a new mechanism called Vehicle Project Online, restructuring logistics, quality, and supply chain functions, and consolidating teams in sales and service. Targets include a 15% reduction in RD spending for Q2, excluding one-off impacts, and controlling RD expenses within 2 to 2.5 billion R&D per quarter by Q4, representing a 20% to 25% YoY decrease. SG&A expenses will also be managed prudently, aiming for a reduction quarter-over-quarter and controlling non-NCAA SG&A expenses within 10% of sales revenue by Q4.

The new smart driving version based on the updated model has been released to users of the second generation platform products. Users' responses are awaited to evaluate its performance against the original solution. There's a focus on whether the cost savings achieved by using custom-designed chips will be passed on to consumers in future models.

A series of active safety features based on an end-to-end architecture has been released, resulting in a significant decrease in accidents and enhanced battery driving safety. Notably, the emergency safety pull-over feature is highlighted as a first in the industry, aligning with the vision to reduce traffic accidents through smart driving technology.

The NWM-based smart driving version significantly improves user experience in driving and parking, offering seamless automatic navigation, particularly in urban and highway scenarios. Continuous iteration based on user feedback aims to further enhance the system's usability and functionality.

In April, significant organizational and operational changes were implemented, leading to a 40% increase in monthly deliveries of the L 60 model in May. The L 60 ranks among the top three best-selling battery electric vehicles in its price segment, showcasing strong market performance. Further strategies include improving store operating efficiency, expanding the battery swap and charging network, and utilizing power swap stations as sales points in lower tier cities to reduce physical costs.

The company anticipates a significant increase in sales for the L 60 model, aiming for over 10,000 units monthly, and plans to release the L 19 in Q3 with high user anticipation. Additionally, the L 90, noted for its large space and energy efficiency, is expected to be a game changer in the three-row SUV segment. The L 80 project is set for Q4 release, aiming to achieve a combined monthly delivery target of 25,000 units across three products by the end of the year, all targeting the family segment with high-quality experiences.

The company achieved a product transition and launched the new 85 85 T E 6 model, resulting in an increase in average market price and a significant cost reduction of around 10000 RMB per unit due to in-house semiconductor development. This led to a vehicle growth margin improvement to around 15% for the new brand. For the Ammo brand, while only having the L 60 model in Q2, cost improvements are expected with growing volume. The major growth margin driver for Ammo will occur in Q3 with the launch of the new model. The overall goal is to achieve a double-digit growth margin in Q2.

In June 2025, Neil Corporation discusses the successful transition of their core volume products, noting improved margins post-promotions aimed at clearing older inventory. They outline expectations for a significant increase in sales volume and improved margins, targeting a break-even point by the fourth quarter of 2025. The company highlights their confidence in achieving operational targets and profitability, attributing their strategy to intensive investments in product development, multi-brand strategy, and network development.

Following the late May release of the new ES 6, 86, 85, and 80 models, the majority of market feedback has been positive, highlighting improvements in product competitiveness, particularly in chip technology, operating systems, and active safety features. Despite some concerns over the continued use of 400V batteries instead of 900V, the company emphasizes enhanced energy efficiency, extended driving range, and the availability of a power swap network for a seamless user experience. Flexible battery upgrade options for the new models further address range requirements, offering upgrades to 100kW and 150kW batteries for increased driving distances.

The company plans to maintain separate sales channels for its R and Firefly products while integrating backend operations for efficiency and synergy. Battery swap stations are being piloted as sales touchpoints, demonstrating significant value in attracting customers, particularly in regions without traditional showrooms, highlighting the unique selling proposition of the brand's products.

The dialogue discusses the strategic positioning of two new high-priced models, LMI and L80, in the family-oriented electric SUV market amidst signs of consumption downgrade. Key points include the models' innovative design, large space, and energy efficiency, addressing family users' needs. The conversation also highlights the turning point for growth in the mid to large electric SUV segment, driven by technological innovation and decreasing battery costs.

Due to lower cash position and high Gering ratio, the company experienced an outflow of working capital and capital expenses. However, fundraising efforts and increasing sales volume are expected to improve operating cash flow, with a target of achieving positive free cash flow by the end of the year. Cost reduction and efficiency improvement measures will also be implemented to control expenses.

The discussion focuses on the strategic priorities for overseas market expansion, particularly in the European market, considering the volume achieved in the previous year and the rapid growth of competing brands. Key points include sales targets for 2025, the impact of potential tariff policy adjustments, details on the global expansion of Firefly including timing, regional priorities, and pricing strategy.

Starting this year, the company has transitioned from a direct sales model to collaborating with local partners in various countries for global expansion. Already partnered in over 15 markets, the strategy includes a long-term view for the Firefly brand's international development, rolling out to multiple European countries and others. Product offerings from the O and new brand will adapt based on market demand, without aggressive volume targets for the global market.

The company plans to meet the targeted monthly volume of over 60,000 by Q4 2025 through current production capacity, with flexibility for double shifts and new factory operations starting in September. Working capital management is under review, with attention to elongated account payable days, account receivable days, and inventory days, aiming for optimized cash conversion cycles.

The company is transitioning from an order-to-delivery model to an inventory-based sales approach to meet consumer demand for immediate vehicle pickup amidst increasing market competition. This shift leads to higher inventory levels of vehicles and production materials, with a targeted inventory level of one third to half of the monthly sales volume per brand. Strict control over inventory is maintained to ensure efficiency. Regarding accounts payable, the standard payment term to suppliers remains at 90 days, with variations depending on supplier type and urgency, allowing for either 50% cash payment or 100% cash payment within 60 days. As sales volume grows, the purchasing value from suppliers increases, resulting in a rising level of accounts payable, which is considered normal and directly correlates with production volume.