A：Ok, good morning, welcome to the NIO 2025 second quarter performance conference. The company delivered 72,056 smart electric vehicles in the second quarter, a 25.6% increase from the same period last year.

A：Four future brand models will complete their 2025 renewal upgrades, aiming to enhance product competitiveness and gradually unleash the growth potential of the LeDao brand in the mainstream family market through the improvement of organizational efficiency and brand reputation momentum.

A：In July and August 2025, the company delivered 21,017 and 31,305 smart electric vehicles respectively. Since the launch of the L90 in late July and the release of the all-new ES8 in late August, market demand has been strong, greatly enhancing user confidence and driving overall sales growth for the company.

A：The overall gross profit margin of the company remains stable, while the gross profit margin of other businesses has achieved significant breakthroughs. Through the comprehensive implementation of cost reduction and efficiency improvement measures, the cost optimization effect is significant, and the second quarter non-GAAP operating loss narrowed by more than 30% compared to the previous quarter.

A：Since the second quarter, the flagship model ET9 has started full delivery, and has performed well in the executive flagship sedan market. We were the first to equip the self-developed Shen chip and global operating system in the ET9, and ensure that the 2025 models of ET5, ET7, EC6 and other models are stably equipped and smoothly apply this chip.

A：The all-new ES8 is positioned as a flagship SUV for all scenarios, meeting users' needs in all scenarios. It features original exquisite design language, the largest seating and loading space in its class, luxurious flagship-level safety assurance, and leading-edge intelligent driving and cabin experience. It is a highly competitive high-end, three-row SUV.

A：Since the official launch of the I90 on July 31st, orders have exceeded expectations, with a record-breaking delivery of 10,575 vehicles in the first month. We are working closely with our supply chain partners to increase production capacity in order to meet the strong market demand as soon as possible.

A：In June this year, NIO EP5, ET5, T, EC6, and ES6 respectively achieved first place in JD Power's China New Energy Vehicle New Car Quality Study Sub-Segments and Product Appeal Index Study. They also won first place in the luxury pure electric car category and second place overall. Since 2019, they have continuously held the first place position in this research sub-segment for seven consecutive years.

A：So far, we have opened 176 NIO Centers and 416 NIO Spaces, as well as 414 NIO Houses. In terms of service network, we have opened 388 service centers and 68 delivery centers. Our sales and service network have efficient collaborative operating capabilities and continue to receive extensive user acclaim.

A：Currently, there are a total of 3,542 battery swapping stations set up globally, including over 1,000 high-speed battery swapping stations in China, providing users with more than 84 million battery swapping services. At the same time, we have completed the deep coverage of battery swapping networks between major cities in the country, as well as the construction of battery swapping routes along National Highway 318, ensuring that NIO users can reach the base camp of Mount Everest through battery swapping services.

A：The three new brands are built on the company's top full-stack technological capabilities and a nationwide charging and swapping network, aiming to reach a broader user base, starting in Q3. The multi-brand strategy is intended to drive sales growth and capture greater market shares across various segments to further the company's mission of shaping a sustainable future.

A：The company has been concentrating on enhancing organizational capabilities through operational efficiency and execution, which has led to a significant optimization of R&D and sales service体系化效率. With the improvements in operational efficiency and execution, the company expects to see a substantial improvement in financial performance and the initiation of the next phase of development.

A：The total revenues for the second quarter of 2025 reached 19 billion RMB, an increase of 9% year over year and 57.9% quarter over quarter. Vehicle sales were 16.1 billion RMB, up 2.9% year over year and 62.3% quarter over quarter. Other sales were 2.9 billion RMB, growing 62.6% year over year and 37.1% quarter over quarter. The year over year growth in vehicle sales was balanced due to higher deliveries, partially offset by a lower average selling price from product make changes. The quarter over quarter increase was mainly from higher deliveries. The vehicle margin was 10.3%, compared with 12.2% in the second quarter of last year and 10.2% in the last quarter. The year over year decline in vehicle margin was mainly due to changes in production mix, partially offset by a lower material cost per unit. The quarter over quarter vehicle margin remained stable. The overall gross margin was 10%, versus 9.7% in the second quarter of last year and 7.6% in the last quarter. The year over year growth in gross margin was stable, and the quarter over quarter increase was mainly attributable to positive revenue mix effects, driven by the increase in revenue from used cars, technical services, and sales of parts and after-sales vehicle services.

A：The company is focusing on expanding production capacity with supply chain partners to meet the strong demand for the L90 and ESA models. The plan is to achieve a monthly production capacity of 15,000 units for the L90 by October and a single-month production capacity of 15,000 units for the ESA by December. The company's goal for the fourth quarter is an average monthly delivery of 50,000 units per brand, potentially exceeding 150,000 units in total for both brands. The company is aiming for an overall delivery target of 150,000 units for the fourth quarter.

A：In the second quarter, the vehicle margin was 10.3%, impacted by a product transition. In the third quarter, with the full quarter deliveries for the 2025 model year projects and the start of deliveries of the L90, the company expects the vehicle margin to further improve. The company anticipates a vehicle margin of around 16% to 17% for the entire group to achieve break-even in the fourth quarter. The other business profit in the second quarter was 8.2% due to various factors such as improved售后服务和金融服务利润, and reduced energy service losses. The company expects this profitability to continue in the second half of the year.

A：The company has been able to achieve cost-effective production for the L90 and ES8 through the沉淀 of technology, self-research of key零部件, and ongoing procurement and cost control measures. By the end of the year, the company expects to meet a 20% gross profit margin target for these models.

A：Other business ventures achieved a positive毛利率 of 8.2% in the second quarter, with contributions from售后和金融服务业务的利润提升, and the energy service's narrowing loss. Furthermore, the company made a notable profit from external basic services. This comprehensive approach resulted in a significant improvement in the company's overall profitability.

A：While acknowledging the variable nature of the company's external technology service revenue, which depends on the vehicle cycle, the company expects a stable quarterly profit margin for other business ventures, aiming for profitability or at least a slight loss in each quarter.

A：The company's guidance for the fourth quarter is not specifically detailed in the provided text. The inquiry regarding R&D and SG&A expenses, as well as the level of profitability, is not fully answered, as the speaker asks for detail but does not provide an explicit response. The company's approach to these inquiries remains pending further information.

A：Starting from the second quarter, we have made a lot of efforts in research and development expenses, combined with the basic operating unit mechanism. The goal is to gradually improve research and development efficiency without affecting the main output. This means that the upcoming product planning and research and development will not be affected, while also pushing the team to improve efficiency. For the third and fourth quarters, we hope to achieve a research and development expense target of 2 billion yuan per quarter. Our quarterly breakeven target is based on the long-term gross margin, and based on this year's RMDMFGNA guidance, we have taken a series of measures to control research and development expenses using the CPU mechanism, ensuring an increase in research and development efficiency without sacrificing mainline research activities and product planning. It is expected that in the third quarter, due to the introduction of new models and increased market activities, the breakeven target may not be reached, but in the fourth quarter, we hope to control the proportion of SGA (sales, general and administrative expenses) in sales revenue to be within 10% to support the achievement of the marketing goals in the fourth quarter.

A：The company is gradually increasing efficiency by combining the mechanisms of basic operating units. In the second quarter, when sales volume reached 70,000 units, the proportion of SG&A was relatively high, but as sales volume and revenue increase, this efficiency will gradually improve. Although in the third quarter expenses increased due to the launch of new car models and market activities, the breakeven target was not achieved, but we expect the SG&A ratio in sales revenue to decrease to less than 10% in the fourth quarter.

A：Currently, while the company is ensuring the production capacity of L90 and Championship, LeDao has adjusted the production capacity of L60 to L90 production. L60 has now become a product ordered according to OTP orders. Currently, the company has four models (L90 Panorama ES8, L60, FY Cloud Tiger City) with orders waiting for production and delivery. In October, LeDao's production capacity will be significantly alleviated, and the constructed capacity will increase to a reasonable level. In the past few months, efforts have been made with battery partners to increase supply.

A：The demand for the all-new ES8 is indeed better than originally planned, so the initial battery supply estimate was conservative. However, the company is working closely with battery suppliers to procure the necessary battery packs. In the fourth quarter, we expect the production capacity target for the entire new brand to be 25,000 units per month, and we are also working diligently to achieve this target.

A：Currently, production capacity is mainly used to meet the demand for existing models, so there will be no new product deliveries this year. The planned release of the L80 this year has been cancelled due to production capacity issues. However, a decision on whether to release it will be made based on market conditions. Next year, the company will deliver three large SUV models, including the known ESQ and the flagship SUVEST, as well as the all-new ES8. In addition, the focus this year will be on the launch of the all-new ES8.

A：The company is committed to achieving a 20% gross profit margin. According to the previously set brand gross profit target, it will continue to strive and is expected to achieve or even exceed the 25% target in the future. LeDao plans to further increase the gross profit margin on the basis of 15%, while Firefly aims to maintain at around 10%. For the already listed ES8 and L9, as well as new models next year, the company hopes to be well prepared during the product definition stage, providing powerful cost support for aggressive pricing, ensuring that the new generation of products are competitively priced compared to the previous generation.

A：We utilized integrated automotive R&D capabilities, through innovative central processing unit and regional controller architecture, enabling the entire vehicle to not only support rich functionalities in terms of intelligence, but also achieve advantages in cost and weight. For example, the highly integrated intelligent insurance system integrates traditional insurance equipment that originally occupied nearly 10 kilograms and 8 liters of volume onto the motherboard, and effectively manages the overall vehicle electrical power consumption, thus reducing costs.

A：We have chosen the electronic pack size that best suits user needs through a technology roadmap that is audible, interchangeable, and upgradable. Unlike some peers who enhance the range of electric vehicles by using lithium iron phosphate batteries to create large capacity batteries (for example, achieving 96 or 100 degrees of electricity), we focus on the energy density and lightweight design of battery packs. For example, our 85-degree battery pack weighs only over 400 kilograms, while similar 90 or 100-degree battery packs in the industry typically weigh between 600 and 700 kilograms. This indicates that our technological architecture has significant advantages in terms of weight and cost.

A：The overall market competitiveness of the third generation product is actually increasing, which is reflected not only in product performance but also in the optimization of cost structure. Through continuous technological innovation, such as the use of 900-volt architecture, we have achieved a more integrated and lightweight design, integrating not only the power system and the entire vehicle's high-voltage architecture, but also improving performance and lightweight design, thereby improving cost structure and competitiveness in experience.

A：We have established a cooperative relationship with our supply chain partners based on shared beliefs and long-term development possibilities in technology roadmaps, committed to forming close cooperation in new technology roadmaps and long-term development. In the past one or two years, we have adjusted our supply chain strategy, focusing more on establishing close connections with partners who identify with the company's technology roadmap and development potential. In the future, in the targeted strategy of the new platform, we will be more resolute in implementing a partner-centered concept, jointly setting cost targets and other goals.

A：Due to our optimization strategy for battery resources, the competitiveness of the vehicle lineup has been enhanced. As for the issue of the increased cost of the new model, we have already mentioned it in previous policy announcements and communications with users. On the 5566 model, we have provided users with many promotional offers when it was released in 2025. This price adjustment is actually to recover these promotional offers, such as including the 38,000 yuan promotional discount. Therefore, from the perspective of the final transaction price - the transaction price, there is basically no significant change. Therefore, this adjustment will not have a significant impact on our transaction price and the gross profit of 5566.

A：This year, we have made significant improvements to the CPU mechanism, optimized the RND process, and increased the ROI of RMD activities and investments. It is expected that the non-GAAP R&D expenses for the next quarter will be approximately between 2 and 2.5 billion Chinese yuan per quarter, which is a reasonable range that will help us maintain long-term competitiveness. From a technical perspective, the main feasibility comes from the development of new car models, as we believe that most of the foundational RND activities and technical investments have already been completed. In the fourth quarter of this year, we have been busy but have also focused on balancing, ensuring long-term development without affecting mainstream production. We have set RND goals to ensure that the output of mainstream products is not affected and to control SGNA expenses within a certain proportion of total sales revenue, as part of achieving our profit and loss targets. In the long term, we expect R&D expenses to be between 2 and 2.5 billion Chinese yuan per quarter in 2026, which will be adjusted based on the pace of new product launches. At the same time, we hope to continue our efforts to achieve higher project goals.

A：The current car market in China is extremely competitive, especially in the sales of smart electric cars which exhibit a significant new car release effect followed by a stable sales period. In the market, we rarely see a car model that can achieve long-term large-scale sales, posing a significant challenge for us and making it difficult to provide a specific long-term stable number. However, we will definitely strive towards higher goals. This year, we have been developing a new marketing paradigm for the L90 and ESA models to extend the new car effect as much as possible and maintain a high level of stability. However, to be realistic, this challenge is very significant, and we will need some time to evaluate whether this new marketing paradigm can help these two competitive products reach a satisfactory stable sales level for the market, investors, and users.