NIO (NIO) 5 Sep 242024 Q2 Earnings call transcript

Hello, ladies and gentlemen, thank you for standing by for NIO Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

I'll now turn the call over to your host, Mr. Investor the of Head Chen, Relations company. of Rui go ahead, Rui. Please

and evening, Good Conference to financial posted published on morning today you. IR release everyone. the Call. results press in and company's the Earnings Thank and XXXX good Welcome earlier were Quarter NIO's The website. company's operating Second

On today's and William Financial Executive and Officer; Mr. Chief Qu, Officer. Chairman Chief Founder, call, Li, we Ms. have Board of Stanley the

contain reminded Private Before made forward-looking Act we will be today's provisions statements U.S. kindly the the that of continue, Securities harbor safe under discussion please Reform XXXX. of Litigation

Forward-looking statements and involve inherent risks uncertainties.

the Exchange company's the of assume does with Exchange company Securities regarding such, the and Kong statements, except the under views be today. Hong actual As Limited. of the materially risks as different in update from forward-looking Limited company not results Trading Securities may included Singapore any the uncertainties required Commission, U.S. law. information Stock Further is Exchange expressed filings The any to obligation and applicable certain

go contains to the call that, press that our comparable I non-GAAP note conference the and over financial Mr. this turn as GAAP call discussions Please measures. With as of press to unaudited CEO, unaudited measures. non-GAAP refer release measures also Li. NIO's financial which unaudited of earnings release ahead. information please Please a GAAP include reconciliation well NIO's William, to will now William

technologies, XXX,XXX. competitiveness community and NIO NT services first user year completes products. you model of of Thank the NIO's Hello, everyone. the as the the the further meantime, and X.X over transaction In of BEVs QX its units, grow. up RMB China, In for joining brand by its order share enhancing higher NIO's In continues record QX [indiscernible], half Call. had in products, XXX.X%. XXXX among this XX% year, Earnings price the the XXXX recognized with to were NIO XX,XXX a reached a market quarterly all people, delivery more than delivery models NIO's intake

continuously July delivery and XX,XXX, XXX,XXX to between respectively. total units. been was than has been consecutive mix XX,XXX in product is months. optimized. NIO's X more August, the expected delivery QX for delivery The be and QX, In NIO's had With and monthly that, XX,XXX Since XX,XXX

In NIO's margin terms vehicle in performance, cost financial components the continuous XX.X%. of supply to of increased core the with QX and chain, optimization

that continued As from user witnessed The larger and vibrant, quarter the after-sales product more gross became to growth improve. the revenues sales other community of second and services. in also margin

to products, the and full-domain of we tape-out recent with like share event, for our On in of smart Moreover, XXXX. chip NIO successful the also smart [indiscernible]. driving. introduced system, the announced would you highlights operations. the At we our operating NXXXXX, in-house system, Slide the I NIO Now developed R&D Shenji XX, and hosted SkyOS

As increase July, makes traditional for based AEB with NAD, the the released coverage than its system capabilities. In driving on AEB. end-to-end NIO continued was to first better safer. It scenario architecture X.Xx function industry's

model, spend is we effort September With to this strong will the going late demand. its mass launch and start in XX, use the brand-new be product, the year. NWM, and for This family-centric this NWM. On the ONVO confidence LXX, Arch expenses all-around ramping based up Inc., NIO second released. was market no introduced delivery and first in X.X architecture Arch advanced on also architecture and celebrate our X.X most of Model, of in production of September. the the Nio driving. NIO also NAD in smart will fulfilling market brand, At end-to-end World half will the features we NAD is released

XXX over as network and swap we over and stores charging Houses XX has the by for services, XX,XXX and stations stores Quick far, over and have has has the of is as XXX cities, For Besides, brand installed X,XXX XXX the XX recharging opened provided as power NIO owners brand NIO well -- centers. to power and and so the swapping worldwide XXX The million XX in XXX centers and has ICE NIO hassle-free EV. NIO NIO service the the chargers and already convincing destination has year-end. at chargers. delivery About over ONVO swaps. now, year critical of sales Spaces, end drive

counties On will will in XXXX, further support become and Chinese market also Power where To XXXX, and the of In reach Up in in more with NIO growth. event, we network available the Counties. Mainland. of The of the the swapping charging announced the of Up Up August charging XX, first help announced NIO an available Partner better the continuous Power network ONVO and X,XXX this drive end in By than become Plan, we the partner. will NIO's deployment Power half and swapping China. hosted initiative, network we expand the agreement sales first country signed plan every of the

the opportunities ensuring to market On be efficient for operations, live, products and UAE in worldwide, products UAE international actively investment went the As markets. introducing delivered will in and development, XX, controllable launched NIO's website evaluate will we while also we expansion. August QX, are accelerating and

of In Power global experience respective for NEV only through NIO ranking June, providing its Ever J.D. years. the cycle user winning establishment, company study released quality since NIO also the segments. models early life NIO the X management. to and itself consecutive committed in ranked top has quality NEV, been in by great a is benchmark quality highest making

meets In quest system with aspires and NIO and innovative business brand funded rolled external the the Blue excellence. a market as value as a July. where and has Coming, NIO bright experience of as company's the we in international future envisions for the shape the strategy enterprise a XX been As sustainable to Sky almost itself years out, upgraded user well change, technology

being great R&D cumulative the brands fundamental infrastructure the look to long-term investment, product will half. second will operations has sophisticated margin. and and sales launched community planning NIO's efficient step-by-step, strategical the NIO the in We that to forward effect. deployment capability have and lead better NIO's NIO the been developing performance With and a

for support. QX's I that, you Over Thank over for to Stanley. now will call details. With financial Stanley turn the you, to

you, Thank William.

my go will stated. unless over let I financial second me today, only the otherwise discussion quarter XXXX. Now our to results for key refer in RMB of

RMB increase of were increase XX.X% an year-over-year of increase The total attributed up an offset and billion, year-over-year from price was XX.X% lower to Revenues year-over-year product up user and quarter-over-quarter. XX.X increase mainly billion, revenue partially in Our RMB sales to representing deliveries, June was average higher XX.X% mix since and was deliveries. higher vehicle selling attributed XXXX. changes The XX.X by due adjustment quarter-over-quarter. mainly quarter-over-quarter rights XXX.X% to

and the quarter-over-quarter and and used by the lower sales and parts, solutions was power increased an of after-sales products RMB and both power increase revenues partially accessories Other after-sales representing vehicle in increase attributed The increase XX.X% technical cars. billion, increase accessories parts, was provision vehicle increase The sales due of quarter-over-quarter. of services, to R&D our services offset an in X.X other of the base from mainly XX.X% to grow of which solutions, were of and sales increase of and services. with sales year-over-year mainly year-over-year provision user

this offset The XX.X% and was XXXX compared quarter-over-quarter quarter costs margin with The same price. Overall, for of the due selling average due year for material last decreased quarter. X.X% increase with lower of same in and in Vehicle a X% the last decreased to the quarter. costs. material by increase was was partially was margin was period X.X% compared last period mainly X.X% the mainly in X.X% and the year-over-year to gross

were which activities. X.X decrease related increased functions due at year-over-year The a increase decreased increased of was X.X billion, personnel by costs X.X% XX.X% to personnel increased year-over-year RMB development from the expenses were and X.X% XX.X% operations RMB driven SG&A increased X.X and was XX.X% design higher a and costs expenses to XX.X% quarter-over-quarter, in of R&D costs functions. decrease and and Loss representing marketing mainly the billion, quarter-over-quarter. sales mainly billion, year-over-year was R&D quarter-over-quarter RMB quarter-over-quarter. incremental and sales increased

RMB was and of a of loss billion, representing quarter-over-quarter. XX.X% year-over-year X.X% X a Net decrease decrease

As time deposits company long-term investments XX, had total our in XXXX, cash, restricted of cash RMB billion. and June short-term and XX.X cash of equivalents,

financial For and XXXX more information the to our details release. second results, please audited earnings press our quarter of refer

call facilitate to over I Now to session. our Thank operator our the prepared concludes turn will this you. the remarks. Q&A

Tim Morgan Your from Instructions] Hsiao question first comes [Operator from Stanley.

questions. X have I

robust received also compared lately. The in is high think mid-May all first about thousands September NIO more delivery what Because ensure first of the the and company very which supply That's avoid a XX? the rate presale could this the consider official after any competition? our the LXX. LXX supply time you meantime, after question Would launch and the starts? since But preparation done getting in potential to I aggressive then, chain model, preorders, conversion how given has team NIO tens of is model launches to started question. client pricing And the has the disruption with the on my

is has the XX, in the the mass-produced the [Interpreted] having views a of he It been question. actually Sales first China, received millions days of witnessed Head there driving first Thank road while and on broadcast the car, of you has trip very members. we doing of this the the for attention and lot public. of mass-produced August have by brand Everyday, LXX, XX almost social for ONVO several On the are offline car a very the media. of the driving broadcast from the

surpassed terms pretty and of it actually our good pre-order expectations. is intake, has the In

quite project. we confident of competitiveness So are the this overall with

price will balance product In adjustments the we the aggressive XXX,XXX, sweet and to official around pricing XX,XXX price the And have model-wide. the overall for in strategy, to we as try product time the of to is we spot. speaking, mid-May, product. on the find and while some have pre-sale XX, of strike triple a product be we margin we the for But the very between RMB margin launch and final will general, vehicle a before is decision. the we announced not reasonable the that price, September realize still room launched point Regarding which need a RMB

that which supply can the is a our chain year, capacity target that hope Regarding is supply by of units. of we the in XX,XXX end September, security, realize we this

be of able next will sometime month. per a we supply capacity And to year, realize units XX,XXX

vehicles second the quarter. second the have is brand. sales My we brands, stabilized, noticed NIO NIO the levels of models the NIO in question monthly brand on on the XX,XXX about Because maybe

portfolio? product there second would gross current the be us question. to any further would Could forward, profit of That's to share and and upside with looking you margin where upside coming sales from? margin branded So the be the on NIO based my that volume vehicle the the vehicles the

[Interpreted] your Tim, is you for question. Stanley. this Thank

the NIO XX.X%. second improvements efficiency Regarding margin vehicle also of because on mainly the brand. achieved supply and quarter, we a the the have That production. vehicle the side is margin in of of the In

XX% vehicle the we months, will product units, XX,XXX mix quarters the a As units opportunities from vehicle well and year XX,XXX margin of margin the the X that, delivery in of high-margin improvements this than further we keep past With volume the the realized X to -- improve marketing of as have the expect in to following the of around the the in for also cost monthly end of optimization realize product year. see we side. products including by improving of as the more

will in our we add delivery yet we improve the vehicle volumes and [Interpreted] will manner is a drastic to to that very And vehicle to balance here will month-over-month, also be margin. delivery but strike the increase margin it the vehicle see a also volume. Both comment either also a or between for need volume opportunities not

we As pursue with very good product. we -- a our ultimately, gross profit

the we in sweet between. to spot So find need

XX,XXX also launch we to in NIO as realizing product, premium over the a believe our the segments products monthly reasonable for time and is upgrades target brand in of around as that priced Battery to on the volume a do XXX,XXX Electric we are much RMB NIO longer the going XX,XXX Vehicle units volume. And segment, targets,

XX,XXX long-term is NIO vehicle sum margin brand, volume up, to of operational the So of realize a XX%. target monthly all our a units and for

products larger will Battery network, much with and more ONVO park] the total ONVO's well-established swapping that faces for million. a than the As brand, charging a X [car best be models. and it against we believe as In as case, Service well market competition that leveraging with other competitive a our as [indiscernible] of our even

higher have a And than they XX% operational for will margin. products, volume products vehicle ONVO So for And month-over-month. -- target higher potential the be sales it's for potential longer that our target. for bigger for ONVO term, we reasonable or also believe more the XX% a do

Bin from comes question next from Wang Bank. Your Deutsche

about Okay. also that target My first mentioned ONVO is this XX,XXX year, volume units. you about is LXX. question Previously, your

order, you by And so for December? So mass my volume if this strong is the Given the November, back in exactly that target? do such question. still of down October, are a maintain because get progress month, we not end what's the you first

half? quarter for SG&A your this about expense. increasing, target the SG&A the Do for upcoming have is each second expense? guidance question seems what's second expense, quarterly And keep It expenses in that you

first I will the take William. This is [Interpreted] question.

LXX, start up the of take for us the we delivery NIO time September, products product. but Regarding of production will and the to ramp the will it late some ONVO supply from the

of year most this So QX. will deliveries our in happen

we We that will from the units delivery be our And month will September, monthly December. but the end around year, very hope for significant of in towards XX,XXX volume. a not the of delivery start

is In side time ramp some their will new it the the of take for supply the supply car terms side, as to with equipped many also production. technologies, up

is [Interpreted] will This the I Stanley. second take question.

X categories. are there expenses, Regarding

expenses. The first is R&D

We a similar investment will R&D pace still on basis. and keep intensity quarterly the

around be basis, or but every they R&D So slight actual roughly are relevant from it on fluctuations billion quarter, differences also be X activities will as non-GAAP there our to quarter-to-quarter conducted. will the RMB

And expenses. SG&A regarding the second category,

think from mentioned our LXX. SG&A increase the of of the But of volume have we percentage SG&A be also will the project, optimizing there overall the As QX, against delivery that will keep will in we we the late we ramp With revenue expenses. we start in LXX. delivery expenses as that, that the up sales

from Hou Your comes question from next Tina Goldman Sachs.

is So regarding question first my LXX. ONVO also

higher So and gross say, plan Should that's and for CapEx to kind XXXX? what expansion CapEx ramping capacity wondering and reasonable volume, this next December year our what higher higher plan XXXX? expect margin model? let's at the So also as XXXX we to is year, just up we question. versus and volume Also, are XX,XXX this in become maybe first volume XX,XXX should be for of

marketing is also question second The and regarding the sales expense.

second is So sub that's XX% quarter. which expense expense? in SG&A And growing give the SG&A more had Yes. of on recorded over in could Wondering, the we details growth you also, the sales items, the any policy one is the the fastest?

my question. second that's So

for take question. you first This I will Thank William. [Interpreted] question. is your your

a volume its targets, margin. when expected that and we believe XX% vehicle overall LXX, will production Regarding a reaches naturally realize it reasonable

the for will marketing competition, speaking, fierce some Yet be we product reserved the have the of for balance against more course, product margin overall vehicle the XX% cost, and in actually competitiveness. so as between efficiency we that competition. good the Of is the this we advancement for also variable realize room flexible the a managed as cost to and designed a is model itself technology reasonable target

preparation, the Regarding we and planning in 'XX. mid- the production having long-term and for capacity capacity our XXXX are

our which October, in the the As to speaking, it in of X we X support upgrade September And FX. upgrade next sufficient already production be operation, in ready factories bottleneck around year, a are to not to capacity and operations by have third planning to bottleneck have or next us, don't will long-term In shifts for third be factory it factories shifts FX the that meantime, the our will be now, LXX. production. Overall factory. the be double will late we especially think to will a products, of QX we X early for started means produce year, production support already have QX be will and also to we completed in will And us.

China, of be disturbance Especially laid long-term not parts will manufacturing supply, in and capacity. stable independent in competent. for some Maybe have companies This foundation will term, bottleneck. quite Here face qualification. has it vehicles a production and the long year, obtained capabilities we for also our and last yet short-term their capacity are capacity the a

is This [Interpreted] I question. your second take will Stanley.

certain status canceling according of the control last management and CapEx, the started some to in have we by the company, the are projects. the Regarding projects even of of starting prudent our management investment quo Especially making pace we postponing year, such expenses. or already

speaking, the significantly or overall that the R&D will XXXX. in XXXX CapEx lower So year in the than of be

picture believe we we have will this XXXX, the haven't intensity clear year. over overall be as As don't budgeting we expense the started to that, year, for a next but similar that for

As expenses it's X in SG&A for mainly the increase contributed in QX, reasons. the to

first also half around May were the specifics and we marketing development of our also model and case, products up units. we expenses In QX, has more XX,XXX QX, -- incentives to site that -- units our that The a that of first The reason have year second team cost total this has campaigns for because the as NIO staff relevant we communications and of year, QX. products many the around drove and sales delivered of in model the the the series our the around And has that April. is launched grown in delivered the around we increased started also in and XX,XXX March a year and naturally April well. mainly force launched have volume of in is from sales than increase increased

a how cost rental ONVO versus of quick in have a store? of you deploy an plan NIO average terms NIO store, store? ONVO So Can do employees I have in follow-up? versus also, store And store many to the very you that do

the we require to stores manner. ONVO [Interpreted] open the actually opening in quick a the and efficient of Regarding up team stores,

for ONVO So the as a locations renovation in type lower as significantly we comparison requirement. than don't in of -- of and a of the that the expenses rent may terms actual the quite store, ONVO be the actually the it CapEx that lower of than on depending the we have a single of specific But different store. the have NIO. And for fee is strict well significantly terms the numbers lower very overall, expense of as But the store, of is store. NIO each

For the XXX the following end requirement opened, we store of able was are renovation be more the the have store, existing use the going million. will efficient by stores more the we we each And ONVO ONVO RMB fee manner. on for the for no open have in -- year, just for existing even the to full than renovation. and XXX X to strict that, we to make a will more renovate With of resources stores

of actual compact plan each stores, also on in city. We In of the most it sure efficient make store number deliveries. depends up for the will set team the for and that of way. team the we But and terms each in orders size each is the general, in

next from Your question comes from Yuqian Ding HSBC.

here. I've got X Yuqian questions.

[indiscernible] about is market about First and is competition second progress and driving dynamics.

progress? terms First you share rate, aspects. NIO the could scenario consumer of regional take coverage, you down disengagement these expansion, the break Especially, our rate, question, the in could NOP

a end the consumer of of the coming, And also, high-tier and in city, city. premium especially new EV -- the in we And until more is noticed low-tier question there's general the than the the so the year. the to of segment, models versus couple months consumption the against in sliding backdrop second low-tier city the coming is ask

technology growth comfortable aspect headwinds conviction macro ONVO's you an and could help service counter perspective, could channel portfolio and the feedback? So and consumer product on order expansion book and and of quarter-on-quarter in NIO still to momentum latest maybe these get us

you for your Thank question. [Interpreted]

the We area. players smart confident the NIO area are in this top also noticed also of is fierce we in competition that yet among the driving,

meantime, is being has NOP+ cumulative the as X.X is In Regarding knowledge surpassed it with as our has reached kilometers. the now XXX,XXX offered X.X now than it product. on feature standard -- by and NOP+, driven used NOP more a users billion NT

of in So the we total top the as player terms are base in a well user as China. also the driven functionality, mileage with

other road many model, solutions technology Right Tesla map. players converging of the China. Regarding technology the and in end-to-end players are inside the their be industry, into roadmap now, it or

improved our the end-to-end already we X.Xx than we have model, its first AEB end-to-end traditional is than based as scenario feature better coverage Its that NIO, AEB. traditional working on end-to-end released AEB. also has performance For are is significantly and functionality the our been

we based very its architecture and NIO meantime, in is also Model the the the is an develop released based end-to-end architecture the Inc., on model the and company have to our and announce on model. but technology we also And architecture, the NIO at foundation World such end-to-end world because end-to-end are first important,

We have the also NAD released Arch X.X.

on can model end-to-end be based the you end-to-end will World be -- the developed NIO architecture the So will the is World with Model the where NIO on Model architecture solution. NIO see based the end-to-end that

Overall we are technologies. in the that the still leading believe of terms driving block we smart speaking,

on be and We tested a functionality architecture, performance to we experience pretty latest and the lower impressive. Model small better will speaking, quicker is able at X.X realize its scale, have NAD Overall with at the World iteration, Arch already functionality end-to-end cost.

brand, the with vision realized of very solution. it technology single terms a But will that, ONVO with has urban product its In a driving with [range] come scenario. performance pure even the in good

functionality also and Shanghai the in tested have I day, other good. The pretty it's

driving. speaking, facts overall we help of So driving improve safety will we users functionalities also -- smart and saw believe the that the that

the In usability the actual keep of terms that. we functionality, will working of also on

diversified premium and this fierce pretty competition, rich segment. such to first not NIO also for to is premium This for for your in the portfolio intensity have Regarding is market question, because offer been face realizing stable second yet share competition, years. time and the mainly the of has a the the product a we us understand the we market segment brand

ESX, ECX, ESX. ETX, ESX, XT, ETX, plus have We

ECX wide be of to pretty enough offering respective many segments. will And to of also products competitors. leading some of some or Not segment. in is a higher even segment, the range in respective ETXT, cover niche ICE product product ECX, many are these their their product BEV the like volume a their sales that mention it's volume for products So that than

we strategy. portfolio a This advantages speaking, we network, have community. and successful overall quite the swapping has made product offering such service Plus, solidified and our product experience, have premium So enhanced the further also segment. technologies, other charging and leading and user good as foothold in the

meantime, course, we segment. them come in work also Of that the premium more this that the BEV into we can segment segment, also this together players premium so size with enlarge can hope to of

we In a company, the actually the strategy NIO meantime, business clear and growth. for straightforward for the have continuous pretty entire

be other which wide to of ICE competitors. price our competition able Battery-as-a-Service, broader reach by be From very to the covered XXX,XXX RMB will brands will as be price X pretty can year, way range in we markets. next -- than will have segments. from all XXX,XXX. are will price in with XXX,XXX, range, that, First price with And brands wide, respective be will a RMB wide be a be With brands these -- range RMB XXX,XXX going range. many price the wider we to With our RMB X by range strong from is X ranging the costs the to the that market a to the

is The via product our wide products, second approach range.

X have brands. We

case, will very We product of be able between that In to pretty diversified comprehensive also cover we with each portfolio brand. segment product have clear differentiation brand. a each a

moment, through sales are cities. expanding our for lower-tier NIO, sales the of cities. the second-tier the in the the coverage. markets and approach And our Right point third we Especially is are of the into and at regional most first- now,

expansion So is coverage such also important. very

Plus With have charging Up the us levels. announced to County business will plants where the brands. further have counties we Power development other overseas swapping our and plan also plan it all X that, expand the reach to help We at the of network also enhance will the for we market. like all

clear So price overall we is coverage. road growth range that product wide by regional also and and for development, speaking, the a the wide long-term have range, a broader map,

Paul comes Gong question from UBS. next from Your

questions Two here.

The flagship first one sedan, is regarding ETX. the

as think the I launch adoption And to on schedule? next regarding model volume this that position for Yes. in targets Is was updates outlook? announced well it you in QX as the year. still new can of give in schedule some terms technology

second question is overseas the The expansion. regarding

open EU nowadays store Middle are UAE are direction that of of delivering as your change of to that reaching going the the into and You Europe the in from expansion a over start East. result their there. markets. a Also, one serves Do this direction been you the tariff Is you of or X signal your peers X as delivering next over has into of years? XX% volume the for think overseas the benchmark overseas a

for question. the you Thank [Interpreted]

we're need according changes ETX and the you preparation the ETX, haven't that ETX to the But the the product. question proceeding [indiscernible] on plan of know including sure any the so to next in-house the in technologies, making as Regarding spare we year. in developed successful this and launch effort launch will steer-by-wire, still further equipped with made meantime, as on many active new chip we this SkyOS, for as of is no well product preparing fully suspension,

Europe, question direction. Yes, becomes tariffs selling second now or costs exporting your more Europe to haven't changed the China on expansion, international expensive. Regarding we in of our because our from

we X started. on So existing markets already have European we focus the that will

and will longer we European establish to we there. in patient year, in in Amsterdam, that Earlier the it premium house swap stations and a also NIO, this the brand our are such stopped have have know a just our take also time very we we that meantime, NIO doesn't our with mean still and deploying We activities market, that. in power opened Europe. are But installing

same plan. keep still the we So will

with may of local our of UAE, is that, the strategic our that investment UAE entry part market In X market Dhabi offer then work And the know we as plan. terms government. entry have received to last services market. you products With USD we to strategic will year, in the UAE and into Abu the into partners the billion from

next suitable difference with but the ONVO, not are and brand the international keep the more between a more to that we a for market actually year, we NIO products, balance active a in will good efficient our the we expansion. Starting our big more global that be which also is products that, only in will we With way. also investment from have global make to need into efficiency and But scale smarter enter sure and meantime, market.

comes Bank question from America. Ming-Hsun of from Lee next Your

X and I William Stanley, questions. also have

question my macro. related more is So the overall first to

So the rate down the in think in still be penetration your because few penetration expect will EV is that high. some potential what market growth EV already now, the very recently, right investors the I view, for EV next Because years? China the is

penetration the first my So your EV what just view, is question. in That's X the Yes. in next years?

And question regarding is Firefly my the second pipeline.

models XXXX right So launch for Firefly? or in X X you now, my will X That's questions.

[Interpreted] for question. Thank you the

of vehicle X.X%. increased year, the the it half by If look you overall passenger this market, has in around at first

million For as is as the million longer term, population units. PV total XX actually, the at to in big XX look if you it China,

largest with the even -- growing, will a very it's slight significant a market So or market Definitely, the segment it's be But growth keep already PV even very probably in passenger but suffer very not it for that, vehicle decrease. the Chinese market the still world. And at amount. a rate. to significant will not normal PV

because surpassed that grew surpassed the vehicle, of keeping will even point. already the has rate the and an NIO penetration has energy increased and ICE to of actually it will Norway XX%. rate cost, reference replacement continue it XX%. And it We In faster has penetration increase think for at at and quickly can to I the as XX% a manner [indiscernible], for faster it terms at much it It example. then XX% once this first, take XX% be of

believe countries, their NIO vehicle from brands, cut penetration brands market in cars cut But their many of mass to we actually of it share. I X China, prices energy the for their cycle vehicles image brand XX%. If because costs their be brands ICE these of Be the and is that the for X similarly interest into the look keep China, of as market also price that, share for years, or have having they premium ICE or them strong the market ICE other hurts they entered in a of So from more brands are a the unsustainable cycle new China or difficult sake profit hurts it With keep well at it their will to sales as rate residual the in to of share. segments. many vicious flushed an prices, products. among value as a to surpass dealers, market very even have it

the decline their be. So it than should market -- of faster their is even share

entering also already of Nissan and have we of Motors. years, like significant and for the are Japanese witnessed like recent the General the For decline brands including And Toyota, Ford same the the Honda Korean recent Hyundai, the market brands shares Kia, space. years,

believe we they normally China some lose when Europe. future including from in ICE joint in face competition. brands shares from And they market difficulties energy that these other lose and to share, market brands will venture the quite general, NIO costs brands, So vehicle the

will believe deliver your we from the are NIO yes, to expected. And question, I quick at faster regard, the that going in vehicle than even So penetration the regarding from grow second XXXX. energy of pace, a product rate Firefly we pretty that

with are preparation. our We in progress smooth product

Chang next CICC. from Your comes Jing from question

I have X questions.

SkyOS, operating our NIO regard been The released first has to July. in which in is system,

it very shown comprehensive and software So ability. our self-development has invest

-- introduce just what be of our improvement is brought question. the product by So the advantages we have the the ask and challenges you more first this and technical NIO can work system? and can are faced also details So

second is The with income, margin. the regard other profit to gross

We seen significantly. improved second the have gross profit the margin has quarter,

can to we that how what's to of forecast in the see major So continuity the growth of And also, volume, swap margin with the future? and profit our our especially our turn -- can and So drivers? the for business, in our these sales charging understand trend battery future? improvement also

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