NIO, Inc. Q3 FY2024 earnings call

• In Q3, NIO achieved a new quarterly record with 61,855 deliveries, with the NIO brand maintaining top position in China's BEV segment above RMB300,000 with 48% market share. - ONVO brand started delivering L60 on September 28. - NIO's Executive Flagship ET9 in final testing, expected to start delivery in March next year. - ONVO L60 ramping up production capacity, near monthly capacity to hit 10,000 units in December and 20,000 units by March. - Third brand Firefly to debut on December 21, 2024, first product to be delivered in first half of next year. - Smart driving had over 610,000 users, 78.4% activated NOP, driven over 1.39 billion kilometers with NOP. - Global stores: NIO has 176 NIO houses and 412 new spaces, ONVO has 191 stores, 398 service centers and 65 delivery centers, 2,737 swap stations globally. - NIO China secured RMB3.3 billion from strategic investors on September 29. - Marked 10th anniversary on November 25.

Total revenues were RMB18.7 billion, decreased 2.1% year-over-year and up 7% quarter-over-quarter. Vehicle sales were RMB16.7 billion, down 4.1% year-over-year, with vehicle sales increasing 6.5% quarter-over-quarter mainly due to increased delivery volume. Vehicle margin was 13.1% in Q3. Other sales were RMB2 billion, grew by 19.2% year-over-year and 11.9% quarter-over-quarter. Overall gross margin was 10.7% up from 8% in the same period of last year and 9.7% in the last quarter.

• Q4 total deliveries expected to be between 72,000 and 75,000 units. - ONVO brand Q4 vehicle margin target at 15%, 2025 target 15% baseline with aim to reach 20% gross margin. - 2025 OpEx to increase with new product launches, but SG&A expenses to gradually come down from Q1 next year as sales capacity established. - CapEx in 2025 to be kept around the same level as 2024, around RMB8 billion.

• Potential cannibalization between NIO and ONVO brands. - Impact of EU tariff increase on pricing and demand in Europe. - Production ramp up speed of ONVO L60 may affect order backlog. - Market competition risks. - Policy changes affecting subsidies.

Q: About demand visibility for ONVO L60 and next generation platform NT3.

A: William Li said confident in L60 demand due to high conversion rate from test drive to order, focusing on expanding sales network; NT3 platform has new technologies trickling down to future products.

Q: About operating expenses and share of losses of equity investee.

A: Stanley Qu said R&D expenses to stabilize around RMB3 billion per quarter, William Li said share of losses of equity investee increase due to investments in upstream/downstream, but battery asset management business has promising profitability going forward