Paul Gong

Paul Gong with UBS inquired about further expense optimization, specifically regarding R&D, which decreased from CNY 3 billion in Q2 2025 to CNY 2 billion in Q4 2025, and whether CNY 2 billion per quarter is the new norm.

Answer

William Li, Founder, Chairman of the Board, and Chief Executive Officer of NIO Inc., stated that R&D investment for 2026 will be maintained at CNY 2 billion to CNY 2.5 billion per quarter, similar to 2025 levels. He emphasized continuous efforts to improve R&D efficiency through the CBU mechanism and dynamically adjust investments based on ROI to ensure key product and technology development.

Paul Gong asked if NIO could pass on raw material cost inflation to customers and sought clarification on the future trend of R&D and SG&A expenses, specifically if Q4 2025 R&D of CNY 2 billion represents a new norm.

Answer

Stanley Qu and William Li acknowledged cost pressures from chips and raw materials but expressed confidence in mitigating the impact through supply chain efficiency and a higher mix of large, higher-margin SUVs. Stanley Qu stated that quarterly R&D investment in 2026 would be maintained at CNY 2-2.5 billion, similar to 2025 full-year levels, with a focus on efficiency and ROI.

Paul Gong inquired about NIO's preparations for the 5% purchase tax on EVs in 2026, specifically whether the company plans to compensate customers, adjust supply chain costs, or expect consumers to bear the majority of the cost. He also asked if the lower cost structure observed in Q3 (R&D around RMB 2 billion, SG&A around RMB 4 billion) would become the new normal for 2026.

Answer

CEO William Li stated that the impact of the halved purchase tax in 2026 would be less significant for NIO, as 80-90% of users subscribe to batteries, excluding battery price from the tax base. He mentioned a purchase tax guarantee for ES8 users due to long waiting times and indicated flexibility in future measures based on market dynamics. William Li confirmed that quarterly R&D expenses are expected to remain flat at around RMB 2 billion, with a focus on efficiency and ROI. For SG&A, the target is 10% of sales revenue, currently around 12% (RMB 4 billion per quarter), with continued efforts to improve efficiency next year.

Paul Gong from UBS asked about NIO's strategy for the 2026 outlook, specifically addressing the impact of the halved purchase tax on EVs and whether the company plans to compensate customers, adjust costs, or let consumers bear the majority of the expense. He also questioned the sustainability of the lower R&D and SG&A cost structure into 2026.

Answer

William Li, Founder, Chairman, and CEO of NIO, explained that the halved purchase tax would have less impact on NIO due to its battery-as-a-service model. He noted that NIO already guarantees purchase tax for long-waiting ES8 orders and will flexibly adapt to market changes for other models. Li expressed confidence in the BEV market's growth, stating that the industry has largely digested the policy changes. Regarding expenses, Li confirmed that quarterly R&D expenses are expected to remain flat at around RMB 2 billion, focusing on efficiency and ROI, while SG&A aims for a 10% ratio to sales revenue next year.

Paul Gong from UBS asked about the financial impacts of making the 100 kWh battery standard across new brands, specifically regarding incremental costs and enhanced competitiveness. He also inquired about the cost savings per car from switching to NIO's self-developed chips, providing scenarios for 20,000 and 50,000 units per month to estimate sensitivity.

Answer

William Li, Founder, Chairman of the Board, and CEO, through a translator, explained that making the 100 kWh battery standard was offset by withdrawing other special offers, resulting in no major financial impact on vehicle margin but a positive impact on sales leads. Stanley Qu, CFO, and a translator clarified that chip cost savings are not directly tied to delivery volumes but are significant compared to previous generations and industry flagship smart driving chips, though specific per-piece savings were not disclosed.

Paul Gong from UBS inquired about the financial impact of making the 100 kWh battery standard on NIO brand vehicles, specifically the incremental cost. He also asked for quantification of the cost savings per vehicle from using self-developed chips at different production volumes.

Answer

A moderator, speaking for management, explained that making the 100 kWh battery standard had no major impact on vehicle margin, as it was offset by the removal of other discounts. Regarding the self-developed chips, management stated that while the in-house solution provides a cost advantage over third-party chips, the savings are not directly tied to sales volume as R&D is expensed. They declined to provide a specific per-unit cost saving figure.

Paul Gong of UBS Group inquired about market feedback for the new 5 and 6 Series models, particularly regarding the 400V battery system. He also asked about the future of the channel network and potential synergies between the NIO and Envoy brands.

Answer

Management stated that feedback on the new models is mostly positive. They addressed the 400V platform by emphasizing improved efficiency and the flexibility offered by the Power Swap network, with no short-term plans to upgrade to 900V. Regarding channels, points of sale will remain separate for brand differentiation, but back-end operations will be integrated for synergy, with pilots using swap stations as sales points.

Paul Gong from UBS questioned the high demand visibility for the ONVO L60, asking for the basis of the 20,000 units/month target for March. He also requested more color on the technological direction and key improvements of the next-generation NT3 platform.

Answer

CEO Bin Li expressed confidence in L60 demand, citing a very high test-drive-to-order conversion rate, which he claimed is higher than any previous NIO product. He stated the current focus is on expanding the sales network to support volume growth. Regarding the NT3 platform, Li described the ET9 as the first model on this platform, featuring significant advancements like a high-voltage architecture, an in-house developed smart driving chip, and advanced sensors, which will eventually trickle down to other models.

Paul Gong from UBS questioned the basis for NIO's confidence in achieving 20,000 monthly deliveries for the ONVO L60 by March, especially given seasonal factors. He also asked for details on the technological advancements of the next-generation NT3 platform.

Answer

CEO Bin Li expressed confidence in the L60's demand, citing a very high conversion rate from test drives to orders. He attributed short-term demand softness to long wait times and the expiration of subsidies. Regarding the next-gen platform, Li explained that the ET9 is the first model built on it, featuring a high-voltage architecture, a new operating system, an in-house developed smart driving chip, and advanced sensors. He stated these technologies represent a significant leap and will gradually be integrated into future products.

Paul Gong of UBS asked if the flagship ET9 sedan is still on schedule for a Q1 2025 launch and requested updates on its technology and volume outlook. He also questioned if the new UAE market entry signals a strategic pivot away from Europe due to tariffs and whether a competitor's 10% overseas sales volume serves as a benchmark for NIO.

Answer

CEO William Li confirmed the ET9 launch is proceeding as planned for next year, emphasizing its advanced technologies like steer-by-wire and in-house chips. He clarified that the UAE entry is not a pivot from Europe but part of a plan with its Abu Dhabi investor. While European expansion is impacted by tariffs, NIO remains patient and continues its activities there. He stated that the ONVO brand will enable more active, yet efficient, international expansion starting next year.

Paul Gong asked why the Li Mega recall cost, announced in Q4, was booked in Q3 2025, how the amount was determined and shared with the supply chain, and the impact on Q4 gross profit margin. He also requested an update on the recall situation, latest Mega orders, and the latest development of VLA, world model, user feedback, future targets, and upgrade process for AI.

Answer

Mr. Johnny Tie Li (Executive Director and CFO) explained that the recall cost was recognized in Q3 as a subsequent event, accruing it in the most recent quarter. He stated that battery packs are being shifted to fulfill recall requirements, which lowers 2025 Mega deliveries to prioritize customer benefits. Mr. Xiang Li (Founder, Chairman, and CEO) reported that the VLA driver was rolled out to all AD Max vehicles in September, showing improved DAU and MPI, with users reporting smoother, more proactive, and accurate driving. He detailed upcoming OTA updates: 8.0 focused on safety, 8.1 in early December for enhanced perception, and a year-end architecture upgrade for language behavior interaction, compatible with the M100 chip. He also mentioned new features like defensive driving AES, full-scenario automated parking, and smart finder.

Paul Gong inquired about the recall of the Mega, specifically why it was booked in Q3 2025 despite being announced in Q4, how the amount was determined, the cost sharing with the supply chain, and the impact on Q4 gross profit margin. He also requested an update on the Mega's recall situation and latest orders. Second, he asked for an update on the latest development of VLA, world model, user feedback, and future R&D targets and iteration progress for AI.

Answer

CFO Johnny Tie Li stated the Mega recall was recognized in Q3 as a subsequent event, accrued in the most recent quarter. He mentioned that battery packs are being shifted to fulfill recall requirements, lowering 2025 Mega deliveries to prioritize customer benefits. CEO Xiang Li reported that VLA driver was rolled out to all AD Max vehicles in September, showing improved DAU and MPI, with users reporting smoother, more proactive, and accurate driving. He outlined upcoming OTA updates (8.1 in early December for perception, year-end architecture upgrade for language behavior interaction, M100 chip compatibility), and innovations like defensive driving AES and automated parking.

Paul Gong of UBS requested more details on the upcoming Li i6 model, including its product positioning, launch schedule, and marketing plan. He also asked for the company's latest thinking on its overseas strategy.

Answer

CEO Xiang Li positioned the Li i6 as a highly competitive large five-seater SUV with a unique design, superior space, and the industry-leading VLA driver model, supported by a new user-centric marketing approach. An executive detailed a three-phase global strategy, with 2025 marking the start of phase two: expanding into global markets like the Middle East, Central Asia, and Europe. Products from 2026 onwards will be developed with global regulations in mind.

Questioned the launch timing of the VLA ADAS system in light of tightening government regulations. Also asked about the lessons learned from the successful launch of the MEGA Home and its implications for the upcoming i8 and i6 models.

Answer

The VLA launch remains on track for July, with the company viewing stringent regulations as favorable to those with strong technology. The key lesson from MEGA Home's success was to return to a user-centric focus on innovating the 'mobile space' experience, rather than focusing on competitors. This principle will guide future launches, aiming to make Li Auto synonymous with 'space experience'.

Paul Gong questioned the consumer availability timeline for the VLA Driver model, especially given recent regulatory tightening. He also asked about the lessons learned from the Li MEGA Home launch and their implications for the upcoming i8 and i6 models.

Answer

CEO Xiang Li confirmed the VLA Driver model is on track for a July release with the i8, stating that stringent regulations favor companies with strong technical fundamentals. He attributed the MEGA Home's success to a renewed focus on user needs and innovating the 'mobile space' experience, a lesson that will be applied to future launches.

Paul Gong from UBS inquired about the launch timing of the VLA driver model, questioning if tightening ADAS regulations would cause delays. He also asked about the key lessons learned from the Li Mega Home's improved sales and how they would be applied to the upcoming i8 and i6 launches.

Answer

Management confirmed the VLA driver is on track for a July release with the i8, stating that stringent regulations favor companies with strong technical fundamentals. The key lesson from the Li Mega was to refocus on user needs and innovate around the 'mobile space' experience, a strategy that will be central to future product launches with the goal of making Li Auto a leader in in-car space experience.

Paul Gong of UBS Group AG inquired about Li Auto's latest launch schedule for its new BEV models and asked for an update on the company's AI development strategy.

Answer

CEO Xiang Li announced that two pure electric SUVs, the Li i8 and Li i6, are scheduled for launch in the second half of the year, with the i8 arriving in July. He explained the timing is to capitalize on Q3/Q4 sales momentum. Regarding AI, Mr. Li detailed the company's vision to move beyond the current dual-system approach to a single, unified foundational model that integrates 3D vision, language understanding (LLM), and physical world interaction to achieve human-like driving capabilities.

Paul Gong asked if the competitive environment in the high-end auto market has improved, considering weak consumption but also government stimulus and price adjustments by German brands. He also inquired about preparations for the 2025 BEV models, including potential technology updates due to the launch delay and the scale of supply chain preparations.

Answer

SVP James Liangjun Zou attributed strong sales to product strength and operational adaptability, including increased online marketing and empowering regional sales teams. He noted that NEV penetration exceeding 50% in the premium market will drive consolidation, benefiting Li Auto. CEO Xiang Li confirmed that multiple 800V BEV models are on track for 2025, with R&D, trial production, and supply chain readiness all proceeding as planned, including in-house development of key components.

Asked whether the competitive environment in the high-end market has improved and inquired about the preparation status for the BEV models launching next year, including technology adoption and supply chain scale.

Answer

The company attributes its strong sales to product strength, adaptability, and new strategies like online marketing and regional sales empowerment. They believe they will benefit from market consolidation. The launch of multiple 800V BEV models in 2025 is on track, with R&D, supply chain readiness, and factory construction proceeding as planned.

Paul Gong inquired about the fluctuation in robotaxi revenue contribution, despite its significant year-over-year growth, requesting further explanation for the trend observed compared to the second quarter. He also asked about WeRide's next steps for European expansion, following the recent driverless robotaxi permit in Switzerland.

Answer

CFO Jennifer Li attributed the robotaxi revenue fluctuation (22% in Q1, 36% in Q2, 21% in Q3) to delivery schedules aligned with permit upgrades and operating area expansion. She noted that the Abu Dhabi driverless permit is expected to accelerate future expansion in the Middle East. CEO Tony Han outlined plans to solidify operations in France, Belgium, and Switzerland, explore other European countries (Germany, Spain, Norway), and leverage strategic partnerships and various applications (robo-bus, robo-sweeper). He emphasized a dynamic expansion approach based on local partners, regulations, and market conditions.

Paul Gong asked about the fluctuation in robotaxi revenue contribution compared to the second quarter, despite strong year-over-year growth, and sought details on WeRide's next steps for European expansion following the Switzerland permit.

Answer

CFO Jennifer Li explained that robotaxi revenue fluctuation is expected due to delivery schedules aligning with permit upgrades and operating area expansion, noting the Abu Dhabi permit's role in accelerating Middle East expansion. CEO Tony Han outlined the European strategy, highlighting high taxifares and labor shortages as opportunities, with plans to solidify operations in France, Belgium, and Switzerland, and explore expansion into Germany, Spain, and Norway, considering local partners and regulatory policies.

Paul Gong asked about the company's strategy for its large product portfolio, which is approaching 20 models, and whether there was room to streamline less popular models. He also inquired about the R&D budget allocation between new model development and advanced technologies like intelligence and AI.

Answer

Executive Cong Hui An emphasized a 'hit product' strategy, aiming for every new launch to be a segment leader, and noted that the product pipeline was already cut by 20% post-integration. Executive Jing Yuan stated the 2025 R&D budget would see a slight single-digit increase over the 2024 pro forma level of ~RMB 13 billion. He specified that spending on smart cockpit and ADAS would remain at a similar level to 2024 (~RMB 1 billion each) due to efficiencies from platformization across both brands.