Tim Hsiao

Tim Hsiao inquired about the latest order and delivery updates for Li I8 and I6 models, the timeline and strategy to resolve current supply bottlenecks for these models, and the expected normalized sales volume in the coming months. He also asked about the reasons for the increasing operating and free cash outflows in Q3 2025 and the outlook for cash flow in subsequent quarters.

Answer

Mr. Xiang Li (Founder, Chairman, and CEO) stated that I8 and I6 models form a solid foundation for BEV growth, with orders increasing significantly in core BEV markets from September. He announced a dual supplier strategy for Li I6 batteries starting November to address production ramp-up challenges, aiming for 20,000 units monthly production by early next year, and apologized for delivery delays. Mr. Johnny Tie Li (Executive Director and CFO) attributed the cash outflow to decreased deliveries impacting revenue and a shortened payment cycle to suppliers, with settlement periods now at 60 days via wire transfer or bank notes.

Tim Hsiao inquired about the latest updates on orders and deliveries for Li I8 and I6 models, the timeline for resolving supply bottlenecks for these models, and expectations for their normalized sales volume in the coming months. He also asked about the significant operating and free cash outflow in Q3 2025 and the outlook for cash flow in subsequent quarters.

Answer

CEO Xiang Li stated that I8 and I6 models are building a solid foundation for BEV growth, with orders increasing significantly in core BEV markets from September. He announced a dual supplier strategy for Li I6 batteries starting November to address production ramp-up challenges, aiming for 20,000 units monthly by early next year. CFO Johnny Tie Li attributed the cash outflow to decreased deliveries impacting revenue and a shortened payment cycle to suppliers (60 days settlement period for accounts payable).

Tim Hsiao of Morgan Stanley asked for an update on the progress and rationale behind the recent sales system adjustments, the expected results, and any potential adverse effects on short-term sales or new model launches.

Answer

President Dongguin Ma explained that the sales team reorganization is complete, with headquarters now directly managing 23 regions. The goal is to empower frontline staff by improving their income, providing growth opportunities, and increasing operational efficiency. He stated that while there may be short-term adaptations, the proactive strategic move will enhance long-term effectiveness and provide stronger support for new vehicle launches like the Li i8 and Li i6, whose timelines remain unchanged.

Tim Hsiao asked how Li Auto plans to maintain its sales growth at twice the market rate amid aggressive competition and when the company might introduce sedan models with both EREV and BEV powertrains.

Answer

CEO Xiang Li stated that weekly sales for the new L Series have surpassed 10,000 units, expressing confidence in returning to 50,000 monthly deliveries soon. He noted that sedan models would be considered after the company achieves RMB 300 billion in revenue from its current SUV lineup.

Tim Hsiao of Morgan Stanley inquired about Li Auto's strategy to maintain its rapid sales growth and market share against aggressively priced competitors, and asked about the company's future plans for entering the sedan market, including potential powertrain strategies.

Answer

Li Auto management stated that weekly sales for the new L series have surpassed 10,000 units, and they are confident monthly deliveries will soon return to the 50,000-unit level. Regarding sedans, the company will consider launching them after achieving a revenue scale of RMB 300 billion with its current SUV lineup, targeting both domestic and international markets.

Inquired about the outlook for sales growth amidst competition and when sales might return to peak levels. Also asked about the scale of future AI investments and potential new applications.

Answer

Sales growth will be driven by product upgrades, sales network expansion, reinforced marketing, and overseas expansion. The company is confident in its growth this year. AI investment will grow substantially, funded by operations. The company's long-term AI vision is to be a device manufacturer for the AGI world, creating three types of robots: L4 vehicles (space robotics), robots that enhance human capabilities, and indoor humanoid robots.

Tim Hsiao from Morgan Stanley asked about Li Auto's strategy for sales growth in a competitive market and the expected timeline for sales to return to peak levels. He also questioned the future scale of AI investment and potential new applications.

Answer

CEO Xiang Li outlined a multi-faceted sales growth strategy for the year, including product upgrades, sales network expansion into lower-tier cities, enhanced marketing through live streaming, and a significant push in overseas markets. On AI, Mr. Li stated that investment will grow substantially, funded by operations. He elaborated on a long-term vision for Li Auto to become a device manufacturer in the AGI world, producing various types of robots, including autonomous vehicles (space robotics), human-assisting robots, and humanoid robots.

Tim Hsiao inquired about the return on investment for Li Auto's autonomous driving (AD) technology and the key metrics for investors to track its commercialization. He also asked for management's view on the competitive landscape with Huawei, particularly in the family SUV market for the second half of the year.

Answer

CEO Xiang Li explained that the key metrics for AD are user adoption (usage rate) and willingness to pay (take rate), noting the AD Max take rate on premium models is approaching 70%. He described AD development as a positive 'snowball effect' where higher sales fund more R&D. Regarding competition, Mr. Li acknowledged Huawei as a major competitor but anticipates a long-term, healthy coexistence, emphasizing that Li Auto is continually learning from Huawei's R&D and operational systems.

Tim Hsiao from Morgan Stanley inquired about NIO's updated Q4 delivery guidance, its impact on the company's break-even target, and the timeline for achieving a 50,000 monthly sales run rate, considering macro uncertainties and new model launch schedules.

Answer

William Li, Founder, Chairman, and CEO of NIO, expressed confidence in achieving Q4 break-even despite the impact of trade-in subsidy phase-out on lower-priced models. He highlighted strong demand for high-margin products like the All-New ES8 and anticipated Q4 vehicle gross margin around 18%. Li also stated that NIO expects to reach 50,000 monthly deliveries in the first half of next year, maintaining the original new model launch cadence with two new models in Q2 and one in Q3 2026.

Tim Hsiao asked about the impact of the updated Q4 delivery guidance (120,000-125,000 units, lower than the previous 150,000 target) on NIO's Q4 break-even target, considering subseasonal demand and policy uncertainty. He also inquired about the timeline for achieving a 50,000 monthly delivery run rate and potential adjustments to the new model launch schedule.

Answer

CEO William Li expressed confidence in achieving quarterly break-even in Q4 despite the revised delivery guidance, attributing the change to the phase-out of trade-in and replacement subsidies affecting the entire industry, particularly ONVO L60 and Almighty models. He noted strong demand for high-margin ES8 and an expected Q4 vehicle gross margin of around 18%, with ES8 margins over 20%. CFO Stanley Yu Qu highlighted Q3 vehicle gross margin of 14.7% and ongoing cost optimization. William Li projected achieving 50,000 monthly deliveries in the first half of next year, driven by three new large models and improved sales efficiency, while maintaining the original new model launch cadence (two in Q2, one in Q3 next year).

Tim Hsiao from Morgan Stanley asked about the new model pipeline, questioning if the robust demand for the L90 and ES8 would alter launch schedules for other models. He also inquired about the company's pricing strategy and the sustainable long-term gross margin trajectory, given the aggressive pricing of recent launches.

Answer

Management, via a moderator, stated that due to prioritizing production for models with high demand, the launch of the Onvo L80 will be delayed, and no other new models will be delivered in 2025. For the long term, the group's target vehicle gross margin is 20%, broken down by brand: NIO at 20-25%, Onvo at no lower than 15%, and Firefly around 10%. This is supported by a competitive cost structure from in-house technology and cost controls.

Tim Hsiao from Morgan Stanley inquired if the robust demand for L90 and ES8 would lead to adjustments in the launch schedule for upcoming models, noting the NIO Day's earlier date. He also asked for insights into the updated model pipeline for subsequent quarters and how the aggressive pricing strategy for L90 and ES8 would extend to future models, impacting NIO's gross profit margin trajectory and ideal vehicle margin level for next year.

Answer

William Li, Founder, Chairman of the Board, and CEO, through a translator, explained that current capacity is prioritized for L90 and ES8, leading to delays for other models like the ONVO L60 and Firefly. Q4 production capacity targets are 25,000 units/month for ONVO, 25,000 units/month for the NIO brand, and 6,000 units/month for Firefly. No new models will be launched or delivered this year, with two new large SUVs (ES8, ES7) under the new brand planned for next year. He reiterated long-term gross margin targets: NIO brand 20-25%, ONVO no lower than 15%, and Firefly around 10%, enabled by tech innovation and cost control.

Tim Hsiao of Morgan Stanley questioned NIO's moderate Q2 volume guidance despite new model launches and asked about the strategy to reach the 30,000 monthly sales target for the NIO brand by year-end. He also inquired about the timeline and specific areas for seeing meaningful results from recent cost-cutting measures.

Answer

Management stated the focus is on balancing sales volume with pricing to achieve a NIO brand vehicle gross margin above 20% on 25,000 monthly units in Q4. On cost reduction, they detailed plans to cut R&D expenses by 15% in Q2, targeting a quarterly run-rate of RMB 2-2.5 billion by Q4. SG&A expenses are also targeted for reduction, aiming to be within 10% of sales revenue by Q4.

Tim Hsiao from Morgan Stanley asked about NIO's brand strategy, focusing on potential sales cannibalization between the NIO and ONVO brands, and inquired about the slower-than-expected production ramp-up for the ONVO L60 model.

Answer

CEO Bin Li clarified that the recent dip in NIO brand sales was a deliberate strategy to reduce promotional spending by approximately RMB 15,000 per unit. He asserted that brand overlap is minimal, with only about 2% of customers cross-shopping, and ONVO primarily attracts customers from competitors. Regarding the L60 ramp-up, Li attributed the pace to the model's advanced technologies, like the 900V architecture, and stated that reaching 10,000 units/month by December is a reasonable target.

Tim Hsiao from Morgan Stanley inquired about NIO's brand strategy, specifically the potential for cannibalization between the NIO and ONVO brands, and asked about the production ramp-up challenges for the ONVO L60 and how the company plans to address supply chain bottlenecks in 2025.

Answer

CEO Bin Li explained that the recent decrease in NIO brand delivery volume was a deliberate adjustment to reduce promotional costs by about RMB 15,000 per unit, not a result of cannibalization. He stated that the overlap between NIO and ONVO customers is minimal (around 2%), with ONVO primarily attracting users from competitors. Regarding the ONVO L60 ramp-up, Li acknowledged it might seem slow but is reasonable given the vehicle's advanced technologies. He projected reaching 10,000 units/month in December and 20,000 by March, attributing some order cancellations to delivery delays causing customers to miss subsidies.

Tim Hsiao of Morgan Stanley inquired about the strategy for converting strong pre-orders for the ONVO L60 into sales, including potential pricing adjustments and supply chain readiness. He also asked about the potential for further sales volume and gross margin upside for the existing NIO brand vehicle portfolio.

Answer

CEO William Li stated that ONVO L60 pre-orders have surpassed expectations and pricing will balance margin and competitiveness without being overly aggressive. He outlined a supply capacity target of 10,000 units per month by year-end. CFO Stanley Qu and William Li added that the NIO brand's vehicle margin, which was 12.2% in Q2, is expected to improve to around 15% by year-end through cost optimization and a better product mix. The long-term goal for the NIO brand is a monthly volume of 30,000-40,000 units with a 25% vehicle margin, while ONVO targets a margin over 15%.

Tim Hsiao inquired about the long-term revenue opportunities from vehicle sales, revenue share, and profit sharing following WeRide's commercial deployment of driverless robotaxis in Abu Dhabi. He also asked about potential key volume driver markets beyond Abu Dhabi and Switzerland, and whether WeRide plans to accelerate R&D and selling expansion to support robust overseas growth in 2026.

Answer

CFO Jennifer Li detailed WeRide's robotaxi business model, distinguishing between domestic China (own and operate) and international markets (collaboration with platform partners like Uber, Grab). She explained revenue streams from ride fare share, annual licensing, and vehicle sales, highlighting the potential for significant revenue per car per year based on utilization and revenue share percentages, particularly in the Middle East. CEO Tony Han identified Dubai, Saudi Arabia, Japan, Singapore, and Korea as potential key volume drivers, emphasizing the replicability of the 'Abu Dhabi model' with partners like Uber and Grab. He stated that while R&D investment will increase, related expenditure growth will be moderate due to a 'satellite model' balancing scaling, investment, and profitability.

Tim Hsiao inquired about quantifying the long-term revenue opportunities from vehicle sales, revenue share, and profit sharing following WeRide's commercial driverless robotaxi deployment in Abu Dhabi. He also asked about identifying key volume-driving markets beyond Abu Dhabi and Switzerland, and whether WeRide plans to accelerate R&D and selling expansion in 2026 to support overseas growth.

Answer

CFO Jennifer Li detailed WeRide's robotaxi business model, distinguishing between China's self-ownership and international partnerships. She outlined three revenue streams: revenue share from ride fares, annual licensing, and vehicle sales, providing specific examples for the Middle East market, including utilization rates and profitability projections. CEO Tony Han identified Dubai, Saudi Arabia, Europe, Japan, Singapore, and Korea as potential key volume drivers, emphasizing the replicability of the 'Abu Dhabi model.' He stated that R&D and selling expenditure growth would be moderate, adopting a 'satellite model' to balance scaling, investment, and profitability.

Tim Hsiao from Morgan Stanley asked about the deployment and mass production timeline for the new HPC 3.0 platform, and inquired about the current international fleet size, permit pipeline, and expansion targets for the end of 2025 and 2026.

Answer

CEO Tony Han stated that the HPC 3.0 platform is already deployed in the Robotaxi GXR, the first mass-produced L4 vehicle using NVIDIA Thor, and that it cuts manufacturing costs by 50%. CFO Jennifer Li added that the company has over 1,300 vehicles globally, with under a third outside China. The goal is to add hundreds more vehicles by year-end, primarily internationally, with ambitions for thousands next year, permit-pending.

Tim Hsiao from Morgan Stanley asked about the deployment and mass production timeline for the new HPC 3.0 platform, potential design changes for the next-gen Robotaxi, the pipeline for new permits, and the company's fleet expansion targets for the end of 2025 and for 2026.

Answer

CEO Tony Han stated that the HPC 3.0 platform is already integrated and on the road in the GXR Robotaxi, making it the world's first mass-produced L4 vehicle using NVIDIA's Thor chip. He highlighted its 2,000 TOPS of power, auto-grade standards, and 50% cost reduction. CFO Jennifer Li added that WeRide expects to upgrade its Abu Dhabi testing permit to a commercial one in the coming months. The global fleet is over 1,300 vehicles, with plans to add hundreds more by year-end, focusing on international markets with strong potential like the Middle East.

Tim Hsiao asked about XPENG's long-term competitive advantage in physical AI, how the company plans to continuously enhance these strengths, and the expected revenue trend from the Volkswagen collaboration for Q4 2025 and full year 2026, including when related revenue will begin to be recognized.

Answer

Co-Founder, Chairman, and CEO Mr. He Xiaopeng explained that XPENG's physical AI advantage stems from its full-stack technology capability and cross-domain integration, viewing cars as a new format of robotics. He highlighted the shift from traditional automaker DNA to future tech definition, with over 50% of future car development involving physical AI components. Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang, confirmed that revenue from technical collaboration increased significantly in Q3 2025, with Q4 expected to be comparable. He noted that Turing SoC revenue will start small in Q4 2025 and ramp up with vehicle sales in 2026, with full-year 2026 technical collaboration revenue expected to be comparable to 2025, reinvesting into R&D.

Tim Hsiao asked about XPeng's long-term competitive advantage in physical AI, how the company plans to enhance these strengths, and the revenue trend from the Volkswagen collaboration, including the timing for Turing SoC revenue recognition in Q4 2025 and full year 2026.

Answer

He Xiaopeng, Co-founder, Chairman, and CEO of XPENG, explained that physical AI will soon account for over 50% of car development, driven by full-stack technology and cross-domain integration, positioning cars as a new form of robotics. Charles Zhang, VP of Corporate Finance and VW Projects, confirmed significant technical collaboration revenue in Q3 2025, with Q4 2025 expected to be comparable. Turing SoC revenue will begin in Q4 2025 and ramp up in 2026 with vehicle mass production, with overall 2026 collaboration revenue comparable to 2025, reinvested into R&D.

Tim Hsiao of Morgan Stanley inquired about Xpeng's strategy to reverse its declining average selling price (ASP) and enhance brand positioning, and how the Turing chip will differentiate its smart driving software experience against rising competition.

Answer

CEO He Xiaopeng outlined a four-part strategy to boost ASP through product layout, technology, emotional design, and brand building. He stated that the Turing AI SoC provides a significant computational advantage (2,250 TOPS vs. competitors' 100-700 TOPS), enabling superior VLA+VLM models that will lead to a generational lead in ADAS performance, aiming for a 10x improvement over rivals by next year.

Tim Hsiao of Morgan Stanley inquired about XPeng's sales volume outlook, asking if the company expects a significant increase beyond its recent 30,000-unit monthly run rate, given its strong upcoming model pipeline.

Answer

CEO He Xiaopeng stated that while the focus is on long-term, steady development, a more aggressive new model launch momentum will begin in Q3 2025. President Brian Gu added that new models like the MONA Max, G7, and P7 will be catalysts for growth, and he anticipates deliveries will hit new historical highs in the third quarter.

Tim Hsiao asked if XPeng's L3 autonomous driving can create a lasting competitive advantage or if the technology will become commoditized. He also inquired about the potential synergies across XPeng's investments in AI vehicles, humanoid robots, and flying cars, and the expected impact on R&D and operating expenses.

Answer

Co-Founder, Chairman and CEO He Xiaopeng responded that XPeng's full-stack self-development, early investments, and integrated platform approach will create a significant and widening gap with competitors. He explained that synergies across AI vehicles, flying cars, and robots exist in AI models, manufacturing, and sales networks, with tangible results like mass-produced flying cars expected by 2026.

Tim Hsiao inquired about the widening technology gap in smart driving, asking how XPeng will differentiate its offerings as competitors make ADAS a standard feature. He also asked about the company's strategy to narrow losses and achieve profitability in the upcoming year.

Answer

CEO He Xiaopeng explained that the gap will widen because leadership requires full-stack, in-house R&D across software, hardware, cloud, and chips, a capability many peers lack. He emphasized that true smart driving involves the entire vehicle, not just ADAS. President Brian Gu addressed profitability, citing improving operating leverage, the higher-margin P7 plus model, controlled R&D spending, and scale effects. He reiterated the company's goal to reach breakeven towards the end of the next year, supported by a healthy cash flow and a strong capital base.

Tim Hsiao asked about Hesai Group's competitive landscape in China, specifically how its ATX product compares against new offerings from competitors like EMX. He also sought management's perspective on SPAD SoC systems and chips, inquiring about the advantages of SPAD-based digital LiDAR and any updates on its development.

Answer

CEO David Li discussed Hesai's structured product release timeline, highlighting the market success of Pandar128, AT128, and ATX in terms of performance, volume, and margin. He emphasized Hesai's strategy of not rushing product releases due to competitors, instead focusing on leveraging semiconductor technology, manufacturing capabilities, brand power, and OEM relationships to deliver well-rounded, high-performing products while managing price declines and maintaining gross margins. Regarding SPAD technology, David Li noted Hesai's early adoption in automotive LiDAR (ST-120) and acquisition of a SPAD technology company. He cautioned about challenges with noise and false triggers in off-the-shelf SPAD solutions, stressing Hesai's safety-first approach and diligent work on in-house solutions to mature the technology for reliable adoption.

Tim Hsiao from Morgan Stanley asked about Hesai Group's competitive landscape, specifically how new products from Chinese competitors, such as EMX, compare to Hesai's ATX LiDAR in terms of market positioning and volume. He also sought management's perspective on SPAD SoC systems and chips, inquiring about the advantages of SPAD-based digital LiDAR and any updates on Hesai's related technological developments.

Answer

CEO David Li addressed competition, stating that Hesai's strategy involves a structured product release timeline, ensuring each generation (like AT128 and ATX) offers superior performance, reliability, and market share despite competitive product launches. He emphasized leveraging Hesai's semiconductor technology, manufacturing, and strong OEM relationships to maintain leadership and gross margins. Regarding SPAD technology, Li confirmed Hesai's early adoption and investment but cautioned about current challenges, particularly noise and false triggering, which are critical safety concerns for LiDAR. He stressed that reliability and safety are paramount, and while SPAD holds future promise for cost and features, these issues must be resolved before widespread long-range automotive adoption.

Tim Hsiao from Morgan Stanley questioned the competitive landscape, citing rumors of a peer winning projects from key Hesai clients, and asked about the new 'Infinity Eye' LiDAR solution, including its shipment timeline, client prospects, and margin profile.

Answer

CFO Andrew Fan stated the company doesn't comment on market speculation, emphasizing Hesai's strong product reputation. CEO Yifan Li added that he was unaware of the rumors and highlighted the high technical bar for new suppliers to displace an incumbent. Regarding 'Infinity Eye', Mr. Fan described it as a flexible L2-L4 solution with a shared architecture that has already secured design wins, assuring that gross margins would remain stable despite the new product mix.

Tim Hsiao from Morgan Stanley inquired about the specifics of Hesai's 2025 guidance, asking for a breakdown of the quarterly volume trajectory, product mix between ATX and other models, the impact of ASP erosion, and the gross margin trend throughout the year.

Answer

CFO Peng Fan detailed the 2025 outlook, projecting full-year revenue of RMB 3.0-3.5 billion and shipments of 1.2-1.5 million units. He noted Q1 would see seasonal effects but expected a rebound to profitability in Q2. Fan clarified the ASPs for key products: AT128 at ~$350, the new ATX at ~$200, and a new high-performance AT series at ~$500. He affirmed a full-year blended gross margin target of around 40% and a significant increase in GAAP profitability to RMB 200-350 million.

Tim Hsiao of Morgan Stanley asked for details on the reported removal of Hesai from the U.S. Department of Defense's 1260H list and its potential impact on overseas business. He also inquired about the market opportunity in the robotaxi sector, particularly with Baidu Apollo Go, and whether Hesai could increase value-add through software or assembly services.

Answer

CEO Yifan Li stated that while he could not comment on the speculative report, Hesai's inclusion on the list was a mistake as its products are for commercial use only, and a removal would be highly beneficial for global deals. Regarding robotaxis, Li highlighted the trend of customers like Baidu adopting the AT128 ADAS LiDAR to scale commercialization. He explained that software tools are bundled with the hardware to enhance the product offering, rather than being sold separately. Executive Yuanting Shi reinforced that Hesai focuses exclusively on hardware to mitigate any data security concerns.

Tim Hsiao of Morgan Stanley asked about the anticipated volume contribution and margin profile for the new Zeekr 9X large hybrid SUV following its debut. He also requested additional details about the other upcoming model, the Zeekr 8X, planned for the fourth quarter.

Answer

CEO Cong Hui An expressed high confidence in the new models, citing strong initial orders for the Zeekr 007 GT, 009 Grand Collector's Edition, and Lynk & Co 900. He detailed that both the Zeekr 9X and 8X are positioned in the luxury segment and will feature the new super electric hybrid powertrain. Mr. An highlighted the 9X's leading technology, including its 900-volt architecture and Level 3 ready intelligent driving. He noted the 8X will be a slightly smaller version, over 5 meters long. Critically, he stated that both models are projected to achieve vehicle margins higher than the current company average and have significant potential in both domestic and global markets.

Tim Hsiao of Morgan Stanley asked about the anticipated sales volume contribution and margin profile for the new Zeekr 9X large hybrid SUV. He also requested more details on the upcoming Zeekr 8X model planned for Q4.

Answer

CEO Cong Hui An highlighted the strong market reception for the Zeekr 9X, noting its unique positioning as a luxury SUV with super electric hybrid technology and a 900-volt architecture. He stated that both the 9X and the smaller 8X are expected to have impressive margins, higher than current vehicle levels. He emphasized the significant potential for these hybrid models in both domestic and international markets.

Tim Hsiao questioned the feasibility of the 710,000-unit sales target for 2025 given the intense market competition. He also asked about the company's strategy to ensure its new models stand out in a crowded market.

Answer

Executive Jing Yuan reaffirmed the 2025 sales target of 710,000 units (390,000 for Lynk & Co, 320,000 for Zeekr), stating the company's profitability and financial strength position it well to compete. Executive Cong Hui An acknowledged that Q1 sales were not fully satisfactory but were in line with expectations, anticipating growth from new product launches in subsequent quarters. He emphasized a strategy of making every new model a hit product through technological leadership, such as the Zeekr 9X's super electric hybrid system and 900-volt architecture, combined with competitive pricing.