Yuqian Ding

Yuqian Ding asked about SG&A OPEX optimization, specifically if the Q4 2025 figure of CNY 3.5 billion serves as a baseline for 2026, with a target of under 10% of sales revenue. She also requested a volume and margin breakdown by brand and product portfolio.

Answer

Stanley Qu, CFO, stated that while the absolute SG&A amount will increase with sales volume in 2026, the target is to keep it under 10% of sales revenue, driven by CBU mechanism efficiency. William Li, Founder, Chairman of the Board, and CEO, noted that the five large SUV models would contribute a very high percentage of total volume, and Firefly's volume is rebounding. He reiterated long-term margin targets: NIO 20-25%, Onvo >15%, and Firefly >10%, emphasizing a management mindset shift to balance volume, margin, and overall business performance.

Yuqian Ding from HSBC Holdings plc inquired about the volume and margin breakdown by brand, specifically between the three portfolio brands (NIO, ONVO, Firefly) and the core five large SUV portfolio versus the rest, to understand dynamics supporting sustainable margin expansion.

Answer

Stanley Qu, Chief Financial Officer of NIO, noted the dynamic market in 2026 makes precise breakdowns difficult but highlighted that the five large SUV models will contribute significantly to sales volume, and Firefly's volume is rebounding strongly. He reiterated long-term margin targets: 20%-25% for NIO, above 15% for ONVO, and above 10% for Firefly, driven by a management shift towards balancing volume, margin, and overall business performance via the CBU mechanism.

Yuqian Ding asked about the cost benefits NIO expects to gain from hitting higher volume thresholds, such as a 500,000-unit run rate, specifically concerning critical components like batteries. He also inquired about the potential impact of next year's new models on scale and mix, considering that lower-priced ONVO models might dilute margins, and whether the overall ONVO scale would outweigh this.

Answer

CEO William Li explained that economy of scale benefits come from stronger bargaining power with the supply chain, improving vehicle cost structure (contributing to Q3/Q4 margins and next year's 20% target), and improved manufacturing efficiency. He stated that the three new large SUV models planned for next year are positioned at the higher end of their segments and are expected to contribute significant margins. These models will also benefit from cost optimization synergies with the current ES8 and L90. With five large models combined, NIO expects to achieve an overall vehicle margin of 20% next year.

Yuqian Ding of HSBC asked about the potential for internal cannibalization of existing models like the ES6 and L60 from the attractively priced new ES8 and L90. She also requested a more detailed breakdown of the company's operating expense reduction targets and initiatives.

Answer

Management, via a moderator, responded that the new models are having a positive halo effect, with the L90's launch boosting order intake for the L60 to a new high. They believe the clear pricing system will benefit all models. On OpEx, they reiterated the goal of reaching non-GAAP breakeven in Q4 by controlling R&D expenses to within RMB 2 billion per quarter and reducing the SG&A-to-sales ratio to around 10%.

Yuqian Ding from HSBC explored the potential internal cannibalization of the ES8 and L90 on existing models like the ES6 or L60, and their splash impact on next year's new model pipeline. She also requested more quantification and breakdown of OpEx cut targets and cost optimization initiatives.

Answer

Stanley Qu, CFO, and William Li, Founder, Chairman of the Board, and CEO, through a translator, stated that the L90 had a positive impact on L60 orders, and the ES8's attractive pricing, combined with the 100 kWh battery standardization on 5/6 series, is expected to positively boost the new brand's awareness and existing SUV models. They reiterated Q4 non-GAAP R&D target of within RMB 2 billion and SG&A within 10% of sales revenue, with 2026 R&D projected at RMB 2 billion-RMB 2.5 billion per quarter, emphasizing continuous efficiency improvements.

Yuqian Ding from HSBC asked about the key selling points for the higher-priced Envoy L80 and L90 models and the expected sales mix. She also inquired about cash flow management and improvements, given the company's high gearing ratio and its Q4 breakeven target.

Answer

Management positioned the Envoy L90 as a game-changer in the three-row SUV segment due to its space and energy efficiency. On cash flow, they attributed the Q1 cash decrease to seasonality and one-off expenses, noting that rising sales volumes from Q2 onwards are expected to improve operating cash flow, with a goal of achieving positive free cash flow for the full year.

Yuqian Ding from HSBC asked for key milestones and challenges for NIO's autonomous driving development in the next 6-12 months. She also inquired about the company's updated breakeven timeline and capital requirements amid an aggressive product cycle.

Answer

CEO Bin Li highlighted the rollout of the end-to-end NIO World Model (NWM) and stated the key goal for next year is to make smart driving 10 times safer than human driving. CFO Stanley Qu noted that the company achieved positive free cash flow in Q3 and expects to continue this in Q4, reducing the immediate need for fundraising. CEO Bin Li added that the company is targeting full-year breakeven in 2026 and will plan its strategy accordingly.

Yuqian Ding from HSBC asked about NIO's key milestones, challenges, and highlights for autonomous driving over the next 6-12 months. She also inquired about the company's updated breakeven timeline and capital requirements for the next 12-18 months.

Answer

CEO Bin Li highlighted the introduction of the NIO World Model (NWM) and end-to-end solution, stating the goal for next year is to make smart driving 10 times safer than human driving. CFO Stanley Qu mentioned that NIO achieved positive free cash flow in Q3 and expects to continue this in Q4, stating there is no urgent need for fundraising. CEO Bin Li added that the company is targeting full-year breakeven in 2026 and will plan its strategy accordingly.

Yuqian Ding from HSBC requested an update on the progress of NIO's Navigate on Pilot (NOP) system, specifically regarding take rates, disengagement rates, and scenario coverage. She also asked how NIO and ONVO plan to maintain growth amidst macro headwinds and increasing competition in the premium EV segment.

Answer

CEO William Li highlighted that NOP+ has over 300,000 users and has surpassed 1.1 billion kilometers driven. He emphasized the shift to an end-to-end architecture, evidenced by the new AEB function and the NAD Arch 2.0. To counter market pressures, Li outlined a three-pronged strategy: covering a wider price range with three brands (NIO, ONVO, Firefly), offering a diverse product portfolio, and expanding market reach into lower-tier cities and overseas, supported by the growing charging and swapping network.

Yuqian Ding asked for an update on the strategy of reallocating model displays in sales channels to boost high-end models like the L8. She also requested the revised full-year R&D expense guidance following organizational adjustments in the first half of the year.

Answer

SVP James Liangjun Zou confirmed that as more stores open in auto parks, display space for the L8 has recovered, supported by new online sales channels. He stated that L8 monthly deliveries have now stabilized in the 6,000 to 7,000 unit range. CFO Johnny Tie Li provided updated guidance, stating that full-year GAAP R&D expenses are expected to be below RMB 12 billion.