NIO Inc. (NIO) Earnings

Management highlights

- Product Launch Milestones & Portfolio * NIO's all-new ES8 (priced above 400,000 RMB) hit 100,000 deliveries in 215 days, a record for passenger vehicles above that price point in China, and held the number one sales position in its segment for five consecutive months. * The new NIO ES9, flagship executive SUV priced above 500,000 RMB, launched for pre-orders/test drives in May 2026 with deliveries starting May 27; it features multiple industry-first technologies and has seen strong pre-launch order momentum. * Updated 2026 models of the ES6, EC6, ET5, and ET5T launched and began deliveries in early April 2026. The AMO L90 received core technology upgrades including in-house NX1931 smart driving chip, and the new AMO L80 (large five-seat SUV) launched in mid-May 2026. * Firefly launched a refreshed model in Q2 2026 with upgrades to powertrain and smart features, and will continue rolling out limited edition models to strengthen brand identity. - Technology & Smart Driving * A major new version of NIO's New World Model (NWM) smart driving architecture launched earlier in 2026, delivering a 92% quarter-over-quarter increase in urban navigation knowledge and a 116% increase in user smart driving usage time. NWM is now rolled out across all new AMO products, with a next major upgrade coming in June 2026 for all NIO and AMO users. * NIO's in-house developed 5nm smart driving chip (NX9031) is already mass-produced and mature, with over 250,000 units shipped to date; the chip is now being rolled out to AMO models, and more than 80% of all NIO vehicles will feature in-house chips by H2 2026. * NWM plus closed-loop reinforcement learning delivers better smart driving performance than peers using only 20% of competitor cloud computing power, improving R&D efficiency. - Sales, Service & Power Infrastructure * NIO's global network includes 168 NIO Houses, 389 NIO Spaces, 430 retail stores, 408 service centers, 90 delivery centers, 3,916 power swap stations, and over 28,000 supercharging/destination chargers. The company continues expanding network density and market coverage via its coordinated SkyStore model. * A recent 10,000-kilometer BEV challenge completed in 94 hours 19 minutes set a new industry record, verifying the reliability, efficiency and convenience of NIO's battery swap technology. - Brand & Competitive Positioning * All three brands hold clear premium positioning in their respective segments: NIO has an average selling price (ASP) of 390,000 RMB (50,000 RMB higher than BMW, 50% higher than Audi), AMO has an ASP of 240,000 RMB on par with second-tier luxury brands, and Firefly has an ASP 50% higher than competing small cars with two-thirds share of its high-end segment. NIO has already surpassed traditional luxury ICE brands in market share in China's first-tier cities like Shanghai.

Guidance

- Delivery guidance for Q2 2026: Total deliveries are expected to reach 110,000 to 115,000 units, representing 52.7% to 59.6% year-over-year growth, supported by the intensive new product launch cycle. - Full-year 2026 financial guidance: Maintain target of positive non-GAAP operating profit for the full year. - Vehicle margin guidance: Target 17% to 18% vehicle margin for Q2 2026 and full-year 2026, despite raw material cost pressures, supported by a high mix of high-margin models, stable pricing for other models, and supply chain efficiency improvements. - R&D expenditure guidance: Maintain quarterly non-GAAP R&D spending target of 2 billion to 2.5 billion RMB, equal to 20 billion to 25 billion RMB annualized, which is sufficient to support core technology development and new product launches after organizational efficiency improvements. - SG&A guidance: Target SG&A as a percentage of total revenue around 10% full-year, with temporary fluctuation in Q2 2026 due to higher marketing costs for intensive new product launches, followed by lower absolute spending in H2 2026. - Other sales (services/community) margin guidance: Target 20% margin for full-year 2026, with further long-term improvement expected as user base grows and efficiency increases. - Battery swap station guidance: Target deploying more than 1,000 new battery swap stations in 2026, with mass rollout of fifth-generation stations starting Q3 2026. Short-term focus is on network expansion rather than standalone profitability.

Segment performance

NIO operates three vehicle product brands: NIO (core premium), AMO (mid-market), and Firefly (high-end small car). In Q1 2026, the company delivered 83,465 total smart EVs, a 98.3% year-over-year increase: - NIO brand: Delivered 58,543 vehicles, holds leadership in China's BEV segment priced above 300,000 RMB. It contributes over 50% of the company's total vehicle margin, with individual vehicle margin above 20% for its core ES8 model. - AMO (formerly Lezao) brand: Delivered 13,339 vehicles, ranks first in the large SUV segment priced 200,000-300,000 RMB. - Firefly (formerly Yinghuchong) brand: Delivered 11,583 vehicles, holds the top position in China's high-end small car segment with ~two-thirds market share. Financially, total company revenue was 25.5 billion RMB in Q1 2026, up 112.2% year-over-year: - Vehicle sales revenue: 22.8 billion RMB (89.4% of total revenue), up 129.2% year-over-year, with vehicle margin of 18.8% (improved 860 bps year-over-year and 70 bps quarter-over-quarter). - Other sales (services, community, power solutions, accessories): 2.7 billion RMB (10.6% of total revenue), up 31.2% year-over-year, with margin reaching 20.6% (a four-year high). Overall gross margin for the company was 19% in Q1 2026, up from 7.6% year-over-year and 17.5% quarter-over-quarter. R&D expenses were 1.9 billion RMB, down 40.7% year-over-year, and SG&A expenses were 3.5 billion RMB, down 20.5% year-over-year. The company reported a net loss of 0.3 billion RMB, with an adjusted (non-GAAP) net profit of 43.5 million RMB and ending cash reserves of 48.2 billion RMB.

Risks & headwinds

- Industry-wide raw material and component cost inflation: Rising prices of memory chips, battery raw materials (lithium carbonate, NCM), copper, and aluminum have increased average per-vehicle costs by more than 10,000 RMB, creating margin pressure starting in Q2 2026. - Increasing competition in the premium large SUV segment: Competitors have launched new competing models, some with aggressive pricing, following the success of NIO's ES8. - Low brand awareness for the AMO brand: As a relatively young brand with only ~20 months of delivery history, AMO still has lower market awareness compared to established brands, requiring ongoing investment to expand reach. - New model demand sustainability risk: New models often see strong initial orders but can face sharp demand declines after the launch 'new vehicle effect', requiring sustained competitive positioning to maintain mass sales volumes.

Analyst Q&A

• Q: What is the current pre-order momentum for the NIO ES9, and what impact is it having on ES8 orders? What is the outlook for Q2 and full-year gross margin amid rising component costs?

  A: The ES9 has strong pre-order and test drive momentum, with strong market recognition of its technology, exterior, and interior design. Management is confident it will succeed in the executive SUV segment above 500,000 RMB and does not expect it to cannibalize ES8 orders. Instead, ES9 pre-launch activity increased in-store traffic, lifting ES8 weekly orders by nearly 30% and pushing May 2026 ES8 orders to a record high since launch, as the two models have complementary positioning. On gross margin, rising component costs add over 10,000 RMB per vehicle starting Q2, but NIO maintains its full-year target of 17%-18% vehicle margin, supported by a high mix of high-margin ES8/ES9, stable pricing for other models, and supply chain optimization to offset cost increases.

• Q: With 2026 volume growth driven heavily by 8/9 series large SUVs, how will NIO drive growth for the rest of the portfolio longer-term, and can it maintain non-GAAP profitability with current OPEX levels?

  A: After the ES9 launch this year, NIO will enter a new product cycle starting 2027, upgrading all existing mainstream models (ET5, ET5T, ES6, EC6) to the latest technology and digital platforms. Current product portfolio already supports strong competitiveness, with NIO holding 8% passenger vehicle market share in Shanghai as of Q1 2026, the highest among all automakers. Management maintains the full-year 2026 target of positive non-GAAP operating profit. Current quarterly R&D spending of 2-2.5 billion RMB is sufficient to support core technology (chips, operating systems) and new product launches, as organizational efficiency improvements mean current R&D productivity matches the output of 3.5 billion RMB in spending in prior years. SG&A is targeted to hit ~10% of revenue full-year, with temporary Q2 increases from new product marketing.

• Q: How does NIO plan to maintain its leading position in the high-end large SUV segment amid growing competition from new aggressive-priced entrants?

  A: NIO's 11 years of investment in six core systemic capabilities (full-stack in-house technology, innovative supply chain, advanced manufacturing, lifecycle quality, power swap infrastructure, holistic premium user experience) create a sustainable competitive advantage that cannot be matched by new entrants. NIO has already established clear premium brand positioning recognized by users, with all three brands holding price points above segment competitors and delivering sufficient user value to justify pricing. NIO's focus on brand values, original design, and user community creates emotional resonance that drives loyalty, removing the need to compete on aggressive low pricing which cannot deliver margins amid current cost pressures. NIO holds 49.7% market share in large three-row SUVs priced above 400,000 RMB, a lead management expects to maintain.

• Q: What are the key drivers of the record 20%+ margin for other sales in Q1, and is this trend sustainable?

  A: There are no one-off factors behind the margin improvement, which reflects an inflection point for NIO's service and community businesses. Key drivers include strong user stickiness and willingness to pay for premium after-sales, accessories, and Neolife merchandise, driven by NIO's long-term focus on holistic user experience. Second, operational efficiency for power services has improved significantly, with lower per-station operating costs. Third, NIO generates additional returns from energy trading via off-peak charging arbitrage. Management targets 20% other sales margin for full-year 2026, with further long-term improvement as the user base grows and efficiency increases, positioning other sales as a key long-term growth and profit driver.