NIO Inc. Q3 FY2025 earnings call

• Product launches: Launched two large zero battery electric SUVs, Omo L90 and new Omo ES8; Firefly continued market growth with new Envo and other brands. - Smart driving: NWM is the first world model with closed-loop training system, and Coconut 210 scheduled for year-end will upgrade urban and highway NOA, parking, etc. - Network: Self and service network includes 172 NIO houses, 395 NIO spaces, 422 Amo stores, etc. Global charging and swapping network has 3,641 power swap stations, over 92 million swaps. - Financing: Completed $1.16 billion in equity financing in September. - Event support: 2025 NIO Cup Formula Student Electric China successfully concluded.

In Q3 2025, NIO delivered 87,071 smart EVs, a year-over-year growth of 40.8%. In October, 40,397 smart EVs were delivered, up 92.6% year-over-year. For Q4, total deliveries are expected to be in the range of 120,000 to 125,000, a year-over-year increase of 60.1% to 72%. Financially, vehicle gross margin improved to 14.7% in Q3, other sales gross margin was 7.8%, and overall gross margin was 13.9%, the highest in nearly three years. Non-GAAP operating loss was narrowed by 30% quarter over quarter. Q3 operating cash flow and free cash flow both turned positive. Amo brand: L90 delivered over 33,000 units in three months since launch, leading the large battery electric SUV segment; L60 maintained top two position in battery electric SUV segment above 200,000 RMB. Firefly brand: Led high-end small EV market in sales volume, with special editions enhancing appeal and expanding globally.

• Q4 total deliveries expected to be 120,000 - 125,000, a year-over-year increase of 60.1% - 72%. - Vehicle gross margin in Q3 was 14.7%, expected to be around 18% in Q4. - 2026 expected vehicle gross margin around 20%, dependent on continuous cost optimization. - Full year 2026 aims for non-GAAP profitability.

• Impact of phase-out and termination of trade-in and replacement subsidies since October, affecting market demand, especially for Amo L60 and L90. - Uncertainty from changes in new energy vehicle purchase tax policies, which may impact market penetration and product sales.

Q: Bin Wang asked about margin drivers in Q3.

A: William Li said margin improvement in Q3 was driven by cost reduction from sales volume increase and sales of high-margin L90.

Q: Jeff asked about 4Q ASP and first quarter margin outlook.

A: William Li said average selling price in Q4 increases due to ES8 sales; first quarter margin may be lower than Q4 but better than Q1 last year due to ES8 order backlog.

Q: Ming-Hsun Lee asked about overseas expansion strategy and Amo brand's future products.

A: William Li said switching to partner-based business model for global expansion, Amo brand will have product bandwidth from 100,000 - 300,000 RMB with more diverse products.

Q: Xing Chang asked about R&D expense allocation.

A: William Li said CPU mechanism helps improve R&D efficiency, maintains competitiveness, and focuses on ROI evaluation for R&D activities.

Q: Yuqian Ding asked about cost benefit from volume threshold and next year's new model margin impact.

A: William Li said economy of scale contributes to cost structure improvement, five large models next year expected to contribute good margin performance with 20% vehicle margin target.