NIO Inc. Q2 FY2026 earnings call

• Delivery Growth: Delivered 107,658 smart EVs in Q2, a 49.4% year-over-year increase. All three brands (NIO, Onvo, Firefly) achieved growth in volume and average transaction price.
• Brand Performance:
  • NIO: Led the >RMB 350k market; ES8 delivered 140,000 units in 335 days, leading in large SUV segment and NPS. ES9 began deliveries late May, targeting traditional luxury users.
  • Onvo: Delivered 29,124 units; L90 surpassed 60,000 deliveries in its first year, leading the ~RMB 300k large BEV SUV segment.
  • Firefly: Delivered 17,589 units, maintaining #1 market share in high-end compact cars for 15 consecutive months.
• Smart Driving: Rolled out latest 'World Model' to 700,000+ users on June 18. Achieved industry-first parallel development across general-purpose and proprietary chips. Urban NOA adoption increased significantly post-upgrade.
• Infrastructure: Operated 4,123 power swap stations and 30,294 chargers globally. Launched 5th generation swap station on Aug 7, supporting all three brands and enabling external services.
• Financial Health: Maintained non-GAAP operating profit and positive operating/free cash flow. Cash reserves stood at 56.7 billion RMB.
• Strategic Focus: Emphasized shift from product competition to comprehensive system competitiveness (brand, service, tech). Confirmed commitment to pure BEV route.

Total revenue reached RMB32.1 billion (up 69.1% YoY). Vehicle sales contributed RMB29.1 billion, representing approximately 90.7% of total revenue, with a gross margin of 18.5%. Other sales (services, parts, accessories) contributed RMB3.1 billion, or approximately 9.7% of total revenue, with a gross margin of 17%. The overall company gross margin was 18.4%.

• Q3/Q4 Volume: Targeting an average monthly delivery volume of over 40,000 units in Q4 2026. Mid-to-long term annual growth expected at 40-50%.
• Gross Margin: Aim to maintain vehicle gross margin at Q2 levels (~18.5%) in H2 2026 despite expected material cost increases of 2,000-3,000 RMB per car.
• Operating Expenses: Non-GAAP SG&A ratio targeted at 10-11% of total income in H2 2026 (down from ~13% in H1 due to one-off launch costs in Q2). Non-GAAP R&D expenses expected to remain stable around 2.5 billion RMB per quarter.

• Cost Inflation: Rising raw material and chip costs (memory, batteries) exert pressure on margins. Average cost per car increased by ~14,000 RMB compared to end of last year, with further increases expected in H2.
• Intense Competition: The Chinese EV market is in a 'brand purge' period with rapid product iteration. Onvo faces particularly intense competition in its segment.
• Brand Awareness: Onvo's brand awareness is currently comparable to NIO's five years ago, requiring significant investment in marketing and network expansion to drive conversion.

Q: Deutsche Bank asked why NIO’s flagship models (ES8/ES9) sustain demand while competitors fade.

A: CEO Li attributed this to technological innovation, precise product definition for business/family needs, and an unreplicable service ecosystem (swapping/network). He noted that in the current 'brand clarity' phase, NIO has established itself as the primary alternative to BBA, with brand reputation driving >30% of purchase decisions and average selling prices exceeding rivals.

Q: Morgan Stanley queried Onvo’s moderate order momentum and future strategy.

A: Li acknowledged Onvo’s tougher competitive landscape but highlighted its success in raising ASP to >240k RMB (one of only 8 brands to do so). Challenges lie in brand awareness, similar to NIO’s early days. Strategy involves expanding shared Sky stores, launching new products for broader families, and balancing volume with margin without entering the entry-level segment.

Q: UBS analyst Paul Gong asked about sustainability of margin improvements amidst cost inflation and requested guidance on vehicle gross margin.

A: CFO Chu stated that while material costs rose ~14,000 RMB/car vs. late 2024, pricing remained stable and supply chain optimizations stabilized Q2 margin at 18.5%. Costs are expected to rise another 2,000-3,000 RMB/car in H2. Management aims to keep H2 vehicle margin consistent with Q2 through these countermeasures.

Q: J.P. Morgan/Nick Lai asked about cash deployment, CapEx, and free cash flow sustainability.

A: Chu clarified full-year CapEx will be flat (~6-7 billion RMB), focused on R&D and sales networks rather than factory capacity. Power swap expansion (1,000 new stations) will be largely funded by partners via the 'Power Up Partner Plan.' Positive operating and free cash flow are expected to continue into H2, strengthening the 56.7 billion RMB cash position.

Q: BofA/Ming Sun asked about the 5th gen swap station economics and external OEM cooperation pricing.

A: Chu explained the 5th gen station uses flexible design for all brands, reducing material costs and improving operational efficiency by 50% vs. last year. Regarding external OEMs, NIO plans to charge access/admission fees for using the swap network. Details are pending specific project implementations, but standardizing battery packs with partners helps amortize costs.