蔚來 (NIO) 2022 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for NIO Incorporated's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded.

你好，女士們，先生們。感謝您參與 NIO Incorporated 2022 年第三季度財報電話會議。此時，所有參與者都處於只聽模式。今天的電話會議正在錄音中。

I will now turn the call over to your host, Ms. Eve Tang from Capital Markets. Please go ahead, Eve.

我現在將把電話轉給您的主持人，資本市場的 Eve Tang 女士。請繼續，夏娃。

Good morning and good evening, everyone. Welcome to NIO's third quarter 2022 earnings conference call. The Company's financial and operating results were published in the press release earlier today and are posted at the Company's IR website.

大家早上好晚上好。歡迎來到蔚來汽車 2022 年第三季度財報電話會議。公司的財務和經營業績於今天早些時候發佈在新聞稿中，並發佈在公司的投資者關係網站上。

On today's call, we have Mr. William Li, Founder, Chairman of the Board, and Chief Executive Officer, Mr. Steven Feng, Chief Financial Officer, Mr. Stanley Qu, Senior Vice President of Finance.

在今天的電話會議上，我們有創始人、董事會主席兼首席執行官李偉文先生，首席財務官馮志文先生，財務高級副總裁曲志偉先生。

Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款作出的前瞻性陳述。

Forward-looking statements involve inherent risks and uncertainties. As such, the Company's actual results may be materially different from the views expressed today.

前瞻性陳述涉及固有風險和不確定性。因此，本公司的實際結果可能與今天所表達的觀點存在重大差異。

Further information regarding risks and uncertainties is included in certain filings of the Company with the U.S. Securities and Exchange Commission, the Stock Exchange of Hong Kong Limited and the Singapore Exchange Securities Trading Limited.

有關風險和不確定性的進一步信息包含在公司向美國證券交易委員會、香港聯合交易所有限公司和新加坡證券交易所有限公司提交的某些文件中。

The Company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

除適用法律要求外，本公司不承擔更新任何前瞻性陳述的任何義務。

Please also note that NIO's earnings press release and this conference call includes discussions of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. Please refer to NIO's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

另請注意，蔚來汽車的收益新聞稿和本次電話會議包括對未經審計的 GAAP 財務信息以及未經審計的非 GAAP 財務指標的討論。請參閱蔚來汽車的新聞稿，其中包含未經審計的非公認會計原則措施與可比公認會計原則措施的對賬。

With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead.

有了這個，我現在將把電話轉給我們的首席執行官 William Li 先生。威廉，請繼續。

(Interpreted) Hello everyone. Thank you for joining NIO's third quarter 2022 earnings call.

（翻譯）大家好。感謝您參加蔚來汽車 2022 年第三季度財報電話會議。

In the third quarter 2022 NIO delivered a total of 31,607 smart electric vehicles, up 29.3% year-over-year, setting a new quarterly high.

2022年第三季度蔚來共交付智能電動汽車31607輛，同比增長29.3%，創下季度新高。

Based on our latest technology program, NT2.0, we have launched and delivered three new products, which has improved the competitiveness of our product line-up in all aspects, and enabled NIO to enter more premium segments, capitalizing continuous demand growth.

基於我們最新的技術方案NT2.0，我們推出並交付了三款新產品，全面提升了我們產品線的競爭力，並讓蔚來進入更多的高端細分市場，利用持續的需求增長。

In October, overcoming the production and supply chain volatilities, we delivered 10,059 vehicles, representing a 174.3% increase year-over-year. We will continue to collaborate closely with our supply chain partners, to stabilize component supply and further accelerate the vehicle production and delivery. We expect the total number of deliveries in the fourth quarter of 2022 to be between 43,000 to 48,000.

10月，克服生產和供應鏈波動，共交付汽車10,059輛，同比增長174.3%。我們將繼續與供應鏈合作夥伴密切合作，穩定零部件供應，進一步加快整車生產和交付。我們預計 2022 年第四季度的交付總數將在 43,000 至 48,000 之間。

Next, I would like to share some recent highlights of our R&D and operations.

接下來，我想分享一下我們最近在研發和運營方面的一些亮點。

In September, as the show cars of ET5, a smart electric mid-size sedan began to be on display in our stores, Store traffic reached a record high, and order intake witnessed a strong growth momentum.

9月，作為ET5的展車，一款智能電動中型轎車開始在門店展出，門店客流量創歷史新高，訂單增長勢頭強勁。

On 30 September we officially kicked off the delivery of ET5, and the preliminary user satisfaction rate exceeded our expectations.

9 月 30 日，我們正式啟動了 ET5 的交付，初步的用戶滿意率超出了我們的預期。

Over the past couple of months, Banyan, the digital system of NT2, has iterated and upgraded multiple times, with continuous user experience improvement. We have strong confidence in the market competitiveness of the new models, based on the NT2 platform.

幾個月來，NT2的數字系統悅榕莊進行了多次迭代升級，用戶體驗不斷提升。我們對基於NT2平台的新機型的市場競爭力充滿信心。

With respect to the sales and service network, we now have 399 new houses and new spaces in 149 cities and 280 service centers and delivery centers in 163 cities.

在銷售和服務網絡方面，我們現在在149個城市擁有399套新房和新空間，在163個城市擁有280個服務中心和配送中心。

In terms of the charging and swapping network, NIO has installed a total of 1210 power swap stations, and provided 14 million battery swaps for users. NIO has installed 2055 charging stations with 5765 power chargers and 6077 destination chargers in place. In the meantime, our power map has connected to over 590,000 third party chargers in China and more than 380,000 chargers in Europe.

在充換電網絡方面，蔚來累計安裝換電站1210座，為用戶提供1400萬次換電。蔚來已安裝 2055 個充電站，配備 5765 個充電樁和 6077 個目的地充電樁。同時，我們的電源地圖已連接中國超過 590,000 個第三方充電器和歐洲超過 380,000 個充電器。

Since we entered the Norwegian market last September, our products and services have been well received by local users and the user community has been growing rapidly, which has laid a solid foundation for, and boosted our confidence in entering more markets in Europe.

自去年9月進入挪威市場以來，我們的產品和服務受到了當地用戶的好評，用戶群體迅速壯大，為我們進入更多歐洲市場奠定了堅實的基礎，也增強了我們的信心。

On 7 October this year we held NIO Berlin 2022, where we comprehensively introduced our products and services to users in Europe, marking our official market entry in Germany, the Netherlands, Denmark and Sweden.

今年10月7日，我們舉辦了蔚來柏林2022，向歐洲用戶全面介紹了蔚來的產品和服務，標誌著蔚來正式進入德國、荷蘭、丹麥和瑞典市場。

NIO Berlin drew a lot of attention and recognition from users and auto industry in Europe. We are now organizing large scale test drives and kicked off user delivery in Europe.

NIO柏林受到了歐洲用戶和汽車行業的廣泛關注和認可。我們現在正在組織大規模的試駕，並在歐洲開始了用戶交付。

Yesterday, NIO ET7 won the 2022 Golden Steering Wheel Award, granted by the prestigious German magazine, Auto Bild, as ET7 was voted the best car in the medium and upper-class category. Both our products and the innovative technology have been highly recognized by the users, industry experts and the professional media in Europe.

昨天，蔚來ET7榮獲德國權威雜誌《汽車圖片報》頒發的2022年度金方向盤獎，ET7被評為中高檔車型。我們的產品和創新技術都得到了歐洲用戶、行業專家和專業媒體的高度認可。

To better serve user communities in Europe, we plan to open NIO Houses and NIO Spaces in 10 major European cities, such as Berlin, Frankfurt, Rotterdam, Copenhagen and Stockholm.

為了更好地服務歐洲用戶社區，我們計劃在柏林、法蘭克福、鹿特丹、哥本哈根和斯德哥爾摩等 10 個歐洲主要城市開設 NIO Houses 和 NIO Spaces。

We also plan to install 20 Power Swap Stations in Europe by the year end and another 100 by the end of 2023, so that more users can experience NIO's chargeable, swappable and upgradable power system in Europe.

我們還計劃年底前在歐洲安裝20個換電站，到2023年底再安裝100個，讓更多用戶在歐洲體驗蔚來可充電、可更換、可升級的電力系統。

In addition, we have established an R&D center in Berlin for localized development and deployment of digital cockpit and ADAS, to continuously improve the intelligent digital experience of local users.

此外，我們在柏林成立了研發中心，用於數字座艙和ADAS的本地化開發和部署，不斷提升本地用戶的智能數字體驗。

On 27 September, NIO announced the collaboration with the Danish Society for Natural Conservation and the Danish Nature Foundation on the Clean Parks initiative. NIO hopes to actively engage with the local communities, share the responsibilities and jointly make contributions to a more sustainable future.

9 月 27 日，蔚來宣布與丹麥自然保護協會和丹麥自然基金會就清潔公園倡議展開合作。蔚來希望與當地社區積極互動，分擔責任，共同為更可持續的未來做出貢獻。

On 30 September, upholding NIO's original aspiration of Blue Sky Coming, NIO released the first NIO Environment Social and Governance Report 2021, where NIO shared its ESG management practices and performance in 2021.

9月30日，秉持蔚來藍天來的初心，蔚來發布了首份《2021蔚來環境社會與管治報告》，蔚來分享了蔚來2021年ESG管理實踐和表現。

In 2022, NIO has further advanced in products, core technologies, charging and swapping network as well as its sales and service network, which has laid a solid foundation for us to compete in the global market for the long run.

2022年，蔚來在產品、核心技術、充換電網絡、銷售服務網絡等方面進一步提升，為我們在全球市場的長期競爭奠定了堅實的基礎。

In spite of the operation challenges brought forward by the changing macro environment, we believe that NIO is fully capable of staying focused on product and technology innovations, as well as service capability improvement, while further optimizing the cost structure and improving operational efficiency, to introduce more beyond-experience products and services to users worldwide.

儘管宏觀環境變化帶來運營挑戰，但我們相信蔚來完全有能力在產品和技術創新、服務能力提升的同時，進一步優化成本結構，提昇運營效率。為全球用戶提供更多超越體驗的產品和服務。

As always, thank you for your support. With that, I will now turn the call over to Steven, to provide the financial details for the third quarter 2022. Over to you, Steven.

一如既往，感謝您的支持。有了這個，我現在將把電話轉給史蒂文，提供 2022 年第三季度的財務細節。交給你，史蒂文。

Thank you, William. I will now go over our key financial results for the third quarter of 2022. And to be mindful of the length of this call, I will reference to RMB only in my discussion today. I encourage listeners to refer to our earnings press release, which is posted online for additional details.

謝謝你，威廉。我現在將回顧一下我們 2022 年第三季度的主要財務業績。為了注意這次電話會議的時間，我將在今天的討論中僅提及人民幣。我鼓勵聽眾參考我們的收益新聞稿，該新聞稿發佈在網上以獲取更多詳細信息。

Our total revenues in the third quarter were RMB13.0 billion, representing an increase of 32.6% year-over-year and 26.3% quarter-over-quarter.

第三季度總收入為人民幣130億元，同比增長32.6%，環比增長26.3%。

Our total revenues are made of two parts, vehicle sales and other sales. Vehicle sales in the third quarter were RMB 11.9 billion, representing an increase of 38.2% year-over-year and 24.7% quarter-over-quarter. The increase in vehicle sales year-over-year and quarter-over-quarter was mainly attributed to higher deliveries as a result of more diversified product mix offered to our users.

我們的總收入由兩部分組成，汽車銷售和其他銷售。第三季度汽車銷售額為人民幣119億元，同比增長38.2%，環比增長24.7%。汽車銷量同比和環比的增長主要是由於為我們的用戶提供更多樣化的產品組合，導致交付量增加。

Other sales in the third quarter were RMB1.1 billion, representing a decrease of 8.5% year-over-year, an increase of 48.2% quarter-over-quarter. The decrease of sales year-over-year was mainly due to the decreased revenue derived from sales of automotive regulatory credits, offset by the increase in other revenues in line with the incremental vehicle sales. The increase in other sales quarter-over-quarter was mainly attributed to the increased revenue derived from sales of automotive regulatory credits and increase in other revenues in line with incremental vehicle sales.

第三季度其他銷售額為人民幣11億元，同比下降8.5%，環比增長48.2%。銷售額同比下降的主要原因是汽車監管信用銷售收入減少，但與汽車銷售增量相一致的其他收入增加抵消了這一影響。其他銷售額環比增長主要是由於汽車監管信貸銷售收入增加，以及其他收入隨著汽車銷量的增加而增加。

Gross margin in the third quarter of 2022 was 13.3%, compared with 20.3% in the third quarter of 2021 and 13.0% in the second quarter of 2022. The decrease of gross margin year-over-year was mainly attributed to, first the decreased revenue derived from sales of automotive regulatory credits with high sales margin, second, the decrease of vehicle margin, and third, the reduction in other sales margin, resulting from expanded investment in power and service network. The increase of gross margin quarter-over-quarter was mainly attributed to sales of automotive regulatory credits with high sales margin.

2022年第三季度毛利率為13.3%，2021年第三季度為20.3%，2022年第二季度為13.0%。毛利率同比下降主要是由於，首先是下降收入來自於銷售利潤率較高的汽車監管信貸的銷售，二是車輛利潤率的下降，三是其他銷售利潤率的下降，原因是電力和服務網絡的投資擴大。毛利率環比增長主要是由於銷售利潤率較高的汽車監管積分。

More specifically, vehicle margin in the third quarter was 16.4%, compared with 18.0% in the third quarter of 2021, and 16.7% in the second quarter of 2022. The decrease of vehicle margin year-over-year was mainly attributed to the increased battery cost per unit, which was partially offset by the decrease in subsidization in user vehicle financing arrangements. Vehicle margin remained stable quarter-over-quarter.

具體而言，第三季度車輛利潤率為16.4%，而2021年第三季度為18.0%，2022年第二季度為16.7%。車輛利潤率同比下降主要是由於增加了單位電池成本，部分被用戶車輛融資安排補貼的減少所抵消。車輛利潤率環比保持穩定。

R&D expenses in third quarter were RMB2.9 billion, representing an increase of 146.8% year-over-year and 37% quarter-over-quarter. The increase in R&D expenses year-over-year and quarter-over-quarter was mainly attributed to the increased personnel costs in research and development functions, as well as incremental design and development costs for new products and technologies.

第三季度研發費用為人民幣29億元，同比增長146.8%，環比增長37%。研發費用同比和環比增加的主要原因是研發職能人員成本增加，以及新產品和技術的設計和開發成本增加。

SG&A expenses in third quarter were RMB2.7 billion, representing an increase of 48.6% year-over-year and 18.8% quarter-over-quarter. The increase in SG&A expenses year-over-year and quarter-over-quarter was primarily due to first, the increase in personnel costs related to sales and the general corporate functions, second, the increased expenses related to the Company's sales and service network expansion, third, increase in marketing and promotional activities to promote our vehicles in China and Europe.

第三季度SG&A費用為人民幣27億元，同比增長48.6%，環比增長18.8%。 SG&A費用同比和環比增加的主要原因一是與銷售和一般公司職能相關的人員成本增加，二是與公司銷售和服務網絡擴張相關的費用增加第三，增加營銷和促銷活動，在中國和歐洲推廣我們的車輛。

Loss from operations in the third quarter was RMB3.9 billion, representing an increase of 290.2% year-over-year and 36.0% quarter-over-quarter. Other losses in the third quarter of 2022 was RMB495.6 million, representing an increase of RMB528.2 million from other income of RMB32.6 million in the third quarter of 2021 and an increase of RMB305.6 million from the second quarter of 2022.

第三季度經營虧損為人民幣39億元，同比增長290.2%，環比增長36.0%。 2022年第三季度其他虧損為人民幣4.956億元，較2021年第三季度其他收入人民幣3,260萬元增加人民幣5.282億元，較2022年第二季度增加人民幣3.056億元.

The increase of other losses over the third quarter of 2021 and second quarter of 2022 was mainly due to the loss from the revaluation of our overseas Renminbi-related assets as a result of the depreciation of Renminbi against US dollar in the third quarter of 2022.

其他虧損較2021年第三季度和2022年第二季度增加的主要原因是2022年第三季度人民幣兌美元貶值，導致境外人民幣相關資產重估損失。

Net loss in the third quarter was RMB4.1 billion, representing an increase of 392.1% year-over-year and 49.1% quarter-over-quarter.

第三季度淨虧損為人民幣41億元，同比增長392.1%，環比增長49.1%。

Net loss attributable to NIO's ordinary shareholders in the third quarter was RMB4.1 billion, representing an increase of 44.9% year-over-year and 50.9% quarter-over-quarter.

第三季度歸屬於蔚來普通股股東的淨虧損為人民幣41億元，同比增長44.9%，環比增長50.9%。

Our balance of cash and cash equivalents, restricted cash, short-term investment and long-term [time] (added by the company after the call) deposits were RMB51.4 billion as of September 30, 2022.

截至 2022 年 9 月 30 日，我們的現金及現金等價物、受限制現金、短期投資和長期[時間]（由公司在催繳後補充）存款餘額為人民幣 514 億元。

Now, this concludes our prepared remarks. I will now turn the call over to the operator to facilitate our Q&A session.

現在，我們準備好的評論到此結束。我現在將把電話轉給接線員，以方便我們的問答環節。

Thank you. We will now begin the question-and-answer session. (Operator instructions). At this time, we will pause momentarily to assemble our roster. Our first question comes from Ming Hsun Lee with Bank of America. Please go ahead.

謝謝你。我們現在開始問答環節。 （操作員說明）。在這個時候，我們將暫停片刻以組建我們的名冊。我們的第一個問題來自美國銀行的 Ming Hsun Lee。請繼續。

(Spoken in Chinese). Previously, your capacity is capped by component supply, especially the welding part as well as the chips, so could you also update your latest component capacity if there is no COVID control impact? Thank you.

（用中文講）。以前，您的產能受到組件供應的限制，尤其是焊接部分和芯片，那麼如果沒有 COVID 控制影響，您是否也可以更新您的最新組件產能？謝謝你。

(Interpreted) Thank you, Ming, for your question. Yes, regarding the production in October, there has been some impacts due to several reasons and the impact is around several thousand. One factor is because of the subframes, just like you mentioned, but we expect that this will be resolved in November and then the second reason is the new EDS for ET5. We actually have a new EDS plant next to our Factory 2 and the automation level of the new EDS plant is very high. We only need to have around 30,000 people to support the overall operation of this new EDS plant. Due to the ramp-up volatilities of the EDS, our production is affected by around 2000 to 3000.

（翻譯）謝謝你，明，你的問題。是的，關於10月份的生產，由於幾個原因，受到了一些影響，影響在幾千左右。一個因素是因為子幀，就像你提到的那樣，但我們預計這將在 11 月得到解決，然後第二個原因是 ET5 的新 EDS。實際上，我們在工廠 2 旁邊有一個新的 EDS 工廠，新 EDS 工廠的自動化水平非常高。我們只需要大約 30,000 人來支持這個新 EDS 工廠的整體運營。由於 EDS 的大幅波動，我們的產量受到大約 2000 到 3000 的影響。

The third reason is the COVID-19 situations. I believe this has impacted the production for around one week. So, overall speaking, all those factors have affected the production in October but we have resumed normal production now and we expect to have a new production line for the new EDS next week and probably by the end of this month, this new EDS line will be ready and we can ramp up the production.

第三個原因是 COVID-19 的情況。我相信這已經影響了大約一周的生產。因此，總體而言，所有這些因素都影響了 10 月份的生產，但我們現在已經恢復正常生產，我們預計下週將有一條新的 EDS 生產線，可能到本月底，這條新的 EDS 線將做好準備，我們可以提高產量。

We have already solved the subframe issue and I believe probably in December, ET5 production will not be an issue and as of now, I don't believe that there is any production issue for the ET7 and the ES7.

我們已經解決了副車架問題，我相信可能在 12 月，ET5 的生產不會成為問題，到目前為止，我認為 ET7 和 ES7 沒有任何生產問題。

(Spoken in Chinese). The US semi ban, how will this impact the development for the industry and also NIO, besides NVIDIA currently can sell A800 chips to China, if compared to A100, how do you see the impact to the progress of our autonomous driving training?

（用中文講）。美國的半禁令，這對行業和蔚來的發展會有什麼影響，除了NVIDIA目前可以向中國銷售A800芯片外，如果與A100相比，您如何看待對我們自動駕駛培訓進度的影響？

(Interpreted) Thank you for your question. Regarding the chip act, I believe this mainly affected the chip used for cloud training. Right now, I believe that we have sufficient chips, like the A100, to satisfy the need for the AD training in the long run but at the same time, we're also exploring different opportunities. For example, we are considering working together with some cloud service providers and we are also evaluating some long-term solutions to support the iteration of our AD solutions. As of now, I don't actually see any impact on our operations.

（翻譯）謝謝你的提問。關於芯片行為，我相信這主要影響了用於雲訓練的芯片。目前，我相信我們有足夠的芯片，比如 A100，可以滿足長期 AD 訓練的需求，但同時我們也在探索不同的機會。例如，我們正在考慮與一些雲服務提供商合作，我們也在評估一些長期解決方案，以支持我們的 AD 解決方案的迭代。到目前為止，我實際上並沒有看到對我們的運營產生任何影響。

Thank you, Ming.

謝謝你，明。

(Spoken in Chinese).

（用中文講）。

Your next question comes from Paul Gong with UBS. Please go ahead.

您的下一個問題來自瑞銀的 Paul Gong。請繼續。

(Spoken in Chinese). So, my first question is regarding the ET5 order. Just now, you mentioned that the satisfaction level has beat your expectation but you didn't mention how the orders' intake has been. How do you see the orders intake since the launch and especially after late October after Tesla launched another wave of price cuts? Do you see any impacts from there? This is my first question.

（用中文講）。所以，我的第一個問題是關於 ET5 的訂單。剛才您提到滿意度超出了您的預期，但您沒有提及訂單的接收情況。您如何看待自推出以來的訂單量，尤其是在 10 月下旬特斯拉推出另一波降價潮之後？你看到那裡有什麼影響嗎？這是我的第一個問題。

(Interpreted) Thank you, Paul for your question. Of course, I understand regarding the ET5 orders, the more important thing for us is right now to find a way to deliver the ET5 to users and shorten the waiting time for the users. So, generally speaking, order is not an issue for us regarding ET5. Regarding the ramp-up of ET5, because this is still at a relatively early stage, we would like to pay more attention to the quality improvement and make sure we can stabilize the quality of the ET5.

（翻譯）謝謝你，保羅的問題。當然，對於ET5的訂單，我理解，我們現在更重要的是想辦法把ET5送到用戶手中，縮短用戶的等待時間。所以，一般來說，關於 ET5，訂單對我們來說不是問題。關於ET5的升級，因為還處於比較早期的階段，所以我們希望更加關注質量的提升，確保ET5的質量能夠穩定下來。

The demand for ET5 is very strong, as we expected. Of course, if the order can be even stronger, the stronger the better, but at the same time we don't want the users to wait for a really long time. If we come back to Tesla, Tesla often cuts its prices so we don't actually think this affect the user demand regarding NIO products.

正如我們預期的那樣，對 ET5 的需求非常強勁。當然，如果訂單可以更強，越強越好，但同時我們也不希望用戶等待很長時間。如果我們回到特斯拉，特斯拉經常降價，所以我們實際上認為這不會影響用戶對 NIO 產品的需求。

If we look at the specific product, like the Model 3, there is a big price gap compared to our product and if we compare the Model Y with our ES6, we don't actually believe that we are competing in the same segment. So, if we look at the pricing of our products and the positioning of our products, strictly speaking we're not competing with Tesla in the same segment.

如果我們看一下具體的產品，比如 Model 3，與我們的產品相比存在很大的價格差距，如果我們將 Model Y 與我們的 ES6 進行比較，我們實際上並不認為我們在同一個領域競爭。所以，如果我們看一下我們產品的定價和產品的定位，嚴格來說，我們並沒有在同一個領域與特斯拉競爭。

(Spoken in Chinese). So, my second question is regarding the expenses, including both R&D and SG&A. It seems to be climbing up a lot Q-on-Q this quarter. Is that just temporary because you have new products and trying to explore the new market in Europe, or is that more like structural and if so, what is your expectation for its trend going forward?

（用中文講）。所以，我的第二個問題是關於費用，包括研發和 SG&A。本季度似乎 Q-on-Q 攀升了很多。這只是暫時的，因為您有新產品並試圖探索歐洲的新市場，還是更像是結構性的，如果是這樣，您對其未來趨勢的期望是什麼？

Hi, Paul. This is Stanley. The increase of SG&A in Q3 compared with Q2 is because our sales and service network in China and also in Europe, since we entered more country market in Europe this third quarter, and also more marketing and promotional activities in Q3 compared with Q2.

嗨，保羅。這是斯坦利。 Q3 SG&A 比 Q2 增加是因為我們在中國和歐洲的銷售和服務網絡，因為我們在第三季度進入了更多的歐洲國家市場，並且與 Q2 相比，Q3 的營銷和促銷活動也更多。

For the long-term, I think also you can check with this result from Q3, SG&A as a percentage of sales revenue will continue to be optimized along with the improvement for our operation efficiency. I think in 2023 and also the coming years, you will see a stable trend for further improvements of this ratio. Thank you, Paul.

從長遠來看，我想你也可以從第三季度的這個結果來看，隨著我們運營效率的提高，SG&A 佔銷售收入的百分比將繼續優化。我認為在 2023 年以及未來幾年，你會看到這個比率進一步提高的穩定趨勢。謝謝你，保羅。

(Interpreted) Regarding the R&D expenses, yes, we do see some increase in the third quarter compared with the second quarter and this is mainly because of our new product development cadence as well as other initiatives like the battery, chipsets and the tests and the validations when we enter new markets, as well as the employee cost and the EDD costs. This is actually part of our plan and we don't think there is any other additional R&D expenses that is out of the planning of the Company.

（解讀）關於研發費用，是的，我們確實看到第三季度與第二季度相比有所增加，這主要是因為我們的新產品開發節奏以及其他舉措，如電池、芯片組和測試以及我們進入新市場時的驗證，以及員工成本和 EDD 成本。這實際上是我們計劃的一部分，我們認為沒有任何其他額外的研發費用超出了公司的計劃。

Regarding the R&D operations, I believe that right now we have entered a relatively stable phase regarding the R&D development work as well as the operations, so for us we believe when it comes to the R&D expenses, including the human resources cost, it will stay at a relatively stable level, for example probably every quarter it should be around RMB3 billion.

在研發運營方面，我相信現在我們的研發工作和運營已經進入了一個比較穩定的階段，所以對於我們來說，我們相信研發費用，包括人力資源成本，會保持不變。在一個相對穩定的水平上，比如大概每個季度應該在30億元左右。

Of course, at the same time we will continue to improve the system efficiency of our R&D efforts but for some time right now, I believe it will stay at this level to make sure we can have more products and technology and innovations to provide better experience for the users.

當然，同時我們會繼續提高我們研發工作的系統效率，但在一段時間內，我相信它會保持在這個水平，以確保我們可以有更多的產品和技術和創新來提供更好的體驗為用戶。

(Spoken in Chinese).

（用中文講）。

(Spoken in Chinese). So what is roughly ratio of Europe account for this quarter's SG&A?

（用中文講）。那麼歐洲佔本季度 SG&A 的比例大致是多少？

Yes, hi Paul. You know Europe is now at quite initial stage. So currently the overall expense is not a big percentage of the overall SG&A, yes. Now the sales and marketing team for our Europe business is about 500 headcount. So yes, that's basically the information for our Europe business.

是的，嗨，保羅。你知道歐洲現在還處於起步階段。所以目前總體費用在總體 SG&A 中所佔的比例並不大，是的。現在，我們歐洲業務的銷售和營銷團隊約有 500 人。所以是的，這基本上就是我們歐洲業務的信息。

Okay, thank you very much. (Spoken in Chinese).

好的，非常感謝。 （用中文講）。

Our next question comes from Tim Hsiao with Morgan Stanley, please go ahead.

我們的下一個問題來自於摩根士丹利的 Tim Hsiao，請繼續。

(Spoken in Chinese) So my first question is about the production and delivery. So I think, based on the fourth quarter guidance, that basically the average delivery in November/December could be around 17,000 to 19,000. So what would be the peak monthly output NIO can reach by end of this year and how the trajectory looks like into first half next year? Will the supply chain bottleneck become a structural issue given the unchanged COVID policy and more new model, new players and a likely longer time for supplier to expand their capacity, they increase their production yield? (Spoken in Chinese).

（中文發言）所以我的第一個問題是關於生產和交付的。所以我認為，根據第四季度的指導，基本上 11 月/12 月的平均交付量可能在 17,000 到 19,000 輛左右。那麼到今年年底蔚來的月產量峰值會是多少？明年上半年的軌跡會如何？鑑於 COVID 政策不變、更多新模式、新參與者以及供應商可能需要更長的時間擴大產能以提高產量，供應鏈瓶頸是否會成為結構性問題？ （用中文講）。

(Interpreted) Overall speaking, it's quite difficult for us to make estimation regarding the impact of the COVID control and prevention measures on the operation of the Company. But if we talk about the supply chain and the vehicle production, I believe the vehicle production capability should be able to meet the delivery target we set for next year.

（解讀）總體而言，我們很難估計新冠疫情防控措施對公司經營的影響。但如果我們談供應鍊和整車生產，我相信整車生產能力應該可以達到我們明年的交付目標。

And if we speak of the supply chain, we do see some challenges, for example, in December. We will face some constraints regarding the supply of the silicon carbide. But if we look at 2023, I believe the supply chain and the production capacity have the flexibility to meet the demands and the target we set out for ourselves.

如果我們談到供應鏈，我們確實看到了一些挑戰，例如，在 12 月。在碳化矽的供應方面，我們將面臨一些限制。但如果我們放眼 2023 年，我相信供應鍊和產能可以靈活地滿足我們為自己設定的需求和目標。

For 2023 I believe for the vehicle production we will have a relatively sufficient production capacity to meet the demand. If we can achieve a 150,000 production capacity on one shift, I believe the production of the vehicle will be carried out in a very smooth manner.

對於2023年的整車生產，我相信我們將有相對充足的產能來滿足需求。如果能做到一班15萬輛的產能，相信整車的生產會非常順利。

(Spoken in Chinese). So my second question is about the profitability. Because based on our own observation, we noticed the lifecycle with smart EV in China is actually getting shorter, rather than longer than traditional cars. So, considering the very sizable R&D and manufacturing investment, what would be the more reasonable terminal growth or operating margins we should look for? Especially I think as competition is getting more intense. Thank you.

（用中文講）。所以我的第二個問題是關於盈利能力的。因為根據我們自己的觀察，我們注意到中國智能電動汽車的生命週期實際上正在變得更短，而不是比傳統汽車更長。那麼，考慮到非常可觀的研發和製造投資，我們應該尋找更合理的終端增長或營業利潤率？特別是我認為隨著競爭越來越激烈。謝謝你。

(Interpreted) Thank you for your question. Regarding the smart electrical vehicles, I believe we have a much faster iteration cycle, compared with the traditional vehicles. We believe the iteration cycle should be around three years and this is how we're iterating our smart technologies in NIO.

（翻譯）謝謝你的提問。關於智能電動汽車，我相信我們的迭代周期要比傳統汽車快得多。我們認為迭代周期應該在三年左右，這就是我們在 NIO 中迭代智能技術的方式。

Of course different companies have different strategies and different iteration cycles. But in NIO, if we look at our technology platforms and we believe with one technology platform we actually have the same kind of hardware and software for all the vehicles based on this technology platform. So, for example, as previously we have explained, we have the NIO Technology 1.0 and the NIO Technology 2.0. For all the products based on NIO Technology 1.0, they have the same kind of software and hardware when it comes to the smart technologies. And that's the same for NIO Technology 2.0.

當然，不同的公司有不同的戰略和不同的迭代周期。但是在蔚來，如果我們看看我們的技術平台，我們相信通過一個技術平台，我們實際上擁有相同類型的硬件和軟件，用於基於該技術平台的所有車輛。因此，例如，如前所述，我們有 NIO 技術 1.0 和 NIO 技術 2.0。所有基於蔚來技術1.0的產品，在智能技術上，軟件和硬件都是一樣的。蔚來技術 2.0 也是如此。

At the same time we also have the unified battery pack and we also share a lot of commonalities when it comes to the vehicle platforms. Of course, previously we mentioned we would like to offer a different kind of top head to meet the diversified demands of and tastes for different users.

同時我們也有統一的電池組，在車載平台方面也有很多共同點。當然，前面我們也提到過，我們希望提供不同的頂頭，以滿足不同用戶的多樣化需求和品味。

So if we think about the technology platforms and platform strategy, I think that 20% to 25% vehicle gross margin is not a very big challenge for us.

所以如果我們考慮技術平台和平台戰略，我認為 20% 到 25% 的汽車毛利率對我們來說並不是一個很大的挑戰。

But if we look at 2022 specifically, the cost of the battery has skyrocketed. So of course at the same time we have increased the price of our products. And even against this backdrop we have, I believe, achieved a relatively reasonable vehicle gross margin.

但如果我們具體看 2022 年，電池的成本已經飆升。當然，與此同時，我們提高了產品的價格。即使在這種背景下，我相信我們也取得了相對合理的汽車毛利率。

Previously we have also achieved a 20% vehicle gross margin the past. In the past we didn't have the battery cost increase. So this is a relatively reasonable vehicle gross margin for our products. In the future if the battery cost can come down to a reasonable level, I think it's possible for us to regain the 20% to 25% vehicle gross margin with our products.

此前我們也實現了 20% 的汽車毛利率。過去我們沒有增加電池成本。所以這是我們產品相對合理的車輛毛利率。未來如果電池成本能夠降到合理的水平，我認為我們有可能通過我們的產品重新獲得20%到25%的汽車毛利率。

In addition to that, with our vehicle technology vertical integrations, including the battery, the chipset, I believe we will have more room to improve for the vehicle gross margin and it's possible for us to achieve a 25% to 30% vehicle gross margin.

除此之外，隨著我們的汽車技術垂直整合，包括電池、芯片組，我相信我們的汽車毛利率會有更大的提升空間，我們有可能實現25%到30%的汽車毛利率。

If we look at the mass market, I believe the challenge is much bigger because if we combine all the companies in the mass market right now, I think the overall gross margin is actually negative. Of course BYD is an exception because they have the vertical integration of the batteries and other technologies.

如果我們看大眾市場，我認為挑戰要大得多，因為如果我們現在將大眾市場中的所有公司結合起來，我認為整體毛利率實際上是負的。當然，比亞迪是個例外，因為他們擁有電池和其他技術的垂直整合。

So if we do not have the vertical integration capabilities in the mass market, it will be quite challenging to survive in the mass market. But if we have these capabilities in place, I think it is possible for us to also achieve 20% to 25% with other mass market products.

所以如果我們不具備大眾市場的垂直整合能力，在大眾市場中生存將是相當具有挑戰性的。但如果我們具備這些能力，我認為我們也有可能通過其他大眾市場產品實現 20% 到 25% 的目標。

Thank you Tim.

謝謝蒂姆。

(Spoken in Chinese).

（用中文講）。

Our next question comes from Bin Wang with Credit Suisse. Please go ahead.

我們的下一個問題來自瑞士信貸的王斌。請繼續。

(Spoken in Chinese). My question, first of all, is about your guidance. You actually guided three things, number 1, the ET5 will be higher volume than BMW 3 Series. And then 2 guidance is that you will break even in the number 4 quarter next year. Number 3 guidance is that this year you have 18% to 20% gross margin for the vehicle. Did you maintain this guidance for this? Thank you.

（用中文講）。首先，我的問題是關於您的指導。您實際上指導了三件事，第 1 點，ET5 的體積將高於寶馬 3 系。然後 2 個指導是，您將在明年的第 4 個季度實現收支平衡。第三個指導是，今年您的車輛毛利率為 18% 至 20%。您是否為此維護了此指南？謝謝你。

(Interpreted) Thank you, Bin, for your question. Overall speaking, that's still the direction we're aiming for. For the core business of NIO, we are still aiming to achieve breakeven in the [fourth] (corrected by the company after the call) quarter of 2023 and this is still our plan.

（翻譯）謝謝你，Bin，你的問題。總的來說，這仍然是我們追求的方向。對於蔚來的核心業務，我們的目標仍然是在2023年[第四]（由公司在電話會議後更正）季度實現盈虧平衡，這仍然是我們的計劃。

At the same time, we're also working on different strategic new business. For example, we have two new brands and the battery chipset and the smartphone business at the same time. So, if we look at 2023, the investment for those strategic new business is going to be around RMB3 billion to RMB4 billion. It means that probably around RMB1 billion every quarter. If we take all those strategic new business aside, we are still very confident to achieve a breakeven for new core business in the fourth quarter of 2023.

同時，我們也在致力於不同的戰略性新業務。例如，我們同時擁有兩個新品牌，電池芯片組和智能手機業務。因此，如果我們看 2023 年，這些戰略性新業務的投資將在 30 億元至 40 億元人民幣左右。這意味著每個季度大概在10億元左右。如果拋開這些戰略性新業務，我們仍然非常有信心在 2023 年第四季度實現新核心業務的盈虧平衡。

So, for the second question regarding ET5, you mentioned previously our co-founder mentioned that ET5 volume is going to exceed the volume of the BMW 3 Series in an event. And of course, this is not a guidance for us, but because I believe ET5 is much, much better than BMW 3 Series, so we're very confident to achieve this target.

所以，關於ET5的第二個問題，您之前提到我們的聯合創始人提到ET5的音量將超過BMW 3系的音量。當然，這不是對我們的指導，但因為我相信 ET5 比寶馬 3 係好得多，所以我們非常有信心實現這個目標。

For the vehicle gross margin, in 2022 I believe there are still many challenges for us, especially when it comes to the lithium carbonate cost. Right now, the lithium carbonate cost is still stayed at a very high level.

對於汽車毛利率，2022年我相信我們仍然面臨很多挑戰，尤其是在碳酸鋰成本方面。目前，碳酸鋰成本仍處於非常高的水平。

Previously, it has dropped to around RMB400,000 and now is going back or actually reached a new high that is around RMB600,000. This has significantly affected the battery cost, and for us, this is actually out of our control and is very difficult for us to predict. But I believe we can still remain a relatively stable vehicle gross margin in the fourth quarter compared with the third quarter.

此前跌至40萬元左右，現在回落或實際達到60萬元左右的新高。這極大地影響了電池成本，而對我們來說，這實際上是我們無法控制的，我們很難預測。但我相信，與第三季度相比，第四季度我們仍然可以保持相對穩定的汽車毛利率。

For the lithium carbonate cost I'd like to probably share some insights. I don't think the price or the cost of the lithium carbonate is due to the supply situation, because right now if you look at the car companies in China, I don't think there's any car companies that cannot deliver their products because of the battery shortage.

對於碳酸鋰的成本，我可能想分享一些見解。我不認為碳酸鋰的價格或成本是由供應情況決定的，因為現在如果你看看中國的汽車公司，我認為沒有任何汽車公司不能交付他們的產品，因為電池短缺。

So, of course in the future we believe the lithium carbonate cost will go down, but we cannot predict when. This has a relatively big impact on us because for all of our products, we have a relatively high battery capacity. Averagely speaking, for each of our vehicles, the battery is around 80 to 90 kilowatt hours. So if the lithium carbonate cost stays at a very high level, this is going to have a big impact on the vehicle gross margin.

所以，當然我們相信未來碳酸鋰的成本會下降，但我們無法預測何時。這對我們影響比較大，因為我們所有產品的電池容量都比較高。平均而言，我們每輛車的電池電量約為 80 到 90 千瓦時。因此，如果碳酸鋰成本保持在非常高的水平，這將對汽車毛利率產生很大影響。

For us, maybe I can give you some numbers, which will probably help you to understand that situation. If we think about RMB100,000 cost for the lithium carbonate. This is actually affecting our vehicle gross margin by around 2 point or 2%. And if we can see the lithium carbonate cost drop from RMB600,000 to RMB400,000, then this is going to improve our vehicle gross margin by around 4%.

對我們來說，也許我可以給你一些數字，這可能會幫助你理解這種情況。如果我們考慮一下碳酸鋰的 10 萬元成本。這實際上影響了我們的汽車毛利率約 2 個百分點或 2%。如果我們能看到碳酸鋰的成本從 60 萬元下降到 40 萬元，那麼這將使我們的汽車毛利率提高 4% 左右。

So, if the lithium carbonate cost can drop to even lower, probably around RMB100,000, which is a reasonable price for the lithium carbonate, then it means that our vehicle gross margin can improve by probably around 8%. So, this is the reality we are facing.

所以，如果碳酸鋰的成本能降到更低，大概10萬元左右，這對於碳酸鋰來說是一個合理的價格，那意味著我們的汽車毛利率大概可以提高8%左右。所以，這就是我們面臨的現實。

(Spoken in Chinese). Actually, we just want to give a check that ET5, you place order today you actually can only get a car in February or March. (Inaudible) product is NIO's Model 3. So, my question's about what is the NIO's model Y? From the media we learn that NIO may launch the protocol of ET5 wagon and is it going to be showcased in the upcoming NIO Day in December this year? Thank you.

（用中文講）。實際上，我們只是想檢查一下ET5，您今天下訂單實際上只能在2月或3月獲得汽車。 （聽不清）產品是 NIO 的 Model 3。所以，我的問題是關於 NIO 的 Model Y 是什麼？從媒體了解到，蔚來可能會推出ET5 wagon協議，是否會在今年12月即將到來的NIO Day上亮相？謝謝你。

(Interpreted) So, for the product line-up in the first half of next year, we're going to have five new products and I believe probably one of them is going to be like the Model Y to Tesla, like you mentioned. But for us, we focus more on the overall volume of all the product line-up.

（解釋）因此，對於明年上半年的產品陣容，我們將推出五款新產品，我相信其中一款可能會像你提到的特斯拉的 Model Y。但對我們來說，我們更關注所有產品系列的整體數量。

We are in the premium market segment, so our philosophy is to satisfy the diversified user demand with high efficiency. In the price range from RMB300,000 to RMB500,000, we will provide the different product to satisfy the diversified user demands and taste. So, I believe with our product line-up we should be able to achieve a good overall delivery volume that can meet our expectations.

我們處於高端市場，所以我們的理念是高效滿足多樣化的用戶需求。在30萬到50萬的價格區間，我們將提供不同的產品，滿足用戶多樣化的需求和品味。因此，我相信通過我們的產品陣容，我們應該能夠實現良好的整體交付量，從而滿足我們的期望。

I don't actually expect that one product can sell over 100,000 units in China. For example, for ET5, if it can sell probably over 30,000 units per month, it's going to be a very common streetcar and I don't think this is good for the ET5 or for NIO.

我實際上並不指望一種產品能在中國銷售超過 100,000 台。例如，對於ET5，如果它每月可以銷售超過30,000輛，這將是一輛非常普通的有軌電車，我認為這對ET5或NIO都沒有好處。

For the mass market, this is a different story. We just had a meeting today with the mass market team and for us, we believe that the mass market product can sell probably over 50,000 units per month because -- for one model, because this is different market segment and different target user group.

對於大眾市場，這是一個不同的故事。我們今天剛剛與大眾市場團隊開會，對我們來說，我們相信大眾市場產品每月可能銷售超過 50,000 台，因為 - 對於一種型號，因為這是不同的細分市場和不同的目標用戶群。

(Spoken in Chinese). Thank you, Bin.

（用中文講）。謝謝你，斌。

Thank you.

謝謝你。

Our next questions comes from Jeff Chung with Citi. Please go ahead.

我們的下一個問題來自花旗銀行的 Jeff Chung。請繼續。

(Spoken in Chinese). So, my first question is about the sales volume growth into November and December. So, in order to meet our median quarterly target for the 3000 units and if the month-on-month improvement to be linear at around 37%, we should be reaching around 19,000 units monthly run rate by December. So, from which -- could you break down the volume of ET5?

（用中文講）。所以，我的第一個問題是關於 11 月和 12 月的銷量增長。因此，為了達到我們 3000 個單位的季度中位數目標，並且如果環比改善在 37% 左右呈線性增長，那麼到 12 月我們應該達到大約 19,000 個單位的月運行率。那麼，您可以從中分解 ET5 的數量嗎？

And the second questions is, if this ramped-up pace is going to be non-linear with most of the weight happening -- concentrating in December, so could you tell us what kind of elements will be determined on our run rate overshoot in December but not in November? Thank you.

第二個問題是，如果隨著大部分重量的發生，這種加快的速度將是非線性的——集中在 12 月，那麼你能否告訴我們，12 月的運行速度超調將決定哪些因素？但不是在 11 月？謝謝你。

(Interpreted) Thank you, Jeff, for your questions. In November, we will still need some time to ramp up production, including ET5, considering the factors I just mentioned, like the EDS.

（翻譯）謝謝你，傑夫，你的問題。 11 月，考慮到我剛才提到的 EDS 等因素，我們仍然需要一些時間來提高產量，包括 ET5。

In December, except the silicone carbide I just mentioned, I believe we will have more production compared with the production of November. Of course, in December we hope that we can still achieve over 20,000 production run rate.

12月份，除了我剛才提到的碳化矽，我相信我們會比11月份有更多的產量。當然，我們希望在 12 月仍能達到 20,000 台以上的生產運行率。

(Spoken in Chinese). No more questions, thank you.

（用中文講）。沒有更多的問題，謝謝。

Thank you.

謝謝你。

The next question comes from Nick Lai with JP Morgan. Please go ahead.

下一個問題來自 JP Morgan 的 Nick Lai。請繼續。

(Spoken in Chinese). I have two simple questions. Really, the first question is about the cash burn and the CapEx expectation as we move into '23 and '24 and also take into account of incremental investment in CapEx and potential CB.

（用中文講）。我有兩個簡單的問題。確實，第一個問題是關於現金消耗和我們進入 23 年和 24 年的資本支出預期，並且還考慮到對資本支出和潛在 CB 的增量投資。

The second questions again is on the AI chips supply strategy and if you can just talk about the potential alternative solution to Nvidia 100 chip, are you looking for (inaudible) solution. That's related algorithm, but what about the chip in the car? Thank you.

第二個問題再次是關於 AI 芯片供應策略的問題，如果您只能談論 Nvidia 100 芯片的潛在替代解決方案，您是否正在尋找（聽不清）解決方案。那是相關的算法，但是汽車中的芯片呢？謝謝你。

(Interpreted) Hi Nick, this is Stanley. As introduced by William and myself, we will further improve our SGA operating efficiency and furthermore, our R&D expense will keep relatively stable compared with 2022. So, operating cash flow wise, I think we are quite optimistic to achieve the positive operating cash flow in future years.

（翻譯）嗨尼克，我是斯坦利。正如威廉和我自己介紹的那樣，我們將進一步提高我們的 SGA 運營效率，此外，我們的研發費用將與 2022 年相比保持相對穩定。因此，運營現金流方面，我認為我們對實現正運營現金流相當樂觀未來幾年。

So, our cash burn mainly depends on the capital investment. Now we are planning our next year's budget and generally, I think the total scale of CapEx in next year will not increase so significantly compared with this year. As you know, we are planning more sales and service network and also we are planning more production and also supply chain capacity. So, at this moment I want to give you clear guidance, and we are also confident that our cash on hand can supply our ongoing operation until breakeven is finally achieved.

因此，我們的現金消耗主要取決於資本投資。現在我們正在計劃明年的預算，總的來說，我認為明年的資本支出總規模與今年相比不會有那麼大的增長。如您所知，我們正在計劃更多的銷售和服務網絡，並且我們正在計劃更多的生產和供應鏈能力。所以，此刻我想給你明確的指導，我們也有信心，我們手頭的現金可以供應我們正在進行的運營，直到最終實現盈虧平衡。

Thank you.

謝謝你。

(Interpreted) Overall speaking, we understand there are still many uncertainties in the market, but I believe that with our current cash reserve and also the bank facilities, we should be able to support the Company's operation until we break even. So, we don't think this is going to be a huge challenge for the Company.

（解讀） 總體而言，我們理解市場仍有很多不確定性，但我相信以我們目前的現金儲備和銀行融資，我們應該能夠支持公司的運營，直到我們收支平衡。因此，我們認為這對公司來說不會是一個巨大的挑戰。

Regarding the chipset previously we have already addressed at the AI training chip that is NVIDIA A100 and now I would like to properly elaborate more the onboard chipset.

關於芯片組，我們之前已經在 AI 訓練芯片 NVIDIA A100 中提到過，現在我想適當地詳細說明一下板載芯片組。

We are the first company in the world to launch our product that is equipped with NVIDIA Orin, which is actually six months earlier than other companies. We also have very close collaborations with NVIDIA. At the same time, last year, we have already kicked off the R&D of our AD chipset. By now we have around 500 people working on the AD chipset. I believe it is commonly acknowledged that AD chipset is closely coupled with the AD algorithm. If we can use the AD algorithm to define the design of the AD chipset the overall efficiency can be significantly improved, which can also contribute to overall vehicle gross margin. So, the overall progress of the AD chipset R&D is on track, and we have seen some positive achievement from the team.

我們是世界上第一家推出配備 NVIDIA Orin 的產品的公司，這實際上比其他公司早了六個月。我們還與 NVIDIA 有非常密切的合作。同時，去年我們已經啟動了AD芯片組的研發。到目前為止，我們有大約 500 人在研究 AD 芯片組。我相信眾所周知，AD芯片組與AD算法緊密耦合。如果我們可以使用 AD 算法來定義 AD 芯片組的設計，則可以顯著提高整體效率，這也有助於提高整體車輛的毛利率。因此，AD芯片組研發的整體進展步入正軌，我們也看到了團隊的一些積極成果。

(Spoken in Chinese). [That will surely be a good thing].

（用中文講）。 [那肯定是好事]。

Yes.

是的。

Okay, thank you. (Spoken in Chinese).

好的謝謝你。 （用中文講）。

The next question comes from [Jing Chang] with CICC. Please go ahead.

下一個問題來自中金公司的【京昌】。請繼續。

(Spoken in Chinese). So, my first question is about, in a current external environment, everyone encounters a lot of difficulties in production. So, in the longer term will we reconsider switching from OEM mode to self-build production. Are there any difficulties in obtaining qualifications and will it optimize our new product ramp up speed or manufacturing cost?

（用中文講）。所以，我的第一個問題是，在目前的外部環境下，大家在生產中都會遇到很多困難。因此，從長遠來看，我們是否會重新考慮從 OEM 模式轉向自建生產。獲得資質是否有困難，是否會優化我們的新產品提升速度或製造成本？

My second question is regarding to R&D investment and CapEx, about the boundaries of our in-house R&D. As we can see that in the third quarter our R&D expense further extends to RMB2.8 billion. So, considering the capital market environment and the much more intense competition in Chinese EV market in a few years, will we adopt a more conservative strategy for R&D and CapEx? So, under what circumstances we will adjust our current strategy and whether our organization is flexible enough to adjust?

我的第二個問題是關於研發投資和資本支出，關於我們內部研發的界限。我們可以看到，第三季度我們的研發費用進一步擴大到人民幣 28 億元。那麼，考慮到資本市場環境和未來幾年中國電動汽車市場的激烈競爭，我們是否會在研發和資本支出方面採取更為保守的策略？那麼，在什麼情況下我們會調整我們目前的戰略，我們的組織是否有足夠的靈活性來調整？

The last question is about, just mentioned MPV models. So, what do we think of the MPV market, will we launch a new product pipeline in this segment in the future? Those are my three questions.

最後一個問題是關於，剛才提到的MPV車型。那麼，我們如何看待MPV市場，未來我們會在這個細分市場推出新的產品線嗎？這是我的三個問題。

(Interpreted) For the Factory 2, we are still working together with JAC. I believe our joint manufacturing corporation has been quite positive. Regarding the vehicle production, I believe the vehicle production capacity can support the company's delivery target in the short-term. Previously I've already mentioned that for one plant we should be able to achieve 150,000 units under one shift and if we combine the two plants together, the Factory 1 and Factory 2, then it means that under one shift we should be able to achieve a production capacity of 300,000 units. If we double this to two shifts then the production capacity can also be doubled.

（翻譯）對於工廠2，我們仍在與江淮汽車合作。我相信我們的聯合製造公司非常積極。在整車生產方面，我相信整車產能能夠在短期內支撐公司的交付目標。前面已經講過，一個廠一班應該能做到15萬台，如果把兩個廠一廠二廠合起來的話，那麼一班就可以做到。 30萬台的生產能力。如果我們將其翻倍為兩班制，那麼產能也可以翻倍。

When it comes to the supply chain, of course there are some volatilities for the whole industry, not just for NIO, but as we ramp up our production capacity and the delivery, I believe that we have the capability to mitigate the risks of the supply chain.

說到供應鏈，整個行業當然會有一些波動，不僅僅是蔚來，隨著我們產能和交付的提升，我相信我們有能力降低供應風險鏈。

For the second question regarding the boundaries of our investment. Previously I have already mentioned that we do have a sufficient cash reserve to support the Company's operations, and when it comes to the overall investment for R&D, every quarter we expect to invest around RMB3 billion for R&D efforts. So, this includes all the R&D initiatives we have explained previously.

第二個問題，關於我們投資的邊界。之前我已經提到，我們確實有足夠的現金儲備來支持公司的運營，而在研發的整體投入上，我們預計每個季度的研發投入在30億元左右。因此，這包括我們之前解釋過的所有研發計劃。

For the CapEx we will improve the efficiency on the CapEx investment and we do have very strict management regarding the finance and the investment of the company.

對於資本支出，我們將提高資本支出投資的效率，我們對公司的財務和投資確實有非常嚴格的管理。

Okay. With regard to the MPV market our strategy is very simple. In the short-term, we have no plan to launch a MPV model. Of course, long-term we'll keep monitoring this niche market. We have also noticed that recently this market is very hot. From a supply side several Chinese brands have launched their high-end MPV model, but from the demand side, at least right now, the MPV segment still remains a niche market, but that's why we would like to keep monitoring and then decide what to do in the next several years.

好的。對於MPV市場，我們的策略很簡單。短期內，我們沒有推出MPV車型的計劃。當然，從長遠來看，我們將繼續監控這個利基市場。我們也注意到最近這個市場非常火爆。從供給端來看，中國的一些品牌已經推出了高端MPV車型，但從需求端來看，至少目前，MPV仍然是一個小眾市場，但這就是為什麼我們要繼續觀察，然後再決定要做什麼。在接下來的幾年裡做。

(Spoken in Chinese).

（用中文講）。

Our next question comes from Yuqian Ding with HSBC. Please go ahead.

我們的下一個問題來自匯豐銀行的丁玉倩。請繼續。

(Spoken in Chinese). I've got two questions. The first is to follow up on the margin side. So, next year's gross profit margin improvement, will that be mainly coming from the increasing economies of scale? Could we have some quantification over there, because from the mix side it was more ET5 in the mix could be coming down a little bit. Also, we talked about a Q4 breakeven, is that based on the current lithium price assumption, or in our Q4 breakeven assumption, that basically baking normalizing of the lithium price.

（用中文講）。我有兩個問題。首先是在邊際方面跟進。那麼，明年毛利率的提升，主要是來自於規模經濟的增長嗎？我們可以在那裡進行一些量化，因為從混音方面來看，混音中更多的 ET5 可能會下降一點。此外，我們談到了第四季度的盈虧平衡，是基於當前的鋰價格假設，或者在我們的第四季度盈虧平衡假設中，基本上是鋰價格的正常化。

And the second part is to ask, what's the city pilot on the autonomous driving side? What's our timeline to push for city pilot and when do we expect our autonomous driving capability to improve from a help-selling vehicle item to support materially on the margin side?

第二部分是問，自動駕駛方面的城市試點是什麼？我們推動城市試點的時間表是什麼？我們預計我們的自動駕駛能力何時會從幫助銷售的車輛項目提高到在利潤方面提供實質性支持？

(Interpreted) Thank you Yuqian for your question. As of now, of course the lithium carbonate cost is not going down as we expected in the fourth quarter, but like I explained previously, I don't believe this is a supply issue because if we look at the market right now all the car companies can actually get sufficient supply of their batteries.

（翻譯）謝謝雨倩的提問。截至目前，碳酸鋰的成本當然並沒有像我們預期的那樣在第四季度下降，但就像我之前解釋的那樣，我不認為這是供應問題，因為如果我們現在看市場，所有的汽車公司實際上可以獲得足夠的電池供應。

For us regarding the lithium resources, we have seen some lithium resources enter the market in the past and we expect that probably next year the cost of the lithium carbonate is going to be around RMB300,000 to RMB400,000.

對於我們來說鋰資源，過去我們看到一些鋰資源進入市場，我們預計明年碳酸鋰的成本可能在30萬到40萬人民幣左右。

When it comes to the budget planning of the Company, of course we would like it to be more conservative. So our assumption is around RMB400,000. This is basically our judgement regarding the lithium carbonate cost probably for the next two years.

談到公司的預算規劃，我們當然希望它更保守一些。所以我們的假設是40萬元左右。這基本上是我們對未來兩年碳酸鋰成本的判斷。

For the autonomous driving, I believe we will still need some time to see the contributions of the autonomous driving to the vehicle gross margin and the overall gross margin. There are several factors. Part is because of the feature and function development and part is because of the legislation. Recently we do see some positive progress on the legislation front. For example, MIT has launched some pilot programs for autonomous driving and whilst we believe it will still need probably one to two years to get mature when it comes to autonomous driving technologies and also the legislations. So in the short term we expect probably there will not be any significant contributions from the autonomous driving to the vehicle gross margin and the overall gross margin.

對於自動駕駛，相信我們還需要一段時間才能看到自動駕駛對整車毛利率和整體毛利率的貢獻。有幾個因素。一部分是因為特性和功能的發展，一部分是因為立法。最近，我們確實在立法方面看到了一些積極進展。例如，麻省理工學院已經啟動了一些自動駕駛試點項目，而我們認為，在自動駕駛技術和立法方面，它可能還需要一到兩年的時間才能成熟。所以在短期內，我們預計自動駕駛對汽車毛利率和整體毛利率可能不會有任何重大貢獻。

Our next question comes from Xinchi Yin with CITIC Securities. Please go ahead.

我們的下一個問題來自中信證券的尹新馳。請繼續。

(Spoken in a foreign language). So, my first question is about inventory. So the inventory is around RMB6.7 billion in quarter 3. It is nearly doubled compared to its quarter 2. So does this number imply around 10,000 more inventory cars on your balance sheet?

（用外語說話）。所以，我的第一個問題是關於庫存。因此，第三季度的庫存約為人民幣 67 億元。與第二季度相比，幾乎翻了一番。那麼這個數字是否意味著您的資產負債表上還有大約 10,000 輛庫存汽車？

My second question is about ET5. It was really hot on the September but recently we see some negative comments and news on social media because of its poor performance on energy efficiency. So I was wondering, what's your next move to deal with the consumer's concerns?

我的第二個問題是關於 ET5。 9 月份真的很熱，但最近我們在社交媒體上看到了一些負面評論和新聞，因為它在能源效率方面表現不佳。所以我想知道，您下一步如何應對消費者的擔憂？

Thank you for taking my questions.

謝謝你接受我的問題。

Hi Xinchi, this is Stanley. For the inventory increase in Q3 I think mainly two reasons. One is about our increase of inventory cars in Q3. Our production was negatively impacted by our rear subframe in Q3, so we increased the production of ES8, ES6 and EC6 in Q3. Secondly, it's because the increase of the component inventory to secure the production in the coming months, we stored more key materials like chips and also other raw materials in Q3, so all of those factors led to the increase of our inventory stock.

嗨，新池，我是斯坦利。對於第三季度的庫存增加，我認為主要有兩個原因。一是關於我們在第三季度增加庫存汽車。我們的產量在第三季度受到後副車架的負面影響，因此我們在第三季度增加了 ES8、ES6 和 EC6 的產量。其次，由於為確保未來幾個月的生產而增加了組件庫存，我們在第三季度存儲了更多的關鍵材料，例如芯片和其他原材料，因此所有這些因素導致我們的庫存增加。

(Interpreted) Regarding the second question, yes, for the ET5 different tires may have a different impact and a different performance when it comes to the power consumption. If the users choose a performance tire then the power consumption will be higher but if the user chooses a long-range tire or the low-resistance tire, then the power consumption performance is going to be much better.

（解讀）關於第二個問題，是的，對於ET5來說，不同的輪胎在功耗方面可能會產生不同的影響和不同的性能。如果用戶選擇性能輪胎，那麼功耗會更高，但如果用戶選擇遠程輪胎或低阻力輪胎，那麼功耗性能會好很多。

So, we would also like to remind our users if you really enjoy driving and handling and you would like to experience the acceleration of ET5 within four seconds, then of course you can go with the performance tire but if you care more about the drive range then it's better for you to go with the long-range tire which will have a much better performance when it comes to the range.

所以，我們也想提醒一下我們的用戶，如果你真的喜歡駕駛和操控，你想在四秒內體驗ET5的加速，那麼當然你可以選擇性能輪胎，但如果你更關心續航里程那麼你最好選擇遠程輪胎，它在續航里程方面會有更好的表現。

(Spoken in Chinese).

（用中文講）。

As there are no further questions, now I'd like to turn the call back over to the Company for closing remarks.

由於沒有其他問題，現在我想將電話轉回公司進行結束髮言。

Thank you once again for joining us today. If you have further questions, please feel free to contact NIO's Investor Relations team through the contact information provided on our website. This concludes the conference call. You may now disconnect your line. Thank you.

再次感謝您今天加入我們。如果您還有其他問題，請隨時通過我們網站上提供的聯繫信息聯繫 NIO 的投資者關係團隊。電話會議到此結束。您現在可以斷開您的線路。謝謝你。

The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.

會議現已結束。感謝您參加今天的演講。你們現在都可以斷開連接了。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

此成績單中標記（翻譯）的部分由現場通話中的口譯員朗讀。翻譯由主辦本次活動的公司提供。