蔚來 (NIO) 2024 Q1 法說會逐字稿

Hello ladies and gentlemen, thank you for standing by for NIO Incorporated's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Rui Chen, Head of Investor Relations of the Company. Please go ahead, Rui.

女士們、先生們，大家好，感謝大家出席蔚來汽車公司 2024 年第一季財報電話會議。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。現在我將電話轉交給東道主，公司投資者關係部主管陳銳先生。請繼續吧，瑞。

Good morning and good evening, everyone. Welcome to NIO's first quarter 2024 earnings conference call. The Company's financial and operating results were published in a press release earlier today and are posted on the Company's IR website. On today's call, we have Mr. William Li, Founder, Chairman of the Board and the Chief Executive Officer, Mr. Steven Feng, Chief Financial Officer, and Mr. Stanley Qu, Senior Vice President of Finance.

大家早安，晚上好。歡迎參加蔚來汽車 2024 年第一季財報電話會議。本公司的財務和經營業績已在今天稍早發布的新聞稿中發布，並發佈在公司的投資者關係網站上。出席今天的電話會議的嘉賓包括創辦人、董事長兼執行長李威廉先生、財務長馮峰先生和財務高級副總裁屈志強先生。

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

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做出的前瞻性陳述。因此，公司的實際結果可能與今天表達的觀點有重大差異。

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

有關風險和不確定性的更多資訊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。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。

Please also note that NIO's earnings press release and this conference call include 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，蔚來的獲利新聞稿和本次電話會議包括對未經審計的 GAAP 財務資訊以及未經審計的非 GAAP 財務指標的討論。請參閱蔚來的新聞稿，其中包含未經審計的非公認會計原則措施與可比較公認會計原則措施的調節表。

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

現在，我將把電話轉給我們的執行長李威廉先生。威廉，請繼續。

Hello everyone, thank you for joining NIO's 2024 Q1 Earnings Call. In Q1, NIO delivered 30,053 premium smart EVs. In Q2, thanks to the launch of all the model-year products, unleash of the sales capabilities, together with a more flexible sales policy, NIO's deliveries started to pick up month-by-month.

大家好，感謝您參加蔚來汽車 2024 年第一季財報電話會議。第一季度，蔚來交付了 30,053 輛高階智慧電動車。第二季度，由於全系車型的上市、銷售能力的釋放以及更靈活的銷售政策，蔚來的交付量開始逐月回升。

In April, NIO delivered 15,620 vehicles and in May, 20,544 vehicles. Our market share in the premium BEV segment continued to grow with year-over-year growth far above the segment average. The total delivery in Q2 is expected to be between 54,000 and 56,000 units, up 129.6% to 138.1% year-over-year.

4月蔚來汽車交車量為15,620輛，5月交車量為20,544輛。我們在高端純電動車細分市場的市佔率持續成長，年增速遠高於細分市場平均。預計第二季總交車量為5.4萬至5.6萬輛，年增129.6%至138.1%。

In terms of NIO's financial performance, during the model-year product transitioning in Q1, the vehicle margin was 9.2%. In the meantime, with the improvements on the utilization of the charging and swapping facilities and on the profitability of the after-sales services, gross loss on other sales was greatly reduced quarter-over-quarter.

從蔚來財務表現來看，第一季車型年產品轉型期間，整車利潤率為9.2%。同時，隨著充換電設施使用率和售後服務獲利能力的提升，其他銷售毛損則是季減。

Now, I would like to share with you the recent highlights of our products, R&D, and the operations. On April 25, the ET7 Executive Edition was launched at the Beijing Auto Show. The delivery of this Executive sedan has started in late April. With all-round upgrades, the 2024 NIO ET7 better caters to the needs of the business community. It's well-placed to compete with the premium executive models, especially ICE models such as BMW 5 Series, Audi A6, and the Mercedes E-Class.

以下我跟大家分享我們近期的產品、研發、營運等方面的亮點。 4月25日，ET7行政版在北京車展上市。這款行政轎車已於四月下旬開始交付。透過全方位升級，2024款蔚來ET7更能滿足了商業群的需求。它在與高端行政車型的競爭中處於有利地位，尤其是BMW 5 系列、Audi A6 和梅賽德斯 E-Class 等 ICE 車型。

In terms of NAD, on April 30, we started to push urban NOP+ to all NT 2.0 users, making it the largest release of its kind, accessible by more 260,000 users on over 1.4 million kilometers of highway and urban streets, and in 726 cities in China. NOP+ has been an industry leader in terms of its user base and the coverage. During the Labor Day holiday, 48.1% of the total mileage was driven with NOP+, making users' journeys safer and more relaxing.

NAD方面，4月30日，我們開始向所有NT 2.0用戶推送城市NOP+，使其成為同類產品中規模最大的版本，在超過140萬公里的高速公路和城市街道上以及726個城市中有超過26萬用戶可以使用。 NOP+在用戶基礎和覆蓋範圍方面一直處於行業領先地位。五一假期期間，NOP+行駛里程佔總哩程的48.1%，讓使用者的出行更安全、更輕鬆。

Since day one, NIO has developed a clear brand roadmap, starting from the premium segment to build up skills and experience, and then introducing a mass market brand to reach and serve more users. With that, we will be able to make greater contributions to a more sustainable future. On May 15, at the International Day of Families, we introduced ONVO, a new brand for the mainstream family market.

從第一天起，蔚來就制定了清晰的品牌路線圖，從高端細分市場開始累積技能和經驗，然後引入大眾市場品牌來接觸和服務更多用戶。如此，我們將能夠為更永續的未來做出更大的貢獻。 5月15日，國際家庭日，我們推出了針對主流家庭市場的新品牌ONVO。

ONVO is from, On Voyage, and it's a Chinese name, Le Dao, translates into, path to happiness. On a mission to make family life better, ONVO is committed to bringing products with the ultimate experience value and optimal ownership cost. The pre-order of its first product, L60, was started. L60 is a smart electric midsize SUV. The official product launch and the delivery will begin in September. The launch of ONVO has shifted us into higher gear, expanding our reach to a wider user base. As more people are aware of our technologies and the products, we will edge closer to our vision of a blue-sky coming.

ONVO取自“On Voyage”，中文名“樂道”，意為“幸福之路”。 ONVO以讓家庭生活更美好為使命，致力於帶來極致體驗價值和最優擁有成本的產品。首款產品L60已開始預約。 L60是一款智慧電動中型SUV。正式產品發布和交付將於9月開始。 ONVO 的推出使我們進入了更高的檔次，將我們的影響力擴展到更廣泛的用戶群。隨著越來越多的人了解我們的技術和產品，我們將更加接近藍天的願景。

As for the sales and the service networks, so far, NIO has 154 NIO houses and 388 NIO spaces, as well as 344 service centers and 64 delivery centers. About the charging and swapping networks, so far, NIO has 2,472 power swap stations worldwide and has provided over 45 million swaps. Besides, NIO has also installed over 22,000 power chargers and destination chargers.

在銷售和服務網絡方面，截至目前，蔚來擁有154個蔚來房屋和388個蔚來車位，以及344個服務中心和64個配送中心。在充換電網路方面，截至目前，蔚來在全球擁有2472個換電站，累計提供超4500萬次換電。此外，蔚來也安裝了超過22,000個充電樁和目的地充電樁。

In the meantime, more industry players have joined NIO's charging and swapping network. As of now, we have partnered with Changan, Geely, JAC, Chery, Lotus, GAC, and FAW to jointly expand and standardize the battery swapping networks. More investors have taken notice and recognized the value of NIO's charging and swapping business.

同時，更多的產業參與者加入了蔚來的充換電網絡。目前，我們已與長安、吉利、江淮、奇瑞、路特斯、廣汽、一汽等合作，共同拓展及規範換電網。越來越多的投資人關注並體認到蔚來充換電業務的價值。

On May 31, NIO Power signed a strategic investment agreement of RMB1.5 billion. With the support of strategic investors, NIO will be able to further develop its core technologies and expand the network. On May 13, NIO was named in the 2024 Fortune China ESG Impact List. We will continue to shoulder social responsibilities and lead by example in the ESG domain to further contribute to sustainable development worldwide.

5月31日，蔚來動力簽署15億元戰略投資協議。在策略投資者的支持下，蔚來汽車將能夠進一步發展其核心技術並擴大網路。 5月13日，蔚來汽車入選《財星》2024中國ESG影響力榜。我們將繼續承擔社會責任，在ESG領域以身作則，進一步為全球永續發展做出貢獻。

Despite a fierce competition, our continuous investment in technology, products, services, and the community starts to pay off and set us apart from others. NIO's premium brand positioning, industry-leading technologies and innovative, chargeable, swappable, and upgradable power experience have been recognized by more people, and thus driven steady sales rebound.

儘管競爭激烈，我們對科技、產品、服務和社區的持續投資開始獲得回報，並使我們與眾不同。蔚來的高端品牌定位、業界領先的技術以及創新的可充可換、可升級的用電體驗得到了更多人的認可，帶動銷量穩步回升。

We will continue to speed up software iterations, optimize products and experiences, improve system capabilities and the operational efficiency to gain a larger market share. In the meantime, as the Company unfolds its multi-brand strategy and enters a broader market, we expect to bring out more potential for growth.

我們將繼續加快軟體迭代，優化產品和體驗，提升系統能力和營運效率，以獲得更大的市場份額。同時，隨著公司多品牌策略的推進，進入更廣大的市場，我們預期將釋放出更多的成長潛力。

As always, thank you for your support. With that, I will now turn the call over to Steven for Q1's financial details. Over to you, Steven.

一如既往，感謝您的支持。現在，我將把電話轉給史蒂文，以了解第一季的財務詳細資訊。交給你了，史蒂文。

Thank you, William. I will now go over our key financial results for the first quarter of 2024. To keep this brief, I will only refer to amounts in RMB today. I encourage listeners to refer to our earnings press release, which is posted online, for additional details.

謝謝你，威廉。我現在將回顧我們 2024 年第一季的主要財務表現。我鼓勵聽眾參考我們在線上發布的收益新聞稿，以了解更多詳細資訊。

Let's begin with revenue. For the first quarter of 2024, total revenues were RMB9.9 billion, down 7.2% year-over-year, and 42.1% quarter-over-quarter. 85% of revenue comes from vehicle sales in Q1, totaling RMB8.4 billion, down 9.1% year-over-year, and 45.7% quarter-over-quarter. The decrease year-over-year was mainly attributed to lower average selling price as a result of user rights adjustments since June 2023, and a decrease in delivery volume. The decrease quarter-over-quarter was mainly attributed to a [39.9%] (corrected by company after the call) decrease in delivery volume, which was affected by seasonal factors.

讓我們從收入開始。 2024年第一季，總營收為人民幣99億元，年減7.2%，季減42.1%。一季85%的營收來自汽車銷售，總計84億元，年減9.1%，季減45.7%。年比下降的主要原因是2023年6月以來因用戶權限調整導致平均售價下降以及交付量減少。環比下降主要是由於受季節性因素影響，交付量下降[39.9%]（公司在電話會議後修正）。

Turning to other sales. Other sales were RMB1.5 billion, showing a 5.2% increase year-over-year and an 8.2% decrease quarter-over-quarter. The year-over-year growth was mainly due to the increase in sales of parts, after-sales vehicle services and provision of power solutions, which grew with our user base and was partially offset by a decrease in revenue from sales of used cars and auto financing services. The decrease quarter-over-quarter was mainly attributed to a decrease in revenue from sales of used cars.

轉向其他銷售。其他銷售額為人民幣15億元，年增5.2%，季減8.2%。年比成長主要是由於零件銷售、售後車輛服務和提供動力解決方案的成長，這些成長隨著我們的用戶群的成長而成長，但部分被二手車和汽車銷售收入的下降所抵消。 。環比下降的主要原因是二手車銷售收入下降。

Then let's have a look at the gross margin. Overall gross margin was 4.9%, compared with 1.5% in the same period of last year and 7.5% in the last quarter. Changes in gross margin were primarily driven by vehicle margin.

然後我們來看看毛利率。整體毛利率為4.9%，去年同期為1.5%，上季為7.5%。毛利率的變化主要是由車輛利潤率所驅動的。

Vehicle margin was 9.2% in this quarter, compared with 5.1% in Q1 2023 and 11.9% in Q4 2023. The year-over-year increase was mainly due to the decreased material cost per unit in Q1 2024. The quarter-over-quarter decrease was mainly due to lower average selling price as a result of increased promotion during product transitioning, changes in product mix and partially offset by the decreased material cost per unit.

本季車輛利潤率為 9.2%，而 2023 年第一季為 5.1%，2023 年第四季為 11.9%。促銷力道加大、產品結構變化導致平均售價下降，但部分被單位材料成本下降所抵銷。

Next, moving on to the operating expenses. R&D expenses were RMB2.9 billion, declined 6.9% year-over-year and 27.9% quarter-over-quarter, which was mainly driven by decreased design and development costs and decreased personnel costs in research and development functions in the first quarter of 2024.

接下來，轉向營運費用。研發費用為人民幣29億元，年減6.9%，季減27.9%，主要是因為2024年第一季設計開發成本下降以及研發職能人員成本下降所致。

SG&A expenses were RMB3 billion, increased by 22.5% year-over-year and decreased by 24.6% quarter-over-quarter. The year-over-year increase was mainly due to, first, the increase in personnel costs related to sales functions. Second, the increase in expenses related to the Company's sales and service network expansion. Third, the increase in sales and marketing activities. The quarter-over-quarter decrease was mainly due to, first, the decrease in sales and marketing activities and professional services and second, the decrease in personnel costs related to sales and general corporate functions.

SG&A費用為人民幣30億元，較去年成長22.5%，季減24.6%。年比成長的主要原因是，首先是與銷售職能相關的人員成本增加。其次，費用增加與公司銷售及服務網絡擴張有關。第三，銷售和行銷活動的增加。環比下降的主要原因是，首先是銷售和行銷活動以及專業服務的減少，其次是與銷售和一般公司職能相關的人員成本的減少。

Now we proceed to the bottom line. Loss from operations was RMB5.4 billion, representing an increase of 5.5% year-over-year and a decrease of 18.6% quarter-over-quarter. Net loss was RMB5.2 billion, representing an increase of 9.4% year-over-year and a decrease of 3.4% quarter-over-quarter.

現在我們繼續討論底線。經營虧損為人民幣54億元，年增5.5%，季減18.6%。淨虧損為人民幣52億元，年增9.4%，季減3.4%。

Finally, our balance of cash and cash equivalents, restricted cash, short-term investment and long-term time deposits was RMB45.3 billion as of 31 March 2024.

截至2024年3月31日，我們的現金及現金等價物、限制性現金、短期投資及長期定期存款餘額為人民幣453億元。

For more information and details of our first quarter 2024 financial results, please refer to our earnings press release.

有關我們 2024 年第一季財務業績的更多資訊和詳情，請參閱我們的收益新聞稿。

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

現在我們準備好的發言就到此結束。我現在將把電話轉給接線員以繼續我們的問答環節。

Thank you. (Operator Instructions). Your first question comes from Tim Hsiao from Morgan Stanley. Please go ahead.

謝謝。 （操作員說明）。你的第一個問題來自摩根士丹利的 Tim Hsiao。請繼續。

Hello and thanks for taking my questions and congratulations on the good feedback on ONVO and also some strategic breakthroughs for NIO Power. I have two questions; the first question is about the gross profit margin. Because as we remember, the Company previously guided vehicle gross profit margin would be back to mid-tens, and the strategic focus of NIO brand is profitability and cash generation, while ONVO would be the one going for volume.

您好，感謝您提出我的問題，並祝賀 ONVO 獲得良好回饋以及 NIO Power 的一些策略突破。我有兩個問題；第一個問題是關於毛利率。因為我們記得，公司先前指導整車毛利率回到幾十左右，而蔚來品牌的策略重點是獲利和現金生成，而ONVO則是追求銷量。

However, we saw increasing promotion for NIO brand in April and May, which worked pretty well actually and successfully boosted volume. Will management consider to continue this kind of more aggressive promotion on NIO brand for better [volume] (corrected by company after the call) in the upcoming months? Do we need to revise down our vehicle margin expectation? That is my first question.

然而，我們看到蔚來品牌在四月和五月的促銷力度加大，實際上效果很好，成功提高了銷售量。管理層是否會考慮在未來幾個月繼續對蔚來品牌進行這種更積極的促銷，以獲得更好的[銷售]（由公司在電話會議後更正）？我們是否需要下調車輛利潤率預期？這是我的第一個問題。

Thank you, Tim. I will ask Stanley to answer your questions.

謝謝你，提姆。我將請史丹利回答你的問題。

Yes, hi, Tim. Regarding the margins for NIO, actually in Q1 we -- regarding the gross margin, actually we upgraded our NT2.0 product to the 2024 version from March. During the transition period of the model year product change, more promotions were offered to the old models, leading to the decrease of our average selling price in Q1. Additionally, more lower margin models like ET5 and ET5T were sold in Q1, all those factors lead to the decrease of our gross margin.

是的，嗨，提姆。關於蔚來的利潤率，實際上在第一季度，關於毛利率，實際上我們從 3 月開始將 NT2.0 產品升級到 2024 年版本。在車型年換產品的過渡期，舊車型促銷力度加大，導致第一季平均售價下降。此外，第一季銷售了更多利潤率較低的型號，如 ET5 和 ET5T，所有這些因素導致我們的毛利率下降。

As you mentioned, we delivered over 20,000 vehicles to users in May. With the recovery of sales volume we will further optimize our product mix and negotiate with our supply chain partners for more cost efficiency in the following months. So we expect the vehicle margin will return to double digits in Q2 and continue to improve in Q3 and Q4. But considering the intensifying market competition, we will also be more flexible on sales policy to make sure our market position is secured. Thank you, Tim.

正如您所提到的，5月我們向用戶交付了超過20,000輛車輛。隨著銷售量的恢復，我們將在接下來的幾個月內進一步優化我們的產品結構，並與供應鏈合作夥伴協商以獲得更高的成本效率。因此我們預計第二季整車利潤率將恢復兩位數，並在第三季和第四季繼續改善。但考慮到市場競爭的加劇，我們的銷售政策也會更加靈活，以確保我們的市場地位。謝謝你，提姆。

Thank you, that's very clear, thanks for sharing all the details. My second question is about NIO Power. As William just mentioned, I think NIO Power secures the first round of strategic investment of RMB1.5 billion or around US$200 million.

謝謝，非常清楚，謝謝分享所有細節。我的第二個問題是關於NIO Power。正如William剛才提到的，我認為NIO Power獲得了15億元人民幣或2億美元左右的第一輪戰略投資。

Looking forward, will NIO Power get and accept more funding support from other car makers in the battery swap alliance? Separately, in addition to NIO Power, are there any other business units within the Group that could follow or pursue to seek external capital injection and be gradually carved out? Could management team give us some examples? That's my second question, thank you.

展望未來，NIO Power是否會獲得並接受換電聯盟其他車企更多的資金支持？另外，除了NIO Power之外，集團內還有其他業務部門可以效仿或尋求外部注資並逐步剝離嗎？管理團隊能給我們一些例子嗎？這是我的第二個問題，謝謝。

(Interpreted) Thank you for the question. For the NIO Power, recently we have just completed the first round of fundraising and after this round of financing, NIO still has around 90% of equity in NIO Power. NIO Power is now open for the external investors, investment from the investors who are from the car companies, we are open for that.

（翻譯）謝謝你的提問。對於NIO Power來說，最近我們剛完成了第一輪融資，在本輪融資之後，蔚來仍然擁有NIO Power 90%左右的股權。 NIO Power現在向外部投資者開放，來自車企的投資者的投資，我們是開放的。

Of course for the longer term, we do believe that NIO Power has the financial sustainability, because we do have a promising and positive outlook for that. At the starting stage, as we needed to build up the network for the power swap facilities, the upfront investment is relatively heavy. However, we do see a clear roadmap for the profitability with NIO Power.

當然，從長遠來看，我們確實相信NIO Power具有財務可持續性，因為我們確實對此抱持樂觀和積極的前景。起步階段，由於需要建置換電設施網絡，前期投資較大。然而，我們確實看到了 NIO Power 獲利能力的清晰路線圖。

Let me share with you a number. Right now for the breakeven point of a single power swap station it's around 60 swaps per day. If you look at our current power swap service, every day on average we offer around 100,000 power swaps with around 2,000 stations. It means that for each station on average they are already providing around 30 swaps per day.

讓我與您分享一個數字。目前，單一換電站的損益平衡點約為每天 60 次換電。如果你看看我們目前的換電服務，我們平均每天會在大約 2,000 個換電站提供大約 100,000 次換電。這意味著每個站點平均每天已經提供約 30 次交換。

So for the longer term, we do see a viable roadmap for the sustainability and also the profitability of our power swap business, not to mention that we can also leverage the revenues contributed by the energy storage and also the flexible battery operator of the power swap.

因此，從長遠來看，我們確實看到了換電業務的可持續性和盈利能力的可行路線圖，更不用說我們還可以利用儲能和換電靈活電池運營商貢獻的收入。

Thank you. Your next question comes from Ming Hsun Lee from Bank of America. Please go ahead.

謝謝。您的下一個問題來自美國銀行的 Ming Hsun Lee。請繼續。

Hello, William and the management team, this is Ming from Bank of America. My first question is regarding the ONVO brand. So right now we are close to the end of second quarter, so could you give us some guidance regarding your sales channel expansion and also CapEx expense related to ONVO brand? Also could you give us a rough product pipeline for the ONVO brand? Thank you, that's my first question.

哈嘍，William 和管理團隊，我是美國銀行的 Ming。我的第一個問題是關於ONVO品牌的。現在我們已接近第二季末，您能否就您的銷售管道擴張以及與 ONVO 品牌相關的資本支出向我們提供一些指導？另外您能否提供我們一下ONVO品牌的粗略產品線？謝謝，這是我的第一個問題。

(Interpreted) Thank you for your question. Our current plan is that when we start to launch and deliver the first products of ONVO in September this year, we are going to open up around 100 stores in China. CapEx-wise, as ONVO sales stores or point of sales does not come with NIO House, which does not require heavy investment in that case, the overall, CapEx will be pretty efficient, around RMB1 million to RMB2 million per store. It won't be a very heavy burden from the CapEx perspective.

（翻譯）謝謝你的提問。我們目前的計畫是，當我們今年9月開始推出和交付ONVO的首批產品時，我們將在中國開設約100家商店。資本支出方面，由於ONVO銷售店或銷售點不附帶NIO House，因此不需要大量投資，因此總體而言，資本支出將相當高效，每家商店約100萬元至200萬元人民幣。從資本支出的角度來看，這不會是個非常沉重的負擔。

(Multiple speakers)

（多位發言者）

Could you give a rough pipeline for ONVO brand? For example, one model this year and then maybe two models next year. Thank you.

您能給ONVO品牌一個大概的管道嗎？例如，今年推出一款型號，明年可能推出兩款。謝謝。

(Interpreted) Regarding the ONVO product pipeline, actually the first product, L60, it will be directly competing with Model Y. It's a midsize SUV for family users. Next year we are going to introduce the second product from ONVO, it will be a mid-large SUV for bigger families.

（解讀）ONVO的產品線，其實第一個產品是L60，它會和Model Y直接競爭，是一款面向家庭用戶的中型SUV。明年我們將推出ONVO的第二款產品，它將是一款適合大家庭的中大型SUV。

We also have other products in the pipeline, but overall speaking for ONVO, we will not have many products in its offering. We will be focusing on enhancing the market share and also the sales volume of each product in their respective segments.

我們還有其他產品正在醞釀中，但總體而言，對於 ONVO 來說，我們不會提供太多產品。我們將專注於提高市場佔有率以及每種產品在各自細分市場的銷售量。

Overall speaking, the total sales volume for ONVO segment, which is a family car market with a starting price of around RMB200,000, the total size is around four million and we do believe that we have a good opportunity and room for growth in that segment.

整體來說，ONVO這個細分市場，是起價20萬元左右的家庭用車​​市場，總銷量在400萬輛左右，我們相信有很好的機會和成長空間。

Thank you, William. My second question is related to your third brand, because we read that in the news today that the Firefly brand could be launched or shown to the market probably by the end of this year. Could you also give us some latest update on the third brand? Last time during the earnings call you mentioned that probably Firefly brand product could be sold in NIO House or NIO Space. So, could you confirm this network channel? Thank you.

謝謝你，威廉。我的第二個問題與你們的第三個品牌有關，因為我們在今天的新聞中看到，Firefly品牌可能會在今年年底推出或向市場展示。您能否為我們介紹第三個品牌的最新動態？上次在財報電話會議上，您提到Firefly品牌的產品可能會在NIO House或NIO Space中銷售。那麼，您能否確認一下這個網路管道呢？謝謝。

(Interpreted) Thank you for the question. Regarding our third brand, Firefly, the R&D activities are in good progress. Several months ago I've already tried one of the early builds of their first model and it's pretty good.

（翻譯）謝謝你的提問。關於我們的第三個品牌Firefly，研發活動進展順利。幾個月前，我已經嘗試過他們第一個模型的早期版本，效果非常好。

Regarding the Firefly product, in the Chinese market it will be a boutique compact vehicle. Although its price segment is around RMB100,000 to RMB200,000, but it will follow a very high standard for the safety and the quality, so it will be a well-designed boutique car for the Chinese market.

對於Firefly產品來說，在中國市場它將是一款精品小型車。雖然其價位在10萬元至20萬元左右，但對於安全性和品質的要求非常高，將是一款專為中國市場精心設計的精品車。

In terms of the sales channel, it will also share the point of sales with NIO, just like how Mini is sharing its dealership force with BMW. We will be using a similar approach, however, the selling price of Firefly will not be as expensive as Mini, but product-wise it is definitely a very good product.

在銷售管道上，它也會與蔚來共享銷售點，就像Mini與BMW共享經銷力量一樣。我們也會採用類似的做法，不過Firefly的價格不會像Mini那麼貴，但從產品角度來看它絕對是一款非常好的產品。

We will start the product delivery from the first half of next year. The brand launch and the product launch, we don't have the specific date for that, but the delivery date is already more or less defined, that is the first half of next year.

我們將從明年上半年開始交付產品。品牌發布和產品發布，我們沒有具體的日期，但交付日期已經或多或少確定了，那就是明年上半年。

Thank you, William.

謝謝你，威廉。

Thank you, Ming.

謝謝你，明。

Thank you. Your next question comes from Bin Wang from Deutsche Bank. Please go ahead.

謝謝。你的下一個問題來自德意志銀行的王斌。請繼續。

Thank you, my question's about the margin. Because you will migrate to NT3.0 this year, so when all the NIO brand products migrate from NT2.0 to NT3.0, how much margin improvement can you achieve through a technology upgrade?

謝謝，我的問題是關於保證金的。因為今年要遷移到NT3.0，那麼當蔚來品牌所有產品從NT2.0遷移到NT3.0時，透過技術升級可以達到多少利潤率提升？

At the same time, based on the NT3.0 technology, can you provide the volume assumption to reach the ONVO company break-even? That's my first question, thank you.

同時，基於NT3.0技術，您能提供達到ONVO公司損益平衡的產量假設嗎？這是我的第一個問題，謝謝。

(Interpreted) Thank you for the question. Regarding NIO brand, starting from next year, we will gradually upgrade our product to the third generation. The first product on NT3.0 will be ET9. For the third-generation product, we will also take different approaches to improve the vehicle margin. For example, we will start to put more in-house technologies into our vehicles, like chips, for better vehicle margin performance. We also see some opportunities with the battery cost reduction.

（翻譯）謝謝你的提問。對於蔚來品牌，從明年開始，我們將逐步將產品升級到第三代。 NT3.0上的第一個產品將是ET9。對於第三代產品，我們也會採取不同的方式來提高整車利潤率。例如，我們將開始在我們的車輛中投入更多的內部技術，例如晶片，以提高車輛的利潤表現。我們也看到了電池成本降低的一些機會。

So overall speaking, our target for the NT3.0 product margin will be around the 20% on average. We do have a confidence of realizing that average margin of 20% from NT3.0.

所以整體來說，我們對NT3.0產品利潤率的目標是平均20%左右。我們確實有信心達到 NT3.0 的平均利潤率 20%。

Regarding the breakeven target for the NIO brand, our target is still the same, that is to realize the monthly sales volume of 30,000 units with a vehicle margin of around 20%. Then we will be breaking even with the core business of the NIO brand in China.

對於蔚來品牌的損益平衡目標，我們的目標還是一樣的，就是實現月銷量3萬輛，整車利潤率約20%。然後我們將在中國實現蔚來品牌核心業務的收支平衡。

Regarding our second brand, ONVO, we have announced that -- the pre-sale price during the brand launch, but we haven't released the final price yet. Even with the pre-sale price, we can realize a pretty good vehicle margin. Of course we also understand the competition in ONVO's segment is more intense than NIO. In that case, we will also strike a balance between the volume and the margin. We will not boost the sales volume at the cost of our vehicle margin. For the longer term, our target for ONVO's products, our margin target for ONVO's products will also be above or even -- around or even above 15%.

關於我們的第二個品牌ONVO，我們已經公佈了——品牌推出時的預售價格，但我們還沒有公佈最終價格。即使以預售價計算，我們也能達到相當不錯的車輛利潤。當然我們也知道ONVO這個細分市場的競爭比蔚來更激烈。在這種情況下，我們也會在成交量和利潤之間取得平衡。我們不會以犧牲車輛利潤為代價來提高銷量。從長遠來看，我們對ONVO產品的目標，我們對ONVO產品的利潤率目標也將高於甚至是15%左右甚至高於15%。

Because looking at Tesla, their current product margin is around 16% to 17%. For ONVO, realizing a margin of above 15% is also a reasonable and achievable target for us in the longer term. For ONVO brand to break even its monthly sales volume should be at least 20,000 to 30,000 units per month.

因為看看特斯拉，他們目前的產品利潤率大約在16%到17%。對ONVO來說，達成15%以上的利潤率也是我們長期合理且可實現的目標。 ONVO品牌要實現損益平衡，其每月銷售量至少要達到2萬到3萬台。

Thank you. My second question is about the order backlog for ONVO. You actually in an interview, said actually you are very satisfied about ONVO's initial order backlog. Some market talk is that you already have 60,000 cancellable order right now. Can you comment on that number and how satisfied you are about ONVO's order so far? Thank you.

謝謝。我的第二個問題是關於 ONVO 的訂單積壓。您實際上在接受採訪時表示，實際上您對ONVO最初的訂單儲備非常滿意。一些市場傳聞您現在已經有 60,000 個可取消訂單。您能否評論一下這個數字以及您迄今為止對 ONVO 訂單的滿意度嗎？謝謝。

(Interpreted) As you know that for us, we never disclose any pre-order intake or numbers as the pre-orders are refundable and we don't think it's a very solid reference for us to look at the actual performance of the product. However, it is true that with the pre-order intake, it has surpassed our expectation, as also mentioned by the president of ONVO, Alan Ai, in some interviews.

（解釋）如您所知，對於我們來說，我們從不透露任何預訂量或數量，因為預訂單是可以退款的，我們認為這對我們查看產品的實際性能來說不是一個非常可靠的參考。不過，確實，從預訂量來看，已經超出了我們的預期，正如 ONVO 總裁艾艾倫在一些採訪中提到的那樣。

So, overall speaking, without opening up any stores or having products to the market, we have already received the pre-orders that's beyond our expectation. That's the information we can share.

所以總體來說，在沒有開店、沒有產品上市的情況下，我們已經收到了超出我們預期的預訂單。這就是我們可以分享的訊息。

Thank you very much. Thank you.

非常感謝。謝謝。

Thank you, Bin.

謝謝你，斌。

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

謝謝。您的下一個問題來自瑞銀集團的 Paul Kong。請繼續。

Thanks for taking my questions. Two questions. The first question is you mentioned that right now you have 2,400 swap stations. To my best understanding, only the third generation and latest battery swap stations could help ONVO to swap the batteries. Could you please remind us how many units of the later generation battery swap stations could help for the ONVO swap?

感謝您回答我的問題。兩個問題。第一個問題是你提到現在你有2400個交換站。據我了解，只有第三代和最新的電池更換站可以幫助ONVO更換電池。您能否提醒我們，新一代電池更換站有多少台可以幫助 ONVO 更換？

(Interpreted) Thank you for the question. For our third generation power swap station to be compatible with ONVO's products, we do need to make some necessary modification. It is not a very expensive one, around RMB200,000 to RMB300,000 per station for the modification.

（翻譯）謝謝你的提問。為了讓我們的第三代換電站相容於ONVO的產品，我們確實需要做一些必要的修改。不是很貴，改裝一站20萬到30萬左右。

So far, we have already installed more than 1,000 third generation power swap stations, so that will be a base. In the meantime, what we're doing, actually next week we will start to install our fourth-generation power swap stations. These stations will be compatible with both ONVO and NIO products.

目前，我們已經安裝了1000多個第三代換電站，這將是一個基地。同時，我們正在做的事情，實際上下週我們將開始安裝我們的第四代換電站。這些站將與 ONVO 和 NIO 產品相容。

Also, later this year, depending on the market and the NIO products. Also later this year, depending on the market and the demand, we will also see and decide how many fourth-generation stations we need to deploy for NIO and ONVO products, that all fourth-generation stations can be accessed by ONVO products. Probably with that, by end of the year, in the market, there will be more than 1,000 stations that can be compatible with ONVO products.

另外，今年晚些時候，取決於市場和蔚來產品。同樣在今年晚些時候，根據市場和需求，我們也會看到並決定蔚來和ONVO產品需要部署多少個第四代站點，所有第四代站點都可以被ONVO產品接入。預計到今年底，市場上能夠相容於ONVO產品的站點將超過1000個。

Of course, it doesn't mean that we will modify or open up all the [third] (corrected by company after the call)-generation stations to ONVO users as not every station needs to be modified or opened up to the second brand. Not to mention that to start with, ONVO will not have a very big user base for the current year. In that case, the experience of those brands will be pretty good.

當然，這並不意味著我們將所有的[第三]（公司在通話後更正）代站都修改或開放給ONVO用戶，因為並不是每個站都需要修改或開放給第二品牌。更不用說，ONVO 今年的用戶基礎不會很大。那麼這些品牌的體驗就會非常好。

In the meantime, we also see some correlations between the number of power swap stations, or the density of the power swap stations in certain regions and the sales performance in that region. For example, in the Yangtze River Delta area, basically half of our users are based in that area.

同時，我們也看到某些地區換電站的數量或換電站的密度與該地區的銷售業績之間存在一些相關性。例如在長三角地區，我們的用戶基本上有一半都在這個地區。

In this area, we have already installed nearly 900 power swap stations. So there is a correlation between the number of stations and the number of sales. In that case, we are also developing a ROI model to calculate the return on the power swap station investment.

在這個地區，我們已經安裝了近900個換電站。所以站數和銷售量之間有相關性。在這種情況下，我們也正在開發一個投資報酬率模型來計算換電站的投資報酬率。

In that case, our deployment of the power swap station and the decision on the deployment will be also relevant to their contributions to the sales volume, the sales of NIO or sales of the ONVO brand.

那麼我們換電站的部署以及部署的決定也將關係到他們對銷售的貢獻，蔚來的銷售量或ONVO品牌的銷售量。

As right now, we have already initially established a charging and swapping network for China to cover most of the basic needs. For the next step, we will look closely at the return on the investment of all the power swap stations, especially the return on the sales volume. In that case, our deployment next step will also be more targeted.

目前，我們已經初步建立了中國的充換電網絡，可以滿足大部分基本需求。下一步，我們會密切注意各個換電站的投資回報，特別是售電量回報。那麼，我們下一步的部署也會更有針對性。

Thank you. So my second question is regarding the level 3 license permit. I think you are among the first batch to receive the level 3 autonomous driving testing license permit. How do you plan to utilize this opportunity, and how should you further develop on the autonomous driving technology? Thank you.

謝謝。我的第二個問題是關於 3 級許可證的。我想你們是第一批獲得三級自動駕駛測試許可證的人之一。您打算如何利用這個機會，以及如何在自動駕駛技術上進一步發展？謝謝。

(Interpreted) Thank you for the question. Yes, two days ago we have received the L3 testing permit issued by four ministries, including MIIT. Also among all the startups, we are one of the earliest to receive the first batch of permits issued by the government. This also represents a recognition of our technology.

（翻譯）謝謝你的提問。是的，前兩天我們已經收到了工信部等四部會頒發的L3測試許可證。而且在所有新創企業中，我們是最早獲得政府頒發的第一批許可證的企業之一。這也代表了對我們技術的認可。

For the next step with the permit, with the testing capability, we will be able to keep more frequent communications with the government regarding the application and also the testing of the higher levels of autonomous driving technologies, which will also be very important for the entire industry.

下一步有了許可，有了測試能力，我們就可以和政府保持更頻繁的溝通，就申請以及更高水平的自動駕駛技術進行測試，這對整個行業來說也是非常重要的。

Thank you, Paul.

謝謝你，保羅。

Thank you. Your next question comes from Yuqian Ding from HSBC. Please go ahead.

謝謝。你的下一個問題來自匯豐銀行的丁宇謙。請繼續。

Thank you, team. My first question is probably still an extra mile on the margin and the pricing. So second quarter, probably we're going to see higher economies of scale, almost doubled versus the first quarter, yet the promotion and also lower mix likely to remain as a dilution.

謝謝你，團隊。我的第一個問題可能仍然是在利潤和定價上加倍努力。因此，第二季度，我們可能會看到更高的規模經濟，幾乎比第一季翻倍，但促銷和較低的組合可能仍然會帶來稀釋作用。

So you talked about the flexible on pricing earlier. So could you put us in a bit more context about how we prioritize pricing mix and volume, and each of their weighting on the margin side?

所以您之前談到了定價的彈性。那麼您能否讓我們了解一下我們如何優先考慮定價組合和銷售量，以及它們在利潤方面的權重？

(Interpreted) Thank you for the question. In the April and also May, we have witnessed the increase in our sales volume. But such increase is actually due to multiple factors.

（翻譯）謝謝你的提問。四月和五月，我們的銷售量都在成長。但這種增長其實是由多種因素造成的。

The first is, we have just completed our model year facelift in the first quarter of this year. With that, it has significantly improved the competitiveness of our products.

首先，我們剛在今年第一季完成了車型改款。從而顯著提高了我們產品的競爭力。

Secondly, we have adjusted our BaaS policy. This March, we have announced our long-life battery strategy and also the adjustments to the BaaS monthly subscription fee. By optimizing our operations and also working with our battery suppliers for longer battery warranty, we can prolong the lifetime of the battery and lower the monthly fee for our users. This is actually a very important approach to boost the take rate of the BaaS service. After the announcements and the adjustments, the take rate of the battery as a service has raised to more than 80%.

其次，我們調整了BaaS政策。今年3月，我們宣布了長壽命電池策略，並調整了BaaS月費。透過優化我們的營運並與我們的電池供應商合作以獲得更長的電池保固期，我們可以延長電池的使用壽命並降低用戶的月費。這其實是提高BaaS服務使用率的一個非常重要的途徑。經過公告和調整後，電池即服務的使用率已提升至80%以上。

Also, we are offering some time-limited promotions on the BaaS service. Right now, our users can buy four months of the BaaS and enjoy one month for free.

此外，我們也在 BaaS 服務上提供一些限時促銷活動。目前，我們的用戶可以購買四個月的 BaaS，並免費享受一個月。

The third reason is regarding the improvements on our sales capabilities and capacity. In the second half of last year, we realized that we didn't have enough sales capacities and capabilities, which means we didn't have enough point of sales or the salespersons on team. In that case, we started to build our sales capacity and capabilities, and starting March/April this year, we are seeing more and more qualified fellows to contribute the sales and also orders to the Company. So, these are several major reasons that are boosting our sales volume in the past two months.

第三個原因是關於我們銷售能力和能力的提升。去年下半年，我們意識到我們沒有足夠的銷售能力和能力，這意味著我們沒有足夠的銷售點或團隊中的銷售人員。在這種情況下，我們開始建立我們的銷售能力和能力，從今年三月/四月開始，我們看到越來越多的合格人員為公司貢獻銷售和訂單。所以，這是過去兩個月我們銷售成長的幾個主要原因。

In addition to that, there are several other reasons. For example, we are deploying and opening up more and more power swap stations. More and more people are also getting to know and starting to recognize the value of rechargeable, swappable and upgradable solutions, and also we have a pretty stable residual value on our used vehicles.

除此之外，還有其他幾個原因。例如，我們正在部署和開放越來越多的換電站。越來越多的人也開始了解並開始認識到可充電、可更換和可升級解決方案的價值，而且我們的二手車也有相當穩定的剩餘價值。

Recently, there was an evaluation coming from the industry institution, and the ES8 and several other NIO models actually have the best RV performance among all of the BEV products. So, it is not just about the adjustments on the prices, not to mention that we haven't announced any price reductions on our products. We are offering some promotions like battery as a service policy promotions or some trade-in incentives for the ICE car users, but no price reductions on the products.

近日，來自業界機構的評測顯示，蔚來ES8等幾款車型其實是所有純電動產品中房車性能最好的。所以，不只是價格的調整，更何況我們的產品還沒有宣布降價。我們提供一些促銷活動，例如電池即服務政策促銷或針對內燃機汽車用戶的一些以舊換新激勵措施，但產品沒有降價。

In the meantime, we also will continue to improve our vehicle margins. So, starting in June, we are taking several actions. The first is to keep improving our product mix. We have started to deliver our ET7 in late April.

同時，我們也將繼續提高我們的車輛利潤率。因此，從六月開始，我們將採取多項行動。一是不斷完善產品結構。我們已於四月底開始交付 ET7。

ET7, ES8 and the EC7, they are pretty competitive in their respective segments. We will also encourage our front-line teams and our fellows to put more focus on these high-margin products to help us optimize product mix.

ET7、ES8和EC7，它們在各自的細分市場中都具有相當的競爭力。我們也會鼓勵第一線團隊和同事更專注於這些高利潤的產品，幫助我們優化產品結構。

Secondly, we are also optimizing our variable marketing expenses. Starting in June, we are also dialing back on our time-limited offers and promotions on the products. For example, we are reducing the number of free power swap brochures we gave out to our users. So, overall speaking, we will keep improving our sales volume steadily while optimizing the vehicle margin.

其次，我們也在優化可變行銷費用。從六月開始，我們也將取消產品的限時優惠和促銷活動。例如，我們正在減少向使用者發放的免費換電手冊的數量。因此，總體而言，我們將在優化車輛利潤率的同時，繼續穩步提高銷量。

Thank you. That's very comprehensive. The next question is on the overseas business, the European Union Anti-subsidy investigation towards China EV might come out as a preliminary result next week. So, could we have an update refresher on NIO's oversea footprint, including Europe and also the Middle East?

謝謝。這非常全面。接下來的問題是關於海外業務，歐盟對中國電動車的反補貼調查可能會在下週出初步結果。那麼，我們能否回顧一下蔚來汽車的海外足跡，包括歐洲和中東？

(Interpreted) Thank you for the question. It's true that the entire industry is waiting for the preliminary announcement on the Anti-subsidy probe of Europe. From our perspective, we don't think such a probe is in the right direction.

（翻譯）謝謝你的提問。誠然，整個產業都在等待歐洲反補貼調查的初步結果。從我們的角度來看，我們認為這樣的探索方向並不正確。

Imposing tariffs on the new energy vehicles is actually going against the initiative of the sustainable development of all humankind. Of course, we will also adjust our directions and strategies according to the latest change on the tariffs of the products. Overall speaking at the moment, European -- the sales in our European market are still quite moderate in comparison to our total vehicle sales. So, the impact on our short-term operations is limited.

對新能源汽車加徵關稅，實際上違背了全人類永續發展的倡議。當然，我們也會根據產品關稅的最新變化來調整我們的方向和策略。總體而言，目前歐洲—與我們的汽車總銷量相比，我們歐洲市場的銷量仍然相當溫和。因此，對我們短期經營的影響有限。

For the longer term, for NIO or for ONVO and the Firefly product, we will also develop and make necessary adjustments to our strategies according to the latest tariff policies.

從長遠來看，對於蔚來汽車或ONVO以及Firefly產品，我們也會根據最新的關稅政策來制定和進行必要的調整。

Regarding the Middle East market entry, later this year, we are going to start to offer our products and services in the UAE market. We are making market entry preparation right now.

關於中東市場的進入，今年晚些時候，我們將開始在阿聯酋市場提供我們的產品和服務。我們現在正在做市場准入準備。

Thank you. Your next question comes from Jing Chang from CICC. Please go ahead.

謝謝。你的下一個問題來自中金公司的常靜。請繼續。

Hi. Thank you for taking my questions. My first question is a quick follow-up question about -- so, can you share with us more information on the financial impact of the major, especially BaaS policy adjustment for first quarter, such as our BaaS rental fee adjustment, and also our four for one battery rental, and also our battery swap coupons, these financial impacts, especially for our income statement? This is my first question.

你好。感謝您回答我的問題。我的第一個問題是一個快速的後續問題——那麼，您能否與我們分享更多有關主要財務影響的信息，特別是第一季度的BaaS 政策調整，例如我們的BaaS 租金調整，以及我們的四個對於一塊電池租賃以及我們的電池更換優惠券，這些財務影響，特別是對我們的損益表？這是我的第一個問題。

Yes, about the BaaS price adjustment, I think two parts. The first is about the price reduction from RMB980 to RMB728. Currently, no material impact to NIO's revenue and gross profit margin.

是的，關於BaaS價格調整，我認為分為兩個部分。首先是價格從980元降到728元。目前，對蔚來汽車的收入和毛利率沒有重大影響。

I think, as mentioned by William, we make this adjustment based on assumptions that the battery can be used for a longer time, and also some optimization of the battery side operations. So, that's first. Secondly about the promotions, use four months and one month for free. We granted this equity to the users for five years. So, generally, the financial impact of this promotion is about below RMB6,000 per car. So, that's the general impact of this policy. Yes.

我想，正如William所提到的，我們做出這樣的調整是基於電池可以使用更長時間的假設，以及對電池端操作的一些最佳化。所以，這是第一。其次關於促銷，使用四個月和免費一個月。我們將這個股權授予用戶五年。因此，一般來說，本次促銷的經濟效益約為每輛車6,000元以下。這就是這項政策的整體影響。是的。

Yes, thank you. My second question is about -- also for our -- ONVO and also Firefly. So, this year, we will have ONVO's first car, and next year, we will have Firefly to be launched.

是的，謝謝。我的第二個問題是關於──也針對我們的──ONVO 和 Firefly。所以，今年我們會有ONVO的第一輛車，明年我們會有Firefly上市。

Our three sub-brands, including NIO, will form a quite complete product matrix next year. So, can you share more information on these different positions and also the different relationships between these three brands, and also in what aspects can we collaborate?

明年我們包括蔚來在內的三個子品牌將形成一個相當完整的產品矩陣。那麼，您能否分享這三個品牌之間的不同定位以及不同關係，以及我們可以在哪些方面進行合作？

(Interpreted) Thank you for the question. Regarding the positioning of our three different brands, actually, they're very clearly differentiated. For NIO, it is a premium brand, target business-oriented users and business communities, also have a spill over to the family-oriented users.

（翻譯）謝謝你的提問。我們三個不同品牌的定位其實是有非常明顯的差異的。對蔚來來說，它是一個高端品牌，目標面向商業用戶和商業社區，也有溢出到家庭用戶。

For ONVO, it targets the premium family market, mass market. So its target user is very clear, family users. For Firefly, as I've mentioned, in China, it'll be an affordable boutique compact car. We target the family-oriented users, especially those families who are buying Firefly as their second vehicle. That's about the positioning of these three brands.

對ONVO來說，它的目標是高端家庭市場、大眾市場。所以它的目標用戶非常明確，家庭用戶。對於Firefly來說，正如我所提到的，在中國，它將是一款價格實惠的精品小型車。我們的目標用戶是家庭用戶，尤其是那些購買 Firefly 作為第二輛車的家庭。這就是關於這三個品牌的定位。

Price wise, it is also pretty clear. The starting prices of all three brands will be around RMB100,000, RMB200,000, and RMB300,000. That is also clearly differentiated. However, these three brands do share a similarity, that is, the power swap. All three brands can support power swap.

價格方面，也很清楚。三個品牌的起售價分別為10萬元、20萬元、30萬元左右。這也是有明顯差別的。不過，這三個品牌確實有一個相似之處，那就是換電。三個品牌均支援電源交換。

(Interpreted) In addition to power swap, the three brands also share the fundamental capabilities for smart technologies, electrification, and also vehicle engineering capabilities. For example, when it comes to smart technologies, software wise, hardware wise, three brands can share quite a lot of synergies.

(解讀)除了換電之外，三個品牌還共享智慧科技、電動化、整車工程能力等基礎能力。例如，在智慧技術、軟體、硬體方面，三個品牌可以分享相當多的綜效。

For the power swap stations, as we've already mentioned, NIO and ONVO will be sharing the same power swap station and also structure. For the vehicle engineering, there are also quite a lot of capabilities that can be shared across all three brands.

對於換電站，正如我們已經提到的，蔚來和ONVO將共享相同的換電站和結構。在車輛工程方面，有三個品牌也有相當多的功能可以分享。

In terms of the manufacturing and production, the first model of ONVO L60 will be manufactured in NIO's second factory, NIO F2. So from this perspective, you can tell how much synergies we can leverage and how much investment we can share across three brands.

在製造和生產方面，ONVO L60的首款車型將在蔚來第二工廠蔚來F2生產。因此，從這個角度來看，您可以看出我們可以在三個品牌之間利用多少協同效應以及我們可以分享多少投資。

Thank you, Jing Chang.

謝謝你，張靜。

Thank you. Your next question comes from Tina Hou from Goldman Sachs. Please go ahead.

謝謝。你的下一個問題來自高盛的蒂娜侯。請繼續。

Thank you for taking my question. So my first question is regarding actually just now William mentioned to keep the volume steadily increased and then to improve growth margins. (Spoken in Chinese). So can we interpret this as for the upcoming month we do expect the vehicle volume to be above 20,000 units per month? That's my first question. Thanks.

感謝您回答我的問題。所以我的第一個問題其實是關於威廉剛才提到的保持銷售穩定成長，然後提高成長率的問題。 （用中文說）。那麼我們是否可以將此解釋為我們預計下個月的車輛銷售將超過每月 20,000 輛？這是我的第一個問題。謝謝。

(Interpreted) It's true that we do see a pretty stable demand on our products. Recently, we do have several small headaches, for example, in May, actually, the order demand has exceeded our production capacity. So the actual deliveries we achieved in May basically means the maximum number of vehicles we can produce for that month. So we do see a steady and a sustainable growth momentum on our order intake, and we have a confidence of continuing that.

（解釋）確實，我們確實看到對我們產品的需求相當穩定。最近，我們確實有幾個小問題，例如5月份，實際上訂單需求已經超過了我們的產能。所以我們5月份的實際交付量基本上就是這個月我們能生產的最大數量。因此，我們確實看到訂單量呈現穩定、可持續的成長勢頭，並且我們有信心繼續保持這種成長勢頭。

Thank you. Can I just have a quick follow up, so for the -- I think starting from September you will start to deliver ONVO. So does the 20,000 units forecast or target include ONVO or exclude ONVO?

謝謝。我可以快速跟進嗎？那麼20,000台的預測或目標是包含ONVO還是不包含ONVO？

(Interpreted) After the launch of ONVO brand, we actually see positive impact on the sales of the NIO product. It hasn't affected the demand on the NIO products. In the meantime, we are also training the operators and also the frontline teams so that we can get ready for the production of ONVO's product.

（解讀）ONVO品牌推出後，我們其實看到了對蔚來產品銷售的正面影響。這並沒有影響蔚來產品的需求。同時，我們也在培訓操作人員和第一線團隊，為ONVO產品的生產做好準備。

We may also arrange dual shifts in certain production lines with sections to fulfill the demand of the both brands and products. Regarding whether this number you've just mentioned, well, if it has included the volume assumptions for ONVO, actually it does not. That is only the assumption for the NIO brand.

我們也可能在某些分段生產線中安排雙班制，以滿足品牌和產品的需求。關於你剛才提到的這個數字，嗯，如果它包含了ONVO的數量假設，實際上它沒有包含在內。這只是蔚來品牌的假設。

Thank you. That's very clear. Thanks, William. Then my second question is regarding the operating expenses. So first on SG&A. In the first quarter we see SG&A actually increased by 22% year-over-year. So should we expect similar type of increase in the following three quarters, and also actually starting from September, since there will be 100 new stores for ONVO added, so in that like the last quarter, should we expect SG&A expense to grow even higher?

謝謝。這非常清楚。謝謝，威廉。那麼我的第二個問題是關於營運費用。首先是SG&A。在第一季度，我們看到 SG&A 實際上同比增長了 22%。那麼，我們是否應該預期接下來的三個季度會出現類似的成長，而且實際上從9 月開始，因為ONVO 將新增100 家新店，所以像上個季度一樣，我們是否應該預期SG&A 費用會成長得更高？

Then in terms of R&D, on the other hand, I see it down 7% year-over-year. So for overall R&D expense, what kind of annual spending level do you think it will be like a sustainable or a steady state kind of expense for us to keep competitive in terms of our hardware and software technology? Thank you.

另一方面，在研發方面，我認為它比去年同期下降了 7%。那麼對於整體研發費用來說，您認為什麼樣的年度支出水平才算是可持續或穩定的支出水平，才能讓我們在硬體和軟體技術方面保持競爭力？謝謝。

Yes. Regarding the operating expense, the first is about selling expense. Yes, actually in Q1, our marketing activities decreased, considering the impact of Chinese New Year Festival and also the seasonal change.

是的。關於營業費用，首先是銷售費用。是的，實際上在第一季度，考慮到春節和季節變化的影響，我們的行銷活動有所減少。

Starting from Q2, we are expecting that the percentage of selling expense against the vehicle revenue will be improved if our sales growth quarter-over-quarter can be achieved as planned. So that's about setting price.

從第二季開始，如果我們的銷售環比成長能夠按計劃實現，我們預計銷售費用佔整車收入的比例將得到改善。這就是定價。

Along with the launch of ONVO, we don't think the efficiency will be damaged since with the volume increase of ONVO, we'll have a larger sales revenue. So this is about the efficiency of selling expense.

隨著ONVO的推出，我們認為效率不會受到損害，因為隨著ONVO的銷售量增加，我們將有更大的銷售收入。所以這是關於銷售費用的效率。

For the R&D expense, the fluctuation in Q1 is in line with the cadence of our R&D activities, especially the development of new vehicle models and the core tech.

研發費用方面，第一季的波動與我們研發活動的節奏一致，特別是新車型和核心技術的開發。

Generally, the forecast for R&D expense in 2024 will be consistent with 2023, that is, to say the non-GAAP quarterly spending will be around RMB3 billion. I think this outlook is consistent with our prior quarter's statements. Thank you, Tina.

整體而言，2024年研發費用預測將與2023年保持一致，即非美國通用會計準則季度支出約30億元。我認為這一前景與我們上一季的聲明一致。謝謝你，蒂娜。

Thank you. Yes, I understand that in terms of SG&A as a percentage of revenue it's going to decline, but just in terms of the year-over-year growth for SG&A, shall we expect it to grow more than 22% this year?

謝謝。是的，我知道就 SG&A 佔收入的百分比而言，它將會下降，但僅就 SG&A 的同比增長而言，我們是否應該預計今年的增長將超過 22%？

I think based on our current forecast that we don't think it will exceed 20% in 2024. Yes.

我認為根據我們目前的預測，2024 年不會超過 20%。

Okay. That's very clear. Thank you.

好的。這非常清楚。謝謝。

Thank you.

謝謝。

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

謝謝。由於現在沒有其他問題，我想將電話轉回公司進行結束語。

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

感謝您今天加入我們。如果您還有其他疑問，請隨時透過我們網站上提供的聯絡方式聯繫蔚來IR團隊。電話會議到此結束。現在您可以斷開線路。謝謝。

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.

此文字記錄中標記（翻譯）的部分是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。