Nio (1Q25 Minutes): Cutting three expenses and scaling back, can Nio save itself from life and death?

Below is the$NIO(NIO.US) FY25Q1 earnings call minutes. For earnings analysis, please refer to《Nio: Empty Promises Are Useless, Survival Is the Key to 'Future'》

I. Key Earnings Highlights

II. Detailed Earnings Call Content

2.1 Core Management Statements

1. Q2 Deliveries: New models began deliveries in late May. Q2 deliveries are expected to reach 72,000–75,000 units.

a. New ES6 and EC6 launched on May 16, deliveries started on May 20.

b. New ET5 and ET5T launched on May 25, deliveries started on May 27.

2. Model Highlights:

ET9: Flagship executive sedan, sales in the first 4 months surpassed BMW 7 Series and Audi A8, breaking into the BBA-dominated premium market.

ONVO: Sustained demand growth for L60 drives ONVO brand deliveries; flagship SUV L90 debuted at Shanghai Auto Show, with deliveries starting in Q3.

Firefly: Deliveries began in late April, covering China and European markets.

3. Smart Technology:

a. NX9031: Deployed in ES6, ET5, etc., with future expansion to more models; equipped with Sky OS and intelligent TSE system to enhance competitiveness.

b. NWM: Upgrade rolled out in late May, optimizing urban/highway driving and automated parking, improving collision prevention and object recognition.

4. Sales Network:

a. China Market: Operates 184 Nio Houses, 461 Nio Spaces, and 445 ONVO stores; service network covers 391 service centers and 66 delivery centers.

b. Charging Infrastructure: 3,408 battery swap stations globally (989 on Chinese highways), with over 26,000 charging guns and destination chargers.

c. Overseas Markets: Entered 15+ core markets, partnered with 10+ local partners; Firefly global model to launch in Q3, enhancing overseas user experience.

5. Full-Year Outlook: Intensive core model launches in H2, accelerated deliveries from Q3, financial improvement from Q2, with sustained margin and operational efficiency gains.

2.2 Q&A

Q: Q2 delivery guidance of 72,000–75,000 units appears modest despite four new model launches. How will Nio further drive sales of ES5 and ES6 in coming months to achieve the year-end target of 30,000 cumulative deliveries for Nio-branded models?

A: Model Rollout: New models began deliveries in late May, with June as the first full delivery month. Prices are ~10% higher than previous gen (post-clearance promotions).

Short-Term Strategy: Avoid price fluctuations, balance volume and profit via model upgrades (gross margin +10%+), prioritize healthy margins. Optimize sales processes and support systems to improve delivery efficiency.

Q4 New Model Push: Launch next-gen ES8 to drive sales, targeting 25,000 monthly Nio-brand deliveries in Q4 (YoY +20%). Nio-brand vehicle gross margin to exceed 20% in Q4, supporting sustainable growth.

Q: Nio implemented cost-cutting measures over the past six months. Which cost categories will see significant improvement in H2? Can you quantify?

A: Key Cost Improvements:

① R&D: Integrated Nio, ONVO, and third-brand R&D resources, terminated low-ROI projects. Target: Q2 YoY -15% ex-one-time items; Q4 at ¥2.0B–2.5B/quarter (YoY -20%–25%).

② SG&A: Streamlined non-frontline teams (e.g., logistics, backend supply chain), optimized marketing efficiency. Target: Sequential reduction from Q2, non-GAAP SG&A as % of revenue ≤10% in Q4.

Other Efficiencies: Industrial cluster optimization (logistics, QC) and supply chain role consolidation, with savings visible from Q2. Focus on high-ROI projects, terminate negative-ROI initiatives, allocate resources to core growth areas.

Q: User feedback on NWM? How does it outperform rule-based autonomous driving? Will cost savings from in-house chips be passed to users? Future chip plans?

A: NWM Feedback: Rolled out to second-gen platform users in late May; active safety features (e.g., emergency roadside stop) reduced accidents, praised for safety and stress reduction.

NWM Advantages:

① Full-scenario upgrades: Highway toll automation, urban point-to-point driving, natural language parking, etc., outperforming peers;

② Data-driven iteration: Real-time data optimizes algorithms for seamless OTA upgrades.

In-House Chips: Current cost savings used to enhance features (e.g., advanced ADAS); future configurations may benefit users. Third-gen platform models (with NX9031 chip) to receive NWM in late June. Long-term, ONVO will adopt in-house chips for unified tech and scale benefits.

Q: Post-ONVO adjustments, strategies to boost L60 sales? Expectations for L80/L90?

A: L60 Strategy: Confident in monthly sales rebounding to 10,000+.

① Team & ops optimization: Post-April core team reshuffle, L60 orders grew in late April, May deliveries +40% MoM;

② Product strength: Top 3 in ¥200K–300K BEV sales for first 4 months, growth expected in May–June;

③ Channel efficiency: 440+ stores optimized, frontline team capabilities enhanced;

④ Battery swap network: ONVO can access 1,900+ swap stations, covering 6 provinces including Beijing/Shanghai.

L80 & L90 Outlook:

L90 (Q3 delivery): Aims to be benchmark in 3-row SUV market with massive storage and low energy consumption;

L80 (Q4 launch): Forms family lineup with L60/L90, targeting 25,000 combined monthly deliveries by end-2025.

Q: Higher-priced new models + in-house chips in Q2—can this expand vehicle margins, lifting overall gross margin to double digits?

A: Brand Drivers: New models (ET5/ET5T/EC6/ES6) have higher ASPs, in-house chips cut cost by ~¥10K/unit; Q2 vehicle gross margin expected at 15%;

Full new model deliveries from June: ES6 margin ~20%, EC6 higher, driving overall improvement.

ONVO Limit: Only L60 in Q2, limited scale benefits; margin lift depends on Q3 L90 launch.

Overall Target: Nio brand margin + ONVO volume growth to lift Q2 gross margin to double digits.

Q: Assuming total OpEx ~¥6B, is this the rough breakeven assumption for Q4?

A: Internal targets align: monthly sales slightly above 50,000, gross margin 17%–18%, SG&A ≤10% of revenue, controlled R&D would achieve breakeven. Peers proved profitable at similar scale; Nio previously achieved >20% vehicle margin in 2021 (single-brand phase). Early-stage R&D, multi-brand, and swap network investments now maturing; cost savings to materialize from Q2, breakeven targeted for Q4.

Q: User feedback on 5/6 Series? Disappointment over 400V (vs. ET9’s 900V)? Plans to switch? Other feedback?

A: High-Voltage Strategy: Users approve chip tech, infotainment, and ET9’s safety features in new models (ES6/EC6/ET5/ET5T); range improved via efficiency (beats prior gen), with swap network and flexible battery upgrades (100kWh/150kWh). Feedback stable, no 900V plans near-term.

Other Feedback: Management declined to comment.

Q: Nio and ONVO have separate channels; Firefly sold via Nio. Any plans to integrate (e.g., cross-selling, network merger) for efficiency?

A: Front-End Independent, Back-End Synergy: Sales channels remain separate for brand differentiation, but HQ/regional integration (e.g., supply chain, dual-brand regional managers) boosts efficiency while balancing positioning.

Long-Term: Deepen back-end synergy but avoid merging channels to prevent user confusion.

Q: ONVO’s L80/L90 are premium-priced. Key selling points amid 2024 consumption downgrade? Expected sales mix for L60/L80/L90 by end-Q4?

A: Selling Points:

① L90 (3-row SUV): Massive frunk fits 10 suitcases with 6 passengers, solving storage pain points;

② L90’s 85kWh battery achieves 600km range, leading energy efficiency;

③ Leverages Nio’s 1,900+ swap stations to ease range anxiety, with ADAS tech for families;

④ Midsize/large BEV SUV market grew 63% YoY (vs. PHEV), boosting demand for spacious, efficient models.

Sales Mix (End-Q4): Not disclosed.

Q: Targeting Q4 breakeven amid high leverage. Details on cash flow/cash management?

A: Q1 Cash Flow Pressure: Seasonal delivery drop (42,000 units, -41.7% YoY) caused >¥10B working capital outflow; capex + one-time items (e.g., convertible put option)