Participants
Eve Tang
Stanley Qu; VP of Finance; NIO Inc.
Wei Feng; CFO; NIO Inc.
William Li; Co-Founder, Chairman & CEO; NIO Inc.
Paul Gong; HK and China Autos Analyst; UBS Investment Bank, Research Division
Tim Hsiao; VP; Morgan Stanley, Research Division
Xin Yu; Research Analyst; Deutsche Bank AG, Research Division
Xue Deng; Analyst; China International Capital Corporation Limited, Research Division
Y.C. Lai; Head of Asia Auto Research; JPMorgan Chase & Co, Research Division
Presentation
Operator
Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Nio Inc. Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions) Today’s conference call is being recorded.
I would now like to hand the conference over to your host, Ms. Eve Tang from Capital Markets. Please go ahead.
Eve Tang
Good morning and good evening, everyone. Welcome to NIO’s Fourth 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. 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 VP of Finance, and Ms. Jade Wei, VP of Capital Markets.
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. 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.
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 news press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.
With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead.
William Li
[Interpreted] Hello, everyone. Thank you for joining NIO’s 2022 Q4 earnings conference. In Q4 2022, NIO delivered a total of 4,052 smart electric vehicles, up 60% year-over-year, achieving a new quarterly record. According to the retail data released by Catac, China Automotive Technology and Research Center, NIO was the best-selling brand in China’s premium EV market priced over RMB 300,000 with a market share of 54.8%, while over market share in the premium EV market priced over RMB 400,000 reached 75.8%.
In 2022, despite the impact posed by COVID and supply chain disruptions, NIO delivered a total of 122,486 smart electric vehicles, up 34% year-over-year. In January and February of 2023, we delivered 20,663 vehicles, representing a 30.89% increase year-over-year. We expect the total deliveries in the first quarter of this year to be between 31,000 and 33,000 units. As the penetration rate of the premium EV growth and more NIO products is expected to be delivered in the second quarter, we have a strong confidence in the market demand in 2023.
Next, I would like to share some recent highlights of our products, R&D and operations. Since we started to deliver ET5 in September 2022, its production and delivery has been ramping up steadily. According to Catac’s retail data, this January, among all the mid-size sedans priced over RMB 300,000, NIO ET5 outperformed popular internal combustion vehicles from well-established brands and became the top-selling model in Beijing, Shanghai, Guangzhou, Shenzhen and other 15 cities in China and the second best-selling model nationwide in China.
On December 24, 2022, we held NIO Day 2022 in Hefei, where we launched the smart electric flagship coupe SUV EC7 and all-round flagship SUV, the All-new ES8. EC7 is a large-sized coupe SUV that inherits NIO’s high-performance DNA and delivers ultimate handling and the riding experience. The delivery of EC7 is expected to start in May. As NIO’s flagship SUV based on the technology platform 2.0, the 6 theater All-new ES8 offers 2 seat layouts catering to all scenarios including work, family, social and exploration. The delivery of the All-new ES8 is expected to start in June, both new products have attracted wide attention and received great feedback.
In the first half of this year, NIO will gradually launch more new products and shortened the waiting time for our launch to user delivery. Other supply chain and manufacturing teams have been preparing for new product launches and production ramp-up, making sure that supply and production go hand-in-hand with the growing demand for the new product.
For intelligent driving, NIO has gradually rolled out NOP+ Beta to all NT2.0 vehicles. Based on our full stack in-house developed intelligent driving technologies and the closed-loop data management. NOP+ Beta has realized significant improvements in areas of a sense of reassurance, comfort and efficiency. The utilization rate has doubled with a total engaged mileage of over 1.75 million kilometers in the recent week. We plan to roll out more features and functions to our users and will gradually release power swap pallet for highway in the first half of this year.
With respect to the sales and service network, we now have 375 NIO houses and NIO spaces in 141 cities and 305 NIO service centers and NIO delivery centers in 148 cities. In terms of the charging and swapping network, NIO has installed a total of 1,331 power swap stations and provided over 18 million battery swap for our users. In the meantime, NIO has accumulatively deployed 60,385 power chargers and 7,558 destination chargers sent over power map has been connected to over 1.04 million third-party charges. In 2022, 50% of the power charged by our users is from battery swapping stations, which has become the most convenient and favorite solution among new users.
In 2023, NIO will speed up the development of the battery swapping network and plan to install additional 1,000 power swap stations. By the end of 2023, there will be more than 3,000 — 2,300 power swap stations in total. So far, the mass production of power swap station 3.0 is going forward smoothly with large-scale production expected to start in April. The accelerated deployment of power stations can not only provide existing users with experiences beyond expectations, but also significantly boost user demand.
In Q4 2022, NIO started to offer NT2.0 products and comprehensive services in Germany, Netherlands, Denmark and Sweden. NIO products have been highly recognized by professional media in Europe, and the user satisfaction rate has also reached off expectations. After obtaining the prestigious Golden Steering Wheel award, ET7 was honored with multiple awards in Europe, such as the Technological Forefront Runner of the Year at the Danish Auto Awards, Car of the Year and The Best in the Luxury segment by Auto Motor Sport Sweden and the promise of 2023 by the Association of Business Drivers in Netherlands.
On January 31, 2023, we started to deliver EL7, our mid-large smart electric SUV to the first batch of users in Europe. As we continue to introduce a more diversified product portfolio, expand our sales to service and power network, improve over brand awareness, we are confident in our long-term development in Europe.
The development of NIO wouldn’t have been possible without our users and customers. In 2022, 4,447 users volunteered at auto shows, NIO Day and other events. NIO users have also been actively making contributions to society with the participation of public wealth activities reaching 6,202 people at times in 2022.
On January 18, 2023. NIO was recognized in Corporate Knights 2023 Global 100, the world’s most sustainable companies to list. Among 333 companies in the car and trucks manufacturing, including parts category, NIO ranked the first. In the meantime, on January 31, 2023, NIO’s second advanced manufacturing base with certified 3-star green building and lead coat marking the first of its kind in China. We attach particular importance to low carbon development, environmental production and ecosystem co-construction and actively practice sustainable philosophy to continuously improve over years to performance.
In 2022, to build our long-term competitiveness we made decisive investments and achieved a positive strides in the research and development of core technologies and products, the deployment of charging and swapping infrastructure as well as sales and service network and the global market expansion, laying a solid foundation for the company’s long-term growth.
As our product portfolio transition to NT2.0 with more NIO products to be launched and delivered in 2023, we will do over level best to provide users with experiences beyond expectations. At the same time, we aim for all-around execution efficiency improvements so as to compete in the global EV market in the long run in an agile and efficient manner.
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 fourth quarter. Over to you, Steven.
Wei Feng
Thank you, William. I will now go over our key financial results for the fourth quarter of 2022. And to be mindful of the financial figures 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.
Our total revenues in the fourth quarter were RMB 16.1 billion, representing an increase of 62.2% year-over-year and 23.5% quarter-over-quarter. Our total revenues are made of 2 parts: vehicle sales and other sales. Vehicle sales in the fourth quarter were RMB 14.8 billion, representing an increase of 60.2% year-over-year and 23.7% quarter-over-quarter. The increase in vehicle sales year-over-year was mainly attributed to higher deliveries as a result of a more diversified product mix offered to our users.
The increase in vehicle sales quarter-to-quarter was mainly due to volume ramp-up of the ET5 and ES7. Other sales in the fourth quarter were RMB 1.3 billion, representing an increase of 90.3% year-over-year, an increase of 22% quarter-over-quarter. The increase in other sales year-over-year was mainly due to the increase of revenue from rendering of research and development services and increase in other revenues in line with the incremental vehicle sales. The increase in other sales quarter-over-quarter was mainly due to increase of revenue from rendering of research and development services and increasing sales for accessories charging piles and used cars in line with the incremental vehicle sales, partially offset by the sales of automotive regulatory credits in the third quarter of 2022.
Gross margin in the fourth quarter of 2022 was 3.9% compared with 17.2% in the fourth quarter of 2021 and 13.3% in the third quarter of 2022. The decrease of gross margin year-over-year was mainly attributed to decrease the vehicle margin. The increase of gross margin quarter-over-quarter was mainly attributed to the credit vehicle margin and the credit other sales margin mainly resulted from the sales of automotive director credits with high gross margin in the third quarter of 2022.
More specifically, vehicle margin in the fourth quarter was 6.8% compared with 20.9% in the fourth quarter of 2021 and 16.4% in the third quarter of 2022. The decrease of vehicle margin year-over-year was mainly attributed to: first, increased inventory provisions, accelerated depreciation on production facilities and losses on purchase commitments for the existing generation of ES8, ES6, and it is fixed but are expected to have lower production levels and deliveries due to the transition to new models on the NIO technology platform 2.0, which in totality greatly impacted vehicle margin by 6.7%; and second, increased battery cost per unit.
The decrease of vehicle margin from the third quarter of 2022 was mainly due to the increased inventory provisions, accelerated depreciation on production facilities and the losses on purchase commitments for the existing generation of ES8, ES6 and ET6. R&D expenses in the fourth quarter were RMB 4.0 billion, representing an increase of 117.7% year-over-year and 35.2% quarter-over-quarter. The increase in R&D expenses year-over-year and quarter-over-quarter, while we attributed to increased personnel costs in research and development functions as well the incremental design and development cost of new products and technologies.
SG&A expenses in the fourth quarter were RMB 3.5 billion, representing an increase of 49.6% year-over-year, at 30% 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 general corporate functions; second, the increase in marketing and promotion activities to promote our vehicles in China and Europe. Third, increased expenses related to the company’s sales and service network expansion. Loss from operations in the fourth quarter was RMB 6.7 billion, representing an increase of 175.5% year-over-year and 74% quarter-over-quarter.
Other income net in the fourth quarter of 2022 was RMB 315.7 million representing an increase of RMB 262.2 million from the fourth quarter of 2021, an increase of RMB 811.3 million for other losses of RMB 495.6 million in the third quarter of 2022. The increase of other incomes year-over-year and quarter-over-quarter was mainly due to the gain from the revaluation of our overseas RMB-related assets are the result of appreciation of RMB against U.S. dollars in the fourth quarter of 2022.
Net loss in the fourth quarter was RMB 5.8 billion, representing an increase of 159.9% year-over-year and 40.8% quarter-over-quarter. Net loss attributable to NIO’s ordinary shareholders in the fourth quarter was RMB 5.8 billion, representing increase of 168.3% year-over-year and 41.2% quarter-over-quarter.
Our balance of cash and cash equivalents, restricted cash, short-term investment in long-term time deposits was RMB 45.5 billion as of December 31, 2022.
Now this concludes our prepared remarks. I will now turn the call over to the operator to proceed with our Q&A session.
Question and Answer Session
Operator
(Operator Instructions) Our first question today comes from Tim Hsiao with Morgan Stanley.
Tim Hsiao
(foreign language) So my first question is about the supply chain and also the development because NIO shipment last year were seriously dragged by the supply bottleneck of aluminum parts, CDS and chips. So according to the announcement of NIO’s first quarter volume guidance of 31,000 to 33,000 or does it suggest more moderated vehicle sales in March. Is that because component that still suffered from supply constraint? What current vehicle production run rate and how fast you could ramp up on weekly and monthly base into second quarter?
William Li
[Interpreted] Thank you, Tim, for your question. In the fourth quarter of last year, supply of the parts have affected over vehicle deliveries to some extent. But starting from the first quarter of this year, we have seen that the control and prevention measures regarding the COVID have been lifted. So currently, we believe the supply of the parts is not the bottleneck for us. Starting from the second quarter, we believe with over new vehicle deliveries, we will need to have some time to ramp up the production, but we don’t believe that the part supply will be a constraint for us.
Tim Hsiao
(foreign language) So my second question is about the battery cost and those of the gross margin because the fourth quarter vehicle gross margin dropped more significantly. So we think the 6.7 percentage point margin mentioned in the announcement, how much of that would be one-off? And how much of that would be lasting into first quarter? In the meantime, on the bright side, I think battery prices cost (inaudible) the vehicle margin, NIO’s vehicle margin this year. So how should we think about the contribution from the new battery country prices? Because I recall that we mentioned we RMB 100,000 decrease in (inaudible) to about 2 percentage point vehicle gross margin expansion. So could you please share some updates regarding how much more contribution from the lower battery cost, should we expect this year or in first half?
Stanley Qu
Thank you, Tim. This is Stanley. First, I want to further clarify the Q4’s 2022 gross profit margin. Since our brand new ES8, ES6 will start user delivery in Q2 23. So we lowered our order forecast for current generation ES8, ES6 and ET6 in Q4 2022. So inventory provision and losses on purchase commitment relate to those products was booked in Q4 with total amount of RMB 985 million, excluding this impact, the vehicle margin in Q4 was 13.5%. So compared with the last quarter, the decrease results from the change of product mix especially more ET5 sold in Q4 with lower gross profit margin.
And for the forecast of gross profit margin in 2023, I’ll ask William to help Explain.
William Li
[Interpreted] Thank you for your question. Starting from the second quarter of this year, we are going to gradually launch and deliver all the products based on the new technology platform 2.0. When it comes to the total product portfolio, we can look at them into 3 different dimensions.
The first 1 is the volume driver that is the ET5, ES6 and the ET5 tooling that we haven’t released about — I believe everyone knows. So if we combine the ET5, ET5 tooling and the ES6 together, we believe it’s possible for us to achieve 20,000 units per month if we consider the addressable market of — when it comes to the second dimension, that is the volume contributor that includes the ET7, ES7 and the ES8. We believe for those models, each model can achieve delivery volume around 2,000 to 4,000 per month. And if we combine them together, then for this volume contributor segment, this property can contribute 8,000 to 10,000 units for overall vehicle delivery and sales.
For the third dimension that is the brand shaper that is over coupe SUV, the EC7 and the EC6 because coupe SUVs is a relatively weak market, and we believe that this can probably help us to better showcase our brand design and for those users who would like it to be different, and they want to show off their taste and their sense of design probably they can choose this brand shaper products. Of course, we hope to sell more products including the brand shaper but this is a relatively niche market segment.
So we believe it’s a brand shaper that the EC7 and the EC6, are probably the volume is around 1,000 to 2,000 per month for each product. So if we look at the complete product portfolio of all those we believe those strong product portfolio and diversified product portfolio should be able to support us to achieve a volume of 30,000 units per month.
Wei Feng
Okay. Tim, this is Steven. I would like to answer your second question about the lithium price. First, it was great that our GP margin is very sensitive to the lithium price. As you have mentioned, if they — lithium increased by RMB 100,000 per ton, our GP margin can be boosted by as high as 200% percentage point. So that means we expect or we believe this year, there’s a good chance that lithium carbonate price will trade to around RMB 200,000 per ton, and that will state a good GP market elasticity for NIO. And if you look at the lithium carbonate price, in the past, it was just like around RMB 100,000 and then it picked around RMB 570,000 in November 2022, which increased the whole EV industry.
And then from the beginning of this year, the lithium carbonate price were treated to around RMB 400,000 per ton. Looking forward on the supply side, at more — several battery suppliers invested in the upstream raw material efforts. And these efforts started to yield meaningful lithium carbonate supply from the second quarter of this year. So from a supply side, we do see a stable increase. On demand side, yes, that year, the China’s EV sales volume almost doubled.
But if you look at this year, a good estimation is around 30%. So we expect the gap between the supply and demand will reduce significantly, which will lead to a lower and more reasonable lithium carbonate price around RMB 2,000 per ton. Not least, when we look at the production cost of lithium carbonate. If you look at the (inaudible) cost which is RMB 150,000. So a lithium carbonate price around RMB 200,000 per ton can offer a good profit room for such (inaudible) supply to offer stable. So in short, if the lithium carbonate price will trade quite a lot this year, and that’s good for the whole industry.
Operator
The next question comes from Paul Gong with UBS.
Paul Gong
Two questions. The first 1 is regarding the latest sales trend of ES7 and ET7. I understand that the 866 these 3 models are phasing out. That is a temporary weekly before switching to the new platform. And I also see you have put a lot of the expectation on the NT2.0 platform products. But what has been driving the weakness of the ES7 and the ET7 recently? Is that due to the immediate hangover effect of the subsidy cards due to the supply chain bottleneck? Or is it like capacity allocation to ET5 that has cannibalized the ES7 and ET7 sales. So what has been the reason for the recent weekly of these 2 NIO platform kind of flagship models?
My second question is regarding the efficiency improvement. I think William had some — spoken beginning of this year regarding the key effort of efficiency improvement in 2023. So what has been the key area that you want to improve? We can still see you invest a lot for the future, including the 1,000 batteries working stations to be deployed for this year, including the expansion and NIO house in Europe, but where can we find the efficiency improvements and the expense ratio or reduction for the rest of this year?
William Li
[Interpreted] Thank you, Paul, for your question. We can see that for the first 2 months of this year, the market demand is not that strong, especially when you come through the demand for the BEV. We see this has suffered some impact. But if you look at all the peers, I believe most peers have published their delivery results for the first 2 months. This is actually affecting everyone in the market. I believe a very important factor is the subsidy cuts. Starting from this year, there will be no more subsidies. And this will create some short-term effect on everyone in this market. But when it comes to NIO specifically, because we have a relatively higher MSRP, so this impact on us is actually relatively lower compared with others.
Starting from the February, we can see the demand is recovering week by week, including the ES7 and the ET7 compared with January. So for the year ES7 and ET7, we can see that in their specific segment, they’re still very competitive. So we are very confident when it comes to the demand for the ES7 and the ET7 in the long run. But in the short term, yes, we are facing some pressure. I believe there are multiple factors we have to consider probably like the Spring Festival and the low seasonalities of the auto market as well as the subsidies or other micro environment. But still, we are very confident with our product competitiveness in their specific segment.
Yes, actually, the efficiency improvement is the most important half for NIO this year. Last year because of the project progress and we have multiple projects going in parallel. So the human resources increase is much faster compared with the past. But when it comes to the efficiency improvements, we are not talking about the cutting projects, we believe that the efficiency is more about improving the efficiency per person. We can improve the overall efficiency of the whole organization when it comes to the R&D, sales and service and also management.
At the same time, we also need to do some prioritization of a different kind of a project, including the R&D projects and also the CapEx investment. So it means that we need to look at the priority in terms of the timeline and also the investment. So all-in-all the efficiency improvement were more focused on the output and the quality of the output as well as to the prioritization.
Operator
The next question comes from Nick Lai with JPMorgan.
Y.C. Lai
(foreign language) Let me translate my question is very fast. Yes, the first question is about the cooperation agreement with CTO and the pricing arrangement with CTO and also another pre-update on statement semi-solid state battery. And secondly, can we talk about the potential investment size for new initiatives?
William Li
[Interpreted] Nick, thank you for your question. For this year, we will introduce a new battery partners. I believe, probably around March, we’re going to launch new battery packs in collaboration with CALB. At the same time, we will also keep our long-term strategic relationship with CATL but right now, we’re in discussion with CATL in terms of the new agreement, but we haven’t signed the agreement yet.
I believe that the discussion direction is basically that the battery companies will start to work in parallel with the auto companies, and we are going to share the volatilities of the raw material cost together throughout the supply chain. And when it comes to the semi-solid battery. We have a sense of battery teams to help our partners in the semi-solid battery and make sure they can have a small mass production for the batteries. But we are really sorry for the delay, but probably this will be available. We estimate this will be available probably after several months.
Regarding the investment for the new strategic — for the strategic new businesses, for the full year, we estimate that this will be around RMB 4 billion to RMB 5 billion. So if we break it down, then it means that probably around RMB 1 billion every quarter. The overall target for the company is that for the group, we still aim to achieve a breakeven for the company in 2024.
Operator
The next question comes from Edison Yu with Deutsche Bank.
Xin Yu
First one, can you maybe go over some feedback you’ve gotten in Europe? You’ve been in Norway for over a year. You recently launched in several other countries. What has been the user feedback? And what is a reasonable amount of volume we could expect there in the next few years?
And then second question really quick. On the other margin, it’s still quite negative. It’s been quite negative. When can we see some recovery in that level?
William Li
[Interpreted] Thank you for your question. European market, we have delivered our products to some users, and those users have been speaking very highly about our products. We have been tracking the user satisfaction rate on a weekly basis. And we believe that this is basically means of expectations. The 1 aspect that we think is lagging behind is the infrastructure building in Europe. Right now, we have around 11 power swap stations. This is actually far behind our original planning. That’s the same with the deployment of the new houses in Europe. So we believe because of the infrastructure deployment in Europe is lagging behind, which also affected the delivery and the sales in the European market.
When we look at the user demand and the test drive data, we can see there are some improvement on a weekly basis. And the team building is also on track for the European market. But the only thing that we need to speed up is the infrastructure building in the European market. For this year, we believe the sales is not the top priority. To be honest, our target in terms of the sales volume for the European market this year is probably less than 10,000. And we believe the most important thing for us is actually the user satisfaction rate. For the long run, we are very confident about our performance in the European market. When we consider the user satisfaction rate that we are seeing right now and the competitiveness of our product portfolio in the market.
Stanley Qu
Okay. For the second question about the (inaudible). As the sales and car product growing in China, the losses from vehicle repair and maintenance continuously narrowing. But we kept expanding our power swap station network in 2022 which drove the loss increase of other loss and we will stick to the continuous deployment of power network and plan to newly build 1,000 power swap stations in 2023, as William mentioned. Therefore, we expect the loss of other business will continue to increase in 2023. But the continuous expansion of our power infrastructure will not only help us improve our user satisfaction but also help us to sell more cars in the market. So that’s all. Thank you.
Operator
The next question comes from Xue Deng with CICC.
Xue Deng
(foreign language) So my first question is about with the further increase in the number of our distribution stocks how we will cover more loyal tier cities, considering that these customers in those markets are very speaky to traditional brands. So we make some more targeted adjustments in our products and marketing?
William Li
[Interpreted] Thank you, Xue Deng for your question. When it comes to the expansion into the sub-tier cities, we’re not talking about the deployment of the NIO houses or NIO spaces. We believe that the more efficient — more efficient way is to deploy the power swap stations in the sub-tier cities. For example, in Shandong province, (inaudible), there’s some growing user base and the users at the beginning, they actually grow the user base themselves and then they worked together with us to deploy the power swap stations that — the first of our swap stations. Then later, we deployed the second power sport stations in this town. And now this town has around 500 users.
So for those sub-tier cities, especially when it comes to the Tier 3 and Tier 4 cities, we think the more efficient way for us to grow our user base is to deploy the power swap stations. Previously, our power substation is mainly deployed in the Tier 1 and Tier 2 cities, but this is our strategy this year to make sure we can deploy more power swap stations in the Tier 3 and the Tier 4 cities.
Xue Deng
(foreign language) So my second question about — we can see that at the beginning of this year, the press competition in the energy vehicle market has become mild. And also, we are positioning on — positioning luxury brand market, where we can still see a greater press reduction in both energy, new energy and ICE vehicle market. So we will be more aggressive in the price strategy of NIO models. Have you considered the way of reducing some consideration and reduce — to introduce more models with lower price?
William Li
[Interpreted] Our consistent strategy is to keep our product pricing stable. So we do not have any plan to cut the features and options for our product. So each of our products in portfolio, we believe when we look at the features and functions and the performance of those products as well as the user benefits. We think every aspect of the product is well deserved and well established when it comes to the product pricing and strategy. So for the NIO brand, we do not have any plan to cut the features and functions of our product. And I think that this is consistent of branding and the pricing strategy because of low pricing is not a part of the strategy or the DNA of the NIO brand.
Operator
As there are no further questions. Now I’d like to turn the call back over to the company for any closing remarks.
Eve Tang
Thank you once again for joining us today. If you have further questions, please feel free to contact the 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.
William Li
Thank you.
Operator
This does conclude our conference for today. Thank you for participating. You may now disconnect your lines.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]