--- title: "NIO (Trans): Q2 & FY vehicle margin target at 17-18%" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/41001625.md" description: "For FY2026, the full-year financial target is positive non-GAAP OP. The goal is to deliver a profit on a non-GAAP operating basis." datetime: "2026-05-21T15:19:01.000Z" locales: - [en](https://longbridge.com/en/topics/41001625.md) - [zh-CN](https://longbridge.com/zh-CN/topics/41001625.md) - [zh-HK](https://longbridge.com/zh-HK/topics/41001625.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # NIO (Trans): Q2 & FY vehicle margin target at 17-18% **Below is Dolphin Research's**$NIO Inc(NIO.US) **FYQ1 2026 earnings call Trans. For our take on the print, see '**[**Out of the ICU, Nio finally looks disciplined**](https://longbridge.com/zh-CN/topics/40997926)**'.** **I. Key takeaways from the release** 1\. **Outlook**: Q2 2026 deliveries guided at 110k–115k units (+52.7% to +59.6% YoY). Full-year 2026 financial goal is to deliver positive Non-GAAP OP. 2\. **GPM**: **Vehicle GPM targeted at ~17%–18% in Q2 and for the full year; 'other sales' (services and community-related biz.) full-year GPM target at 20%. Raw-material inflation (memory, lithium carbonate, NCM, copper/aluminum, etc.) from Q2 adds over RMB10k per unit on Avg. cost; the company will partly offset via mix and supply-chain savings.** 3\. **OpEx**: Non-GAAP R&D to stay at ~RMB2.0–2.5bn per quarter. SG&A ratio targeted at ~10% of revenue, but Q2 will run notably above Q1 on intensive launches, with absolute spend expected to ease in 2H. 4\. **Profitability**: Q1 Non-GAAP OP was RMB66.8mn, and Non-GAAP net income was RMB43.5mn, marking two consecutive quarters of Non-GAAP profit. Cash and equivalents totaled RMB48.2bn at quarter-end, with positive operating cash flow in the quarter. 5\. **Key metrics**: Q1 R&D fell 40.7% YoY to RMB1.9bn, and SG&A fell 20.5% YoY to RMB3.5bn, both driven by org. optimization and efficiency gains. **II. Call details** **2.1 Management highlights** **1) Deliveries and sales** \- Q1 2026 deliveries were 83,465 smart EVs, up 98.3% YoY. The Nio brand delivered 58,543 units, retaining leadership in China's \>RMB300k pure EV passenger segment; ONVO delivered 13,339; FIREFLY delivered 11,583, ranking No.1 in China's premium small-car niche. \- Apr. deliveries were 29,356 (+22.8% YoY). \- From Q2, all three brands enter a dense launch and delivery cycle, underpinning faster growth ahead. **2) Nio brand products** \- The all-new ES8 has been delivered since late Sep. 2025, surpassing 100k units in 215 days, a record for \>RMB400k passenger cars in China. As of Apr., it led the \>RMB400k passenger and large SUV segments for five straight months (all powertrains). \- Early Apr., 2026 ES6/EC6/ET5/ET5T were launched and began deliveries. \- The new flagship executive SUV ES9 debuted on Apr. 9 with multiple industry firsts, with official launch and deliveries starting May 27. The company is confident in its competitiveness in the \>RMB500k executive SUV segment. \- A 5-seat ES8 will launch in 2H. From 2027, ET5/ET5T/ES6/EC6 will migrate to the latest tech platform and digital architecture. **3) ONVO brand** \- L90 retained No.1 in the RMB200k–300k large SUV segment in Q1 2026. The 2026 L90 received a comprehensive upgrade with in-house ES931 ADAS SoC, a new domain-control model and the SOS vehicle OS. \- ONVO L80, an innovative large 5-seat SUV with dual front-and-rear trunks, launched and began deliveries on May 15. It offers the largest trunk volume among China's 5-seat SUVs, targeting a market about 3x the size of L90's 3-row SUV space. \- ONVO L60 will debut in late May with refreshed design and smarter features to boost competitiveness. **4) FIREFLY brand** \- The refreshed FIREFLY began deliveries in Q2, with upgraded performance and smart experience. New variants will be selectively introduced to reinforce unique brand identity. **5) Smart driving** \- A major upgrade based on the New World Model (NWM), which fuses world models with E2E reinforcement learning, was rolled out early this year. Full-scenario NOP mileage rose 92% QoQ in Q1, with ADAS usage time share up 116%. \- NWM has extended to new ONVO models. In Jun., Nio and ONVO users will receive the next major NWM upgrade, covering driving, parking and active safety. \- The in-house X1931 ADAS SoC is the world's first auto-grade 5nm chip, leading in inference, bandwidth, ISP and inter-chip comms. Shipments have surpassed 250k units; in 2H, over 80%–85% of vehicles are expected to carry it. \- The company has built a full-stack ADAS flywheel from chip to model architecture, data loop and monetization. Existing users subscribe to ADAS; new buyers have a free trial window, and over time ADAS subs should become a key 'other sales' revenue driver. **6) Sales and service network** \- Currently operating 168 NIO House locations, 389 NIO Space stores, 430 ONVO stores, plus 408 service centers and 90 delivery centers. \- Globally, 3,916 battery-swap stations and 28k+ chargers are in place. The goal is to add 1,000+ swap stations this year, with Gen-5 stations scaling from Q3. \- In the first four months, the company reached 8% share in Shanghai's passenger-car market, surpassing traditional luxury ICE brands. **2.2 Q&A** **Q (Deutsche Bank, Bin Wang): How is ES9 pre-sale demand? Any cannibalization of ES8 orders?** A: ES9 officially launches and begins deliveries on May 27. Since pre-reveal, its tech as well as exterior and interior design have been well received, and orders have accelerated further after test drives started on May 11. We typically do not disclose model-specific order data, but we are confident in ES9's performance in China's \>RMB500k flagship executive EV SUV segment. ES9's pre-reveal did not cannibalize ES8 attention or orders; instead it provided a positive halo. With ES9 pre-reveal and test drives, store traffic surged, and many visitors chose the ES8 after comparing both for their use cases; **ES8 orders rose 30% WoW in the week after ES9 test drives started**. In the first 20 days of May, ES8 orders hit a record since the all-new ES8 launch last Oct. Positioning-wise, ES9 skews more to business use, competing with BMW X7 and Mercedes GLS among legacy luxury ICE flagships, while ES8 is a versatile SUV balancing business and family needs. The two occupy distinct price bands with complementary roles, reinforcing our high-end positioning. **Q (Deutsche Bank, Bin Wang): How do you see vehicle GPM in Q2 and for the year? How big is raw-material pressure?** A: **Q1 vehicle GPM reached 18.8%, up meaningfully both YoY and QoQ, driven by a higher mix of higher-margin models, especially ES8. ES8 contributed over 50% of total GP in Q1 with its own vehicle GPM above 20%. Early stocking of key components also partly hedged raw-material inflation in Q1.** **From Q2, the sector faces higher costs for memory, lithium carbonate, NCM and copper/aluminum, adding over RMB10k per unit on Avg. cost. We still target 17%–18% vehicle GPM for the year, driven by three levers: 1) raise mix of high-price/high-margin models like ES8/ES9; 2) keep stable pricing and promo policies for mid-margin models rather than trading margin for volume; 3) deepen supplier collaboration on engineering, efficiency and commercial terms to absorb cost pressure together.** **Q (Morgan Stanley, Tim Hsiao): After the growth peak of the 8- and 9-series large SUVs, how will you reaccelerate mid-range lines like ET5/ES6/ET7?** A: This year's growth is indeed driven by high-price/high-margin models, which support volume while lifting vehicle GPM. ES8 should remain solid; ES9 deliveries start soon, and a 5-seat ES8 is coming. ONVO's L90 and L80 will continue to lead share in the RMB200k–300k large SUV band. **From next year, the lineup enters a new upgrade cycle: ET5/ET5T/ES6/EC6 will migrate to the latest tech platform and digital architecture, and ONVO will add new models. We aim to launch ~5–7 new or refreshed models a year, prioritizing leading share in each niche over absolute volume.** In the first four months, our Shanghai passenger-car share reached 8%, among the top of all brands. With ongoing channel expansion, denser swap infrastructure, and growing EV acceptance in lower-tier cities, we are confident our current and in-development lines will sustain competitiveness. **Q (Morgan Stanley, Tim Hsiao): Can you maintain Non-GAAP profitability each quarter this year? Is the current OpEx framework sufficient? When will the next R&D upcycle start?** A: **Our 2026 goal is positive Non-GAAP OP for the year. For R&D, we target Non-GAAP spend of ~RMB2.0–2.5bn per quarter, sufficient to fund core areas like chips and OS to preserve our tech edge, while supporting multiple launches and ramp-ups each year.** **While keeping total spend broadly stable, we continue to improve resource efficiency. Since adopting the CBU mechanism last year, RMB2.0bn of R&D output now matches what RMB3.5bn produced before. We also remain all-in on pure EVs rather than splitting resources on range extenders, keeping R&D more focused than peers pursuing multiple powertrains.** **On SG&A, we target ~10% of revenue, with quarterly swings. Q2 will be notably higher than Q1 on dense launches; as new models settle in Q3–Q4, absolute spend should recede.** **Q (UBS, Paul Gong): As competitors follow into premium large EV SUVs, some with aggressive pricing, what are Nio's core moats?** A: ES8 has excelled above RMB400k—100k deliveries in 215 days, a record at that price point, and five straight months as No.1 in \>RMB400k passenger and large SUV segments with 49.7% share. This stems from 11 years of systematic capability building across six pillars: full-stack in-house tech, innovative supply chain enabling scale ramp of industry-first features, advanced manufacturing and lifecycle quality, an intelligent power system with charge/swap network, nationwide premium end-to-end ownership experience, and a user community ops system. We see two user-side signals: first, brand competition in China's NEV market is clarifying, and Nio is increasingly recognized as a premium brand—many view Nio as the next Mercedes/BMW/Audi. In Q1, Nio brand ASP was ~RMB390k, ~RMB50k above BMW and ~RMB50k above Audi. **Second, in tier-1 cities like Shanghai, our share has surpassed the combined share of all traditional luxury ICE brands. With industry-wide cost pressure, scale does not create much leverage in items like memory, battery materials or copper/aluminum, and low price is not necessarily an edge. We will stick to premium positioning, building loyalty through emotional connection and superior experience rather than price competition.** **Q (UBS, Paul Gong): With raw-material pressure higher, peers may be under more strain. Is there room to pull back on promotions and improve industry pricing?** A: **With per-unit costs up by over RMB10k, our approach is to keep list prices stable while selectively trimming discounts and promos. Different companies will respond differently; our choice is to defend price integrity and offset pressure by enhancing product and service competitiveness, rather than trading margin for volume, aiming for healthy volume growth alongside improving GPM and OP.** On the supply side, since last year we have advanced a transparent supply-chain mechanism and a 'preferred partner' system to identify and remove non-value-adding costs with partners. We see ~5%–10% cost-down potential, helping jointly absorb raw-material inflation through refined ops. **Q (JP Morgan, Nick Lai): Update on ADAS strategy and in-house chip rollout? How does the chip subsidiary's financing help R&D?** A: Our in-house X1931 ADAS SoC is the world's first auto-grade 5nm chip, leading in inference, bandwidth, ISP and inter-chip comms. It went to mass production last Mar. on the all-new ET9, with shipments now over 250k, making the solution quite mature. It has been extended to ONVO's new models, unifying the ADAS software baseline, improving R&D efficiency and the data loop; in 2H, over 80%–85% of vehicles are expected to carry it. **On algorithms, we shifted this year to a fusion of NWM and E2E reinforcement learning, delivering comparable or better ADAS with just ~20% of the in-car compute vs. peers. In Q1, Urban NOP mileage rose 92% QoQ and ADAS usage time share rose 116%. Two major upgrades are coming in 2H. We have completed the full ADAS chain from chip to model, data loop and monetization, and over time ADAS subs should be a major 'other sales' revenue driver.** **The chip subsidiary's successful fundraise (RMB2.0bn in Q1) provides more resources and flexibility for next-gen chips, especially more cost-competitive designs.** **Q (CICC, Jing Chang): How is ONVO L80 feedback? How to avoid a post-launch fade? What's the plan to build ONVO brand awareness?** A: ONVO L80 is a defining product for large 5-seat SUVs. The 5-seat SUV market is about 3x the size of 3-row SUVs, giving L80 broader reach. Since its Apr. 29 launch, media and test drivers have responded positively, and orders are in line with expectations, with target users spanning young couples, pet owners and empty nesters; its core edge lies in tech and reimagined space/lifestyle scenarios. We believe L80 will lead the large 5-seat SUV segment into the pure EV era, much as L90/ES8 did for large 3-row SUVs. ONVO's biggest challenge remains brand awareness; ~20 months into deliveries, awareness is similar to Nio's in 2020. We are taking a multi-pronged approach: partnering with widely influential celebrities among target users, and mobilizing front-line teams for deep market coverage, including door-to-door product pitches and test-drive invitations. This is labor-intensive but working; once users know ONVO, conversion from awareness to orders is highly efficient. **Q (CICC, Jing Chang): 'Other sales' GPM hit a four-year high (\>20%) in Q1. What drove this, and was any of it one-off? How does the full-year trend look?** A: 'Other sales' include after-sales service and maintenance, parts mall, power services and lifestyle goods. Q1 GPM exceeded 20% with no one-offs, driven by three factors. First, our long-term focus on lifecycle experience has built strong loyalty and willingness to pay, lifting after-sales, parts and lifestyle performance. Second, continued efficiency gains across services, with swap-station unit economics improving markedly. Third, better profitability in energy and power services via time-of-use arbitrage and power trading. **We see an inflection for 'other sales' into a new growth phase. The 2026 full-year GPM target is 20%, and with a larger user base and ongoing efficiency gains, profitability should improve further. 'Other sales' will grow alongside vehicle sales as a key sustainable driver.** **Q (HSBC, Yuqian Ding): What key new models arrive in 2H? What's the ES7 timeline and positioning?** A: The main 2H launch is the 5-seat version of the new ES8. Beyond that, the focus in 2H will be on sales and user services, with no other large-scale launches. **Q (Nomura, Joel Ying): What's the year-end target and utilization for swap stations? When can the swap network be profitable on a standalone basis?** A: At peaks like holidays and rush hours, a station can do about 45 swaps per day, with a daily Avg. of ~30 in normal times. Near term, we prioritize network expansion, aiming to add over 1,000 stations this year, with Gen-5 stations scaling from Q3, while continually improving per-station efficiency. Standalone profitability is not the short-term goal as we continue upfront investment. Notably, swap is embedded within the 'other sales' profit pool; Q1 'other sales' already delivered \>20% GPM, implying the swap business is already contributing and we have ample resources to keep expanding the network. **Risk disclosures and statements:**[**Dolphin Research Disclaimer and General Disclosures**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [09866.HK](https://longbridge.com/en/quote/09866.HK.md) - [VIVS.US](https://longbridge.com/en/quote/VIVS.US.md) - [ONVO.US](https://longbridge.com/en/quote/ONVO.US.md) - [NIO.US](https://longbridge.com/en/quote/NIO.US.md) - [NIO.SG](https://longbridge.com/en/quote/NIO.SG.md)