Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [4]. Core Views - The company's revenue for Q1 2025 showed a year-on-year increase of 21.5% but a quarter-on-quarter decrease of 38.9%, totaling 12.04 billion RMB. The gross margin decreased by 4.1 percentage points quarter-on-quarter to 7.6% [1]. - The management expects Q2 2025 delivery volumes to be around 72,000 to 75,000 units, with potential recovery in gross margins starting from June 2025 as new models are delivered [2]. - The company is focusing on multiple strategies to improve its fundamentals, including cost reduction, enhancing sales channels, and launching new models equipped with self-developed chips [3]. Summary by Sections Financial Performance - Q1 2025 total revenue was 12.04 billion RMB, with a gross margin of 7.6%. Non-GAAP net loss was 6.28 billion RMB, which is a year-on-year increase of 28.2% [1]. - The automotive business revenue for Q1 2025 was 9.94 billion RMB, with a gross margin of 10.2% [2]. Cost Management - R&D expense ratio decreased by 2.6 percentage points year-on-year to 24.2%, while SG&A expenses increased by 5.4 percentage points year-on-year to 35.0% [2]. - The company is implementing various cost-cutting measures, which are expected to gradually reflect in financial results [3]. Future Outlook - The management anticipates a recovery in gross margins starting from June 2025, driven by the delivery of new models [2]. - The company aims to achieve a monthly sales volume of 25,000 units for both NIO and the new brand by Q4 2025 [3]. Valuation and Estimates - The report adjusts the Non-GAAP net loss estimates for 2025 to 17.2 billion RMB, down from a previous estimate of 17.8 billion RMB [4]. - Revenue projections for 2025 are set at 84.64 billion RMB, with a growth rate of 28.8% [5].

Core Viewpoint - NIO has launched a significant update for its "5 series" models, specifically the 2025 ET5/ET5T, with over 500 changes, marking a substantial mid-cycle refresh that includes a 45% overall vehicle renewal rate [2][4]. Group 1: Product Upgrades - The new ET5/ET5T features a redesigned front structure for the 18.8-inch W-HUD, a restructured intelligent domain control for the Shenqi chip, and improved seating for enhanced passenger experience [2]. - The vehicle's center of gravity has been optimized, and multiple improvements have been made to the body bushings, spring stiffness, and anti-roll bars [2]. - The new CDC dynamic damping suspension control system and the 4D all-domain comfort navigation function are now standard features [2]. Group 2: Market Positioning and Strategy - NIO is targeting a younger demographic that values driving performance, especially in light of competition from brands like Xiaomi and Lotus that emphasize speed and excitement [3]. - The ET5/ET5T models have contributed over 40% to NIO's sales recently, indicating their importance as a volume driver for the company [3]. - NIO has decided against raising prices for the new models, maintaining the same pricing structure while enhancing customer benefits, aiming for profitability by Q4 2023 [4][6]. Group 3: Internal Reforms and Efficiency - NIO has initiated a CBU (Complete Built Unit) operational mechanism to establish clear ROI metrics and performance incentives across its units, aiming to reduce costs and improve efficiency [4][5]. - The company is undergoing organizational restructuring, including staff reductions in certain departments, to streamline operations [5]. - NIO plans to launch nine new vehicles across its brands this year, focusing on enhancing competitiveness and achieving a stable monthly sales volume of around 10,000 units [6].