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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACTOF 1934 ORANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal ye
2、ar ended December 31,2022.ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to .ORSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934 Date of event requiring this shell company report.Commiss
3、ion file number:001-38638NIO Inc.(Exact Name of Registrant as Specified in Its Charter)N/A(Translation of Registrants Name Into English)Cayman Islands(Jurisdiction of Incorporation or Organization)Building 20,No.56 AnTuo Road,Anting Town,Jiading DistrictShanghai 201804,Peoples Republic of China(Addr
4、ess of Principal Executive Offices)Wei Feng,Chief Financial OfficerBuilding 20,No.56 AnTuo Road,Anting Town,Jiading DistrictShanghai 201804,Peoples Republic of ChinaTelephone:+8621-6908 2018Email:(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)Securities registere
5、d or to be registered pursuant to Section 12(b)of the Act:Title of Each Class Trading Symbol Name of Each Exchange On Which RegisteredAmerican depositary shares(each representing oneClass A ordinary share),par value US$0.00025 per shareNIONew York Stock ExchangeClass A ordinary shares,par value US$0
6、.00025 pershare9866The Stock Exchange of Hong Kong LimitedClass A ordinary shares,par value US$0.00025 pershareNIOThe Singapore Exchange Securities TradingLimitedSecurities registered or to be registered pursuant to Section 12(g)of the Act:None(Title of Class)Securities for which there is a reportin
7、g obligation pursuant to Section 15(d)of the Act:None(Title of Class)Table of ContentsIndicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period coveredby the annual report:As of December 31,2022,there were(i)1,570,605,680 Class
8、A ordinary shares outstanding,par value US$0.00025 per share,and(ii)148,500,000 Class C ordinary shares outstanding,par value US$0.00025 per share.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes NoIf this report is an annual o
9、r transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13or 15(d)of the Securities Exchange Act of 1934.Yes NoIndicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the SecuritiesE
10、xchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically every Interact
11、ive Data File required to be submitted pursuantto Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrantwas required to submit such files).Yes NoIndicate by check mark whether the registrant is a large accelerated filer,an acc
12、elerated filer,a non-accelerated filer,or an emerginggrowth company.See the definitions of“large accelerated filer,”“accelerated filer,”and“emerging growth company”in Rule 12b-2 ofthe Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerEmerging growth companyIf an emerging grow
13、th company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if theregistrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a)of the Exchange Act.The te
14、rm“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to itsAccounting Standards Codification after April 5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the
15、effectiveness ofits internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registeredpublic accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether
16、 the financial statements of the registrantincluded in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-basedcompensation received by a
17、ny of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAPInternational Financial Reporting Standards as issued by
18、theOtherInternational Accounting Standards BoardIf“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registranthas elected to follow.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant is a shell
19、 company(as defined in Rule 12b-2 of the ExchangeAct).Yes No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)ofthe Securities Exch
20、ange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes NoTable of ContentsiTABLE OF CONTENTSINTRODUCTION1FORWARD-LOOKING INFORMATION3Part I.4Item 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS4Item 2.OFFER STATISTICS AND EXPECTED TIMETABLE4Item 3.
21、KEY INFORMATION4Item 4.INFORMATION ON THE COMPANY74Item 4A.UNRESOLVED STAFF COMMENTS114Item 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS114Item 6.DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES130Item 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS140Item 8.FINANCIAL INFORMATION143Item 9.THE OFFER A
22、ND LISTING144Item 10.ADDITIONAL INFORMATION145Item 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK157Item 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES159Part II.168Item 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES168Item 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECU
23、RITY HOLDERS AND USE OF PROCEEDS168Item 15.CONTROLS AND PROCEDURES169Item 16A.AUDIT COMMITTEE FINANCIAL EXPERT170Item 16B.CODE OF ETHICS170Item 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES170Item 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES170Item 16E.PURCHASES OF EQUITY SECURITIES B
24、Y THE ISSUER AND AFFILIATED PURCHASERS170Item 16F.CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT171Item 16G.CORPORATE GOVERNANCE171Item 16H.MINE SAFETY DISCLOSURE171Item 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS171Part III.171Item 17.FINANCIAL STATEMENTS171Item 18.FINANCIA
25、L STATEMENTS171Item 19.EXHIBITS172Table of Contents1INTRODUCTIONIn this annual report on Form 20-F,or this annual report,except where the context otherwise requires and for purposes of thisannual report only:“ADAS”refers to advanced driver assistance system;“ADRs”refer to the American depositary rec
26、eipts that evidence the ADSs;“ADSs”refer to our American depositary shares,each of which represents one Class A ordinary share;“AI”refers to artificial intelligence;“Anhui NIO AT”refers to Anhui NIO AI Technology Co.,Ltd.,one of the VIEs;“Anhui NIO DT”refers to Anhui NIO Data Technology Co.,Ltd.,one
27、 of the VIEs;“Beijing NIO”refers to Beijing NIO Network Technology Co.,Ltd.,one of the VIEs;“China”or the“PRC”refers to the Peoples Republic of China,excluding,for the purpose of this annual report only,HongKong,Macau and Taiwan;“Class A ordinary shares”refer to our Class A ordinary shares,par value
28、 US$0.00025 per share;“Class B ordinary shares”refer to the Class B ordinary shares that we historically authorized and issued,par valueUS$0.00025 per share.All the authorized Class B ordinary shares were redesignated as Class A ordinary shares at theannual general meeting held on August 25,2022;“Cl
29、ass C ordinary shares”refer to our Class C ordinary shares,par value US$0.00025 per share;“EVs”refer to electric passenger vehicles;“FOTA”refers to firmware over-the-air;“Hong Kong”or“HK”refers to the Hong Kong Special Administrative Region of the Peoples Republic of China;“Hong Kong Listing Rules”r
30、efer to the Rules Governing the Listing of Securities on The Stock Exchange of Hong KongLimited,as amended or supplemented from time to time;“Hong Kong Stock Exchange”refers to The Stock Exchange of Hong Kong Limited;“ICE”refers to internal combustion engine;“Main Board of the Hong Kong Stock Exchan
31、ge”refers to the stock market(excluding the option market)operated by theHong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of theHong Kong Stock Exchange;“Main Board of the Singapore Exchange”refers to the stock market operated by The Singa
32、pore Exchange SecuritiesTrading Limited;“NEVs”refer to new energy passenger vehicles;Table of Contents2“NIO,”“we,”“us,”“our company,”and“our”refer to NIO Inc.,our Cayman Islands holding company and its subsidiaries,and,in the context of describing our operations and consolidated financial informatio
33、n,include the VIEs,namely BeijingNIO,Anhui NIO AT and Anhui NIO DT,and their respective subsidiaries,where applicable;“Ordinary shares”refer to our Class A ordinary shares and Class C ordinary shares,each of par value US$0.00025 pershare;“Relevant Period”refers to the period commencing from the date
34、 on which any of our shares first become secondary listedon the Hong Kong Stock Exchange to and including the date immediately before the day on which the secondary listing iswithdrawn from the Hong Kong Stock Exchange;“RMB”or“Renminbi”refers to the legal currency of China;“Singapore Exchange”refers
35、 to The Singapore Exchange Securities Trading Limited;and“US$,”“dollars”or“U.S.dollars”refer to the legal currency of the United States.Unless otherwise noted,all translations from Renminbi to U.S.dollars and from U.S.dollars to Renminbi in this annual reportare made at a rate of RMB6.8972 to US$1.0
36、0,the exchange rate in effect as of December 30,2022 as set forth in the H.10 statisticalrelease of the Board of Governors of the Federal Reserve System.We make no representation that any Renminbi or U.S.dollar amountscould have been,or could be,converted into U.S.dollars or Renminbi,as the case may
37、 be,at any particular rate,or at all.Unlessotherwise specified,the description of our vehicles,services and business models in this report refers to our business in China.Table of Contents3FORWARD-LOOKING INFORMATIONThis annual report contains forward-looking statements that reflect our current expe
38、ctations and views of future events.Theseforward-looking statements are made under the“safe-harbor”provisions of the U.S.Private Securities Litigation Reform Act of 1995.Known and unknown risks,uncertainties and other factors,may cause our actual results,performance or achievements to be materiallyd
39、ifferent from those expressed or implied by the forward-looking statements.These statements involve known and unknown risks,uncertainties and other factors,including those listed under“Item 3.Key InformationD.Risk Factors,”that may cause our actualresults,performance or achievements to be materially
40、 different from those expressed or implied by the forward-looking statements.You can identify these forward-looking statements by words or phrases such as“may,”“will,”“expect,”“anticipate,”“aim,”“estimate,”“intend,”“plan,”“believe,”“likely to,”“potential,”“continue”or other similar expressions.We ha
41、ve based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affectour financial condition,results of operations,business strategy and financial needs.These forward-looking statements include,but arenot lim
42、ited to,statements about our goals and growth strategies,our future business development,financial condition and results ofoperations,our expectations regarding demand for and market acceptance of our products and services,and assumptions underlying orrelated to any of the foregoing.Although we beli
43、eve that our expectations expressed in these forward-looking statements are reasonable,our expectations maylater be found to be incorrect.Our actual results could be materially different from our expectations.Moreover,we operate in an evolvingenvironment.New risk factors and uncertainties emerge fro
44、m time to time,and it is not possible for our management to predict all riskfactors and uncertainties,nor can we assess the impact of all factors on our business or the extent to which any factor,or combination offactors,may cause actual results to differ materially from those contained in any forwa
45、rd-looking statements.This annual report contains certain data and information that we obtained from various government and private publications.Statistical data in these publications also include projections based on a number of assumptions.The electric vehicles industry may notgrow at the rate pro
46、jected by market data,or at all.Failure of this market to grow at the projected rate may have a material adverse effecton our business and the market price of our ADSs or Class A ordinary shares.In addition,the rapidly evolving nature of the electricvehicles industry results in significant uncertain
47、ties for any projections or estimates relating to the growth prospects or future conditionof our market.Furthermore,if any one or more of the assumptions underlying the market data are later found to be incorrect,actualresults may differ from the projections based on these assumptions.You should not
48、 place undue reliance on these forward-lookingstatements.The forward-looking statements made in this annual report relate only to events or information as of the date on which thestatements are made in this annual report.Except as required by law,we undertake no obligation to update or revise public
49、ly anyforward-looking statements,whether as a result of new information,future events or otherwise,after the date on which the statements aremade or to reflect the occurrence of unanticipated events.You should read this annual report and the documents that we refer to in thisannual report and exhibi
50、ts to this annual report completely and with the understanding that our actual future results may be materiallydifferent from what we expect.We qualify all of our forward-looking statements by these cautionary statements.Table of Contents4PART I.ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADV
51、ISERSNot applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3.KEY INFORMATIONOur Holding Company Structure and Contractual Arrangements with the VIEsNIO Inc.is not an operating company in China but a Cayman Islands holding company with no equity ownership in itsconsolidated
52、 variable interest entities,or VIEs.We conduct our operations in China(i)primarily through our PRC subsidiaries,and(ii)toa much lesser extent,through the VIEs,namely Beijing NIO,Anhui NIO AT,and Anhui NIO DT,with each of which we maintaincontractual arrangements.We have also established subsidiaries
53、 in the United States,Germany,the United Kingdom,Norway and otheroverseas jurisdictions to promote our services and businesses,entering into business contracts with offshore counterparties and holdingoverseas intellectual properties.PRC laws and regulations(i)restrict and impose conditions on foreig
54、n investment in value-added telecommunication services,including without limitation,performing internet information services as well as holding certain related licenses;and(ii)prohibit foreigninvestment in certain services related to autonomous driving as well as the holding of relevant licenses by
55、foreign entities.Additionally,in practice,subject to the qualifications set by China Banking and Insurance Regulatory Commission,or the CBIRC,for foreignshareholders of the insurance brokerage companies,the CBIRC typically would not approve the establishment of foreign-investedinsurance brokerage co
56、mpanies which perform insurance brokerage services and hold certain related licenses.Accordingly,we operatethese businesses in China through Beijing NIO,Anhui NIO AT,and Anhui NIO DT,or as referred to as the VIEs.We rely on contractualarrangements among our relevant PRC subsidiaries,the VIEs and the
57、ir nominee shareholders to maintain a controlling financial interestas the primary beneficiary of each VIE(as defined in US GAAP,ASC 810).Under US GAAP we consolidate each VIE within ourconsolidated financial statements.Specifically,we operate value-added telecommunication services,including without
58、 limitation,performing internet information services,and hold certain related licenses,through Beijing NIO.We intend to obtain requisite licensesfor certain supporting functions during the development of our autonomous driving technology through Anhui NIO AT.We intend toprovide insurance brokerage s
59、ervices which are mainly vehicle-related and property-related and to hold the requisite licenses throughAnhui NIO DT.As of the date of this annual report,these businesses are still in early stage.As used in this annual report,“NIO,”“we,”“us,”“our company,”and“our”refer to NIO Inc.,our Cayman Islands
60、 holding company and its subsidiaries,and in the context ofdescribing our operations and consolidated financial information,include the VIEs and their respective subsidiaries,where applicable.Table of Contents5The following diagram illustrates our corporate structure,including our principal subsidia
61、ries and the VIEs,as of the date of thisannual report:In April 2018,we,through one of our PRC subsidiaries,entered into a series of contractual arrangements with Beijing NIO andits shareholders,which were replaced by a new set of contractual arrangements we entered into with the same parties in Apri
62、l 2021.Further,in November 2022 and December 2022,we,through our respective PRC subsidiaries,entered into a series of contractualarrangements with each of Anhui NIO AT and Anhui NIO DT,respectively,and their respective shareholders,to conduct certain futureoperations in China.These contractual arran
63、gements enable us to:receive the economic benefits that could potentially be significant to the VIEs in consideration for the services provided byour subsidiaries;exercise effective control over the VIEs;andhold an exclusive option to purchase all or part of the equity interests in the VIEs when and
64、 to the extent permitted by PRClaw.These contractual agreements include an exclusive business cooperation agreement,exclusive option agreement,equity pledgeagreement,loan agreement and power of attorney.For more details of these contractual arrangements,see“Item 4.Information on theCompanyC.Organiza
65、tional StructureContractual Agreements with the VIEs and Their Shareholders.”Table of Contents6Beijing NIO,Anhui NIO AT and Anhui NIO DT,taking into account all of their respective business with or without foreigninvestment restrictions and prohibitions under PRC laws,did not contribute to our total
66、 revenues in 2020,2021 and 2022.The VIEsprovided services internally to our subsidiaries,and such services amounted to RMB0.2 million,RMB0.6 million and RMB89.2 million(US$12.9 million)for the years ended December 31,2020,2021 and 2022,respectively.As of December 31,2020,2021 and 2022,noneof Beijing
67、 NIO,Anhui NIO AT and Anhui NIO DT had significant operations or any material assets or liabilities.Holdings of our ADSs and Class A ordinary shares are not holding equity interests in the VIEs in China but instead are holdingequity interests in a holding company incorporated in the Cayman Islands.W
68、e do not have any equity interests in the VIEs.However,asa result of contractual arrangements,we have a controlling financial interest over and are considered the primary beneficiary of each ofthe VIEs,and we have consolidated the financial results,pursuant to US GAAP,each of these entities in our c
69、onsolidated financialstatements.However,the contractual arrangements may not be as effective as direct ownership in providing us with control over theVIEs and we may incur substantial costs to enforce the terms of the arrangements.If the VIEs or the nominee shareholders fail toperform their respecti
70、ve obligations under the contractual arrangements,we could be limited in our ability to enforce the contractualarrangements that give us effective control over the VIEs.Furthermore,if we are unable to maintain effective control,we would not beable to continue to consolidate the financial results of
71、the VIEs in our financial statements.See“Item 3.Key InformationD.RiskFactorsRisks Related to Our Corporate StructureWe rely on contractual arrangements with the VIEs and their shareholders to hold acontrolling financial interest as the primary beneficiary over each VIE and its related business,which
72、 may not be as effective as directownership in providing operational control”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate StructureThe shareholders of the VIEs have conflicts of interest with us,which may materially and adversely affect our business and financialcondition.”
73、There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws,regulationsand rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with theVIEs and their nominee shareholders.
74、It is uncertain whether any new PRC laws or regulations relating to contractual arrangements willbe adopted or if adopted,what they would provide.If we or any of the VIEs is found to be in violation of any existing or future PRClaws or regulations,or fail to obtain or maintain any of the required pe
75、rmits or approvals,the relevant PRC regulatory authorities wouldhave broad discretion to take action in dealing with such violations or failures.Our Cayman Islands holding company,our PRCsubsidiaries and VIEs,and investors of our company face uncertainty about potential future actions by the PRC gov
76、ernment that couldaffect the enforceability of the contractual arrangements with the VIEs and,consequently,significantly affect the financial performanceof the VIEs and our company as a whole.See“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate StructureIf the PRC government deems
77、that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions onforeign investment in the relevant industries,or if these regulations or the interpretation of existing regulations change in the future,wecould be subject to severe penalties or be forced to relinquish
78、our interests in those operations.”PRC governments significant authority in regulating our operations and its oversight and control over offerings conductedoverseas by,and foreign investment in,China-based issuers could significantly limit or completely hinder our ability to offer or continueto offe
79、r securities to investors.Implementation of industry-wide regulations in this nature may cause the value of such securities tosignificantly decline or become worthless.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to DoingBusiness in ChinaThe PRC governments significant over
80、sight and discretion over our business operation could result in a materialadverse change in our operations and the value of our ADSs.”Risks and uncertainties arising from the legal system in China,including risks and uncertainties regarding the enforcement oflaws and quickly evolving rules and regu
81、lations in China,could result in a material adverse change in our operations and the value of ourADSs.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaUncertainties inthe interpretation and enforcement of PRC laws and regulations could limit the legal
82、protections available to you and us.”Permissions Required from the PRC Authorities for Our OperationsOur operations in China are governed by PRC laws and regulations.As of the date of this annual report,our PRC subsidiariesand VIEs have obtained the requisite licenses and permits from the PRC govern
83、ment authorities that are material for the main businessoperations of our holding company,our PRC subsidiaries and the VIEs in China,including,among others,a license for conductingInternet content provision services,or the ICP license,and the insurance brokerage license.Given the uncertainties of in
84、terpretation andimplementation of relevant laws and regulations and the enforcement practice by relevant government authorities,we may be required toobtain additional licenses,permits,filings or approvals for our business operations in the future.For more detailed information,see“Item3.Key Informati
85、onD.Risk FactorsRisks Related to Doing Business in ChinaWe may be adversely affected by the complexity,uncertainties and changes in PRC regulations on internet-related business,automotive businesses and other business carried out by ourPRC subsidiaries and VIEs.”Table of Contents7Meanwhile,the PRC g
86、overnment has recently sought to exert more oversight and control over capital raising activities of listedcompanies that are conducted overseas and/or foreign investment in China-based issuers.In December 2021,the CyberspaceAdministration of China,or the CAC,together with other authorities,jointly
87、promulgated the Cybersecurity Review Measures,whichbecame effective on February 15,2022 and replaces its predecessor regulation.Pursuant to the Cybersecurity Review Measures,criticalinformation infrastructure operators that procure internet products and services and network platform operators that c
88、onduct data processactivities must be subject to the cybersecurity review if their activities affect or may affect national security.On February 17,2023,China Securities Regulatory Commission,or the CSRC,released several regulations regarding the filing requirements for overseasofferings and listing
89、s by domestic companies,including the Trial Administrative Measures of Overseas Securities Offering and Listingby Domestic Companies and five supporting guidelines(collectively,the“Overseas Listing Filing Rules”),which were formallyimplemented on March 31,2023.According to the Overseas Listing Filin
90、g Rules,domestic enterprises like us that have completedoverseas listings are not required to file with CSRC immediately,but shall carry out filing procedures as required if we conductrefinancing or fall within other circumstances that require filing with the CSRC.Any failure to obtain or delay in o
91、btaining such approvalor completing such procedures could subject us to restrictions and penalties imposed by the CSRC,the CAC or other PRC regulatoryauthorities,which could include fines and penalties on our operations in China,delays of or restrictions on the repatriation of theproceeds from our o
92、ffshore offerings into China,or other actions that could materially and adversely affect our business,financialcondition,results of operations,and prospects,as well as the trading price of our ADSs.For more detailed information,see“Item 3.KeyInformation D.Risk Factors Risks Related to Doing Business
93、 in China The approval of or the filing with the CSRC or otherPRC government authorities may be required in connection with our future offshore listings and capital raising activities under PRC law,and,if required,we cannot predict whether or for how long we will be able to obtain such approval or f
94、iling.”The Holding Foreign Companies Accountable ActPursuant to the Holding Foreign Companies Accountable Act,or the HFCAA,if the SEC determines that we have filed auditreports issued by a registered public accounting firm that has not been subject to inspections by the Public Company AccountingOver
95、sight Board(United States),or the PCAOB,for two consecutive years,the SEC will prohibit our shares or ADSs from being tradedon a national securities exchange or in the over-the-counter trading market in the United States.On December 16,2021,the PCAOBissued a report to notify the SEC of its determina
96、tion that the PCAOB was unable to inspect or investigate completely registered publicaccounting firms headquartered in mainland China and Hong Kong,including our auditor.In May 2022,the SEC conclusively listed NIOInc.as a Commission-Identified Issuer under the HFCAA following the filing of the annua
97、l report on Form 20-F for the fiscal year endedDecember 31,2021.On December 15,2022,the PCAOB issued a report that vacated its December 16,2021 determination and removedmainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered publ
98、icaccounting firms.For this reason,we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we filethis annual report on Form 20-F.Each year,the PCAOB will determine whether it can inspect and investigate completely audit firms inmainland China and Hong Kong,among ot
99、her jurisdictions.If PCAOB determines in the future that it no longer has full access to inspectand investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firmheadquartered in one of these jurisdictions to issue an audit report on our financial s
100、tatements filed with the SEC,we would be identifiedas a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.There can be noassurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year,and if we wer
101、e so identified fortwo consecutive years,we would become subject to the prohibition on trading under the HFCAA.For more details,see“Item 3.KeyInformationD.Risk FactorsRisks Related to Doing Business in ChinaThe PCAOB had historically been unable to inspect ourauditor in relation to their audit work
102、performed for our financial statements and the inability of the PCAOB to conduct inspections ofour auditor in the past has deprived our investors with the benefits of such inspections”and“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaOur ADSs may be prohibited from trad
103、ing in the United States under the HFCAA in thefuture if the PCAOB is unable to inspect or investigate completely auditors located in China.The delisting of the ADSs,or the threat oftheir being delisted,may materially and adversely affect the value of your investment.”Table of Contents8Cash Flows th
104、rough Our OrganizationNIO Inc.is a holding company with no material operations of its own.We conduct our operations in China(i)primarily throughour PRC subsidiaries,and(ii)to a much lesser extent,the VIEs.As a result,although other means are available for us to obtain financingat the holding company
105、 level,NIO Inc.s ability to pay dividends to the shareholders and to service any debt it may incur may dependupon dividends paid by our PRC subsidiaries and service fees paid by the VIEs in China.If any of our subsidiaries incurs debt on its ownbehalf in the future,the instruments governing such deb
106、t may restrict its ability to pay dividends to NIO Inc.In addition,our PRCsubsidiaries are permitted to pay dividends to NIO Inc.only out of their retained earnings,if any,as determined in accordance with PRCaccounting standards and regulations.Further,our PRC subsidiaries and VIEs are required to m
107、ake appropriations to certain statutoryreserve funds or may make appropriations to certain discretionary funds,which are not distributable as cash dividends except in the eventof a solvent liquidation of the companies.For more details,see“Item 5.Operating and Financial Review and Prospects B.Liquidi
108、tyand Capital Resources Holding Company Structure”.Under PRC laws and regulations,our PRC subsidiaries and VIEs are subject to certain restrictions with respect to payingdividends or otherwise transferring any of their net assets to us.Remittance of dividends by a wholly foreign-owned enterprise out
109、 ofChina is also subject to examination by the banks designated by the State Administration of Foreign Exchange of the PRC,or SAFE.Theamounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the VIEs inwhich we have no legal ownersh
110、ip,totaling RMB20,656.8 million,RMB38,902.1 million and RMB40,720.9 million(US$5,904.0million)as of December 31,2020,2021 and 2022,respectively,and the net assets of the VIEs that are restricted was nil,nil andRMB50.0 million(US$7.2 million)as of December 31,2020,2021 and 2022,respectively.For risks
111、 relating to the fund flows of ouroperations in China,see“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China We may rely ondividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have,andany limitation on
112、 the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability toconduct our business”.For purposes of illustration,the following discussion reflects the hypothetical taxes that might be required to be paid withinChina,assuming that:(i)we have tax
113、able earnings,and(ii)we determine to pay dividends in the future.Tax calculation(1)Hypothetical pre-tax earnings 100%Tax on earnings at statutory rate of 25%(2)(25)%Net earnings available for distribution 75%Withholding tax at standard rate of 10%(3)(7.5)%Net distribution to Parent/Shareholders 67.5
114、%Notes:(1)For purposes of this example,the tax calculation has been simplified.The hypothetical book pre-tax earnings amount,notconsidering timing differences,is assumed to equal taxable income in China.(2)Certain of our subsidiaries qualifies for a 15%preferential income tax rate in China.For purpo
115、ses of this hypothetical example,thetable above reflects a maximum tax scenario under which the full statutory rate would be effective.(3)The PRC Enterprise Income Tax Law imposes a withholding income tax of 10%on dividends distributed by a foreign investedenterprise,or the FIE,to its immediate hold
116、ing company outside of China.A lower withholding income tax rate of 5%is applied ifthe FIEs immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement withChina,subject to a qualification review at the time of the distribution.For purposes of this
117、hypothetical example,the table aboveassumes a maximum tax scenario under which the full withholding tax would be applied.Under PRC law,NIO Inc.may provide funding to our PRC subsidiaries only through capital contributions or loans,and to theVIEs only through loans,subject to satisfaction of applicab
118、le government registration and approval requirements.NIO Inc.and itssubsidiaries extended loans to the nominee shareholders of the VIEs for their investment in the VIEs,with outstanding principal amountof RMB19.7 million,RMB0.08 million and RMB50.09 million(US$7.26 million)as of December 31,2020,202
119、1 and 2022,respectively.In addition,NIO Inc.and its subsidiaries also extended loans to the VIEs for operations with outstanding principal amountof nil,RMB7.0 million and RMB32.8 million(US$4.7 million)as of December 31,2020,2021 and 2022,respectively.Table of Contents9Pursuant to the exclusive busi
120、ness cooperation agreements dated April 19,2018 and April 12,2021,respectively,between NIOCo.,Ltd.,or Shanghai NIO,a wholly-owned subsidiary of our company,and Beijing NIO,Shanghai NIO may adjust the payment timeand payment method of the service fees,and Beijing NIO will accept any such adjustment.F
121、or the years ended December 31,2020,2021and 2022,no service under the contractual arrangements was provided by Shanghai NIO and no service fee was paid by Beijing NIO toShanghai NIO accordingly.We intend to determine the amount of service fee and payment method based on the working capital needs ofS
122、hanghai NIO and Beijing NIO,and settle such service fees accordingly in the future.Pursuant to a separate service agreement,for theyears ended December 31,2020,2021 and 2022,Shanghai NIO paid Beijing NIO RMB0.2 million,RMB0.6 million and RMB0.7million(US$0.1 million)for services provided by Beijing
123、NIO.Pursuant to the exclusive business cooperation agreement dated November 30,2022 between Anhui NIO Autonomous DrivingTechnology Co.,Ltd.,or Anhui NIO AD,a wholly-owned subsidiary of our company,and Anhui NIO AT,Anhui NIO AD may adjust thepayment time and payment method of the service fees,and Anh
124、ui NIO AT will accept any such adjustment.For the year endedDecember 31,2022,no service under the contractual arrangements was provided by Anhui NIO AD and no service fee was paid byAnhui NIO AT to Anhui NIO AD accordingly.We intend to determine the amount of service fee and payment method based on
125、theworking capital needs of Anhui NIO AD and Anhui NIO AT,and settle such service fees accordingly in the future.Pursuant to a separateservice agreement,for the years ended December 31,2020,2021 and 2022,Anhui NIO AD paid Anhui NIO AT RMB nil,RMB nil andRMB70.1 million(US$10.2 million)for services p
126、rovided by Anhui NIO AT.Pursuant to the exclusive business cooperation agreement dated December 12,2022 between NIO Holding Co.,Ltd.,or NIOChina,a PRC subsidiary in which we hold 92.114%controlling equity interests,and Anhui NIO DT,NIO China may adjust the paymenttime and payment method of the servi
127、ce fees,and Anhui NIO DT will accept any such adjustment.For the year ended December 31,2022,no service under the contractual arrangements was provided by NIO China and no service fee was paid by Anhui NIO DT to NIOChina accordingly.We intend to determine the amount of service fee and payment method
128、 based on the working capital needs of NIOChina and Anhui NIO DT,and settle such service fees accordingly in the future.NIO Inc.has not declared or paid any cash dividends,nor does it have any present plan to pay any cash dividends on ourordinary shares in the foreseeable future.We currently intend
129、to retain most,if not all,of our available funds and any future earnings tooperate and expand our business.See“Item 8.Financial Information A.Consolidated Statements and Other Financial Information Dividend Policy.”For Cayman Islands,PRC and United States federal income tax considerations of an inve
130、stment in our ADSs orClass A ordinary shares,see“Item 10.Additional Information E.Taxation.”As of December 31,2020,2021 and 2022 and for the years ended December 31,2020,2021 and 2022,none of Beijing NIO,Anhui NIO AT and Anhui NIO DT had significant operations or any material assets or liabilities.A
131、s a result,the financial informationrelated to the consolidated VIEs were insignificant to our consolidated financial statements.A.ReservedB.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.D.Risk FactorsSummary of Risk FactorsAn investment in o
132、ur ADSs and Class A ordinary shares involves significant risks.Below is a summary of material risks weface,organized under relevant headings.These risks are discussed more fully in Item 3.Key InformationD.Risk Factors.Table of Contents10Risks Related to Our Business and IndustryRisks and uncertainti
133、es related to our business and industry include,but are not limited to,the following:Our ability to develop and manufacture vehicles of sufficient quality and appeal to customers on schedule and on a largescale is still evolving;We have not been profitable,and only generated positive cash flows from
134、 operations in certain periods;Our business,financial condition and results of operations may be adversely affected by the COVID-19 pandemic;We have a limited operating history and face significant challenges as a new entrant into our industry;Manufacturing in collaboration with partners is subject
135、to risks;The unavailability,reduction or elimination of government and economic incentives or government policies which arefavorable for electric vehicles and domestically produced vehicles could have a material adverse effect on our business,financial condition,operating results and prospects;Our v
136、ehicles may not perform in line with customer expectations;Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have a materialadverse effect on our business;We may face challenges providing our power solutions;Our services may not be generally accep
137、ted by our users.If we are unable to provide good customer service,our businessand reputation may be materially and adversely affected;We are dependent on our suppliers,many of whom are our single source suppliers for the components they supply;We rely on Battery Asset Company to work together with
138、us to provide Battery as a Service to our users.If Battery AssetCompany fails to achieve smooth and stable operations,our Battery as a Service and reputation may be materially andadversely affected;andOur business is subject to a variety of laws,regulations,rules,policies and other obligations regar
139、ding cybersecurity,privacy,data protection and information security.Any failure to comply with these laws,regulations and other obligationsor any losses,unauthorized access or releases of confidential information or personal data could subject us to significantreputational,financial,legal and operat
140、ional consequences.Table of Contents11Risks Related to Our Corporate StructureWe are also subject to risks and uncertainties related to our corporate structure,including,but not limited to,the following:We are a Cayman Islands holding company with no equity ownership in the VIEs and we conduct our o
141、perations in China(i)primarily through our PRC subsidiaries,and(ii)to a much lesser extent,the VIEs with which we maintain contractualarrangements.Investors in our ADSs and Class A ordinary shares thus are not purchasing equity interests in the VIEs inChina but instead are purchasing equity interest
142、s in a Cayman Islands holding company.If the PRC government deems thatour contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in therelevant industries,or if these regulations or the interpretation of existing regulations change in the future,w
143、e could besubject to severe penalties or be forced to relinquish our interests in those operations.Our holding company in the CaymanIslands,the VIEs and investors of our company face uncertainty about potential future actions by the PRC government thatcould affect the enforceability of the contractu
144、al arrangements with the VIEs and,consequently,significantly affect thefinancial performance of the VIEs and our company as a group;We rely on contractual arrangements with the VIEs and their shareholders to exercise a controlling financial interest as theprimary beneficiary over each VIE and its re
145、lated business,which may not be as effective as direct ownership in providingoperational control;Our ability to enforce the equity pledge agreements between us and the VIEs shareholders may be subject to limitationsbased on PRC laws and regulations;andThe shareholders of the VIEs have conflicts of i
146、nterest with us,which may materially and adversely affect our business andfinancial condition.Risks Related to Doing Business in ChinaWe face risks and uncertainties related to doing business in China in general,including,but not limited to,the following:Changes in Chinas political or social conditi
147、ons or government policies could have a material and adverse effect on ourbusiness and results of operations;Risks and uncertainties arising from the legal system in China,including risks and uncertainties regarding the enforcementof laws and quickly evolving rules and regulations in China,could res
148、ult in a material adverse change in our operations andthe value of our ADSs and Class A ordinary shares.For more details,see“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China Uncertainties in the interpretation and enforcement of PRC laws andregulations could limit the l
149、egal protections available to you and us”;The PRC governments significant authority in regulating our operations and its oversight and control over capital raisingactivities of listed companies conducted overseas by,and foreign investment in,China-based issuers could significantlylimit or completely
150、 hinder our ability to offer or continue to offer securities to investors.Implementation of industry-wideregulations in this nature may cause the value of such securities to significantly decline.For more details,see“Item 3.KeyInformation D.Risk Factors Risks Related to Doing Business in China The P
151、RC governments significantoversight and discretion over our business operation could result in a material adverse change in our operations and thevalue of our ADSs”;The approval of or the filing with the CSRC or other PRC government authorities may be required in connection with ourfuture offshore l
152、istings and capital raising activities under PRC law,and,if required,we cannot predict whether or for howlong we will be able to obtain such approval or filing;We may be adversely affected by the complexity,uncertainties and changes in PRC regulations on internet-relatedbusiness,automotive businesse
153、s and other business carried out by our PRC subsidiaries and VIEs;Table of Contents12The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financialstatements and the inability of the PCAOB to conduct inspections of our auditor in the past ha
154、s deprived our investors withthe benefits of such inspections;andOur ADSs may be prohibited from being traded in the United States under the HFCAA in the future if the PCAOBdetermines that it is unable to inspect or investigate completely auditor located in China.The delisting of the ADSs,or thethre
155、at of their being delisted,may materially and adversely affect the value of your investment.For more details,see“Item3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaOur ADSs may be prohibited fromtrading in the United States under the HFCAA in the future if the PCAOB is unable
156、 to inspect or investigate completelyauditors located in China.The delisting of the ADSs,or the threat of their being delisted,may materially and adverselyaffect the value of your investment.”Risks Related to Our ADSs and Class A Ordinary SharesIn addition to the risks described above,we are subject
157、 to risks related to our ADSs and Class A ordinary shares:We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong StockExchange;If we change the listing venue of our securities,including delisting from the New York Stock Exchange,the Hong Kong
158、Stock Exchange,or the Singapore Exchange,you may lose the shareholder protection mechanisms afforded under theregulatory regimes of the applicable securities exchange;The trading prices of our listed securities have been and are likely to continue to be,volatile,which could result insubstantial loss
159、es to investors;If securities or industry analysts do not publish research or reports about our business,or if they adversely change theirrecommendations regarding our Class A ordinary shares and/or ADSs,the market price for our Class A ordinary sharesand/or ADSs and trading volume could decline;and
160、Our dual-class voting structure will limit the holders of our Class A ordinary shares and ADSs to influence corporatematters,provide certain shareholders of ours with substantial influence and could discourage others from pursuing anychange of control transactions that holders of our Class A ordinar
161、y shares and ADSs may view as beneficial.Risks Related to Our Business and IndustryOur ability to develop and manufacture vehicles of sufficient quality and appeal to customers on schedule and on a large scale is stillevolving.Our future business depends in large part on our ability to execute on ou
162、r plans to develop,manufacture,market and sell ourelectric vehicles.We plan to manufacture our vehicles in higher volumes than our present production capabilities.Our continued development and manufacturing of our current and future vehicle models are and will be subject to risks,including with resp
163、ect to:our ability to secure necessary funding;the equipment we use being able to accurately manufacture the vehicle within specified design tolerances;compliance with environmental,workplace safety and similar regulations;securing necessary components on acceptable terms and in a timely manner;dela
164、ys in delivery of final component designs to our suppliers,or delays in the development and delivery of our coretechnologies and new vehicle models,such as our NIO Autonomous Driving,or NAD,and technologies for batteries;Table of Contents13our ability to attract,recruit,hire and train skilled employ
165、ees;quality controls;delays or disruptions in our supply chain;our ability to maintain solid partnership with our manufacturing partners and suppliers;andother delays in manufacturing and production capacity expansion,and cost overruns.Currently,our product portfolio consists of the ES8,a six-seater
166、 smart electric flagship SUV,the ES7(or the EL7),a mid-largefive-seater smart electric SUV,the ES6,a five-seater all-round smart electric SUV,the EC7,a five-seater smart electric flagship coupeSUV,the EC6,a five-seater smart electric coupe SUV,the ET7,a smart electric flagship sedan,and the ET5,a mi
167、d-size smart electricsedan.Our vehicles may not meet customer expectations and our future models may not be commercially viable.Historically,automobilecustomers have expected auto companies to periodically introduce new and improved vehicle models.In order to meet theseexpectations,we may be require
168、d to introduce new vehicle models and enhanced versions of existing vehicle models.To date,we havelimited experience designing,testing,manufacturing,marketing and selling our electric vehicles and therefore cannot assure you that wewill be able to meet customer expectations.Any of the foregoing coul
169、d have a material adverse effect on our results of operations and growth prospects.We have not been profitable,and only generated positive cash flows from operations in certain periods.We have not been profitable since our inception,and only generated positive cash flows from operations in certain p
170、eriods.Weincurred net losses of RMB5,304.1 million,RMB4,016.9 million and RMB14,437.1 million(US$2,093.2 million)for the years endedDecember 31,2020,2021 and 2022,respectively.In addition,although we generated positive operating cash flows in 2020 and 2021,wehad negative operating cash flows of RMB3
171、,866.0 million(US$560.5 million)in 2022.There can be no assurance that we will not experience liquidity problems in the future.We may not be able to fulfill ourobligations in providing vehicles,embedded products or services to our users in respect of advances from customers,the failure of whichmay n
172、egatively affect our cash flow position.If we fail to generate sufficient revenue from our operations,or if we fail to maintainsufficient cash and financing,we may not have sufficient cash flows to fund our business,operations and capital expenditure and ourbusiness and financial position will be ad
173、versely affected.We have made significant up-front investments in research and development,service network,and sales and marketing torapidly develop and expand our business.We expect to continue to invest significantly in research and development and sales and servicenetwork,and in production capaci
174、ty expansion,to further develop and expand our business,and these investments may not result in anincrease in revenue or positive cash flow on a timely basis,or at all.For example,we are working on the development of electric vehiclestargeting the mass market,autonomous driving technologies and smar
175、t devices.We cannot assure you that we will be able to competesuccessfully against existing or future competitors in those new areas.We may continue to record net losses and negative operating cash flows in the near future.We may not generate sufficientrevenues or we may incur substantial losses for
176、 a number of reasons,including lack of demand for our vehicles and services,increasingcompetition,challenging macro-economic environment due to the COVID-19 pandemic,as well as other risks discussed herein,and wemay incur unforeseen expenses,or encounter difficulties,complications and delays in gene
177、rating revenue or achieving profitability.If weare unable to achieve profitability,we may have to reduce the scale of our operations,which may impact our business growth andadversely affect our financial condition and results of operations.In addition,our continuous operation depends on our capabili
178、ty toimprove operating cash flows as well as our capacity to obtain sufficient external equity or debt financing.If we do not succeed in doingso,we may have to limit the scale of our operations,which may limit our business growth and adversely affect our financial conditionand results of operations.
179、Table of Contents14Our business,financial condition and results of operations may be adversely affected by the COVID-19 pandemic.Since the beginning of 2020,the COVID-19 pandemic has resulted in temporary closure of many corporate offices,retail stores,manufacturing facilities and factories across C
180、hina and the world.Our operations experienced disruptions,such as temporary closure ofour offices and/or those of our customers or suppliers and suspension of services,resulting in a reduction of vehicles manufactured anddelivered,which affected our business,financial condition,results of operations
181、 and cash flow.In particular,in late March and April2022,our vehicle production was impacted by the supply chain volatilities and other constraints caused by a new wave of COVID-19outbreaks in certain regions in China.Our results of operations have been and could continue to be adversely affected to
182、 the extent theCOVID-19 pandemic or any other epidemic harms the Chinese economy in general.In addition,the ongoing global pandemic mayadversely affect the supply chains,which in turn may materially and adversely affect our business and results of operations.The globalpandemic may also delay the exe
183、cution of our overseas market expansion plan.Further,to the extent the COVID-19 pandemic adverselyaffects our business and financial results,it has and may continue to have the effect of heightening many of the other risks described inthis annual report,such as those relating to our level of indebte
184、dness,our need to generate sufficient cash flows to service ourindebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness.There has been an easing of the travel restrictions and quarantine requirements related to COVID-19 in China since Decembe
185、r2022.Shortly after that,there were surges of cases in many cities during this time which caused impacts to certain of our customersand/or suppliers in locations where we have service centers and vehicle delivery centers,which have adversely affected our business,financial condition,results of opera
186、tions and cash flows.The extent to which the pandemic impacts our results of operations goingforward will depend on future developments which are highly uncertain and unpredictable,including the frequency,duration and extentof outbreaks of COVID-19,the appearance of new variants with different chara
187、cteristics,the success or failure of efforts to contain ortreat cases,and future actions we or the authorities may take in response to these developments.Even if the economic impact of COVID-19 recedes,the pandemic could have a lingering,long-term effect on business activities and consumption behavi
188、or.There is no assurancethat we will be able to adjust our business operations to adapt to these changes and the increasingly complex environment in which weoperate.Consequently,the COVID-19 pandemic may continue to adversely affect our business,financial condition and results ofoperations in the cu
189、rrent and future years.We have a limited operating history and face significant challenges as a new entrant into our industry.We were formed in 2014 and began making deliveries to the public of our first volume manufactured vehicle in June 2018.Ourcurrent product portfolio consists of the ES8,the ES
190、7(or the EL7),the ES6,the EC7,the EC6,the ET7 and the ET5.You should consider our business and prospects in light of the risks and challenges we face as a new entrant into our industry,including,among other things,with respect to our ability to:design and produce safe,reliable and quality vehicles o
191、n an ongoing basis;build a well-recognized and respected brand;establish and expand our customer base;successfully market our vehicles and services;properly price our products and services,and successfully anticipate the sales volume of our vehicle products and the take-rate of services provided to
192、users;improve and maintain our operational efficiency;maintain a reliable,secure,high-performance and scalable technology infrastructure;attract,retain and motivate talented employees;anticipate and adapt to changing market conditions,including technological developments and changes in competitivela
193、ndscape;andTable of Contents15navigate an evolving and complex regulatory environment.If we fail to address any or all of these risks and challenges,our business may be materially and adversely affected.We have limited experience to date in high volume manufacturing of our electric vehicles.We canno
194、t assure you that we will beable to develop efficient,automated,cost-efficient manufacturing capability and processes,and reliable sources of component supply thatwill enable us to meet the quality,price,engineering,design and production standards,as well as the production volumes required tosuccess
195、fully sell our current and future vehicle models in a large scale.Furthermore,our vehicles are highly technical products that will require maintenance and support.If we were to cease or cutback operations,even years from now,buyers of our vehicles from years earlier might encounter difficulties in m
196、aintaining their vehiclesand obtaining satisfactory support.We also believe that our service offerings,including user confidence in our ability to provide ourpower solutions and honor our obligations under our service package,will be key factors in marketing our vehicles.As a result,consumers will b
197、e less likely to purchase our vehicles now if they are not convinced that our business will succeed or that our operationswill continue for many years.Similarly,suppliers and other third parties will be less likely to invest time and resources in developingbusiness relationships with us if they are
198、not convinced that our business will succeed.Manufacturing in collaboration with partners is subject to risks.We partner with Jianghuai Automobile Group Ltd.,or JAC,a major state-owned automobile manufacturer in China,for the jointmanufacturing of our vehicles.JAC jointly manufactures with us all of
199、 our current vehicle models,including the ES8,the ES7(or theEL7),the ES6,the EC7,the EC6,the ET7 and the ET5,in the first advanced manufacturing base,or the F1 Plant,and the secondadvanced manufacturing base,or the F2 Plant,and will jointly manufacture with us our other vehicle models in the F2 Plan
200、t.For theyears ended December 31,2020,2021 and 2022,we paid JAC for each vehicle produced on a per-vehicle basis monthly.Pursuant to the joint manufacturing arrangements we entered into with JAC,as amended and renewed,JAC and us jointlymanufacture a series of our vehicle models in the F1 Plant.We ar
201、e in charge of vehicle development and engineering,supply chainmanagement,manufacturing techniques and quality management and assurance.Jianglai Advanced Manufacturing Technology(Anhui)Co.,Ltd.,or Jianglai,a joint venture for operation management established by JAC and us,who joined as a party to th
202、e jointmanufacturing arrangements in May 2021,is responsible for parts assembly and operation management.Pursuant to the manufacturingcooperation agreements we entered into with JAC in September 2022,JAC will jointly manufacture with us the ET5 and potentially ourother vehicle models in the F2 Plant
203、.We will be in charge of relevant trademarks and related technologies license,vehicle specifications,parameters and option requirements,as well as raw materials supply.In relation to the manufacturing cooperation agreements,we alsoentered into an assets transfer agreement and its supplementary agree
204、ment with JAC on December 23,2022,under which we wouldtransfer to JAC certain equipment and other assets.Collaboration with third parties for the manufacturing of vehicles is subject to operational risks that may be beyond our control.We could experience production and delivery delays to the extent
205、our partners do not meet agreed-upon timelines or experience capacityconstraints.The volume of vehicles manufactured could fall short of expectation if there is any adverse change in our partners liquidityposition or overall operations that causes their inability to meet their contractual manufactur
206、ing obligations.There is risk of potentialdisputes with partners,and we and our brand image could be affected by adverse publicity or public sentiment towards our partnerswhether or not such publicity or public sentiment is related to their collaboration with us.In addition,although we are involved
207、in eachstep of the supply chain and manufacturing process,given that we also rely on our partners to meet our quality standards,there can be noassurance that we will successfully maintain quality standards.Our joint manufacturing arrangement with JAC for the vehicle manufacturing in the F1 plant wil
208、l expire in May 2024,and ourmanufacturing cooperation agreement with JAC for the vehicle manufacturing in the F2 plant will expire in September 2025,uponwhich,respectively,we will need to renew the relevant contract with JAC or locate other manufacturing partners.We may be unable toenter into new ag
209、reements or extend existing agreements with JAC and other third-party manufacturing partners on terms and conditionsacceptable to us.If that happens,we may need to significantly enhance our own production capacity,and there is substantial uncertaintyon our ability to achieve that and the timetable r
210、elated thereto.The expense and time required to complete any transition,and to assurethat vehicles manufactured at facilities of new third-party partners,or at our own facilities if we choose to enhance our own productioncapacity,comply with our quality standards and regulatory requirements,may be g
211、reater than anticipated.Table of Contents16The unavailability,reduction or elimination of government and economic incentives or government policies which are favorable forelectric vehicles and domestically produced vehicles could have a material adverse effect on our business,financial condition,ope
212、rating results and prospects.Our growth has benefited significantly from the government subsidies,economic incentives and government policies thatsupport the growth of new energy vehicles.Favorable government incentives and subsidies in China include one-time governmentsubsidies,exemption from vehic
213、le purchase tax,exemption from license plate restrictions in certain cities,preferential utility rates forcharging facilities and more.Changes in government subsidies,economic incentives and government policies to support NEVs couldadversely affect the results of our operations.Chinas central govern
214、ment provided subsidies for purchases of certain NEVs until 2022 and reviews and further adjusts thesubsidy standard on an annual basis.We have seen a general decrease in the amount of government subsidies available to purchase ofNEVs in recent years.For example,the 2020 subsidy standard,effective f
215、rom April 23,2020,reduces the base subsidy amount in generalby 10%for each NEV,and sets subsidies for around two million vehicles as the upper limit of annual subsidy scale.The 2022 subsidystandard was further reduced by 30%compared to the standard of 2021.In addition,the subsidy policy for the purc
216、hase of NEVs in 2022was terminated on December 31,2022,and that subsidy will no longer be granted to vehicles where car licenses are issued afterDecember 31,2022.We believe that our sales performance in 2020,2021 and 2022 was negatively affected by the reduction in thesubsidy standard to some extent
217、.The termination of government subsidies starting from the end of 2022 could further affect our salesperformance in 2023.Our vehicles sales may also be impacted by government policies such as tariffs on imported vehicles and foreign investmentrestrictions in the industry.The tariff in China on impor
218、ted passenger vehicles(other than those originating in the United States ofAmerica)was reduced to 15%starting from July 1,2018.As a result,pricing advantage of domestically manufactured vehicles could bediminished.There used to be a certain limitation on foreign ownership of automakers in China,but
219、for automakers of NEVs,such limitwas lifted in 2018.Further,pursuant to the Special Administrative Measures(Negative List)for Foreign Investment Access(2021Version),or 2021 Negative List,most recently jointly promulgated by the Ministry of Commerce of the PRC,or the MOFCOM,and theNational Developmen
220、t and Reform Commission of the PRC,or the NDRC,on December 27,2021 and became effective on January 1,2022,the limit on foreign ownership of automakers for ICE passenger vehicles was also lifted.As a result,foreign NEV competitorscould build wholly-owned facilities in China without the need for a dom
221、estic joint venture partner.These changes could affect thecompetitive landscape of the NEV industry and reduce our pricing advantage,which may adversely affect our business,results ofoperations and financial condition.Apart from vehicle purchase subsidies,Chinas central government has adopted an NEV
222、 credit scheme that incentivizes OEMsto increase the production and sale of NEVs.Excess positive NEV credits(“automotive regulatory credits”)are tradable and may besold to other enterprises through a credit trading scheme established by the Ministry of Industry and Information Technology of the PRC,
223、or the MIIT.For further information relating to automotive regulatory credits,please refer to“Item 4.Information on the CompanyB.Business OverviewRegulationsRegulations Relating to Parallel Credits Policy on Vehicle Manufacturers and Importers.”We haveearned positive NEV credits through manufacturin
224、g new energy vehicles and sold some of our excess positive NEV credits to othervehicle manufacturers or importers.We generated revenue from the sale of automotive regulatory credits totaled RMB67.3 million(US$9.8 million)in 2022.The credits earned are calculated based on the formula published by the
225、 MIIT,which is dependent on variousmetrics such as vehicle mileage and battery energy efficiency.There is no guarantee that we will continue to earn a similar level oramount of credits going forward.Moreover,as the prices for automotive regulatory credits are subject to market demand,which affectsth
226、e amount of regulatory credits generated by other vehicle manufacturers during a given period,we cannot assure you that we willcontinue to sell our automotive regulatory credits at the current price or a higher price.Any changes in government policies to restrict oreliminate such automotive regulato
227、ry credits trading could adversely affect our business,financial condition and results of operations.Table of Contents17Such negative influence and our undermined sales performance resulted therefrom could continue.Furthermore,Chinas centralgovernment provides certain local governments with funds an
228、d subsidies to support the roll-out of charging infrastructure.See“Item 4.Information on the CompanyB.Business OverviewRegulationsFavorable Government Policies Relating to New Energy Vehiclesin the PRC.”These policies are subject to change and beyond our control.We cannot assure you that any changes
229、 would be favorable toour business.Furthermore,any reduction,elimination,delayed payment or discriminatory application of government subsidies andeconomic incentives because of policy changes,the reduced need for such subsidies and incentives due to the perceived success ofelectric vehicles,fiscal t
230、ightening or other factors may result in the diminished competitiveness of the alternative fuel vehicle industrygenerally or our electric vehicles in particular.In addition,as we seek to increase our revenues from vehicle sales,we may alsoexperience an increase in accounts receivable relating to gov
231、ernment subsidies.However,the collection of the government subsidies issubject to the appropriation arrangement and cadence of the relevant governmental authority.Any uncertainty or delay in collection ofthe government subsidies may also have an adverse impact on our financial condition.For more det
232、ails,please refer to“11.Other Non-current Assets”set forth in our consolidated financial statements included elsewhere in this annual report.Any of the foregoing couldmaterially and adversely affect our business,results of operations,financial condition and prospects.Our vehicles may not perform in
233、line with customer expectations.Our vehicles may not perform in line with customers expectations.For example,our vehicles may not have the durability orlongevity of other vehicles in the market,and may not be as easy and convenient to repair as other vehicles in the market.Any productdefects or any
234、other failure of our vehicles to perform as expected could harm our reputation and result in adverse publicity,lost revenue,delivery delays,product recalls,product liability claims,harm to our brand and reputation,and significant warranty and other expenses,and could have a material adverse impact o
235、n our business,financial condition,operating results and prospects.In addition,the range of our vehicles on a single charge declines principally as a function of usage,time and charging patternsas well as other factors.For example,a customers use of his or her electric vehicle as well as the frequen
236、cy with which he or she chargesthe battery can result in additional deterioration of the batterys ability to hold a charge.Furthermore,our vehicles may contain defects in design and manufacture that may cause them not to perform as expected orthat may require repair.We have delivered vehicles based
237、on NIO Technology Platform 2.0,or NT2.0,with certain features of the NAD,our next generation,proprietary full stack autonomous driving technology,and plan to gradually turn on more features of the NAD.Wecannot assure you that the NAD will ultimately perform in line with expectations.Our vehicles use
238、 a substantial amount of software codeto operate and software products are inherently complex and often contain defects and errors when first introduced.While we have performed extensive internal testing on our vehicles software and hardware systems,we have a limited frame ofreference by which to ev
239、aluate the long-term performance of our systems and vehicles.There can be no assurance that we will be able todetect and fix any defects in the vehicles prior to their sale to consumers.If any of our vehicles fail to perform as expected,we may needto delay deliveries,initiate product recalls and pro
240、vide servicing or updates under warranty at our expense,which could adversely affectour brand in our target markets and could adversely affect our business,prospects and results of operations.Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have
241、a material adverseeffect on our business.Auto companies often experience delays in the design,manufacture and commercial release of new vehicle models.We areplanning to target a broader market with our future vehicles,and to the extent we need to delay the launch of our vehicles,our growthprospects
242、could be adversely affected as we may fail to grow our market share.We also plan to periodically perform facelifts or refreshexisting models,which could also be subject to delays.Furthermore,we rely on third-party suppliers for the provision and developmentof many of the key components and materials
243、 used in our vehicles.To the extent our suppliers experience any delays in providing us withor developing necessary components,we could experience delays in delivering on our timelines.Any delay in the manufacture or launchof our current or future vehicle models,including in the build-out of the man
244、ufacturing facilities in China for these models or due to anyother factors,or in refreshing or performing facelifts to existing models,could subject us to customer complaints and materially andadversely affect our reputation,demand for our vehicles,results of operations and growth prospects.Table of
245、 Contents18We may face challenges providing our power solutions.We provide our users with comprehensive power solutions.We install home chargers for users upon our users requests wherepracticable,and provide other solutions,including battery swapping,supercharging,charging through publicly accessibl
246、e charginginfrastructure and charging using our fast-charging vans.Our users are able to use our One Click for Power valet charging service wheretheir vehicles are picked up,charged and then returned.For each of our vehicle models,we currently offer two battery options:(i)the 70kWh and 75 kWh batter
247、y,or the Standard Range Battery;(ii)the 100 kWh battery,or the Long Range Battery.In January 2021,weannounced the 150 kWh battery,or the Ultra-long Range Battery,with the next generation battery technology.We expect to deliver theUltra-long Range Battery in 2023.We have experienced delay in deliveri
248、ng our power solutions in the past,and we cannot assure youthat such delay will not occur again in the future.We have very limited experience in the actual provision of our power solutions to users and providing these services is subjectto challenges,including the challenges associated with sorting
249、out the logistics of rolling out our network and teams in appropriate areas,inadequate capacity or over capacity of our services in certain areas,security risks or risk of damage to vehicles during One Click forPower valet services and the potential for lack of user acceptance of our services.In add
250、ition,although the Chinese government hassupported the roll-out of a public charging network,the current number of charging infrastructures is generally considered to beinsufficient.We also face uncertainties with regard to governmental support and public infrastructure as we roll out our power solu
251、tions,including whether we can obtain and maintain access to sufficient charging infrastructure,whether we can obtain any required permitsand land use rights and complete any required filings,and whether the government support in this area may discontinue.Furthermore,given our limited experience in
252、providing power solutions,there could be unanticipated challenges which mayhinder our ability to provide our solutions or make the provision of our solutions costlier than anticipated.To the extent we are unable tomeet user expectations or experience difficulties in providing our power solutions,our
253、 reputation and business may be materially andadversely affected.Our services may not be generally accepted by our users.If we are unable to provide good customer service,our business andreputation may be materially and adversely affected.We aim to provide users with a good customer service experien
254、ce,including by providing our users with access to a full suite ofservices conveniently through our mobile application and vehicle applications.In addition,we seek to engage with our users on anongoing basis using online and offline channels,in ways which are non-traditional for automakers.We are al
255、so expanding our servicescope to meet our users evolving demands.For example,in January 2021,we launched NIO Certified,our official used car business,where our users can sell their NIO vehicles to us and we will resell them for value.We have established a nationwide used vehiclebusiness network,cove
256、ring services including vehicle inspection,evaluation,acquisition and sales.In addition,we have also started tooffer auto financing arrangements to our users directly through our subsidiary,NIO Financial Leasing Co.,Ltd.,in late 2020.Newservice offerings will subject us to unknown risks.We cannot as
257、sure you that our services,including our service package and energypackage,our power solution services,our used car service,our auto financing services or our efforts to engage with our users using bothour online and offline channels,will be successful,which could impact our revenues as well as our
258、customer satisfaction and marketing.Our servicing will partially be carried out through third parties certified by us.Although such servicing partners may haveexperience in servicing other vehicles,we and such partners have very limited experience in servicing our vehicles.Servicing electricvehicles
259、 is different from servicing ICE vehicles and requires specialized skills,including high voltage training and servicing techniques.There can be no assurance that our service arrangements will adequately address the service requirements of our users to theirsatisfaction,or that we and our partners wi
260、ll have sufficient resources to meet these service requirements in a timely manner as thevolume of vehicles we deliver increases.In addition,if we are unable to roll out and establish a widespread service network,user satisfaction could be adversely affected,which in turn could materially and advers
261、ely affect our sales,results of operations and prospects.Table of Contents19We have received only a limited number of reservations for our vehicles,all of which are subject to cancellation.Reservations for our vehicles are subject to cancellation by the customer until delivery of the vehicle.We have
262、 experiencedcancellations in the past.While we require a deposit of less than 2.0%of the manufacturers suggested retail price,or the MSRP,suchdeposit becomes non-refundable after a certain period of time upon which the reservation will be automatically confirmed.Notwithstanding the non-refundable de
263、posit,our users may still cancel their reservations for many reasons outside of our control.Thepotentially long wait from the time a reservation is made until the time the vehicle is delivered could also impact user decisions onwhether to ultimately make a purchase,due to potential changes in prefer
264、ences,competitive developments and other factors.If weencounter delays in the delivery our current or future vehicle models,we believe that a significant number of reservations may becancelled.As a result,no assurance can be made that reservations will not be cancelled and will ultimately result in
265、the final purchase,delivery,and sale of the vehicle.Such cancellations could harm our financial condition,business,prospects and operating results.The automotive market is highly competitive,and we may not be successful in competing in this industry.The automotive market is highly competitive and we
266、 expect it will become more competitive in the future as additional playersenter into this market.We compete with ICE vehicles as well as new energy vehicles.Many of our current and potential competitors,particularly international competitors,have significantly greater financial,technical,manufactur
267、ing,marketing and other resources thanwe do and may be able to devote greater resources to the design,development,manufacturing,promotion,sale and support of theirproducts.We expect competition in our industry to intensify in the future in light of increased demand and regulatory push for alternativ
268、efuel vehicles,continuing globalization and consolidation in the worldwide automotive industry.Factors affecting competition include,among others,product quality and features,innovation and development time,pricing,reliability,safety,fuel economy,customer serviceand financing terms.Increased competi
269、tion may lead to lower vehicle unit sales and increased inventory,which may result in downwardprice pressure and adversely affect our business,financial condition,operating results and prospects.Our ability to successfully competein our industry will be fundamental to our future success in existing
270、and new markets and our market share.There can be no assurancethat we will be able to compete successfully in our markets.If our competitors introduce new vehicles or services that successfullycompete with or surpass the quality or performance of our vehicles or services at more competitive prices,w
271、e may be unable to satisfyexisting customers or attract new customers at the price levels that would allow us to generate attractive rates of return on ourinvestment.Furthermore,our competitive advantage as the company with the first-to-market and leading EV volume-manufactureddomestically in China
272、will be severely compromised if our competitors begin making deliveries earlier than expected,or offer morefavorable price than we do.We may also be affected by the growth of the overall China automotive market.There have been fluctuations in the retail salesof the passenger vehicles in China in rec
273、ent years.If the demand for automobiles in China decreases,our business,results of operationsand financial condition could be materially adversely affected.We may face challenges in expanding our business and operations internationally and our ability to conduct business in internationalmarkets may
274、be adversely affected by legal,regulatory,political and economic risks.We face challenges and risks associated with expanding our business and operations globally into new geographic markets.Forexample,following our entry into the Norwegian market in 2021,we announced our provision of products and s
275、ervices for Germany,theNetherlands,Denmark,and Sweden in October 2022.New geographic markets may have competitive conditions,user preferences,anddiscretionary spending patterns that are more difficult to predict or satisfy than our existing markets.In certain markets,we haverelatively little operati
276、ng experience and may not benefit from any first-to-market advantages or otherwise succeed.We may also faceprotectionist policies that could,among other things,hinder our ability to execute our business strategies and put us at a competitivedisadvantage relative to domestic companies.Local companies
277、 may have a substantial competitive advantage because of their greaterunderstanding of,and focus on,the local users,as well as their more established local brand names,requiring us to build brandawareness in that market through greater investments in advertising and promotional activity.Internationa
278、l expansion may also requiresignificant capital investment,which could strain our resources and adversely impact current performance,while adding complexity toour current operations.We are subject to PRC law in addition to the laws of the foreign countries in which we operate.If any of ouroverseas o
279、perations,or our associates or agents,violate such laws,we could become subject to sanctions or other penalties,which couldnegatively affect our reputation,business and operating results.Table of Contents20In addition,we may face operational issues that could have a material adverse effect on our re
280、putation,business and results ofoperations,if we fail to address certain factors including,but not limited to,the following:lack of acceptance of our products and services,and challenges of localizing our offerings to appeal to local tastes;conforming our products to regulatory and safety requiremen
281、ts and charging and other electric infrastructures;failure to attract and retain capable talents with international perspectives who can effectively manage and operate localbusinesses;challenges in identifying appropriate local business partners and establishing and maintaining good working relation
282、shipswith them;availability,reliability and security of international payment systems and logistics infrastructure;challenges of maintaining efficient and consolidated internal systems,including technology infrastructure,and of achievingcustomization and integration of these systems with the other p
283、arts of our technology platform;challenges in replicating or adapting our company policies and procedures to operating environments different from that ofChina;national security policies that restrict our ability to utilize technologies that are deemed by local governmental regulators topose a threa
284、t to their national security;the need for increased resources to manage regulatory compliance across our international businesses;compliance with privacy laws and data security laws and compliance costs across different legal systems;heightened restrictions and barriers on the transfer of data betwe
285、en different jurisdictions;differing,complex and potentially adverse customs,import/export laws,tax rules and regulations or other trade barriers orrestrictions related compliance obligations and consequences of non-compliance,and any new developments in these areas;business licensing or certificati
286、on requirements of the local markets;challenges in the implementation of BaaS and other innovative business models in countries and regions outside of China;exchange rate fluctuations;political instability and general economic or political conditions in particular countries or regions,including terr
287、itorial ortrade disputes,war and terrorism;andsignificant capital required for entering into new geographical markets,including cost of promoting NIO brand in the newmarkets,building sales and services networks and power infrastructures.Failure to manage these risks and challenges could negatively a
288、ffect our ability to expand our business and operations overseasas well as materially and adversely affect our business,financial condition and results of operations.Table of Contents21We face challenges in developing our subscription business and leasing programs in the new markets,and our vehicles
289、 used for oursubscription may be stolen,damaged or destroyed before being returned to us,or our car leasing partners may run into operationaldifficulties,which could negatively impact our business,financial condition,results of operations and prospectus.We began to offer subscription offerings in Ge
290、rmany,the Netherlands,Denmark and Sweden starting from October 2022,whichrequires significant capital.We may incur losses or otherwise fail to introduce the service successfully.For example,we may incurinsufficient utilization rate of our fleets under the subscription offering and therefore only gen
291、erate lower-than-expected revenue.We alsoface risks in connection with the expansion of our customer base in Europe through our subscription offering.For example,customers ofour vehicle subscription may have a higher-than-expected rate of default due to macroeconomic factors or if we fail to correct
292、ly assesstheir creditworthiness,which would result in increased costs incurred by our company.In addition,we cooperate with partners in European market who engage in car leasing business.We sell vehicles to the carleasing partners who will then lease the cars purchased from us to the end customers.A
293、s such customers would use NIO vehicles andenjoy certain NIO services,such as using NIO app and entering into NIO House,if our car leasing partners run into any operationaldifficulties,our users experience may be negatively affected,our brand name could be compromised.Furthermore,given that our vehi
294、cles are typically stored in unroofed parking lots under the vehicle subscription offering,forcemajeure events such as flooding,fires or hail may affect a large number of our vehicles.This type of parking lot also has an increasedrisk of theft or vandalism.Such events may cause us to incur large,uni
295、nsured damages,deprive us of a significant portion of ourinventory and reduce customer satisfaction if we cannot deliver subscribed vehicles.In addition,vehicles provided to customers underour vehicle subscription service may be stolen,damaged or destroyed before being returned to us.While we carry
296、insurance for ourvehicles,the insurance coverage may not be sufficient.As of December 31,2022,our subscription business and leasing programs were not material.However,with the expansion ofthe subscription business and leasing programs in the future,any of the foregoing could have a material adverse
297、effect on our business,financial condition,results of operations and prospects.We are subject to the risk of a decrease in the residual value of used vehicles under our subscription offering.As the actual owner of the vehicles under the subscription offering,we are exposed to the risk that the subsc
298、ription value of ourexisting vehicles could decrease after new vehicle models are released,which will reduce our asset value.We are also exposed to the riskthat the market value of the vehicles returned at the end of the relevant subscription term may be lower than the calculated residual valueat th
299、e time the relevant subscription contract was entered into,which may in turn increases the likelihood that the future subscriptionprice for the returned vehicle turns out to be lower than expected.A decline in the value of used vehicles can be caused by a broad rangeof external factors affecting the
300、 vehicle market,including adverse changes in customer confidence and preferences,economic conditions,government policies,exchange rates,marketing programs,price pressure in the new vehicle,the actual or perceived safety or reliabilityof vehicles,the price of raw materials regained from recycling or
301、scrapping,or technological developments.Uncertainties may also exist regarding the internal methods for calculating residual values.Although we continuously employresidual value models and monitor used vehicle prices,demand and supply trends and other factors to forecast residual values,theassumptio
302、ns on which residual value assessments are based may prove to be incorrect.In addition,in the case that actual residual values,due to changes in market or regulatory conditions,turn out to be lower than the amounts calculated for our subscription pricing,provisions for residual value risk may be ins
303、ufficient.Similarly,if the market value of the used cars decreases,we may have to recordwrite-downs beyond its existing reserves for used vehicle inventory risk.Finally,a significant decrease in the value of used vehicles maycreate pricing pressure for our new car business if customers are not willi
304、ng to pay significantly higher prices in monthly subscriptionpayments as a consequence of decreased residual values.As a result of the above factors,with the expansion of the subscription business in the future,if the market value of the usedvehicles under our subscription service is significantly b
305、elow our estimate,it may have a material adverse effect on our business,assets,results of operations,financial condition and prospects.Table of Contents22Our industry and its technology are rapidly evolving and may be subject to unforeseen changes.Developments in alternativetechnologies or improveme
306、nts in the internal combustion engine may materially and adversely affect the demand for our electricvehicles.We operate in Chinas electric vehicle market,which is rapidly evolving and may not develop as we anticipate.We faceunanticipated risks such as the increase of lithium price,which may reduce
307、the demand of battery electric vehicle and negatively impacton our business.Also,the regulatory framework governing the industry is currently uncertain and may remain uncertain for theforeseeable future.As our industry and our business develop,we may need to modify our business model or change our s
308、ervices andsolutions.These changes may not achieve expected results,which could have a material adverse effect on our results of operations andprospects.Furthermore,we may be unable to keep up with changes in electric vehicle technology and,as a result,our competitiveness maysuffer.Our research and
309、development efforts may not be sufficient to adapt to changes in electric vehicle technology.As technologieschange,we plan to upgrade or adapt our vehicles and introduce new models in order to provide vehicles with the latest technology,inparticular digital technologies,which could involve substanti
310、al costs and lower our return on investment for existing vehicles.There canbe no assurance that we will be able to compete effectively with alternative vehicles or source and integrate the latest technology into ourvehicles,against the backdrop of our rapidly evolving industry.Even if we are able to
311、 keep pace with changes in technology and developnew models,our prior models could become obsolete more quickly than expected,potentially reducing our return on investment.Developments in alternative technologies,such as advanced diesel,ethanol,fuel cells or compressed natural gas,orimprovements in
312、the fuel economy of the internal combustion engine,may materially and adversely affect our business and prospects inways we do not currently anticipate.For example,fuel which is abundant and relatively inexpensive in China,such as compressednatural gas,may emerge as consumers preferred alternative t
313、o petroleum based propulsion.Any failure by us to successfully react tochanges in existing technologies could materially harm our competitive position and growth prospects.We may be unable to adequately control the costs associated with our operations.We have required significant capital to develop
314、and grow our business,including entering into more markets,developing ourproducts as well as building our brands.We expect to incur significant costs which will impact our profitability,including research anddevelopment expenses as we roll out new models and improve existing models,raw material proc
315、urement costs and selling anddistribution expenses as we build our brand and market our vehicles.In addition,we may incur significant costs in connection with ourservices,including providing power solutions and honoring our commitments under our service package.Our ability to becomeprofitable in the
316、 future will not only depend on our ability to successfully market our vehicles and other products and services but also tocontrol our costs.If we are unable to cost efficiently design,manufacture,market,sell and distribute and service our vehicles andservices,our margins,profitability and prospects
317、 will be materially and adversely affected.We could experience cost increases or disruptions in supply of raw materials or other components used in our vehicles.We incur significant costs related to procuring raw materials required to manufacture and assemble our vehicles.We use variousraw materials
318、 in our vehicles including aluminum,steel,carbon fiber,non-ferrous metals such as copper,lithium,nickel as well as cobalt.The prices for these raw materials fluctuate depending on factors beyond our control,including market conditions and global demand forthese materials,and could adversely affect o
319、ur business and operating results.Our business also depends on the continued supply ofbatteries for our vehicles.Battery manufacturers may refuse to supply electric vehicle manufacturers to the extent they determine that thevehicles are not sufficiently safe.We are exposed to multiple risks relating
320、 to availability and pricing of quality lithium-ion battery cells.These risks include:the inability or unwillingness of current battery manufacturers to build or operate battery manufacturing plants to supplythe numbers of lithium-ion cells required to support the growth of the electric or plug-in h
321、ybrid vehicle industry as demandfor such cells increases;disruption in the supply of cells due to quality issues or recalls by the battery manufacturers;andan increase in the cost of raw materials,such as lithium,nickel and cobalt,used in lithium-ion cells.Table of Contents23In the long term,we inte
322、nd to supplement cells from our suppliers with cells manufactured by us,which are customized to meetour specific requirements.However,our efforts to develop and manufacture such battery cells have required,and may continue torequire,significant investments,and there can be no assurance that we will
323、always be able to achieve these targets in the timeframes thatwe have planned or at all.If we are unable to do so,we may have to curtail our planned vehicle production or procure additional cellsfrom suppliers at potentially greater costs,either of which may harm our business and operating results.F
324、urthermore,currency fluctuations,tariffs or shortages in petroleum and other economic or political conditions may result insignificant increases in freight charges and raw material costs.Substantial increases in the prices for our raw materials or componentswould increase our operating costs,and cou
325、ld reduce our margins.In addition,a growth in popularity of electric vehicles without asignificant expansion in battery production capacity could result in shortages which would result in increased costs in raw materials to usor impact of prospects.We are dependent on our suppliers,many of whom are
326、our single source suppliers for the components they supply.Each of our vehicle models uses a great amount of purchased parts from suppliers,many of whom are currently our singlesource suppliers for these components,and we expect that this will be similar for any future vehicle we may produce.The sup
327、ply chainexposes us to multiple potential sources of delivery failure or component shortages.While we obtain components from multiple sourceswhenever possible,similar to other players in our industry,many of the components used in our vehicles are purchased by us from asingle source.To date,we have
328、not qualified alternative sources for most of the single sourced components used in our vehicles and wedo not maintain long-term agreements with some of our single source suppliers.Furthermore,qualifying alternative suppliers or developing our own replacements for certain highly customized component
329、s ofour vehicles,may be time-consuming and costly.Any disruption in the supply of components,whether or not from a single sourcesupplier,could temporarily disrupt the production of our vehicles until an alternative supplier is fully qualified by us or is otherwise ableto supply us with the required
330、material.There can be no assurance that we would be able to successfully retain alternative suppliers orsupplies on a timely basis,on acceptable terms or at all.Changes in business conditions,force majeure and other factors beyond ourcontrol or which we do not presently anticipate,could also affect
331、our suppliers ability to deliver components to us on a timely basis.Forexample,the global supply constraint of semiconductor chips had negatively impacted our production activity and volume,as a result ofwhich,we temporarily suspended the vehicle production activity in the F1 Plant for five working
332、days starting from March 29,2021.InMay 2021,our vehicle delivery was adversely impacted for several days due to the volatility of semiconductor supply and certainlogistical adjustments.In April 2022,we suspended our vehicle production as a result of the component shortages.In July 2022,theproduction
333、 of our ET7 and EC6 was constrained by the short supply of casting parts.In addition,the COVID-19 pandemic has broughtsubstantial supply chain volatilities relating to the components that are essential to our vehicle production.Although the reducedproduction volume and number of vehicles delivered as a result of supply chain volatilities have not had a material impact on ourliquidity and capital r