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(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of event requiring this shell company report.
For the transition period from to .
Commission file number: 001-38638
NIO Inc.
(Exact Name of Registrant as Specified in Its Charter)
N/A
(Translation of Registrant’s Name into English)
Cayman Islands
(Jurisdiction of Incorporation or Organization)
Building 19, No. 1355, Caobao Road, Minhang District
Shanghai, People’s Republic of China
(Address of Principal Executive Offices)
Wei Feng, Chief Financial Officer
Building 19, No. 1355, Caobao Road, Minhang District
Shanghai, People’s Republic of China
Telephone: +8621-6908 2018
Email: ir@nio.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
American depositary shares (each representing one
Class A ordinary share),par value US$0.00025 per share
Class A ordinary shares, par value US$0.00025 per
share
Class A ordinary shares, par value US$0.00025 per
share
Trading Symbol
NIO
Name of Each Exchange on Which Registered
New York Stock Exchange
9866
NIO
The Stock Exchange of Hong Kong Limited
The Singapore Exchange Securities Trading
Limited
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
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(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report:
As of December 31, 2023, there were (i) 1,932,063,749 Class 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 ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange 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 ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
Non-accelerated filer
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Accelerated filer
Emerging growth company
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act. ☐
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
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 the financial statements of the registrant
included 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-based
compensation received by any of the registrant’s 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. GAAP
☐
International Financial Reporting Standards as
International Accounting Standards Board
issued by
the
☐
Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). ☐ 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) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
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INTRODUCTION
FORWARD-LOOKING INFORMATION
PART I.
TABLE OF CONTENTS
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
ITEM 4. INFORMATION ON THE COMPANY
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8. FINANCIAL INFORMATION
ITEM 9. THE OFFER AND LISTING
ITEM 10. ADDITIONAL INFORMATION
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II.
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G. CORPORATE GOVERNANCE
ITEM 16H. MINE SAFETY DISCLOSURE
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J. INSIDER TRADING POLICIES
ITEM 16K. CYBERSECURITY
PART III.
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
SIGNATURES
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INTRODUCTION
In this annual report on Form 20-F, except where the context otherwise requires and for purposes of this annual report only:
● “ADAS” refers to advanced driver assistance system;
● “ADR” refers to the American depositary receipt that evidences the ADS;
● “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 of the VIEs;
● “Beijing NIO” refers to Beijing NIO Network Technology Co., Ltd., one of the VIEs;
● “China” or the “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong
Kong, Macau and Taiwan;
● “Class A ordinary shares” refer to our Class A ordinary shares, par value US$0.00025 per share;
● “Class B ordinary shares” refer to the Class B ordinary shares that we historically authorized and issued, par value
US$0.00025 per share. All the authorized Class B ordinary shares were redesignated as Class A ordinary shares at the
annual general meeting held on August 25, 2022;
● “Class C ordinary shares” refer to our Class C ordinary shares, par value US$0.00025 per share;
● “EV” refers to electric passenger vehicle;
● “Hong Kong” or “HK” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
● “Hong Kong Listing Rules” refer to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited, 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 Exchange” refers to the stock market (excluding the option market) operated by the
Hong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the
Hong Kong Stock Exchange;
● “Main Board of the Singapore Exchange” refers to the stock market operated by The Singapore Exchange Securities
Trading Limited;
● “NEVs” refer to new energy passenger vehicles;
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● “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 information, include the VIEs, namely Beijing
NIO, 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$0.00025 per
share;
● “Relevant Period” refers to the period commencing from the date on which any of our shares first become secondary listed
on the Hong Kong Stock Exchange to and including the date immediately before the day on which the secondary listing is
withdrawn from the Hong Kong Stock Exchange. As of the date of this annual report, we are in the Relevant Period;
● “RMB” or “Renminbi” refers to the legal currency of China;
● “Singapore Exchange” refers to The Singapore Exchange Securities Trading Limited; and
● “US$,” “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 report
are made at a rate of RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023 as set forth in the H.10 statistical
release of the Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts
could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all. Unless
otherwise specified, the description of our vehicles, services and business models in this report refers to our business in China.
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FORWARD-LOOKING INFORMATION
This annual report contains forward-looking statements that reflect our current expectations and views of future events. These
forward-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 materially
different 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 Information—D. Risk Factors,” that may cause our actual
results, performance or achievements to be materially 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 have based these forward-
looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are
not limited to, statements about our goals and growth strategies, our future business development, financial condition and results of
operations, our expectations regarding demand for and market acceptance of our products and services, and assumptions underlying or
related to any of the foregoing.
Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may
later be found to be incorrect. Our actual results could be materially different from our expectations. Moreover, we operate in an evolving
environment. New risk factors and uncertainties emerge from time to time, and it is not possible for our management to predict all risk
factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-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 not
grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material adverse effect
on our business and the market price of our ADSs or Class A ordinary shares. In addition, the rapidly evolving nature of the electric
vehicles industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition
of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual
results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking
statements.
The forward-looking statements made in this annual report relate only to events or information as of the date on which the
statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are
made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we refer to in this
annual report and exhibits to this annual report completely and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
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PART I.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
Our Holding Company Structure and Contractual Arrangements with the VIEs
NIO Inc. is not an operating company in China but a Cayman Islands holding company with no equity ownership in its
consolidated variable interest entities, or VIEs. We conduct our operations in China (i) primarily through our PRC subsidiaries, and (ii) to
a much lesser extent, through the VIEs, namely Beijing NIO, Anhui NIO AT, and Anhui NIO DT, with each of which we maintain
contractual arrangements, and their subsidiary. We have also established subsidiaries in the United States, Germany, the United
Kingdom, Norway and other overseas jurisdictions to promote our services and businesses, entering into business contracts with offshore
counterparties and holding overseas intellectual properties.
PRC laws and regulations (i) restrict and impose conditions on foreign investment in value-added telecommunication services,
including without limitation, performing internet information services as well as holding certain related licenses; and (ii) prohibit foreign
investment in certain services related to autonomous driving as well as the holding of licenses by foreign entities. Additionally, in
practice, subject to the qualifications set by China Banking and Insurance Regulatory Commission for foreign shareholders of the
insurance brokerage companies, the China Banking and Insurance Regulatory Commission typically would not approve the
establishment of foreign-invested insurance brokerage companies which perform insurance brokerage services and hold certain related
licenses. Accordingly, we operate these businesses in China through Beijing NIO, Anhui NIO AT, and Anhui NIO DT, or as referred to as
the VIEs, and their subsidiary. We rely on contractual arrangements among our PRC subsidiaries, the VIEs and their nominee
shareholders to maintain a controlling financial interest as the primary beneficiary of each VIE (as defined in U.S. GAAP, ASC 810).
Under U.S. GAAP, we consolidate each VIE within our consolidated financial statements. Specifically, we operate value-added
telecommunication services, including without limitation, performing internet information services, and hold certain related licenses,
through Beijing NIO. We rely on the contractual arrangements with Anhui NIO DT and its shareholders to operate insurance brokerage
services. NIO Insurance Broker Co., Ltd., the subsidiary of Anhui NIO DT, currently holds an insurance brokerage license and provides
insurance brokerage services primarily related to vehicles and properties. We intend to obtain requisite licenses for certain supporting
functions during the development of our assisted and intelligent driving technology through Anhui NIO AT. As of the date of this annual
report, the business operations of the VIEs are insignificant in relation to our total revenues and net loss. As used in this annual report,
“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 information, include the VIEs and their respective subsidiaries, where
applicable.
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The following diagram illustrates our corporate structure, including our principal subsidiaries and the VIEs, as of the date of this
annual report:
In April 2018, we entered into a series of contractual arrangements through one of our PRC subsidiaries with Beijing NIO and
its shareholders, which were replaced by a new set of contractual arrangements we entered into with the same parties in April 2021.
Further, in November 2022 and December 2022, we entered into a series of contractual arrangements through our respective PRC
subsidiaries with each of Anhui NIO AT and Anhui NIO DT, respectively, and their respective shareholders, to conduct certain future
operations in China. These contractual arrangements enable us to:
● receive the economic benefits that could potentially be significant to the VIEs in consideration for the services provided by
our subsidiaries;
● exercise effective control over the VIEs; and
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● hold an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC
law.
These contractual agreements include an exclusive business cooperation agreement, exclusive option agreement, equity pledge
agreement, loan agreement and power of attorney. For more details of these contractual arrangements, see “Item 4. Information on the
Company—C. Organizational Structure—Contractual Agreements with the VIEs and Their Shareholders.”
Beijing NIO, Anhui NIO AT, and Anhui NIO DT and its subsidiary, taking into account all of their respective business with or
without foreign investment restrictions and prohibitions under PRC laws, contributed insignificantly to our total revenues, accounting for
nil, nil and RMB13.8 million (US$2.0 million) for the years ended December 31, 2021, 2022 and 2023, respectively. The VIEs provided
services internally to our subsidiaries, and such services amounted to RMB0.6 million, RMB89.2 million and RMB110.5 million
(US$15.6 million) for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2021, 2022 and 2023, none
of Beijing 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 holding
equity interests in a holding company incorporated in the Cayman Islands. We do not have any equity interests in the VIEs. However, as
a result of contractual arrangements, we have a controlling financial interest over and are considered the primary beneficiary of each of
the VIEs, and we have consolidated the financial results, pursuant to U.S. GAAP, each of these entities in our consolidated financial
statements. However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the
VIEs and we may incur substantial costs to enforce the terms of the arrangements. If the VIEs or the nominee shareholders fail to
perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual
arrangements that give us effective control over the VIEs. Furthermore, if we are unable to maintain effective control, we would not be
able to continue to consolidate the financial results of the VIEs in our financial statements. See “Item 3. Key Information—D. Risk
Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders to hold a
controlling financial interest over each VIE, which may not be as effective as direct ownership in providing operational control” and
“Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIEs have conflicts of
interest with us, which may materially and adversely affect our business and financial condition.”
There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations
and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the
VIEs and their nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to contractual arrangements will
be 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 PRC
laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have
broad discretion to take action in dealing with such violations or failures. Our Cayman Islands holding company, our PRC subsidiaries
and the VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the
enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs
and our company as a whole. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC
government deems that our VIE arrangements do not comply with PRC laws, or if these PRC laws change, we could be subject to severe
penalties or be forced to relinquish our interests in those operations.”
PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted
overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue
to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to
significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing
Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in
our operations and the value of our ADSs.”
Risks and uncertainties regarding the interpretation and enforcement of laws and quickly evolving rules and regulations in
China, could result in a material adverse change in our operations and the value of our ADSs. 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 and regulations could limit the legal protections available to you and us.”
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Permissions Required from the PRC Authorities for Our Operations
Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries
and the VIEs have obtained the requisite licenses and permits from the PRC government authorities that are material for the main
business operations of our holding company, our PRC subsidiaries and the VIEs in China, including, among others, a license for
conducting internet content provision services, or the ICP license, and the insurance brokerage license. In addition, we have completed
the filing process for our electric passenger vehicle investment project with the authorities in Anhui province and have been included in
the Ministry of Industry and Information Technology’s catalogue of approved manufacturers. Given the uncertainties of interpretation
and implementation of laws and regulations and the enforcement practice by government authorities, we may be required to obtain
additional licenses, permits, filings or approvals for our business operations in the future. For more detailed information, see “Item 3.
Key Information—D. Risk Factors—Risks Related to Doing Business in China—We 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 our
PRC subsidiaries and the VIEs.”
Meanwhile, the PRC government has sought to exert more oversight and control over capital raising activities of listed
companies that are conducted overseas and/or foreign investment in China-based issuers. In December 2021, the Cyberspace
Administration of China, or the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which
took effect on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical
information infrastructure operators that procure internet products and services and network platform operators that conduct data process
activities 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 overseas
offerings and listings by domestic companies, including the Trial Administrative Measures of Overseas Securities Offering and Listing
by Domestic Companies and five supporting guidelines, which were formally implemented on March 31, 2023. According to these rules,
domestic enterprises like us that have completed overseas listings are not required to file with CSRC immediately, but shall carry out
filing procedures as required if we conduct refinancing or fall within other circumstances that require filing with the CSRC. Any failure
to obtain or delay in obtaining such approval or completing such procedures could subject us to restrictions and penalties imposed by the
CSRC, the CAC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, delays of or
restrictions on the repatriation of the proceeds from our offshore offerings into China, or other actions that could materially and adversely
affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. For more detailed
information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of or the filing
with the CSRC or other PRC government authorities may be required in connection with our future offshore listings and capital raising
activities, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or filing.”
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The Holding Foreign Companies Accountable Act
Pursuant to the Holding Foreign Companies Accountable Act, which was enacted on December 18, 2020 and further amended
by the Consolidated Appropriations Act, 2023, signed into law on December 29, 2022, or the HFCAA, if the SEC determines that we
have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company
Accounting Oversight Board (United States), or the PCAOB, for two consecutive years, the SEC will prohibit our shares or ADSs from
being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the
PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered
public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively
listed NIO Inc. as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal
year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination
and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely
registered public accounting firms. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we
filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be identified as a Commission-
Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023. Each year,
the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among
other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely
accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue
an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the
filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a
Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject
to the prohibition on trading under the HFCAA. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to
Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for
our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with
the benefits of such inspections” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our
ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or
investigate completely auditors located in China. The delisting or prohibition of trading of the ADSs, or the threat of their being delisted
or prohibited from trading, may materially and adversely affect the value of your investment.”
Cash Flows through Our Organization
NIO Inc. is a holding company with no material operations of its own. We conduct our operations in China (i) primarily through
our PRC subsidiaries, and (ii) to a much lesser extent, the VIEs and their subsidiary. As a result, although other means are available for
us to obtain financing at the holding company level, NIO Inc.’s ability to pay dividends to the shareholders and to service any debt it may
incur may depend upon dividends paid by our PRC subsidiaries and service fees paid by the VIEs in China. If any of our subsidiaries
incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to NIO Inc. In
addition, our PRC subsidiaries are permitted to pay dividends to NIO Inc. only out of their retained earnings, if any, as determined in
accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and the VIEs are required to make
appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as
cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial
Review and Prospects — B. Liquidity and Capital Resources — Holding Company Structure.”
Under PRC laws and regulations, our PRC subsidiaries and the VIEs are subject to certain restrictions with respect to paying
dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of
China is also subject to examination by the banks designated by the State Administration of Foreign Exchange of the PRC, or SAFE. The
amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the VIEs and
their subsidiaries in which we have no legal ownership, totaling RMB38,902.1 million, RMB40,720.9 million and RMB42,256.2 million
(US$5,951.7 million) as of December 31, 2021, 2022 and 2023, respectively, and the net assets of the VIEs and their subsidiaries that are
restricted was nil, RMB50.0 million and RMB54.7 million (US$7.7 million) as of December 31, 2021, 2022 and 2023, respectively. For
risks relating to the fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing
Business in China—We may rely on distributions by our PRC subsidiaries for our financing requirements, and any limitation on our PRC
subsidiaries to make payments to us could have a material and adverse effect on our business.”
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For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within
China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay dividends in the future.
Hypothetical pre-tax earnings
Tax on earnings at statutory rate of 25% (2)
Net earnings available for distribution
Withholding tax at standard rate of 10% (3)
Net distribution to Parent/Shareholders
Notes:
Tax calculation (1)
100 %
(25)%
75 %
(7.5)%
67.5 %
(1) For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not
considering 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 purposes of this hypothetical example, the
table 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 invested
enterprise to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the foreign
invested enterprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty
arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example,
the table above assumes 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 the
VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. NIO Inc. and its
subsidiaries extended loans to the nominee shareholders of the VIEs for their investment in the VIEs, with outstanding principal amount
of RMB0.1 million, RMB50.1 million and RMB50.1 million (US$7.1 million) as of December 31, 2021, 2022 and 2023, respectively. In
addition, NIO Inc. and its subsidiaries also extended loans to the VIEs for operations with outstanding principal amount of RMB7.0
million, RMB32.8 million and RMB86.9 million (US$12.2 million) as of December 31, 2021, 2022 and 2023, respectively.
Pursuant to the exclusive business cooperation agreements between NIO Co., Ltd., or Shanghai NIO, a wholly-owned
subsidiary of our company, and Beijing NIO, Shanghai NIO may adjust the payment time and payment method of the service fees, and
Beijing NIO will accept any such adjustment. For the years ended December 31, 2021, 2022 and 2023, no service under the contractual
arrangements was provided by Shanghai NIO and no service fee was paid by Beijing NIO to Shanghai NIO accordingly. We intend to
determine the amount of service fee and payment method based on the working capital needs of Shanghai NIO and Beijing NIO, and
settle such service fees accordingly in the future. Pursuant to a separate service agreement, for the years ended December 31, 2021, 2022
and 2023, Shanghai NIO paid Beijing NIO RMB0.6 million, RMB0.7 million and RMB0.7 million (US$0.1 million) for services
provided by Beijing NIO.
Pursuant to the exclusive business cooperation agreement dated November 30, 2022 between Anhui NIO Autonomous Driving
Technology Co., Ltd., or Anhui NIO AD, a wholly-owned subsidiary of our company, and Anhui NIO AT, Anhui NIO AD may adjust the
payment time and payment method of the service fees, and Anhui NIO AT will accept any such adjustment. For the years ended
December 31, 2022 and 2023, no service under the contractual arrangements was provided by Anhui NIO AD and no service fee was
paid by Anhui NIO AT to Anhui NIO AD accordingly. We intend to determine the amount of service fee and payment method based on
the working capital needs of Anhui NIO AD and Anhui NIO AT, and settle such service fees accordingly in the future. Pursuant to a
separate service agreement, for the years ended December 31, 2021, 2022 and 2023, Anhui NIO AD paid Anhui NIO AT nil, RMB70.1
million and RMB58.4 million (US$8.2 million) for services provided by Anhui NIO AT.
Pursuant to the exclusive business cooperation agreement dated December 12, 2022 between NIO Holding Co., Ltd., or NIO
China, a PRC subsidiary in which we hold 92.114% controlling equity interests, and Anhui NIO DT, NIO China may adjust the payment
time and payment method of the service fees, and Anhui NIO DT will accept any such adjustment. For the years ended December 31,
2022 and 2023, no service under the contractual arrangements was provided by NIO China and no service fee was paid by Anhui NIO
DT to NIO China accordingly. We intend to determine the amount of service fee and payment method based on the working capital needs
of NIO China and Anhui NIO DT, and settle such service fees accordingly in the future.
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NIO Inc. has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on our
ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to
operate 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 investment in our ADSs or
Class A ordinary shares, see “Item 10. Additional Information — E. Taxation.”
As of December 31, 2021, 2022 and 2023 and for the years ended December 31, 2021, 2022 and 2023, none of Beijing NIO,
Anhui NIO AT and Anhui NIO DT had significant operations or any material assets or liabilities. As a result, the financial information
related to the consolidated VIEs were insignificant to our consolidated financial statements.
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Summary of Risk Factors
An investment in our ADSs and Class A ordinary shares involves significant risks. Below is a summary of material risks we
face, organized under relevant headings. These risks are discussed more fully in “Item 3. Key Information—D. Risk Factors.”
Risks Related to Our Business and Industry
Risks and uncertainties related to our business and industry include, but are not limited to, the following:
● The automotive market is highly competitive, and we face significant challenges in competing in our industry;
● Our ability to develop and manufacture vehicles of sufficient quality and appeal to customers on schedule and on a large
scale is still evolving;
● We have not been profitable, and only generated positive cash flows from operations in certain periods;
● We have limited experience in independent manufacturing. Any delays in the manufacturing and launching of our products,
or ramping up of our production capacity, could have a material adverse effect on our business;
● Manufacturing in collaboration with partners is subject to risks;
● The unavailability, reduction or elimination of government and economic incentives or governmental policies which are
favorable for electric vehicles and domestically produced vehicles could have a material adverse effect on our business;
● Our current or future vehicles may not perform in line with customer expectations;
● We may face challenges providing our power solutions;
● Our products and services may not be generally accepted by our users. If we are unable to provide or arrange satisfactory
products or customer service for our users, our business and 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; and
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● We rely on Battery Asset Company to provide Battery as a Service to our users. If Battery Asset Company fails to achieve
smooth and stable operations, our Battery as a Service may be materially and adversely affected.
Risks Related to Our Corporate Structure
We 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 operations in China
(i) primarily through our PRC subsidiaries, and (ii) to a much lesser extent, the VIEs with which we maintain contractual
arrangements, and their subsidiary. Investors in our ADSs and Class A ordinary shares thus are not purchasing equity
interests in the VIEs in China but instead are purchasing equity interests in a Cayman Islands holding company. If the PRC
government deems that our VIE arrangements do not comply with PRC laws, or if these PRC laws change, we could be
subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company in the Cayman
Islands, the VIEs and investors of our company face uncertainty about potential future actions by the PRC government that
could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the
financial performance of the VIEs and our company as a group;
● We rely on contractual arrangements with the VIEs and their shareholders to hold a controlling financial interest over each
VIE, which may not be as effective as direct ownership in providing operational control;
● Our ability to enforce the equity pledge agreements between us and the VIEs’ shareholders may be subject to limitations
based on PRC laws and regulations; and
● The shareholders of the VIEs have conflicts of interest with us, which may materially and adversely affect our business and
financial condition.
Risks Related to Doing Business in China
We face risks and uncertainties related to doing business in China in general, including, but not limited to, the following:
● Changes in China’s political or social conditions or government policies could have a material and adverse effect on our
business and results of operations;
● Risks and uncertainties regarding the interpretation and enforcement of laws and quickly evolving rules and regulations in
China, could result in a material adverse change in our operations and the 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 and regulations could limit the legal protections available
to you and us”;
● The PRC government’s significant authority in regulating our operations and its oversight and control over capital raising
activities of listed companies conducted overseas by, and foreign investment in, China-based issuers could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide
regulations in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key
Information — D. Risk Factors — Risks Related to Doing Business in China — The PRC government’s significant
oversight over our business operation could result in a material adverse change in our operations and the value of our
ADSs”;
● The approval of or the filing with the CSRC or other PRC government authorities may be required in connection with our
future offshore listings and capital raising activities, and, if required, we cannot predict whether or for how long 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-related
business, automotive businesses and other business carried out by our PRC subsidiaries and the VIEs;
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● The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial
statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with
the benefits of such inspections; and
● Our ADSs may be prohibited from being traded in the United States under the HFCAA in the future if the PCAOB
determines that it is unable to inspect or investigate completely auditor located in China. The delisting or prohibition of
trading of the ADSs, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the
value of your investment. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing
Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the
PCAOB is unable to inspect or investigate completely auditors located in China. The delisting or prohibition of trading of
the ADSs, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of
your investment.”
Risks Related to Our ADSs and Class A Ordinary Shares
In addition to the risks described above, we are subject 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 Stock
Exchange;
● If we change the listing venue of our securities, you may lose the shareholder protection mechanisms afforded under the
regulatory 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 in
substantial losses to investors;
● If securities or industry analysts do not publish research or reports about our business, or if they adversely change their
recommendations regarding our Class A ordinary shares and/or ADSs, the market price for our Class A ordinary shares
and/or ADSs and trading volume could decline; and
● Our dual-class voting structure will limit the holders of our Class A ordinary shares and ADSs to influence corporate
matters, provide certain shareholders of ours with substantial influence and could discourage others from pursuing any
change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
Risks Related to Our Business and Industry
The automotive market is highly competitive, and we face significant challenges in competing in our industry.
The automotive market is highly competitive and we expect it will become more competitive in the future as additional players
enter into this market. We compete with both NEV and ICE vehicles targeting the mid- to high-end segment. Many of our current and
potential competitors, particularly international competitors, have significantly greater financial, engineering, manufacturing, marketing
and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, promotion, sale
and support of their products. Factors affecting competition include, among others, pricing, technological innovation, product design and
performance, product quality and safety, service and charging options, user experience, and manufacturing efficiency. Increased
competition may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely
affect our business, financial condition, operating results and prospects.
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Moreover, we expect competition in the China automotive market to intensify in the future in light of intense price competition
and phase-out of government subsidies. Increasing competition may lead to lower vehicle unit sales and increasing inventory, which may
result in downward price pressure and may adversely affect our business, financial condition, results of operations, and prospects.
Furthermore, our competitive advantage as the company with the first-to-market and leading EV volume-manufactured domestically in
China will be severely compromised if our competitors begin making deliveries earlier than expected, or offer more favorable pricing
than we do. We may also be affected by the growth of the overall China automotive market. There have been fluctuations in the retail
sales of the passenger vehicles in China in recent years. If the demand for automobiles in China decreases, our business, results of
operations and financial condition could be materially adversely affected. Our ability to successfully compete in our industry will be
fundamental to our future success in existing and new markets and our market share. There can be no assurance that we will be able to
compete successfully in our markets. If our competitors introduce new vehicles or services that successfully compete with or surpass the
quality or performance of our vehicles or services at more competitive prices, we may be unable to satisfy existing customers or attract
new customers at the price levels that would allow us to generate attractive rates of return on our investment.
You should consider our business and prospects in light of the risks and challenges we face in our industry, including, among other
things, with respect to our ability to:
● design and produce safe, reliable and quality vehicles on an ongoing basis;
● build a well-recognized and respected brand;
● establish and expand our customer base;
● successfully market our vehicles and services;
● competitively price our products and services, and successfully anticipate the sales volume of our vehicle products and the
take-rate of services provided to users;
● improve and maintain our operational efficiency;
● maintain a reliable, secure, high-performance and scalable technology infrastructure;
● successfully develop and protect our core technologies;
● attract, retain and motivate talented employees;
● anticipate and adapt to changing market conditions, including technological developments and changes in competitive
landscape; and
● navigate 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.
Furthermore, our vehicles are highly technical products that will require maintenance and support. If we were to cease or cut
back operations, even years from now, buyers of our vehicles from years earlier might encounter difficulties in maintaining their vehicles
and obtaining satisfactory support. We also believe that our service offerings, including user confidence in our ability to provide our
power solutions and honor our obligations under our service package, will be key factors in marketing our vehicles. As a result,
consumers will be less likely to purchase our vehicles now if they are not convinced that our business will succeed or that our operations
will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing
business relationships with us if they are not convinced that our business will succeed.
Our ability to develop and manufacture vehicles of sufficient quality and appeal to customers on schedule and on a large scale is still
evolving.
Our future business depends in large part on our ability to execute on our plans to develop, manufacture, market and sell our
electric vehicles. We plan to manufacture our vehicles in higher volumes than our present production capabilities.
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Our continued development and manufacturing of our current and future vehicle models are and will be subject to risks,
including with respect 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;
● delays in delivery of final component designs to our suppliers, or delays in the development and delivery of our core
technologies and new vehicle models, such as our NIO Assisted and Intelligent Driving, or NAD, and technologies for
batteries;
● our ability to attract, recruit, hire and train skilled employees;
● quality controls;
● delays or disruptions in our supply chain;
● our ability to maintain solid partnership with our suppliers; and
● other delays in manufacturing and production capacity expansion, and cost overruns.
Currently, our product portfolio consists of the ES8, a six-seater smart electric flagship SUV, the ES7 (or the EL7), a mid-large
five-seater smart electric SUV, the ES6 (or the EL6), a five-seater all-round smart electric SUV, the EC7, a five-seater smart electric
flagship coupe SUV, the EC6, a five-seater smart electric coupe SUV, the ET9, a smart electric executive flagship, the ET7, a smart
electric flagship sedan, the ET5, a mid-size smart electric sedan, and the ET5T, a smart electric tourer. Our vehicles may not meet
customer expectations and our future models may not be commercially viable. Historically, automobile customers have expected auto
companies to periodically introduce new and improved vehicle models. In order to meet these expectations, we may be required to
introduce new vehicle models and enhanced versions of existing vehicle models. To date, we have limited experience designing, testing,
manufacturing, marketing and selling our electric vehicles and therefore cannot assure you that we will be able to meet customer
expectations.
Any of the foregoing could 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 periods. We
incurred net losses of RMB4,016.9 million, RMB14,437.1 million and RMB20,719.8 million (US$2,918.3 million) for the years ended
December 31, 2021, 2022 and 2023, respectively. In addition, although we generated positive operating cash flows in 2021, we had
negative operating cash flows of RMB3,866.0 million and RMB1,381.5 million (US$194.6 million) in 2022 and 2023, respectively.
There can be no assurance that we will not experience liquidity problems in the future. We may not be able to fulfill our
obligations in providing vehicles, embedded products or services to our users in respect of advances from customers, the failure of which
may negatively affect our cash flow position. If we fail to generate sufficient revenue from our operations, or if we fail to maintain
sufficient cash and financing, we may not have sufficient cash flows to fund our business, operations and capital expenditure and our
business and financial position will be adversely affected.
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We have made significant up-front investments in research and development, power network, service network, and sales and
marketing to rapidly develop and expand our business. We expect to continue to invest significantly in research and development, sales
and service network, and in production capacity expansion, to further develop and expand our business, and these investments may not
result in an increase in revenue or positive cash flow on a timely basis, or at all. For example, we are working on the development of
electric vehicles targeting the mass market, assisted and intelligent driving technologies, other core technologies, and smart devices. We
cannot assure you that we will be able to compete successfully against existing or future competitors in those new areas. Additionally, the
electric vehicle industry is witnessing a trend where numerous market players are resorting to aggressive pricing strategies to carve out a
larger market share. Maintaining our current margins could become increasingly challenging amidst this price-cutting competition.
Adjusting our pricing may become essential to remain competitive, while this could lead to a direct contraction of our margin levels, and
adversely affect our financial condition and results of operations.
We may continue to record net losses and negative operating cash flows in the near future. We may not generate sufficient
revenues, or we may incur substantial losses for a number of reasons, including lack of demand for our vehicles and services, increasing
competition, challenging macro-economic environment, as well as other risks discussed herein, and we may incur unforeseen expenses,
or encounter difficulties, complications and delays in generating revenue or achieving profitability. If we are unable to achieve
profitability, we may have to reduce the scale of our operations, which may impact our business growth and adversely affect our financial
condition and results of operations. In addition, our continuous operation depends on our capability to improve operating cash flows as
well as our capacity to obtain sufficient external equity or debt financing. If we do not succeed in doing so, we may have to limit the
scale of our operations, which may limit our business growth and adversely affect our financial condition and results of operations.
We have limited experience in independent manufacturing. Any delays in the manufacturing and launching of our products, or
ramping up of our production capacity, could have a material adverse effect on our business.
Auto companies often experience delays in the design, manufacture and commercial release of new vehicle models. We had
been, and will continue to target a broader market with our future vehicles, and to the extent we need to delay the launch of our vehicles,
our growth prospects could be adversely affected as we may fail to grow our market share. We also plan to periodically perform facelifts
or refresh existing models, which could also be subject to delays. We may introduce in the future new or unique manufacturing processes
and design features for our products. As we expand our vehicle offerings and global footprint, there is no guarantee that we will be able
to successfully and timely introduce and scale such processes or features. Furthermore, we rely on third-party suppliers for the provision
and development of many of the key components and materials used in our vehicles. To the extent our suppliers experience any delays in
providing us with or developing necessary components, we could experience delays in delivering on our timelines.
In addition, our manufacturing model has transitioned from joint manufacturing to independent manufacturing, potentially
introducing new risks. Such a shift poses additional challenges due to our limited experience in manufacturing independently. The
intricacies of overseeing all aspects of production independently, such as managing the entire production line and supervising production
personnel, may lead to unforeseen obstacles in maintaining efficiency and timeliness, and, ultimately, delays in product launch and
delivery. Therefore, we may be required to invest in more time and resources to assure that vehicles manufactured at our own facilities
comply with our quality standards and regulatory requirements. We have limited experience in managing our manufacturing workforce,
and we may also face challenges in providing training to our production personnel. Additionally, we cannot assure you that we will be
able to attract or retain qualified personnel or other highly skilled employees in a timely and cost-efficient manner. Any failure to
effectively manage or provide adequate training to our manufacturing workforce and production personnel, as well as attract or retain
qualified personnel, may result in delays in production, reduced efficiency, and potential quality issues.
Furthermore, we may need to expand or convert our existing manufacturing facilities in the future to ramp up the production of
our current and future vehicle models. The expansion or conversion of our manufacturing facilities could experience delays or other
difficulties, potentially affecting the timeline for increasing production capacity. Moreover, as we increase our production capacity and
improve our operation efficiency, significant capital may also be required to maintain our property, plant and equipment, and such costs
may exceed our current anticipations. There is substantial uncertainty about our ability to achieve these objectives. We cannot assure you
that we will be able to complete the expansion or conversion of our manufacturing bases or ramp up our production capacity on schedule
and within budget.
Any delay in production ramp-up of our current vehicle models, or in the development, manufacture, launch and production
ramp-up of our future vehicle models, including in the build-out of the manufacturing facilities in China for these models or due to any
other factors, or in refreshing or performing facelifts to existing models, could subject us to customer complaints and materially and
adversely affect our reputation, demand for our vehicles, results of operations and growth prospects.
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Manufacturing in collaboration with partners is subject to risks.
In the past, we partnered with Anhui Jianghuai Automobile Group Co., Ltd. (formerly known as Anhui Jianghuai Automobile
Co., Ltd.), or JAC, a major state-owned automobile manufacturer in China, for the joint manufacturing of our vehicles in the first
advanced manufacturing base, or the F1 Plant, and the second advanced manufacturing base, or the F2 Plant. Under our previous joint
manufacturing arrangement, we and JAC jointly manufactured a series of our vehicle models in the F1 Plant and the F2 Plant. We were
in charge of vehicle development and engineering, trademarks and technology licensing, supply chain management, 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, was responsible for parts assembly and operation management.
We entered into definitive agreements with JAC in December 2023, pursuant to which we agreed to acquire the manufacturing
equipment and assets of the F1 Plant and the F2 Plant from JAC for a total consideration of approximately RMB3.16 billion, excluding
tax. The asset transfer was completed in December 2023. In addition, we have completed the filing process for our electric passenger
vehicle investment project with the authorities in Anhui province and have been included in the Ministry of Industry and Information
Technology’s catalogue of approved manufacturers. Our manufacturing model has transitioned from joint manufacturing to independent
manufacturing. We have commenced independent manufacturing of all our current vehicles models in the F1 Plant and the F2 Plant. We
have also entered into a manufacturing technical services agreement with Jianglai, pursuant to which Jianglai provides certain technical
support and services to us in support of our independent manufacturing, including logistics and planning, production quality control, and
technical training and skills enhancement for our production personnel.
We were subject to operational risks under our previous joint manufacturing arrangement. Although we have transitioned to
independent manufacturing, we expect Jianglai to provide technical support and services to us in support of our independent
manufacturing. We may have limited ability to control the actions of Jianglai and its performance under the manufacturing technical
services agreement. In addition, to the extent JAC or Jianglai are subject to negative publicity or harm to their reputation relating to their
business, we may also suffer negative publicity or harm to our reputation by virtue of our association with them. Any of the foregoing
could adversely affect our business, financial condition and results of operations.
The unavailability, reduction or elimination of government and economic incentives or governmental policies which are favorable for
electric vehicles and domestically produced vehicles could have a material adverse effect on our business.
Our growth has benefited significantly from the government subsidies, economic incentives and government policies that
support the growth of new energy vehicles. Favorable government incentives and subsidies in China include one-time government
subsidies, exemption from vehicle purchase tax, exemption from license plate restrictions in certain cities, preferential utility rates for
charging facilities and more. Changes in government subsidies, economic incentives and government policies to support NEVs could
adversely affect the results of our operations.
China’s central government provided subsidies for purchases of certain NEVs until 2022 and reviews and further adjusts the
subsidy standard on an annual basis. We have seen a general decrease in the amount of government subsidies available to purchase of
NEVs in recent years. For example, the 2020 subsidy standard, effective from April 23, 2020, reduces the base subsidy amount in general
by 10% for each NEV, and sets subsidies for around two million vehicles as the upper limit of annual subsidy scale. The 2022 subsidy
standard was further reduced by 30% compared to the standard of 2021. In addition, the subsidy policy for the purchase of NEVs in 2022
was terminated on December 31, 2022, and that subsidy will no longer be granted to vehicles where car licenses are issued after
December 31, 2022. We believe that our sales performance in 2021, 2022 and 2023 was negatively affected by the reduction in the
subsidy standard to some extent. In addition, local governments in China have been implementing incentives and subsidy policies for
consumers, such as NEV replacement subsidies. If these favorable government incentives and subsidies are scaled back in the future, it
could potentially reduce consumers’ willingness to purchase NEVs, thereby negatively impacting our vehicle sales.
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Our vehicle sales may also be impacted by government policies such as tariffs on imported vehicles and foreign investment
restrictions in the industry. The tariff in China on imported passenger vehicles (other than those originating in the United States of
America) was reduced to 15% starting from July 1, 2018. As a result, pricing advantage of domestically manufactured vehicles could be
diminished. There used to be a certain limitation on foreign ownership of automakers in China, but for automakers of NEVs, such limit
was lifted in 2018. Further, pursuant to the Special Administrative Measures (Negative List) for Foreign Investment Access (2021
Version), or 2021 Negative List, most recently jointly promulgated by the Ministry of Commerce of the PRC and the National
Development and Reform Commission of the PRC, or the NDRC, on December 27, 2021 and took effect on January 1, 2022, the limit on
foreign ownership of automakers for ICE passenger vehicles was also lifted. As a result, foreign NEV competitors could build wholly-
owned facilities in China without the need for a domestic joint venture partner. These changes could affect the competitive landscape of
the NEV industry and reduce our pricing advantage, which may adversely affect our business, results of operations and financial
condition.
Apart from vehicle purchase subsidies, China’s central government has adopted an NEV credit scheme that incentivizes OEMs
to increase the production and sale of NEVs. On June 29, 2023, the Ministry of Industry and Information Technology of the PRC, the
Ministry of Finance, the Ministry of Commerce, the General Administration of Customs of the PRC, and the State Administration for
Market Regulation, jointly promulgated the Decision on Amending Measures for the Parallel Administration of the Average Fuel
Consumption and New Energy Vehicle Credits of Passenger Vehicle Enterprises, which took effect on August 1, 2023. Under these
measures, each of the vehicle manufacturers and vehicle importers above a certain scale is required to, among other things, maintain its
new energy vehicles credits, or the NEV credits, and corporate average fuel consumption credits, above zero, regardless of whether
NEVs or ICE vehicles are manufactured or imported by it, and NEV credits can be earned only by manufacturing or importing NEVs.
Therefore, NEV manufacturers will enjoy preferences in obtaining and calculating NEV credits. Additionally, the Ministry of Industry
and Information Technology will establish an NEV credits pool for passenger vehicle enterprises to store or withdraw positive NEV
credits, and decide whether to open such pool before July 30 each year based on the average fuel consumption of passenger vehicle
enterprises across the country and the supply and demand of NEV credits. The positive NEV credits stored in the credit pool do not have
a carryover ratio requirement and are valid for five years. Furthermore, NEV credits are equal to the aggregate actual scores of a vehicle
manufacturer or a vehicle importer minus its aggregate targeted scores. The actual scores shall be calculated by multiplying the score of
each new energy vehicle model, which depends on various metrics such as the driving range, battery energy efficiency and the rated
power of fuel cell systems, and is calculated based on formula published by the Ministry of Industry and Information Technology (in the
case of a battery electric vehicle, the NEV credit of each vehicle is calculated by multiplying 0.0034 by the vehicle’s mileage, adding 0.2
to the result, and then multiplying the total by the mileage adjustment coefficient, battery energy density adjustment coefficient, and
electricity consumption coefficient), by the respective production or import volume, while the targeted scores shall be calculated by
multiplying the annual production or import volume of traditional ICEs of a vehicle manufacturer or importer by the NEV credit ratio set
by the Ministry of Industry and Information Technology. The NEV credit ratios are 14%, 16% and 18% for the years of 2021, 2022 and
2023. Excess positive NEV credits, or the automotive regulatory credits, are tradable and may be sold to other enterprises through a
credit trading scheme established by the Ministry of Industry and Information Technology while excess positive corporate average fuel
consumption credits can only be carried forward or transferred among related parties. Negative NEV credits can be offset by purchasing
automotive regulatory credits from other manufacturers or importers. We have earned positive NEV credits through manufacturing new
energy vehicles and sold some of our automotive regulatory credits to other vehicle manufacturers or importers. We generated revenue
from the sale of automotive regulatory credits totaled RMB516.5 million, RMB67.3 million and RMB10.6 million (US$1.5 million) in
2021, 2022 and 2023, respectively. The credits earned are calculated based on the formula published by the Ministry of Industry and
Information Technology, which is dependent on various metrics such as vehicle mileage and battery energy efficiency. There is no
guarantee that we will continue to earn a similar level or amount of credits going forward. Moreover, as the prices for automotive
regulatory credits are subject to market demand, which affects the amount of regulatory credits generated by other vehicle manufacturers
during a given period, we cannot assure you that we will continue to sell our automotive regulatory credits at the current price or a higher
price. Any changes in government policies to restrict or eliminate such automotive regulatory credits trading could adversely affect our
business, financial condition and results of operations.
On June 19, 2023, the Ministry of Industry and Information Technology, the Ministry of Finance and the State Taxation
Administration jointly promulgated the Announcement on Continuing and Optimizing the Vehicle Purchase Tax Reduction and
Exemption Policies for New Energy Vehicles. Pursuant to such announcement, the NEVs purchased during the period from January 1,
2024 to December 31, 2025, shall be exempt from vehicle purchase tax, with the amount of tax exemption for each new energy
passenger vehicle not exceeding RMB30,000, and the vehicle purchase tax on the NEVs purchased during the period from January 1,
2026 to December 31, 2027, shall be reduced by half, with the amount of tax reduction for each new energy passenger vehicle not
exceeding RMB15,000.
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Such negative influence and our undermined sales performance resulted therefrom could continue. Furthermore, China’s central
government provides certain local governments with funds and subsidies to support the roll-out of charging infrastructure. See “Item 4.
Information on the Company—B. Business Overview—Regulations—Favorable Government Policies Relating to New Energy Vehicles
in the PRC.” These policies are subject to change and beyond our control. We cannot assure you that any changes would be favorable to
our business. Furthermore, any reduction, elimination, delayed payment or discriminatory application of government subsidies and
economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of
electric vehicles, fiscal tightening or other factors may result in the diminished competitiveness of the alternative fuel vehicle industry
generally or our electric vehicles in particular. In addition, as we seek to increase our revenues from vehicle sales, we may also
experience an increase in accounts receivable relating to government subsidies. However, the collection of the government subsidies is
subject to the appropriation arrangement and cadence of the governmental authority. Any uncertainty or delay in collection of the
government subsidies may also have an adverse impact on our financial condition. For more details, please refer to “10. Other Non-
current Assets” set forth in our consolidated financial statements included elsewhere in this annual report. Any of the foregoing could
materially and adversely affect our business, results of operations, financial condition and prospects.
Our current or future vehicles may not perform in line with customer expectations.
Our current or future vehicles may not perform in line with customers’ expectations. For example, our vehicles may not have
the durability or longevity of other vehicles in the market, and may not be as easy and convenient to repair as other vehicles in the
market. Any product defects or any 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 on 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 patterns
as well as other factors. For example, a customer’s use of his or her electric vehicle as well as the frequency with which he or she charges
the battery can result in additional deterioration of the battery’s ability to hold a charge.
Furthermore, our vehicles may contain defects in design and manufacture that may cause them not to perform as expected or
that may require repair. We have delivered vehicles based on NIO Technology 2.0, or NT2.0, with certain features of the NAD, and plan
to gradually turn on more features of the NAD. We cannot assure you that the NAD will ultimately perform in line with expectations.
Our vehicles use a substantial amount of software code to 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 of
reference by which to evaluate the long-term performance of our systems and vehicles. There can be no assurance that we will be able to
detect 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 need
to delay deliveries, initiate product recalls and provide servicing or updates under warranty at our expense, which could adversely affect
our brand in our target markets and could adversely affect our business, prospects and results of operations.
We may face challenges providing our power solutions.
We provide our users with comprehensive power solutions. Our power solutions include home charger, which we refer to as
Power Home; battery swapping, which we refer to as Power Swap; supercharging piles, which we refer to as Power Charger; destination
charging piles, which we refer to as Destination Charger; and mobile charging, which we refer to as Power Mobile. In addition, we offer
our users our One Click for Power valet service where we pick up, charge and then return the vehicle. For each of our vehicle models, we
currently offer two battery options: (i) the 75 kWh battery, or the Standard Range Battery and (ii) the 100 kWh battery, or the Long
Range Battery. We expect to deliver the 150 kWh battery, or the Ultra-long Range Battery, with the next generation battery technology in
the near future. We have experienced delays in delivering our power solutions in the past, and we cannot assure you that such delays will
not occur again in the future.
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We have very limited experience in the actual provision of our power solutions to users and providing these services is subject
to challenges, including the challenges associated with sorting 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 for
Power valet services and the potential for lack of user acceptance of our services. In addition, although the Chinese government has
supported the roll-out of a public charging network, the current number of charging infrastructures is generally considered to be
insufficient. We also face uncertainties with regard to governmental support and public infrastructure as we roll out our power solutions,
including whether we can obtain and maintain access to sufficient charging infrastructure, whether we can obtain any required permits
and land use rights and complete any required filings, and whether the government support in this area may discontinue. Furthermore, we
may be subject to illegal activities perpetrated against us and our power solutions, which may disrupt our operations and damage user
confidence in our vehicles and service offerings, thereby negatively affect our business and results of operations.
Furthermore, given our limited experience in providing power solutions, there could be unanticipated challenges which may
hinder our ability to provide our solutions or make the provision of our solutions costlier than anticipated. To the extent we are unable to
meet user expectations or experience difficulties in providing our power solutions, our reputation and business may be materially and
adversely affected.
Our products and services may not be generally accepted by our users. If we are unable to provide or arrange satisfactory products or
customer service for our users, our business and reputation may be materially and adversely affected.
We aim to provide users with satisfactory products and a good customer service experience, including by providing our users
with access to a full suite of services conveniently through our mobile application and vehicle applications. In addition, we seek to
engage with our users on an ongoing basis using online and offline channels, in ways which are non-traditional for automakers. We are
also expanding our service scope to meet our users’ evolving demands. For example, in January 2021, we launched NIO Certified, our
official used car business. We have established a nationwide used vehicle business network, covering services including vehicle
inspection, evaluation, acquisition and sales. We also partner with various used car dealers through our NIO app to assist users in
completing their used car transactions more efficiently and conveniently. In addition, we have also started to offer auto financing
arrangements to our users directly through our subsidiary, NIO Financial Leasing Co., Ltd., in late 2020. New service offerings will
subject us to unknown risks. In addition, we may from time to time roll out new vehicle models and upgraded versions of existing
vehicle models to meet the evolving expectations and demands of our users. However, we cannot assure you that our products and
services, including new vehicle models or upgraded versions of existing vehicle models, our service package and energy package, our
power solution services, our used car service, our auto financing services or our efforts to engage with our users using both our online
and offline channels, will be successful, which could impact our revenues as well as our customer satisfaction and marketing.
Our servicing will partially be carried out through third parties which we certified. Although such servicing partners may have
experience in servicing other vehicles, we and such partners have very limited experience in servicing our vehicles. Servicing electric
vehicles 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 their
satisfaction, or that we and our partners will have sufficient resources to meet these service requirements in a timely manner as the
volume 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 adversely affect our sales, results of operations and prospects.
We are dependent on our suppliers, many of whom are 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 single
source suppliers for these components, and we expect that this will be similar for any future vehicle we may produce. The supply chain
exposes us to multiple potential sources of delivery failure or component shortages. While we obtain components from multiple sources
whenever possible, similar to other players in our industry, many of the components used in our vehicles are components we purchased
from a single source. To date, we have not qualified alternative sources for most of the single sourced components used in our vehicles
and we do not maintain long-term agreements with some of our single source suppliers. In addition, part of our supply chain is
geographically concentrated. The lack of geographic diversification in our suppliers could lead to increased costs and delays in
production of our vehicles.
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Qualifying alternative suppliers or developing our own replacements for certain highly customized components of our vehicles,
may be time-consuming and costly. Any disruption in the supply of components, whether or not from a single source supplier, could
temporarily disrupt the production of our vehicles until an alternative supplier is fully qualified or is otherwise able to supply us with the
required material. There can be no assurance that we would be able to successfully retain alternative suppliers or supplies on a timely
basis, on acceptable terms or at all. Furthermore, our collaboration with startup suppliers poses a potential risk to our operations. These
suppliers may lack the experience and resources to effectively manage their supply chains, leading to potential disruptions in the delivery
of goods or services to us. In addition, operational inefficiencies within these suppliers may lead to inconsistencies in product or service
quality, thereby affecting our own ability to deliver high-quality products or services to our customers. Some of these suppliers may have
limited financial resources and rely on external financing to sustain their operations. If they experience financial constraints or fail to
sustain their operations, it could impact their ability to meet our requirements, potentially causing delays or disruptions in our operations.
Changes in business conditions, force majeure and other factors beyond our control or which we do not presently anticipate,
could also affect our suppliers’ ability to deliver components to us on a timely basis. For example, the global supply constraint of
semiconductor chips had negatively impacted our production activity and volume, as a result of which, we temporarily suspended the
vehicle production activity in the F1 Plant for five working days starting from March 29, 2021. In May 2021, our vehicle delivery was
adversely impacted for several days due to the volatility of semiconductor supply and certain logistical adjustments. In April 2022, we
suspended our vehicle production as a result of the component shortages. In July 2022, the production of our ET7 and EC6 was
constrained by the short supply of casting parts. Although the reduced production volume and number of vehicles delivered as a result of
supply chain volatilities have not had a material impact on our liquidity and capital resources, our results of operations in these periods
have been negatively affected. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our
business, financial condition and results of operations may be adversely affected by natural disasters, health epidemics and other
outbreaks.” While we have been working closely with supply chain partners and have been actively seeking alternative sources of supply,
our production activity and results of operations may be impacted should the supply chain volatilities continue. In addition, even if we
succeed in locating alternative sources of supply, cooperating with new suppliers will subject us to uncertainties with respect to the
reliability of these suppliers and the quality of the components they provide. We cannot assure you that the new sources of component
supply will enable us to meet the quality, price, design, engineering, and production standards, as well as the production volumes to
satisfy the market demand for our vehicles. Any defects of or quality issues with these components or any non-compliance incidents
associated with these third-party suppliers could result in quality issues with our vehicles and hence compromise our brand image and
results of operations. Any of the foregoing could materially and adversely affect our results of operations, financial condition and
prospects.
We rely on Battery Asset Company to provide Battery as a Service to our users. If Battery Asset Company fails to achieve smooth and
stable operations, our Battery as a Service may be materially and adversely affected.
On August 20, 2020, we introduced the Battery as a Service, or BaaS, which allows users to purchase electric vehicles and
subscribe for the usage of batteries separately. If users opt to purchase a vehicle and subscribe for the battery under the BaaS, they can
enjoy a deduction off the original vehicle purchase price and pay a monthly subscription fee for the battery.
For each user under the BaaS model, we sell a battery to Wuhan Weineng Battery Asset Co., Ltd., or the Battery Asset
Company, and the user subscribes for the usage of the battery from the Battery Asset Company. The service we provide to our users
under the BaaS relies, in part, on the smooth operation of and stability and quality of service delivered by the Battery Asset Company,
which we cannot guarantee. We invested in the Battery Asset Company with CATL, Hubei Science Technology Investment Group Co.,
Ltd. and a subsidiary of Guotai Junan International Holdings Limited, which we refer to as the Initial BaaS Investors in this annual
report. We and the Initial BaaS Investors each invested RMB200 million and held 25% equity interests in the Battery Asset Company at
its establishment. In December 2020, April 2021, August 2021 and July 2022, respectively, the Battery Asset Company entered into
agreements with new and existing investors for additional financing. We refer to the Initial BaaS Investors together with the other
investors of the Battery Asset Company that subsequently joined as the Battery Asset Company Investors. As of the date of this annual
report, we beneficially own approximately 19.4% of the equity interests in the Battery Asset Company. As a result, we have significant
influence, but not control, over the business operations of the Battery Asset Company. If it fails in delivering smooth and stable
operations, we will suffer from negative customer reviews and even returns of products or services and our reputation may be materially
and adversely affected.
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Additionally, given that we generate a portion of our total revenues from sales of battery purchases and provision of service to
the Battery Asset Company, our results of operations and financial performance will be negatively affected if the Battery Asset Company
fails to operate smoothly. The Battery Asset Company may finance the purchase of batteries through issuance of equity and debt or bank
borrowing. If the Battery Asset Company is unable to obtain future financings from the Battery Asset Company Investors or other third
parties to meet its operational needs, it may not be able to make payments to us for the batteries purchased from us on time, to continue
purchasing batteries from us and providing them to our users through battery subscription, or to otherwise maintain its healthy and
sustainable operations. On the other hand, if the Battery Asset Company bears a significant rate of customer default on its payment
obligations, its results of operations and financial performance may be materially impacted, which will in turn reduce the value of our
and the Battery Asset Company Investors’ investments in the Battery Asset Company. In addition, in furtherance of the BaaS, we agreed
to provide a guarantee to the Battery Asset Company for the default in payment of monthly subscription fees from users, while the
maximum amount of guarantee that can be claimed shall not be higher than the accumulated service fees we receive from the Battery
Asset Company. As the BaaS user base is expanding, if an increased number of default occurs, our results of operations and financial
performance will be negatively affected. As of December 31, 2023, the guarantee liability we provided to Battery Asset Company was
immaterial.
Reservations for our vehicles are subject to cancellation.
Reservations for our vehicles are subject to cancellation by the customer until delivery of the vehicle. We have experienced
cancellations in the past. While we require a deposit of less than 2.0% of the manufacturer’s suggested retail price, such deposit becomes
non-refundable after a certain period of time upon which the reservation will be automatically confirmed. Notwithstanding the non-
refundable deposit, our users may still cancel their reservations for many reasons outside of our control. The potentially long wait from
the time a reservation is made until the time the vehicle is delivered could also impact user decisions on whether to ultimately make a
purchase, due to potential changes in preferences, competitive developments and other factors. If we encounter delays in the delivery our
current or future vehicle models, we believe that a significant number of reservations may be cancelled. As a result, no assurance can be
made that reservations will not be cancelled and will ultimately result in the final purchase, delivery, and sale of the vehicle. Such
cancellations could harm our financial condition, business, prospects and operating results.
We may be subject to risks associated with assisted and intelligent driving technologies.
We provide an enhanced advanced driver assistance system, or ADAS, and plan to offer higher levels of assisted and intelligent
driving functionalities, and through our research and development, we continually update and improve our assisted and intelligent
driving technologies. Regulatory, safety and reliability issues, or the perception thereof, many of which are beyond our control, could
cause the public, our users or our potential business partners to lose confidence in the assisted and intelligent driving solutions in general.
The safety of such technology depends in part on end users of vehicles equipped with ADAS and higher levels of assisted and intelligent
driving systems, as well as other drivers, pedestrians, other obstacles on the roadways or other unforeseen events. For example, there
have been traffic accidents involving vehicles equipped with ADAS, including our NIO vehicles. Even though the actual causes of such
traffic accidents may not be associated with the use of ADAS, they resulted in, and any future similar accidents could result in,
significant negative publicity, and, in the future, could result in suspension or prohibition of vehicles equipped with ADAS and other
assisted and intelligent driving systems, as well as regulatory investigations, recalls, systems or features modifications and related
actions. In addition, to the extent accidents associated with our ADAS and other assisted and intelligent driving systems (once launched)
occur, we could be subject to liability, government scrutiny and further regulation. For example, our research and development activities
related to ADAS are subject to regulatory restrictions on surveying and mapping, as well as driverless road testing. Any further
tightening of regulatory restrictions could significantly impede our development of assisted and intelligent driving technologies. Any of
the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.
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We may face challenges in expanding our business and operations internationally and our ability to conduct business in international
markets may 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. For
example, following our entry into the Norwegian market in 2021, we announced our provision of products and services for Germany, the
Netherlands, Denmark, and Sweden in October 2022. New geographic markets may have competitive conditions, user preferences, and
discretionary spending patterns that are more difficult to predict or satisfy than our existing markets. In certain markets, we have
relatively little operating experience and may not benefit from any first-to-market advantages or otherwise succeed. We may also face
protectionist policies that could, among other things, hinder our ability to execute our business strategies and put us at a competitive
disadvantage relative to domestic companies. For example, in September 2023, the European Commission announced that an
investigation will be launched on whether to impose punitive tariffs to protect European Union producers against lower-priced Chinese
electric vehicle imports it says are benefiting from state subsidies. If there are any adverse findings during or upon the conclusion of such
investigation, the European Commission may impose countervailing duties or punitive tariffs, which may in turn negatively affect our
operations and expansions in Europe. Local companies may have a substantial competitive advantage because of their greater
understanding of, and focus on, the local users, as well as their more established local brand names, requiring us to build brand
awareness in that market through greater investments in advertising and promotional activity. International expansion may also require
significant capital investment, which could strain our resources and adversely impact current performance, while adding complexity to
our current operations. We are subject to PRC law in addition to the laws of the foreign countries in which we operate. If any of our
overseas operations, or our associates or agents, violate such laws, we could become subject to sanctions or other penalties, which could
negatively affect our reputation, business and operating results.
In addition, we may face operational issues that could have a material adverse effect on our reputation, business and results of
operations, 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 requirements and charging and other electric infrastructures;
● failure to attract and retain capable personnel with international perspectives who can effectively manage and operate local
businesses;
● challenges in identifying appropriate local business partners and establishing and maintaining good working relationships
with 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 achieving
customization and integration of these systems with the other parts of our technology platform;
● challenges in replicating or adapting our company policies and procedures to operating environments different from that of
China;
● national security policies that restrict our ability to utilize technologies that are deemed by local governmental regulators to
pose a threat 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 between different jurisdictions;
● differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or
restrictions related compliance obligations and consequences of non-compliance, and any new developments in these areas;
● business licensing or certification requirements of the local markets;
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● 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 territorial or
trade disputes, war and terrorism; and
● significant capital required for entering into new geographical markets, including cost of promoting our current and future
brands in the new markets, building sales and services networks and power infrastructures.
Failure to manage these risks and challenges could negatively affect our ability to expand our business and operations overseas
as well as materially and adversely affect our business, financial condition and results of operations.
Rising international political tension, including changes in U.S. and international trade policies, particularly with regard to China,
may adversely impact our business and operating results.
The U.S. government has made statements and taken certain actions that may lead to potential changes to U.S. and international
trade policies towards China. In January 2020, the “Phase One” agreement was signed between the United States and China on trade
matters. However, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to
international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, or
other trade matters. Any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand
for our products and services, impact the competitive position of our products or prevent us from selling products in certain countries.
Moreover, many of the recent policy updates in the U.S., including the Clean Network project initiated by the U.S. Department of State
in August 2020 and the Entity List regime maintained and regularly updated by the U.S. Bureau of Industry and Security, may have
unforeseen implications for our business. In addition, in October 2022, the U.S. Commerce Department’s Bureau of Industry and
Security imposed additional export controls on certain advanced computing semiconductor chips, integrated circuits, semiconductor
manufacturing items and related transactions. These recent export controls are, in part, intended to restrict China’s ability to obtain
advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. The implementation,
interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is uncertain. These
actions and/or other actions that may be taken by the governments of either the U.S. or China, or both (including in response to recent
increased tensions), could hinder our ability to transfer our U.S.-origin software to China, source U.S.-origin software and components or
otherwise access U.S. technology, which could materially and adversely affect our business, results of operations and financial condition.
If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the
U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on
our business, financial condition and results of operations.
Additionally, the United States and various foreign governments have imposed controls, export license requirements and
restrictions on the import or export of technologies and products (or voiced the intention to do so), especially related to semiconductor
chips, AI and other high-tech areas, which may have a negative impact on our business, financial condition and results of operations.
Moreover, political tensions between the United States and China have escalated due to various incidents relating to trade dispute,
tensions in the Taiwan Strait, U.S. sanctions on certain Chinese government officials and Chinese companies, and various restrictions
relating to the Chinese semiconductor industry. On August 9, 2023, the Biden administration of the United States released an executive
order directing the Department of Treasury to create an outbound foreign direct investment review program that will require reporting on
or (in more narrow circumstances) will prohibit investments by U.S. persons involving “covered national security technologies and
products,” which is defined to include “sensitive technologies and products in the semiconductors and microelectronics, quantum
information technologies, and AI sectors that are critical for the military, intelligence, surveillance, or cyber-enabled capabilities” of
China. The Department of Treasury issued an advance notice of proposed rulemaking, which provided a conceptual framework for
outbound investment controls focused on China. As of the date of this annual report, the final rules implementing the administrative
order have not taken effect yet, and the scope of the outbound foreign direct investment review program may be materially different from
what is currently contemplated by the advance notice. In response, China has implemented, and may further implement, measures in
response to the changing trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiated by the U.S.
Moreover, our deployment of advanced core technologies in ADAS, whether developed internally or acquired from third parties, may
exposes us to risks associated with sanctions imposed by the U.S. government.
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We may also face protectionist policies that could, among other things, hinder our ability to execute our business strategies and
put us at a competitive disadvantage relative to domestic companies. For example, in September 2023, the European Commission
announced that an investigation will be launched on whether to impose punitive tariffs to protect European Union producers against
lower-priced Chinese electric vehicle imports it says are benefiting from state subsidies. If there are any adverse findings during or upon
the conclusion of such investigation, the European Commission may impose countervailing duties or punitive tariffs, which may in turn
negatively affect our operations and expansions in Europe.
Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities
between the two major economies, which would have a material adverse effect on global economic conditions and the stability of global
financial markets. Any of these factors could have a material adverse effect on our business, prospects, financial condition, and results of
operations.
We face challenges in developing and operating our subscription business and leasing, and our vehicles used for subscription may be
stolen or destroyed, or our car leasing partners may run into operational difficulties, which could negatively impact our business.
We began to offer subscription offerings in Germany, the Netherlands, Denmark and Sweden starting from October 2022, which
requires significant capital. We may incur losses or otherwise fail to introduce the service successfully. For example, we may incur
insufficient utilization rate of our fleets under the subscription offering and therefore only generate lower-than-expected revenue. We also
face risks in connection with the expansion of our customer base in Europe through our subscription offering. For example, customers of
our vehicle subscription may have a higher-than-expected rate of default due to macroeconomic factors or if we fail to correctly assess
their 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 car
leasing partners who will then lease the cars purchased from us to the end customers. As such customers would use NIO vehicles and
enjoy certain NIO services, such as using NIO app and entering into NIO House, if our car leasing partners run into any operational
difficulties, our users’ experience may be negatively affected, our brand name could be compromised.
Furthermore, given that our vehicles are typically stored in unroofed parking lots under the vehicle subscription offering, force
majeure events such as flooding, fires or hail may affect a large number of our vehicles. This type of parking lot also has an increased
risk of theft or vandalism. Such events may cause us to incur large, uninsured damages, deprive us of a significant portion of our
inventory and reduce customer satisfaction if we cannot deliver subscribed vehicles. In addition, vehicles provided to customers under
our vehicle subscription service may be stolen, damaged or destroyed before being returned to us. While we carry insurance for our
vehicles, the insurance coverage may not be sufficient.
With the expansion of the subscription business and leasing programs into international markets in the future, any of the
foregoing could have a material adverse 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 economic owner of the vehicles under the subscription offering, we are exposed to the risk that the market value of our
existing vehicles could decrease after new vehicle models are released, which will reduce our asset value. We are also exposed to the risk
that the market value of the vehicles returned at the end of the subscription term may be lower than the calculated residual value at the
time the subscription contract was entered into, which may in turn increases the likelihood that the future subscription price 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 range of external
factors affecting the 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 reliability
of vehicles, the price of raw materials regained from recycling or scrapping, or technological developments.
Uncertainties may also exist regarding the internal methods for calculating residual values. Although we continually employ
residual value models and monitor used vehicle prices, demand and supply trends and other factors to forecast residual values, the
assumptions 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 insufficient. Similarly, if the market value of the used cars decreases, we may have to record
write-downs beyond its existing reserves for used vehicle inventory risk. Finally, a significant decrease in the value of used vehicles may
create pricing pressure for our new car business if customers are not willing to pay significantly higher prices in monthly subscription
payments as a consequence of decreased residual values.
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As a result of the above factors, with the expansion of the subscription business in the future, if the market value of the used
vehicles under our subscription service is significantly below our estimate, it may have a material adverse effect on our business, assets,
results of operations, financial condition and prospects.
Our industry is rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies may materially
and adversely affect the demand for our electric vehicles.
We operate in the electric vehicle market, which is rapidly evolving and may not develop as we anticipate. We face
unanticipated risks such as an increase in lithium prices, which may reduce the demand of battery electric vehicle and negatively impact
on our business. Also, the regulatory framework governing the industry is currently uncertain and may remain uncertain for the
foreseeable future. As our industry and our business develop, we may need to modify our business model or change our services and
solutions. These changes may not achieve expected results, which could have a material adverse effect on our results of operations and
prospects.
Furthermore, we may be unable to keep up with changes in electric vehicle technology and, as a result, our competitiveness may
suffer. Our research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As technologies
change, we plan to upgrade or adapt our vehicles and introduce new models in order to provide vehicles with the latest technology, in
particular digital technologies, which could involve substantial costs and lower our return on investment for existing vehicles. There can
be no assurance that we will be able to compete effectively with alternative vehicles or source and integrate the latest technology into our
vehicles, against the backdrop of our rapidly evolving industry. Even if we are able to keep pace with changes in technology and develop
new 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, or
improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in
ways we do not currently anticipate. For example, fuel which is abundant and relatively inexpensive in China, such as compressed
natural gas, may emerge as consumers’ preferred alternative to petroleum based propulsion. Any of our failure to successfully react to
changes 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 and grow our business, including entering into more markets, developing our
products as well as building our brands. We expect to incur significant costs which will impact our profitability, including research and
development expenses as we roll out new models and improve existing models, raw material procurement costs and selling and
distribution expenses as we build our brand and market our vehicles. In addition, we may incur significant costs in connection with our
services, including providing power solutions and honoring our commitments under our service package. Our ability to become
profitable in the future will not only depend on our ability to successfully market our vehicles and other products and services but also to
control our costs. If we are unable to cost efficiently design, manufacture, market, sell and distribute and service our vehicles and
services, our margins, profitability and prospects 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 various
raw materials 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 for
these materials, and could adversely affect our business and operating results. Our business also depends on the continued supply of
batteries for our vehicles. Battery manufacturers may refuse to supply electric vehicle manufacturers to the extent they determine that the
vehicles are not sufficiently safe. We are exposed to multiple risks relating 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 supply
the numbers of lithium-ion cells required to support the growth of the electric or plug-in hybrid vehicle industry as demand
for such cells increases;
● disruption in the supply of cells due to quality issues or recalls by the battery manufacturers; and
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● an increase in the cost of raw materials, such as lithium, nickel and cobalt, used in lithium-ion cells.
In the long term, we intend to supplement cells from our suppliers with cells that we manufactured, which are customized to
meet our specific requirements. However, our efforts to develop and manufacture such battery cells have required, and may continue to
require, significant investments, and there can be no assurance that we will always be able to achieve these targets in the timeframes that
we have planned or at all. If we are unable to do so, we may have to curtail our planned vehicle production or procure additional cells
from suppliers at potentially greater costs, either of which may harm our business and operating results.
Furthermore, currency fluctuations, tariffs or shortages in petroleum and other economic or political conditions may result in
significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials or components
would increase our operating costs, and could reduce our margins. In addition, a growth in popularity of electric vehicles without a
significant expansion in battery production capacity could result in shortages which would result in increased costs in raw materials to us
or impact of prospects.
Our business is subject to a variety of laws and regulations regarding cybersecurity, privacy, data protection and information security
in China and elsewhere. Any failure to comply with these laws and regulations could subject us to significant adverse consequences.
We face significant challenges with respect to cybersecurity, privacy, data protection and information security in China and
other jurisdictions that we operate in, including the collection, storage, transmission and sharing of confidential information. We use our
vehicles’ electronic systems to log information about each vehicle’s use, such as charge time, battery usage, mileage and driving
behavior, in order to aid us in vehicle diagnostics, repair and maintenance, as well as to help us customize and optimize the driving and
riding experience. Our users may object to the use of this data, which may hinder our capabilities in conducting our business. We also
transmit and store certain confidential and private information of our vehicle buyers, including certain personal information such as
names, accounts, user IDs and passwords, and payment or transaction related information. Collection, transmission, possession and use
of our user’s data in conducting our business may subject us to legislative and regulatory burdens in China and other jurisdictions that
could require notification of any data breach, restrict our use of such information and hinder our ability to acquire new customers or
market to existing customers.
We are required by PRC law to ensure the confidentiality, integrity, availability and authenticity of the information of our
customers, which is also essential to maintaining their confidence in our vehicles and services. We have adopted strict information
security policies and deployed advanced measures to implement the policies, including, among others, advanced encryption technologies.
However, advances in technology, an increased level of sophistication and diversity of our products and services, an increased level of
expertise of hackers, new discoveries in the field of cryptography or others can still result in a compromise or breach of the measures that
we use. If we are unable to protect our systems, and hence the information stored in our systems, from unauthorized access, use,
disclosure, disruption, modification or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the
owners of confidential information or even subject us to fines and penalties. If users allege that we have improperly collected, used,
transmitted, released or disclosed their personal information, we could face legal claims and reputational damage. In addition, we may
incur significant expenses to comply with privacy, consumer protection and security standards and protocols imposed by laws,
regulations, industry standards or contractual obligations, some of which may not be compatible with our existing business practice. If
third parties improperly obtain and use the personal information of our users, we may be required to expend significant resources to
resolve these problems. In December 2022, we were made aware that certain user information and vehicle sales information in China
before August 2021 was for sale on the internet by third parties for illegal purposes. We followed the PRC legal requirements on data
leakage incident settlement, and also issued a public statement in China related to the incident, including providing a dedicated hotline
and an email address to respond to user queries regarding the data leakage. We have also undertaken the responsibilities for the loss that
the users may incur, if any, in connection with the data leakage. As of the date of this annual report, we were not aware of significant
issues related to the security of our electronic systems nor did we receive any claims from users.
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In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators,
both domestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase
our compliance costs and subject us to heightened risks and challenges associated with data security and protection. Significant capital
and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or
to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods
used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any of our
failure or perceived failure to prevent information security breaches or to comply with privacy policies or privacy-related legal
requirements, or any security breach that results in the unauthorized release or transfer of personally identifiable information or other
customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online
transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of
online retail and other online services generally, which may reduce the number of orders we receive.
The PRC regulatory and enforcement regime with regard to data security and data protection is evolving and may be subject to
different interpretations or significant changes. Moreover, different PRC regulatory bodies, including the Standing Committee of the
National People’s Congress of China, the Ministry of Industry and Information Technology, the CAC, the Ministry of Public Security,
and the State Administration for Market Regulation have enforced a variety of laws and regulations regarding cybersecurity, privacy, data
protection and information security with varying standards and applications in recent years, including, among others, the PRC National
Security Law, the PRC Cyber Security Law, the PRC Personal Information Protection Law, the PRC Data Security Law, the Regulations
on the Protection of the Security of Critical Information Infrastructure, the Cybersecurity Review Measures, the Several Provisions on
Automobile Data Security Management (Trial Implementation), the Administration Measures on Data Security in the Field of Industry
and Information Technology (Trial Implementation) and the Measures for the Security Assessment of Data Exit. See “Item 4.
Information on the Company—B. Business Overview—Regulations—Regulations on Internet Information Security and Privacy
Protection.” The following are examples of certain recent PRC regulatory activities in this area:
Data Security
In July 2021, the State Council of the PRC promulgated the Regulations on the Protection of the Security of Critical Information
Infrastructure, which took effect on September 1, 2021. Pursuant to this regulation, critical information infrastructure means key network
facilities or information systems of critical industries or sectors, such as public communication and information service, energy,
transportation, water conservation, finance, public services, e-government affairs and national defense science, the damage, malfunction
or data leakage of which may endanger national security, people’s livelihoods and the public interest. In December 2021, the CAC,
together with other authorities, jointly promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022 and
replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that
procure internet products and services and network platform operators that conduct data process activities must be subject to the
cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that
network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for
a cybersecurity review before any public offering at a foreign stock exchange. PRC governmental authorities may also initiate
cybersecurity review if they determine certain network products, services, or data processing activities affect or may affect national
security. As of the date of this annual report, no detailed rules or implementation rules have been issued by any authority and we have not
been informed that we are a critical information infrastructure operator by any government authorities. Furthermore, the scope of
“network products or services or data processing activities that will or may affect national security” and the scope of operators of
“critical information infrastructure” remains unclear, and the PRC government authorities may have wide discretion in the interpretation
and enforcement of the applicable laws.
In November 2021, the CAC released the Administration Regulations on Cyber Data Security (Draft for Comments). These
regulations provide that data processors refer to individuals or organizations that, during their data processing activities such as data
collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data
processing. In accordance with these regulations, data processors shall apply for a cybersecurity review for certain activities, including,
among other things, (i) the listing abroad of data processors that process the personal information of more than one million users and (ii)
any data processing activity that affects or may affect national security. However, there have been no clarifications from the authorities as
of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national
security.” In addition, these regulations require that data processors that process “important data” or are listed overseas must conduct an
annual data security assessment by itself or commission a data security service provider to do so, and submit the assessment report of the
preceding year to the municipal cybersecurity department by the end of January each year. As of the date of this annual report, there is no
definitive timetable as to when these regulations will be enacted.
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In 2021, the PRC government initiated cybersecurity reviews against a number of mobile applications operated by several US-
listed Chinese companies and prohibited applications from registering new users during the review period. We expect that cybersecurity
and data protection issues will receive greater and continued attention and scrutiny from regulators and the public going forward, which
could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection, as
well as negative publicity. If the Cybersecurity Review Measures and the enacted version of the Administration Regulations on Cyber
Data Security (Draft for Comments) mandate clearance of cybersecurity review and other specific actions to be taken by overseas listed
companies like us, we face uncertainties as to whether we can complete these additional procedures timely, or at all, which may subject
us to government enforcement actions and investigations, fines, penalties, revocation of the required licenses, suspension of our non-
compliant operations, or removal of our mobile application from the application stores, and materially and adversely affect our business
and results of operations. As of the date of this annual report, we have not been involved in any formal investigations on cybersecurity
review made by the CAC on such basis.
Personal Information and Privacy
On August 16, 2021, the CAC, the NDRC, the Ministry of Public Security, the Ministry of Industry and Information Technology
and the Ministry of Transport jointly promulgated the Several Provisions on Automobile Data Security Management (Trial
Implementation), which impose a series of additional personal information and data security protection obligations on automobile data
processors like us, including, among other things, (i) in-car processing of automobile data in principle, (ii) enhanced notification and
consent requirements, (iii) enhanced individual control over their automobile personal information, and (iv) submitting annual report for
processing automobile important data. We may be required to make further adjustments to our business practices to comply with the
personal information and data protection laws and regulations.
Many of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the
regulators. In general, compliance with the existing PRC laws and regulations, as well as additional laws and regulations that PRC
regulatory bodies may enact in the future, related to data security and personal information protection, may be costly and result in
additional expenses to us, and subject us to negative publicity, which could harm our reputation and business operations. There are also
uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice.
In addition, regulatory authorities in the U.S., Europe and elsewhere around the world have adopted or are considering a number
of legislative and regulatory proposals concerning data protection. These legislative and regulatory proposals, if adopted, and the
uncertain interpretations and application thereof could, in addition to the possibility of fines, result in an order requiring that we change
our data practices and policies, which could have an adverse effect on our business and results of operations. For example, the European
Union adopted the European Union General Data Protection Regulation, which took effect on May 25, 2018. This regulation includes
operational requirements for companies that receive or process personal data of residents of the European Economic Area, and
establishes new requirements applicable to the processing of personal data, affords new data protection rights to individuals and imposes
penalties for serious data breaches. Individuals also have a right to compensation under this regulation for financial or non-financial
losses. As we offer our products and services in European market, we are subject to provisions of this regulation.
Our business depends significantly on our ability to build our brands. We may not succeed in continuing to establish, maintain and
strengthen our brands.
Our business and prospects are heavily dependent on our ability to develop, maintain and strengthen the “NIO” brand. If we do
not continue to establish, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers.
Promoting and positioning our brand will likely depend significantly on our ability to provide high quality vehicles and services and
engage with our customers as intended and we have limited experience in these areas. In addition, we expect that our ability to develop,
maintain and strengthen the NIO brand will depend heavily on the success of our user development and branding efforts. Such efforts
mainly include building a community of online and offline users engaged with us through our mobile application, NIO Houses, NIO
Spaces as well as other branding initiatives such as our annual NIO Day. Such efforts may be non-traditional and may not achieve the
desired results. To promote our brand, we may be required to change our user development and branding practices, which could result in
substantially increased expenses, including the need to use traditional media such as television, radio and print. If we do not develop and
maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.
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Additionally, we may decide to launch one or more electric vehicle brands, positioned and priced in a manner that varies from
our existing “NIO” brand and our current vehicle models. The launch of a new brand within the electric vehicle market involves
substantial risks related to market differentiation and consumer acceptance. Establishing a clear position and price range for the new
brand in an already competitive landscape requires significant investment in branding, development and marketing efforts. We also face
the inherent uncertainty of consumer response to the new brand, which poses a risk to achieving the desired market penetration and sales
volumes. Moreover, introducing a new brand could cause potential dilution to the brand equity of our existing “NIO” brand and the
diversion of our resources, leading to potential inefficiencies. Moreover, the vehicles under the new brand could potentially cannibalize
sales from our existing vehicles, adversely affecting our current market position and revenue streams. Any of the foregoing could
materially and adversely affect our ability to grow our business and our results of operations.
In addition, if incidents occur or are perceived to have occurred, whether or not such incidents are our fault, we could be subject
to adverse publicity. In particular, given the popularity of social media, including WeChat/Weixin in China, any negative publicity,
whether true or not, could quickly proliferate and harm consumer perceptions and confidence in our brand. Furthermore, there is the risk
of potential adverse publicity related to our manufacturing and other partners, such as JAC and NIO Capital, whether or not such
publicity related to their collaboration with us. Our ability to successfully position our brand could also be adversely affected by
perceptions about the quality of JAC’s vehicles. Although we have transitioned to independent manufacturing, any product quality issues
with vehicles that were historically jointly manufactured by our partners and us could adversely harm our brand and reputation.
Furthermore, from time to time, our vehicles are evaluated and reviewed by third parties. Any negative reviews or reviews
which compare us unfavorably to competitors could adversely affect consumer perception about our vehicles.
Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and
our operations may be severely disrupted if we lose their services.
Our success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our
executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them
easily, in a timely manner, or at all. As we build our brand and become more well-known, the risk that competitors or other companies
may poach our talent increases. Our industry is characterized by high demand and intense competition for talent and therefore we cannot
assure you that we will be able to attract or retain qualified staff or other highly skilled employees. In addition, because our electric
vehicles are based on a different technology platform than traditional ICE vehicles, individuals with sufficient training in electric vehicles
may not be available to hire, and we will need to expend significant time and expense training the employees we hire. We also require
sufficient talent in areas such as software development. Furthermore, as our company is relatively young, our ability to train and integrate
new employees into our operations may not meet the growing demands of our business, which may materially and adversely affect our
ability to grow our business and our results of operations.
If any of our executive officers and key employees terminates his or her services with us, our business may be severely
disrupted, our financial condition and results of operations may be materially and adversely affected and we may incur additional
expenses to recruit, train and retain qualified personnel. We have not obtained any “key person” insurance on our key personnel. If any of
our executive officers or key employees joins a competitor or forms a competing company, we may lose customers, know-how and key
professionals and staff members. To the extent permitted by laws, each of our executive officers and key employees has entered into an
employment agreement and a non-compete agreement with us. However, if any dispute arises between our executive officers or key
employees and us, the non-competition provisions contained in their non-compete agreements may not be enforceable, especially in
China, where these executive officers reside, on the ground that we have not provided adequate compensation to them for their non-
competition obligations, which is required under PRC laws.
Our future growth is dependent on the demand for, and upon consumers’ willingness to adopt, electric vehicles.
Demand for automobile sales depends to a large extent on economic, political and social conditions in a given market and the
introduction of new vehicles and technologies. As our business grows, economic conditions and trends will impact our business,
prospects and operating results as well.
Demand for our electric vehicles may also be affected by factors directly impacting automobile prices or the cost of purchasing
and operating automobiles, such as sales and financing incentives, prices of raw materials and parts and components, cost of fuel and
governmental regulations, including tariffs, import regulation and other taxes. Volatility in demand may lead to lower vehicle unit sales,
which may result in further downward price pressure and adversely affect our business, prospects, financial condition and operating
results.
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In addition, the demand for our vehicles and services will highly depend upon the adoption by consumers of new energy
vehicles in general and electric vehicles in particular. The market for new energy vehicles is still rapidly evolving, characterized by
rapidly changing technologies, evolving government regulation and industry standards and changing consumer demands and behaviors.
Other factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include:
● perceptions about electric vehicle quality, safety, design, performance and cost, especially if adverse events or accidents
occur that are linked to the quality or safety of electric vehicles, whether or not such vehicles are produced by us or other
companies;
● perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced
technology;
● the limited range over which electric vehicles may be driven on a single battery charge and the speed at which batteries can
be recharged;
● the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge;
● concerns about electric grid capacity and reliability;
● the availability of new energy vehicles, including plug-in hybrid electric vehicles;
● improvements in the fuel economy of the internal combustion engine;
● the availability of service for electric vehicles;
● the environmental consciousness of consumers;
● access to charging stations, standardization of electric vehicle charging systems and consumers’ perceptions about
convenience and cost to charge an electric vehicle;
● the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation
requiring increased use of nonpolluting vehicles;
● perceptions about and the actual cost of alternative fuel; and
● macroeconomic factors.
Any of the factors described above may cause current or potential customers not to purchase our electric vehicles and use our
services. If the market for electric vehicles does not develop as we expect or develops more slowly than we expect, our business,
prospects, financial condition and operating results will be affected.
We depend on revenue generated from a limited number of models, and in the foreseeable future will be significantly dependent on a
limited number of models.
Our business currently depends substantially on the sales and success of a limited number of models that we have launched,
including the ES8, the ES7 (or the EL7), the ES6 (or the EL6), the EC7, the EC6, the ET9, the ET7, the ET5 and the ET5T. Historically,
automobile customers have come to expect a variety of vehicle models offered in a company’s fleet and new and improved vehicle
models to be introduced frequently. In order to meet these expectations, we plan in the future to introduce new vehicle models as well as
enhance versions of existing vehicle models. To the extent our product variety and cycles do not meet consumer expectations, or cannot
be produced on our projected timelines and cost and volume targets, our future sales may be adversely affected. Given that for the
foreseeable future our business will depend on a limited number of models, to the extent a particular model is not well-received by the
market, our sales volume could be materially and adversely affected. This could have a material adverse effect on our business,
prospects, financial condition and operating results.
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We are subject to risks related to customer credit.
We offer auto financing arrangements to users directly through our subsidiaries. Under the financing arrangements we typically
receive a small portion of the total vehicle purchase price at the commencement of the financing term, followed by a stream of payments
over the financing term. To the extent our users fail to make payments on time under any of the foregoing arrangements, our results of
operations may be adversely affected. As of December 31, 2023, the amount of auto financing receivables was RMB4,906.7 million
(US$691.1 million). As we continue to grow our business, we may increase the amount of our auto financing receivables. We may fail to
effectively manage the credit risks related to our auto financing arrangements. To the extent our users default on their obligations to us or
fail to make payments on time under any of the foregoing arrangements, our results of operations may be adversely affected.
We may be exposed to credit risk of trade receivables.
Our trade receivables primarily include amounts of vehicle sales in relation of government subsidy to be collected from
government on behalf of customers, current portion of auto financing receivables, current portion of battery installment and others. We
have identified the risk characteristics of our customers and the related receivables, prepayments, deposits and other receivables which
include size, type of the services or the products we provide, or a combination of these characteristics. Receivables with similar risk
characteristics have been grouped into pools. For each pool, we consider the historical credit loss, current economic conditions,
supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors
that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business
to customers, and industry-specific factors that could impact our receivables. Additionally, external data and macroeconomic factors are
also considered. In 2023, we reversed RMB26.3 million (US$3.7 million) expected credit loss expense in selling, general and
administrative expenses. As of December 31, 2023, the expected credit loss provision for the current and non-current assets were
RMB113.7 million (US$16.0 million). We cannot assure you that all of our customers will not default on their obligations to us in the
future, despite our efforts to conduct credit assessment on them.
We face inventory risks that, if not properly managed, could harm our financial condition, operating results, and prospects.
We are exposed to significant inventory risks that may adversely affect our operating results as a result of increased competition,
seasonality, new models launches, rapid changes in vehicle life cycles and pricing, defective vehicles, changes in consumer demand and
consumer spending patterns, and other factors. We endeavor to accurately predict these trends and avoid overstocking or understocking
issues. Demand for our vehicles, however, can change significantly between the time inventory or components are ordered and the date
of sale. We may misjudge customer demand, resulting in inventory buildup and possible significant inventory write-down. It may also
make it more difficult for us to inspect and control quality and ensure proper handling, storage and delivery. We may experience higher
return rates on new vehicles, receive more customer complaints about them and face costly product liability claims as a result of selling
them, which would harm our brand and reputation as well as our financial performance.
We might not be able to fulfil our obligation in respect of deferred revenue, which might have impact on our cash or liquidity
position.
Our recognition of deferred revenue is subject to future performance obligations, mainly including the transaction price
allocated to the performance obligations that are unsatisfied, or partially satisfied, which mainly arises from the vehicle connectivity
service, the extended warranty service, the points offered to customers, undelivered home chargers as well as free battery swapping
service with certain limits embedded in the vehicle sales contract. We may have multiple performance obligations identified in the
vehicle sales contract and the sales of packages to transfer goods or services to a customer for which we have received consideration, or
an amount of consideration is due, from the customer, which is recorded as deferred revenue. Due to potential future changes in customer
preferences and the need for us to satisfactorily perform product support and other services, deferred revenue at any particular date may
not be representative of actual revenue for any future period. Any failure to fulfil the obligations in respect of deferred revenue may have
an adverse impact on our results of operations and liquidity.
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Fluctuation of fair value change of short-term and long-term investments that we made may adversely affect our financial condition,
results of operations, and prospects.
The fluctuation in the fair value of our short-term and long-term investments could adversely affect our financial condition,
results of operations and prospects. For the years ended December 31, 2021, 2022 and 2023, our short-term investments consisted
primarily of investments in fixed deposits with maturities between three months and one year, investments in money market funds and
financial products issued by banks, and our long-term investments consisted primarily of equity investments in publicly traded
companies and privately-held companies, and debt security investments. Determining the fair value of our short-term and long-term
investments involves using certain valuation methodologies, which rely heavily on management judgment and are inherently uncertain.
Factors beyond our control, such as changes in general economic conditions, market liquidity, asset values, and the performance of the
companies we invested in, can lead to adverse changes in the estimates we use, thereby adversely affecting the fair value of our
investments. In addition, we are exposed to credit risks in relation to our short-term and long-term investments, which may further affect
the net changes in their fair value. We cannot assure you that market conditions will result in fair value gains on our short-term and long-
term investments or we will not incur any fair value losses on these investments in the future. If we incur such fair value losses, our
results of operations, financial condition and prospects may be adversely affected.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able
to successfully defend or insure against such claims.
We may become subject to product liability claims, which could harm our business, prospects, operating results and financial
condition. The automotive industry experiences significant product liability claims and we face inherent risk of exposure to claims in the
event our vehicles do not perform as expected or malfunction resulting in property damage, personal injury or death. Our risks in this
area are particularly pronounced given we have limited field experience of our vehicles. In addition, we may be subject to product
liability claims for defective components and parts that are manufactured by our third-party partners. A successful product liability claim
against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative
publicity about our vehicles and business and inhibit or prevent commercialization of our future vehicle candidates which would have a
material adverse effect on our brand, business, prospects and operating results. Any insurance coverage might not be sufficient to cover
all potential product liability claims. Any lawsuit seeking significant monetary damages may have a material adverse effect on our
reputation, business and financial condition.
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Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material
adverse effect on our business and operating results.
All vehicles sold must comply with various standards of the market where the vehicles were sold. In China, vehicles must meet
or exceed all mandated safety standards. Rigorous testing and the use of approved materials and equipment are among the requirements
for achieving such standards. Vehicles must pass various tests and undergo a certification process and be affixed with the China
Compulsory Certificate mark, before receiving delivery from the factory, being sold, or being used in any commercial activity. In
addition, the Opinion on Strengthening the Access Administration of Intelligent Connected Vehicles Manufacturing Enterprises and
Their Products requires vehicles manufacturing enterprises to ensure the compliance of vehicle products with laws, regulations, technical
standards and technical specification and file for record with the Ministry of Industry and Information Technology prior to over-the-air
updates, and shall file with the Ministry of Industry and Information Technology in the event of any change to the safety, energy saving,
environment protection, anti-theft and other technical parameters and shall ensure conformance by vehicle products and production.
Without the approval, no over-the-air update shall be conducted to add or update the autonomous driving function. Any delays or lags of
the over-the-air updates due to the Ministry of Industry and Information Technology prior filing procedures may materially and adversely
affect our business and operating results. Furthermore, given we commenced delivery of our vehicles in Norway, Germany, the
Netherlands, Denmark, and Sweden, we are also subject to mandated safety standards in these markets. If we fail to have any of our
current or future vehicle models satisfy motor vehicle standards or any new laws and regulations in China, Norway or other markets
where our vehicles are sold, it would have a material adverse effect on our business and operating results.
We may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and financial
performance.
Recalls of our vehicles can cause adverse publicity, damage to our brand and liability for costs. For example, in January 2023,
we voluntarily recalled 997 ET5 electric vehicles manufactured between September 7, 2022 and October 10, 2022 due to a potential
safety hazard in extreme cases of a serious frontal collision, which could be retrofitted by adding a high-strength insulating protective
cover. In the future, we may at various times, voluntarily or involuntarily, initiate a recall if any of our vehicles, including any systems or
parts sourced from our suppliers, prove to be defective or non-compliant with applicable laws and regulations. Such recalls, whether
voluntary or involuntary or caused by systems or components that we or our suppliers engineered or manufactured, could involve
significant expense and could adversely affect our brand image in our target markets, as well as our business, prospects, financial
condition and results of operations.
The long-term viability of our distribution model is unproven.
Our vehicles are generally made to order. We conduct vehicle sales directly to users primarily through our NIO Houses, NIO
Spaces and mobile application rather than through dealerships. This model of vehicle distribution subjects us to substantial risk as it
requires, in the aggregate, significant expenditures and provides for slower expansion of our distribution and sales systems than may be
possible by utilizing the traditional dealer franchise system commonly applied for the sales of ICE vehicles and other EV companies. For
example, we will not be able to utilize long established sales channels developed through a franchise system to increase our sales
volume. Moreover, we will be competing with companies with well established distribution channels. Our success will depend in large
part on our ability to effectively develop our own sales channels and marketing strategies. Implementing our business model is subject to
numerous significant challenges, including obtaining permits and approvals from government authorities, and we may not be successful
in addressing these challenges.
In addition, the lead time in fulfilling our orders could lead to cancelled orders. Our aim for the fulfilling speed is 21 to 28 days
from the order placement date to delivery to users. If we are unable to achieve this target, our customer satisfaction could be adversely
affected, harming our business and reputation.
Our financial results may vary significantly from period to period due to the seasonality of our business and fluctuations in our
operating costs.
Our operating results may vary significantly from period to period due to many factors, including seasonal factors that may have
an effect on the demand for our electric vehicles. In the past few years, demand for new vehicles in the automotive industry were
generally higher in the fourth quarter. Such variation may or may not continue in the future. Our limited operating history makes it
difficult for us to judge the exact nature or extent of the seasonality of our business. Also, any unusually severe weather conditions in
some markets may impact demand for our vehicles. Our operating results could also suffer if we do not achieve revenue consistent with
our expectations for this seasonal demand because many of our expenses are based on anticipated levels of annual revenue.
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We also expect our period-to-period operating results to vary based on our operating costs which may increase in future periods
as we, among other things, design, develop and manufacture our electric vehicles, build and equip new manufacturing facilities, open
new NIO Houses and NIO Spaces, and develop charging and swapping networks.
As a result of these factors, we believe that period-to-period comparisons of our operating results are not necessarily meaningful
and that these comparisons cannot be relied upon as indicators of future performance. Moreover, our operating results may not meet
expectations of equity research analysts or investors. If this occurs, the trading price of our ADSs could fall substantially either suddenly
or over time.
If our vehicle owners customize our vehicles or change the charging infrastructure with aftermarket products, the vehicle may not
operate properly, which may create negative publicity and could harm our business.
Automobile enthusiasts may seek to “hack” our vehicles to modify their performance which could compromise vehicle safety
systems. Also, customers may customize their vehicles with after-market parts that can compromise driver safety. We do not test, nor do
we endorse, such changes or products. In addition, the use of improper external cabling or unsafe charging outlets can expose our
customers to injury from high voltage electricity. Such unauthorized modifications could reduce the safety of our vehicles and any
injuries resulting from such modifications could result in adverse publicity which would negatively affect our brand and harm our
business, prospects, financial condition and operating results.
We are subject to risks related to the investment in NIO China.
In February 2020, we entered into a collaboration framework agreement with the municipal government of Hefei, Anhui
province, where our manufacturing hub is located. Subsequently from April to June 2020, we entered into definitive agreements, as
amended and supplemented, or the Previous Hefei Agreements, for investments in NIO China with a group of investors, which we refer
to as the Hefei Strategic Investors in this annual report. Under the Previous Hefei Agreements, the Hefei Strategic Investors agreed to
invest an aggregate of RMB7 billion in cash into NIO Holding Co., Ltd. (previously known as NIO (Anhui) Holding Co., Ltd.), or NIO
China, a legal entity that we wholly owned pre-investment. We agreed to inject our core businesses and assets in China, including vehicle
research and development, supply chain, sales and services and NIO Power, collectively referred to as the Asset Consideration, valued at
RMB17.77 billion in total, into NIO China, and invest RMB4.26 billion in cash into NIO China. For more information, see “Item 4.
Information on the Company—B. Business Overview—Certain Other Cooperation Arrangements—Hefei Strategic Investors” included
elsewhere in this annual report.
On March 30, 2024, we entered into a shareholders agreement, or the 2024 Hefei Shareholders Agreement with (i) Hefei
Jianheng New Energy Automobile Investment Fund Partnership (Limited Partnership), or Jianheng New Energy Fund, (ii) Advanced
Manufacturing Industry Investment Fund II (Limited Partnership), or Advanced Manufacturing Industry Investment Fund, (iii) Anhui
Jintong New Energy Automobile II Fund Partnership (Limited Partnership), or New Energy Automobile Fund, and (iv) Anhui Provincial
Sanzhong Yichuang Industry Development Fund Co., Ltd., or Anhui Sanzhong Yichuang. The 2024 Hefei Shareholders Agreement
amends certain shareholders’ rights in NIO China and supersedes the Previous Hefei Shareholders Agreement (as defined below).
Pursuant to the 2024 Hefei Shareholders Agreement, NIO China granted certain minority shareholders’ rights to the Hefei
Strategic Investors, including, among others, the right of first refusal, co-sale right, preemptive right, anti-dilution right, redemption right,
liquidation preference and conditional drag-along right. You would not enjoy these preferential rights or treatment through investing in
our ADSs and the underlying ordinary shares. Exercise of these preferential rights by the Hefei Strategic Investors may also adversely
affect your investment in our company.
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In particular, the Hefei Strategic Investors may require us to redeem the shares of NIO China they hold under various
circumstances, at a redemption price equal to the total amount of the investment price of the Hefei Strategic Investors plus an investment
income calculated at a compound rate of 8.5% per annum upon the occurrence of certain events. If any of the triggering events of
redemption occurs, we will need substantial capital to redeem the shares of NIO China held by the Hefei Strategic Investors, and the
value of your investment in our company will be negatively affected. In particular, if NIO China fails to complete the listing application
or to issue the material assets restructuring plan related to the qualified initial public offering before December 31, 2027, or fails to
complete the qualified initial public offering before December 31, 2028, the Hefei Strategic Investors may request us to redeem the
equity interest in NIO China then held by them. In addition, if we pursue the initial public offering of NIO China, we will be subject to
various requirements under the Hong Kong Listing Rules and practice notes, including, among others, the requirement in the level of
operations and assets of the remaining business in our company following the spin-off to maintain listing status, the approval of the Hong
Kong Stock Exchange and shareholder approval. As a result, the application for and the completion of the qualified initial public offering
are subject to substantial uncertainties. If we do not have adequate cash available or cannot obtain additional financing, or our use of cash
is restricted by applicable laws, regulations or agreements governing our current or future indebtedness, we may not be able to redeem
shares of NIO China when required under the 2024 Hefei Shareholders Agreement, which would constitute an event of default under the
2024 Hefei Shareholders Agreement and subject us to liabilities.
In addition, before NIO China completes its potential qualified initial public offering, without the prior written consent of the
Hefei Strategic Investors, we may not directly or indirectly transfer, pledge or otherwise dispose of NIO China’s shares to a third party
that may result in our shareholding in NIO China falling below 60%.
Because we have injected the core businesses and assets into NIO China, the Hefei Strategic Investors will have senior claims
over the assets of NIO China compared to NIO China’s other shareholders (i.e., our other subsidiaries) when a liquidation event of NIO
China occurs. As a result, holders of our Class A ordinary shares and ADSs will be structurally subordinated to the Hefei Strategic
Investors, which may negatively affect the value of the investment of ADS holders and holders of Class A ordinary shares in our
company. We may not have sufficient funding to repay our existing debts. We essentially control the daily operation of and substantially
all of the corporate matters of NIO China. Notwithstanding this, the Hefei Strategic Investors have voting rights with respect to various
significant corporate matters of NIO China and its consolidated entities, such as change in NIO China’s corporate structure, change of its
core business and amendment to its articles of association, which may limit our ability to make certain major corporate decisions with
regard to NIO China. Any of the foregoing could materially adversely affect your investment in our Class A ordinary shares and ADSs.
Our business plans require a significant amount of capital, and we may issue additional equity or debt securities that may have an
adverse effect on our shareholders or may otherwise adversely affect our business.
We will need significant capital to, among other things, conduct research and development and expand our production capacity
as well as roll out our power, sales and service network. As we ramp up our production capacity and operations, we may also require
significant capital to maintain our property, plant and equipment and such costs may be greater than anticipated. We expect our capital
expenditures to continue to be significant in the foreseeable future as we expand our business, and that our level of capital expenditures
will be significantly affected by user demand for our products and services. The fact that we have a limited operating history means we
have limited historical data on the demand for our products and services. As a result, our future capital requirements may be uncertain
and actual capital requirements may be different from those we currently anticipate. We may seek equity or debt financing to finance a
portion of our capital expenditures. Such financing might not be available to us in a timely manner or on terms that are acceptable, or at
all. Our substantial amount of currently outstanding indebtedness may also affect our ability to obtain financing in a timely manner and
on reasonable terms.
Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general
market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of
such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our
spending of, delay or cancel some or all of our planned research, development, manufacturing and marketing activities or substantially
change our corporate structure, any of which could materially harm our business. We might not be able to obtain any funding, and we
might not have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or
discontinue our operations.
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In addition, our future capital needs and other business reasons could require us to issue additional equity or debt securities or
obtain a credit facility. If we raise funds through the issuance of additional equity or debt, including convertible debt or debt secured by
some or all of our assets, holders of any debt securities or preferred shares issued will have rights, preferences and privileges senior to
those of holders of our ordinary shares in the event of liquidation. The terms of the convertible notes we issued do not restrict our ability
to issue additional debt. If additional debt is issued, there is a possibility that once all senior claims are settled, there may be no assets
remaining to pay out to the holders of ordinary shares. In addition, if we raise funds through the issuance of additional equity, whether
through private placements or public offerings, such an issuance would dilute ownership of our current shareholders that do not
participate in the issuance.
Furthermore, the terms of any additional debt securities we may issue in the future may impose restrictions on our operations,
which may include limiting our ability to incur additional indebtedness, pay dividends on or repurchase our share capital, or make certain
acquisitions or investments. In addition, we may be subject to covenants requiring us to satisfy certain financial tests and ratios, and our
ability to satisfy such covenants may be affected by events outside of our control.
The terms of the convertible notes we issued could delay or prevent an attempt to take over our company. The terms of the 2026
Notes, 2027 Notes, 2029 Notes and 2030 Notes require us to repurchase the respective notes in the event of a fundamental change. A
takeover of our company would constitute a fundamental change. This could have the effect of delaying or preventing a takeover of our
company that may otherwise be beneficial to our shareholders.
Our warranty reserves may be insufficient to cover future warranty claims which could adversely affect our financial performance.
For the initial owner of our vehicles in China, in addition to the warranty required under the PRC law, including (i) a bumper-to-
bumper three-year or 120,000-kilometer warranty, (ii) for critical EV components (battery, electric motors, power electric unit and
vehicle control unit) an eight-year or 120,000-kilometer warranty, and (iii) a two-year or 50,000 kilometer warranty covering vehicle
repair, replacement and refund, we also provide an extended warranty, subject to certain conditions. For the owners of our vehicles in
Europe, in addition to the warranty required under the applicable laws and regulations, we also provide an extended warranty subject to
certain conditions. Our warranty program is similar to other auto company’s warranty programs intended to cover all parts and labor to
repair defects in material or workmanship in the body, chassis, interior, electric system, battery, electric powertrain and other related
vehicle parts. We plan to record and adjust warranty reserves based on changes in estimated costs and actual warranty costs.
However, because we only started making delivery of our first volume-manufactured vehicle model ES8 in June 2018, we have
little experience with warranty claims regarding our vehicles or with estimating warranty reserves. As of December 31, 2023, we had
warranty reserves in respect of our vehicles of RMB3,912.2 million (US$551.0 million). We cannot assure you that such reserves will be
sufficient to cover future claims. We could, in the future, become subject to significant and unexpected warranty claims, resulting in
significant expenses, which would in turn materially and adversely affect our results of operations, financial condition and prospects.
We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and would cause
us to incur substantial costs.
Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary
rights that would prevent, limit or interfere with our ability to make, use, develop, sell or market our vehicles or components, which
could make it difficult for us to operate our business. From time to time, owners of patents or trademarks may contact us regarding their
proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or
otherwise assert their rights and urge us to take licenses. Our applications and uses of patented technologies and trademarks relating to,
among others, our designs, software or artificial intelligence technologies could subject us to the risk of infringing existing intellectual
property rights.
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For example, a German automotive manufacturer claimed that we infringed its trademark rights based on resemblance of model
designations of certain of our vehicles with those of the manufacturer’s. For that purpose, the manufacturer has filed an infringement
lawsuit with the Munich Regional Court against us and brought certain opposition and cancellation proceedings against our trademark
applications and registrations of the aforesaid model designations in front of competent intellectual property authorities in certain
jurisdictions. Although we believe the allegations of trademark infringement to be unjustified, we have taken precautionary measures and
renamed certain car models involved in the infringement claim before our entry into the European market to avoid substantial impact on
our sales operations in the Europe and other jurisdictions. As of the date of this annual report, the lawsuit and the proceedings are still
ongoing and we have not yet received any final decisions. We cannot assure you that the final ruling will be in our favor. If we are not
permitted to use these model names in Europe or other jurisdictions where our vehicles are offered, our sales performance there may be
negatively affected, which in turn would harm our results of operations and financial condition.
If we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of
the following:
● cease selling, incorporating certain components into, or using vehicles or offering goods or services that incorporate or use
the challenged intellectual property;
● pay substantial damages;
● seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable
terms or at all;
● redesign our vehicles or other goods or services; or
● establish and maintain alternative branding for our products and services.
In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed
technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially and
adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and
diversion of resources and management attention.
We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and
competitive position.
We regard our trademarks, service marks, patents, domain names, trade secrets, proprietary technologies and similar intellectual
property as critical to our success. We rely on trademark and patent law, trade secret protection and confidentiality agreements, and
technology license agreements with our employees, business constituents and others to protect our proprietary rights.
We have invested significant resources to develop our own intellectual property. Failure to maintain or protect these rights could
harm our business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect our current and
future revenues and our reputation.
Implementation and enforcement of PRC intellectual property-related laws have historically been challenging. Furthermore,
policing unauthorized use or leakage of proprietary technology or various infringement on our intellectual property rights is difficult and
expensive. We rely on a combination of patent, copyright, trademark and trade secret laws and contractual restrictions on disclosure and
usage to protect our intellectual property rights. Despite our efforts to protect our proprietary rights, third parties may attempt to copy or
otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property
rights. Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot assure you that the steps we have
taken or will take will prevent misappropriation of our intellectual property. From time to time, we may have to resort to litigation to
enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.
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Our patent rights may not protect us effectively, and we may not be able to prevent others from developing or exploiting competing
technologies, which could have a material and adverse effect on our business.
As of December 31, 2023, we had 4,690 issued patents and 3,788 patent applications pending. For our pending application, we
cannot assure you that we will be granted patents pursuant to our pending applications. Even if our patent applications succeed and we
are issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented or invalidated in the
future. In addition, the rights granted under any issued patents may not provide us with meaningful protection or competitive advantages.
The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing
technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from
licensing and exploiting any patents that issue from our pending applications. Numerous patents and pending patent applications owned
by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might
have priority over our patent applications and could subject our patent applications to invalidation. Finally, in addition to those who may
claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or
unenforceable.
We have limited insurance coverage, which could expose us to significant costs and business disruption.
We have limited liability insurance coverage for our products and business operations. A successful liability claim against us
due to injuries suffered by our users could materially and adversely affect our financial condition, results of operations and reputation. In
addition, we do not have any business disruption insurance. Any business disruption event could result in substantial costs to us and
diversion of our resources.
We maintain a considerable level of debt that are senior in capital structure and cash flow to our shareholders. Satisfying these debt
obligations could adversely affect the distributions to our shareholders or result in dilution.
We maintain a considerable level of indebtedness to finance our operations and business expansion. In February 2019, we issued
US$750 million aggregate principal amount of 4.50% convertible senior notes due 2024, or the 2024 Notes. The 2024 Notes matured on
February 1, 2024, and we repaid the then outstanding 2024 Notes that had not been redeemed, repurchased or converted in full. In
January 2021, we issued US$750 million aggregate principal amount of 0.00% convertible senior notes due 2026, or the 2026 Notes, and
US$750 million aggregate principal amount of 0.50% convertible senior notes due 2027, or the 2027 Notes. In September and October
2023, we issued US$575 million aggregate principal amount of 3.875% convertible senior notes due 2029, or the 2029 Notes, and
US$575 million aggregate principal amount of 4.625% convertible senior notes due 2030, or the 2030 Notes. As of December 31, 2023,
we had RMB13,042.9 million (US$1,837.0 million) in total long-term borrowings outstanding, consisting primarily of (i) our 4.50%
convertible senior notes due 2024, (ii) our 0.00% convertible senior notes due 2026 and 0.50% convertible senior notes due 2027, (iii)
our 3.875% convertible senior notes due 2029 and 4.625% convertible senior notes due 2030, and (iv) our long-term bank debt,
excluding the current portions of (i), (ii), (iii) and (iv) that are due within one year from December 31, 2023. Meanwhile, as of December
31, 2023, we had RMB9,821.5 million (US$1,383.3 million) in total short-term borrowings, including the current portions of long-term
borrowings. Among the current portions of long-term borrowings, the 4.50% convertible senior notes due 2024 was repaid in full in
February 2024. On February 1, 2024, we completed the repurchase right offer relating to 2026 Notes with aggregate principal amount of
US$300.5 million.
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The 2026 Notes and the 2027 Notes are unsecured debt. Prior to August 1, 2025, in the case of the 2026 Notes, and August 1,
2026, in the case of the 2027 Notes, the 2026 Notes and the 2027 Notes, as applicable, will be convertible at the option of the holders
only upon satisfaction of certain conditions and during certain periods. Holders may convert their 2026 Notes or 2027 Notes, as
applicable, at their option at any time on or after August 1, 2025, in the case of the 2026 Notes, or August 1, 2026, in the case of the 2027
Notes, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, we
will pay or deliver to such converting holders, as the case may be, cash, ADSs, or a combination of cash and ADSs, at our election. The
initial conversion rate of the 2026 Notes is 10.7458 ADSs per US$1,000 principal amount of such 2026 Notes. The initial conversion rate
of the 2027 Notes is 10.7458 ADSs per US$1,000 principal amount of such 2027 Notes. The conversion rate for such series of the 2026
Notes and the 2027 Notes is subject to adjustment upon the occurrence of certain events. Holders of the 2026 Notes and the 2027 Notes
may require us to repurchase all or part of their 2026 Notes and 2027 Notes for cash on February 1, 2024, in the case of the 2026 Notes,
and February 1, 2025, in the case of the 2027 Notes, or in the event of certain fundamental changes, at a repurchase price equal to 100%
of the principal amount of the 2026 Notes or the 2027 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding,
the repurchase date. In addition, on or after February 6, 2024, in the case of the 2026 Notes, and February 6, 2025, in the case of the 2027
Notes, until the 20th scheduled trading day immediately prior to the maturity date, we may redeem the 2026 Notes or the 2027 Notes, as
applicable for cash subject to certain conditions, at a redemption price equal to 100% of the principal amount of the 2026 Notes or the
2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the optional redemption date. Furthermore, we
may redeem all but not part of the 2026 Notes or the 2027 Notes in the event of certain changes in the tax laws. In 2022, we repurchased
an aggregate principal amount of US$192.9 million of 2026 Notes for a total cash consideration of US$170.5 million. In September
2023, shortly after the pricing of the 2029 Notes and the 2030 Notes, we repurchased an aggregate principal amount of US$255.6 million
of the 2026 Notes for a total cash consideration of US$249.9 million and an aggregate principal amount of US$244.4 million of the 2027
Notes for a total cash consideration of US$222.0 million. In February 2024, we completed the repurchase right offer relating to the 2026
Notes. US$300.5 million in aggregate principal amount of the 2026 Notes were validly surrendered and not withdrawn prior to the
expiration of the repurchase right offer.
The 2029 Notes and the 2030 Notes are unsecured debt. The holders of the 2029 Notes and the 2030 Notes shall have the right,
at such holder’s option, to convert all or any portion of their 2029 Notes or 2030 Notes, as applicable, at any time prior to the close of
business on the second scheduled trading day immediately preceding the maturity date, i.e., October 15, 2029, in the case of the 2029
Notes, and October 15, 2030, in the case of the 2030 Notes. The initial conversion rate of the 2029 Notes is 89.9685 ADSs per US$1,000
principal amount of such 2029 Notes. The Initial conversion rate of the 2030 Notes is 89.9685 ADSs per US$1,000 principal amount of
such 2030 Notes. The conversion rate is subject to adjustment upon the occurrence of certain events. Holders of the 2029 Notes and 2030
Notes may require us to repurchase all or any portion of their 2029 Notes and 2030 Notes for cash on October 15, 2027, in the case of the
2029 Notes, and October 15, 2028, in the case of 2030 Notes, or in the event of certain fundamental changes, at a repurchase price equal
to 100% of the principal amount of the 2029 Notes or the 2030 Notes to be repurchased plus accrued and unpaid interest, if any, to, but
excluding, the repurchase date. In addition, on or after October 22, 2027, in the case of the 2029 Notes, and October 22, 2028, in the case
of the 2030 Notes, until the 20th scheduled trading day immediately prior to the maturity date, i.e., October 15, 2029, in the case of the
2029 Notes, and October 15, 2030, in the case of the 2030 Notes, we may redeem all or part of the 2029 Notes and 2030 Notes, as
applicable for cash subject to certain conditions, at a redemption price equal to 100% of the principal amount of the 2029 Notes or the
2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the optional redemption date. Furthermore, we
may redeem all but not part of the 2029 Notes or the 2030 Notes in the event of certain changes in the tax laws.
Satisfying the obligations of all these indebtedness and interest liabilities could adversely affect the amount or timing of any
distributions to our shareholders. We may choose to satisfy, repurchase, or refinance any of these liabilities through public or private
equity or debt financings if we deem such financings available on favorable terms. If we do not have adequate cash available or cannot
obtain additional financing, or our use of cash is restricted by applicable law, regulations or agreements governing our current or future
indebtedness, we may not be able to repurchase any of these notes when required under the respective transaction documents, which
would constitute an event of default under the respective transaction documents. An event of default could also lead to a default under
other agreements governing our current and future indebtedness, and if the repayment of such other indebtedness were accelerated, we
may not have sufficient funds to repay the indebtedness and repurchase any of these notes or make cash payments upon conversion of
any of these notes. In addition, the holders of any of these notes may convert their notes to a number of our ADSs in accordance with the
respective transaction documents. Any conversion will result in immediate dilution to the ownership interests of existing shareholders
and such dilution could be material. Lastly, we are exposed to interest rate risk related to our portfolio of investments in debt securities
and the debt that we have issued. Among other things, some of our bank loans carry floating interest, and increases in interest rates
would result in a decrease in the fair value of our outstanding debt. In the event that we incur a decrease in the fair value of our
outstanding debt, our financial performance will be adversely affected.
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We are or may be subject to risks associated with strategic alliances or acquisitions.
We have entered into and may in the future enter into strategic alliances, including joint ventures or minority equity
investments, with various third parties to further our business purpose from time to time. For example, we have opened our Power Swap
network to the entire industry and signed strategic partnership agreements with Changan Automobile, Geely Group, JAC Group and
Chery Automobile on battery swapping. We have partnered with multiple energy companies, and expect to join hands with more partners
to collectively contribute towards the development of power network and the wider adoption of battery swapping. Furthermore, on
February 26, 2024, we entered into a technology license agreement with Forseven Limited, or Forseven. Under this agreement, we
granted a non-exclusive and non-transferrable worldwide license to Forseven to use certain of our technical information, technical
solutions, software and intellectual property rights related to or subsisting in our existing and future smart electric vehicle platforms
within certain period, for, among other things, the research and development, manufacturing, sales, import and export of vehicle models
sold or marketed under Forseven’s brand, subject to the terms and conditions set forth in the agreement. These alliances could subject us
to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased
expenses in establishing new strategic alliances. We may have limited ability to monitor or control the actions of these third parties and,
to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from events relating to their business,
we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party. Specifically, any
technical failure in the coordination with our Power Swap network partners can disrupt our charging and battery swapping services to
users and delay the expansion of our Power Swap network and the adoption of our battery swapping technology. Also, inefficient
processes or inadequate workforce training could lead to operational inefficiencies and increased costs. Furthermore, any problems
arising from Forseven’s use of the licensed technologies, including product recalls, safety issues, or resulting legal disputes, could
negatively harm our brand and reputation. Any of these risks may materially and adversely affect our business, results of operation and
financial conditions.
In addition, we may acquire additional assets, products, technologies or businesses that are complementary to our existing
business. In addition to possible shareholder approval, we may have to obtain approvals and licenses from government authorities for the
acquisitions and to comply with any applicable PRC laws and regulations, which could result in increased delay and costs, and may
derail our business strategy if we fail to do so. Furthermore, past and future acquisitions and the subsequent integration of new assets and
businesses into our own require significant attention from our management and could result in a diversion of resources from our existing
business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial
results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities,
the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential
unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
If we fail to manage our growth effectively, we may not be able to execute our growth strategies successfully.
We have expanded our operations, and as we ramp up our production and sales, further significant expansion may be required,
especially in connection with providing our users with high-quality service, expansion of our sale network and power infrastructures, and
managing different models of vehicles. Our future operating results depend to a large extent on our ability to manage this expansion and
growth successfully. Risks that we face in undertaking this expansion include, among others:
● managing a larger organization with different divisions;
● training a greater number of employees and managing their behaviors, including but not limited to deterring or preventing
employee misconducts or illegal actions;
● controlling expenses and investments in anticipation of expanded operations;
● establishing or expanding design, manufacturing, sales and service facilities;
● implementing and enhancing administrative infrastructure, systems and processes; and
● addressing new markets and potentially unforeseen challenges as they arise.
Any failure to manage our growth effectively could materially and adversely affect our business, prospects, results of operations
and financial condition.
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We have granted, and may continue to grant options and other types of awards under our share incentive plan, which may result in
increased share-based compensation expenses.
We adopted share incentive plans in 2015, 2016, 2017, 2018 and 2024, which we refer to as the 2015 Plan, the 2016 Plan, the
2017 Plan, the 2018 Plan and 2024 Plan, respectively, for the purpose of granting share-based compensation awards to employees,
directors and consultants to incentivize their performance and align their interests with ours. The 2018 Plan became effective as of
January 1, 2019 and expired on December 31, 2023. The 2024 Plan became effective as of February 7, 2024. We recognize expenses in
our consolidated statement of income in accordance with U.S. GAAP. Under our share incentive plans, we are authorized to grant options
and other types of awards. Under the 2015 Plan, the 2016 Plan and the 2017 Plan, the maximum numbers of Class A ordinary shares
which may be issued pursuant to all awards are 46,264,378, 18,000,000 and 33,000,000, respectively. Under the 2018 Plan, a maximum
number of 23,000,000 Class A ordinary shares may be issued pursuant to all awards. This amount should automatically increase each
year by the number of shares representing 1.5% of the then total issued and outstanding share capital of our company as of the end of
each preceding year during the term of the 2018 Plan. The maximum number of shares available for issuance pursuant to all awards
under the 2024 Plan was initially 19,288,470 Class A ordinary shares, and the amount automatically increases at the beginning of each
new year by the number of shares representing 1.2% of the then total issued and outstanding share capital of our company as of the last
day of the immediately preceding fiscal year during the term of the 2024 Plan. In addition, any awards not granted under an earlier plan
when it terminates are automatically added to the 2024 Plan. As of February 29, 2024, awards to purchase an aggregate amount of
123,804,348 Class A ordinary shares under the 2015 Plan, the 2016 Plan, the 2017 Plan, the 2018 Plan and the 2024 Plan had been
granted and were outstanding, excluding awards that were forfeited or cancelled after the grant dates. In addition, one of our subsidiaries
also adopted a share incentive plan in 2021, pursuant to which the subsidiary can grant share options to its employees. As of
December 31, 2023, our unrecognized share-based compensation expenses related to the stock option and restricted shares amounted to
RMB5,840.5 million (US$822.6 million).
We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and
employees, and we will continue to grant share-based compensation to employees in the future. As a result, our expenses associated with
share-based compensation may increase, which may have an adverse effect on our results of operations.
Furthermore, prospective candidates and existing employees often consider the value of the equity awards they receive in
connection with their employment. Thus, our ability to attract or retain highly skilled employees may be adversely affected by declines in
the perceived value of our equity or equity awards. Furthermore, there are no assurances that the number of shares reserved for issuance
under our share incentive plans will be sufficient to grant equity awards adequate to recruit new employees and to compensate existing
employees.
If we do not appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002, we may be unable to accurately report our financial results and the market price of our ADSs may be
adversely affected.
We are subject to reporting obligations under the U.S. securities laws. The SEC, as required under Section 404 of the Sarbanes-
Oxley Act of 2002, adopted rules requiring public companies to include a report of management on such company’s internal control over
financial reporting in its document, which contains management’s assessment of the effectiveness of the company’s internal control over
financial reporting. We were subject to such requirement starting from the fiscal year of 2019. In addition, an independent registered
public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting.
Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. In
addition, our independent registered public accounting firm has audited the effectiveness of our internal control over financial reporting
as of December 31, 2023.
In the future, our management may conclude that our internal control over financial reporting is not effective. Moreover, even if
our management concludes that our internal control over financial reporting is effective, our independent registered public accounting
firm, after conducting its own independent testing, may issue a report with adverse opinion if it is not satisfied with our internal controls
or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the requirements differently from us.
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If we fail to implement and maintain an effective internal control environment, we could suffer material misstatements in our
consolidated financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our
reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline
in the trading price of our listed securities. Furthermore, we may incur additional costs and use additional management and other
resources as our business and operations further expand or in an effort to remediate any significant control deficiencies that may be
identified in the future. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or
misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and
civil or criminal sanctions.
If our suppliers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be
harmed due to negative publicity.
Our core values, which include developing high quality electric vehicles while operating with integrity, are an important
component of our brand image, which makes our reputation sensitive to allegations of unethical business practices. We do not control our
independent suppliers or their business practices. Accordingly, we cannot guarantee their compliance with ethical business practices,
such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of demonstrated
compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products,
product shortages or other disruptions of our operations.
Violation of labor or other laws by our suppliers or the divergence of an independent supplier’s labor or other practices from
those generally accepted as ethical in the markets in which we do business could also attract negative publicity for us and our brand. This
could diminish the value of our brand image and reduce demand for our electric vehicles if, as a result of such violation, we were to
attract negative publicity. If we, or other players in our industry, encounter similar problems in the future, it could harm our brand image,
business, prospects, results of operations and financial condition.
If we update our manufacturing equipment more quickly than expected, we may have to shorten the useful lives of any equipment to
be retired, which could negatively affect our financial results.
We have invested, and we expect to continue to invest, significantly in what we believe is state of the art tooling, machinery and
other manufacturing equipment for the product lines where the vehicles are manufactured, and we depreciate the cost of such equipment
over their expected useful lives. Manufacturing technology may evolve rapidly, and therefore we may decide to update our
manufacturing process with advanced equipment more quickly than expected. Moreover, as our engineering and manufacturing expertise
and efficiency increase, we may be able to manufacture our products using less of our installed equipment. The useful life of any
equipment that would be retired early as a result would be shortened, causing the depreciation on such equipment to be accelerated, and
to the extent we own such equipment, our results of operations could be negatively impacted. An increased amount of investment into the
manufacturing plants will lead to an increased cost in asset depreciation and amortization, which could negatively affect our results of
operations and financial conditions.
The construction and operation of our manufacturing facilities are subject to regulatory approvals or filings and may be subject to
changes, delays, cost overruns or may not produce expected benefits.
In 2017, we signed a framework agreement with the Shanghai Jiading government and its authorized investment entity to build
and develop our own manufacturing facility in Jiading, Shanghai. In 2019, we agreed with the related contractual parties to cease
construction of this planned manufacturing facility and terminate this development project.
In February 2020, we entered into a collaboration framework agreement with the municipal government of Hefei, Anhui
province. Subsequently from April to June 2020, we entered into definitive agreements, as amended and supplemented, for investments
in NIO China. Pursuant to the definitive agreements, we will collaborate with the Hefei Strategic Investors and Hefei Economic and
Technological Development Area to develop NIO China’s business and to support the accelerated development of the smart electric
vehicle sectors in Hefei. In February 2021, we, through NIO China, entered into a further collaboration framework agreement with the
municipal government of Hefei, Anhui province, pursuant to which the Hefei government and NIO China agreed in principle to jointly
build a world-class industrial campus to support the development and innovations of the smart electric vehicle industry and related
supply chains led by NIO China. In addition, the Hefei government and its associated parties plan to re invest their returns from the equity
investments in NIO China to support the further cooperation in Hefei.
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Under PRC law, construction projects are subject to broad and strict government supervision and approval procedures, including
but not limited to project approvals and filings, construction land and project planning approvals, environment protection approvals,
pollution discharge permits, work safety approvals, fire protection approvals, and the completion of inspection and acceptance by
authorities. Some of the construction projects being carried out by us are undergoing necessary approval procedures as required by law.
As a result, the entities operating such construction projects may be subject to administrative uncertainty, and construction projects in
question may be subject to fines or the suspension of use of such projects. Failure to complete the construction projects on schedule and
within budget, and failure to obtain necessary approvals or any incompliance with government supervision could have a material adverse
impact on our operations, and we may not be able to find commercially reasonable alternatives.
Our vehicles make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.
The batteries that we produce make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy
they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. In June 2019,
certain safety incidents resulting from the batteries on ES8 vehicles occurred in Shanghai and other locations in China. We then
voluntarily recalled 4,803 ES8s, and replaced the batteries in the NIO battery swap network equipped with the malfunctioned modules.
While we have designed the battery to passively contain any single cell’s release of energy without spreading to neighboring cells, and
have taken measures to enhance the safety of our battery designs, a field or testing failure of our vehicles or other batteries that we
produce could occur in the future, which could subject us to lawsuits, product recalls, or redesign efforts, all of which would be time-
consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or
any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve our vehicles, could
seriously harm our business.
In addition, we store a significant number of lithium-ion cells at our facilities. Any mishandling of battery cells may cause
disruption to the operation of our facilities. While we have implemented safety procedures related to the handling of the cells, a safety
issue or fire related to the cells could disrupt our operations. Such damage or injury could lead to adverse publicity and potentially a
safety recall. Moreover, any failure of a competitor’s electric vehicle or energy storage product may cause indirect adverse publicity for
us and our products. Such adverse publicity could negatively affect our brand and harm our business, prospects, financial condition and
operating results.
Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our
services.
We aim to provide our users with an innovative suite of services through our mobile application. In addition, our in-car services
depend, to a certain extent, on connectivity. The availability and effectiveness of our services depend on the continued operation of our
information technology and communications systems. Our systems are vulnerable to damage or interruption from, among other adverse
effects, fire, terrorist attacks, natural disasters, power loss, telecommunications failures, computer viruses, computer denial of service
attacks or other attempts to harm our systems. Our data centers are also subject to break-ins, sabotage, and intentional acts of vandalism,
and potential disruptions. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all
eventualities. Any problems at our data centers could result in lengthy interruptions in our service. In addition, our products and services
are highly technical and complex and may contain errors or vulnerabilities, which could result in interruptions in our services or the
failure of our systems.
We are subject to anti-corruption, anti-money laundering and similar laws, non-compliance with which can subject us to penalties
and expenses, which could adversely affect our business, financial condition and reputation.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and
regulations in various jurisdictions in which we conduct activities, including, among others, the U.S. Foreign Corrupt Practices Act and
the U.K. Bribery Act 2010. These acts prohibit us and our officers, directors, employees and business partners acting on our behalf,
including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes
of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The Foreign Corrupt
Practices Act also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions
of assets and to maintain a system of adequate internal accounting controls. The U.K. Bribery Act also prohibits non-governmental
“commercial” bribery and soliciting or accepting bribes. A violation of these laws or regulations could adversely affect our business,
results of operations, financial condition and reputation.
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We have direct or indirect interactions with officials and employees of government agencies and state-owned affiliated entities
in the ordinary course of business. We have also entered into joint ventures and/or other business partnerships with government agencies
and state-owned or affiliated entities. These interactions subject us to an increased level of compliance-related concerns. We are in the
process of implementing policies and procedures designed to ensure that we and our directors, officers, employees, representatives,
consultants, agents and business partners comply with applicable anti-corruption, anti-bribery, anti-money laundering, financial and
economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient and our directors,
officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be
held responsible.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could
subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions,
collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of
operations, financial condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our
business and investments in our shares.
Any unauthorized control or manipulation of our vehicles’ systems could result in loss of confidence in us and our vehicles and harm
our business.
Our vehicles contain complex information technology systems. For example, our vehicles are designed with built-in data
connectivity to accept and install periodic remote updates from us to improve or update the functionality of our vehicles. We have
designed, implemented and tested security measures intended to prevent unauthorized access to our information technology networks,
our vehicles and their systems. However, hackers may attempt in the future, to gain unauthorized access to modify, alter and use such
networks, vehicles and systems to gain control of, or to change, our vehicles’ functionality, user interface and performance
characteristics, or to gain access to data stored in or generated by the vehicle. Vulnerabilities could be identified in the future and our
remediation efforts may not be successful. Any unauthorized access to or control of our vehicles or their systems or any loss of data
could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our vehicles, their
systems or data, as well as other factors that may result in the perception that our vehicles, their systems or data are capable of being
“hacked,” could negatively affect our brand and harm our business, prospects, financial condition and operating results.
Our business, financial condition and results of operations may be adversely affected by natural disasters, health epidemics and other
outbreaks.
Our business could be adversely affected by the effects of epidemics. In recent years, there have been outbreaks of epidemics in
China and globally. Our results of operations could be adversely affected to the extent that the outbreak harms the Chinese economy in
general.
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 China and the world. Our operations experienced disruptions, such as temporary closure of
our offices and/or those of our customers or suppliers and suspension of services, resulting in a reduction of vehicles manufactured and
delivered, which affected our business, financial condition, results of operations and cash flow. Our results of operations have been and
could continue to be adversely affected to the extent the COVID-19 pandemic or any other epidemic harms the Chinese economy in
general. Further, to the extent the COVID-19 pandemic adversely affects our business and financial results, it has and may continue to
have the effect of heightening many of the other risks described in this annual report, such as those relating to our level of indebtedness,
our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the
agreements that govern our indebtedness.
We are also vulnerable to natural disasters and other calamities. Our vehicle production, sales and delivery and our service
operations and capacities could be materially and adversely affected by natural disasters and other calamities in the areas where we
operate and where our vehicles are sold to. For example, in July 2021, our deliveries of vehicles and power services were interrupted due
to the flood in Henan province and the typhoon in Shanghai and several other neighboring cities. Although we have servers that are
hosted in an offsite location, our backup system does not capture data on a real-time basis and we may be unable to recover certain data
in the event of a server failure. We cannot assure you that any backup systems will be adequate to protect us from the effects of fire,
floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of
the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which
could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide
services on our platform.
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Our revenues and financial results may be adversely affected by any economic slowdown in China as well as globally.
The success of our business ultimately depends on consumer spending. We derive a substantial majority of our revenues from
China. As a result, our revenues and financial results are impacted to a significant extent by economic conditions in China. The growth
rate of the Chinese economy has gradually slowed down since 2010 and the Chinese population began to decline in 2022, and the trend
may continue. Any slowdown could significantly reduce domestic commerce in China. In addition, as we continue to expand our global
presence and offer products and services to markets outside China, we expect our results of operations will also be impacted by the
global economic conditions. The global macroeconomic environment is facing numerous challenges. For example, the COVID-19
pandemic had a severe and negative impact on the Chinese and the global economy from 2020 through 2022. The Federal Reserve and
other central banks outside of China have raised interest rates. There is considerable uncertainty over the long-term effects of the
previous expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading
economies, including the United States and China, and the ongoing transmission of monetary policy in the United States and Europe. The
Russia-Ukraine conflict, the Hamas-Israel conflict and the attacks on shipping in the Red Sea have heightened geopolitical tensions
across the world, while it has not had a direct impact on our business operations and financial results to date, it could raise energy prices,
cause supply chain volatilities and disrupt global markets in general, and may negatively affect our business expansion in Europe and
other international markets, which may adversely affect our results of operations and financial results. Regional unrest, terrorist threats
and the potential for war may increase market volatility across the globe. There have also been concerns about the relationship between
China and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is
significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties,
government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in
domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged
slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial
condition.
Sales of high-end and luxury consumer products, such as our performance electric vehicles, depend in part on discretionary
consumer spending and are even more exposed to adverse changes in general economic conditions. In response to their perceived
uncertainty in economic conditions, consumers might delay, reduce or cancel purchases of our electric vehicles and our results of
operations may be materially and adversely affected.
We cannot predict the duration or direction of current trends or their impact on China and globally. If we experience unfavorable
global market conditions, or if we cannot or do not maintain operations at a scope that is commensurate with such conditions or are later
required to or choose to suspend such operations again, our business, prospects, financial condition and operating results may be harmed.
Shutdowns of the U.S. federal government could materially impair our business and financial condition.
Development of our product candidates and/or regulatory approval may be delayed for reasons beyond our control. For
example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the SEC,
have had to furlough critical SEC and other government employees and stop critical activities. In our operations as a public company,
future government shutdowns could impact our ability to access the public markets, such as delaying the declaration of effectiveness of
registration statements and obtaining necessary capital to properly capitalize and continue our operations.
Recent disruptions in the financial markets and economic conditions could affect our ability to raise capital.
In recent years, the United States and global economies suffered dramatic downturns as the result of a deterioration in the credit
markets and related financial crisis as well as a variety of other factors including, among others, extreme volatility in security prices,
severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. The
United States and certain foreign governments have taken unprecedented actions in an attempt to address and rectify these extreme
market and economic conditions by providing liquidity and stability to the financial markets. If the actions taken by these governments
are not successful, the return of adverse economic conditions may cause a significant impact on our ability to raise capital, if needed, on
a timely basis and on acceptable terms or at all.
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There are uncertainties relating to our users trust arrangement involving a portion of our chairman’s shareholding in our company.
In conjunction with our pursuit of being a user enterprise and with the goal of building a deeper connection between NIO and
our users, Mr. Bin Li, our founder, chairman of the board of directors and chief executive officer, transferred certain of his ordinary
shares to NIO Users Trust after the completion of the initial public offering of our ADSs on the New York Stock Exchange in September
2018. As of the date of this annual report, NIO Users Trust holds 16,967,776 Class A ordinary shares and 33,032,224 Class C ordinary
shares through two holding companies controlled by it. Mr. Li continues to retain the voting rights of these shares. In 2019, our user
committee adopted the NIO Users Trust Charter by way of voting, and established a User Council to generally discuss and give advice
on the management and the operation of NIO Users Trust. In this way, our users have the opportunity to discuss and propose the use of
the economic benefits from the shares in NIO Users Trust, which is intended to be composed mainly of the dividends from the shares that
it holds future interests accrued from and investment returns generated by cash assets to be held under the trust, and proceeds from the
pledging of such shares from time to time, through the User Council consisting of members of our user community elected by our users.
See “Item 4. Information on the Company—B. Business Overview—User Development and User Community—NIO Users Trust” for
further details about NIO Users Trust.
The current NIO Users Trust Charter provides certain mechanisms for the User Council to discuss the management and
supervision of the operations of NIO Users Trust. There is no assurance that such current mechanisms for managing the operations of
NIO Users Trust we have adopted are to the satisfaction of all of our users, or that such mechanisms will be carried out in the way it was
intended. The User Council may not be able to achieve its intended work focus or carry out their work effectively and efficiently as the
power to give instructions to the trustee vests with the settlor, protector and investment advisor of the trust. Furthermore, depending on
the proposed use of the economic interests of the shares held by the NIO Users Trust in the future, there could be accounting implications
to us that cannot presently be ascertained.
We and certain of our directors and officers have been named as defendants in shareholder class action lawsuits and legal
proceedings, which could have a material adverse impact on our business, financial condition, cash flows and reputation.
Several shareholder class action lawsuits have been filed against us and certain of our directors and officers. See “Item 8.
Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings” for more details. We are
currently unable to estimate the potential loss, if any, associated with the resolution of such lawsuits, if they proceed. We anticipate that
we will continue to be a target for lawsuits in the future, including class action lawsuits brought by shareholders. From time to time, we
may also be involved in legal proceedings in the ordinary course of our business. There can be no assurance that we will be able to
prevail in our defense or reverse any unfavorable judgment on appeal, and we may decide to settle lawsuits on unfavorable terms. Any
adverse outcome of these cases, including any plaintiffs’ appeal of the judgment in these cases, could result in payments of substantial
monetary damages or fines, or changes to our business practices, and thus have a material adverse effect on our business, financial
condition, results of operation, cash flows and reputation. In addition, there can be no assurance that our insurance carriers will cover all
or part of the defense costs, or any liabilities that may arise from these matters. The litigation process may utilize a significant portion of
our cash resources and divert management’s attention from the day-to-day operations of our company, all of which could harm our
business. We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that
indemnification claims may have on our business or financial results.
Risks Related to Our Corporate Structure
If the PRC government deems that our VIE arrangements do not comply with PRC laws, or if these PRC laws change, we could be
subject to severe penalties or be forced to relinquish our interests in those operations.
Foreign ownership of certain areas of businesses is subject to restrictions and prohibitions under current PRC laws and
regulations. For example, pursuant to the 2021 Negative List, foreign investors are not allowed to, among other things, (i) own more than
50% of the equity interests in a value-added telecommunication service provider (other than for e-commerce, domestic multi-parties
communications, storage and forwarding categories, call centers); and (ii) invest in certain services related to autonomous driving.
Additionally, in practice, subject to the qualifications set by the China Banking and Insurance Regulatory Commission for foreign
shareholders of the insurance brokerage companies, the China Banking and Insurance Regulatory Commission typically would not
approve the establishment of foreign-invested insurance brokerage companies.
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We are a Cayman Islands exempted company and our PRC subsidiaries are considered foreign-invested enterprises.
Accordingly, we have entered into a series of contractual arrangements with Beijing NIO, Anhui NIO AT, Anhui NIO DT and their
respective shareholders that enable us to hold or to apply for all the required licenses in China, including, among others, the ICP license,
the insurance brokerage license and certain licenses relating to the operation of certain services related to autonomous driving. For a
detailed description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—
Contractual Agreements with the VIEs and Their Shareholders.”
In the opinion of Han Kun Law Offices, our PRC legal counsel, (i) the ownership structures of NIO Co., Ltd. and Beijing NIO,
the ownership structure of Anhui NIO AD and Anhui NIO AT, and the ownership structure of NIO China and Anhui NIO DT, in China
do not result in any violation of PRC laws and regulations currently in effect; and (ii) the contractual arrangements between our
subsidiaries, the VIEs and their shareholders governed by PRC laws will not result in any violation of PRC laws or regulations currently
in effect. However, we have been advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation
and application of current and future PRC laws, regulations and rules, and there can be no assurance that the PRC regulatory authorities
will take a view that is consistent with the opinion of our PRC legal counsel. See “Item 4. Information on the Company—B. Business
Overview—Regulations— Regulations on Foreign Investment in China” and “Item 3. Key Information—D. Risk Factors—Risks
Related to Doing Business in China—Our business may be significantly affected by the Foreign Investment Law.” It is uncertain whether
any new PRC laws or regulations relating to VIE structures will be adopted or, if adopted, what they would provide.
If the ownership structure, contractual arrangements and businesses of our PRC subsidiaries or the VIEs are found to be in
violation of any existing or future PRC laws or regulations, or our PRC subsidiaries or the VIEs fail to obtain or maintain any of the
required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations
or failures, including:
● revoking the business licenses and/or operating licenses of such entities;
● shutting down our servers or blocking our website, or discontinuing or placing restrictions or onerous conditions on our
operation through any transactions between our PRC subsidiaries and the VIEs;
● imposing fines, confiscating the income from our PRC subsidiaries or the VIEs, or imposing other requirements with which
we or the VIEs may not be able to comply;
● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with
the VIEs and deregistering the equity pledge of the VIEs, which in turn would affect our ability to consolidate, derive
economic interests from, or exert effective control over the VIEs; or
● restricting or prohibiting our use of the proceeds of any financing outside China to finance our business and operations in
China, and taking other regulatory or enforcement actions that could be harmful to our business.
Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which
would in turn materially and adversely affect our business, financial condition and results of operations. If any of these occurrences
results in our inability to direct the activities of the VIEs that most significantly impact their economic performance, and/or our failure to
receive the economic benefits from the VIEs, we may not be able to consolidate the entities in our consolidated financial statements in
accordance with U.S. GAAP. Currently, Beijing NIO, Anhui NIO AT, and Anhui NIO DT, taking into account all of their respective
business with or without foreign investment restrictions under PRC laws, contributed insignificantly to our total revenues in 2021, 2022
and 2023. As of December 31, 2021, 2022 and 2023, the consolidated VIEs did not have significant operations or any material assets or
liabilities.
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We rely on contractual arrangements with the VIEs and their shareholders to hold a controlling financial interest over each VIE,
which may not be as effective as direct ownership in providing operational control.
We have relied and expect to continue to rely on contractual arrangements with Beijing NIO, Anhui NIO AT, Anhui NIO DT
and their shareholders to maintain a controlling financial interest as the primary beneficiary of each of them (as defined in U.S. GAAP,
ASC 810) and to conduct a portion of our operations in China. For a description of these contractual arrangements, see “Item 4.
Information on the Company—C. Organizational Structure—Contractual Agreements with the VIEs and Their Shareholders.” The
shareholders of VIEs may not act in the best interests of our company or may not perform their obligations under these contracts. If we
had direct ownership of the VIEs, we would be able to exercise our rights as a shareholder to control the VIEs to exercise rights of
shareholders to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable
fiduciary obligations, at the management and operational level. However, under the contractual arrangements, we would rely on legal
remedies under PRC law for breach of contract in the event that the VIEs and their shareholders did not perform their obligations under
the contracts. These legal remedies may not be as effective as direct ownership in providing us with control over the VIEs.
If the VIEs or their shareholders fail to perform their obligations under the contractual arrangements, we may have to incur
substantial costs and expend additional resources to enforce such arrangements, and rely on legal remedies under PRC laws, including
contractual remedies, which may not be sufficient or effective. All of the agreements under our contractual arrangements are governed by
and interpreted in accordance with PRC laws, and disputes arising from these contractual arrangements will be resolved through
arbitration in China. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit our ability to enforce
these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements
in the context of a VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate
outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final, parties
cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time
limit, the prevailing parties may only enforce the arbitration awards in the PRC courts through arbitration award recognition proceedings,
which would require additional expenses and delay. If we are unable to enforce these contractual arrangements, or if we suffer significant
delay or face other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control
over the VIEs, and our ability to conduct our business may be negatively affected. See “Risks Related to Doing Business in China—
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and
us.”
Our ability to enforce the equity pledge agreements between us and the VIEs’ shareholders may be subject to limitations based on
PRC laws and regulations.
Pursuant to the equity pledge agreements under our VIE contractual arrangements, each shareholder of the VIEs agrees to
pledge its equity interests in the respective VIE to our PRC subsidiary to secure the respective VIE’s performance of its obligations under
the contractual arrangements. The equity pledges of shareholders of each VIE under equity pledge agreements have been registered with
the local branch of the State Administration for Market Regulation. In addition, in the registration forms of the local branch of the State
Administration for Market Regulation for the pledges over the equity interests under the equity pledge agreements, the aggregate amount
of registered equity interests pledged to NIO Co., Ltd. represents 100% of the registered capital of Beijing NIO, the aggregate amount of
registered equity interests pledged to Anhui NIO AD represents 100% of the registered capital of Anhui NIO AT, and the aggregate
amount of registered equity interests pledged to NIO China represents 100% of the registered capital of Anhui NIO DT See “Item 4.
Information on the Company—C. Organizational Structure—Contractual Agreements with the VIEs and Their Shareholders” for more
information.
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The equity pledge agreements with the VIEs’ shareholders provide that the pledged equity interests shall constitute continuing
security for any and all of the indebtedness, obligations and liabilities under all of the principal service agreements and the scope of
pledge shall not be limited by the amount of the registered capital of that VIE. However, a PRC court may take the position that the
amount listed on the equity pledge registration forms represents the full amount of the collateral that has been registered and perfected. If
this is the case, the obligations that are supposed to be secured in the equity pledge agreements in excess of the amount listed on the
equity pledge registration forms could be determined by the PRC court as unsecured debt, which typically takes last priority among
creditors.
The shareholders of the VIEs have conflicts of interest with us, which may materially and adversely affect our business and financial
condition.
Our founders, Bin Li and Lihong Qin, own 80% and 20%, respectively, of the equity interests in Beijing NIO and Anhui NIO
DT, and own 80% and 2.24%, respectively, of the equity interests in Anhui NIO AT. Shaoqing Ren, a vice president of our company,
owns 17.76% of the equity interests in Anhui NIO AT. See “Item 4. Information on the Company—C. Organizational Structure—
Contractual Agreements with the VIEs and Their Shareholders” for more information. As shareholders of the VIEs, they have conflicts
of interest with us. These shareholders may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements
we have with them and the VIEs, which would have a material and adverse effect on our ability to effectively control the VIEs and
receive economic benefits from it. For example, the shareholders may be able to cause our agreements with the VIEs to be performed in
a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis.
We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our company or
such conflicts will be resolved in our favor.
Currently, we do not have any arrangements to address conflicts of interest between these shareholders and our company. Each
of Bin Li and Lihong Qin is also a director and executive officer of our company, and Shaoqing Ren is a vice president of our company.
We rely on Bin Li, Lihong Qin and Shaoqing Ren to abide by the laws of the Cayman Islands and China, which provide that directors
and senior management owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the
best interests of the company and not to use their position for personal gain. There is currently no specific and clear guidance under PRC
laws that addresses any conflict between PRC laws and the laws of Cayman Islands in respect of any conflict relating to corporate
governance. If we cannot resolve any conflict of interest or dispute between us and the shareholders of VIEs, we would have to rely on
legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such
legal proceedings.
Our contractual arrangements with the VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or
the VIEs owe additional taxes, which could negatively affect our financial condition.
Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities within ten years after the taxable year when the transactions are conducted. The PRC Enterprise
Income Tax Law requires every enterprise in China to submit its annual enterprise income tax return together with a report on
transactions with its related parties to the tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have
identified any related party transactions that are inconsistent with arm’s length principles. We may face material and adverse tax
consequences if the PRC tax authorities determine that the contractual arrangements between our PRC subsidiaries the VIEs in China,
and the VIEs’ shareholders were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in
taxes under applicable PRC laws, rules and regulations, and adjust VIEs’ income in the form of a transfer pricing adjustment. A transfer
pricing adjustment could, among other things, result in a reduction of expense deductions recorded by VIEs for PRC tax purposes, which
could in turn increase their tax liabilities without reducing our PRC subsidiary’s tax expenses. If any of our PRC subsidiaries requests the
shareholders of the respective VIE to transfer their equity interests in such VIE at nominal or no value pursuant to the contractual
agreements, such transfer could be viewed as a gift and subject our PRC subsidiary to PRC income tax. Furthermore, the PRC tax
authorities may impose late payment fees and other penalties on VIEs for the adjusted but unpaid taxes according to the applicable
regulations. Our financial position could be materially and adversely affected if any of the VIEs’ tax liabilities increase or if any VIE is
required to pay late payment fees and other penalties.
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We may lose the ability to use and benefit from assets held by the VIEs that are material to the operation of our business if the VIEs
go bankrupt or becomes subject to dissolution or liquidation proceedings.
As part of our contractual arrangements with the VIEs, the entities may in the future hold certain assets that are material to the
operation of our business. If any VIE goes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors,
we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial
condition and results of operations. Under the contractual arrangements, the VIEs may not, in any manner, sell, transfer, mortgage or
dispose of their assets or legal or beneficial interests in the business without our prior consent. If any VIE undergoes voluntary or
involuntary liquidation proceedings, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our
ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.
Divestitures of businesses and assets may have a material and adverse effect on our business and financial condition.
We may undertake in the future, partial or complete divestitures or other disposal transactions in connection with certain of our
businesses and assets, particularly ones that are not closely related to our core focus areas or might require excessive resources or
financial capital, to help our company meet its objectives. These decisions are largely based on our management’s assessment of the
business models and likelihood of success of these businesses. However, our judgment could be inaccurate, and we may not achieve the
desired strategic and financial benefits from these transactions. Our financial results could be adversely affected by the impact from the
loss of earnings and corporate overhead contribution/allocation associated with divested businesses.
Dispositions may also involve continued financial involvement in the divested business, such as through guarantees, indemnities
or other financial obligations. Under these arrangements, performance by the divested businesses or other conditions outside of our
control could affect our future financial results. We may also be exposed to negative publicity as a result of the potential misconception
that the divested business is still part of our consolidated group. On the other hand, we cannot assure you that the divesting business
would not pursue opportunities to provide services to our competitors or other opportunities that would conflict with our interests. If any
conflicts of interest that may arise between the divesting business and us cannot be resolved in our favor, our business, financial
condition, results of operations could be materially and adversely affected.
Furthermore, reducing or eliminating our ownership interests in these businesses might negatively affect our operations,
prospects, or long-term value. We may lose access to resources or know-how that would have been useful in the development of our own
business. Our ability to diversify or expand our existing businesses or to move into new areas of business may be reduced, and we may
have to modify our business strategy to focus more exclusively on areas of business where we already possess the necessary expertise.
We may sell our interests too early, and thus forego gains that we otherwise would have received had we not sold. Selecting businesses to
dispose of or spin off, finding buyers for them (or the equity interests in them to be sold) and negotiating prices for what may be
relatively illiquid ownership interests with no easily ascertainable fair market value will also require significant attention from our
management and may divert resources from our existing business, which in turn could have an adverse effect on our business operations.
The Hong Kong Stock Exchange has granted us a waiver from strict compliance with the requirements in Paragraph 3(b) of
Practice Note 15 to the Hong Kong Listing Rules such that we are able to list a subsidiary entity on the Hong Kong Stock Exchange
within three years of the listing of our Class A ordinary shares on the Hong Kong Stock Exchange. While we currently do not have any
plan with respect to any spin-off listing on the Hong Kong Stock Exchange, we may consider a spin-off listing on the Hong Kong Stock
Exchange for one or more of our businesses within the three-year period subsequent to our listing in Hong Kong. The waiver granted by
the Hong Kong Stock Exchange is conditional upon us confirming to the Hong Kong Stock Exchange in advance of any spin-off that it
would not render our company incapable of fulfilling the eligibility requirements under Rule 19C.05 of the Hong Kong Listing Rules
based on the financial information of the entity or entities to be spun-off at the time of the listing of our Class A ordinary shares on the
Hong Kong Stock Exchange (calculated cumulatively if more than one entity is spun-off).
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Risks Related to Doing Business in China
The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements
and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such
inspections.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual
report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws
in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional
standards. The auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and
investigations completely before 2022. As a result, we and investors in the ADSs were deprived of the benefits of such PCAOB
inspections. The inability of the PCAOB to conduct inspections of auditors in China in the past has made it more difficult to evaluate the
effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to
auditors outside of China that are subject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its
December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to
inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer
has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm
headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we and investors in our
ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the
ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or
investigate completely auditors located in China. The delisting or prohibition of trading of the ADSs, or the threat of their being
delisted or prohibited from trading, may materially and adversely affect the value of your investment.
Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm
that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being
traded on a national securities exchange or in the over-the-counter trading market in the United States.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to
inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor
was subject to that determination. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA
following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB
removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered
public accounting firms. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our
annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual
report on Form 20-F for the fiscal year ended December 31, 2023.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and
Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate
completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these
jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified
Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities
would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if
we are identified as a Commission-Identified Issuer for two consecutive years in the future. Although our Class A ordinary shares have
been listed on the Hong Kong Stock Exchange and the Singapore Exchange, and the ADSs and Class A ordinary shares are fully
fungible, we cannot assure you that an active trading market for our Class A ordinary shares on the Hong Kong Stock Exchange and the
Singapore Exchange will be sustained or that the ADSs can be converted and traded with sufficient market recognition and liquidity, if
our shares and ADSs are prohibited from trading in the United States. A prohibition of being able to trade in the United States would
substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with
delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise
capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and
prospects.
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Changes in China’s political or social conditions or government policies could have a material and adverse effect on our business and
results of operations.
Substantially all of our revenues are expected to be derived in China in the near future and most of our operations, including all
of our manufacturing, is conducted in China. Accordingly, our results of operations, financial condition and prospects are influenced by
economic, political and legal developments in China. The PRC government may influence China’s economic growth through
strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and
providing preferential treatment to particular industries or companies. While the PRC economy has experienced significant growth over
the past decades, that growth has been uneven across different regions and between economic sectors. Any adverse changes in economic
conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse
effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, leading to
reduction in demand for our services and solutions and adversely affect our competitive position.
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you
and us.
The PRC legal system is a civil law system based on written statutes. Prior court decisions may be cited for reference but have
limited precedential value. Our PRC subsidiaries are foreign-invested enterprises and are subject to laws and regulations applicable to
foreign-invested enterprises as well as various Chinese laws and regulations generally applicable to companies incorporated in China.
However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of
many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since
PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it
may be difficult to evaluate the outcome of administrative and court proceedings and the level of protection we enjoy in China. Such
uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural
rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business
and impede our ability to continue our operations.
Our business may be significantly affected by the Foreign Investment Law.
On March 15, 2019, the National People’s Congress of China promulgated the Foreign Investment Law, which took effect on
January 1, 2020. However, uncertainties still exist in relation to its interpretation and implementation. The Foreign Investment Law does
not explicitly classify whether VIEs that are controlled via contractual arrangements would be deemed as foreign invested enterprises if
they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under definition of “foreign investment” to
include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods
prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions to provide for
contractual arrangements as a form of foreign investment. There can be no assurance that our contractual arrangements will not be
deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations.
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The Foreign Investment Law grants national treatment to foreign invested entities, except for those foreign invested entities that
operate in industries deemed to be either “restricted” or “prohibited” in the “negative list” to be published. Because the “negative list”
has yet been published, it is unclear as to whether it will differ from the 2021 Negative List currently in effect. The Foreign Investment
Law provides that only foreign invested entities operating in foreign restricted or prohibited industries will require entry clearance and
other approvals that are not required by PRC domestic entities or foreign invested entities operating in other industries. In the event that
any VIE through which we operate our business is not treated as domestic investment and our operations carried out through such VIE
are classified in the “restricted” or “prohibited” industry in the “negative list” under the Foreign Investment Law, such contractual
arrangements may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or dispose of
such business.
Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with
respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a
timely manner, or at all. In addition, the Foreign Investment Law provides that existing foreign invested enterprises established according
to the existing laws regulating foreign investment may maintain their structure and corporate governance within five years after the
implementation of the Foreign Investment Law, which means that we may be required to adjust the structure and corporate governance of
certain of our PRC entities then. Failure to take timely and appropriate measures to cope with any of these or similar regulatory
compliance challenges could materially and adversely affect our current corporate structure, corporate governance and business
operations.
The approval of or the filing with the CSRC or other PRC government authorities may be required in connection with our future
offshore listings and capital raising activities, and, if required, we cannot predict whether or for how long we will be able to obtain
such approval or filing.
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors require an overseas special purpose
vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain
the approval of the CSRC, prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The
interpretation and application of the regulations remain unclear and uncertain. If the CSRC approval is required for any of our offshore
listings and capital raising activities, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we
obtain such CSRC approval, such CSRC approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for
our offshore listings and capital raising activities if such approval is required, or a rescission of such CSRC approval that we have
obtained, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and
penalties on our operations in the PRC, restrictions or limitations on our ability to pay dividends outside of the PRC, and other forms of
sanctions that may materially and adversely affect our business, financial condition, and results of operations.
On July 6, 2021, the PRC government authorities issued the Opinions on Strictly Cracking Down Illegal Securities Activities in
Accordance with the Law, which called for the enhanced administration over illegal securities activities and supervision of overseas-
listed China-based companies, proposed to revise the regulation governing the overseas issuance and listing of shares by such companies
and clarified the responsibilities of competent domestic industry regulators and government authorities.
On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by
Domestic Companies and five supporting guidelines, which took effect on March 31, 2023. According to these rules, the issuer or a
major domestic operating company designated by the issuer, as the case may be, shall file with the CSRC, among other things, (i) with
respect to its follow-on offering in the same foreign market within three business days, after completion of the follow-on offering, and
(ii) with respect to its follow-on offering and listing in other foreign markets within three business days, after its initial filing of the
listing application to the regulator in the place of such intended listing. Non-compliance with these rules or an overseas listing completed
in breach of them may result in a warning on the domestic companies and a fine of RMB1 million to RMB10 million on them.
Furthermore, the supervisors directly responsible and other directly responsible persons of the domestic enterprises may be warned, and
fined between RMB500,000 to RMB5,000,000. The controlling shareholders or actual controllers of the domestic company which
organize or instigate the illegal acts, or conceal matters resulting in the illegal acts, may be fined between RMB1 million to RMB10
million. On February 17, 2023, the CSRC issued the Notice on Administrative Arrangements for the Filing of Domestic Enterprise’s
Overseas Offering and Listing, which stipulates the domestic enterprises like us that have completed overseas listings are not required to
file with the CSRC in accordance with these rules immediately, but shall carry out filing procedures as required if we conduct refinancing
or fall within other circumstances that require filing with the CSRC.
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Considering that these rules have been promulgated recently, there are still some uncertainties about how to further refine and
implement the requirements, which needs to be further guided and clarified by the CSRC and other regulatory authorities. If we have
subsequent filing or reporting matters in the future, such as future offshore listings, refinancing and other capital raising activities, as well
as other major events, including but not limited to the change of control, investigated or punished by overseas securities regulatory
authorities or competent authorities, changing listing status or listing sector, terminating the listing voluntarily or forcibly, and changing
our major business activities, given the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot
assure you that we will be able to complete the filings or reporting and fully comply with the new rules and requirements in a timely
manner or at all. See “Item 4. Information on the Company—B. Business Overview—Regulations—M&A Rules and Overseas Listing.”
The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our
offshore listings or future capital raising activities before settlement and delivery of the proceeds hereby. Consequently, if you engage in
market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery
may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we
obtain their approvals or accomplish the required filing or other regulatory procedures for our offshore listings or future capital raising
activities, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a
waiver. Any uncertainties or negative publicity regarding such approval, filing or other requirements could materially and adversely
affect our business, prospects, financial condition, reputation, and the proceeds of the shares.
We 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 our PRC subsidiaries and the VIEs.
We operate in the automotive and internet industry, both of which are extensively regulated by the PRC government. For
example, the PRC government imposes foreign ownership restrictions and licensing and permit requirements for companies in the
internet industry. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations on Foreign Investment
in China” and “—Regulations on Value-added Telecommunications Services.” Manufacturing of our vehicles is subject to extensive
regulations in China. See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations and Approvals
Covering the Manufacturing of New Energy Vehicles.” These laws and regulations are relatively new and evolving, and their
interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine
what actions or omissions may be deemed to be in violation of applicable laws and regulations and furthermore, we cannot assure you
that we have complied or will be able to comply with all applicable laws at all times. Consequently, we could face the risks of being
subject to governmental investigations, orders by the competent authorities for rectification, administrative penalties or other legal
proceedings.
Currently, we rely on the contractual arrangements with Beijing NIO and its shareholders to hold an ICP license, and separately
own the domain names and trademarks in connection with our internet services and operate our website and mobile application through
NIO Co., Ltd. Our internet services may be treated as a value-added telecommunications business. If so, we may be required to transfer
the domain names, trademark and the operations of the internet services from NIO Co., Ltd. to Beijing NIO, and we may also be subject
to administrative penalties. We rely on the contractual arrangements with Anhui NIO DT and its shareholders to operate insurance
brokerage services. NIO Insurance Broker Co., Ltd., the subsidiary of Anhui NIO DT, currently holds an insurance brokerage license and
provides insurance brokerage services primarily related to vehicles and properties. We intend to apply for requisite licenses for Anhui
NIO AT for certain supporting functions during the development of our assisted and intelligent driving technology. Any challenge to the
validity of these arrangements may significantly disrupt our business, subject us to sanctions, compromise enforceability of our
contractual arrangements, or have other harmful effects on us. It is uncertain, (i) if Beijing NIO or NIO Co., Ltd. will be required to
obtain a separate operating license for certain services that we carried out through our mobile application in addition to the valued-added
telecommunications business operating licenses for internet content provision services, and if Beijing NIO will be required to supplement
our current ICP license in the future, (ii) if Anhui NIO DT, its subsidiary or NIO China will be required to obtain a separate operating
license for certain services that we carried out in addition to the insurance brokerage license, and if Anhui NIO DT or its subsidiary will
be required to supplement our current insurance brokerage license in the future; and (iii) if Anhui NIO AT or Anhui NIO AD will be
required to obtain a separate operating license for certain services that we carried out in addition to certain required licenses to be applied
for, and if Anhui NIO AT will be required to supplement certain required licenses to be applied for in the future.
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In addition, our mobile applications are also regulated by the Administrative Provisions on Information Services of Mobile
Internet Applications promulgated by CAC in June 2022, which took effect on August 1, 2022 and replaces its predecessor regulation.
According to these provisions, the providers of mobile applications shall be responsible for the information contents presented and shall
not produce and disseminate illegal information and shall consciously prevent and resist unhealthy information. However, we cannot
assure that all the information or content displayed on, retrieved from or linked to our mobile applications complies with the
requirements of these provisions at all times. If our mobile applications were found to be violating these provisions, we may be subject to
administrative penalties, including warning, service suspension or removal of our mobile applications from the mobile application store,
which may materially and adversely affect our business and operating results.
The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies
relating to the internet industry, particularly the policies relating to value-added telecommunications services, have created substantial
uncertainties regarding the legality of existing and future foreign investments in the businesses and activities of internet businesses in
China, including our business.
Several PRC regulatory authorities, such as the State Administration for Market Regulation, the NDRC, the Ministry of Industry
and Information Technology, and the Ministry of Commerce, oversee different aspects of our operations, and we are required to obtain a
wide range of government approvals, licenses, permits and registrations in connection with our operations. For example, certain filings
must be made by automobile dealers through the information system for the national automobile circulation operated by the commerce
department within 90 days after the receipt of a business license. Furthermore, the NEV industry is relatively new in China, and the PRC
government has not adopted a clear regulatory framework to regulate the industry. As some of the laws, rules and regulations that we
may be subject to were primarily enacted with a view toward application to ICE vehicles, or are relatively new, there is significant
uncertainty regarding their interpretation and application with respect to our business. For example, it remains unclear under PRC laws
whether our charging vans need to be registered with related local traffic management authorities or obtain transportation operation
licenses for their services, and whether we would be required to obtain any particular permit or license to be qualified to provide our
charging services in cooperation with third-party charging stations. In addition, the PRC government may enact new laws and regulations
that require additional licenses, permits, approvals and/or registrations for the operation of any of our existing or future business. As a
result, we cannot assure you that we have all the permits, licenses, registrations, approvals and/or business license covering the sufficient
scope of business required for our business or that we will be able to obtain, maintain or renew permits, licenses, registrations, approvals
and/or business license covering sufficient scope of business in a timely manner or at all.
The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations
and the value of our ADSs.
We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations. The PRC
government has significant oversight over the conduct of our business, and may influence our operations as the government deems
appropriate to advance regulatory and societal goals and policy positions. The PRC government has recently published new policies that
significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies that
directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a
material adverse change in our operation and/or the value of our ADSs. Therefore, investors of our company and our business face
potential uncertainty from actions taken by the PRC government affecting our business.
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We may rely on distributions by our PRC subsidiaries for our financing requirements, and any limitation on our PRC subsidiaries to
make payments to us could have a material and adverse effect on our business.
We are a holding company, and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our
cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and
service any debt we may incur. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their
accumulated after-tax profits upon satisfaction of statutory conditions and procedures, if any, determined in accordance with Chinese
accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits
each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. As of December 31,
2023, most of our PRC subsidiaries and the VIEs had not made appropriations to statutory reserves as our PRC subsidiaries and the VIEs
reported accumulated loss. For a detailed discussion of applicable PRC regulations governing distribution of dividends, see “Item 4.
Information on the Company—B. Business Overview—Regulations—Regulations on Dividend Distribution.” Additionally, if our PRC
subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or
make other distributions to us. Furthermore, the PRC tax authorities may require our subsidiaries to adjust their taxable income under the
contractual arrangements they currently have in place with the VIEs in a manner that would materially and adversely affect their ability
to pay dividends and other distributions to us. See “Risks Related to Our Corporate Structure—Our contractual arrangements with the
VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIEs owe additional taxes, which
could negatively affect our financial condition.” In addition, the incurrence of indebtedness by our PRC subsidiaries could result in
operating and financing covenants and undertakings to creditors that would restrict the ability of our PRC subsidiaries to pay dividends
to us.
Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and
adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise
fund and conduct our business. See “—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification
could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”
Increases in labor costs and enforcement of stricter labor laws and regulations in the PRC may adversely affect our business and our
profitability.
China’s overall economy and the average wage in China have increased in recent years and are expected to grow. The average
wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits,
will increase. Unless we are able to pass on these increased labor costs to those who pay for our services, our profitability and results of
operations may be materially and adversely affected.
In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our
employees, limitation with respect to utilization of labor dispatching, applying for foreigner work permits, labor protection and labor
condition and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury
insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees.
Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing
labor contracts, minimum wages, paying remuneration, determining the term of employee’s probation and unilaterally terminating labor
contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the
PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective
manner, which could adversely affect our business and results of operations.
Companies registered and operating in China are required under the PRC Social Insurance Law (latest amended in 2018) and
the Regulations on the Administration of Housing Funds (latest amended in 2019) to, apply for social insurance registration and housing
fund deposit registration within 30 days of their establishment, and to pay for their employees different social insurance including
pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent
required by law. However, certain of our PRC subsidiaries and the VIEs that do not hire any employees and are not a party to any
employment agreement, have not applied for and obtained such registration, and instead of paying the social insurance payment on their
own for their employees, certain of our PRC subsidiaries and the VIEs use third-party agencies to pay in the name of such agency. We
could be subject to orders by the competent labor authorities for rectification and failure to comply with the orders may further subject us
to administrative fines.
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As the interpretation and implementation of labor-related laws and regulations are still evolving, our employment practices may
violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We cannot
assure you that we have complied or will be able to comply with all labor-related law and regulations including those relating to
obligations to make social insurance payments and contribute to the housing provident funds. If we are deemed to have violated labor
laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition
and results of operations will be adversely affected.
Furthermore, in order to control labor costs, we conducted a series of organizational restructuring to cut headcount in 2019,
which we believe has negatively affected our reputation, brand image and our ability to retain the remaining qualified staff and skilled
employees. We could undertake an organizational restructuring again in the future, the occurrence of which will pose negative
implications on our competitive position, cost us qualified employees and subject us to potential employment lawsuits. Any of the above
would negatively affect our business, financial condition and results of operations.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations.
The conversion of RMB into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The
RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of RMB against the U.S. dollar and other
currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other
things. We cannot assure you that RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is
difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between RMB and the U.S. dollar
in the future.
Any significant appreciation or depreciation of RMB may materially and adversely affect our revenues, earnings and financial
position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, to the extent that we need to convert
U.S. dollars we receive into RMB to pay our operating expenses, appreciation of RMB against the U.S. dollar would have an adverse
effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of RMB against the U.S. dollar
may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs.
Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. While we have entered
into and may continue to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited,
and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC
exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates
may have a material adverse effect on your investment.
PRC regulation on funding PRC subsidiaries by offshore entities and governmental control of currency conversion may delay or
prevent us from funding our PRC subsidiaries, which could materially and adversely affect our liquidity and business.
Under PRC laws and regulations, we are permitted to utilize the proceeds of any financing outside China to fund our PRC
subsidiaries by making loans to or additional capital contributions to our PRC subsidiaries, subject to applicable government registration,
statutory limitations on amount and approval requirements. For more details, see “Item 4. Information on the Company—B. Business
Overview—Regulations—Regulations on Foreign Exchange.” These PRC laws and regulations may significantly limit our ability to use
Renminbi converted from the net proceeds of any financing outside China to fund the establishment of new entities in China by our PRC
subsidiaries, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish new VIEs in China.
Moreover, we cannot assure you that we will be able to complete the necessary registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or future capital contributions that we made to
our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or
expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which
could materially and adversely affect our liquidity and our ability to fund and expand our business.
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On December 26, 2017, the NDRC issued the Management Rules for Overseas Investment by Enterprises. On February 11,
2018, the Catalog on Overseas Investment in Sensitive Industries (2018 Edition) was promulgated. Overseas investment governed by
these rules refers to the investment activities conducted by an enterprise located in the territory of China either directly or via an overseas
enterprise under its control through making investment with assets and equities or providing financing or guarantees in order to obtain
overseas ownership, control, management rights and other related interests, and overseas investment by a PRC individual through
overseas enterprises under his/her control is also subject to these rules. According to these rules, before being conducted, any overseas
investment in a sensitive industry or any direct investment by a Chinese enterprise in a non-sensitive industry but with an investment
amount over US$300 million requires approval from, or filing with, the NDRC, and for those non-sensitive investments indirectly by
Chinese investors (including PRC individuals) with investment amounts over US$300 million need to be reported. However,
uncertainties remain with respect to the interpretation and application of these rules, we are not sure whether our using of proceeds will
be subject to these rules. If we fail to obtain the approval, complete the filing or report our overseas investment with our proceeds (as the
case may be) in a timely manner provided that these rules are applicable, we may be forced to suspend or cease our investment, or be
subject to penalties or other liabilities, which could materially and adversely affect our business, financial condition and prospects.
Governmental control of currency conversion may limit our ability to utilize our revenues effectively.
The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the
remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, such as profit
distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from
the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, approval from or
registration with appropriate governmental authorities is required where Renminbi is to be converted into a foreign currency and remitted
out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies. See “Item 4. Information on the
Company—B. Business Overview—Regulations—Regulations on Foreign Exchange.”
Since 2016, the PRC government has further tightened its foreign exchange policies and enhanced its scrutiny of major
outbound capital movement. More restrictions and a substantial vetting process have been put in place by SAFE to regulate cross-border
transactions falling under the capital account. The PRC government may also restrict access in the future to foreign currencies for current
account transactions, at its discretion. We receive substantially all of our revenues in RMB. If the foreign exchange control system
prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in
foreign currencies to our shareholders, including holders of our ADSs.
PRC regulations on offshore investment by PRC residents may prevent our PRC subsidiaries from distributing profits to us or expose
us or our PRC resident beneficial owners to penalties under PRC law.
SAFE requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or
control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities
must update their SAFE registrations when the offshore special purpose vehicle undergoes certain material events. See “Item 4.
Information on the Company—B. Business Overview—Regulations—Regulations on Foreign Exchange—Offshore Investment.”
If our shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC
subsidiaries may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation
to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries. Moreover, failure to comply with
SAFE registration requirements could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.
However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interests in our
company, nor can we compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you
that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or
obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to
comply with SAFE regulations, or our failure to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to
fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to make
distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.
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China’s M&A Rules and other regulations establish complex procedures for certain acquisitions of PRC companies by foreign
investors, which could make it difficult for us to pursue growth through acquisitions in China.
A number of PRC laws and regulations have established procedures and requirements that could make merger and acquisition
activities in China by foreign investors more time-consuming and complex. In addition to the Anti-Monopoly Law of China itself, these
include the Rules on Acquisition of Domestic Enterprises by Foreign Investors, adopted by six PRC governmental and regulatory
agencies in 2006 and amended in 2009, and the Rules of the Ministry of Commerce on Implementation of Security Review System of
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, promulgated in 2011. These laws and regulations impose
requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a
foreign investor takes control of a PRC domestic enterprise. In addition, the Anti-Monopoly Law of China requires that the Ministry of
Commerce be notified in advance of any concentration of undertaking if certain thresholds are triggered. Moreover, these rules specify
that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions
through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject
to strict review by the Ministry of Commerce, and prohibit any attempt to bypass a security review, including by structuring the
transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary
businesses. Complying with the requirements of the regulations to complete such transactions could be time-consuming, and any
required approval processes, including approval from the Ministry of Commerce, may delay or inhibit our ability to complete such
transactions, which could affect our ability to expand our business or maintain our market share.
Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject
the PRC plan participants or us to fines and other legal or administrative sanctions.
Under SAFE regulations, PRC residents who participate in a stock incentive plan in an overseas publicly listed company are
required to register with SAFE or its local branches and complete certain other procedures. See “Item 4. Information on the Company—
B. Business Overview—Regulations—Regulations on Employment and Social Welfare—Employee Stock Incentive Plan.” We and our
PRC resident employees who participate in our share incentive plans are subject to these regulations since we became a public company
listed in the United States. If we or any of these PRC resident employees fail to comply with these regulations, we or such employees
may be subject to fines and other legal or administrative sanctions. We also face regulatory uncertainties that could restrict our ability to
adopt additional incentive plans for our directors, executive officers and employees under PRC law.
Discontinuation of any of the preferential tax treatments and government subsidies or imposition of any additional taxes and
surcharges could adversely affect our financial condition and results of operations.
Our PRC subsidiaries currently benefit from a number of preferential tax treatments. For example, one of our VIEs, Anhui NIO
AT, is entitled to enjoy, after completing certain application formalities, a 15% preferential enterprise income tax from 2022 as it has
been qualified as a “High and New Technology Enterprise” under the PRC Enterprise Income Tax Law and related regulations. The
discontinuation of any of the preferential income tax treatment that we currently enjoy could have a material and adverse effect on our
result of operations and financial condition. We cannot assure you that we will be able to maintain or lower our current effective tax rate
in the future.
In addition, our PRC subsidiaries have received various financial subsidies from PRC local government authorities. The
financial subsidies result from discretionary incentives and policies adopted by PRC local government authorities. Local governments
may decide to change or discontinue such financial subsidies at any time. The discontinuation of such financial subsidies or imposition of
any additional taxes could adversely affect our financial condition and results of operations.
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If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax
consequences to us and our non-PRC shareholders or ADS holders.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a
“de facto management body” within the PRC is considered a PRC resident enterprise. The implementation rules define the term “de facto
management body” as the body that exercises full and substantial control over and overall management of the business, productions,
personnel, accounts and properties of an enterprise. In 2009, the State Taxation Administration issued a circular, known as Circular 82,
which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is
incorporated offshore is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises or
PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set forth in the circular may reflect the
State Taxation Administration’s general position on how the “de facto management body” test should be applied in determining the tax
resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or
a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be
subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the
day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are
made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and
records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting
board members or senior executives habitually reside in the PRC.
We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax
resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the
interpretation of the term “de facto management body.” If the PRC tax authorities determine that we are a PRC resident enterprise for
enterprise income tax purposes, we will be subject to the enterprise income tax on our global income at the rate of 25% and we will be
required to comply with PRC enterprise income tax reporting obligations. In addition, we may be required to withhold a 10%
withholding tax from interest or dividends we pay to our shareholders that are non-PRC resident enterprises, including the holders of our
ADSs. In addition, non-PRC resident enterprise shareholders (including our ADS holders) may be subject to PRC tax at a rate of 10% on
gains realized on the sale or other disposition of our ADSs or ordinary shares, if such income is treated as sourced from within the PRC.
Furthermore, if PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, interest or
dividends paid to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of the ADSs or
ordinary shares by such holders may be subject to PRC tax at a rate of 20% (which, in the case of interest or dividends, we may withhold
at source), if such gains are deemed to be from PRC sources. These rates may be reduced by an applicable tax treaty, but it is unclear
whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between their country of tax residence and the
PRC in the event that we are treated as a PRC resident enterprise.
We may not be able to obtain certain benefits under tax arrangements on dividends paid by our PRC subsidiaries to us through our
Hong Kong subsidiary.
We are a holding company incorporated under the laws of the Cayman Islands and as such rely on dividends and other
distributions on equity from our PRC subsidiaries to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income
Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” to a foreign enterprise
investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax
treatment. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and Tax Evasion on Income, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise
owns no less than 25% of a PRC enterprise. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy
Treatments under Treaties, which took effect in January 2020, require non-resident enterprises to determine whether they are qualified to
enjoy the preferential tax treatment under the tax treaties and file report and materials with the tax authorities. There are also other
conditions for enjoying the reduced withholding tax rate according to other tax rules and regulations. See “Item 5. Operating and
Financial Review and Prospects—A. Operating Results—Taxation—PRC.” As of December 31, 2023, most of our subsidiaries and the
VIEs located in the PRC reported accumulated loss and therefore they had no retained earnings for offshore distribution. In the future, we
intend to re-invest all earnings, if any, generated from our PRC subsidiaries for the operation and expansion of our business in China.
Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant withholding tax. Our
determination regarding our qualification to enjoy the preferential tax treatment could be challenged by the tax authority and we may not
be able to complete the necessary filings with the tax authority and enjoy the preferential withholding tax rate of 5% under the
arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiary.
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We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding
companies.
In February 2015, the State Taxation Administration issued the Circular on Issues of Enterprise Income Tax on Indirect
Transfers of Assets by Non-PRC Resident Enterprises, or Circular 7. Circular 7 extends its tax jurisdiction to not only indirect transfers
but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company.
In addition, Circular 7 provides certain criteria on how to assess reasonable commercial purposes and has introduced safe harbors for
internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to
both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-
resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an
overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the
taxable assets may report to the tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may
disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose
of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise
income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes,
currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. On October 17, 2017, the State Taxation
Administration issued Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax, or Circular 37, which
took effect on December 1, 2017 and was amended on June 15, 2018. Circular 37 further clarifies the practice and procedure of the
withholding of nonresident enterprise income tax.
We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or
other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax
authorities may pursue such non-PRC resident enterprises with respect to a filing or the transferees with respect to withholding
obligations, and request our PRC subsidiaries to assist in the filing. As a result, we and non-PRC resident enterprises in such transactions
may become at risk of being subject to filing obligations or being taxed under Circular 7 and Circular 37, and may be required to expend
valuable resources to comply with them or to establish that we and our non-PRC resident enterprises should not be taxed under these
regulations, which may have a material adverse effect on our financial condition and results of operations.
If the authorized users of our non-tangible assets, including our corporate chops and seals, fail to fulfill their responsibilities, or
misuse these assets, our business could be materially and adversely affected.
Under PRC law, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the
signature of a legal representative whose designation is registered and filed with the branch of the State Administration for Market
Regulation.
Although we usually utilize chops to enter into contracts, the designated legal representatives of each of our PRC subsidiaries
and the VIEs have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities. All
designated legal representatives of our PRC subsidiaries and the VIEs are members of our senior management team who have signed
employment agreements with us or our PRC subsidiaries and the VIEs under which they agree to abide by various duties they owe to us.
In order to maintain the physical security of our chops and chops of our PRC entities, we generally store these items in secured locations
accessible only by the authorized personnel in the legal or finance department of each of our subsidiaries and the VIEs. Although we
monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly,
if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining
control over the entities and experience significant disruption to our operations. If a designated legal representative obtains control of the
chops in an effort to obtain control over any of our PRC subsidiaries or the VIEs, we or our PRC subsidiaries or the VIEs would need to
pass a new shareholders or board resolution to designate a new legal representative and we would need to take legal action to seek the
return of the chops, apply for new chops with the authorities, or otherwise seek legal redress for the violation of the representative’s
fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular
business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of our control in the
event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.
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Our interest in leased property may be defective or subject to lien and our right to lease, own or use the properties may be therefore
challenged, which could cause significant disruption to our business.
Under PRC laws, all lease agreements are required to be registered with the local housing authorities. We presently lease several
premises in China, some of which have not completed the registration of the ownership rights or the registration of our leases with the
authorities. Failure to complete these required registrations may expose our landlords, lessors and us to potential monetary fines. If these
registrations are not obtained in a timely manner or at all, we may be subject to monetary fines or may have to relocate our offices and
incur the associated losses.
Some of the ownership certificates or other similar proof of certain leased properties have not been provided to us by the lessors.
Therefore, we cannot assure you that such lessors are entitled to lease the real properties to us. If the lessors are not entitled to lease the
real properties to us and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors,
we may not be able to enforce our rights to lease such properties under the respective lease agreements against the owners. If our lease
agreements are claimed as null and void by third parties who are the real owners of such leased real properties, we could be required to
vacate the properties, in the event of which we could only initiate the claim against the lessors under lease agreements for indemnities for
their breach of the leasing agreements. In addition, we may not be able to renew our existing lease agreements before their expiration
dates, in which case we may be required to vacate the properties. We cannot assure you that suitable alternative locations are readily
available on commercially reasonable terms, or at all, and if we are unable to relocate our operations in a timely manner, our operations
may be adversely affected.
Some of our PRC subsidiaries have incurred or will incur indebtedness and may, in connection therewith, create mortgage,
pledge or other lien over substantive operating assets, facilities or equity interests of certain PRC subsidiaries as guarantee to their
repayment of indebtedness or as counter guarantee to third-party guarantors which provide guarantee to our PRC subsidiaries’ repayment
of indebtedness. In the event that the PRC subsidiaries fail to perform their repayment obligations, or such guarantors perform their
guarantee obligations, claims may be raised to our substantive operating assets, facilities or equity interests of the PRC subsidiaries in
question. If we cannot continue to own or use such assets, facilities or equity interests, our operation may be adversely affected.
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 Stock Exchange.
The trading of our Class A ordinary shares on the Hong Kong Stock Exchange commenced on March 10, 2022 under the stock
code “9866.” As a company listed on the Hong Kong Stock Exchange pursuant to Chapter 19C of the Hong Kong Listing Rules, we are
not subject to certain provisions of the Hong Kong Listing Rules pursuant to Rule 19C.11, including, among others, rules on notifiable
transactions, connected transactions, share option schemes, content of financial statements as well as certain other continuing obligations.
In addition, in connection with the listing of our Class A ordinary shares on the Hong Kong Stock Exchange, we have applied for a
number of waivers and/or exemptions from strict compliance with the Hong Kong Listing Rules, the Codes on Takeovers and Mergers
and Shares Buy-backs issued by the Securities and Futures Commission, and the Securities and Futures Ordinance. As a result, we will
adopt different practices as to those matters as compared with other companies listed on the Hong Kong Stock Exchange that do not
enjoy those exemptions or waivers.
Our articles of association are specific to us and include certain provisions that may be different from the requirements under the
Hong Kong Listing Rules and common practices in Hong Kong. In particular, in our amended articles of associations put forth in the first
annual general meeting after the listing of our Class A ordinary shares on the Hong Kong Stock Exchange, or the First AGM, we refer to
the Relevant Period as the period commencing from the date on which any of our Class A ordinary shares first become secondary listed
on the Hong Kong Stock Exchange to and including the date immediately before the day which the secondary listing is withdrawn from
the Hong Kong Stock Exchange. For example, in order to comply with applicable Hong Kong Listing Rules, during the Relevant Period,
(i) NIO Users Trust will not have any director nomination right; (ii) our company shall have only one class of shares with enhanced or
weighted voting rights; (iii) our directors shall not have the power to, amongst others, authorize share split or designate a new share class
with enhanced or weighted voting rights; and (iv) certain restrictions on the weighted voting right structure of our company under
Chapter 8A of the Hong Kong Listing Rules shall be applicable, such as, amongst others, no further increase in the proportion of WVR
shares, that only a director or a director holding vehicle is permitted to hold WVR shares and automatic conversion of WVR shares into
Class A ordinary shares under certain circumstances.
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Notwithstanding the above and at any time after the Relevant Period, the provisions which are subject to the Relevant Period
will continue to apply in the circumstances where the Company has a change of listing status on the Hong Kong Stock Exchange other
than in the case where the secondary listing of the Company is withdrawn from the Hong Kong Stock Exchange pursuant to the
applicable Hong Kong Listing Rules.
Given certain shareholder protection under the Hong Kong Listing Rules will only be applicable during the Relevant Period, our
investors may be afforded less protection after the Relevant Period under our amended articles of association adopted in the First AGM
as compared with other companies secondarily listed in Hong Kong.
We may only cease to be secondary listed under Chapter 19C of the Hong Kong Listing Rules under one of the following
situations:
● withdrawal, in the case where we are primary listed on another stock exchange and voluntarily withdraw our secondary
listing on the Hong Kong Stock Exchange;
● migration of the majority of trading to the Hong Kong Stock Exchange’s markets, in the case where the majority of trading
in our listed shares migrates to the Hong Kong Stock Exchange’s markets on a permanent basis;
● primary conversion, i.e., our voluntary conversion to a dual-primary listing on the Hong Kong Stock Exchange;
● overseas de-listing, where our shares or depositary receipts issued on our shares cease to be listed on the stock exchange
which we are primary listed;
● if the Hong Kong Stock Exchange cancels the listing of our securities; and
● if the Securities and Futures Commission of Hong Kong directs the Hong Kong Stock Exchange to cancel the listing of our
securities.
The scenarios under which we may cease to be secondary listed on the Hong Kong Stock Exchange are subject to the changing
market conditions, our listing or de-listing in other jurisdictions, our compliance with the listing rules of the Hong Kong Stock Exchange
and other factors beyond our control. As a result, there are substantial uncertainties relating to applicability of the shareholders’ rights
and protection under the aforementioned provisions of our amended articles of association put forth in the First AGM particularly in the
case where the Company de-lists from the Hong Kong Stock Exchange.
As we are listed as a Non-Grandfathered Greater China Issuer pursuant to Chapter 19C of the Hong Kong Listing Rules, our
articles of association must comply with the requirements of the Hong Kong Listing Rules unless waived by the Hong Kong Stock
Exchange. We have put forth resolutions to our shareholders at our first general meeting convened on August 25, 2022 to amend certain
provisions of our articles in order to comply with the Hong Kong Listing Rules.
Furthermore, if 55% or more of the total worldwide trading volume, by dollar value, of our Class A ordinary shares and ADSs
over our most recent fiscal year takes place on the Hong Kong Stock Exchange, the Hong Kong Stock Exchange will regard us as having
a dual primary listing in Hong Kong and we will no longer enjoy certain exemptions or waivers from strict compliance with the
requirements under the Hong Kong Listing Rules, the Codes on Takeovers and Mergers and Shares Buy-backs and the Securities and
Futures Ordinance, which could result in us having to amend our corporate structure and articles of association and we may incur of
incremental compliance costs.
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If we change the listing venue of our securities, you may lose the shareholder protection mechanisms afforded under the regulatory
regimes of the applicable securities exchange.
As a company listed on the New York Stock Exchange, the Hong Kong Stock Exchange and the Singapore Exchange, we are
subject to various listing standards and requirements that are aimed at protecting your rights as shareholders of our company, subject to
certain permitted exceptions applicable to foreign companies. For example, after our listing on the Hong Kong Stock Exchange, our
thirteenth amended and restated memorandum and articles of association requires that there should only be one class of shares with
enhanced voting rights, and that certain reserved matters under the Hong Kong Listing Rules are required to be voted on a one vote per
share basis at the general meetings. In the event that we reduce the number of shares in issue, the holders of WVR shares shall reduce
their voting rights in the Company proportionately through a conversion of a portion of their Class C shares or otherwise. If we choose to
change the listing venue of our securities, including delisting from either exchanges, you may lose the shareholder protection
mechanisms afforded under the regulatory regimes of the applicable securities exchange. In particular, various factors will be taken into
consideration by the Company in relation to the circumstances under which it may be considered not desirable or viable for the shares to
remain listed on a certain stock exchange, such as the then regulatory environment of the listing venue, whether the additional
compliance burden arisen by remaining listed in a particular stock exchange will be unduly burdensome for the Company to further its
interest, realize its vision or implementing certain business plans.
The trading prices of our listed securities have been and are likely to continue to be volatile, which could result in substantial losses
to investors.
The trading prices of our listed securities have been and are likely to continue to be volatile and could fluctuate widely in
response to a variety of factors, many of which are beyond our control. For example, in 2023, the trading price of our ADSs ranged from
a low of US$7.15 to a high of US$15.46; the trading price of our Class A ordinary shares listed on the Hong Kong Stock Exchange
ranged from a low of HK$55.35 to a high of HK$122.60; the trading price of our Class A ordinary shares listed on the Main Board of the
Singapore Exchange ranged from a low of US$7.07 to a high of US$15.78. The market price for our listed securities may continue to be
volatile and subject to wide fluctuations in response to factors including, but not limited to, the following:
● actual or anticipated fluctuations in our quarterly results of operations and cash flows;
● changes in financial estimates by securities research analysts;
● conditions in automotive markets;
● changes in the operating performance or market valuations of other automotive companies;
● announcements we or our competitors made of new products, acquisitions, strategic partnerships, joint ventures or capital
commitments;
● addition or departure of key personnel;
● fluctuations of exchange rates between RMB and the U.S. dollar;
● litigation, government investigation or other legal or regulatory proceeding;
● release of lock-up and other transfer restrictions on our Class A ordinary shares or ADSs, issuance of ADSs or ordinary
shares upon conversion of the convertible notes we issued, or any ordinary shares or sales of additional ADSs;
● any actual or alleged illegal acts of our shareholders or management;
● any share repurchase program; and
● general economic or political conditions in China or elsewhere in the world.
Any of these factors may result in large and sudden changes in the volume and price at which our Class A ordinary shares
and/or ADSs will trade.
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In addition, the stock market in general, and the market prices for companies with operations in China in particular, have
experienced volatility that often has been unrelated to the operating performance of such companies. The securities of some China-based
companies that have listed their securities in the United States have experienced significant volatility since their initial public offerings in
recent years, including, in some cases, substantial declines in the trading prices of their securities. The trading performances of these
companies’ securities after their offerings may affect the attitudes of investors towards Chinese companies listed in the United States in
general, which consequently may impact the trading performance of our Class A ordinary shares and/or ADSs, regardless of our actual
operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent
accounting, corporate structure or other matters of other Chinese companies may also negatively affect the attitudes of investors towards
Chinese companies in general, including us, regardless of whether we have engaged in any inappropriate activities. In particular, the
global financial crisis and the ensuing economic recessions in many countries have contributed and may continue to contribute to
extreme volatility in the global stock markets. These broad market and industry fluctuations may adversely affect the market price of our
Class A ordinary shares and/or ADSs. Volatility or a lack of positive performance in our Class A ordinary shares and/or ADSs price may
also adversely affect our ability to retain key employees, most of whom have been granted options or other equity incentives.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their
recommendations regarding our Class A ordinary shares and/or ADSs, the market price for our Class A ordinary shares and/or ADSs
and trading volume could decline.
The trading market for our Class A ordinary shares and/or ADSs will be influenced by research or reports that industry or
securities analysts publish about our business. If one or more analysts who cover us downgrade our Class A ordinary shares and/or
ADSs, the market price for our Class A ordinary shares and/or ADSs would likely decline. If one or more of these analysts cease to cover
us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price
or trading volume for our Class A ordinary shares and/or ADSs to decline.
Our dual-class voting structure will limit the holders of our Class A ordinary shares and ADSs to influence corporate matters,
provide certain shareholders of ours with substantial influence and could discourage others from pursuing any change of control
transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
We had historically adopted a triple-class voting structure such that our ordinary shares consisted of Class A ordinary shares,
Class B ordinary shares and Class C ordinary shares. Upon the listing of our Class A ordinary shares on the Hong Kong Stock Exchange,
all of our Class B ordinary shares, which used to be beneficially owned by Tencent entities, namely, Image Frame Investment (HK)
Limited and Mount Putuo Investment Limited, were converted to Class A ordinary shares pursuant to the conversion notice delivered by
the shareholders. The shareholding structure of Class B ordinary shares and provisions related to Class B ordinary shares have been
removed in our thirteenth amended and restated memorandum and articles of association, approved by our shareholders at the annual
general meeting held on August 25, 2022. Currently, our ordinary shares consist of Class A ordinary shares and Class C ordinary shares.
Holders of Class A ordinary shares and Class C ordinary shares have the same rights other than voting and conversion rights. Each
holder of our Class A ordinary shares is entitled to one vote per share, and each holder of our Class C ordinary shares is entitled to eight
votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class C ordinary shares vote together as a
single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Each Class C ordinary
share is convertible into one Class A ordinary share, whereas Class A ordinary shares are not convertible into Class C ordinary shares
under any circumstances. Upon any transfer of Class C ordinary shares by a holder thereof to any person or entity which is not an
affiliate of such holder, such Class C ordinary shares are automatically and immediately converted into the equal number of Class A
ordinary shares.
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As of the date of this annual report, Mr. Bin Li, our founder, chairman and chief executive officer, together with his affiliates,
beneficially own all of our issued Class C ordinary shares. Due to the disparate voting powers associated with our multi classes of
ordinary shares, Mr. Li has considerable influence over important corporate matters. As of March 31, 2024, Mr. Li beneficially owned
approximately 38.5% of the aggregate voting power of our company through mobike Global Ltd. and Originalwish Limited, companies
wholly owned by Mr. Li, and through NIO Users Limited, a holding company ultimately controlled by Mr. Li and through NIO Users
Community Limited, a company wholly owned by NIO Users Limited. Mr. Li has considerable influence over matters requiring
shareholder approval, including electing directors and approving material mergers, acquisitions or other business combination
transactions. This concentrated control will limit the ability of the holders of our Class A ordinary shares and ADSs to influence
corporate matters and could also discourage others from pursuing any potential merger, takeover or other change of control transaction,
which could have the effect of depriving the holders of our Class A ordinary shares and our ADSs of the opportunity to sell their shares
at a premium over the prevailing market price. Moreover, Mr. Li may increase the concentration of his voting power and/or share
ownership in the future, which may, among other consequences, decrease the liquidity in our Class A ordinary shares and ADSs.
Techniques employed by short sellers may drive down the market price of our ADSs.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the
intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the
value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects
to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many
short sellers publish, or arrange for the publication of, negative opinions regarding the issuer and its business prospects in order to create
negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to
selling of shares in the market.
Public companies listed in the United States that have a substantial majority of their operations in China have been the subject
of short selling. Much of the scrutiny and negative publicity have centered on allegations of a lack of effective internal control over
financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of
adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and
external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.
On June 28, 2022, Grizzly Research LLC issued a short seller report that made certain allegations against us. On June 29, 2022,
we announced that our board of directors, including the audit committee, was reviewing the allegations and considering the appropriate
course of action to protect the interests of all shareholders. On July 11, 2022, our board of directors, including the audit committee of our
board, decided to form an independent committee, consisting of independent directors Mr. Denny Ting Bun Lee, Mr. Hai Wu, and
Ms. Yu Long, to oversee an independent internal review regarding the key allegations made in the short seller report. The internal review
was performed by the independent committee with the assistance of third-party professional advisors including an international law firm
and forensic accounting experts from a well-regarded forensic accounting firm that is not our auditor. On August 26, 2022, we
announced that the internal review was substantially completed. Based on findings of the internal review, the independent committee has
concluded that the allegations in the short seller report were not substantiated.
We may be the subject of unfavorable allegations made by short sellers again in the future. Any such allegations may be
followed by periods of instability in the market price of our ordinary shares and ADSs and negative publicity. If and when we become the
subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we would have to expend a significant
amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any meritless short
seller attacks, we may be constrained in the manner in which we can proceed against the short seller by principles of freedom of speech,
applicable federal or state law or issues of commercial confidentiality. Moreover, while an internal investigation is ongoing and to ensure
that its findings are reached independently without undue influence, we may also be constrained in our ability to offer a public rebuttal
immediately even if the allegation can, in our view, be readily rebutted. Such a situation could be costly and time-consuming and could
distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against
us could severely impact our business operations and shareholders’ equity, and the value of any investment in our ADSs could be greatly
reduced or rendered worthless.
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The sale or availability for sale of substantial amounts of our Class A ordinary shares and/or ADSs could adversely affect their
market price.
Sales of substantial amounts of our Class A ordinary shares and/or ADSs in the public market, or the perception that these sales
could occur, could adversely affect the market price of our Class A ordinary shares and/or ADSs and could materially impair our ability
to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our
significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our
Class A ordinary shares and/or ADSs. In addition, certain holders of our existing shareholders are entitled to certain registration rights,
including demand registration rights, piggyback registration rights, and Form F-3 or Form S-3 registration rights. Registration of these
shares under the Securities Act of 1933, or the Securities Act, would result in these shares becoming freely tradable without restriction
under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the public market, or
the perception that such sales could occur, could cause the price of our Class A ordinary shares and/or ADSs to decline.
Because we do not expect to pay dividends in the foreseeable future, the holders of our Class A ordinary shares and/or ADSs must
rely on price appreciation of our Class A ordinary shares and/or ADSs for return on their investment.
We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth
of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an
investment in our Class A ordinary shares and/or ADSs as a source for any future dividend income.
Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to
declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and
cash flow, our capital requirements and surplus, the amount of distributions, if any, that we received from our subsidiaries, our financial
condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return to ADS holders
will likely depend entirely upon any future price appreciation of our Class A ordinary shares and/or ADSs. There is no guarantee that our
Class A ordinary shares and/or ADSs will appreciate in value or even maintain the price at which Class A ordinary shares and/or ADS
holders purchased the Class A ordinary shares and/or ADSs. Our Class A ordinary shares and/or ADS holders may not realize a return on
their investment in our Class A ordinary shares and/or ADSs and they may even lose their entire investment in our Class A ordinary
shares and/or ADSs.
There can be no assurance that we will not be classified as a passive foreign investment company, or PFIC, for U.S. federal income
tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or
Class A ordinary shares.
A non-U.S. corporation, such as our company, will be classified as a passive foreign investment company, or PFIC, for U.S.
federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of
“passive” income; or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such
year is attributable to assets that produce or are held for the production of passive income.
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Although the law in this regard is not entirely clear, we treat the VIEs as being owned by us for U.S. federal income tax
purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with
these entities, and as a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were
determined, however, that we do not own the VIEs for U.S. federal income tax purposes, we may be treated as a PFIC for the current
taxable year and any subsequent taxable year.
Assuming that we are the owner of the VIEs for U.S. federal income tax purposes, and based upon our current and expected
income and assets, we do not believe that we were a PFIC for the taxable year ended December 31, 2023. However, no assurance can be
given that we will not be or become a PFIC in the current or future taxable years because the determination of whether we will be or
become a PFIC is a factual determination made annually that will depend, in part, upon the nature and composition of our income and
assets (in particular, the retention of substantial amounts of cash and investments). Fluctuations in the market price of our ADSs or Class
A ordinary shares may cause us to be classified as a PFIC for the current or future taxable years because the value of our assets for
purposes of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the
market price of our ADSs or Class A ordinary shares, which may be volatile. In particular, recent declines in the market price of the
ADSs and Class A ordinary shares increased our risk of becoming a PFIC. The market price of the ADSs and Class A ordinary shares
may continue to fluctuate considerably and, consequently, we cannot assure you of our PFIC status for any taxable year. Furthermore, the
composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances
where our passive income significantly increases relative to our non-passive income, or where we determine not to deploy significant
amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. If we were to be or become a
PFIC for any taxable year during which a U.S. holder holds our ADSs or Class A ordinary shares, certain adverse U.S. federal income
tax consequences could apply to such U.S. holders.
Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights
of holders of our Class A ordinary shares and ADSs.
Our thirteenth amended and restated memorandum and articles of association contain provisions that have the potential to limit
the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could
have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by
discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors
has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations,
powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions,
including dividend rights, conversion rights, voting rights, rights and terms of redemption and liquidation preferences, any or all of which
may be greater than the rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued
quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If
our board of directors decides to issue preferred shares, the price of our Class A ordinary shares and/or ADSs may fall and the voting and
other rights of the holders of our Class A ordinary shares and ADSs may be materially and adversely affected.
Our shareholders may face difficulties in protecting their interests, and ability to protect their rights through U.S. courts may be
limited, because we are incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our
thirteenth amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands, or the
Companies Act, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by
minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by
the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial
precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority,
but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors
under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the
United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states,
such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition,
with respect to Cayman Islands companies, plaintiffs may face special obstacles, including but not limited to those relating to jurisdiction
and standing, in attempting to assert derivative claims in state or federal courts of the United States.
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Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect
corporate records (except for our memorandum and articles of association and our register of mortgages and charges) or to obtain copies
of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not,
and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to
our shareholders. This may make it more difficult for our shareholders to obtain the information needed to establish any facts necessary
for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a Cayman Islands company listed on the New York Stock Exchange, we are subject to the NYSE corporate governance
listing standards. However, the NYSE corporate governance listing standards permit a foreign private issuer like us to follow the
corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home
country, may differ significantly from the NYSE corporate governance listing standards.
Pursuant to Sections 303A.01, 303A.04, 303A.05, 303A.07 and 302.00 of the New York Stock Exchange Listed Company
Manual, a company listed on the New York Stock Exchange must have a majority of independent directors, a nominating and corporate
governance committee composed entirely of independent directors, a compensation committee composed entirely of independent
directors and an audit committee with a minimum of three members, and must hold an annual shareholders’ meeting during each fiscal
year. We currently follow our home country practice in lieu of these requirements. We may also continue to rely on these and other
exemptions available to foreign private issuers in the future, and to the extent that we choose to do so in the future, our shareholders may
be afforded less protection than they otherwise would under the NYSE corporate governance listing standards applicable to U.S.
domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were
you investing in a United States domestic issuer.
It may be difficult for overseas regulators to conduct investigations or collect evidence within China and it may also be challenging to
export evidence from China for use in litigation.
Shareholder claims or regulatory investigations that are common in the United States generally are difficult to pursue as a matter
of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
regulatory investigations or litigation initiated outside China. With respect to foreign regulatory investigations, although the authorities in
China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to
implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the United States
may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC
Securities Law, which took effect in March 2020, no overseas securities regulator is allowed to directly conduct investigations or
evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under this article
have yet to be promulgated, the inability of an overseas securities regulator to directly conduct investigations or evidence collection
activities within China may further increase difficulties faced by you in protecting your interests. With respect to both foreign regulatory
investigations and foreign litigation, Article 36 of the PRC Data Security Law, which took effect in September 2021, provides that any
organization or individual within the territory of the PRC shall not provide any foreign judicial authority and law enforcement with any
data stored within the territory of the PRC without the approval of the competent authority of the PRC. Since detailed interpretation of or
implementation rules under this article have yet to be promulgated, the ambiguity of “competent authority” for approving data
exportation and its relations with other applicable legal provisions including Article 177 of the PRC Securities Law may further increase
difficulties faced by you in protecting your interests.
ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreements, which could result in less
favorable outcomes to the plaintiff(s) in any such action.
The deposit agreement governing the ADSs representing our Class A ordinary shares provides that, subject to the depositary’s
right to require a claim to be submitted to arbitration, the federal or state courts in the City of New York have exclusive jurisdiction to
hear and determine claims arising under the deposit agreement and in that regard, to the fullest extent permitted by law, ADS holders
waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our Class A ordinary
shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.
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If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was
enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge,
the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not
been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver
provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In
determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party
knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit
agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.
If any of the holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising
under the deposit agreement or the ADSs, including claims under federal securities laws, such holder or beneficial owner may not be
entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the
depositary, lead to increased costs to bring a claim, limited access to information and other imbalances of resources between such holder
and us, or limit such holder’s ability to bring a claim in a judicial forum that such holder finds favorable. If a lawsuit is brought against us
and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be
conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including
results that could be less favorable to the plaintiff(s) in any such action.
Nevertheless, if this jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the
terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us
or the depositary from our respective obligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any
holder or beneficial owner of ADSs of compliance with the U.S. federal securities laws and the rules and regulations promulgated
thereunder.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and the majority of our assets are located outside of the United States. The most
significant portion of our operations are conducted in China. In addition, a majority of our current directors and officers are nationals and
residents of countries other than the United States. Substantially all of the assets of these persons may be located outside the United
States. As a result, it may be difficult or impossible for our shareholders to bring an action against us or against these individuals in the
United States in the event that such shareholders believe that their rights have been infringed under the U.S. federal securities laws or
otherwise. Even if such shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may
render them unable to enforce a judgment against our assets or the assets of our directors and officers.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain
provisions applicable to United States domestic public companies.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities
rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
● the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K
with the SEC;
● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security
registered under the Exchange Act;
● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and
liability for insiders who profit from trades made in a short period of time; and
● the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
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We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend
to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the New York Stock
Exchange. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the
information we are required to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the
SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to
you were you investing in a U.S. domestic issuer.
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and they may not be able to exercise their
right to vote their Class A ordinary shares.
Holders of our ADSs will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in
accordance with the provisions of the deposit agreement, dated as of September 11, 2018 by and among NIO Inc., Deutsche Bank Trust
Company Americas, as ADS depositary, and the holders and beneficial owners of the ADSs issued thereunder and the deposit agreement
for restricted securities, dated as of February 4, 2019 by and among NIO Inc., Deutsche Bank Trust Company Americas, as depositary,
and the holders and beneficial owners of the restricted ADSs issued thereunder (each, as the context requires and applicable to a
particular ADS holder, the “deposit agreement”). Under the deposit agreement, ADS holders must vote by giving voting instructions to
the depositary. If we ask for instructions of ADS holders, then upon receipt of such voting instructions, the depositary will try to vote the
underlying Class A ordinary shares in accordance with these instructions. If we do not instruct the depositary to ask for instructions of
ADS holders, the depositary may still vote in accordance with instructions given by holders of ADSs, but it is not required to do so. ADS
holders will not be able to directly exercise their right to vote with respect to the underlying shares unless they withdraw the shares.
When a general meeting is convened, an ADS holder may not receive sufficient advance notice to withdraw the shares underlying his or
her ADSs to allow such holder to vote with respect to any specific matter. If we ask for instructions of holders of ADSs, the depositary
will notify ADS holders of the upcoming vote and will arrange to deliver our voting materials to ADS holders. We have agreed to give
the depositary at least 30 days’ prior notice of shareholders’ meetings. Nevertheless, we cannot assure you that ADS holders will receive
the voting materials in time to ensure that ADS holders can instruct the depositary to vote their shares. In addition, the depositary and its
agents are not responsible for failing to carry out voting instructions or for their manner of carrying out ADS holders’ voting instructions.
This means that an ADS holder may not be able to exercise the right to vote and may have no legal remedy if the shares underlying his or
her ADSs are not voted as such holder requested.
The depositary for our ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying the ADSs if the holders
of such ADSs do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect the interests of our
ADS holders.
Under the deposit agreement for the ADSs, if any holder of the ADSs does not vote, the depositary will give us a discretionary
proxy to vote our Class A ordinary shares underlying such ADSs at shareholders’ meetings unless:
● we have failed to timely provide the depositary with notice of meeting and related voting materials;
● we have instructed the depositary that we do not wish a discretionary proxy to be given;
● we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;
● a matter to be voted on at the meeting would have a material adverse impact on shareholders; or
● the voting at the meeting is to be made on a show of hands.
The effect of this discretionary proxy is that if any such holder of the ADSs does not vote at shareholders’ meetings, such holder
cannot prevent our Class A ordinary shares underlying such ADSs from being voted, except under the circumstances described above.
This may make it more difficult for shareholders to influence the management of our company. Holders of our Class A ordinary shares
are not subject to this discretionary proxy.
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An ADS holder’s right to pursue claims against the depositary is limited by the terms of the deposit agreement.
Under the deposit agreement, any action or proceeding against or involving the depositary, arising out of or based upon the
deposit agreement or the transactions contemplated thereby or by virtue of owning the ADSs may only be instituted in a state or federal
court in New York, New York, and a holder of our ADSs, will have irrevocably waived any objection which such holder may have to the
laying of venue of any such proceeding, and irrevocably submitted to the exclusive jurisdiction of such courts in any such action or
proceeding. However, there is uncertainty as to whether a court would enforce this exclusive jurisdiction provision. Furthermore,
investors cannot waive compliance with the U.S. federal securities laws and rules and regulations promulgated thereunder.
The depositary may, in its sole discretion, require that any dispute or difference arising from the relationship created by the
deposit agreement be referred to and finally settled by an arbitration conducted under the terms described in the deposit agreement,
although the arbitration provisions do not preclude an ADS holder from pursuing claims under the Securities Act or the Exchange Act in
state or federal courts. Furthermore, if an ADS holder is unsuccessful in such arbitration, such holder may be responsible for the fees of
the arbitrator and other costs incurred by the parties in connection with such arbitration pursuant to the deposit agreement. Also, we may
amend or terminate the deposit agreement without the consent of any ADS holder. If an ADS holder continues to hold its ADSs after an
amendment to the deposit agreement, such holder agrees to be bound by the deposit agreement as amended.
Our ADS holders may not receive dividends or other distributions on our Class A ordinary shares and the ADS holders may not
receive any value for them, if it is illegal or impractical to make them available to the ADS holders.
The depositary of our ADSs has agreed to pay the ADS holders the cash dividends or other distributions it or the custodian
receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. Our ADS
holders will receive these distributions in proportion to the number of Class A ordinary shares the underlying ADSs represent. However,
the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs.
For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the
Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may
also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be
less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to
register under U.S. securities laws any ADSs, Class A ordinary shares, rights or other securities received through such distributions. We
also have no obligation to take any other action to permit the distribution of ADSs, Class A ordinary shares, rights or anything else to
holders of ADSs. This means that our ADS holders may not receive distributions we make on our Class A ordinary shares or any value
for them if it is illegal or impractical for us to make them available to the ADS holders. These restrictions may cause a material decline in
the value of our ADSs or Class A ordinary shares.
Our ADS holders may experience dilution of their holdings due to inability to participate in rights offerings.
We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit
agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to
which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs or are registered
under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third
parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we
are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a
registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may
experience dilution of their holdings as a result.
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We may need additional capital, and the sale of additional Class A ordinary shares and/or ADSs or other equity securities could result
in additional dilution to our shareholders, and the incurrence of additional indebtedness could increase our debt service obligations.
We may require additional cash resources due to changed business conditions, strategic acquisitions or other future
developments. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities
or obtain additional credit facilities. The sale of additional equity and equity-linked securities could result in additional dilution to our
shareholders. The sale of substantial amounts of our Class A ordinary shares and/or ADSs (including upon conversion of our convertible
notes) could dilute the interests of our shareholders and ADS holders and adversely impact the market price of our Class A ordinary
shares and/or ADSs. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and
financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms
acceptable to us, if at all.
Future sales or issuances, or perceived future sales or issuances, of substantial amounts of our ordinary shares or ADSs could
adversely affect the price of our Class A ordinary shares and/or ADS.
If our existing shareholders sell, or are perceived as intending to sell, substantial amounts of our ordinary shares or ADSs,
including those issued upon the exercise of our outstanding stock options, the market price of our Class A ordinary shares and/or ADSs
could fall. Such sales, or perceived potential sales, by our existing shareholders might make it more difficult for us to issue new equity or
equity-related securities in the future at a time and place we deem appropriate. Ordinary shares held by our existing shareholders may be
sold in the public market in the future subject to the restrictions contained in Rule 144 and Rule 701 under the Securities Act and the
applicable lock-up agreements. If any existing shareholder or shareholders sell a substantial amount of ordinary shares after the
expiration of the applicable lock-up periods, the prevailing market price for our Class A ordinary shares and/or ADSs could be adversely
affected.
In addition, certain of our shareholders or their transferees and assignees will have the right to cause us to register the sale of
their shares under the Securities Act upon the occurrence of certain circumstances. Registration of these shares under the Securities Act
would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of
the registration.
Our ADS holders may be subject to limitations on transfer of their ADSs.
Our ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time
to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time
for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs
to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies,
and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our
share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of
any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other
reason.
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The different characteristics of the capital markets in the U.S., Hong Kong and Singapore may negatively affect the trading prices of
our Class A ordinary shares and/or ADSs.
We are subject to the U.S., Hong Kong and Singapore listing and regulatory requirements concurrently. The NYSE, Hong Kong
Stock Exchange and Singapore Exchange have different trading hours, trading characteristics (including trading volume and liquidity),
trading and listing rules, and investor bases (including different levels of retail and institutional participation). As a result of these
differences, the trading prices of our Class A ordinary shares and our ADSs may not be the same, even allowing for currency differences.
Fluctuations in the price of our ADSs due to circumstances peculiar to the U.S. capital markets could materially and adversely affect the
price of our Class A ordinary shares, or vice versa. Certain events having significant negative impact specifically on the U.S. capital
markets may result in a decline in the trading price of our Class A ordinary shares notwithstanding that such event may not impact the
trading prices of securities listed in Hong Kong and Singapore generally or to the same extent, or vice versa. Because of the different
characteristics of the U.S., Hong Kong and Singapore capital markets, the historical market prices of our ADSs may not be indicative of
the trading performance of our Class A ordinary shares after the listing of our Class A ordinary shares on the Hong Kong Stock
Exchange and the Singapore Exchange.
Exchange between our Class A ordinary shares and our ADSs may adversely affect the liquidity and/or trading price of each other.
Our ADSs are currently traded on NYSE. Subject to compliance with U.S. securities law and the terms of the Deposit
Agreement, holders of our Class A ordinary shares may deposit Class A ordinary shares with the depositary in exchange for the issuance
of our ADSs. Any holder of ADSs may also surrender ADSs and withdraw the underlying Class A ordinary shares represented by the
ADSs pursuant to the terms of the Deposit Agreement for trading on the Hong Kong Stock Exchange or the Singapore Exchange. In the
event that a substantial number of Class A ordinary shares are deposited with the depositary in exchange for ADSs or vice versa, the
liquidity and trading price of our Class A ordinary shares on the Hong Kong Stock Exchange or the Singapore Exchange and our ADSs
on NYSE may be adversely affected.
The time required for the exchange between Class A ordinary shares and ADSs might be longer than expected and investor might not
be able to settle or effect any sale of their securities during this period, and the exchange of Class A ordinary shares into ADSs
involves costs.
There is no direct trading or settlement between the NYSE and the Hong Kong Stock Exchange or the Singapore Exchange on
which our ADSs and our Class A ordinary shares are respectively traded. In addition, the time differences between New York and Hong
Kong or Singapore, unforeseen market circumstances or other factors may delay the deposit of Class A ordinary shares in exchange for
ADSs or the withdrawal of Class A ordinary shares underlying the ADSs. Investors will be prevented from settling or effecting the sale
of their securities during such periods of delay. In addition, there is no assurance that any exchange for Class A ordinary shares into
ADSs (and vice versa) will be completed in accordance with the timelines that investors may anticipate. Furthermore, the depositary for
the ADSs is entitled to charge holders fees for various services including for the issuance of ADSs upon deposit of Class A ordinary
shares, cancelation of ADSs, distributions of cash dividends or other cash distributions, distributions of ADSs pursuant to share
dividends or other free share distributions, distributions of securities other than ADSs and annual service fees. As a result, shareholders
who exchange Class A ordinary shares into ADSs, and vice versa, may not achieve the level of economic return the shareholders may
anticipate.
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ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
We were founded in November 2014, as Nextev Inc., which was changed to our current name NIO Inc. in July 2017. Significant
milestones in our development since 2023 include the following:
● In July 2023, we closed the US$738.5 million strategic equity investment from CYVN Investments RSC Ltd, or
CYVN Investments, an affiliate of CYVN Holdings L.L.C., which is an investment vehicle based in Abu Dhabi.
CYVN Investments invested US$738.5 million in cash to subscribe 84,695,543 newly issued Class A ordinary shares
of our company at a per share purchase price of US$8.72. In July 2023, CYVN Investments also acquired 40,137,614
Class A ordinary shares of our company from an affiliate of Tencent for an aggregate consideration of US$350 million.
In December 2023, we closed the additional US$2.2 billion strategic equity investment from CYVN Investments.
CYVN Investments invested an aggregate of US$2.2 billion in cash to subscribe for 294,000,000 newly issued Class A
ordinary shares of our company at a per share purchase price of US$7.50. Following these transactions, CYVN
Investments in aggregate beneficially owns approximately 20.1% of our total issued and outstanding shares.
● In September and October 2023, we issued US$575 million aggregate principal amount of 3.875% convertible senior
notes due 2029, or the 2029 Notes, and US$575 million aggregate principal amount of 4.625% convertible senior notes
due 2030, or the 2030 Notes. Shortly after the pricing of the 2029 Notes and the 2030 Notes, we purchased, in separate
privately negotiated transactions effected through one of the initial purchasers and its affiliates, approximately US$256
million aggregate principal amount of the 2026 Notes and approximately US$244 million aggregate principal amount
the 2027 Notes for cash using the net proceeds from the offering of the 2029 Notes and the 2030 Notes.
● In February 2024, we completed the repurchase right offer relating to the 2026 Notes. US$300.5 million in aggregate
principal amount of the 2026 Notes were validly surrendered and not withdrawn prior to the expiration of the
repurchase right offer. Following settlement of the repurchase, US$912,000.00 aggregate principal amount of the 2026
Notes remained outstanding and continue to be subject to the existing terms of the indenture and the 2026 Notes.
Our principal executive offices are located at Building 19, No. 1355, Caobao Road, Minhang District, Shanghai, PRC. Our
telephone number at this address is +86-21-6908-2018. Our registered office in the Cayman Islands is located at the offices of Maples
Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process
in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. We maintain our
website at http://ir.nio.com/. The information contained on, or linked from, our website is not a part of this annual report.
The SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC using its EDGAR system.
See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures” for a
discussion of our capital expenditures.
B.
Business Overview
Our Chinese name, Weilai (蔚来), which means Blue Sky Coming, reflects our commitment to a more environmentally friendly
future.
We are a pioneer and a leading company in the premium smart electric vehicle market. We design, develop, manufacture, and
sell premium smart electric vehicles, driving innovations in next-generation technologies in assisted and intelligent driving, digital
technologies, electric powertrains and batteries. We differentiate ourselves through our continuous technological breakthroughs and
innovations, such as our industry-leading battery swapping technologies, Battery as a Service, or BaaS, as well as our proprietary NIO
assisted and intelligent driving and its subscription services.
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Our Vehicles
We design, develop, manufacture and sell our vehicles in the premium smart electric vehicle market. We currently offer our
products and services in China, Norway, Germany, the Netherlands, Denmark and Sweden and plan to expand into more global markets
to capture the fast-growing EV demand.
We introduced the EP9 supercar in 2016, which was the then fastest electric vehicle, setting the Nurburgring Nordschleife all-
electric vehicle lap record. Starting from December 2017, we launched a succession of well-positioned vehicle models and established a
competitive product portfolio, including the ES8, a six-seater smart electric flagship SUV, the ES7 (or the EL7), a mid-large five-seater
smart electric SUV, the ES6 (or the EL6), a five-seater all-round smart electric SUV, the EC7, a five-seater smart electric flagship coupe
SUV, the EC6, a five-seater smart electric coupe SUV, the ET9, a smart electric executive flagship, the ET7, a smart electric flagship
sedan, the ET5, a mid-size smart electric sedan, and the ET5T, a smart electric tourer.
In 2023, we completed our product lineup on the NIO Technology 2.0 (NT2.0) by starting deliveries of the EC7, All-New ES6,
All-New ES8, ET5T, and All-New EC6. With enhanced driving and riding experiences with exquisite design, high performance, superior
comfort, and advanced digital systems, our product portfolio caters to wide-ranging journeys of users for their family, business and
leisure needs. In December 2023, we launched the ET9, a smart electric executive flagship. The ET9 embodies our latest advancements
in technological research and development, presenting a combination of flagship-style exterior, innovative executive space, leading
driving and riding experience, intelligent technologies, efficient power solutions, and comprehensive safety standards. We expect to start
deliveries of the ET9 in the first quarter of 2025.
Inheriting our high-performance DNA marked by dual-motor intelligent All-Wheel-Drive system, all NIO models are able to
achieve outstanding performances in 0-100 km/h and braking distance. Enabled by battery swapping technology, all our models are
compatible with different battery packs including Standard Range Battery, Long Range Battery and Ultra-Long Range Battery,
supporting different driving ranges and providing an upgradable and flexible user experience. We aim to deliver products with the
highest safety and quality standards to our users in line with our core values and commitments.
We believe our vehicles are well-positioned in the premium smart electric vehicle market. We delivered 160,038 vehicles,
including 92,186 premium smart electric SUVs and 67,852 premium smart electric sedans in 2023. In 2024, we expect to launch our new
brand and commence deliveries of its first product, complementing our product portfolio and contributing to our vehicle sales. We are
also developing more products to expand our addressable market segments.
Notes:
†
Represent currently available models for sale.
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*
Represent China Light-Duty Vehicle Test Cycle, or the CLTC, range. The driving ranges are based on the officially filed
documents or engineering test results, which may vary due to different road types, weather and road conditions, battery level,
loading and tires.
**
150 kWh battery is expected to be available in the near future.
***
Represent starting manufacturer’s suggested retail price, or the MSRP, in China as of the date of this annual report.
Our Key Technological Breakthroughs and Innovations
Since our inception, we have remained committed to innovation and dedicated to investing in research and development of core
technologies. Our technological breakthroughs and innovations differentiate us from our peers, creating better user experiences and
enhancing our users’ confidence in us. We have strategically focused on building in-house capabilities including battery swapping,
assisted and intelligent driving, digital technologies, electric powertrain and battery, vehicle engineering and design, among others, to
control the design and development of the vehicle software and hardware architecture and the critical components that go into our
products. Our capabilities have given us greater flexibility to continually improve our current products and allow us to launch new
products. By integrating these industry-leading technologies, all of our vehicles can create a relaxing, interactive, intelligent and
immersive experience for our users.
We have strategically located our research and development offices in locations where we believe give us access to the best
talent. Our global research and development center for production models is located in Shanghai. Our advanced vehicle manufacturing
center is located in Hefei. Our global research and development center for software is located in Beijing. Our global research and
development center for assisted and intelligent driving is located in San Jose. Our global design center is located in Munich. Our global
research and development center for advanced engineering is located in Oxford.
Battery Swapping and BaaS
All of our smart electric vehicles are equipped with proprietary battery swapping technologies, providing our users with a
“chargeable, swappable, upgradable” experience. We also offer Battery as a Service, or BaaS, an industry-first innovative model which
allows users to purchase electric vehicles and subscribe for the usage of batteries separately. BaaS enables our users to benefit from lower
vehicle purchase prices, flexible battery upgrade options and assurance of battery performance.
● Battery Swapping. Supported by over 1,600 patented technologies as of December 31, 2023, all of our vehicles support
battery swapping. It provides our users with convenient “recharging” experiences by simply swapping the user’s battery for
another one within minutes. Moreover, it enables users to enjoy the benefits of battery technology advancements with
upgrade options. Additionally, during each battery swap, a comprehensive health assessment on the battery and electric
drive system is performed to ensure optimal condition of the vehicle. In December 2023, we introduced Power Swap
Station 4.0, which boasts enhanced efficiency improvements and can reach a service capacity of up to 480 swaps per day.
Equipped with Lidars and NVIDIA DRIVE Orin X chips, it possesses the capability to conduct fully automatic swap and
handle complex environments for more intelligent vehicle-station connectivity. Power Swap Station 4.0 is compatible with
multiple vehicle brands.
● BaaS. Enabled by vehicle-battery separation and battery subscription, BaaS decouples the battery price from the purchase
price of a vehicle and allows users to subscribe for battery usage separately. For each user under the BaaS model, we sell a
battery to the Battery Asset Company, and the user subscribes for the usage of the battery from the Battery Asset Company.
If users opt to purchase a NIO vehicle and subscribe for the battery under BaaS, they can enjoy a deduction off the original
vehicle purchase price while paying a monthly subscription fee for the battery. NIO users are able to enjoy permanent or
flexible upgrades to batteries with higher capacities or other future battery options with an additional fee as the battery
technologies evolve.
Assisted and Intelligent Driving and Subscription
We believe that assisted and intelligent driving is the core of smart electric vehicles, and it has been our focus from day one. We
are one of the first companies in China to offer enhanced ADAS capabilities and we have been dedicated to developing our proprietary
full-stack assisted and intelligent driving capabilities.
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NIO assisted and intelligent driving, or NAD, our full-stack in-house developed assisted and intelligent driving capabilities, is
equipped with our proprietary perception algorithms, localization, control strategy and platform software. The technology comprises NIO
Adam, a super computing platform with outstanding computing power, and NIO Aquila, a super sensing system equipped with high-
performance sensors including LiDAR. With the gradual release of certain features of the NAD through Navigate on Pilot Plus, or
NOP+, a driving assist feature based on NT2.0 to users, our generalization capability and collective intelligence capability have seen
rapid growth. Currently, NOP+ has been made available for expressways, urban areas, parking and battery swapping and we expect to
release it to all NT2.0 users in the future to deliver a safer and more relaxing assisted and intelligent driving experience for our users. Our
NOP+ is available for user subscription.
In addition, we have commenced our in-house research and development of the intelligent driving chipset to maximize the
assisted and intelligent driving algorithm efficiency. In December 2023, we unveiled our first proprietary automotive-grade chip for
assisted and intelligent driving, the NX9031. We intend to integrate this chip into our future products to enhance the intelligent driving
experience for our users.
Digital Technologies
Digital System
Digital system is the foundation for us to achieve continuous upgrades through over-the-air updates, the digital platform for
building our own proprietary software and algorithms and the security system for deep reassurance.
On top of our proprietary software architecture and cloud data platform, SkyOS, our all-domain vehicle operating system, has
what we believe to be the industry-leading connectivity and remote service capabilities with an end-to-end security framework. By
seamlessly integrating and efficiently collaborating various systems, including intelligent driving, vehicle control, digital cockpit, and
connectivity, SkyOS provides a secure, intelligent and smooth driving experience to users.
Digital Cockpit
Our digital cockpit has an AI-driven, scalable and flexible architecture that presents users with an intelligent and immersive
digital experience. We have built flexibility into the digital cockpit, so that we can continue to update the cockpit’s operating system with
new features and applications.
Inspired by the concept of creating a mobile living space, providing a caring emotion companion while connecting products,
services and community, we have launched PanoCinema, a panoramic digital cockpit with AR and VR capabilities, to bring immersive
audio and visual experiences to our users. Inside our digital cockpit, NOMI, our in-car AI companion, can listen to, communicate and
interact with users to build a strong emotional connection between vehicles and users. In addition, we expect to release our NOMI GPT, a
multimodal large vision model, in the near future.
Electric Powertrain and Battery
Electric Powertrain
Starting from our first product, we have designed, developed and manufactured our own proprietary electric powertrains in-
house. We possess in-house research and development capabilities across motors, electric controls, reducers, and high voltage charging
and distribution systems.
Our electric powertrains are designed specifically for NIO’s vehicles, and through firmware over-the-air, we are able to continue
to improve and update, and adjust according to our users’ driving behavior. Enabled by in-house research and development capabilities,
our dual-motor configuration offers a variety of electric motors, including 150-300kW induction motor and 160-210 kW permanent
magnet motor. We are in the process of developing our next generation electric powertrains based on the high-voltage architecture.
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Battery
We are committed to the research, development and innovations in battery technologies and have built up the research and
development capabilities throughout the lifecycle of uni-pack battery. Our batteries are based on advanced battery pack design, battery
management system and proprietary swapping mechanism.
Currently, we offer two battery options: Standard Range Battery and Long Range Battery. The Standard Range Battery currently
on offer is a 75 kWh battery with lithium iron phosphate cells. With certain proprietary patents, the 100 kWh Long Range cell-to-pack
battery features thermal propagation prevention, highly integrated design, all-climate thermal management and bi-directional cloud
battery management system. We expect to commence the delivery of our 150 kWh battery, or the Ultra-long Range Battery with the next
generation battery technology in the near future. In addition, we expect to collaborate with our partners in developing long-life batteries.
Vehicle Engineering and Design Capabilities
We have significant in-house vehicle engineering and design capabilities, covering all major areas of vehicle development
starting from inception to completion, with a particular emphasis on software-driven technologies and fast iteration. For example, our in-
house developed intelligent chassis controller enables redundancy control, electronic parking brake control, damper control, air spring
leveling control, while achieving functional safety, cyber security and OTA updates. In addition, we have implemented integrated die
casting to minimize the number of vehicle parts, reduce process steps, shorten production line length, and enhance overall efficiency.
Our global design team has comprehensive design capabilities across the board, from brand, vehicles, user interface/user
experience, lifestyle products to accessories.
User Development and User Community
We reach out to and engage with our users directly through our own offline and online platforms, including NIO Houses, NIO
Spaces and NIO app, and aim to build a community where we share joy and grow together with our users.
NIO House and NIO Space
NIO Houses and NIO Spaces serve as the offline channels for us to reach out to and serve our users, as well as the offline
platforms for NIO user community.
NIO Houses have showroom functions while serving as a clubhouse for our users and their friends. Since we opened our first
NIO House in Beijing in November 2017, we continue to expand our network of NIO Houses globally. As of December 31, 2023, we
had 145 NIO Houses in total globally.
NIO Spaces are mainly showrooms for our brand, vehicles and services. Compared with NIO Houses, NIO Spaces are generally
smaller in scale, more delicate and sales-focused. As of December 31, 2023, we had 335 NIO Spaces in total globally.
NIO App
NIO app, our mobile application, is designed to serve as a comprehensive portal. It allows users to not only place orders for and
configure all NIO vehicles, but also to access vehicle control, power and other service, as well as purchase NIO Life product. Most
importantly, it functions as an online platform for our user community.
NIO Day and NIO Events
Our annual NIO Day is an event jointly hosted by NIO and our users where we launch our new products and technologies and
celebrate the user community. In December 2017 in Beijing, China, we held our first NIO Day and launched the ES8. We had since then
held multiple NIO Days to launch new products and interact with our users and industry participants in the subsequent years. Most
recently, in December 2023, we held the seventh NIO Day in Xi’an, China, with the official debut of ET9.
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In 2021, we held the Norway strategy conference, where we announced our entry into the Norwegian market. In 2022, we held
NIO Berlin 2022, marking our expansion into Germany, the Netherlands, Denmark and Sweden. Currently, we offer ES8, EL7, EL6,
ET7, ET5 and ET5T in European markets. We offer our products in Europe through direct sales, leasing programs, and subscription
programs.
NIO Life
We have established our lifestyle brand NIO Life, which has an online store on NIO app where users can purchase NIO lifestyle
products. The product categories include clothing and accessories, home and living, consumer electronics, food and beverages. Since we
launched our online store in December 2016, over 13 million NIO Life items have been delivered to our users through online and offline
channels as of December 31, 2023.
NIO Points
We provide users with NIO Points to encourage user engagement and positive user behavior, such as to keep a safe driving
record. NIO Points are earned, among other things, through the welcome packages upon the purchase of NIO vehicles, referrals for test
drives and vehicle purchases, and active engagement in the user community. NIO Points can be used, both at our online store and at our
NIO Houses and some of the NIO Spaces.
NIO Users Trust
In conjunction with our pursuit of being a user enterprise and with the goal of building a deeper connection between NIO and
our users, Mr. Bin Li, our chairman of the board of directors and chief executive officer, transferred a certain amount of his ordinary
shares to NIO User Trust in January 2019. Our users have the opportunity to discuss and propose the use of the economic benefits from
the shares in NIO User Trust through a User Council consisting of members of our user community elected by our users. The User
Council helps coordinate user activities in our community. According to the articles of association of NIO Users Trust, incomes and
proceeds derived from the trust assets shall be mainly used for the following purposes: (i) environmental protection and sustainable
development, (ii) NIO Users community care projects, (iii) community activities promoting common growth of users and other necessary
projects, and (iv) operational expenses of the Users Trust.
Our Power Solutions
We offer a comprehensive and innovative suite of power solutions to address the charging and swapping needs of our users. Our
power solutions include home charger called Power Home, battery swapping called Power Swap, supercharging piles called Power
Charger, destination charging piles called Destination Charger, and mobile charging called Power Mobile, all of which are connected to
cloud-enabled Power Cloud, which synchronizes users’ power consumption information and our power network, and intelligently
suggests the appropriate services, according to the users’ locations and power consumption patterns. Our users not only get to check the
availability of charging and swapping resources of NIO’s own network, but also have access to a network of public chargers and their
real-time information through the Power Map on our NIO app. In addition, we offer our users our One Click for Power valet service
where we pick up, charge and then return the vehicle. Our goal is to provide the most convenient power solutions to our users.
Power Home
Through Power Home, we install home chargers at our users’ homes upon our users’ requests if the installation is feasible.
Currently we are offering our users standard home chargers and high-speed home chargers.
Power Swap
All of our vehicles support battery swapping. Once a vehicle is parked in the swap station and the swap function is activated,
battery swapping will take place within minutes. Automatic battery and electric system checks are performed during each swap to
enhance the safety and security of the vehicle and battery.
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In December 2023, we introduced Power Swap Station 4.0, which boasts enhanced efficiency improvements and can reach a
service capacity of up to 480 swaps per day. Equipped with Lidars and NVIDIA DRIVE Orin X chips, it possesses the capability to
conduct fully automatic swap and handle complex environments for more intelligent vehicle-station connectivity. Power Swap Station
4.0 is compatible with multiple vehicle brands. We have opened our Power Swap network to the entire industry and signed strategic
partnership agreements with Changan Automobile, Geely Group, JAC Group and Chery Automobile on battery swapping. As of
December 31, 2023, we had 2,350 Power Swap Stations covering urban areas and expressways globally, through which we had
completed over 35 million battery swaps cumulatively.
We plan to strategically deploy more Power Swap Stations in selected geographical areas to ensure optimal battery swap
experience for our growing user base and boost sales. We have partnered with multiple energy companies, including, among others,
Anhui Province Energy Group Co., Ltd. and China Southern Power Grid Peak Load and Frequency Modulation (Guangdong) Energy
Storage Technology Co., Ltd., and expect to join hands with more partners to collectively contribute towards the development of power
network and the wider adoption of battery swapping.
Power Charger and Destination Charger
Through Power Charger, our supercharging piles, we provide our users a fast and reliable power solution. Users are able to
locate, use and pay for the charging through our NIO app. Our Power Chargers are of a slim design and are located in parking lots and
other locations easily accessible to our users. We currently offer up to 640kW Power Charger.
We also deploy chargers in tourist attractions, shopping malls, office buildings, and other types of destinations to expand the
charging network for convenience and flexibility.
As of December 31, 2023, we had 21,091 Power Chargers and Destination Chargers in operation. We plan to further enhance
the efficiency and expand the deployment of our chargers to cater to the growing user demand.
Power Mobile
Through Power Mobile, we provide charging services through fast charging vans with our proprietary fast-charging
technologies, supplementing our swapping and charging network. Users are able to book Power Mobile services in advance through our
NIO app.
We have a fleet of Power Mobile vans in operation in China. We regularly adjust the deployment of Power Mobile vans in
China based on our user distribution and user needs and plan to improve the efficiency of these NIO Power Mobile vans to create better
experiences for users.
Power Map
In addition to our own swapping and charging network, our users have access to a network of public chargers and their real-time
information through the Power Map on our NIO app, which consisted of over 1,460,000 publicly accessible charging piles globally as of
December 31, 2023. In order to further improve user experience, we have been working to increase the number of chargers with data
synchronized to our Power Cloud.
One Click for Power
We offer our users our One Click for Power valet service. Through our NIO app, a user can have our team pick up his or her
vehicle at the user’s designated parking location for valet charging, battery swapping or power mobile. We aim to provide users with the
most convenient charging experience by identifying the most appropriate power solution based on the user’s travel habits through cloud-
based smart scheduling.
Service and Warranty
Our users can access a full suite of innovative services on our NIO app, as part of our strategy of redefining the user experience.
NIO Service, our one-stop service ecosystem marked by the innovative worry-free service plan, provides NIO users with a holistic end-
to-end service experience. We believe our service capability is among the core competitiveness we possess.
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Service
Service Network
We currently provide servicing both through NIO service centers and authorized third-party service centers, both of which
provide repair, maintenance and bodywork services.
For our NIO service centers, we have dedicated qualified technicians who receive regular professional trainings and skill tests,
which ensures high-quality user services. As of December 31, 2023, we had 82 NIO service centers worldwide. For authorized third-
party service centers, we have a devoted management team to carefully select and bring authorized service centers into our network,
most with experience servicing high-end branded vehicles. As of December 31, 2023, we had 228 authorized service centers worldwide.
We also provide high-quality delivery service through NIO delivery centers, which serve as vital hubs in the user experience
journey. At our NIO delivery centers, we offer users a full-service support package, including vehicle transportation and delivery, pre-
delivery inspection (PDI) services, assistance with vehicle inspection, guidance and orientation on vehicle features, assistance with
vehicle registration and insurance processing.
Service Plan
We offer our users worry-free service plans on an annual fee basis in certain regions. The worry-free service plans provide a
combination of insurance and a series of service options. The insurance offered in the plan covers statutory third-party liability and
vehicle damage insurance, which are provided through third-party insurers. Our service offerings include vehicle repair and maintenance
services, courtesy vehicles, roadside assistances, optional value-added services, and enhanced data packages, among other services.
Users are able to arrange for vehicle services using our NIO app. We also provide worry-free services such as repair,
maintenance and charging at users’ doorstep through Service Mobile, our service centers on wheels.
Auto Financing
We currently have agreements with several commercial banks in China, pursuant to which we assist users across China in
acquiring financing when they purchase our vehicles. We also offer auto financing arrangements to users directly through our
subsidiaries.
NIO Certified (Used Vehicle Service)
In January 2021, we launched NIO Certified, our used vehicle service, to provide high-quality services for used NIO vehicle
transactions. We have developed the capabilities in the major cities in China to cover services including used vehicle inspection,
evaluation, acquisition and sales. We also partner with various used car dealers through our NIO app to assist users in completing their
used car transactions more efficiently and conveniently.
Warranty Policy
For an initial retail purchaser of a new NIO vehicle in China, in addition to the warranty required under the PRC laws, including
(i) a bumper-to-bumper three-year or 120,000-km warranty, (ii) for critical EV components (batteries, electric motors, power electric
units and vehicle control units), an eight-year or 120,000-km warranty, and (iii) a two-year or 50,000-km warranty covering vehicle
repair, replacement and refund, we also provide an extended warranty in China subject to certain conditions. For the owners of our
vehicles in Europe, in addition to the warranty required under the applicable laws and regulations, we also provide an extended warranty
subject to certain conditions. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business and Industry — Our
warranty reserves may be insufficient to cover future warranty claims which could adversely affect our financial performance.”
Supply Chain, Manufacturing and Quality Assurance
We view the suppliers and manufacturers we work with as key partners in our vehicle development process. We aim to leverage
our partners’ industry expertise to ensure that each vehicle we produce meets our strict quality standards.
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Supply Chain
We work with global and local supply chain partners while the majority of our supply base is located in China, which enables us
to acquire supplies more quickly and reduces the overall logistics-related cost.
We obtain systems, components, raw materials, parts, manufacturing equipment and other supplies and services from suppliers
which we believe to be reputable and reliable. We follow our internal process to source suppliers taking into account quality, cost and
timing. We continually innovate our supply chain in order to establish a more effective and diverse supply chain system. We actively
cultivate partnerships with suppliers that have innovative technological capabilities and cost advantages, thereby increasing the
competitiveness and innovativeness of our supply chain. While we obtain components from multiple sources whenever possible, many of
the components used in our vehicles are purchased from a single source. Eventually we plan to implement a multi-source volume
purchasing strategy in order to reduce our reliance on sole source suppliers.
We usually enter into our standard form of agreements with our suppliers. Suppliers shall provide to us the goods and services at
terms and conditions as provided under the agreements according to the pre-determined schedule. We typically pay suppliers with respect
to the goods provided after receipt of goods and within 30-90 days upon receipt of invoices issued by suppliers. The suppliers provide
quality warranty for the goods sold to us. Neither we nor the suppliers are allowed to subcontract or assign any obligations under the
agreements. We typically have the right to terminate the agreement with suppliers due to our strategy or business concern by giving a six-
month prior written notice to supplier. In addition, either party has the right to terminate the agreement upon a material default by the
other party. We hold our suppliers to high ethical standards of code of conducts in areas such as human rights, labor conventions such as
prohibition of forced labor and child labor, environmental protection and anti-corruption, and incorporate these standards in our
cooperation agreements with our suppliers.
Manufacturing
Vehicle Manufacturing
In the past, we partnered with JAC for the joint manufacturing of our vehicles in the F1 Plant and the F2 Plant in Hefei, China.
We entered into definitive agreements with JAC in December 2023, pursuant to which we agreed to acquire the manufacturing
equipment and assets of the F1 Plant and the F2 Plant from JAC for a total consideration of approximately RMB3.16 billion, excluding
tax. The asset transfer was completed in December 2023. In addition, we have completed the filing process for our electric passenger
vehicle investment project with the authorities in Anhui province and have been included in the Ministry of Industry and Information
Technology’s catalogue of approved manufacturers. Our manufacturing model has transitioned from joint manufacturing to independent
manufacturing. We have commenced independent manufacturing of all our current vehicles models in the F1 Plant and the F2 Plant.
Other Manufacturing
We have established our manufacturing center in China for the production of electric powertrains, with highly automated
production lines, advanced manufacturing execution systems and automated guided vehicles. We also manufacture Power Swap Stations
and charging piles independently, as well as in collaboration with our partners.
Quality Assurance
We aim to deliver high-quality products and services to our users in line with our core values and commitments. We believe that
our quality assurance systems are the key to ensuring the delivery of high-quality products and services, and to minimize waste and to
maximize efficiency. We have established a Quality Committee for the overall quality management of our company. The Quality
Committee is chaired by our executive vice president, and is responsible for formulating the group-level quality assurance policies,
strategies, goals and initiatives and reviewing the progress of quality goals. We strongly emphasize quality management across all
business functions, including product development, manufacturing, partner quality management, procurement, power solutions, user
experience, service and logistics. Our quality management groups are responsible for our overall quality strategy, quality systems and
processes, quality culture, and general quality management implementation.
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In the research and development stage, we have established a failure mode analysis sub-committee and a reliability working
group to continually improve the awareness, knowledge and ability of problem prevention in product design, process design, service
design and other aspects. We have built a NIO product development platform to manage the entire product development process,
efficiently integrating the workflows of various business departments, and achieving high-quality management of vehicles to be
delivered.
In the manufacturing stage, we implement end-to-end quality planning based on product and process characteristics, covering
quality issue prevention, incoming material inspection, in-process inspection, customer review, pre-shipment inspection and rapid
problem resolution. In the meantime, we actively promote the digitalization of manufacturing quality management in various use cases,
including, among others, problem management, change point management, vehicle management, and personnel management. Through
intelligent data monitoring and analysis, we are able to timely detect abnormalities and make corrections.
In terms of supply chain, we have established the NIO quality premium partner evaluation system, which comprehensively
evaluates our partners from various dimensions to achieve effective quality control of the supply chain. On top of the regular audit and
training of our supply chain partners, we organize expert resources of different fields and functions to work together with the supply
chain partners in need of capability enhancement to quickly improve their process assurance and quality control capabilities.
In addition, we collect users’ feedback through various channels, such as hotline, NIO app, NIO Fellow, user service group, and
NOMI in our vehicles, and direct these feedbacks to our product experience, service and quality assurance team so as to drive the fast
iteration and improvement in terms of product development, manufacturing and supply chain.
Certain Other Cooperation Arrangements
Hefei Strategic Investors
On April 29, 2020, we entered into an investment agreement, or the initial investment agreement, and a shareholders agreement,
or the initial shareholders agreement (collectively, the initial agreements), for investments into NIO Holding Co., Ltd. (previously known
as NIO (Anhui) Holding Co., Ltd.), or NIO China, a legal entity that we wholly owned pre-investment, with Hefei City Construction and
Investment Holding (Group) Co., Ltd., CMG-SDIC Capital Co., Ltd. and Anhui Provincial Emerging Industry Investment Co., Ltd., or
Anhui High-tech Co.
Pursuant to the initial agreements, each investor may designate a fund managed by it or a third party, as applicable, to perform
the investment obligations and assume other rights and obligations under the initial agreements. Accordingly, on June 5, 2020, we
entered into respective supplemental agreements I to the initial agreements with the investors and their respective designated funds,
Jianheng New Energy Fund, Advanced Manufacturing Industry Investment Fund and New Energy Automobile Fund. Under the
supplemental agreements I, (i) Hefei City Construction and Investment Holding (Group) Co., Ltd. designated Jianheng New Energy
Fund to assume all of its rights and obligations under the initial agreements, (ii) CMG-SDIC Capital Co., Ltd. designated Advanced
Manufacturing Industry Investment Fund to assume all of its rights and obligations under the initial agreements, (iii) Anhui High-tech
Co. designated New Energy Automobile Fund to perform a portion of its investment obligations under the investment agreement and
assume the corresponding rights and obligations under the initial agreements, and (iv) Anhui High-tech Co. will continue to perform the
remaining of its investment and other obligations not assigned to New Energy Automobile Fund and enjoy its rights under the initial
agreements. On June 5, 2020, NIO China updated its Industrial and Commercial Registration to reflect, among other things, Jianheng
New Energy Fund, Advanced Manufacturing Industry Investment Fund, Anhui High-tech Co. and New Energy Automobile Fund as NIO
China’s investors. On June 18, 2020, we entered into respective supplemental agreements II with the parties to the supplemental
agreements I and Anhui Sanzhong Yichuang, another designated fund of Anhui High-tech Co. Under the supplemental agreements II,
Anhui High-tech Co. designated Anhui Sanzhong Yichuang to assume its remaining rights and obligations under the initial agreements
that had not been assigned to New Energy Automobile Fund pursuant to the supplemental agreements I.
The initial investment agreement, as amended and supplemented, is referred to as the Hefei Investment Agreement, and the
initial shareholders agreement, as amended and supplemented, is referred to as the Previous Hefei Shareholders Agreement in this annual
report. The Hefei Investment Agreement and the Previous Hefei Shareholders Agreement are collectively referred to as the Previous
Hefei Agreements in this annual report.
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On March 30, 2024, we entered into the 2024 Hefei Shareholders Agreement with Jianheng New Energy Fund, Advanced
Manufacturing Industry Investment Fund, New Energy Automobile Fund and Anhui Sanzhong Yichuang. The 2024 Hefei Shareholders
Agreement amends certain shareholders’ rights in NIO China and supersedes the Previous Hefei Shareholders Agreement.
Under the Hefei Investment Agreement, the Hefei Strategic Investors agreed to invest an aggregate of RMB7 billion in cash into
NIO China. We agreed to inject our core businesses and assets in China, including vehicle research and development, supply chain, sales
and services and NIO Power, collectively referred to as the Asset Consideration, into NIO China. The Asset Consideration is valued at
RMB17.77 billion, as calculated based on 85% of the market value of our company (calculated based on our average ADS trading price
over the thirty public trading days preceding April 21, 2020). As of the date of this annual report, the injection of our core businesses and
assets into NIO China has been completed. Further, we agreed to invest RMB4.26 billion in cash into NIO China. Upon the completion
of the investments, we held 75.885% of controlling equity interests in NIO China, and the Hefei Strategic Investors collectively held the
remaining 24.115%. In September 2020, February 2021 and September 2021, we, through one of our wholly-owned subsidiaries,
purchased from certain Hefei Strategic Investors equity interests in NIO China and subscribed for newly increased registered capital of
NIO China to increase our shareholding. After the completion of these transactions, as of the date of this annual report, we hold 92.114%
controlling equity interests in NIO China.
Pursuant to the Previous Hefei Agreements, NIO China establishes its headquarters in the Hefei Economic and Technological
Development Area for its business operation, research and development, sales and services, supply chain and manufacturing functions.
We collaborate with the Hefei Strategic Investors and Hefei Economic and Technological Development Area to develop NIO China’s
business and to support the accelerated development of the smart electric vehicle sectors in Hefei. In addition, NIO China could enjoy a
series of subsidies and support from Hefei Economic and Technological Development Area, including rent subsidies, financial support
and preferential tax treatment, when NIO China meets certain performance criteria, such as targets for manufacturing capacity,
procurement amount and vehicle sales.
Pursuant to the 2024 Hefei Shareholders Agreement, the Hefei Strategic Investors have certain minority shareholder rights,
including, among others, the right of first refusal, co-sale right, preemptive right, anti-dilution right, redemption right, liquidation
preference and conditional drag-along right. In particular, the following rights, among others, directly relate to obligations of NIO Inc.:
● Redemption right. The Hefei Strategic Investors may require us or our Hong Kong holding vehicles, the immediate holding
companies of NIO China, to redeem all or a portion of the equity interests in NIO China held by the Hefei Strategic
Investors at a redemption price of the total amount of the investment price equal to the Hefei Strategic Investors plus an
investment income calculated at a compound rate of 8.5% per annum upon the occurrence of certain events. In particular, if
NIO China fails to complete the listing application or to issue the material assets restructuring plan related to the qualified
initial public offering before December 31, 2027, or fails to complete the qualified initial public offering before December
31, 2028, the Hefei Strategic Investors may request us to redeem the equity interest in NIO China then held by them.
● Share transfer restriction. Before NIO China completes its potential qualified initial public offering, without the prior
written consent of the Hefei Strategic Investors, we may not directly or indirectly transfer, pledge or otherwise dispose of
NIO China’s shares to a third party that may result in our shareholding in NIO China fall below 60%. A qualified initial
public offering refers to NIO China’s shares being directly or indirectly listed on the Shanghai Stock Exchange, the
Shenzhen Stock Exchange, or another overseas stock exchange approved by all shareholders of NIO China, through an
initial public offering or a material assets restructuring with a listed company.
● Liquidation preference. In the event that NIO China is liquidated, the Hefei Strategic Investors are guaranteed a minimum
investment return equal to the sum of their capital contribution in NIO China by the Hefei Strategic Investors plus an
investment income calculated at a compound interest rate of 8.5% per annum on the basis of the total amount of their
capital contribution. If the total consideration received by the Hefei Strategic Investors in such liquidation events is not
sufficient to realize the guaranteed minimum investment return, we undertake to compensate separately the shortfall to the
Hefei Strategic Investors in cash. Therefore, we could potentially be liable for the full amount of the minimum investment
return under the Hefei Investment Agreement.
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We maintain effective control over NIO China through our significant shareholdings and corresponding voting rights in NIO
China. As of the date of this annual report, we held 92.114% controlling equity interests and corresponding voting rights in NIO China.
According to the 2024 Hefei Shareholders Agreement and NIO China’s articles of association, certain significant corporate matters
requiring shareholders’ approval by law that fall into the protective provisions at the board of directors level shall be approved by the
board of directors of NIO China before being presented to the shareholders for approval. Resolutions of the shareholders involving such
significant corporate matters may be passed by shareholders holding at least two thirds of all valid voting power, while resolutions
involving other matters may be passed by shareholders holding at least half of all valid voting power. Considering our 92.114%
controlling equity interests and corresponding voting rights in NIO China, we have the power to approve all corporate matters that are
required to be approved by NIO China’s shareholders.
We also have effective control over the board of directors of NIO China through the majority representation and corresponding
voting rights on its board. According to the 2024 Hefei Shareholders Agreement, the current board of directors of NIO China consists of
seven members, five of whom are designated by us and serve as directors or executive officers of the Company. The remaining two
directors are designated by Jianheng New Energy Fund and Advanced Manufacturing Industry Investment Fund. Each of these two
directors independently exercises voting rights on board matters without any act-in-concert arrangements between them or among the
Hefei Strategic Investors. These two directors do not participate in the daily operations and management of NIO China outside of their
board meeting participation. Moreover, if the aggregate equity holding of the Hefei Strategic Investors in NIO China is lower than 5%,
the Hefei Strategic Investors shall not be entitled to nominate any directors.
In addition, the affirmative votes of a majority of the directors are sufficient to approve most corporate matters, such as the
annual budget, the annual final accounts, and the appointment or removal of the CEO and CFO, in accordance with the 2024 Hefei
Shareholders Agreement. A limited scope of significant corporate matters, such as changes in NIO China’s corporate structure, changes
to its core business, and amendment to its articles of association, require the affirmative votes of three-fourths (3/4) of the directors for
fundamental investor protection purposes.
Subsequent to the entry into the Previous Hefei Agreements, the cash contribution obligations of us and the Hefei Strategic
Investors have all been fulfilled and we have exercised our redemption right and capital increase right under the Previous Hefei
Shareholders Agreement in September 2020. In particular, in connection with our exercise of redemption right, we, through one of our
wholly-owned subsidiaries, redeemed from Jianheng New Energy Fund 50% of the equity interests in NIO China then held by the
Jianheng New Energy Fund in September 2020, which accounted for 8.612% equity interests in NIO China, and the total consideration
we paid for such redemption was RMB511.5 million, consisting of the actual capital increase payment Jianheng New Energy Fund had
made plus prorated interest accrued at an interest rate of 10% per annum. In addition, we assumed Jianheng New Energy Fund’s
remaining cash contribution obligation of RMB2.0 billion. In connection with our exercise of our capital increase right, we, through one
of our wholly-owned subsidiaries, subscribed for newly increased registered capital of NIO China at a consideration of US$600 million.
In addition, in February 2021, we, through one of our wholly-owned subsidiaries, also purchased from two of the Hefei Strategic
Investors an aggregate of 3.305% equity interests in NIO China for a total consideration of RMB5.5 billion and subscribed for newly
increased registered capital of NIO China at a subscription price of RMB10.0 billion. In September 2021, we, through one of our wholly-
owned subsidiaries, purchased from a minority strategic investor of NIO China an aggregate of 1.418% equity interests in NIO China for
a total consideration of RMB2.5 billion and subscribed for newly increased registered capital of NIO China at a subscription price of
RMB7.5 billion.
As a result of these transactions, as of the date of this annual report, the registered capital of NIO China was RMB6.429 billion,
and we held 92.114% controlling equity interests in NIO China. We have fulfilled all obligations due to be fulfilled under the Previous
Hefei Agreements and the 2024 Hefei Shareholders Agreement as of the date of this annual report.
Battery Asset Company
In August 2020, we and the Battery Asset Company Investors jointly established the Battery Asset Company. We and the Initial
BaaS Investors each invested RMB200 million and held 25% equity interests in the Battery Asset Company at its establishment. In
December 2020, April 2021, August 2021 and July 2022, respectively, the Battery Asset Company entered into agreements with new and
existing investors for additional financing. As of the date of this annual report, we beneficially own approximately 19.4% of the equity
interests in the Battery Asset Company.
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Business Collaboration with Forseven
On February 26, 2024, we entered into a technology license agreement, or the Technology License Agreement, with Forseven, a
subsidiary of CYVN Holdings L.L.C. Pursuant to the Technology License Agreement, we granted a non-exclusive and non-transferrable
worldwide license to Forseven to use certain of our technical information, technical solutions, software and intellectual property rights
related to or subsisting in our existing and future smart electric vehicle platforms within certain period, which we collectively refer to as
the Licensed Technologies, for (i) the research and development, manufacturing, offering to sell, sales, import and export of vehicle
models sold or marketed under Forseven brand(s) meeting pre-agreed manufacturer’s suggested retail price thresholds (excluding tax)
under the Technology License Agreement, which we collectively refer to as the Licensed Products, and (ii) the provision or procurement
of certain after-sales services for the Licensed Products to its users or technical services from us. We will also provide Forseven with
information and reasonable assistance to the extent necessary for Forseven to utilize the Licensed Technologies in accordance with
general industry practices.
Under the Technology License Agreement, we will receive technology license fees comprising a non-refundable, fixed upfront
license fee plus royalties determined based on the future sales of Licensed Products by Forseven. In addition, Forseven agrees to
indemnify us against any losses incurred in connection with breach of its confidentiality obligations under the Technology License
Agreement up to a specified liability cap. Subject to certain exceptions, we agree to indemnify Forseven against losses incurred in
connection with any third-party intellectual property rights infringement claims resulting from Forseven’s or its sublicensee’s use of the
Licensed Technologies in accordance with the Technology License Agreement in an amount of up to twice the amount of the technology
license fees paid or payable to us and up to a specified liability cap. Subject to certain limitations, each party’s aggregate liabilities under
the Technology License Agreement are capped at a specified liability cap, provided that Forseven’s intentional breach of the
confidentiality obligation is uncapped.
Unless terminated in accordance with provisions provided therein, the Technology License Agreement will remain valid until
the end of production of the Licensed Products (if the license is used for researching, developing, manufacturing, selling, importing and
exporting Licensed Products) or the expiration of Forseven’s obligation to provide after-sales services to its users (if the license is used
for providing after-sales services). Either party may terminate the Technology License Agreement if the other party: (i) voluntarily
applies for insolvency, liquidation, receivership, bankruptcy, or any other similar procedure for the purpose of debt settlement (other than
solvent mergers or reorganizations); (ii) involuntarily applies for insolvency, liquidation, receivership, bankruptcy, or any other similar
procedure, and such procedures are not revoked or reversed within 60 days; (iii) makes a general assignment for the benefit of its
creditors; (iv) dissolves; (v) suspends or threatens to suspend payment of its debts, or is unable to pay debts as they fall due, or admits
inability to pay its debts; (vi) commits a material breach of the Technology License Agreement and (a) such breach is irremediable or (b)
fails to rectify the breach within 60 days after receiving a notice from the non-breaching party detailing the breach and requesting a
remedy; and (vii) violates applicable laws relating to export control, sanctions, anti-corruption and anti-bribery.
We may also terminate the Technology License Agreement under certain conditions, including if a company that owns one or
more automotive brands and sells vehicles under such brand(s) to the market obtains control of Forseven.
Competition
The automotive market is highly competitive, and we compete with both NEV and ICE vehicles targeting the mid- to high-end
segment. The electric vehicle market is constantly evolving due to shifting user needs and expectations, favorable policies towards new
energy vehicles, expanding charging infrastructure, and technological advances in electric components. Competition in the industry is
expected to intensify in the future as more traditional OEMs and other companies with strong financial, engineering, manufacturing,
marketing, or other resources enter the electric vehicle market. We believe the primary competitive factors in our markets include, among
others, pricing, technological innovation, product design and performance, product quality and safety, service and charging options, user
experience, and manufacturing efficiency. We believe our competitive advantages in this evolving market include our well-positioned
products, proprietary software and hardware technological advances, battery swapping and other comprehensive power solutions, as well
as the worry-free user experience we offer.
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Intellectual Property
We have developed a number of proprietary systems and technologies. Since our inception, we have remained committed to
innovation and have dedicated ourselves to investing in research and development of core technologies. We have strategically focused on
building in-house capabilities, including battery swapping, assisted and intelligent driving, digital technologies, electric powertrain and
battery, vehicle engineering and design, among others. As a result, our success depends, at least in part, on our ability to protect our core
technology and intellectual property, including our registered patents for electric powertrain, battery and assisted and intelligent driving
technologies, among others. To accomplish this, we rely on a combination of patents, patent applications and trade secrets, including,
among others, employee and third-party nondisclosure agreements, copyright laws, trademarks, intellectual property licenses to establish
and protect our proprietary rights in our technology. We will actively monitor and pursue claims against unauthorized use of our
intellectual property.
As of December 31, 2023, we had 4,690 issued patents and 3,788 pending patent applications, 5,633 registered trademarks and
1,189 pending trademark applications in the United States, China, Europe and other jurisdictions. As of December 31, 2023, we also held
or otherwise had the legal right to use 262 registered copyrights for software or works of art and approximately 666 registered domain
names, including www.nio.io. We intend to continue to file additional patent applications with respect to our technology.
Environmental, Social and Governance
Since our inception, we have embraced the vision of Blue Sky Coming. We deeply understand that the smart electric vehicle
industry plays a crucial role in driving the green and low-carbon transformation of the economy and society. Recognizing the importance
of environmental, social, and corporate governance, or ESG, and firmly believing in creating sustainable value, we are committed to
leveraging our technologies, products, and services to be a force for good in these areas.
Over the past year, we have continually enhanced our ESG practice with an unwavering dedication to sustainable development.
In 2023, we received the Green Innovation Award at the 2023 Paulson Prize for Sustainability, which is a recognition of the novelty,
scalability, as well as the economic and environmental benefits of our battery swapping technology and business model. In addition, we
were honored among the “2023 Global 100: The World’s Most Sustainable Companies” by Corporate Knights. Furthermore, we
announced our commitment to join the Science Based Targets initiative, making us the first NEV company in China to join the initiative
for science-based carbon targets, which further solidifies our commitment to making a positive social impact. Throughout 2023, we
conducted extensive research on ESG topics and actively solicited feedback from internal and external stakeholders.
We are dedicated to fostering sustainable development through responsible governance. We have established a robust and
efficient corporate governance structure, and have established the Nominating and ESG Committee under our board of directors, as well
as the ESG Steering Team, to streamline our ESG initiatives. We release ESG reports annually on our website, detailing our latest ESG
policies and sustainability initiatives.
With the guidelines from the United Nation Global Compact, United Nation Sustainable Development Goals, and Global
Reporting Initiative, we have identified the following three pillars in our ESG initiatives, which have been integrated into our business
operations and corporate governance.
Environmental Sustainability
Focusing on low-carbon development, ecological protection and environmental management, we make efforts to put the concept
of sustainability into practice through the whole lifecycle of the green industry chain and build a green eco-system with upstream and
downstream partners.
At the product design and development stage, based on the philosophy of design for sustainability, we conduct comprehensive
research on the availability and application of low-carbon technologies and materials, and apply them on our products to reduce the
carbon emission and energy consumption of our product portfolio. During the manufacturing process, we continue to improve and carry
forward its green manufacturing system by carrying out intensive green space construction, empowering digital management and
committing to low-carbon energy utilization. In addition, we implemented water, aluminum and other scrap material recycling in our
plant and aim to further expand our recycling efforts throughout the product lifecycle.
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Moreover, we have initiated a series of activities together with different stakeholders to protect the environment and support the
broader community. We launched Clean Parks, an ecosystem co-conservation initiative co-initiated with the World Wide Fund for Nature
and the United Nations Development Programme.
Social Sustainability
We are fully committed to being socially responsible and making a positive impact on the society. Driven by user experience,
we integrate quality, safety, and innovation into the whole lifecycle management of products and services, which not only covers research
and development, supply chain, manufacturing and user service, but also includes innovative business models based on core
technologies, aligning user needs with full-lifecycle user experiences. We have formulated a Quality Manual at the corporate level, which
defines the quality management requirements for the entire business chain, from product development, supply chain, manufacturing and
logistics to user experience and service quality.
We have built a user community extending from personal growth to community development and user co-creation. To further
understand the demands of users and improve our service quality, NIO has set up a multi-dimensional satisfaction survey mechanism.
As a member of the United Nations Global Compact, we are committed to fulfilling the standards and requirements of the
Universal Declaration of Human Rights and the Declaration of the International Labor Organization on Fundamental Principles and
Rights at Work, and has integrated them into internal systems and polices. We focus on identifying and attracting talent from diverse
backgrounds across the globe and aim to facilitate the long-term development of employees through a value-driven mechanism based on
NIO value system. We have established a unique career development system, NIO Career Path system, providing different development
paths for employees in different positions. On top of our employee stock ownership plan and compulsory benefits and insurances
covering all employees, we also offer our employees various supplementary benefits and organize various employee activities to enrich
employees’ lives and improve their wellbeing.
We have established various corporate social responsibility initiatives to comprehensively give back to the communities and to
create value for the society. We are the sponsor of the Formula Student Electric China, a competition event where college students design
and race electric racing vehicles, allowing us to nurture the young talent for the future of the automotive industry. In addition, NIO Users
Trust has been making continuous contributions to public welfare projects, including rural revitalization, emergency assistant, user care
and charity donations, and collaborating with third-party organizations in various projects with the goal to achieve a balance between
social benefits and economic development.
Corporate Governance
We strictly abide by all laws and regulations and aim to protect the rights and interests of shareholders, enhance corporate value,
guide the formulation of business strategies and policies, and increase corporate transparency. To promote our sustainable development
and strengthen the effectiveness of governance, we appropriately balance the diversity among board members and management team. As
a vital part of our company, our management and board members contribute their insights into the strategic decision-making process by
drawing on their gender perspective and diversified industry and technical background. We also aim to develop a pipeline of potential
female successors to the Board to increase the percentage of female Board representatives in the coming years.
As a responsible company, we serve the long-term value of our business and act with integrity and ethics. We established
comprehensive internal ethics and compliance system and polices to manage our business behavior and prohibit corruption, bribery,
extortion, fraud, money laundering, monopoly and unfair competition, and insider trading. For enabling a comprehensive supervision of
ethics, we set up the reporting mechanism with whistle-blower protection. In addition, we carry out integrity training for all employees
every year, and implement standardized management of the performance of their duties.
To provide solid support for business development, we have established a comprehensive information security management
system, and has been improving the system constantly in line with applicable laws and regulations in the countries and regions where we
conduct business, supporting smooth business operations of our company and protecting the security of user information.
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To support our mission and advance our ESG initiatives, Nominating and ESG Committee oversees and manages our ESG
strategies, policies, and performance, and reports to our board of directors regarding the ESG progress to align the ESG related affairs
with the overall strategy of our company. The ESG steering team under the Nominating and ESG Committee takes charges of the
implementation of ESG initiatives and projects, and leads the ESG coordination team and the ESG responsible personnel in relevant
departments to execute ESG-related specific measures.
Seasonality
In the past few years, demand for new vehicles in the automotive industry were generally higher in the fourth quarter. Such
variation may or may not continue in the future. Our limited operating history makes it difficult for us to judge the exact nature or extent
of the seasonality of our business. Also, any unusually severe weather conditions in some markets may impact demand for our vehicles.
Insurance
We maintain various insurance policies required by PRC laws and regulations to safeguard against risks and unexpected events.
We consider that the coverage from the insurance policies that we maintain is in line with the industry norm. We do not have any
business liability or disruption insurance to cover our operations. For the years ended December 31, 2021, 2022 and 2023, we have not
made, nor been the subject of, any material insurance claim.
Regulations
This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.
Regulations and Approvals Covering the Manufacturing of New Energy Vehicles
The NDRC promulgated the Provisions on Administration of Investment in Automobile Industry, which took effect on
January 10, 2019. According to these provisions, enterprises are encouraged to, through equity investment and cooperation in production
capacity, enter into strategic cooperation relationship, carry out joint research and development of products, organize manufacturing
activities jointly and increase industrial concentration. The advantageous resources in production, high learning, research, application and
other areas shall be integrated and core enterprises in automobile industry shall be propelled to form industrial alliance and industrial
consortium. The vehicle investment projects shall be filed with the provincial development and reform authorities.
According to the Regulations on the Administration of Newly Established Pure Electric Passenger Vehicle Enterprises, which
took effect on July 10, 2015, the NDRC and the Ministry of Industry and Information Technology are responsible for supervising and
administering investment projects of newly established enterprises, as well as overseeing the access of vehicle manufacturers and
products within the scope of their respective duties. Before our vehicles can be added to the Announcement of Vehicle Manufacturers and
Products, or the Manufacturers and Products Announcement, issued by the Ministry of Industry and Information Technology, a
procedure that is required in order for our vehicles to be approved for manufacture and sale in China, our vehicles must meet the
applicable requirements set forth in laws and regulations. Such laws and regulations include, among others, the Administrative Rules on
the Admission of New Energy Vehicle Manufacturers and Products, which took effect on July 1, 2017 and was amended on July 24, 2020,
and the Administrative Rules on the Admission of Passenger Vehicles Manufacturer and Products, which took effect on January 1, 2012,
and pass the review by the Ministry of Industry and Information Technology. NEVs that have entered into the Manufacturers and
Products Announcement are required to undergo regular inspection every three years by the Ministry of Industry and Information
Technology so that it may determine whether the vehicles remain qualified to stay in the Manufacturers and Products Announcement.
According to the Administrative Rules on the Admission of New Energy Vehicle Manufacturers and Products, in order for our
vehicles to enter into the Manufacturers and Products Announcement, our vehicles must satisfy certain conditions, including, among
others, meeting certain standards set out therein, meeting other safety and technical requirements specified by the Ministry of Industry
and Information Technology, and passing inspections conducted by a state-recognized testing institution. Once such conditions for
vehicles are met and the application has been approved by the Ministry of Industry and Information Technology, the qualified vehicles
are published in the Manufacturers and Products Announcement by the Ministry of Industry and Information Technology. Where any
new energy vehicle manufacturer manufactures or sells any model of a new energy vehicle without the prior approval of the competent
authorities, including being published in the Manufacturers and Products Announcement by the Ministry of Industry and Information
Technology, it may be subject to penalties, including fines, forfeiture of any illegally manufactured and sold vehicles and spare parts and
revocation of its business licenses.
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Regulations on Compulsory Product Certification
Under the Administrative Regulations on Compulsory Product Certification which was promulgated by the General
Administration of Quality Supervision, Inspection and Quarantine, which has been merged into the State Administration for Market
Regulation, on July 3, 2009 and was latest amended on September 29, 2022 and took effect on November 1, 2022, and the List of the
First Batch of Products Subject to Compulsory Product Certification which was promulgated in association with the State Certification
and Accreditation Administration Committee on December 3, 2001 and took effect on May 1, 2002, the State Administration for Market
Regulation is responsible for the regulation and quality certification of automobiles. Automobiles and parts and components must not be
sold, exported or used in operating activities until they are certified by designated certification authorities of the PRC as qualified
products and granted certification marks.
Regulations Relating to Parallel Credits Policy on Vehicle Manufacturers and Importers
On September 27, 2017, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of
Commerce, the General Administration of Customs of PRC and the State Administration for Market Regulation jointly promulgated the
Measures for the Parallel Administration of the Average Fuel Consumption and New Energy Vehicle Credits of Passenger Vehicle
Enterprises, which were most recently amended on June 29, 2023 and took effect on August 1, 2023. Under these measures, each of the
vehicle manufacturers and vehicle importers above a certain scale is required to, among other things, maintain its new energy vehicles
credits, or the NEV credits, and corporate average fuel consumption credits, above zero, regardless of whether NEVs or ICE vehicles are
manufactured or imported by it, and NEV credits can be earned only by manufacturing or importing NEVs. Therefore, NEV
manufacturers will enjoy preferences in obtaining and calculating NEV credits.
NEV credits are equal to the aggregate actual scores of a vehicle manufacturer or a vehicle importer minus its aggregate targeted
scores. According to these measures, the actual scores shall be calculated by multiplying the score of each new energy vehicle model,
which depends on various metrics such as the driving range, battery energy efficiency and the rated power of fuel cell systems, and is
calculated based on formula published by the Ministry of Industry and Information Technology (in the case of a battery electric vehicle,
the NEV credit of each vehicle is calculated by multiplying 0.0034 by the vehicle’s mileage, adding 0.2 to the result, and then
multiplying the total by the mileage adjustment coefficient, battery energy density adjustment coefficient, and electricity consumption
coefficient), by the respective production or import volume, while the targeted scores shall be calculated by multiplying the annual
production or import volume of traditional ICEs of a vehicle manufacturer or importer by the NEV credit ratio set by the Ministry of
Industry and Information Technology. The NEV credit ratios are 28% and 38% for the years of 2024 and 2025, respectively, increasing
from 16% and 18% for the years of 2022 and 2023, respectively.
Additionally, the Ministry of Industry and Information Technology will establish an NEV credits pool for passenger vehicle
enterprises to store or withdraw positive NEV credits, and decide whether to open such pool before July 30 each year based on the
average fuel consumption of passenger vehicle enterprises across the country and the supply and demand of NEV credits. The positive
NEV credits stored in the credit pool do not have a carryover ratio requirement and are valid for five years. Excess positive NEV credits,
or the automotive regulatory credits, are tradable and may be sold to other enterprises through a credit trading scheme established by the
Ministry of Industry and Information Technology while excess positive corporate average fuel consumption credits can only be carried
forward or transferred among related parties. Negative NEV credits can be offset by purchasing automotive regulatory credits from other
manufacturers or importers.
According to these measures, the requirements on the NEV credits shall be considered for the entry approval of passenger
vehicle manufacturers and products by the regulators. If a passenger vehicle enterprise fails to offset its negative credits, its new
products, if the fuel consumption of which does not reach the target fuel consumption value for a certain vehicle models as specified in
the Evaluation Methods and Indicators for the Fuel Consumption of Passenger Vehicles, it will not be listed in the Announcement of the
Vehicle Manufacturers and Products issued by the Ministry of Industry and Information Technology, or will not be granted the
compulsory product certification, and the vehicle enterprises may be subject to penalties according to the applicable rules and
regulations.
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Regulations on Electric Vehicle Charging Infrastructure
Pursuant to the Guidance Opinions of the General Office of the State Council on Accelerating the Promotion and Application of
the New Energy Vehicles, which took effect on July 14, 2014, the Guidance Opinions of the General Office of the State Council on
Accelerating the Development of Charging Infrastructures of the Electric Vehicle, which took effect on September 29, 2015, the
Guidance on the Development of Electric Vehicle Charging Infrastructure (2015-2020), which took effect on October 9, 2015, and the
Development Plan for the New-energy Vehicle Industry (2021-2035), which took effect on October 20, 2020, the PRC government
encourages the construction and development of charging infrastructure for electric vehicles, such as charging stations and battery swap
stations, and only centralized charging and battery replacement power stations are required to obtain approvals for construction, permits
from the authorities.
The Circular on Accelerating the Development of Electrical Vehicle Charging Infrastructures in Residential Areas promulgated
on July 25, 2016 provides that the operators of electrical vehicle charging and battery swap infrastructure are required to be covered
under liability insurance policies to protect the purchasers of electric vehicles, covering the safety of electric vehicle charging.
Regulations on Automobile Sales
Pursuant to the Administrative Measures on Automobile Sales promulgated by the Ministry of Commerce, April 5, 2017, which
took effect on July 1, 2017, automobile suppliers and dealers are required to file with authorities through the information system for the
national automobile circulation operated by the competent commerce department within 90 days after the receipt of a business license.
Where there is any change to the information concerned, automobile suppliers and dealers must update such information within 30 days
after such change.
Regulations on the Recall of Defective Automobiles
On October 22, 2012, the State Council promulgated the Administrative Provisions on Defective Automotive Product Recalls,
which took effect on January 1, 2013 and were amended on March 2, 2019. The product quality supervision department of the State
Council is responsible for the supervision and administration of recalls of defective automotive products nationwide. Pursuant to the
administrative provisions, manufacturers of automobile products are required to take measures to eliminate defects in products they sell.
A manufacturer must recall all defective automobile products. Failure to recall such products may result in an order to recall the
defective products from the quality supervisory authority of the State Council. If any operator conducting sales, leasing, or repair of
vehicles discovers any defect in automobile products, it must cease to sell, lease or use the defective products and must assist
manufacturers in the recall of those products. Manufacturers must recall their products through publicly available channels and publicly
announce the defects. Manufacturers must take measures to eliminate or cure defects, including rectification, identification, modification,
replacement or return of the products. Manufacturers that attempt to conceal defects or do not recall defective automobile products in
accordance with regulations will be subject to penalties, including fines, forfeiture of any income earned in violation of law and
revocation of licenses.
Pursuant to the Implementation Rules on the Administrative Provisions on Defective Automotive Product Recalls, which took
effect on January 1, 2016 and was latest amended on October 23, 2020, if a manufacturer is aware of any potential defect in its
automobiles, it must investigate in a timely manner and report the results of such investigation to the State Administration for Market
Regulation. Where any defect is found during the investigations, the manufacturer must cease to manufacture, sell, or import the
automobile products and recall such products in accordance with applicable laws and regulations.
On November 23, 2020, the State Administration for Market Regulation issued the Circular on Further Improving the
Regulation of Recall of Automobile with Over-the-Air (OTA) Technology, pursuant to which automobiles manufacturers that provide
technical services through OTA are required to complete filing with the State Administration for Market Regulation and those who have
provided such services through OTA must complete such filing before December 31, 2020. In addition, if an automaker uses OTA
technology to eliminate defects and recalls its defective products, it must make a recall plan and complete a filing with the State
Administration for Market Regulation.
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Regulations on Product Liability
Pursuant to the Product Quality Law of the PRC, promulgated on February 22, 1993 and latest amended on December 29, 2018,
a manufacturer is prohibited from producing or selling products that do not meet applicable standards and requirements for safeguarding
human health and ensuring human and property safety. Products must be free from unreasonable dangers threatening human and property
safety. Where a defective product causes physical injury to a person or property damage, the aggrieved party may make a claim for
compensation from the producer or the seller of the product. Producers and sellers of non-compliant products may be ordered to cease
the production or sale of the products and could be subject to confiscation of the products and/or fines. Earnings from sales in
contravention of such standards or requirements may also be confiscated, and in severe cases, an offender’s business license may be
revoked.
Favorable Government Policies Relating to New Energy Vehicles in the PRC
On November 2, 2020, the State Council issued the Development Plan for the New-energy Vehicle Industry (2021-2035), in
order to boost the high-quality development of NEVs from 2021 to 2035. The development plan is implemented with a view to achieve
the following goals: (i) by 2025, the average power consumption of NEVs will drop to 12.0 kWh per 100 kilometers. The sales volume
of NEVs will reach around 20% of the total sales volume of new vehicles, and highly autonomous vehicles will achieve commercial
applications in limited areas and specific scenarios; (ii) by 2035, pure electric vehicles shall become the mainstream of new vehicles for
sale. Vehicle use in public areas shall achieve full electrification, fuel cell vehicles shall achieve commercialized application, and highly
autonomous vehicles shall achieve large-scale application, in order to effectively promote the improvement of energy saving and
emission reduction level and social operation efficiency. On December 27, 2023, the NDRC issued the Guidance Catalog for Industrial
Structural Adjustment (2024 Edition), which took effect on February 1, 2024, and pursuant to which, electric vehicle charging facilities
and key components of new energy vehicles are categorized as encouraged projects.
Government Subsidies for Purchases of New Energy Vehicles
On April 22, 2015, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information
Technology and the NDRC jointly issued the Circular on the Financial Support Policies on the Promotion and Application of New
Energy Vehicles in 2016-2020, which took effect on the same day. This circular provides that those who purchase new energy vehicles
specified in the Catalogue of Recommended New Energy Vehicle Models for Promotion and Application by the Ministry of Industry and
Information Technology, may obtain subsidies from the PRC national government. Pursuant to this circular, a purchaser may purchase a
new energy vehicle from a seller by paying the original price minus the subsidy amount, and the seller may obtain the subsidy amount
from the government after such new energy vehicle is sold to the purchaser. This circular also provided a preliminary phase-out schedule
for the provision of subsidies.
On December 29, 2016, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and
Information Technology and the NDRC jointly issued the Circular on Adjusting the Subsidy Policy for the Promotion and Application of
New Energy Vehicles, or the Circular on Adjusting the Subsidy Policy, which took effect on January 1, 2017, to adjust the existing
subsidy standard for purchases of new energy vehicles. The Circular on Adjusting the Subsidy Policy capped the local subsidies at 50%
of the national subsidy amount, and further specified that national subsidies for purchasers purchasing certain new energy vehicles
(except for fuel cell vehicles) from 2019 to 2020 would be reduced by 20% as compared to 2017 subsidy standards.
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The subsidy standard is reviewed and updated on an annual basis. The 2020 subsidy standard, effective from April 23, 2020,
was provided in the Circular on Improving the Subsidy Policies for the Promotion and Application of New Energy Vehicles jointly
promulgated by the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology
and the NDRC on the same day. The 2020 subsidy standard reduces the base subsidy amount by 10% for each NEV, sets subsidies for 2
million vehicles as the upper limit of annual subsidy scale; and provides that national subsidy shall only apply to an NEV that is either (i)
with the sale price under RMB300,000 or (ii) equipped with battery swapping mechanism. Given all our vehicles are equipped with
battery swapping mechanism, purchasers of all our vehicles, regardless of sales price, are eligible to enjoy the subsidies provided by the
PRC government to purchases of new energy vehicles. The 2021 subsidy standard, effective from January 1, 2021, was provided in the
Circular on Further Improving the Subsidy Policies for the Promotion and Application of New Energy Vehicles jointly promulgated by
the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the NDRC on
December 31, 2020. The 2021 subsidy standard reduces the base subsidy amount by 20% for each NEV based on that for the previous
year. Further, the 2022 subsidy standard, effective from January 1, 2022, was provided in the Circular on Financial Subsidy Policies for
the Promotion and Application of New Energy Vehicles in Year 2022 jointly promulgated by the Ministry of Finance, the Ministry of
Science and Technology, the Ministry of Industry and Information Technology and the NDRC on December 31, 2021. The 2022 subsidy
standard reduces the base subsidy amount by 30% for each NEV from that for the previous year. The new energy vehicles subsidy policy
was terminated on December 31, 2022.
Exemption of Vehicle Purchase Tax
On December 26, 2017, the Ministry of Finance, the State Taxation Administration, the Ministry of Industry and Information
Technology and the Ministry of Science and Technology jointly issued the Announcement on Exemption of Vehicle Purchase Tax for New
Energy Vehicle. On June 28, 2019, the Ministry of Finance and the State Taxation Administration jointly issued the Announcement on
Renewal of Preferential Policies on Vehicle Purchase Tax. Pursuant to the two announcements, from January 1, 2018 to December 31,
2020, the vehicle purchase tax which is applicable for ICE vehicles is not imposed on purchases of qualified new energy vehicles listed
in the Catalogue of New Energy Vehicle Models Exempt from Vehicle Purchase Tax, issued by the Ministry of Industry and Information
Technology. Such announcement provides that the policy on exemption of vehicle purchase tax is also applicable to new energy vehicles
added to this catalogue prior to December 31, 2017. On April 16, 2020, the Ministry of Finance, the State Taxation Administration and
the Ministry of Industry and Information Technology jointly issued the Announcement on Exemption of Vehicle Purchase Tax for New
Energy Vehicle, with effect from January 1, 2021, which extends the vehicle purchase tax exemption period provided under the above
two announcements till December 31, 2022. On September 18, 2022, the Ministry of Finance, the State Taxation Administration and the
Ministry of Industry and Information Technology jointly issued the Announcement on Continuation of Policies for Exemption of Vehicle
Purchase Tax for New Energy Vehicle, with effect from September 18, 2022, which provides that the new energy vehicles purchased
during the period from January 1, 2023 to December 31, 2023 will be exempted from the vehicle purchase tax. On June 19, 2023, the
Ministry of Industry and Information Technology, the Ministry of Finance and the State Taxation Administration, jointly promulgated the
Announcement on Continuing and Optimizing the Vehicle Purchase Tax Reduction and Exemption Policies for New Energy Vehicles,
pursuant to which, the NEVs purchased during the period from January 1, 2024 to December 31, 2025 are eligible for exemption from
vehicle purchase tax, with the amount of tax exemption for each new energy passenger vehicle not exceeding RMB30,000; and the
vehicle purchase tax on the NEVs purchased during the period from January 1, 2026 to December 31, 2027 shall be reduced by half, with
the amount of tax reduction for each new energy passenger vehicle not exceeding RMB15,000.
Non-imposition of Vehicle and Vessel Tax
The Notice on Preferential Vehicle and Vessel Tax Policies for Energy-saving and New-energy Vehicles and Vessels, which was
jointly promulgated by the Ministry of Finance, the Ministry of Transport, the State Taxation Administration and the Ministry of Industry
and Information Technology on July 10, 2018, clarifies that NEVs are not subject to vehicle and vessel tax.
New Energy Vehicle License Plate
In recent years, in order to control the number of motor vehicles on the road, certain local governments have issued restrictions
on the issuance of vehicle license plates. These restrictions generally do not apply to the issuance of license plates for new energy
vehicles, which makes it easier for purchasers of new energy vehicles to obtain automobile license plates. For example, pursuant to the
recently issued Implementation Measures on Encouraging Purchase and Use of New Energy Vehicles in Shanghai, which took effect on
January 1, 2024 and remain valid until December 31, 2024, local authorities will issue new automobile license plates to qualified
purchasers of new energy vehicles without requiring such qualified purchasers to go through certain license-plate bidding processes and
to pay license-plate purchase fees as compared with purchasers of ICE vehicles.
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Regulations on Value-added Telecommunications Services
In 2000, the State Council promulgated the Telecommunications Regulations of the PRC, which was most recently amended in
February 2016 and provides a regulatory framework for telecommunications services providers in the PRC. These regulations categorize
all telecommunications businesses in China as either basic or value-added. Value-added telecommunications services are defined as
telecommunications and information services provided through public network infrastructure. Pursuant to the Classified Catalogue of
Telecommunications Services, an attachment to these regulations, which was most recently updated in June 2019 by the Ministry of
Industry and Information Technology, internet information services, or ICP services, are classified as value-added telecommunications
services. Under these regulations and administrative measures, commercial operators of value-added telecommunications services must
first obtain a license for conducting internet content provision services, or an ICP license, from the Ministry of Industry and Information
Technology or its provincial level counterparts. Otherwise, such operator might be subject to sanctions, including corrective orders and
warnings, imposition of fines and confiscation of illegal gains and, in the case of significant infringement, orders to close the website.
Pursuant to the Administrative Measures on Internet Information Services, promulgated by the State Council in 2000 and
amended in 2011, “internet information services” refer to the provision of information through the internet to online users, and are
divided into “commercial internet information services” and “non-commercial internet information services.” A commercial ICP service
operator must obtain an ICP license before engaging in any commercial ICP service within China, while the ICP license is not required if
the operator will only provide internet information on a non-commercial basis.
In addition to the regulations and measures above, the provision of commercial internet information services on mobile internet
applications are regulated by the Administrative Provisions on Information Services of Mobile Internet Applications, promulgated by the
CAC in June 2022, which took effect on August 1, 2022. Pursuant to these provisions, the mobile internet applications providers shall
acquire qualifications required by laws and regulations and implement the information security management responsibilities strictly and
fulfill their obligations, including real-name system, protection of users’ information, examination and management of information
content, and shall comply with provisions on the scope of necessary personal information when engaging in personal information
processing activities. In addition, such providers shall not compel the user to agree to the processing of personal information for any
reason and refuse the user to use its basic functions and services as the user does not agree to provide non-essential personal information.
The Regulations for the Administration of Foreign-Invested Telecommunications Enterprises, promulgated by the State Council
on December 11, 2001 and latest amended on March 29, 2022, which took effect on May 1, 2022, requires that the ultimate foreign
equity ownership in a value-added telecommunications services provider may not exceed 50%, except as otherwise stipulated by the
state. In addition, the telecommunications enterprises must obtain approval from the Ministry of Industry and Information Technology, or
its authorized local counterparts, before launching the value-added telecommunications business in China.
Regulations on Autonomous Driving
On July 27, 2021, the Ministry of Public Security and the Ministry of Transport issued Administration of Road Testing and
Demonstration Application of Intelligent Connected Vehicles (Trial Implementation), or the Circular No. 97, which took effect on
September 1, 2021, and is the primary regulation governing protocol of road testing and demonstration application of intelligent
connected vehicles in the PRC. Pursuant to the Circular No. 97, any entity intending to conduct the road testing and demonstration
application of intelligent connected vehicles must apply for and obtain a temporary license plate for each tested vehicle. To qualify for
such temporary license plate, an applicant entity must satisfy, among others, the following requirements: (i) it must be an independent
legal person registered under PRC law with the capacity to conduct manufacturing, technological research or testing of automobiles and
automobile parts, which has established protocols to test and assess the performance of autonomous driving functionalities of intelligent
connected vehicles and is capable of conducting real-time remote monitor of the tested vehicles, and has the ability to ensure the network
security of tested vehicles and remote monitoring platform; (ii) the tested vehicle must be equipped with a driving system that can switch
between autonomous driving mode and human driving mode in a safe, quick and simple manner and ensures human driver to take
control of the tested vehicle any time immediately when necessary; (iii) the tested vehicle must be equipped with the function of
recording, storing and real-time monitoring the condition of the tested vehicle and is able to transmit real-time data of the tested vehicle,
such as the control mode, location and speed; (iv) it must sign an employment contract or a labor service contract with the driver of the
tested vehicle, who must be a licensed driver of corresponding vehicle types with more than three years’ driving experience and a track
record of safe driving and is familiar with the testing protocol or application scheme for autonomous driving system and proficient in
operating the system; and (v) it must provide the safety self-declaration, the result of risk assessment on network security, the proof of
corresponding measures taken against such risk and other materials to the competent department, and insure each tested vehicle for at
least RMB5 million against vehicle accidents or provide a letter of guarantee covering the same. In addition, as to the demonstration
application, the applicant entity could also be a consortium of several independent legal persons and has the operational capability of
demonstration application and relevant scheme.
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During the road testing and demonstration application, the tested vehicle shall be marked with the words such as “autonomous
driving road test” or “for autonomous driving demonstration purposes” in a noticeable manner and the autonomous driving mode shall
not be used unless in the permitted areas specified in the safety self-declaration, and the entity shall not make any changes of software
and hardware that may affect the function and performance of the tested vehicle without providing the safety description materials to the
competent department in advance. In addition, the entity is required to submit to the competent department a periodical report every six
months and a final report within one month after the completion of road testing and demonstration application. In the case of a vehicle
accident which causes severe injury or death of personnel or vehicle damage, the entity must report such accident to the competent
department within 24 hours and submit a comprehensive analysis report in writing covering cause analysis, final liability allocation
results, etc. within five working days after the traffic enforcement agency determines the liability for the accident.
On March 24, 2021, the Ministry of Public Security issued the Draft Proposed Amendments of the Road Traffic Safety Law. The
proposal clarifies, among other things, the requirements related to road testing of, and access by, vehicles equipped with autonomous
driving functions, as well as regulating how liability for traffic violations and accidents will be allocated. The proposal stipulates that
vehicles equipped with autonomous driving functions should first pass tests in closed roads and venues and obtain temporary license
plates before embarking on road testing. Further such road testing should be conducted at designated times, areas and routes in
accordance with the law. After passing the road test, vehicles equipped with autonomous driving functions can be manufactured,
imported and sold in accordance with the laws and regulations, and those needing access to the road must apply for motor vehicle
number plates. The proposal provides that when vehicles equipped with autonomous driving functions and human driving modes are
involved in road traffic violations or accidents, the responsibility of the driver or the autonomous driving system developer shall be
determined in accordance with laws, as well as the liability for damage. For vehicles on the road that are equipped with autonomous
driving functions without human driving modes, this liability issue should be separately dealt with by departments of the State Council.
According to the Notice on Promoting the Development of Intelligent Connected Vehicles and Maintaining the Security of
Surveying and Mapping Geographic Information issued by the Ministry of Natural Resources of the PRC on August 25, 2022, if an
intelligent connected vehicle is equipped with or integrated with certain sensors, the collection, storage, transmission and processing of
surveying and mapping geographic information and data, including spatial coordinates, images, point clouds and their attribute
information, of vehicles and surrounding road facilities in the process of road test, will be considered surveying and mapping activities.
Persons who collect, store, transmit and process such surveying and mapping geographic information and data, will be the main actors of
surveying and mapping activities. Additionally, if any vehicle manufacturer, service provider or smart driving software provider that is a
domestic enterprise needs to engage in the collection, storage, transmission and processing of surveying and mapping geographic
information and data, it shall obtain the corresponding surveying and mapping qualification or entrust an agency with the corresponding
surveying and mapping qualification to carry out the intended activities; if any vehicle manufacturer, service provider or smart driving
software provider that is a foreign-invested enterprise needs to engage in the collection, storage, transmission and processing of
surveying and mapping geographic information and data, it shall entrust an agency with corresponding surveying and mapping
qualification to carry out the intended activities, and the entrusted agency shall undertake the collection, storage, transmission and
processing of the relevant spatial coordinates, images, point clouds and their attribute information and other businesses, and provide
geographic information service and support.
Regulations on Consumer Rights Protection
Our business is subject to a variety of consumer protection laws, including the PRC Consumer Rights and Interests Protection
Law, as amended in 2013 and took effect on March 15, 2014, which imposes stringent requirements and obligations on business
operators. Failure to comply with these consumer protection laws could subject us to administrative sanctions, such as the issuance of a
warning, confiscation of illegal income, imposition of fines, an order to cease business operations, revocation of business licenses, as
well as potential civil or criminal liabilities.
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On March 15, 2024, the State Council promulgated the Implementation Regulations on the PRC Consumer Rights and Interests
Protection Law, which will take effect on July 1, 2024. These implementation regulations refine and supplement the provisions on
operator obligations, improve the provisions related to the online consumption, and strengthen the obligations of prepaid consumption
operators. For example, (i) operators shall not use standard clauses to unreasonably exempt or reduce their liabilities, aggravate
consumers’ liabilities, or restrict consumers’ rights to change or terminate contracts in accordance with the law, choose litigation or
arbitration to resolve disputes, or choose goods or services from other operators; (ii) operators shall not excessively collect consumers’
personal information, and shall not force or covertly force consumers to consent to the collection and use of personal information that is
not directly related to business activities by means of a general authorization, default authorization, or other methods; (iii) without the
consent of consumers, operators shall not send commercial information or make commercial phone calls to consumers; if consumers
agree to receive such information or calls, operators shall provide clear and convenient cancellation methods; if consumers choose to
cancel, operators shall immediately stop sending such information or making such calls; (iv) operators shall use an easy-to-understand
method to provide consumers with information related to goods or services truly and comprehensively, and shall not set different prices
or charging standards for the same goods or services under the same conditions without the knowledge of consumers; and (v) if operators
provide services through automatic extension or automatic renewal, they shall bring it to the attention of consumers in a conspicuous
manner before consumers accept the services and before the date of automatic extension or automatic renewal.
Regulations on Internet Information Security and Privacy Protection
In December 2012, the Standing Committee of the National People’ s Congress of China promulgated the Decision on
Strengthening Network Information Protection to enhance the legal protection of information security and privacy on the internet. This
decision also requires internet operators to take measures to ensure confidentiality of information of users.
In July 2013, the Ministry of Industry and Information Technology promulgated the Provisions on Protection of Personal
Information of Telecommunication and Internet Users to regulate the collection and use of users’ personal information in the provision of
telecommunication service and internet information service in China.
On July 1, 2015, the Standing Committee of the National People’s Congress of China promulgated the PRC National Security
Law, which took effect on the same day. The PRC National Security Law provides that the state shall safeguard the sovereignty, security
and cyber security development interests of the state, and that the state shall establish a national security review and supervision system
to review, among other things, foreign investment, key technologies, internet and information technology products and services, and
other important activities that are likely to impact the national security of the PRC.
In August 2015, the Standing Committee of the National People’s Congress of China promulgated the Ninth Amendment to the
Criminal Law, which took effect in November 2015 and amended the standards of crime of infringing citizens’ personal information and
reinforced the criminal culpability of unlawful collection, transaction, and provision of personal information. It further provides that any
ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and
refuses to rectify upon orders will be subject to criminal liability.
In November 2016, the Standing Committee of the National People’s Congress of China promulgated the Cyber Security Law of
the PRC, which took effect on June 1, 2017. The Cyber Security Law requires that a network operator take technical measures and other
necessary measures in accordance with applicable laws and regulations and the compulsory requirements of the national and industrial
standards to safeguard the safe and stable operation of its networks. We are subject to such requirements as we are operating internet of
vehicles, a website and mobile application and providing certain internet services mainly through our mobile application. The Cyber
Security Law further requires network operators to formulate contingency plans for network security incidents, report to the competent
departments immediately upon the occurrence of any incident endangering cyber security and take corresponding remedial measures.
Network operators are also required to maintain the integrity, confidentiality and availability of network data. The Cyber
Security Law reaffirms the basic principles and requirements specified in other existing laws and regulations on personal data protection,
such as the requirements on the collection, use, processing, storage and disclosure of personal data, and network operators being required
to take technical and other necessary measures to ensure the security of the personal information they have collected and prevent the
personal information from being divulged, damaged or lost. Any violation of the Cyber Security Law may subject the internet
information services provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, shutdown of
websites or criminal liabilities.
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The General Administration of Quality Supervision, Inspection and Quarantine and Standardization Administration issued the
Standard of Information Security Technology—Personal Information Security Specification (2017 edition), which took effect in May
2018, and the Standard of Information Security Technology—Personal Information Security Specification (2020 edition), which took
effect in October 2020. Pursuant to these standards, any entity or person who has the authority or right to determine the purposes for and
methods of using or processing personal information are seen as a personal data controller. Such personal data controller is required to
collect information in accordance with applicable laws, and prior to collecting such data, the information provider’s consent is required.
On November 28, 2019, the Secretary Bureau of the CAC, the General Office of the Ministry of Industry and Information
Technology, the General Office of the Ministry of Public Security and the General Office of the State Administration for Market
Regulation jointly issued the Notice on the Measures for Determining the Illegal Collection and Use of Personal Information through
Mobile Applications, which aims to provide reference for supervision and administration departments and provide guidance for mobile
applications operators’ internal examination and internal correction and social supervision by netizens, and further elaborates the forms
of behavior constituting illegal collection and use of the personal information through mobile applications including: (i) failing to publish
the rules on the collection and use of personal information; (ii) failing to explicitly explain the purposes, methods and scope of the
collection and use of personal information; (iii) collecting and using personal information without the users’ consent; (iv) collecting
personal information unrelated to the services they provide and beyond the necessary principle; (v) providing personal information to
others without the users’ consent; (vi) failing to provide the function of deleting or correcting the personal information according to the
laws or failing to publish information such as ways of filing complaints and reports.
In addition, on May 28, 2020, the National People’s Congress of China approved the PRC Civil Code, which took effect on
January 1, 2021. Pursuant to the PRC Civil Code, the collection, storage, use, process, transmission, provision and disclosure of personal
information should follow the principles of legitimacy, properness and necessity.
On May 12, 2021, the CAC issued the Several Provisions on Automobile Data Security Management (Draft for Comment),
which further elaborates the principles and requirements for the protection of personal information and important data in the automobile
industry scenarios, and defines enterprise or institution engaged in the automobile design, manufacture, and service as an operator. Such
operator is required to process personal information or important data in accordance with applicable laws and regulations during the
process of design, production, sales, operation, maintenance, and management of automobile. On August 16, 2021, the CAC, the NDRC,
the Ministry of Public Security, the Ministry of Industry and Information Technology and the Ministry of Transport jointly promulgated
the Several Provisions on Automobile Data Security Management (Trial Implementation), or the Provisions on Automobile Data
Security, which took effect from October 1, 2021 and clearly defines the definition of automobile data, automobile data processing,
automobile data processor, personal information, sensitive personal information and important data, and aims to regulate the collection,
analysis, storage, utilization, provision, publication, and cross-border transmission of personal information and important data generated
throughout the lifecycle of automobiles by automobile designers, producers and service providers. Automobile data processors, including
automobile manufacturers, compartment and software providers, dealers, maintenance providers are required to process personal
information and important data in accordance with applicable laws during the automobile design, manufacture, sales, operation,
maintenance and management. To process personal information, automobile data processors shall obtain the consent of the individual or
conform to other circumstances stipulated by laws and regulations. Pursuant to the Provisions on Automobile Data Security, important
data shall be stored within the PRC and a cross-border data security assessment shall be conducted by the national cyberspace
administration authority in concert with departments under the State Council if there is a need to provide such data overseas. The security
management for the cross-border transfer of personal information which is not included in important data shall be governed by the PRC
laws and regulations. To process important data, automobile data processors shall conduct risk assessment in accordance with regulations
and submit risk assessment reports to related departments at provincial levels.
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On June 10, 2021, the Standing Committee of the National People’s Congress of China promulgated the Data Security Law of
the PRC, which took effect in September 2021. The Data Security Law sets forth data security and privacy related compliance
obligations on entities and individuals carrying out data related activities. The Data Security Law also introduces a data classification and
layered protection system based on the importance of data and the degree of impact on national security, public interests or legitimate
rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked or illegally acquired or used. In
addition, the Data Security Law provides a national security review procedure for those data activities that may affect national security,
and imposes export restrictions on certain data and information. According to the PRC National Security Law, the State shall establish
institutions and mechanisms for national security review and regulation, and conduct national security review on certain matters that
affect or may affect PRC national security, such as key technologies and IT products and services. Furthermore, the Data Security Law
also provides that any organization or individual within the territory of the PRC shall not provide any foreign judicial body and law
enforcement body with any data without the approval of the competent PRC governmental authorities. In early July 2021, regulatory
authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United
States.
In July 2021, General Office of the Central Committee of the Communist Party of China and the General Office of the State
Council jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, which were made
available to the public on July 6, 2021. The opinions emphasized the need to strengthen the administration over illegal securities
activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting
the construction of regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies. As
of the date of this annual report, we have not received any inquiry, notice, warning, or sanctions from PRC governmental authorities in
connection with the above contents of the opinions.
On December 28, 2021, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public
Security, the Ministry of National Security, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the State
Administration for Market Regulation, the National Radio and Television Administration, the CSRC, the National Administration of
State Secrets Protection and the State Cryptography Administration jointly released the Cybersecurity Review Measures, which took
effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, network platform operators with information of over one
million users shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate, among other things,
the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being
influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk.
On July 30, 2021, the Ministry of Industry and Information Technology issued the Opinion on Strengthening the Access
Administration of Intelligent Connected Vehicles Manufacturing Enterprises and Their Products, which provided responsibilities of
intelligent connected vehicles manufacturing enterprises, and required such enterprises to strengthen the management of vehicle data
security, cyber security, software updates, function safety and intended function safety. Furthermore, this opinion stated that vehicles
manufacturing enterprises shall conduct cybersecurity reviews prior to transmitting data abroad.
On July 30, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information
Infrastructure, which took effect in September 2021. These regulations supplement and specify the provisions on the security of critical
information infrastructure as stated in the Cyber Security Law. These regulations provide, among other things, that protection department
of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification of certain
critical information infrastructure. According to these regulations, operators of certain industries or sectors that may endanger national
security, people’s livelihood and public interest in case of damage, function loss or data leakage may be identified as critical information
infrastructure operators by the CAC or the respective industrial regulatory authorities once they meet the identification standards
promulgated by the authorities.
On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal
Information Protection Law of the PRC, which took effect in November 2021. As the first systematic and comprehensive law specifically
for the protection of personal information in the PRC, the Personal Information Protection Law provides, among other things, that (i) an
individual’s separate consent shall be obtained before operation of such individual’s sensitive personal information, e.g., biometric
characteristics and individual location tracking, (ii) personal information operators operating sensitive personal information shall notify
individuals of the necessity of such operations and the influence on the individuals’ rights, (iii) if personal information operators reject
individuals’ requests to exercise their rights, individuals may file a lawsuit with a People’s Court.
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On October 29, 2021, the CAC issued the Measures for the Security Assessment of Data Exit (Draft for Comment), and on
July 7, 2022, the CAC finally adopted the Measures for the Security Assessment of Data Exit, which took into effect on September 1,
2022 and stipulates that data processors who provide overseas the personal information and important data collected and generated
during operations within the PRC shall be subject to security assessment by the CAC. Specifically, if the data processor provides data
overseas and meets one of the following circumstances, it shall declare the security assessment: (i) personal information by operators of
critical information infrastructure; (ii) the data contains important data; (iii) personal information processors who have processed
personal information of one million people provide personal information abroad; (iv) accumulatively provided personal information of
more than one hundred thousand people or sensitive personal information of more than ten thousand people abroad since January 1 of the
previous year; and (v) other circumstances as specified by the CAC. The assessment results of the data exit are valid for two years.
In addition, on November 14, 2021, the Administration Regulations on Cyber Data Security (Draft for Comments) were
proposed by the CAC for public comments until December 13, 2021. These regulations set out general guidelines, protection of personal
information, security of important data, security management of cross-border data transfer, obligations of internet platform operators,
supervision and management, and legal liabilities. Key requirements include: (i) data processors shall enhance the security protection of
data processing systems, data transmission networks, and data storage environments, among other things, under the graded cybersecurity
protection requirements, and any system that processes important data shall in principle meet the security protection requirements for
Level 3 or higher cyberspace and critical information infrastructure, and any system that processes core data shall be strictly protected in
accordance with regulations; (ii) data processors should establish a data security emergency response mechanism, and promptly start the
emergency response mechanism in the event of a data security incident; (iii) the detailed rules for data processors to apply when
providing personal information to third parties, or sharing, trading or entrusting important data to third parties; (iv) the scenarios of
cybersecurity review which shall be subject to Cybersecurity Review Measures; (v) the definitions of important data and processors’
security protection obligations; (vi) the detailed rules on cross-border data transfer which added missing details to the Personal
Information Protection Law; (vii) data processors processing personal information of more than one million individuals shall also comply
with the regulations for processing of important data; and (viii) data processors dealing with important data or listing overseas (including
Hong Kong) should carry out an annual data security assessment by themselves or by entrusting data security service agencies, and each
year before January 31, data security assessment report for the previous year shall be submitted to the districted city level cyberspace
administration department. In addition, these regulations reiterate that data processors which process the personal information of at least
one million individuals must apply for a cybersecurity review if they are to be listed abroad, and further require the data processors that
carry out the following activities to apply for cybersecurity review in accordance with the laws and regulations: (i) the merger,
reorganization or division of internet platform operators that have gathered a large number of data resources related to national security,
economic development and public interests affects or may affect national security; (ii) the listing of the data processor in Hong Kong
affects or may affect national security; and (iii) other data processing activities that affect or may affect national security. Furthermore, in
one of the following situations, data processors shall delete or anonymize personal information within 15 business days: (i) the purpose
of processing personal information has been achieved or the purpose of processing is no longer needed; (ii) the storage term agreed with
the users or specified in the personal information processing rules has expired; (iii) the service has been terminated or the account has
been canceled by the individual; or (iv) unnecessary personal information or personal information unavoidably collected due to the use of
automatic data collection technology but without the consent of the individual. Any failure to comply with such requirements may
subject us to, among other consequences, suspension of services, fines, revoking business permits or business licenses and penalties. As
of the date of this annual report, there is no definite timetable as to when these regulations will be enacted.
On December 8, 2022, the Ministry of Industry and Information Technology published the Administration Measures on Data
Security in the Field of Industry and Information Technology (Trial Implementation), which took effect on January 1, 2023. Such
measures require the industrial and telecom data processors to further implement data classification and hierarchical management, take
necessary measures to ensure that data remains effectively protected and being lawfully applied and conduct data security risk
monitoring. Such measures also provide the definitions of “core data” and “important data” in the field of industry and information
technology.
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Regulations on E-Commerce
On August 31, 2018, the Standing Committee of the National People’s Congress of China promulgated the E-Commerce Law of
the PRC, which took effect as of January 1, 2019. The E-Commerce Law establishes the regulatory framework for the e-commerce sector
in the PRC for the first time by laying out certain requirements on e-commerce platform operators. According to the E-Commerce Law,
the e-commerce platform operators shall prepare a contingency plan for cybersecurity events and take technological measures and other
measures to prevent online illegal and criminal activities. The E-Commerce Law also expressly requires e-commerce platform operators
to take necessary actions to ensure fair dealing on their platforms to safeguard the legitimate rights and interests of consumers, including
to prepare platform service agreements and transaction information record-keeping and transaction rules, to prominently display such
documents on the platform’s website, and to keep such information for no less than three years following the completion of a transaction.
Where the e-commerce platform operators conduct its own business on their platforms, they shall distinguish and mark their business
from the businesses of the business operators using the platform in a prominent manner, and shall not mislead consumers. The e-
commerce platform operators shall bear civil liability of a commodity seller or service provider for its own business, pursuant to the law.
Regulations on Insurance Brokerage
According to Insurance Law of the PRC promulgated by the Standing Committee of the National People’s Congress of China on
June 30, 1995 and latest amended on April 24, 2015, which took effect on April 24, 2015, insurance brokers shall meet the conditions
prescribed by the insurance regulatory agency of the State Council and obtain the license for operating insurance brokerage business. On
February 1, 2018, China Insurance Regulatory Commission which has been merged into the China Banking and Insurance Regulatory
Commission, promulgated the Regulatory Provisions on Insurance Brokerages, which took effect on May 1, 2018. Pursuant to these
provisions, insurance brokers shall mean institutions which provide intermediary services for execution of insurance contracts between
policyholders and insurance companies based on interests of policyholders and collect commissions, including insurance brokerage
companies and their branches. Any insurance brokerage company operating insurance brokerage businesses in the PRC shall satisfy the
stipulated criteria and obtain a license for operating insurance brokerage businesses. Whoever illegally engages in insurance brokerage
business without a license shall be banned, and its illegal gains shall be confiscated and it shall be fined not less than one time and not
more than five times the illegal gains; if there is no illegal gains or the illegal gains are less than RMB50,000, a fine of not less than
RMB50,000 and not more than RMB300,000 shall be imposed.
According to the Service Guidelines for Approval of the Establishment of Insurance Brokerage Institutions issued by the China
Banking and Insurance Regulatory Commission on September 30, 2021, insurance brokers whose foreign investment ratio is higher than
or equal to 25% after penetrating cumulative calculation are regarded as foreign-invested insurance brokers. Pursuant to the Notice of the
CBIRC General Office on Clarifying Relevant Measures for the Opening-up of the Insurance broker Market issued by the China Banking
and Insurance Regulatory Commission on December 3, 2021, overseas insurance brokerage companies with actual business experience
and complying with the provisions of the China Banking and Insurance Regulatory Commission are permitted to invest in and establish
insurance brokerage companies in China to engage in insurance brokerage business. However, in practice, subject to the qualifications set
by the China Banking and Insurance Regulatory Commission for foreign shareholders of the insurance brokerage companies, the China
Banking and Insurance Regulatory Commission typically would not approve the establishment of foreign-invested insurance brokerage
companies.
Regulations on Land and the Development of Construction Projects
Regulations on Land Grants
Under the Interim Regulations on Assignment and Transfer of the Rights to the Use of the State-owned Urban Land of the PRC,
promulgated by the State Council on May 19, 1990 and latest amended on November 29, 2020, a system of assignment and transfer of
the right to use state-owned land was adopted. A land user must pay land premiums to the state as consideration for the assignment of the
right to use a land site within a certain term, and the land user who obtained the right to use the land may transfer, lease out, mortgage or
otherwise commercially exploit the land within the term of use. Under the Interim Regulations on Assignment and Transfer of the Rights
to the Use of the State-owned Urban Land of the PRC and the Law of the PRC on Urban Real Estate Administration, the local land
administration authority may enter into an assignment contract with the land user for the assignment of land use rights. The land user is
required to pay the land premium as provided in the assignment contract. After the full payment of the land premium, the land user must
register with the land administration authority and obtain a land use rights certificate which evidences the acquisition of land use rights.
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Regulations on Planning of a Construction Project
Pursuant to the Regulations on Planning Administration regarding Assignment and Transfer of the Rights to Use of the State-
Owned Land in Urban Area promulgated by the Ministry of Construction in December 1992 and amended in January 2011, a
construction land planning permit shall be obtained from the municipal planning authority with respect to the planning and use of land.
According to the Urban and Rural Planning Law of the PRC promulgated by the Standing Committee of the National People’s Congress
of China on October 28, 2007 and latest amended on April 23, 2019, a construction work planning permit must be obtained from the
competent urban and rural planning government authority for the construction of any structure, fixture, road, pipeline or other
engineering project within an urban or rural planning area.
After obtaining a construction work planning permit, subject to certain exceptions, a construction enterprise must apply for a
construction work commencement permit from the construction authority under the local people’s government at the county level or
above in accordance with the Administrative Provisions on Construction Permit of Construction Projects promulgated by the Ministry of
Housing and Urban-Rural Development on June 25, 2014 and implemented on October 25, 2014 and latest amended on March 30, 2021.
Pursuant to the Administrative Measures for Reporting Details Regarding Acceptance Examination upon Completion of
Buildings and Municipal Infrastructure promulgated by the Ministry of Construction on April 4, 2000 and amended on October 19, 2009
and the Provisions on Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated and
implemented by the Ministry of Housing and Urban - Rural Development on December 2, 2013, upon the completion of a construction
project, the construction enterprise must submit an application to the competent department in the people’s government at or above
county level where the project is located, for examination upon completion of building and for filing purpose; and to obtain the filing
form for acceptance and examination upon completion of construction project.
Regulations on Environmental Protection and Work Safety
Regulations on Environmental Protection
Pursuant to the Environmental Protection Law of the PRC promulgated by the Standing Committee of the National People's
Congress of China, on December 26, 1989, latest amended on April 24, 2014 and effective on January 1, 2015, any entity which
discharges or will discharge pollutants during the course of operations or other activities must implement effective environmental
protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases,
radioactive substances, noise, vibrations, electromagnetic radiation and other hazards produced during such activities.
Environmental protection authorities impose various administrative penalties on persons or enterprises in violation of the
Environmental Protection Law. Such penalties include warnings, fines, orders to rectify within the prescribed period, orders to cease
construction, orders to restrict or suspend production, orders to make recovery, orders to disclose information or make an announcement,
imposition of administrative action against responsible persons, and orders to shut down enterprises. Any person or entity that pollutes
the environment resulting in damage could also be held liable under the PRC Civil Code. In addition, environmental organizations may
also bring lawsuits against any entity that discharges pollutants detrimental to the public welfare.
Regulations on Work Safety
Under construction safety laws and regulations, including the Work Safety Law of the PRC, which was promulgated by the
Standing Committee of the National People’s Congress of China on June 29, 2002, latest amended on June 10, 2021 and took effect on
September 1, 2021, production and operating business entities must establish objectives and measures for work safety and improve the
working environment and conditions for workers in a planned and systematic way. A work safety protection scheme must also be set up
to implement the work safety job responsibility system. In addition, production and operating business entities must arrange work safety
training and provide the employees with protective equipment that meets the national standards or industrial standards. Furthermore,
production and operating business entities shall report their major hazard sources and related safety and emergency measures to the
emergency management department and other departments for the record, and establish a safety risk grading control system and take
corresponding control measures. Automobile and components manufacturers are subject to the above-mentioned environment protection
and work safety requirements.
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Regulations on Fire Control
Pursuant to the Fire Control Law of the PRC promulgated by the Standing Committee of the National People’s Congress of
China on April 29, 1998 and latest amended on April 29, 2021, for special construction projects stipulated by the housing and urban-rural
development authority of the State Council, the developer shall submit the fire safety design documents to the housing and urban-rural
development authority for examination, while for construction projects other than those stipulated as special development projects, the
developer shall, at the time of applying for the construction permit or approval for work commencement report, provide the fire safety
design drawings and technical materials which satisfy the construction needs. According to the Interim Regulations on Administration of
Examination and Acceptance of Fire Control Design of Construction Projects promulgated on April 1, 2020 and effective on June 1,
2020, which was latest amended on August 21, 2023, an examination system for fire prevention design and acceptance only applies to
special construction projects, and for other projects, a record-filing and spot check system would be applied.
Regulations on Intellectual Property Rights
Patent Law
According to the Patent Law of the PRC promulgated by the Standing Committee of the National People’s Congress of China
on March 12, 1984 and was latest amended in October 2020 and took effect on June 1, 2021, the State Intellectual Property Office is
responsible for administering patent law in the PRC. The patent administration departments of provincial, autonomous region or
municipal governments are responsible for administering patent law within their respective jurisdictions. The Chinese patent system
adopts a first-to-file principle, which means that when more than one person files different patent applications for the same invention,
only the person who files the application first is entitled to obtain a patent of the invention. To be patentable, an invention or a utility
model must meet three criteria: novelty, inventiveness and practicability. The protection period is twenty years for an invention patent
and ten years for a utility model patent and fifteen years for a design patent, commencing from their respective application dates.
Regulations on Copyright
The Copyright Law of the PRC which took effect on June 1, 1991 and was latest amended in 2020 and took effect on June 1,
2021, provides that Chinese citizens, legal persons, or other organizations shall, whether published or not, own copyright in their
copyrightable works, which include, among others, works of literature, art, natural science, social science, engineering technology and
computer software. Copyright owners enjoy certain legal rights, including right of publication, right of authorship and right of
reproduction. The Copyright Law extends copyright protection to internet activities, products disseminated over the internet and software
products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection
Center. According to the Copyright Law, an infringer of the copyrights shall be subject to various civil liabilities, which include ceasing
infringement activities, apologizing to the copyright owners and compensating the loss of the copyright owner. Infringers of a copyright
may also be subject to fines and/or administrative or criminal liabilities in severe situations.
Pursuant to the Computer Software Copyright Protection Regulations promulgated by the State Council on December 20, 2001,
latest amended on January 30, 2013 and took effect on March 1, 2013, the software copyright owner may go through the registration
formalities with a software registration authority recognized by the State Council’s copyright administrative department. The software
copyright owner may authorize others to exercise that copyright, and is entitled to receive remuneration.
Trademark Law
Trademarks are protected by the Trademark Law of the PRC which was adopted on August 23, 1982 and latest amended in
2019, as well as by the Implementation Regulations of the PRC Trademark Law adopted by the State Council in 2002 and latest amended
on April 29, 2014. The Trademark Office under the State Administration for Market Regulation handles trademark registrations. The
Trademark Office grants a ten-year term to registered trademarks and the term may be renewed for another ten-year period upon request
by the trademark owner. A trademark registrant may license its registered trademarks to another party by entering into trademark license
agreements, which must be filed with the Trademark Office for its record. As with patents, the Trademark Law of the PRC has adopted a
first-to-file principle with respect to trademark registration. If a trademark applied for is identical or similar to another trademark which
has already been registered or subject to a preliminary examination and approval for use on the same or similar kinds of products or
services, such trademark application may be rejected. Any person applying for the registration of a trademark may not injure existing
trademark rights first obtained by others, nor may any person register in advance a trademark that has already been used by another party
and has already gained a “sufficient degree of reputation” through such party’s use.
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Regulations on Domain Names
The Ministry of Industry and Information Technology promulgated the Measures on Administration of Internet Domain Names
on August 24, 2017, which took effect on November 1, 2017. According to these measures, the Ministry of Industry and Information
Technology is in charge of the administration of PRC internet domain names. The domain name registration follows a first-to-file
principle. Applicants for registration of domain names must provide the true, accurate and complete information of their identities to
domain name registration service institutions. The applicants will become the holder of such domain names upon the completion of the
registration procedure.
Regulations on Foreign Investment in China
Catalogue for the Guidance of Foreign Investment Industries
Investments in the PRC by foreign investors and foreign-invested enterprises were regulated by the Catalogue for the Guidance
of Foreign Investment Industries, jointly promulgated by the Ministry of Commerce and NDRC on June 28, 1995 and amended from
time to time. This catalogue was last repealed by the Special Administrative Measures (Negative List) for Foreign Investment Access
(2021 Version), or the 2021 Negative List, which was jointly promulgated by the Ministry of Commerce and the NDRC on December 27,
2021 and took effect on January 1, 2022, and the Catalogue of Industries for Encouraging Foreign Investment (2022 Version), or the
2022 Encouraging Catalogue, which was jointly promulgated by the Ministry of Commerce and the NDRC on October 26, 2022 and
took effect on January 1, 2023. The 2022 Encouraging Catalogue and the 2021 Negative List set out the industries and economic
activities in which foreign investment in the PRC is encouraged, restricted or prohibited. Pursuant to the 2022 Encouraging Catalogue,
the research and development and manufacture of key parts and components of NEVs fall within the encouraged catalogue, and the 2021
Negative List lifts the limit on foreign ownership of automakers for ICE passenger vehicles. However, the 2021 Negative List provides
that foreign investors shall hold no more than 50% of the equity interest in a service provider operating certain value-added
telecommunications services (other than for e-commerce, domestic multi-parties communications, storage and forwarding categories,
call centers), and foreign investors are prohibited to invest in certain services related to autonomous driving.
The establishment, operation and management of corporate entities in the PRC is governed by the PRC Company Law, which
was latest amended on December 29, 2023 and will take effect on July 1, 2024. The PRC Company Law governs two types of companies
—limited liability companies and joint stock limited companies. The PRC Company Law shall also apply to foreign-invested companies.
Where laws on foreign investment have other stipulations, such stipulations shall prevail. The primary amendments in the latest amended
PRC Company Law include revisions aimed at improving the company’s establishment and exit system, optimizing the company’s
organizational structure, detailing exercise of shareholder rights, perfecting the company’s capital system and strengthening the
responsibilities of controlling shareholders and management personnel, etc. The establishment procedures, approval or record-filing
procedures, registered capital requirements, foreign exchange matters, accounting practices, taxation and labor matters of a wholly
foreign-owned enterprise are regulated by the Foreign Investment Law of the PRC, which took effect on January 1, 2020.
Foreign Investment Law
On March 15, 2019, the National People’s Congress of China promulgated the Foreign Investment Law, which took effect on
January 1, 2020. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment
regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for
both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework for the access to,
and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted
by one or more natural persons, business entities, or otherwise organizations of a foreign country, or collectively the foreign investor,
within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other
investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in
assets, or other similar rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other
investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations or
the State Council.
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According to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special
administrative measures, or the “negative list.” The Foreign Investment Law grants national treatment to foreign invested entities, except
for those foreign invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.”
Because the “negative list” has yet been published, it is unclear whether it will differ from the current 2021 Negative List. The Foreign
Investment Law provides that foreign invested entities operating in foreign restricted or prohibited industries will require market entry
clearance and other approvals from PRC governmental authorities.
Furthermore, the Foreign Investment Law provides that foreign invested enterprises established before the implementation of
the Foreign Investment Law may maintain their structure and corporate governance within five years after the implementation of the
Foreign Investment Law.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their
investments in the PRC, including, among others, that local governments shall abide by their commitments to the foreign investors;
foreign-invested enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory
procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the
investment of foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital
gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or
proceeds received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign
currency. Also, foreign investors or the foreign investment enterprise should be imposed legal liabilities for failing to report investment
information in accordance with the requirements.
On December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law of the
PRC, effective on January 1, 2020, which further requires that foreign-invested enterprises and domestic enterprises shall be treated
equally with respect to policy making and implementation. Pursuant to the Implementation Regulations on the Foreign Investment Law,
if the existing foreign-invested enterprises fail to change their original forms as of January 1, 2025, the market regulation departments
will not process other registration matters for the enterprises, and may disclose their information to the public.
On December 30, 2019, the Ministry of Commerce and the State Administration for Market Regulation jointly issued the
Measures for Reporting of Foreign Investment Information, which took effect on January 1, 2020. Since January 1, 2020, for foreign
investors carrying out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall
submit investment information through the enterprise registration system and the national enterprise credit information publicity system
operated by the State Administration for Market Regulation. Foreign investors or foreign-invested enterprises shall disclose their
investment information by submitting reports for their establishments, modifications and cancellations and their annual reports in
accordance with these measures. If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its
establishment, modifications and cancellation and its annual reports, the information will be shared by the competent market regulation
department to the competent commercial department, and such foreign-invested enterprise is not required to submit the reports to the two
departments separately.
Regulations on Foreign Exchange
General Principles of Foreign Exchange
Under the Regulations on the Foreign Exchange System of the PRC promulgated on January 29, 1996 and most recently
amended on August 5, 2008 and various regulations issued by the State Administration of Foreign Exchange of the PRC, or the SAFE,
and other PRC government authorities, Renminbi is convertible into other currencies for current account items, such as trade-related
receipts and payments and payment of interest and dividends. The conversion of Renminbi into other currencies and remittance of the
converted foreign currency outside the PRC of capital account items, such as direct equity investments, loans and repatriation of
investment, requires the prior approval from the SAFE or its local office.
Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC
companies may not repatriate foreign currency payments received from abroad or retain the same abroad. Foreign-invested enterprises
may retain foreign exchange in accounts with designated foreign exchange banks under the current account items subject to a cap set by
the SAFE or its local branch. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial
institution engaged in settlement and sale of foreign exchange pursuant to SAFE rules and regulations. For foreign exchange proceeds
under the capital accounts, approval from the SAFE is required for the retention or sale of such proceeds to a financial institution
engaged in settlement and sale of foreign exchange.
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Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct
Investment, or the SAFE Circular No. 59, promulgated by SAFE on November 19, 2012, which took effect on December 17, 2012 and
latest amended on December 30, 2019, approval of SAFE is not required for opening a foreign exchange account and depositing foreign
exchange into the accounts relating to the direct investments. The SAFE Circular No. 59 also simplified foreign exchange-related
registration required for the foreign investors to acquire the equity interests of Chinese companies and further improve the administration
on foreign exchange settlement for foreign-invested enterprises.
The Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the
SAFE Circular No. 13, effective from June 1, 2015 and latest amended on December 30, 2019, cancels the administrative approvals of
foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign
exchange-related registration. Pursuant to SAFE Circular No. 13, the investors shall register with banks for direct domestic investment
and direct overseas investment.
The Circular on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested
Enterprise, or the SAFE Circular No. 19, which was promulgated by the SAFE on March 30, 2015 and latest amended on March 23,
2023, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign
exchange capital in its capital account for which the foreign exchange administration has confirmed monetary capital contribution rights
and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to SAFE
Circular No. 19, for the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capital on a
discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of
business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled,
the foreign-invested enterprise must first go through domestic re investment registration and open a corresponding account for foreign
exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.
The Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or
the SAFE Circular No. 16, which was promulgated by the SAFE and took effect on June 9, 2016, and latest amended on December 4,
2023, provides that enterprises registered in the PRC may also convert their foreign debts from foreign currency into Renminbi at their
own discretion. SAFE Circular No. 16 also provides an integrated standard for conversion of foreign exchange under capital account
items (including, but not limited to, foreign currency capital and foreign debts) on a basis of self-discretion, which applies to all
enterprises registered in the PRC.
According to the PRC Market Entities Registration Administrative Regulations promulgated by the State Council on July 27,
2021 and effective on March 1, 2022, and other laws and regulations governing the foreign-invested enterprises and company
registrations, the establishment of a foreign-invested enterprise and any capital increase and other major changes in a foreign-invested
enterprise shall be registered with the State Administration for Market Regulation or its local counterparts, and shall be filed via the
foreign investment comprehensive administrative system, if such foreign-invested enterprise does not involve special access
administrative measures prescribed by the PRC government.
On October 23, 2019, the SAFE issued the Circular on Further Promoting Cross-border Trade and Investment Facilitation.
This circular allows the foreign-invested enterprises without equity investment as in their approved business scope to use their capital
obtained from foreign exchange settlement to make domestic equity investment if the investments are real and in compliance with the
foreign investment-related laws and regulations. In addition, this circular stipulates that qualified enterprises in certain pilot areas may
use their capital income from registered capital, foreign debt and overseas listing, for the purpose of domestic payments without
providing authenticity certifications to the banks in advance for those domestic payments. Payments for transactions that take place
within the PRC must be made in RMB. Foreign currency revenues received by PRC companies may be repatriated into the PRC or
retained outside of the PRC in accordance with requirements and terms specified by SAFE.
Pursuant to SAFE Circular No. 13 and other laws and regulations relating to foreign exchange, when setting up a new foreign-
invested enterprise, the foreign-invested enterprise shall register with the bank located at its registered place after obtaining the business
license, and if there is any change in capital or other changes relating to the basic information of the foreign-invested enterprise,
including, without limitation, any increase in its registered capital or total investment, the foreign-invested enterprise must register such
changes with the bank located at its registered place after obtaining approval from or completing the filing with competent authorities.
Pursuant to the foreign exchange laws and regulations, the above-mentioned foreign exchange registration with the banks will typically
take less than four weeks upon the acceptance of the registration application.
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On December 4, 2023, the SAFE issued the Circular on Further Deepening the Reform to Facilitate Cross-border Trade and
Investment. This circular relaxes restrictions on the scale of preliminary expenses for overseas direct investment, facilitates the payment
and use of funds from equity transfer under domestic reinvestment and funds raised from overseas listing of foreign direct investment,
improves the administration of the negative list for the use of revenue under the capital account, and cancels the approval for the opening
of foreign debt accounts at different locations.
Based on the foregoing, if we intend to provide funding to our wholly foreign-owned subsidiaries through capital injection at or
after their establishment, we must register the establishment of and any follow-on capital increase in our wholly foreign-owned
subsidiaries with the State Administration for Market Regulation or its local counterparts, file such via the foreign investment
comprehensive administrative system and register such with the local banks for the foreign exchange related matters.
Loans by the Foreign Companies to their PRC Subsidiaries
A loan made by foreign investors as shareholders in a foreign-invested enterprise is considered to be foreign debt in China and
is regulated by various laws and regulations, including the Regulation of the PRC on Foreign Exchange Administration, the Interim
Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions (Revised in 2020), the
Administrative Measures for Registration of Foreign Debts, and the Administrative Measures for Examination and Registration of
Medium and Long-term Foreign Debts of Enterprises. Under these rules and regulations, a shareholder loan in the form of foreign debt
made to a PRC entity does not require the prior approval of the SAFE. However, such foreign debt must be registered with and recorded
by the SAFE or its local branches within fifteen (15) business days after entering into the foreign debt contract. Pursuant to these rules
and regulations, the balance of the foreign debts of a foreign-invested enterprise shall not exceed the difference between the total
investment and the registered capital of the foreign-invested enterprise, or the Total Investment and Registered Capital Balance.
On January 12, 2017, the People’s Bank of China promulgated the Notice of the People’s Bank of China on Matters concerning
the Macro-Prudential Management of Full-Covered Cross-Border Financing, or the PBOC Notice No. 9. Pursuant to PBOC Notice
No. 9, within a transition period of one year from January 12, 2017, the foreign-invested enterprises may adopt the currently valid
foreign debt management mechanism, or the mechanism as provided in PBOC Notice No. 9, at their own discretions. PBOC Notice
No. 9 provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies as required. Pursuant to
PBOC Notice No. 9, the outstanding cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be
calculated using a risk-weighted approach, and shall not exceed certain specified upper limits. PBOC Notice No. 9 further provides that
the upper limit of risk-weighted outstanding cross-border financing for enterprises shall be equal to 200% of its net assets multiplied by
macro-prudential regulation parameter, or the Net Asset Limits. The macro-prudential regulation parameter shall be 1. Enterprises shall
file with the SAFE in its capital item information system after entering into the cross-border financing contracts and prior to three
business days before drawing any money from the foreign debts. On July 20, 2023, the People’s Bank of China and the SAFE raised the
macro-prudential regulation parameter for cross-border financing of enterprises and financial institutions from 1.25 to 1.5.
Based on the foregoing, if we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, the balance
of such loans shall not exceed the Total Investment and Registered Capital Balance and we will need to register such loans with the
SAFE or its local branches in the event that the currently valid foreign debt management mechanism applies, or the balance of such loans
shall be subject to the risk-weighted approach and the Net Asset Limits and we will need to file the loans with the SAFE in its
information system in the event that the mechanism as provided in PBOC Notice No. 9 applies. According to PBOC Notice No. 9, after a
transition period of one year from January 12, 2017, the People’s Bank of China and the SAFE will determine the cross-border financing
administration mechanism for the foreign-invested enterprises after evaluating the overall implementation of PBOC Notice No. 9. As of
the date of this annual report, neither the People’s Bank of China nor the SAFE has promulgated and made public any further rules,
regulations, notices or circulars in this regard. It is uncertain which mechanism will be adopted by the People’s Bank of China and the
SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries.
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Offshore Investment
Under the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration
over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the
SAFE Circular 37, issued by the SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch
prior to the establishment or control of an offshore special purpose vehicle, which is defined as an offshore enterprise directly established
or indirectly controlled by PRC residents for investment and financing purposes, with the enterprise assets or interests PRC residents
hold in China or overseas. The term “control” means to obtain the operation rights, right to proceeds or decision-making power of an
SPY through acquisition, trust, holding shares on behalf of others, voting rights, repurchase, convertible bonds or other means. An
amendment to registration or subsequent filing with the local SAFE branch by such PRC resident is also required if there is any change
in basic information of the offshore company or any material change with respect to the capital of the offshore company. At the same
time, the SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip
Investment regarding the procedures for SAFE registration under SAFE Circular 37, which took effect on July 4, 2014 as an attachment
of SAFE Circular 37.
Under these rules, failure to comply with the registration procedures set forth in the SAFE Circular 37 may result in bans on the
foreign exchange activities of the onshore company, including the payment of dividends and other distributions to its offshore parent or
affiliates, and may also subject PRC residents to penalties under PRC foreign exchange administration regulations.
Regulations on Dividend Distribution
Wholly foreign-owned enterprises and Sino-foreign equity joint ventures in the PRC may pay dividends only out of their
accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, these foreign-
invested enterprises may not pay dividends unless they set aside at least 10% of their respective accumulated profits after tax each year, if
any, to fund certain reserve funds, until such time as the accumulative amount of such fund reaches 50% of the enterprise’s registered
capital. In addition, these companies also may allocate a portion of their after-tax profits based on PRC accounting standards to employee
welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.
Regulations governing abovementioned dividend distribution arrangements have been replaced by the Foreign Investment Law
and its implantation rules, which do not provide specific dividend distribution rules for foreign invested enterprises. The Foreign
Investment Law and its implementation rules also provide that after the conversion from a wholly foreign-owned enterprise or sino-
foreign equity joint venture to a foreign invested enterprise under the Foreign Investment Law, distribution method of gains agreed in the
joint venture agreements may continue to apply.
Regulations on Taxation
Enterprise Income Tax
On March 16, 2007, the Standing Committee of the National People’s Congress of China promulgated the PRC Enterprise
Income Tax Law which was amended on February 24, 2017 and December 29, 2018 and on December 6, 2007, the State Council enacted
the Regulations for the Implementation of the Enterprise Income Tax Law which took effect on January 1, 2008 and was amended on
April 23, 2019. Under the Enterprise Income Tax Law, both resident enterprises and non-resident enterprises are subject to tax in the
PRC. Resident enterprises are defined as enterprises that are established in China in accordance with PRC laws, or that are established in
accordance with the laws of foreign countries but are actually or in effect controlled from within the PRC. Non-resident enterprises are
defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC,
but have established institutions or premises in the PRC, or have no such established institutions or premises but have income generated
from inside the PRC. Under the Enterprise Income Tax Law and implementation regulations, a uniform corporate income tax rate of 25%
is applied. However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have
formed permanent establishment or premises in the PRC but there is no actual relationship between the income derived in the PRC and
the established institutions or premises set up by them, enterprise income tax is set at the rate of 10% with respect to their income
sourced from inside the PRC.
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In addition, an enterprise certified as a high and new technology enterprise enjoys a reduced enterprise income tax rate of 15%.
According to the Administrative Measures for the Certification of High-Tech Enterprises amended in January 2016, the provincial
counterparts of the Ministry of Science and Technology, the Ministry of Finance and the State Taxation Administration jointly determine
whether an enterprise is a High-Tech Enterprise considering the ownership of core technology, whether the main technologies underlying
the key products or services fall within the officially supported high-tech fields, the proportion of research and development personnel of
the total staff, the proportion of research and development expenditure of total revenue, the proportion of high-tech products or services
of total revenue, and other factors prescribed.
Value-added Tax
The Provisional Regulations of the PRC on Value-added Tax were promulgated by the State Council on December 13, 1993,
took effect on January 1, 1994 and were subsequently amended from time to time; and the Detailed Rules for the Implementation of the
Provisional Regulations of the PRC on Value-added Tax (Revised in 2011) were promulgated by the Ministry of Finance on
December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011, or collectively the VAT Law. On
November 19, 2017, the State Council promulgated the Decisions on Abolishing the Provisional Regulations of the PRC on Business Tax
and Amending the Provisional Regulations of the PRC on Value-added Tax. On March 20, 2019, the Ministry of Finance, the State
Taxation Administration and the General Administration of Customs jointly issued the Announcement on Relevant Policies on Deepen
the Reform of Value-added Tax. According to the VAT Law and the Decisions on Abolishing the Provisional Regulations of the PRC on
Business Tax and Amending the Provisional Regulations of the PRC on Value-added Tax, all enterprises and individuals engaged in the
sale of goods, the provision of processing, repair and replacement services, sales of services, intangible assets, real property and the
importation of goods within the territory of the PRC are the taxpayers of value-added tax. According to the Announcement on Relevant
Policies on Deepen the Reform of Value-added Tax, the value-added tax rates generally applicable are simplified as 13%, 9%, 6% and
0%, which took effect on April 1, 2019, and the value-added tax rate applicable to the small-scale taxpayers is 3%.
Dividend Withholding Tax
The Enterprise Income Tax Law provides that since January 1, 2008, an income tax rate of 10% will normally be applicable to
dividends declared to non-PRC resident investors that do not have an establishment or place of business in the PRC, or that have such
establishment or place of business but the income is not effectively connected with the establishment or place of business, to the extent
such dividends are derived from sources within the PRC.
Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable
PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the conditions and
requirements under such arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident
enterprise receives from a PRC resident enterprise may be reduced to 5%. However, based on the Circular on Certain Issues with Respect
to the Enforcement of Dividend Provisions in Tax Treaties, or Circular 81, issued on February 20, 2009 by the State Taxation
Administration, if the PRC tax authorities determine, in their discretions, that a company benefits from such reduced income tax rate due
to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According
to the Circular on Several Questions regarding the “Beneficial Owner” in Tax Treaties, which was issued on February 3, 2018 by the
State Taxation Administration and took effect on April 1, 2018, when determining the applicant’s status as the “beneficial owner”
regarding tax treatments in connection with dividends, interests or royalties in the tax treaties, several factors, including, without
limitation, whether the applicant is obligated to pay more than 50% of his or her income in twelve months to residents in third country or
region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country or
region to the tax treaties does not levy any tax or grant any tax exemption on incomes or levy tax at an extremely low rate, will be taken
into account, and such factors will be analyzed according to the actual circumstances of the specific cases. This circular further provides
that an applicant who intends to prove his or her status as the “beneficial owner” shall submit the documents to the tax bureau according
to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under
Agreements.
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Tax on Indirect Transfer
On February 3, 2015, the State Taxation Administration issued the Circular on Issues of Enterprise Income Tax on Indirect
Transfers of Assets by Non-PRC Resident Enterprises, or the Circular 7, which was latest amended on December 29, 2017. Pursuant to
Circular 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises, may
be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial
purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such
indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a “reasonable commercial purpose” of
the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest of the
offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the offshore enterprise mainly consists of
direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its
subsidiaries directly or indirectly holding PRC taxable assets have a real commercial nature which is evidenced by their actual function
and risk exposure. According to Circular 7, where the payer fails to withhold any or sufficient tax, the transferor shall declare and pay
such tax to the tax authority by itself within the statutory time limit. Circular 7 does not apply to transactions of sale of shares by
investors through a public stock exchange where such shares were acquired on a public stock exchange. On October 17, 2017, the State
Taxation Administration issued the Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax, or the
Circular 37, which was amended by the Announcement of the State Taxation Administration on Revising Certain Taxation Normative
Documents issued on June 15, 2018 by the State Taxation Administration. The Circular 37 further elaborates the implemental rules
regarding the calculation, reporting and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there
remain uncertainties as to the interpretation and application of Circular 7. Circular 7 may be determined by the tax authorities to be
applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non resident enterprises, being the
transferors, were involved.
Regulations on Employment and Social Welfare
Labor Contract Law
The Labor Contract Law of the PRC which was promulgated on June 29, 2007 and amended on December 28, 2012, is
primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance
and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor
relationships are to be or have been established between employers and employees. Employers are prohibited from forcing employees to
work above certain time limits and employers shall pay employees for overtime work in accordance with national regulations. In
addition, employee wages shall be no lower than local standards on minimum wages and must be paid to employees in a timely manner.
Interim Provisions on Labor Dispatch
Pursuant to the Interim Provisions on Labor Dispatch promulgated by the Ministry of Human Resources and Social Security on
January 24, 2014, which took effect on March 1, 2014, dispatched workers are entitled to equal pay with full-time employees for equal
work. Employers are allowed to use dispatched workers for temporary, auxiliary or substitutive positions, and the number of dispatched
workers may not exceed 10% of the total number of employees. Pursuant to the Labor Contract Law, if the employer violates the labor
dispatch regulations, the labor administrative department shall order it to make corrections within a prescribed time limit; if it fails to
make corrections within the time limit, a fine of more than RMB5,000 but less than RMB10,000 per person will be imposed on the
employer.
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Social Insurance and Housing Fund
As required under the Regulation of Insurance for Labor Injury implemented on January 1, 2004 and amended in 2010, the
Provisional Measures for Maternity Insurance of Employees of Corporations implemented on January 1, 1995, the Decisions on the
Establishment of a Unified Program for Old-Aged Pension Insurance of the State Council issued on July 16, 1997, the Decisions on the
Establishment of the Medical Insurance Program for Urban Workers of the State Council promulgated on December 14, 1998, the
Unemployment Insurance Measures promulgated on January 22, 1999 and the Social Insurance Law of the PRC implemented on July 1,
2011 and amended on December 29, 2018, employers are required to provide their employees in the PRC with welfare benefits covering
pension insurance, unemployment insurance, maternity insurance, work-related injury insurance and medical insurance. These payments
are made to local administrative authorities. Any employer that fails to make social insurance contributions may be ordered to rectify the
non-compliance and pay the required contributions within a prescribed time limit and be subject to a late fee. If the employer still fails to
rectify the failure to make the contributions within the prescribed time, it may be subject to a fine ranging from one to three times the
amount overdue.
In accordance with the Regulations on the Administration of Housing Funds which was promulgated by the State Council in
1999 and latest amended in March 2019, employers must register at the designated administrative centers and open bank accounts for
depositing employees’ housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no
less than 5% of the monthly average salary of the employee in the preceding year in full and on time. See “Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—Increases in labor costs and enforcement of stricter labor laws and regulations
in the PRC may adversely affect our business and our profitability.”
Employee Stock Incentive Plan
Pursuant to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in
Stock Incentive Plan of Overseas Listed Company, which was issued by the SAFE on February 15, 2012, employees, directors,
supervisors, and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are
PRC citizens or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are
required to register with the SAFE through a qualified domestic agent, which may be a PRC subsidiary of such overseas listed company,
and complete certain other procedures.
In addition, the State Taxation Administration has issued certain circulars concerning employee stock options and restricted
shares. Under these circulars, employees working in the PRC who exercise stock options or are granted restricted shares will be subject
to PRC individual income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee
stock options and restricted shares with tax authorities and to withhold individual income taxes of employees who exercise their stock
options or purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with
laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.
M&A Rules and Overseas Listing
On August 8, 2006, six PRC governmental and regulatory agencies, including the Ministry of Commerce and the CSRC,
promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, governing the mergers and
acquisitions of domestic enterprises by foreign investors that took effect on September 8, 2006 and was revised on June 22, 2009. These
rules, among other things, require that if an overseas company established or controlled by PRC companies or individuals, intends to
acquire equity interests or assets of any other PRC domestic company affiliated with the PRC companies or individuals, such acquisition
must be submitted to the Ministry of Commerce for approval. These rules also require that an offshore special vehicle, or a special
purpose vehicle formed for overseas listing purposes and controlled directly or indirectly by the PRC companies or individuals, shall
obtain the approval of the CSRC prior to overseas listing and trading of such special purpose vehicle’s securities on an overseas stock
exchange.
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On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by
Domestic Companies and five supporting guidelines, which took effect on March 31, 2023. According to these rules, the issuer or a
major domestic operating company designated by the issuer, as the case may be, shall file with the CSRC, among other things, (i) with
respect to its follow-on offering in the same foreign market within three business days after completion of the follow-on offering, and (ii)
with respect to its follow-on offering and listing in other foreign markets within three business days, after its initial filing of the listing
application to the regulator in the place of such intended listing. Non-compliance with these rules or an overseas listing completed in
breach of these rules may result in a warning on the domestic companies and a fine of RMB1 million to RMB10 million on them.
Furthermore, the supervisors directly responsible and other directly responsible persons of the domestic enterprises may be warned, and
fined between RMB500,000 to RMB5,000,000. The controlling shareholders or actual controllers of the domestic company organize or
instigate the illegal acts, or conceals matters resulting in the illegal acts, may be fined between RMB1 million to RMB10 million. On
February 17, 2023, the CSRC issued the Notice on Administrative Arrangements for the Filing of Domestic Enterprise’s Overseas
Offering and Listing, which stipulates the domestic enterprises have completed overseas listings are not required to file with CSRC in
accordance with these rules immediately, but shall carry out filing procedures as required if they conduct refinancing or fall within other
circumstances that require filing with the CSRC.
On February 24, 2023, the CSRC and several other administrations jointly released the Provisions on Strengthening
Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, which took effect on
March 31, 2023. These rules apply to both overseas direct offerings and overseas indirect offerings. These rules provide that, among
other things, (i) in relation to the overseas listing activities of domestic enterprises, the domestic enterprises are required to strictly
comply with the requirements on confidentiality and archives management, establish a sound confidentiality and archives system, and
take necessary measures to implement their confidentiality and archives management responsibilities; (ii) during the course of an
overseas offering and listing, if a domestic enterprise needs to publicly disclose or provide to securities companies, accounting firms or
other securities service providers and overseas regulators, any materials that contain state secrets or that have a sensitive impact (i.e., be
detrimental to national security or the public interest if divulged), the domestic enterprise should complete the approval/filing and other
regulatory procedures; and (iii) working papers produced in the PRC by securities companies and securities service institutions, which
provide domestic enterprises with securities services during their overseas issuance and listing, should be stored in the PRC, and the
transmission of all such working papers to recipients outside of the PRC is required to be approved by competent authorities of the PRC.
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C.
Organizational Structure
The following diagram illustrates our corporate structure, including our principal subsidiaries and the VIEs, as of the date of this
annual report:
Contractual Agreements with the VIEs and Their Shareholders
In April 2018, we entered into a series of contractual arrangements through one of our PRC subsidiaries with Beijing NIO and
its shareholders, which was then replaced by a new set of contractual arrangements we entered into with the same parties in April 2021.
Further, on November 30, 2022 and December 12, 2022, we entered into a series of contractual agreements through our respective PRC
subsidiaries with each of Anhui NIO AT and Anhui NIO DT, respectively, and their respective shareholders.
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The following is a summary of the contractual agreements by and among Shanghai NIO, Beijing NIO and the shareholders of
Beijing NIO. The terms of the contractual agreements with the same title between (i) Anhui NIO AD, Anhui NIO AT and the
shareholders of Anhui NIO AT, and (ii) NIO China, Anhui NIO DT and the shareholders of Anhui NIO DT are substantially the same as
those described below, except for, among other things, the amount of the loans to the shareholders of each VIE and the amount of service
fees to be paid. We believe that the shareholders of all the VIEs will not receive any personal benefits from these agreements except as
shareholders of our company.
Exclusive Business Cooperation Agreement between Shanghai NIO and Beijing NIO
Under the exclusive business cooperation agreement dated April 12, 2021, between Shanghai NIO and Beijing NIO, pursuant to
which, in exchange for a monthly service fee, Beijing NIO agreed to engage the Shanghai NIO as its exclusive provider of technical
support, consultation and other services.
Under the agreement, the service fee shall consist of 100% of the total consolidated profit of Beijing NIO, after the deduction of
any accumulated deficit of Beijing NIO in respect of the preceding financial year(s), operating costs, expenses, taxes and other statutory
contributions. Notwithstanding the foregoing, Shanghai NIO may adjust the scope and amount of services fees according to mainland
China tax law and tax practices, and Beijing NIO will accept such adjustments. Shanghai NIO shall calculate the service fee on a
monthly basis and issue a corresponding invoice to Beijing NIO. Notwithstanding the payment arrangements in the agreement, Shanghai
NIO may adjust the payment time and payment method, and Beijing NIO will accept any such adjustment.
In addition, absent the prior written consent of Shanghai NIO, during the term of the agreement, with respect to the services
subject to the agreement and other matters, Beijing NIO shall not directly or indirectly accept the same or any similar services provided
by any third party and shall not establish cooperation relationships similar to that formed by the agreement with any third party. Shanghai
NIO may appoint other parties, who may enter into certain agreements with Beijing NIO, to provide Beijing NIO with the services under
the agreement.
The agreement also provides that Shanghai NIO has the exclusive proprietary rights to and interests in any and all intellectual
property rights developed or created by Beijing NIO during the performance of the agreement.
The agreement shall remain effective unless terminated (a) in accordance with the provisions of the agreement; (b) in writing by
the Shanghai NIO; or (c) renewal of the expired business period of either Shanghai NIO or Beijing NIO is denied by government
authorities, at which time the agreement will terminate upon termination of that business period.
Exclusive Option Agreements between Shanghai NIO, Registered Shareholders and Beijing NIO
The exclusive option agreement, dated April 12, 2021, was executed among Shanghai NIO, Beijing NIO and the shareholders of
Beijing NIO, namely Mr. Bin Li and Mr. Lihong Qin. We refer to Mr. Li and Mr. Qin as the Registered Shareholders. Under the
exclusive option agreement, Shanghai NIO has the rights to require the Registered Shareholders to transfer any or all their equity
interests in Beijing NIO to Shanghai NIO and/or a third party designated by it, in whole or in part at any time and from time to time, for
considerations equivalent to the respectively outstanding loans owed to the Registered Shareholders (or part of the loan amounts in
proportion to the equity interests being transferred) or, if applicable, for a nominal price, unless the government authorities or the
mainland China laws request that another amount be used as the purchase price, in which case the purchase price shall be the lowest
amount under such request.
Beijing NIO and the Registered Shareholders, and Registered Shareholders, separately, have made a series covenants and
undertakings to ensure that Shanghai NIO retains control over all material respects of the operation and governance of Beijing NIO.
The Registered Shareholders have also undertaken that, subject to the laws and regulations, they will return to Shanghai NIO
any consideration they receive in the event that Shanghai NIO exercise the options under the exclusive option agreement to acquire the
equity interests in Beijing NIO.
The exclusive option agreement shall remain effective unless terminated in the event that the entire equity interests held by the
Registered Shareholders in Beijing NIO have been transferred to Shanghai NIO or its appointee(s).
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Equity Pledge Agreements between Shanghai NIO, Registered Shareholders and Beijing NIO
Under the equity pledge agreement dated April 12, 2021, entered into between Shanghai NIO, the Registered Shareholders and
Beijing NIO, the Registered Shareholders agreed to pledge all their respective equity interests in Beijing NIO that they own, including
any interest or dividend paid for the shares, to Shanghai NIO as a security interest to guarantee the performance of contractual
obligations and the payment of outstanding debts.
The pledge in respect of Beijing NIO takes effect upon the completion of registration with the administration for industry and
commerce and shall remain valid until after all the contractual obligations of the Registered Shareholders and Beijing NIO under the
contractual arrangements have been fully performed and all the outstanding debts of the Registered Shareholders and Beijing NIO under
the contractual arrangements have been fully paid.
Upon the occurrence and during the continuance of an event of default (as defined in the equity pledge agreements), Shanghai
NIO shall have the right to require Beijing NIO’s shareholders (i.e., the Registered Shareholders) to immediately pay any amount
payable by Beijing NIO under the Exclusive Business Cooperation Agreement, repay any loans and pay any other due payments, and
Shanghai NIO shall have the right to exercise all such rights as a secured party under any applicable mainland China law and the equity
pledge agreements, including without limitations, being paid in priority with the equity interests based on the monetary valuation that
such equity interests are converted into or from the proceeds from auction or sale of the equity interest upon written notice to the
Registered Shareholders.
The registration of the equity pledge agreement as required by the laws and regulations has been completed in accordance with
the terms of the equity pledge agreements and the PRC laws and regulations.
Power of Attorney by Registered Shareholders
The Registered Shareholders have executed powers of attorney dated April 12, 2021. Under the powers of attorney, the
Registered Shareholders irrevocably appointed Shanghai NIO and their designated persons (including but not limited to directors and
their successors and liquidators replacing the directors but excluding those non-independent or who may give rise to conflict of interests)
as their attorneys-in-fact to exercise on their behalf, and agreed and undertook not to exercise without such attorneys-in-fact’s prior
written consent, any and all right that they have in respect of their equity interests in Beijing NIO, including without limitation:
(i)
(ii)
(iii)
(iv)
(v)
to convene and attend shareholders’ meetings of Beijing NIO;
to file documents with the companies registry;
to exercise all shareholder’s rights and shareholder’s voting rights in accordance with law and the constitutional
documents of Beijing NIO, including but not limited to the sale, transfer, pledge or disposal of any or all of the equity
interests in Beijing NIO;
to execute any and all written resolutions and meeting minutes and to approve the amendments to the articles of
associations in the name and on behalf of such shareholder; and
to nominate, appoint or remove the legal representatives, directors, supervisors, general manager and other senior
management of Beijing NIO.
Further, the powers of attorney shall remain effective for so long as each shareholder holds an equity interest in Beijing NIO.
Loan Agreements between Shanghai NIO and Registered Shareholders
Shanghai NIO and the Registered Shareholders entered into a loan agreement dated April 12, 2021, pursuant to which Shanghai
NIO agreed to provide loans to the Registered Shareholders, to be used exclusively as investment in Beijing NIO. The loans must not be
used for any other purposes without the lender’s prior written consent.
The term of each loan commences from the date of the agreement and ends on the date the lender exercises its exclusive call
option under the Exclusive Option Agreement, or when certain defined termination events occur, such as if the lender sends a written
notice demanding repayment to the borrower, or upon the default of the borrower, whichever is earlier.
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After the lender exercises his exclusive call option, the borrower may repay the loan by transferring all of its equity interest in
Beijing NIO to the lender, or a person or entity nominated by the lender, and use the proceeds of such transfer as repayment of the loan.
If the proceeds of such transfer are equal to or less than the principal of the loan under the Loan Agreement, the loan is considered
interest-free. If the proceeds of such transfer are higher than the principal of the loan under the Loan Agreement, any surplus is
considered interest for the loan under the Loan Agreement.
In the opinion of Han Kun Law Offices, our PRC legal counsel:
(i)
each of the agreements comprising the contractual arrangements is legal, valid and binding on the parties thereto,
enforceable under applicable PRC laws and regulations, except that (a) the contractual arrangements provide that the arbitral body may
award remedies over the shares and/or assets or award injunctive relief and/or order the winding up of Beijing NIO, and that courts of
competent jurisdictions are empowered to grant interim remedies in support of the arbitration pending the formation of an arbitral
tribunal or in appropriate cases, while under PRC laws and regulations, an arbitral body has no power to grant injunctive relief or to order
an entity to wind up, and the aforesaid interim remedies granted by competent courts may not be recognizable or enforceable in the PRC;
and (b) the contractual arrangements provide that the Registered Shareholders undertake to appoint committees designated by Shanghai
NIO as the liquidation committee upon the winding up of Beijing NIO to manage its assets; however, in the event of a mandatory
liquidation required by PRC laws and regulations, these provisions may not be enforceable;
(ii)
(iii)
each of the agreements comprising the contractual arrangements does not violate the provisions of the articles of
associations of Shanghai NIO and Beijing NIO, respectively; and
no approval or authorization from the PRC governmental authorities are required for entering into and the performance
of the contractual arrangements except that (a) the pledge of any equity interest in Beijing NIO for the benefit of
Shanghai NIO is subject to registration requirements with the governmental authority which has been duly completed;
(b) the exercise of any exclusive option rights by Shanghai NIO under the exclusive option agreements may subject to
the approval, filing or registration requirements with the authorities under the then prevailing PRC laws and
regulations; and (c) the arbitration awards/interim remedies provided under the dispute resolution provision of the
contractual arrangements shall be recognized by competent courts before compulsory enforcement.
For a description of the risks related to our corporate structure, please see “Item 3. Key Information—D. Risk Factors—Risks
Related to Our Corporate Structure.”
D.
Property, Plants and Equipment
Currently, we own land use rights with respect to a parcel of land in Nanjing of approximately 355,297 square meters and the
ownership with respect to the plant thereon for a term ending on March 10, 2063, which are used for the manufacture of our electric
powertrains. As of December 31, 2023, we also leased a number of our facilities in various cities in China, mainly facilities we use for
user centers, warehouses, power management centers and sales, marketing and customer service, with an aggregated floor area of
approximately 3,106,040 square meters. As of December 31, 2023, we leased property in North America for our North American
headquarters and global software development center and our marketing, light assembly, research and development center with an
aggregate floor area of 201,900 square feet; we leased properties in Europe for management, engineering and storage, design
headquarters, and sales and marketing with an aggregate floor area of approximately 304,734 square meters.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations is based upon and should be read in conjunction
with our consolidated financial statements and their related notes included elsewhere in this annual report. This annual report contains
forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the
information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our
businesses and financial performance are subject to substantial risks and uncertainties.
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A. Operating Results
Overview
We are a pioneer and a leading company in the premium smart electric vehicle market. We design, develop, manufacture, and
sell premium smart electric vehicles, driving innovations in next-generation technologies in assisted and intelligent driving, digital
technologies, electric powertrains and batteries. We differentiate ourselves through our continuous technological breakthroughs and
innovations, such as our industry-leading battery swapping technologies, Battery as a Service, or BaaS, as well as our proprietary NIO
assisted and intelligent driving and its subscription services.
Our product portfolio currently consists of the ES8, a six-seater smart electric flagship SUV, the ES7 (or the EL7), a mid-large
five-seater smart electric SUV, the ES6 (or the EL6), a five-seater all-round smart electric SUV, the EC7, a five-seater smart electric
flagship coupe SUV, the EC6, a five-seater smart electric coupe SUV, the ET9, a smart electric executive flagship, the ET7, a smart
electric flagship sedan, the ET5, a mid-size smart electric sedan, and the ET5T, a smart electric tourer. In 2023, we delivered 160,038
vehicles, including 92,186 premium smart electric SUVs and 67,852 premium smart electric sedans.
Key Line Items Affecting Our Results of Operations
Revenues
The following table presents our revenue components by amount and as a percentage of the total revenues for the periods
indicated.
Revenues:
Vehicle sales
Other sales(1)
Total revenues
Note:
2021
RMB
%
RMB
2022
%
(in thousands)
2023
RMB
US$
%
Year Ended December 31
33,169,740
2,966,683
36,136,423
91.8
8.2
100.0
45,506,581
3,761,980
49,268,561
92.4
7.6
100.0
49,257,270
6,360,663
55,617,933
6,937,741
895,881
7,833,622
88.6
11.4
100.0
(1) Other sales are comprised as below:
Other sales
Parts, accessories and after-sales vehicle services
Provision of power solutions
Others
Total
Year Ended December 31
2021
2022
RMB
%
RMB
%
(in thousands)
RMB
2023
US$
%
806,079
811,809
1,348,795
2,966,683
2.2
2.3
3.7
8.2
1,228,385
1,016,094
1,517,501
3,761,980
2.5
2.0
3.1
7.6
2,337,490
1,666,346
2,356,827
6,360,663
329,229
234,700
331,952
895,881
4.2
3.0
4.2
11.4
We currently generate revenues from vehicle sales, which represent revenues from sales of new vehicles, and other sales
including (a) parts, accessories and after-sales vehicle services, including repair, maintenance, service package, extended warranty
services and other vehicle services, (b) provision of power solutions, including sale of charging piles, provision of battery charging and
swapping services, battery upgrade services, BaaS battery buy-out services and other power solution services, (c) others, which mainly
consist of revenues from sales of used cars, auto financing services, NIO Life merchandise, automotive regulatory credits and other
products and services.
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Revenue from sales of new vehicles, used vehicles, charging piles, battery upgrade services, automotive regulatory credits and
sales of parts, accessories and after-sales vehicle services are recognized when control is transferred. For embedded vehicle connectivity
services and battery swapping services offered together with vehicle sales, we recognize revenue over time using a straight-line method
(commensurate with the transfer of benefit to the consumer over the period of service). As for the extended warranty, given our limited
operating history and lack of historical data, we recognize revenue over time based on a straight-line method initially, and will continue
monitoring the cost pattern periodically and adjust the revenue recognition pattern to reflect the actual cost pattern as it becomes
available with more data.
Cost of Sales
The following table presents our cost of sales components by amount and as a percentage of our total cost of sales for the period
indicated.
Cost of Sales:
Vehicle sales
Other sales
Total cost of sales
2021
RMB
%
RMB
2022
%
(in thousands)
2023
RMB
US$
%
Year Ended December 31
(26,516,643)
(2,798,347)
(29,314,990)
90.5
9.5
100.0
(39,271,801)
(4,852,767)
(44,124,568)
89.0
11.0
100.0
(44,587,572)
(7,978,565)
(52,566,137)
(6,280,028)
(1,123,757)
(7,403,785)
84.8
15.2
100.0
We incur cost of sales in relation to (i) vehicle sales, including parts, materials, processing fee, labor costs, manufacturing cost
(including depreciation of assets associated with the production), losses on production related purchase commitments, warranty
expenses, and inventory write-downs, and (ii) other sales, including parts, materials, labor costs, vehicle connectivity cost, and
depreciation of assets that are associated with sales of service and others.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of (i) employee compensation, representing salaries, benefits and bonuses
as well as share-based compensation expenses for our research and development staff and (ii) design and development expenses, which
include, among others, consultation fees, outsourcing fees and expenses of testing materials. Our research and development expenses
also include travel expenses, depreciation and amortization of equipment used in relation to our research and development activities,
rental and related expenses with respect to laboratories and offices for research and development teams and others, which primarily
consists of telecommunication expenses, office fees and freight charges.
Our research and development expenses are mainly driven by the number of our research and development employees, the stage
and scale of our vehicle development and development of technology.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses mainly include (i) employee compensation, including salaries, benefits and
bonuses as well as share-based compensation expenses with respect to our sales, marketing and general corporate staff, (ii) marketing
and promotional expenses, which primarily consist of marketing and advertising costs, (iii) rental and related expenses, which primarily
consist of rental for NIO Houses, NIO Spaces and offices, (iv) professional service expenses, which consist of outsourcing fees primarily
relating to legal and human resources and IT functions, design fees paid for NIO Houses, NIO Spaces and offices and fees paid to
auditors, (v) depreciation and amortization expenses, primarily consisting of depreciation and amortization of leasehold improvements,
IT equipment and software, among others, (vi) expenses of low value consumables, primarily consisting of, among others, IT
consumables, office supplies, sample fees and IT-system related licenses, (vii) traveling expenses, and (viii) other expenses, which
includes telecommunication expenses, utilities and other miscellaneous expenses.
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Our selling, general and administrative expenses are significantly affected by the number of our non-research and development
employees, marketing and promotion activities and the expansion of our sales and after-sales network, including NIO Houses, NIO
Spaces and other leased properties.
Interest and Investment Income
Interest and investment income primarily consists of interest and gain earned on cash deposits, short-term investment and long-
term investment.
Gain on Extinguishment of Debt
Gain on extinguishment of debt consists of gain earned from repurchase of convertible notes.
Interest Expense
Interest expense consists of interest expense with respect to our indebtedness.
Share of Income of Equity Investees
Share of income of equity investees primarily consists of our share of the losses, net of shares of gains of our investees in which,
as of December 31, 2023, we held 1.0% to 51.0% in related equity interests. Our equity interests are accounted for using the equity
method since we exercise significant influence but do not own a majority equity interest in or control those investees. For investees in
which we held equity interest less than 20%, we can exercise significant influence over investees through participation and voting right
in the board of directors or investment committee. For investee in which we held equity interest of 51.0%, we cannot control the
significant financial and operating decisions of this investee at our discretion according to the corporate government documents.
Other Income/(Loss), Net
Other income or losses primarily consist of foreign exchange gains or losses we incur based on movements between the U.S.
dollar and the Renminbi. Other income also includes income from reimbursement from depository bank.
Income Tax Expense
Income tax expense primarily consists of current income tax expense, mainly attributable to intra-group income earned by our
United States, German, UK, Hong Kong and PRC subsidiaries which are eliminated upon consolidation but were subject to tax in
accordance with applicable tax law, and deferred income tax expense, recognized for the tax consequences attributable to differences
between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss
carry-forwards.
Taxation
Cayman Islands
We are incorporated in the Cayman Islands. The Cayman Islands currently has no form of income, corporate or capital gains tax.
There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may
be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands.
Hong Kong
Subsidiaries incorporated in Hong Kong are subject to 8.25% profit tax on the first HKD2 million taxable income and 16.5%
profit tax on the remaining taxable income generated from operations in Hong Kong. There is no withholding tax in Hong Kong on
remittance of dividends.
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PRC
Generally, our PRC subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%,
except for our certain PRC subsidiaries that are qualified as high and new technology enterprises under the PRC Enterprise Income Tax
Law and are eligible for a preferential enterprise income tax rate of 15%. The enterprise income tax is calculated based on the entity’s
global income as determined under PRC tax laws and accounting standards.
Our products and services are primarily subject to value-added tax at a rate of 13% on the vehicles and charging piles, repair
and maintenance services and charging services as well as 6% on services such as research and development services, in each case less
any deductible value-added tax we have already paid or born. We are also subject to surcharges on value-added tax payments in
accordance with PRC law.
Dividends paid by our PRC subsidiaries in China to our Hong Kong subsidiaries will be subject to a withholding tax rate of
10%, unless the Hong Kong entity satisfies all the requirements under the Arrangement Between the Mainland of China and the Hong
Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes
on Income and Capital and receives approval from the tax authority. If our Hong Kong subsidiaries satisfy all the requirements under the
tax arrangement and receive approval from the tax authority, then the dividends paid to the Hong Kong subsidiaries would be subject to
withholding tax at the standard rate of 5%. Effective from November 1, 2015, the above-mentioned approval requirement has been
abolished, but a Hong Kong entity is still required to file application package with the tax authority, and settle the overdue taxes if the
preferential 5% tax rate is denied based on the subsequent review of the application package by the tax authority.
If NIO Inc. or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise
Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Under the PRC Enterprise Income Tax Law, research and development expenses incurred by an enterprise in the course of
carrying out research and development activities that have not formed intangible assets and are included in the profit and loss account for
the current year. Besides deducting the actual amount of research and development expenses incurred, an enterprise is allowed an
additional 100% deduction of the amount in calculating its taxable income for the relevant year. For research and development expenses
that have formed intangible assets, the tax amortization is based on 200% of the costs of the intangible assets.
Recently Issued Accounting Pronouncements
For a summary of recently issued accounting pronouncements, see Note 3 to our consolidated financial statements included
elsewhere in this annual report.
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Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information
should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The
operating results in any year are not necessarily indicative of the results that may be expected for any future periods.
Revenues:(1)
Vehicle sales
Other sales(3)
Total revenues
Cost of sales:(2)
Vehicle sales
Other sales
Total cost of sales
Gross profit
Operating expenses:(2)
Research and development(2)
Selling, general and administrative(2)
Other operating income, net
Total operating expenses
Loss from operations
Interest and investment income
Interest expenses
Gain on extinguishment of debt
Share of income of equity investees
Other income/(loss), net
Loss before income tax expense
Income tax expense
Net loss
Other comprehensive income/(loss)
Change in unrealized gains/(losses) related to available-for-sale debt securities, net
of tax
Foreign currency translation adjustment, net of nil tax
Total other comprehensive (loss)/income
Total comprehensive loss
Accretion on redeemable non-controlling interests to redemption value
Net loss/(profit) attributable to non-controlling interests
Other comprehensive (income)/loss attributable to non-controlling interests
Comprehensive loss attributable to ordinary shareholders of NIO Inc.
Notes:
(1) We currently generate revenues from vehicle sales and other sales.
2021
RMB
33,169,740
2,966,683
36,136,423
(26,516,643)
(2,798,347)
(29,314,990)
6,821,433
(4,591,852)
(6,878,132)
152,248
(11,317,736)
(4,496,303)
911,833
(637,410)
—
62,510
184,686
(3,974,684)
(42,265)
(4,016,949)
24,224
(230,345)
(206,121)
(4,223,070)
(6,586,579)
31,219
(4,727)
(10,783,157)
Year Ended December 31,
2022
RMB
RMB
(in thousands)
2023
US$
45,506,581
3,761,980
49,268,561
(39,271,801)
(4,852,767)
(44,124,568)
5,143,993
(10,836,261)
(10,537,119)
588,728
(20,784,652)
(15,640,659)
1,358,719
(333,216)
138,332
377,775
(282,952)
(14,382,001)
(55,103)
(14,437,104)
746,336
717,274
1,463,610
(12,973,494)
(279,355)
157,014
(151,299)
(13,247,134)
49,257,270
6,360,663
55,617,933
(44,587,572)
(7,978,565)
(52,566,137)
3,051,796
(13,431,399)
(12,884,556)
608,975
(25,706,980)
(22,655,184)
2,210,018
(403,530)
170,193
64,394
155,191
(20,458,918)
(260,835)
(20,719,753)
(770,560)
11,514
(759,046)
(21,478,799)
(303,163)
(124,051)
156,026
(21,749,987)
6,937,741
895,881
7,833,622
(6,280,028)
(1,123,757)
(7,403,785)
429,837
(1,891,773)
(1,814,752)
85,772
(3,620,753)
(3,190,916)
311,275
(56,836)
23,971
9,070
21,858
(2,881,578)
(36,738)
(2,918,316)
(108,531)
1,622
(106,909)
(3,025,225)
(42,700)
(17,472)
21,976
(3,063,421)
(2) Share-based compensation expenses were allocated in cost of sales and operating expenses as follows:
Cost of sales
Research and development expenses
Selling, general and administrative expenses
Total
34,009
406,940
569,191
1,010,140
66,914
83,972
1,323,370
905,612
2,295,896
1,517,206
767,863
2,369,041
11,827
213,694
108,151
333,672
(3) Other sales mainly consist of revenues from (a) parts, accessories and after-sales vehicle services, including repair, maintenance,
service package, extended warranty services and other vehicle services, (b) provision of power solutions, including sale of charging
piles, provision of battery charging and swapping services, battery upgrade service, BaaS battery buy-out service and other power
solution services, (c) others, which mainly consist of revenues from sales of used cars, auto financing services, NIO Life
merchandise, automotive regulatory credits and other products and services.
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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Revenues
Our revenues increased by 12.9% from RMB49,268.6 million in 2022 to RMB55,617.9 million (US$7,833.6 million) in 2023,
primarily attributable to (i) an increase of vehicle sales by RMB3,750.7 million, as a result of an increase in vehicle delivery volume by
30.7% mainly due to a more diversified product mix offered to our users, and partially offset by a decrease in the average selling price of
our vehicles by 15.7% also mainly due to changes in product mix, (ii) an increase in other revenues by RMB2,655.4 million from sales of
parts, accessories and after-sales vehicle services, provision of power solutions and other sales, as a result of continued growth in the
number of our users, and partially offset by (iii) the decrease in revenue from sales of automotive regulatory credits by RMB56.7 million
mainly due to decreased sales of credits with lower selling prices.
Cost of sales
Our cost of sales increased by 19.1% from RMB44,124.6 million in 2022 to RMB52,566.1 million (US$7,403.8 million) in
2023, primarily attributable to an increase in cost of vehicle sales by RMB5,315.8 million and an increase of cost of provision of power
solutions and parts, accessories and after-sales vehicle services by RMB2,124.1 million, which was mainly due to (i) an increase of
vehicle delivery volume by 30.7% in 2023, (ii) partially offset by lower material cost per vehicle and the inventory provisions,
accelerated depreciation on production facilities, and losses on purchase commitments for the previous generation of ES8, ES6 and EC6
recorded in 2022 (RMB985.4 million in total) and (iii) higher depreciation and operating cost from the expanded investment in our
power and service network.
Gross Profit and Gross Margin
Our gross profit decreased by 40.7% from RMB5,144.0 million in 2022 to RMB3,051.8 million (US$429.8 million) in 2023.
The decrease of gross profit compared to 2022 was mainly driven by (i) the decrease of profit from vehicle sales with RMB1,565.1
million primarily due to lower average selling price as a result of changes in product mix, (ii) the decrease of profit from provision of
power solutions with RMB697.1 million as a result of the expanded power network, (iii) and partially offset by the increase of profit
from sales of parts, accessories and after-sales vehicle services with RMB332.9 million.
Gross margin in 2023 was 5.5%, compared with 10.4% in 2022. The decrease of gross margin as compared to 2022 was mainly
driven by the decrease of vehicle margin.
Vehicle margin in 2023 was 9.5%, compared with 13.7% in 2022. Vehicle margin is the margin of new vehicle sales, which is
calculated based on revenues and cost of sales derived from new vehicle sales only. The decrease of vehicle margin as compared to 2022
was mainly driven by lower average selling price primarily due to changes in product mix.
Other sales margin in 2023 was negative 25.4%, compared with negative 29.0% in 2022, which was mainly driven by the
increase of sales of parts, accessories and after-sales vehicle services with high sales margin.
Research and Development Expenses
Research and development expenses increased by 23.9% from RMB10,836.3 million in 2022 to RMB13,431.4 million
(US$1,891.8 million) in 2023, primarily due to increased personnel costs in research and development functions of RMB2,313.4 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by 22.3% from RMB10,537.1 million in 2022 to RMB12,884.6 million
(US$1,814.8 million) in 2023, primarily due to (i) increased employee compensation expense of RMB1,397.3 million due to an increase
in sales and general corporate functions, and (ii) increased marketing and promotional expenses of RMB867.0 million due to the increase
in sales and marketing activities.
Loss from Operations
As a result of the foregoing, we incurred a loss from operations of RMB22,655.2 million (US$3,190.9 million) in 2023,
representing an increase of 44.8% as compared to a loss of RMB15,640.7 million in 2022.
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Interest and investment income
We recorded interest and investment income of RMB2,210.0 million (US$311.3 million) in 2023, representing an increase of
62.7% as compared to RMB1,358.7 million in 2022, primarily due to the recycling of an unrealized gain from other comprehensive
income to investment income of RMB977.3 million related to an equity investment previously accounted for as an available-for-sale debt
investment.
Interest Expenses
Our interest expenses increased from RMB333.2 million in 2022 to RMB403.5 million (US$56.8 million) in 2023, primarily
because the principal amount of convertible notes outstanding was higher in 2023 due to the issuance of the 2029 Notes and the 2030
Notes.
Gain on extinguishment of debt
Our gain on extinguishment of debt was RMB170.2 million (US$24.0 million) in 2023, compared with RMB138.3 million in
2022, which was attributed to the gain from the repurchase of a portion of the 2026 Notes and 2027 Notes with a carrying amount of
RMB1,822.0 million (US$256.6 million) in 2023 and RMB1,739.3 million (US$245.0 million), respectively.
Share of Income of Equity Investees
We recorded share of income of equity investees of RMB64.4 million (US$9.1 million) in 2023, compared with RMB377.8
million in 2022, primarily due to the decreased share of income recorded from our equity investments measured under equity method due
to decreased earnings of equity investees in 2023.
Other Income/(Loss), Net
We recorded other income of RMB155.2 million (US$21.9 million) in 2023, compared with other losses of RMB283.0 million
in 2022, primarily due to a decrease in foreign exchange loss of RMB463.3 million from the revaluation impact of overseas Renminbi-
related assets as a result of the appreciation of Renminbi against U.S. dollars in 2023.
Income Tax Expense
Our income tax expense increased from RMB55.1 million in 2022 to RMB260.8 million (US$36.7 million) in 2023, primarily
due to the recognition of an income tax expense of RMB206.7 million in 2023 in connection with recycling of an unrealized gain from
other comprehensive income to investment income of RMB977.3 million for the available-for-sale debt investment referred to above.
Net Loss
As a result of the foregoing, we incurred a net loss of RMB20,719.8 million (US$2,918.3 million) in 2023, representing an
increase of 43.5% as compared to a net loss of RMB14,437.1 million in 2022.
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Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenues
Our revenues increased by 36.3% from RMB36,136.4 million in 2021 to RMB49,268.6 million in 2022, primarily attributable
to (i) an increase of vehicle delivery volume by 34.0% in 2022 as compared to 2021 mainly due to a more diversified product mix
offered to our users, (ii) an increase in other revenue by RMB1,471.7 million from sales of packages and provision of power solutions,
charging piles and other sales, which was in line with the incremental vehicle sales, and partially offset by (iii) the decrease in revenue
from sales of automotive regulatory credits by RMB449.3 million due to decreased sales of credits with lower selling prices and
volumes, and (iv) a decrease in revenue from battery upgrade services by RMB227.1 million, mainly due to the cumulative demand
having been fulfilled in 2021.
Cost of sales
Our cost of sales increased by 50.5% from RMB29,315.0 million in 2021 to RMB44,124.6 million in 2022, primarily
attributable to an increase in cost of vehicle sales by RMB12,755.2 million and an increase of cost of packages and provision of power
solutions by RMB1,547.8 million, which is mainly due to (i) an increase of vehicle delivery volume by 34.0% in 2022, (ii) higher battery
cost per vehicle, (iii) inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the
existing generation of ES8, ES6 and EC6 which are expected to have lower production and delivery levels due to their transition to new
models under NT2.0 (RMB985.4 million in total), and (iv) higher depreciation and operating cost from the expanded investment in our
power and service network.
Gross Profit and Gross Margin
Our gross profit decreased by 24.6% from RMB6,821.4 million in 2021 to RMB5,144.0 million in 2022. The decrease of gross
profit compared to 2021 was mainly driven by the decrease of profit from sales of packages and provision of power solutions with
RMB1,216 million as a result of the expanded investment in our power and service network, and the decrease of RMB449.3 million from
sales of the automotive regulatory credits with high sales margin.
Gross margin in 2022 was 10.4%, compared with 18.9% in 2021. The decrease of gross margin as compared to 2021 was
mainly driven by the decrease of vehicle margin and other sales margin in 2022.
Vehicle margin in 2022 was 13.7%, compared with 20.1% in 2021. Vehicle margin is the margin of new vehicle sales, which is
calculated based on revenues and cost of sales derived from new vehicle sales only. The decrease of vehicle margin as compared to 2021
was mainly driven by (i) the increased battery cost per vehicle with negative impact of around 3.8%, and (ii) the increased inventory
provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the existing generation of ES8,
ES6 and EC6 which are expected to have lower production levels and deliveries due to their transition to new models under NT2.0, with
a negative impact of 2.2% on vehicle margin.
Other sales margin in 2022 was negative 29.0%, compared with 5.7% in 2021, which was mainly driven by (i) decrease of
margin from sales of packages and provision of power solutions with a negative impact of 24.8% as a result of the expanded investment
in power and service network, (ii) the decrease of margin from sales of automotive regulatory credits which with high sales margin, with
negative impact of 15.6%, and (iii) partially offset by increase of interest income from our auto financing arrangement and other sales
with high margin.
Research and Development Expenses
Research and development expenses increased by 136.0% from RMB4,591.9 million in 2021 to RMB10,836.3 million in 2022,
primarily due to increased personnel costs in research and development functions of RMB4,026.8 million as well as the incremental
design and development costs of RMB1,704.1 million for new products and technologies.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by 53.2% from RMB6,878.1 million in 2021 to RMB10,537.1 million in
2022, primarily due to (i) increased employee compensation expense of RMB1,638.2 million due to an increase in sales and general
corporate functions, (ii) increased rental and related expense and professional service expense which totaled RMB913.9 million mainly
due to the Company’s sales and service network expansion, (iii) increased marketing and promotional expenses of RMB347.2 million
due to an increase in marketing and promotional activities to promote our vehicles in China and Europe.
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Loss from Operations
As a result of the foregoing, we incurred a loss from operations of RMB15,640.7 million in 2022, representing an increase of
247.9% as compared to a loss of RMB4,496.3 million in 2021.
Interest and investment income
We recorded interest and investment income of RMB1,358.7 million in 2022, representing an increase of 49.0% as compared to
RMB911.8 million in 2021, primarily due to the increase in short-term investment and long-term time deposits on average throughout
2022.
Interest Expense
Our interest expense decreased from RMB637.4 million in 2021 to RMB333.2 million in 2022, primarily due to the conversion
premium charged in connection with separately and individually negotiated agreements with certain holders of their outstanding 2024
Notes for early conversion in January 2021.
Gain on extinguishment of debt
Our gain on extinguishment of debt was RMB138.3 million in 2022, compared with nil in 2021, which was attributed to the
gain from the repurchase of a portion of the 2026 Notes with a carrying amount of RMB1,317.1 million in 2022.
Share of Income of Equity Investees
We recorded share of income of equity investees of RMB377.8 million in 2022, as compared to RMB62.5 million in 2021,
primarily due to the increased share of income recorded from our equity investments measured under equity method due to increased
earnings of equity investees in 2022.
Other Income/(Loss), Net
We recorded other losses of RMB283.0 million in 2022, as compared with other income of RMB184.7 million in 2021,
primarily due to a foreign exchange loss of RMB504.7 million mainly reflecting the revaluation impact of overseas Renminbi-related
assets as a result of Renminbi’s depreciation against U.S. dollars.
Income Tax Expense
In 2022, our income tax expense was RMB55.1 million, as compared to RMB42.3 million in 2021.
Net Loss
As a result of the foregoing, we incurred a net loss of RMB14,437.1 million in 2022, representing an increase of 259.4% as
compared to a net loss of RMB4,016.9 million in 2021.
B.
Liquidity and Capital Resources
Cash Flows and Working Capital
We had net cash provided by operating activities of RMB1,966.4 million in 2021, net cash used in operating activities of
RMB3,866.0 million in 2022, and net cash used in operating activities of RMB1,381.5 million (US$194.6 million) in 2023.
As of December 31, 2023, we had a total of RMB55,431.6 million (US$7,807.4 million) in cash and cash equivalents, restricted
cash (including non-current restricted cash) and short-term investments. As of December 31, 2023, 44.7% of our cash and cash
equivalents and restricted cash (including non-current restricted cash) and short-term investments were denominated in Renminbi and
held in PRC and Hong Kong and the other cash and cash equivalents and restricted cash (including non-current restricted cash) and
short-term investments were mainly denominated in US$ and held in the PRC, Hong Kong and the United States. Our cash and cash
equivalents consist primarily of cash on hand, time deposits and highly liquid investments placed with banks, which are unrestricted as to
withdrawal and use, and which have original maturities of three months or less.
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As of December 31, 2023, we had bank facilities with an aggregate amount of RMB64,464.1 million (US$9,079.6 million),
which consists of non-collateral based bank facilities of RMB16,348.3 million (US$2,302.6 million) and collateral-based bank facilities
of RMB48,115.8 million (US$6,777.0 million). Out of the total non-collateral based bank facilities, RMB5,492.8 million (US$773.6
million), RMB1,201.2 million (US$169.2 million), and RMB250.0 million (US$35.2 million) were used for bank borrowing, issuance of
letters of guarantee, and bank’s acceptance notes, respectively. Out of the total collateral-based bank facilities, RMB2,588.9 million
(US$364.6 million), RMB14,713.9 million (US$2,072.4 million) and nil were used for issuance of letters of guarantee, bank’s
acceptance notes and letter of credit, respectively.
As of December 31, 2023, we had RMB9,821.5 million (US$1,383.3million) and RMB13,042.9 million (US$1,837.0 million)
in total short-term and long-term borrowings outstanding, respectively. The borrowings outstanding primarily consisted of the 2024
Notes, 2026 Notes, 2027 Notes, 2029 Notes and 2030 Notes, portions of the asset-backed notes, and our short-term and long-term bank
debt.
The 2024 Notes are unsecured debt and are not redeemable by us prior to the maturity date except for certain changes in tax law.
In accordance with the indenture governing the 2024 Notes, or the 2024 Notes Indenture, holders of the 2024 Notes may require us to
purchase all or any portion of their notes on February 1, 2022 at a repurchase price equal to 100% of the principal amount of the 2024
Notes to be repurchased, plus accrued and unpaid interest. Such repurchase right offer expired on January 28, 2022. None of the
noteholders exercised their repurchase right, and no notes were surrendered for repurchase. Holders of the 2024 Notes may also require
us, upon a fundamental change (as defined in the 2024 Notes Indenture), to repurchase for cash all or part of their 2024 Notes at a
fundamental change repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and
unpaid interest. The holders of the 2024 Notes may convert their notes to a number of our ADSs at their option at any time prior to the
close of business on the second business day immediately preceding the maturity date pursuant to the 2024 Notes indenture, at a
conversion rate of 105.1359 ADSs per US$1,000 principal amount of the 2024 Notes. The 2024 Notes that are converted in connection
with a make-whole fundamental change (as defined in the 2024 Notes Indenture) may be entitled to an increase in the conversion rate for
such 2024 Notes. In connection with the issuance of the 2024 Notes, we entered into capped call transactions and zero-strike call option
transactions. Satisfying the obligations of the 2024 Notes could adversely affect the amount or timing of any distributions to our
shareholders. We repaid the then outstanding 2024 Notes that had not been redeemed, repurchased or converted in full as it matured on
February 1, 2024.
In January 2021, we issued US$750 million aggregate principal amount of 0.00% convertible senior notes due 2026, or the 2026
Notes, and US$750 million aggregate principal amount of 0.50% convertible senior notes due 2027, or the 2027 Notes. The 2026 Notes
and the 2027 Notes are unsecured debt. The 2026 Notes will not bear interest, and the principal amount of the 2026 Notes will not
accrete. The 2027 Notes will bear interest at a rate of 0.50% per year. The 2026 Notes will mature on February 1, 2026 and the 2027
Notes will mature on February 1, 2027, unless repurchased, redeemed or converted in accordance with their terms prior to such date.
Prior to August 1, 2025, in the case of the 2026 Notes, and August 1, 2026, in the case of the 2027 Notes, the 2026 Notes and the 2027
Notes, as applicable, will be convertible at the option of the holders only upon satisfaction of certain conditions and during certain
periods. Holders may convert their 2026 Notes or 2027 Notes, as applicable, at their option at any time on or after August 1, 2025, in the
case of the 2026 Notes, or August 1, 2026, in the case of the 2027 Notes, until the close of business on the second scheduled trading day
immediately preceding the relevant maturity date. Upon conversion, we will pay or deliver to such converting holders, as the case may
be, cash, ADSs, or a combination of cash and ADSs, at our election. The initial conversion rate of the 2026 Notes is 10.7458 ADSs per
US$1,000 principal amount of such 2026 Notes. The initial conversion rate of the 2027 Notes is 10.7458 ADSs per US$1,000 principal
amount of such 2027 Notes. The relevant conversion rate for such series of the 2026 Notes and the 2027 Notes is subject to adjustment
upon the occurrence of certain events. Holders of the 2026 Notes and the 2027 Notes may require us to repurchase all or part of their
2026 Notes and 2027 Notes for cash on February 1, 2024, in the case of the 2026 Notes, and February 1, 2025, in the case of the 2027
Notes, or in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount of the 2026 Notes or
the 2027 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date.
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In addition, on or after February 6, 2024, in the case of the 2026 Notes, and February 6, 2025, in the case of the 2027 Notes,
until the 20th scheduled trading day immediately prior to the relevant maturity date, we may redeem the 2026 Notes or the 2027 Notes,
as applicable for cash subject to certain conditions, at a redemption price equal to 100% of the principal amount of the 2026 Notes or the
2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the relevant optional redemption date.
Furthermore, we may redeem all but not part of the 2026 Notes or the 2027 Notes in the event of certain changes in the tax laws.
Satisfying the obligations of the 2026 Notes and the 2027 Notes could adversely affect the amount or timing of any distributions to our
shareholders. We may choose to satisfy, repurchase, or refinance the 2026 Notes or the 2027 Notes through public or private equity or
debt financings if we deem such financings available on favorable terms. In 2022, we repurchased an aggregate principal amount of
US$192.9 million of 2026 Notes for a total cash consideration of US$170.5 million. In September 2023, shortly after the pricing of the
2029 Notes and the 2030 Notes, we repurchased an aggregate principal amount of US$255.6 million of the 2026 Notes for a total cash
consideration of US$249.9 million and an aggregate principal amount of US$244.4 million of the 2027 Notes for a total cash
consideration of US$222.0 million. In February 2024, we completed the repurchase right offer relating to the 2026 Notes. US$300.5
million in aggregate principal amount of the 2026 Notes were validly surrendered and not withdrawn prior to the expiration of the
repurchase right offer.
In September 2023, we issued US$500 million aggregate principal amount of 3.875% convertible senior notes due 2029, or the
2029 Notes, and US$500 million aggregate principal amount of 4.625% convertible senior notes due 2030, or the 2030 Notes. We
granted the initial purchasers in the notes offering an option to purchase up to an additional US$75 million in aggregate principal amount
of the 2029 Notes and up to an additional US$75 million in aggregate principal amount of the 2030 Notes. The initial purchasers
exercised in full the option to purchase from us an aggregate of US$75 million principal amount of the 2029 Notes and US$75 million
principal amount of the 2030 Notes. The 2029 Notes and the 2030 Notes are unsecured debt. The 2029 Notes will bear interest at a rate
of 3.875% per year, and the 2030 Notes will bear interest at a rate of 4.625% per year. The 2029 Notes will mature on October 15, 2029
and the 2030 Notes will mature on October 15, 2030, unless repurchased, redeemed or converted in accordance with their terms prior to
such date. The holders of the 2029 Notes and the 2030 Notes shall have the right, at such holder’s option, to convert all or any portion of
their 2029 Notes or 2030 Notes, as applicable, at any time prior to the close of business on the second scheduled trading day immediately
preceding the relevant maturity date.
Upon conversion, we will pay or deliver to such converting holders, as the case may be, cash, ADSs, or a combination of cash
and ADSs, at our election. The initial conversion rate of the 2029 Notes is 89.9685 ADSs per US$1,000 principal amount of such 2029
Notes. The initial conversion rate of the 2030 Notes is 89.9685 ADSs per US$1,000 principal amount of such 2030 Notes. The relevant
conversion rate for such series of the 2029 Notes and the 2030 Notes is subject to adjustment upon the occurrence of certain events.
Holders of the 2029 Notes and 2030 Notes may require us to repurchase all or any portion of their 2029 Notes and 2030 Notes
for cash on October 15, 2027, in the case of the 2029 Notes, and October 15, 2028, in the case of 2030 Notes, or in the event of certain
fundamental changes, at a repurchase price equal to 100% of the principal amount of the 2029 Notes or the 2030 Notes to be repurchased
plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. In addition, on or after October 22, 2027, in the case of
the 2029 Notes, and October 22, 2028, in the case of the 2030 Notes, until the 20th scheduled trading day immediately prior to the
relevant maturity date, we may redeem all or part of the 2029 Notes and 2030 Notes, as applicable for cash subject to certain conditions,
at a redemption price equal to 100% of the principal amount of the 2029 Notes or the 2030 Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the optional redemption date. Furthermore, we may redeem all but not part of the 2029 Notes or
the 2030 Notes in the event of certain changes in the tax laws. Satisfying the obligations of the 2029 Notes and the 2030 Notes could
adversely affect the amount or timing of any distributions to our shareholders. We may choose to satisfy, repurchase, or refinance the
2029 Notes or the 2030 Notes through public or private equity or debt financings if we deem such financings available on favorable
terms.
Based on the outstanding principal amount of the 2024 Notes, 2026 Notes, the 2027 Notes, the 2029 Notes and the 2030 Notes,
and the highest conversion rate under each indenture, the maximum number of ADSs that would be issued in connection with the
outstanding convertible notes is approximately 169.4 million.
Our principal sources of liquidity have been proceeds from issuances of equity securities, our notes offerings, our bank facilities
and cash flow from business operations. We have been applying a variety of methods to manage our working capital. We use just-in-
time, pull-production system to control the inventory level of the components. We adopt made-to-order model and do not maintain a high
level of inventories of vehicles. We aim to fulfill orders and deliver vehicles to our users within 21 to 28 days from the date users place
their orders. We manage the payment term policy to suppliers to improve our cash position. For most of our suppliers, the payment term
ranges from 30 to 90 days. Meanwhile, payment methods can be a combination of cash and notes payable.
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We believe that our current cash, cash equivalents and short-term investments balance as of December 31, 2023 is sufficient to
fund our operating activities, capital expenditures and other obligations for at least the next twelve months. However, we may decide to
enhance our liquidity position or increase our cash reserve for future expansions and acquisitions through additional capital and/or
finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of
indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We
cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
The following table sets forth a summary of our cash flows for the periods indicated.
Summary of Consolidated Cash Flow Data:
Net cash used in operating activities before movements in working
capital
Changes in operating assets and liabilities
Net cash provided by/(used in) operating activities
Net cash (used in)/provided by investing activities
Net cash provided by/(used in) financing activities
Effects of exchange rate changes on cash, cash equivalents and
restricted cash
Net (decrease)/increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of the year
Cash, cash equivalents and restricted cash at end of the year
Operating Activities
2021
RMB
Year Ended December 31,
2022
RMB
RMB
(in thousands)
2023
US$
(701,159)
2,667,545
1,966,386
(39,764,704)
18,128,743
(8,116,982)
4,250,974
(3,866,008)
10,385,017
(1,616,384)
(14,466,984)
13,085,438
(1,381,546)
(10,885,375)
27,662,881
(2,037,633)
1,843,046
(194,587)
(1,533,173)
3,896,236
(500,959)
(20,170,534)
38,545,098
18,374,564
(121,896)
4,780,729
18,374,564
23,155,293
70,254
15,466,214
23,155,293
38,621,507
9,895
2,178,371
3,261,355
5,439,726
Net cash used in operating activities was RMB1,381.5 million (US$194.6 million) in 2023, as compared to a net loss of
RMB20,719.8 million. The difference was primarily attributable to (i) non-cash items of RMB6,252.8 million, which primarily consisted
of depreciation and amortization of RMB3,378.0 million, share-based compensation expenses of RMB2,369.0 million, amortization of
right-of-use assets of RMB1,529.5 million, and (ii) a net increase in changes in operating assets and liabilities by RMB13,085.4 million,
which was primarily attributable to an increase in trade and notes payable of RMB4,870.8 million, a decrease in inventory of
RMB2,895.5 million, a decrease in other non-current assets of RMB2,600.0 million.
Net cash used in operating activities was RMB3,866.0 million in 2022, as compared to a net loss of RMB14,437.1 million. The
difference was primarily attributable to (i) non-cash items of RMB6,320.1 million, which primarily consisted of depreciation and
amortization of RMB2,852.3 million, share-based compensation expenses of RMB2,295.9 million, amortization of right-of-use assets of
RMB1,141.7 million, and (ii) a net increase in changes in operating assets and liabilities by RMB4,251.0 million, which was primarily
attributable to an increase in trade and notes payable of RMB11,650.9 million, an increase in accruals and other liabilities of
RMB4,119.4 million, an increase in other non-current liabilities of RMB1,620.9 million, which was partially offset by, among other
things, an increase in inventory of RMB6,257.5 million, trade and notes receivable of RMB2,303.4 million and prepayments and other
current assets of RMB1,239.9 million.
Net cash provided by operating activities was RMB1,966.4 million in 2021, as compared to a net loss of RMB4,016.9 million.
The difference was primarily attributable to (i) non-cash items of RMB3,315.8 million, which primarily consisted of depreciation and
amortization of RMB1,708.0 million, share-based compensation expenses of RMB1,010.1 million, amortization of right-of-use assets of
RMB643.9 million and expected credit loss expense of RMB54.3 million, and (ii) a net increase in changes in operating assets and
liabilities by RMB2,667.5 million, which was primarily attributable to an increase in trade and notes payable of RMB6,260.3 million, an
increase in accruals and other liabilities of RMB2,485.1 million, an increase in other non-current liabilities of RMB1,778.4 million, an
increase in taxes payable of RMB447.0 million and an increase in amount due to related parties of RMB342.6 million, which was
partially offset by, among other things, an increase in other non-current assets of RMB3,705.8 million and an increase in trade and notes
receivable of RMB1,717.7 million.
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Investing Activities
Net cash used in investing activities was RMB10,885.4 million (US$1,533.2 million) in 2023, primarily attributable to (i)
purchase of short-term investments of RMB43,899.1 million, and (ii) purchase of property, plant and equipment and intangible assets of
RMB14,340.8 million, inclusive of VAT input, partially offset by proceeds from maturities of short-term investments of RMB47,753.6
million.
Net cash provided by investing activities was RMB10,385.0 million in 2022, primarily attributable to proceeds from maturities
of short-term investments of RMB106,658.2 million, partially offset by (i) purchase of short-term investments of RMB87,631.7 million,
(ii) purchase of property, plant and equipment and intangible assets of RMB6,972.9 million, and (iii) purchase of held to maturity debt
investments of RMB1,830.0 million.
Net cash used in investing activities was RMB39,764.7 million in 2021, primarily attributable to (i) purchases of short-term
investments of RMB134,316.2 million, (ii) purchase of property, plant and equipment and intangible assets of RMB4,078.8 million, (iii)
acquisitions of held to maturity debt investments of RMB1,300.0 million, (iv) acquisitions of equity investees and equity security
investments of RMB592.6 million, and (v) purchase of available-for-sale debt investment of RMB650.0 million, partially offset by (i)
proceeds from maturities of short-term investments of RMB101,121.7 million, and (ii) loan repayment from related parties of RMB50.0
million.
Financing Activities
Net cash provided by financing activities was RMB27,662.9 million (US$3,896.2 million) in 2023, primarily attributable to (i)
proceeds from issuance of ordinary shares to CYVN Investments, net of RMB20,962.3 million, (ii) proceeds from issuance of
convertible senior notes of RMB8,120.8 million, and (iii) proceeds from borrowings from third parties of RMB8,014.4 million, partially
offset by repayments of borrowings from third parties of RMB6,096.0 million and repurchase of convertible senior notes of RMB3,387.6
million.
Net cash used in financing activities was RMB1,616.4 million in 2022, primarily attributable to repayments of borrowings from
third parties of RMB7,347.9 million and repurchase of convertible senior notes of RMB1,202.4 million, partially offset by proceeds from
borrowings from third parties of RMB6,918.6 million.
Net cash provided by financing activities was RMB18,128.7 million in 2021, primarily attributable to (i) proceeds from
issuance of ordinary shares, net of RMB12,677.6 million, (ii) proceeds from issuance of convertible senior notes of RMB9,560.8 million,
(iii) proceeds from borrowings from third parties of RMB6,112.0 million, and (iv) proceeds from exercise of stock options of RMB144.6
million, partially offset by (i) repurchase of redeemable non-controlling interests of RMB8,000.0 million, (ii) repayments of borrowings
from third parties of RMB2,432.3 million, and (iii) principal payments of finance leases of RMB32.9 million.
Material Cash Requirements
Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital
commitments, operating and financing lease obligations, short-term and long-term borrowings, convertible notes and asset-backed
securities and notes, as below:
Capital commitments
Operating lease obligations
Finance lease obligations
Short-term and long-term borrowings
Interest on borrowings
Convertible notes with principal and interest
Asset-backed notes
Total
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
Payment due by period
6,017,818
17,197,585
66,423
7,125,800
160,948
16,646,343
278,823
47,493,740
5,512,258
2,658,392
28,395
5,927,420
98,241
3,684,309
278,823
18,187,838
(in RMB thousands)
505,231
3,674,221
21,930
815,880
51,540
4,282,406
—
329
2,623,203
13,779
340,000
10,626
8,679,628
—
9,351,208
11,667,565
—
8,241,769
2,319
42,500
541
—
—
8,287,129
Our capital commitments are commitments in relation to the purchase of property and equipment including leasehold
improvements.
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Our operating and finance lease obligations consist of leases in relation to certain manufacturing plant, offices and buildings,
NIO Houses and other property for our sales and after-sales network.
Our short-term and long-term borrowings represent borrowings with maturity from eleven months to seven years.
Our convertible notes that remained outstanding as of December 31, 2023 represented the 2024 Notes with outstanding principal
amount of US$163.7 million as of December 31, 2023, which matured on February 1, 2024, the 2026 Notes with outstanding principal
amount of US$301.5 million as of December 31, 2023, the 2027 Notes with outstanding principal amount of US$505.6 million as of
December 31, 2023, which will mature in February 2026 and February 2027, the 2029 Notes with outstanding principal amount of
US$575 million as of December 31, 2023 and the 2030 Notes with outstanding principal amount of US$575 million as of December 31,
2023, which will mature in October 2029 and October 2030, respectively. The 2024 Notes matured on February 1, 2024, and we repaid
the then outstanding 2024 Notes that had not been redeemed, repurchased or converted in full. On February 1, 2024, we completed the
repurchase right offer relating to 2026 Notes with aggregate principal amount of US$300.5 million.
Our asset-backed notes represent the proceeds from the issuance of debt notes under asset-backed securitization arrangements
with the principal amount of RMB847 million and RMB1,025 million as of December 31, 2023, which will become mature in March
2024 and June 2024, respectively.
We intend to fund our existing and future material cash requirements with our existing cash balance. We will continue to make
cash commitments, including capital expenditures, to support the growth of our business.
Other than those shown above, we did not have any significant capital and other commitments, long-term obligations,
mortgages and charges or guarantees as of December 31, 2023. As of December 31, 2023, save as disclosed in our consolidated financial
statements included elsewhere in this annual report, we did not have significant contingent liabilities. As of December 31, 2023, save as
disclosed in this section, we did not have any significant bank overdrafts, loans and other similar indebtedness, liabilities under
acceptances or acceptance credits, debentures, mortgages, charges hire purchase commitments or other outstanding material contingent
liabilities.
Capital Expenditures
In 2021, 2022 and 2023, our capital expenditures were mainly used for the acquisition of property, plant and equipment which
consisted primarily of charging and battery swap equipment, mold and tooling, production facilities, IT equipment, research and
development equipment, leasehold improvements mainly for NIO Houses and NIO Spaces, delivery and servicing centers, Power Swap
Stations and laboratories as well as equity investments. We made capital expenditures of RMB4,671.3 million, RMB7,251.9 million and
RMB14,762.5 million (US$2,079.3 million) in 2021, 2022 and 2023, respectively. We expect our capital expenditures to continue to be
significant in the foreseeable future as we expand our business, and that our level of capital expenditures will be significantly affected by
user demand for our products and services. The fact that we have a limited operating history means we have limited historical data on the
demand for our products and services. As a result, our future capital requirements may be uncertain and actual capital requirements may
be different from those we currently anticipate. To the extent the proceeds of securities we have issued and cash flows from our business
activities are insufficient to fund future capital requirements, we may need to seek equity or debt financing. We will continue to make
capital expenditures to support the expected growth of our business.
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Holding Company Structure
NIO Inc. is a holding company with no material operations of its own. We conduct our operations in China primarily through
our PRC subsidiaries, and, to a much lesser extent, the VIEs and their subsidiary. As a result, our ability to pay dividends depends
significantly upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their
own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly
foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in
accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and the VIEs and their subsidiaries
in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such
reserve funds reach 50% of its registered capital. In addition, each of our wholly foreign-owned subsidiaries in China may allocate a
portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds, staff bonuses and welfare funds at its
discretion, and the VIEs may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus
fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of
dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the SAFE. Our PRC
subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the
requirements for statutory reserve funds. The VIEs did not have any material assets or liabilities as of December 31, 2023. In the future,
we expect (i) Beijing NIO to focus on value-added telecommunications services, including, without limitation, performing internet
services as well as holding certain related licenses; (ii) Anhui NIO AT to focus on assisted and intelligent driving services, including,
without limitation, performing certain services as well as holding certain related licenses; and (iii) Anhui NIO DT to focus on insurance
brokerage services, including, without limitation, performing insurance brokerage services as well as holding certain related licenses
through its subsidiary.
Off-Balance Sheet Arrangements
Other than the guarantees provided to Battery Asset Company in relation to the BaaS model as described in Note 2(r) to our
consolidated financial statements included elsewhere in this annual report, we have not entered into any off-balance sheet financial
guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that
serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that
provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
C.
Research and Development, Patents and Licenses, etc.
See “Item 4. Information on the Company—B. Business Overview—Intellectual Property.”
D.
Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or
events for the current fiscal year that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or
capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or
financial conditions.
E.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires our management to make
estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet
dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material
differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our
estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our
circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
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We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters
that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to
occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material
impact on our financial condition or results of operations. There are other items within our financial statements that require estimation
but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our
financial statements. For a detailed discussion of our significant accounting policies and related judgments, see Note 2 to our
consolidated financial statements included elsewhere in this annual report.
Warranty liabilities
We accrue a warranty reserve for all new vehicles that we sell, which includes our best estimate of the projected costs to repair
or replace items under warranties. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency
and costs of future claims. These estimates are inherently uncertain given our relatively short history of sales, and changes to the
historical or projected warranty experience may cause material changes to the warranty reserve when we accumulate more actual data
and experience in the future.
The portion of the warranty reserve expected to be incurred within the next 12 months is included within accruals and other
liabilities, while the remaining balance is included within other non-current liabilities on the consolidated balance sheets. Warranty
expense is recorded as a component of cost of revenues in the consolidated statements of comprehensive loss.
When our assumptions relating to the estimates of the projected costs to repair or replace items under warranties
decreased/increased by 5% while holding all other assumptions constant, there would be no significant impact to our consolidated results
of operations.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Executive Officers
The following table sets forth information regarding our executive officers and directors as of the date of this annual report.
Directors and Executive Officers
Bin Li
Lihong Qin
Feng Shen
Xin Zhou
Wei Feng
Ganesh V. Iyer
Hai Wu
Denny Ting Bun Lee
Yu Long
Yonggang Wen
Eddy Georges Skaf
Nicholas Paul Collins
Age
49
50
60
53
44
56
55
56
51
46
50
49
Position/Title
Chairman and Chief Executive Officer
Director and President
Executive Vice President
Executive Vice President
Chief Financial Officer
Chief Executive Officer of NIO U.S.
Independent Director
Independent Director
Independent Director
Independent Director
Director
Director
Mr. Bin Li is our founder and has served as chairman of the board since our inception and our chief executive officer since
March 2018. Since July 2021, Mr. Li has served as a director of Uxin Limited (Nasdaq: UXIN), a leading e-commerce platform for
buying and selling used cars in China. In 2000, Mr. Li co-founded Beijing Bitauto E-Commerce Co., Ltd. and served as its director and
president until 2006. From 2010 to 2020, Mr. Li served as chairman of the board of directors at Bitauto Holdings Limited (previously
listed on NYSE with stock code BITA), a former NYSE-listed automobile service company and a leading automobile service provider in
China. In 2002, Mr. Li co-founded Beijing Creative & Interactive Digital Technology Co., Ltd. as the chairman of the board of directors
and had served as its president and director. Mr. Li received his bachelor’s degree in sociology from Peking University.
Mr. Lihong Qin is our co-founder and has served as our director and our president since our inception. Prior to joining us, Mr.
Qin served as chief marketing officer and executive director at Longfor Properties Co., Ltd. (HKEX: 960), a leading company involved
in property development and investment in China, from 2008 to 2014. He also served as deputy general manager at Anhui Chery
Automobile Sales and Service Company from 2005 to 2008, as senior consultant and project manager at Roland Berger Strategy
Consultants from 2003 to 2005. Mr. Qin received his bachelor’s degree and a master’s degree in law from Peking University in 1996 and
1999, respectively, and a master’s degree in public policy from Harvard University in 2001.
Mr. Feng Shen joined our company in December 2017, and currently serves as our executive vice president and chairman of
quality management committee. Mr. Shen worked in several senior executive management roles, such as president of Polestar China and
global chief technology officer at Polestar, president at Volvo Cars China R&D Company, vice president of Volvo Cars Asia-Pacific
Operation, and chairman at China-Sweden Traffic Safety Research Center from 2010 to 2017. Prior to that, Mr. Shen served in various
roles, including powertrain manager and six-sigma quality management master, at Ford Motor Company (NYSE: F) from 1999 to 2010
in the United States and China. Mr. Shen received a bachelor’s degree in mathematics and mechanics and a master’s degree in applied
mechanics from Fudan University in 1984 and 1987, respectively. He also received a doctoral degree in mechanical engineering from
Auburn University in 1996.
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Mr. Xin Zhou joined our company in April 2015. He has served as the chairman of product committee since 2017, and currently
serves as our executive vice president. Prior to joining our company, Mr. Zhou served as executive director at Qoros Automotive Co.,
Ltd. from September 2009 to April 2015. Prior to that, he was the engagement manager of McKinsey & Co. from April 2007 to August
2009, and executive director of Lear Corp. (NYSE: LEA) from May 1998 to April 2007. From 1995 to 1998, Mr. Zhou worked at
General Motors China Inc. Mr. Zhou received a bachelor’s degree in applied science from Fudan University in 1992 and a master’s
degree in business administration from China Europe International Business School in 2008.
Mr. Wei Feng has served as our Chief Financial Officer since November 2019. Mr. Feng serves as an independent non-executive
director of TUHU Car Inc. (HKEX: 9690). Prior to joining our company, Mr. Feng served as managing director and head of the auto and
auto parts research team at China International Capital Corporation. Prior to that, Mr. Feng served as an industry analyst at Everbright
Securities Co. Ltd. from 2010 to 2013. Mr. Feng’s career also includes more than five years’ working experience within the ZF (China)
Investment Co., Ltd. where he participated in numerous corporate matters. Mr. Feng received his bachelor’s degree in engineering from
the Department of Automotive Engineering at Tsinghua University, and his joint master’s degree in automotive system engineering from
RWTH Aachen University in Germany and Tsinghua University in China.
Mr. Ganesh V. Iyer joined our company in April 2016. He has served as the chief executive officer of NIO U.S. since December
2018. Mr. Iyer has over 32 years of experience delivering results in various industries including autonomous technology, hi-tech,
manufacturing, and telecom. Mr. Iyer worked as vice president of Information Technology at Tesla Inc. (Nasdaq: TSLA) until 2016. Prior
to Tesla, where he served as vice president of Information Technology, Mr. Iyer joined VMWare (NYSE: VMW) in 2010 and held senior
information technology leadership roles at VMWare. Prior to VMWare, Mr. Iyer served as director of information technology at Juniper
Networks (NYSE: JNPR) and WebEx and worked in consulting primarily at Electronic Data Systems. Mr. Iyer received a bachelor’s
degree in chemical engineering from the University of Calicut in India.
Mr. Hai Wu has served as our director since July 2016. Mr. Wu has served as a managing partner of Cenova Capital since May
2019. He has extensive experience in investments and management. Prior to Cenova Capital, Mr. Wu served as an executive director of
China at Temasek Holdings Advisors (Beijing) Co., Ltd. since April 2014. Prior to that, Mr. Wu was the chief executive officer at
Ramaxel Technology (Shenzhen) Limited from April 2012 to February 2014 and a managing director at CITIC Private Equity Funds
Management Co., Ltd. from March 2010 to May 2012. Prior to that, Mr. Wu had served at Beijing Branch office of McKinsey &
Company for more than ten years and was appointed as the global director and managing partner until February 2010. He also served as
a non-executive director of COFCO Meat Holdings Limited (HKEX: 1610) from September 2015 to December 2017. He received a
bachelor’s degree in physiology from Peking University, a master’s degree in business administration from the Johnson School of
Management, Cornell University and a doctoral degree in biomedical science from Rutgers University.
Mr. Denny Ting Bun Lee has served as our independent director since September 2018. Mr. Lee currently serves as the chairman
of the audit committees and an independent non-executive director of the boards of New Oriental Education & Technology Group Inc.
(NYSE: EDU; HKEX: 9901) and Jianpu Technology Inc. (NYSE: JT), which are listed on the New York Stock Exchange. From April
2002 to June 2022, Mr. Lee served as a director of NetEase, Inc., formerly known as NetEase.com, Inc., which is listed on the Nasdaq
Global Select Market (Nasdaq: NTES) and the Hong Kong Stock Exchange (HKEX: 9999). He was the chief financial officer of
NetEase.com, Inc. from April 2002 to June 2007 and its financial controller from November 2001 to April 2002. Prior to joining
NetEase.com, Mr. Lee worked in the Hong Kong office of KPMG for more than ten years. Mr. Lee graduated from the Hong Kong
Polytechnic University with a professional diploma in accounting and is a member of The Hong Kong Institute of Certified Public
Accountants and The Chartered Association of Certified Accountants.
Ms. Yu Long has served as our director since July 2021. Ms. Long currently serves as the Founding and Managing Partner of
BAI Capital. She also serves as a member of Bertelsmann Group Management Committee and the governor of China Venture Capital and
Private Equity Association. Formerly, Ms. Long was the chief executive officer of Bertelsmann China Corporate Center and the
managing partner of Bertelsmann Asia Investments. Prior to that, she was a Principal at Bertelsmann Digital Media Investments. She
joined the international media, services, and education company via the Bertelsmann Entrepreneurs Program in 2005. Ms. Long is a
member of the World Economic Forum’s Young Global Leaders Advisory Council and its Global Agenda Council on the Future of
Media, Entertainment & Information and was a member of the Stanford Graduate School of Business Advisory Council from May 2015
to May 2021. Ms. Long serves as an independent director on the board of directors of Tapestry Inc. (NYSE: TPR, its portfolio includes
Coach, Stuart Weitzman and Kate Spade) and an independent non-executive director of the boards of the Hongkong and Shanghai
Banking Corporation Limited. Ms. Long received a bachelor’s degree in electrical engineering from University of Electronic Science and
Technology in China and an MBA from Stanford Graduate School of Business.
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Mr. Yonggang Wen has served as our director since November 2023. Mr. Wen currently serves as a Full Professor and
President’s Chair of Computer Science and Engineering at Nanyang Technological University, Singapore. He is a Fellow of the Institute
of Electrical and Electronics Engineers (IEEE, the world’s largest technical professional organization), a Fellow of Singapore Academy
of Engineering, and a Distinguished Member of Association for Computing Machinery. He also serves as the Director of the Centre for
Computational Technologies in Finance, and has been the Associate Provost (Graduate Education) and Dean of Graduate College at
Nanyang Technological University since January 2024. Mr. Wen has served as a non-executive director of Red Dot Analytics Pte Ltd in
Singapore since 2016. His career has been marked by pioneering work in applying learning-based techniques to system prototyping and
performance optimization for large-scale networked computer systems. He has received numerous awards for his contributions, including
the 2020 IEEE Industrial Technical Excellence Award, the 2019 Nanyang Research Award and the 2016 Nanyang Award in Innovation
and Entrepreneurship. Professor Wen also has a strong record of leadership in academic and research roles, including serving as the Chair
for IEEE ComSoc Multimedia Communication Technical Committee from 2014 to 2016 and the Editor in Chief of IEEE Transactions on
Multimedia currently. Professor Wen received his PhD in electrical engineering and computer science from Massachusetts Institute of
Technology in 2008.
Mr. Eddy Georges Skaf has served as our director since February 2024. Mr. Skaf has held the position of chief investment
officer at CYVN Holdings L.L.C. since May 2023. He has also been a director of Foreight Limited and Forseven Limited since June
2023, and a director of CYVN Investments RSC Ltd. since July 2023. Previously, from August 2019 to May 2023, Mr. Skaf served as a
senior advisor to Digital Infrastructure at Mubadala. Before this, he served as the chief strategy officer at Emirates Integrated Telecom
Company (du) from August 2017 to May 2019. Mr. Skaf received his bachelor’s degree in computer and communication engineering
from American University of Beirut in 1995, and his master’s degree of business administration in business administration and
management and master’s degree of science in management information systems from Boston University in 2000.
Mr. Nicholas Paul Collins has served as our director since February 2024. Mr. Collins has served as the chief executive officer
of Forseven Limited since January 2024. Prior to this role, Mr. Collins worked at Jaguar Land Rover from March 2015 to December
2023 in various capacities, including a director of both Jaguar Land Rover Limited and Jaguar Land Rover Holdings Limited, and an
executive director of vehicle programs at Jaguar Land Rover Limited. Mr. Collins began his career in the automotive industry in 1993
and has extensive experience in global product development, product and business strategy, and vehicle development and launch across
Ford Motor Company and Jaguar Land Rover. Mr. Collins received his master’s degree in mechanical engineering from University of
Nottingham in 1998, and an MBA from Henley Management College in 2004.
B. Compensation
For the year ended December 31, 2023, we paid an aggregate of approximately US$3.1 million in cash to our directors and
executive officers. For share incentive grants to our directors and executive officers, see “—Stock Incentive Plans.” We have not set
aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our PRC
subsidiaries and the VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her
pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with each of our executive officers. Under these agreements, each of our
executive officers is employed for a specified time period. For the executive officers who joined our company prior to September 2018,
we may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of such executive officer,
such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or
misconduct or a failure to perform agreed duties. In such case of termination, we will provide severance payments to the executive
officer as expressly required by applicable law of the jurisdiction where the executive officer is based.
Each executive officer has agreed to hold, both during and after the termination or expiry of the executive officer’s employment
agreement, in strict confidence and not to use, except as required in the performance of the executive officer’s duties in connection with
the executive officer’s employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential
information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party that we
received and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all
inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with
us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights
for these inventions, designs and trade secrets.
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In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term
of the executive officer’s employment and typically for one year following the last date of employment. Specifically, each executive
officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive
officer in the executive officer’s capacity as a representative of us for the purpose of doing business with such persons or entities that will
harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our
competitors, or engage, whether as principal, partner, licensor or otherwise, with any of our competitors, without our express consent; or
(iii) seek directly or indirectly, to solicit the services of any of our employees who we employed on or after the date of the executive
officer’s termination, or in the year preceding such termination, without our express consent.
We have also entered into indemnification agreements with each of our directors and each of our executive officers who joined
our company prior to September 2018. Under these agreements, we agree to indemnify our directors and executive officers against
certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of
our company.
Stock Incentive Plans
We adopted share incentive plans in 2015, 2016, 2017, 2018 and 2024, which we refer to as the 2015 Plan, the 2016 Plan, the
2017 Plan, the 2018 Plan and the 2024 Plan, respectively. The 2018 Plan expired on December 31, 2023. All of the others remain
effective. The terms of the 2015 Plan, the 2016 Plan and the 2017 Plan are substantially similar, and the terms of the 2018 Plan and the
2024 Plan are substantially similar. The purpose of our stock incentive plans is to attract and retain the best available personnel, to
provide additional incentives to our employees, directors and consultants and to promote the success of our business. Our board of
directors believes that our long-term success is dependent upon our ability to attract and retain superior individuals who, by virtue of
their ability and qualifications, make important contributions to our business.
The maximum numbers of Class A ordinary shares which may be issued pursuant to all awards are 46,264,378 under the 2015
Plan, 18,000,000 under the 2016 Plan and 33,000,000 under the 2017 Plan. The maximum number of shares available for issuance
pursuant to all awards under the 2018 Plan was initially 23,000,000 Class A ordinary shares, and the amount automatically increased at
the beginning of each new year by the number of shares representing 1.5% of the then total issued and outstanding share capital of our
company as of the end of the prior year during the term of the 2018 Plan. The maximum number of shares available for issuance pursuant
to all awards under the 2024 Plan was initially 19,288,470 Class A ordinary shares, and the amount automatically increases at the
beginning of each new year by the number of shares representing 1.2% of the then total issued and outstanding share capital of our
company as of the last day of the immediately preceding fiscal year during the term of the 2024 Plan. In addition, any awards not granted
under an earlier plan when it terminates are automatically added to the 2024 Plan. As of February 29, 2024, awards to purchase an
aggregate amount of 123,804,348 Class A ordinary shares under the 2015 Plan, the 2016 Plan, the 2017 Plan, the 2018 Plan and the 2024
Plan had been granted and were outstanding, excluding awards that were forfeited or cancelled after the grant dates.
The following paragraphs describe the principal terms of the 2015 Plan, the 2016 Plan and the 2017 Plan.
Types of Awards. These three plans permit the awards of options, restricted shares, restricted share units, share appreciation
rights, dividend equivalent right or other right or benefit under each plan.
Plan Administration. Our board of directors or a committee of one or more members of the board of directors or officers
administer these three plans. The committee or the full board of directors, as applicable, will determine the grantees to receive awards,
the type and number of awards to be granted to each grantee, and the terms and conditions of each award grant.
Award Agreement. Awards granted under these three plans are evidenced by an award agreement that sets forth terms, conditions
and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s
employment or service terminates, and our authority to unilaterally or bilaterally amend the award.
Eligibility. We may grant awards to our employees, consultants and directors.
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Vesting Schedule. Except as approved by the plan administrator, options to be issued to the grantees under these three plans shall
be subject to a minimum four (4) year vesting schedule calling for vesting no earlier than the following, counting from the applicable
grant date or vesting commencement date (as determined by the plan administrator) with respect to the total issued options: the option
representing 25% of the Class A ordinary shares under the option shall vest at the end of the first twelve (12) months commencing from
the vesting commencement date, with remaining portions vesting in equal monthly installments over the next thirty-six (36) months.
Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the relevant award
agreement. Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator
determines at the time of grant. However, in the case of an option granted to an employee who, at the time the option is granted, owns
(or, pursuant to Section 424(d) of the U.S. Code, is deemed to own) stock representing more than 10% of the total combined voting
power of all classes of shares of us or our subsidiary or affiliate, the term of the option will not be longer than ten years from the date of
grant under the 2017 Plan, or five years from the date of grant under the 2015 Plan and the 2016 Plan.
Transfer Restrictions. Awards shall be transferable, subject to applicable laws, (i) by will and by the laws of descent and
distribution and (ii) during the lifetime of the grantee, to the extent and in the manner authorized by the plan administrator.
Notwithstanding the foregoing, the grantee may designate one or more beneficiaries of the grantee’s award in the event of the grantee’s
death on a beneficiary designation form provided by the plan administrator.
Termination and Amendment of the Plan. Unless terminated earlier or extended before expiration, each of these three plans has a
term of ten years. The board of directors has the authority to terminate, amend or modify any or all of these three plans; provided,
however, that no such amendment shall be made without the approval of our shareholders to the extent such approval is required by
applicable laws or provisions of the stock incentive plans. However, without the prior written consent of the grantee, no such action may
adversely affect any outstanding award previously granted pursuant to the plan.
The following paragraphs describe the principal terms of the 2018 Plan before its expiration on December 31, 2023.
Types of Awards. The 2018 Plan permits the awards of options, restricted shares or any other type of awards that the committee
grants.
Plan Administration. Our board of directors or a committee of one or more members of our board of directors shall administer
the 2018 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and
number of awards to be granted to each participant, and the terms and conditions of each award grant.
Award Agreement. Awards granted under the 2018 Plan are evidenced by an award agreement that sets forth terms, conditions
and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s
employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Eligibility. We may grant awards to the employees, directors and consultants of our company. However, we may grant incentive
share options only to our employees, parent and subsidiaries.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award
agreement.
Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award
agreement. The vested portion of an option will expire if not exercised prior to the time as the plan administrator determines at the time
of its grant. However, the maximum exercisable term is five years from the date of a grant.
Transfer Restrictions. Awards may not be transferred in any manner by the grantee other than by will or the laws of descent and
distribution, except as otherwise determined by the plan administrator.
Termination and amendment. Unless terminated earlier, the 2018 Plan has a term of five years from January 1, 2019. Our board
of directors has the authority to amend or terminate the plan. However, no such action may adversely affect in any material way any
awards previously granted unless agreed by the grantee.
The following paragraphs describe the principal terms of the 2024 Plan.
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Types of Awards. The 2024 Plan permits the awards of options, restricted shares or any other type of awards that the committee
grants.
Plan Administration. Our board of directors or a committee of one or more members of our board of directors shall administer
the 2024 Plan. The committee or the full board of directors, as applicable, shall determine the participants to receive awards, the type and
number of awards to be granted to each participant, and the terms and conditions of each award grant.
Award Agreement. Awards granted under the 2024 Plan are evidenced by an award agreement that sets forth terms, conditions
and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s
employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Eligibility. We may grant awards to the employees, directors and consultants of our company. However, we may grant incentive
share options only to our employees, parent and subsidiaries.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award
agreement.
Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award
agreement. The vested portion of an option will expire if not exercised prior to the time as the plan administrator determines at the time
of its grant. However, the maximum exercisable term is ten years from the date of a grant.
Transfer Restrictions. Awards may not be transferred in any manner by the grantee other than by will or the laws of descent and
distribution, except as otherwise determined by the plan administrator.
Termination and amendment. Unless terminated earlier, the 2024 Plan has a term of five years from February 7, 2024. Our board
of directors has the authority to amend or terminate the plans. However, no such action may adversely affect in any material way any
awards previously granted unless agreed by the grantee.
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The following table summarizes, as of February 29, 2024, the awards granted under the 2015 Plan, the 2016 Plan, the 2017
Plan, the 2018 Plan and the 2024 Plan to several of our executive officers, excluding awards that were forfeited or cancelled after the
relevant grant dates.
Name
Bin Li
Lihong Qin
Xin Zhou
Denny Ting Bun Lee
Hai Wu
Feng Shen
Wei Feng
Ganesh V Iyer
Yu Long
Yonggang Wen
Eddy Georges Skaf
Nicholas Paul Collins
Total
Class A Ordinary
Shares Underlying
Options and
Restricted Share
Units
15,000,000
*
*
*
*
*
*
*
*
*
*
*
26,639,608
Exercise Price
(US$/Share**)
Date of Expiration
February 29, 2028
April 1, 2030
February 27, 2028
January 31, 2028
September 24, 2026
April 1, 2030
February 27, 2028
January 31, 2028
May 29, 2026
September 25, 2019
February 28, 2018
February 1, 2018
Date of Grant
2.55 March 1, 2018
N/A March 5, 2020
2.39 April 2, 2020
2.55
2.55
N/A March 5, 2020
N/A August 31, 2023
2.05
2.39 April 2, 2020
2.55
2.55
N/A March 5, 2020
N/A August 31, 2023
N/A September 12, 2018
N/A August 13, 2020
N/A September 12, 2020
3.61 May 29, 2019
N/A June 10, 2021
N/A November 3, 2023
1.8 December 31, 2017
September 25, 2019
February 28, 2018
February 1, 2018
December 30, 2027
September 24, 2026
April 1, 2030
January 31, 2028
2.05
2.39 April 2, 2020
2.55
N/A March 5, 2020
N/A August 31, 2023
1.8 November 18, 2019 November 17, 2026
February 1, 2018
April 1, 2030
May 28, 2027
September 24, 2026
May 2, 2026
February 29, 2028
April 1, 2030
September 25, 2019
April 2, 2020
2.39
3.98 May 29, 2020
N/A March 5, 2020
N/A August 31, 2023
2.05
0.27 May 3, 2016
2.55 March 1, 2018
2.39 April 2, 2020
N/A August 31, 2023
N/A July 12, 2021
N/A November 3, 2023
N/A November 3, 2023
N/A February 7, 2024
N/A February 7, 2024
* Less than one percent of our total outstanding shares.
As of February 29, 2024, non-executive officers and other grantees as a group held awards to purchase 98,713,648 Class A
ordinary shares of our company. The exercise prices of the options outstanding as of February 29, 2024 ranged from US$0.1 to US$48.45
per share.
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C. Board Practices
Board of Directors
The board of directors of our company, or the board, consists of eight directors. A director is not required to hold any shares in
our company by way of qualification. A director may vote with respect to any contract, proposed contract or arrangement in which he is
interested provided (a) such director has declared the nature of his interest at the earliest meeting of the board at which it is practicable
for him to do so, either specifically or by way of a general notice and (b) if such contract or arrangement is a transaction with a related
party, such transaction has been approved by the audit committee. The directors may exercise all the powers of our company to borrow
money, mortgage our company’s undertaking, property and uncalled capital, and issue debentures or other securities whenever money is
borrowed or as security for any obligation of our company or of any third party. None of our non-executive directors has a service
contract with us that provides for benefits upon termination of service.
Committees of the Board of Directors
We have established three committees under the board: an audit committee, a compensation committee and a nominating and
ESG committee. We have adopted a charter (as amended from time to time) for each of the three committees. Each committee’s members
and functions are described below.
Audit Committee. Our audit committee consists of Denny Ting Bun Lee, Hai Wu and Yu Long. Denny Ting Bun Lee is the
chairman of our audit committee. We have determined that Denny Ting Bun Lee, Hai Wu and Yu Long satisfy the “independence”
requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange
Act. We have determined that Denny Ting Bun Lee qualifies as an “audit committee financial expert.” The audit committee oversees our
accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is
responsible for, among other things:
● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by
the independent auditors;
● reviewing with the independent auditors any audit problems or difficulties and management’s response;
● discussing the annual audited financial statements with management and the independent auditors;
● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps
taken to monitor and control major financial risk exposures;
● reviewing and approving all proposed related party transactions;
● meeting separately and periodically with management and the independent auditors; and
● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness
of our procedures to ensure proper compliance.
Compensation Committee. Our compensation committee consists of Hai Wu, Denny Ting Bun Lee and Bin Li. Hai Wu is the
chairman of our compensation committee. We have determined that Hai Wu and Denny Ting Bun Lee satisfy the “independence”
requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee
assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors
and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is
deliberated. The compensation committee is responsible for, among other things:
● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer
and other executive officers;
● reviewing and recommending to the board for determination with respect to the compensation of our non-employee
directors;
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● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and
● selecting any compensation consultant, legal counsel or other adviser only after taking into consideration all factors to that
person’s independence from management.
Nominating and ESG Committee. Our nominating and ESG committee consists of Yu Long, Hai Wu and Denny Ting Bun Lee.
Yu Long is the chairperson of our nominating and ESG committee. Hai Wu, Denny Ting Bun Lee and Yu Long satisfy the
“independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating
and ESG committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the
board and its committees. The nominating and ESG committee is responsible for, among other things:
● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;
● reviewing annually with the board the current composition of the board with regards to characteristics such as
independence, knowledge, skills, experience and diversity;
● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the
committees of the board;
● advising the board periodically with regard to significant developments in the law and practice of corporate governance as
well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of
corporate governance and on any remedial action to be taken;
● providing advice on ESG matters to management, and discussing with management and approving, or recommending to
the board for approval, our company’s initiatives, objectives, strategies and targets for ESG matters; and
● reviewing and monitoring our company’s progress toward achieving approved ESG objectives and targets.
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty to act honestly, and a duty to act
in good faith. The directors must act bona fide in what they consider to be in our best interests. Our directors must also exercise their
powers only for a proper purpose. Our directors also have a duty to act with skills they actually possess and exercise the care and
diligence that would be displayed by a reasonable director in comparable circumstances. It was previously considered that a director need
not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge
and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill
and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must
ensure compliance with our thirteenth amended and restated memorandum and articles of association, as amended and restated from time
to time, and the class rights vested thereunder in the holders of the shares. Our directors owe their fiduciary duties to our company and
not to our company’s individual shareholders, and it is our company which has the right to seek damages if a duty owed by our directors
is breached. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed
by our directors is breached.
Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The
functions and powers of our board of directors include, among others:
● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such
meetings;
● declaring dividends and other distributions;
● appointing officers and determining the term of office of the officers;
● exercising the borrowing powers of our company and mortgaging the property of our company; and
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● approving the transfer of shares in our company, including the registration of such shares in our share register.
Terms of Directors and Officers
Our directors are not subject to a term of office (unless there is any written agreement between our company and such director)
and hold office until such time as they are removed from office by ordinary resolution of the shareholders or by the board pursuant to our
thirteenth amended and restated memorandum and articles of association. The office of a director shall be vacated if, among other things,
the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) resigns his office by notice in writing
to our company; or (iii) dies or is found to be or becomes of unsound mind. In addition, for so long as our Class A ordinary shares are
listed on the Hong Kong Stock Exchange, our independent directors are subject to retirement by rotation at least once every three years
and eligible for re-election at our annual general meeting.
Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of
directors.
D. Employees
As of December 31, 2021, 2022 and 2023, we had 15,204, 26,763 and 32,820 full-time employees. The following table sets
forth the numbers of our employees categorized by function as of December 31, 2023.
User experience (sales and marketing and service)
Product and software development
Manufacturing
General administration
Total number of employees
As of December 31, 2023
17,172
11,222
2,231
2,195
32,820
Our employees have set up labor unions in China according to the related Chinese labor law. To date, we have not experienced
any labor strike, and we consider our relationship with our employees to be good.
We provide competitive level of salary and other employee benefits to our employees. Every employee beneficially owns shares
in our company. We provide employees with a wide range of benefits, including but not limited to employees’ commercial insurance,
physical examinations, vocational training and holiday benefits. We aim to create a warm, safe and secure working environment for
everyone.
E. Share Ownership
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary
shares as of March 31, 2024 with respect to:
● each of our directors and executive officers; and
● each person known to us to own beneficially more than 5% of our ordinary shares.
The calculations in the table below are based on 2,087,029,186 ordinary shares outstanding as of March 31, 2024, comprising of
1,938,529,186 Class A ordinary shares (excluding 10,722,037 Class A ordinary shares issued and reserved for future issuance upon the
exercising or vesting of awards granted under our stock incentive plans) and 148,500,000 Class C ordinary shares.
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Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to
acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security.
These shares, however, are not included in the computation of the percentage ownership of any other person.
Directors and Executive Officers**:
Bin Li(1)
Lihong Qin
Feng Shen
Xin Zhou
Wei Feng
Ganesh V. Iyer(2)
Hai Wu(3)
Denny Ting Bun Lee(4)
Yu Long(5)
Yonggang Wen(6)
Eddy Georges Skaf(7)
Nicholas Paul Collins(8)
All Directors and Executive Officers as a Group
Principal Shareholders:
Founder vehicles(9)
CYVN Investments RSC Ltd(10)
Tencent entities(11)
* Less than 1% of our total outstanding shares.
Class A
ordinary
shares
beneficially
owned
Class C
ordinary
shares
beneficially
owned
Total
ordinary
shares
beneficially
owned
% of
beneficial
ownership
% of
aggregate
voting
power†
30,467,776
*
*
*
*
*
*
*
*
—
—
—
50,797,273
148,500,000
—
—
—
—
—
—
—
—
—
—
—
148,500,000
178,967,776
*
*
*
*
*
*
*
*
—
—
—
199,317,273
8.5
*
*
*
*
*
*
*
*
—
—
—
9.5
16,967,776
418,833,157
124,112,015
148,500,000
165,467,776
— 418,833,157
— 124,112,015
7.9
20.1
5.9
38.5
*
—
*
—
*
—
—
—
—
—
—
38.9
38.5
13.4
3.9
** Except where otherwise disclosed in the footnotes below, the business address of all the directors and executive officers is Building
19, No. 1355, Caobao Road, Minhang District, Shanghai, People’s Republic of China.
† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power
beneficially owned by such person or group by the voting power of all of our Class A and Class C ordinary shares as a single class.
Each holder of our Class A ordinary shares is entitled to one vote per share and each holder of our Class C ordinary shares is entitled
to eight votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class C ordinary shares vote
together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law.
(1) Represents (i) 13,500,000 Class A ordinary shares issuable to Mr. Bin Li upon exercise of options within 60 days of March 31, 2024,
(ii) 89,013,451 Class C ordinary shares held by Originalwish Limited, a British Virgin Islands company wholly owned by Mr. Bin
Li, (iii) 26,454,325 Class C ordinary shares held by mobike Global Ltd., a British Virgin Islands company wholly owned by Mr. Bin
Li, and (iv)16,967,776 Class A ordinary shares and 33,032,224 Class C ordinary shares held by NIO Users Limited, a holding
company controlled by NIO Users Trust, which is under the control of Mr. Bin Li, among which 14,967,776 Class A ordinary shares
and 33,032,224 Class C ordinary shares were held on record by NIO Users Limited and 2,000,000 Class A ordinary shares were held
on record by NIO Users Community Limited, a British Virgin Islands company wholly owned by NIO Users Limited.
(2) The business address of Mr. Iyer is 3200 North First Street, San Jose, CA 95134.
(3) The business address of Mr. Wu is No. 53, Gaoyou Road, Xuhui District, Shanghai, People’s Republic of China.
(4) The business address of Mr. Lee is No. 4 Dianthus Road, Yau Yat Chuen, Kowloon, Hong Kong.
(5) The business address of Ms. Long is Unit 1610, 16th Floor, West Tower, Genesis Beijing, 8 Xinyuan South Road, Chaoyang District,
Beijing 100027, People’s Republic of China.
(6) The business address of Mr. Wen is N4-02c-95, Nanyang Avenue, Singapore 639798.
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(7) The business address of Mr. Skaf is Building No. 51B, Al Bateen Executive Airport, Abu Dhabi, UAE.
(8) The business address of Mr. Collins is Suite 1, 7th Floor 50 Broadway, London, United Kingdom, SW1H 0DB.
(9) Represents (i) 89,013,451 Class C ordinary shares held by Originalwish Limited, a British Virgin Islands company wholly owned by
Mr. Bin Li, (ii) 26,454,325 Class C ordinary shares held by mobike Global Ltd., a British Virgin Islands company wholly owned by
Mr. Bin Li, and (iii) 16,967,776 Class A ordinary shares and 33,032,224 Class C ordinary shares held by NIO Users Limited, a
holding company controlled by NIO Users Trust, which is under the control of Mr. Bin Li, among which ordinary shares 14,967,776
Class A ordinary shares and 33,032,224 Class C ordinary shares were held on record by NIO Users Limited and 2,000,000 Class A
ordinary shares were held on record by NIO Users Community Limited, a British Virgin Islands company wholly owned by NIO
Users Limited. The registered address of Originalwish Limited and mobike Global Ltd. is Sertus Chambers, P.O. Box 905, Quastisky
Building, Road Town, Tortola, British Virgin Islands. The registered address of NIO Users Limited is Maples Corporate Services
(BVI) Limited, Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.
(10) Represents 418,833,157 Class A ordinary shares held by CYVN Investments RSC Ltd, according to the statement on Schedule
13D/A filed on February 28, 2024 by CYVN Investments RSC Ltd. CYVN Investments RSC Ltd is a restricted scope company
incorporated in the Abu Dhabi Global Market, Abu Dhabi, United Arab Emirates, and is wholly-owned by the Government of Abu
Dhabi represented by the Abu Dhabi Department of Finance. The principal business address of CYVN Investments RSC Ltd is
Office at 9th Floor, Level 9, Al Khatem Tower, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab
Emirates.
(11) Based on the statement on Schedule 13D/A filed on June 23, 2023 jointly by (i) Tencent Holdings Limited, (ii) Image Frame
Investment (HK) Limited, and (iii) Huang River Investment Limited, pursuant to which, as of June 23, 2023, Image Frame
Investment (HK) Limited held 47,251,193 Class A ordinary shares, a wholly-owned subsidiary of Tencent Holdings Limited held
146,578 Class A ordinary shares, and Huang River Investment Limited beneficially owned 76,714,244 Class A ordinary shares.
Image Frame Investment (HK) Limited, Huang River Investment Limited and Tencent Holdings Limited are collectively referred to
in this annual report as the Tencent entities. Huang River Investment Limited is a company incorporated in the British Virgin
Islands, and Image Frame Investment (HK) Limited is a company incorporated in Hong Kong. Each of Image Frame Investment
(HK) Limited and Huang River Investment Limited is beneficially owned and controlled by Tencent Holdings Limited, a Cayman
Islands company. The registered office of Huang River Investment Limited is Vistra Corporate Services Centre, Wickhams Cay II,
Road Town, Tortola, VG1110, British Virgin Islands. The registered address of Image Frame Investment (HK) Limited is 29/F Three
Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong. The principal business address of Tencent Holdings Limited is Level
29, Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong.
As of March 31, 2024, to our knowledge, 378,564,881 of our Class A ordinary shares were held by one record holder in the
United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program. The number of beneficial
owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the
United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Currently, our ordinary shares consist of Class A ordinary shares and Class C ordinary shares. Holders of Class A ordinary
shares are entitled to one vote per share, and holders of Class C ordinary shares are entitled to eight votes per share. We issued Class A
ordinary shares represented by our ADSs in our initial public offering in September 2018. Holders of our Class C ordinary shares may
choose to convert their respective Class C ordinary shares into the same number of Class A ordinary shares at any time. Class A ordinary
shares are not convertible into Class C ordinary shares under any circumstance. See “Item 10. Additional Information—B. Memorandum
and Articles of Association” for a more detailed description of our ordinary shares.
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”
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B. Related Party Transactions
Contractual Arrangements with The VIEs and Their Shareholders
See “Item 4. Information on the Company—C. Organizational Structure.”
Shareholders Agreement and Registration Rights
We entered into a shareholders agreement and a right of first refusal and co-sale agreement on November 10, 2017 with our
shareholders.
The shareholders agreement and right of first refusal and co-sale agreement (i) provided for certain special rights, including
right of first refusal, co-sale rights and preemptive rights and (ii) contained provisions governing board of directors and other corporate
governance matters. These special rights and corporate governance provisions automatically terminated upon the closing of the initial
public offering of our ADSs on September 12, 2018.
Pursuant to our shareholders agreement dated November 10, 2017, we have granted certain registration rights to those
shareholders who are parties to that agreement. Set forth below is a description of the registration rights granted under the agreement.
Demand Registration Rights. Holders holding 10% or more of the voting power of the then outstanding registrable securities
held by all holders are entitled to request in writing that we effect a registration statement for any or all of the registrable securities of the
initiating holders. We have the right to defer filing of a registration statement for a period of not more than 90 days if our board of
directors determines in good faith judgment that filing of a registration statement in the near future will be materially detrimental to us or
our shareholders, but we cannot exercise the deferral right on any one occasion or more than once during any twelve-month period and
cannot register any other securities during such period. We are not obligated to effect more than two demand registrations. Further, if the
registrable securities are offered by means of an underwritten offering, and the managing underwriter advises us that marketing factors
require a limitation of the number of securities to be underwritten, the underwriters may decide to exclude up to 75% of the registrable
securities requested to be registered but only after first excluding all other equity securities from the registration and underwritten
offering, provided that the number of shares to be included in the registration on behalf of the non-excluded holders is allocated among
all holders in proportion to the respective amounts of registrable securities requested by such holders to be included.
Registration on Form F-3 or Form S-3. Any holder is entitled to request us to file a registration statement on Form F-3 or
Form S-3 if we qualify for registration on Form F-3 or Form S-3. The holders are entitled to an unlimited number of registrations on
Form F-3 or Form S-3 so long as such registration offerings are in excess of US$5.0 million. We have the right to defer filing of a
registration statement for a period of not more than 60 days if our board of directors determines in good faith judgment that filing of a
registration statement in the near future will be materially detrimental to us or our shareholders, but we cannot exercise the deferral right
on any one occasion or more than once during any twelve-month period and cannot register any other securities during such period.
Piggyback Registration Rights. If we propose to register for our own account any of our equity securities, or for the account of
any holder, other than current shareholders, of such equity securities, in connection with the public offering, we shall offer holders of our
registrable securities an opportunity to be included in such registration. If the underwriters advise in writing that market factors require a
limitation of the number of registrable securities to be underwritten, the underwriters may exclude up to 75% of the registrable securities
requested to be registered but only after first excluding all other equity securities (except for securities sold for the account of our
company) from the registration and underwriting, provided that the number of shares to be included in the registration on behalf of the
non-excluded holders is allocated among all holders in proportion to the respective amounts of registrable securities requested by such
holders to be included.
Expenses of Registration. We will bear all registration expenses, other than the underwriting discounts and selling commissions
applicable to the sale of registrable securities, incurred in connection with registrations, filings or qualification pursuant to the
shareholders agreement.
Termination of Obligations. We have no obligation to effect any demand, piggyback, Form F-3 or Form S-3 registration upon
the earlier of (i) September 14, 2028 and (ii) with respect to any holder, the date on which such holder may sell without registration, all
of such holder’s registrable securities under Rule 144 of the Securities Act in any 90-day period.
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In addition, on June 20, 2023, we entered into a registration rights agreement with CYVN Holdings L.L.C. On July 11, 2023,
CYVN Holdings L.L.C. assigned all of its rights, interests and obligations under the registration rights agreement to its affiliate, CYVN
Investments, which executed a counterpart to the registration rights agreement and agreed to be treated as an investor under the
registration rights agreement. Pursuant to the registration rights agreement, subject to certain exceptions, we are obligated to prepare and
file with the SEC (i) no later than the 30th day immediately following the six-month anniversary of the closing of the share subscription
agreement entered into by us and CYVN Holdings L.L.C., i.e., January 19, 2024, and (ii) at any time thereafter, no later than the 30th day
immediately following a written demand by CYVN Investments (in case we do not already have an effective registration statement on
Form F-3 on file with the SEC) a registration statement for an offering to be made on a continuous basis pursuant to Rule 415 of the
Securities Act, registering the resale from time to time by CYVN Investments of all of the registrable securities, which include all Class
A ordinary shares purchased pursuant to the share subscription agreement, and the stock purchase agreement entered into by and among
CYVN Holdings L.L.C. and Image Frame Investment (HK) Limited dated June 20, 2023, and any shares purchased by CYVN
Investments following the closing of the share subscription agreement, then held by CYVN Investments that are not covered by an
effective registration statement. If our board of directors determines in good faith that it would be materially detrimental to our company
or our members to effect such a registration, we have the right to defer such registration, not more than once in any 12-month period, for
a period of up to 60 days. Additionally, pursuant to the registration rights agreement, in the event that we propose to register any of our
equity securities under the Securities Act for our own account or for the account of any holder of our equity securities, CYVN
Investments is entitled to certain piggyback registration rights. These registration rights terminate on the date that CYVN Investments
owns less than 3% of our Class A ordinary shares outstanding.
Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification
Agreements.”
Share Option Grants
See “Item 6. Directors, Senior Management and Employees—B. Compensation—Stock Incentive Plans.”
Other Transactions with Related Parties
In 2021, 2022 and 2023, we provided sales of goods to our affiliates, including Wuhan Weineng Battery Assets Co., Ltd.,
Beijing Yiche Interactive Advertising Co., Ltd., Shanghai Weishang Business Consulting Co., Ltd., Kunshan Siwopu Intelligent
Equipment Co., Ltd., and Hefei Chuangwei Information Consultation Co., Ltd., and we received total sales of goods of RMB4,139.2
million, RMB3,105.9 million, and RMB1,457.9 million (US$205.3 million), respectively.
In 2021, 2022 and 2023, we received advertising and IT support services from Beijing Yiche Interactive Advertising Co., Ltd.,
Tianjin Boyou Information Technology Co., Ltd. and Beijing Bit Ep Information Technology Co., Ltd., and we incurred expenses of
marketing and advertising services of RMB5.2 million, RMB9.0 million, and RMB7.8 million (US$1.1 million), respectively. Beijing
Yiche Interactive Advertising Co., Ltd., Tianjin Boyou Information Technology Co., Ltd. and Beijing Bit Ep Information Technology
Co., Ltd. are controlled by our principal shareholders.
In 2021, 2022 and 2023, we provided property management, administrative support, design and research and development
services to our affiliates and companies controlled by our principal shareholders, including Wuhan Weineng Battery Assets Co., Ltd.,
Nanjing Weibang Transmission Technology Co., Ltd. and Beijing Weixu Business Consulting Co., Ltd., and we received total service
income of RMB57.9 million, RMB122.7 million, and RMB167.2 million (US$23.5 million), respectively.
In 2021, 2022 and 2023, we paid a total of RMB89.3 million, nil and nil, respectively, for the cost of manufacturing
consignment to Suzhou Zenlead XPT New Energy Technologies Co., Ltd., or Suzhou Zenlead. Suzhou Zenlead was an affiliate of ours in
2021. In February 2022, Suzhou Zenlead paid a consideration of RMB46.6 million to us in exchange for the exemption from battery
warranty liabilities, and we disposed of our equity interests in Suzhou Zenlead. As a result, Suzhou Zenlead is no longer a related party
of our company as of the date of this annual report.
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In 2021, 2022 and 2023, we received research and development and maintenance services from Kunshan Siwopu Intelligent
Equipment Co., Ltd., Xunjie Energy (Wuhan) Co., Ltd., Wuhan Weineng Battery Assets Co., Ltd, Ningbo Meishan Free Trade Port
Weilai Xinneng Investment Management Co., Ltd., Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd., Beijing Welion
New Energy Technology Co., Ltd and paid a total service fees of RMB8.2 million, RMB136.4 million, and RMB242.2 million (US$34.1
million), respectively.
In 2021, 2022 and 2023, we paid a total of RMB1,157.7 million, RMB1,066.8 million, and RMB1,247.5 million (US$175.7
million), for purchase of property and equipment and raw material, to Kunshan Siwopu Intelligent Equipment Co., Ltd., Nanjing
Weibang Transmission Technology Co., Ltd. and Xunjie Energy (Wuhan) Co., Ltd.
In 2021, 2022 and 2023, we received a total of nil, RMB1.0 million, and RMB5.6 million (US$0.8 million) for sale of raw
material, property and equipment from Wuhan Weineng Battery Assets Co., Ltd.
In November 2021, we acquired from Ningbo Meishan Bonded Port Area Weilan Investment Co., Ltd., certain equity interests
in companies associated with NIO Capital for RMB50.0 million.
In February 2024, we entered into a technology license agreement with Forseven Limited, a subsidiary of CYVN Holdings
L.L.C. Pursuant to the agreement, we will grant a non-exclusive and non-transferrable worldwide license to Forseven to use certain of
our existing and future technical information, technical solutions, software and intellectual property rights related to or subsisting in our
smart electric vehicle platforms. We will receive technology license fees comprising a non-refundable, fixed upfront license fee plus
royalties determined based on the future sales of licensed products by Forseven.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
We have appended consolidated financial statements filed as part of this annual report.
Legal Proceedings
From time to time, we may be involved in legal proceedings in the ordinary course of our business. Between March and July
2019, several securities class action lawsuits were filed against us, certain of our directors and officers, our underwriters in the IPO and
our process agent. Some of these actions have been withdrawn, transferred, consolidated or dismissed. One action commenced during the
aforementioned time period remains pending, under the caption In re NIO, Inc. Securities Litigation, 1:19-cv-01424, in the U.S. District
Court for the Eastern District of New York (E.D.N.Y.). The plaintiffs in this case allege, in sum and substance, that our statements in the
registration statement and/or other public statements were false or misleading and in violation of the U.S. federal securities laws. The
Court denied our motion to dismiss in August 2021, and granted plaintiffs’ motion for class certification in August 2023. Discovery is
ongoing.
Separately, between August and September 2022, two complaints were filed against us, our CEO and our CFO in the federal
district court for the Southern District of New York (S.D.N.Y.), in the actions captioned Saye v. NIO Inc. et al., Case No. 1:22-cv-07252
(S.D.N.Y.) and Bohonok v. NIO Inc. et al., Case No. 1:22-cv-07666 (S.D.N.Y.). Relying on a short seller report (see “Item 3. Key
Information—D. Risk Factors—Risks Related to Our ADSs and Class A Ordinary Shares – Techniques employed by short sellers may
drive down the market price of our ADSs”), these complaints allege that certain of our public disclosures between August 2020 and July
2022 contained false statements or omissions in violation of the Exchange Act. On December 14, 2022, the court consolidated the two
actions and appointed a lead plaintiff. Briefing on our motion to dismiss was completed on July 31, 2023. The Court’s decision on the
motion to dismiss is pending.
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For those of the abovementioned class actions that remain pending, we are currently unable to estimate the potential loss, if any,
associated with the resolution of such lawsuits. We are defending the actions vigorously. See “Item 3. Key Information—D. Risk Factors
—Risks Related to our Business and Industry—We and certain of our directors and officers have been named as defendants in
shareholder class action lawsuits, which could have a material adverse impact on our business, financial condition, cash flows and
reputation” for further details.
Dividend Policy
The payment of dividends is at the discretion of our board of directors, subject to our thirteenth amended and restated
memorandum and articles of association. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend
may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under
Cayman Islands law, namely that our company may only pay dividends out of profits or the share premium account, and provided that in
no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary
course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and
earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of
directors may deem relevant.
We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend
to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
We are a holding company incorporated in the Cayman Islands. We may rely on dividends paid by our subsidiaries in China for
our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC
subsidiaries to pay dividends to us. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We
may rely on distributions by our PRC subsidiaries for our financing requirements, and any limitation on our PRC subsidiaries to make
payments to us could have a material and adverse effect on our business.”
If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the ordinary shares
underlying our ADSs to the depositary, as the registered holder of such ordinary shares, and the depositary then will pay such amounts to
our ADS holders in proportion to the ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit
agreements, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S.
dollars.
B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our
audited consolidated financial statements included in this annual report.
ITEM 9. THE OFFER AND LISTING
A. Offering and Listing Details
Our ADSs, each representing one Class A ordinary share, have been listed on the NYSE since September 12, 2018 under the
symbol “NIO.”
Our Class A ordinary shares have been listed on the Hong Kong Stock Exchange, by way of introduction, since March 10, 2022
under the stock code “9866.”
Our Class A ordinary shares have been listed on the Singapore Exchange, by way of introduction, since May 20, 2022 under the
stock code “NIO.”
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Currently, our ordinary shares consist of Class A ordinary shares and Class C ordinary shares. Holders of Class A ordinary
shares are entitled to one vote per share, and holders of Class C ordinary shares are entitled to eight votes per share. See “Item 3. Key
Information—D. Risk Factors—Risks Related to Our ADSs and Class A Ordinary Shares—Our dual-class voting structure will limit the
holders of our Class A ordinary shares and ADSs to influence corporate matters, provide certain shareholders of ours with substantial
influence and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and
ADSs may view as beneficial.”
B. Plan of Distribution
Not applicable.
C. Markets
Our ADSs, each representing one Class A ordinary share, have been listed on the NYSE since September 12, 2018 under the
symbol “NIO.”
Our Class A ordinary shares have been listed on the Hong Kong Stock Exchange, by way of introduction, since March 10, 2022
under the stock code “9866.”
Our Class A ordinary shares have been listed on the Singapore Exchange, by way of introduction, since May 20, 2022 under the
stock code “NIO.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
We are an exempted company incorporated under the laws of the Cayman Islands and our affairs are governed by our current
thirteenth amended and restated memorandum and articles of association, the Companies Act, and the common law of the Cayman
Islands.
The following are summaries of material provisions of our thirteenth amended and restated memorandum and articles of
association which took effect in August 2022, insofar as they relate to the material terms of our ordinary shares.
Objects of Our Company
Under our thirteenth amended and restated memorandum and articles of association, the objects of our company are unrestricted
and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.
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Ordinary Shares
Our authorized share capital is US$1,000,000 divided into 4,000,000,000 shares comprising of (i) 2,632,030,222 Class A
ordinary shares of a par value of US$0.00025 each, (ii) 148,500,000 Class C ordinary shares of a par value of US$0.00025 each and (iii)
1,219,469,778 shares of a par value of US$0.00025 each of such class or classes (however designated) as our board of directors may
determine in accordance with our thirteenth amended and restated memorandum and articles of association. All of our issued and
outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registered form, and are issued when
registered in our register of members. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their
ordinary shares. Under our thirteenth amended and restated memorandum and articles of association, our company may not issue bearer
shares.
Class of ordinary shares
Holders of Class A ordinary shares and Class C ordinary shares shall at all times vote together as one class on all resolutions
submitted to a vote by the holders of ordinary shares. Each Class A ordinary share shall entitle the holder thereof to one (1) vote on all
matters subject to vote at general meetings of our company, and each Class C ordinary share shall entitle the holder thereof to eight (8)
votes on all matters subject to vote at general meetings of our company. During the Relevant Period, our company shall have only one
class of shares that each of such share entitles the holder thereof to more than one (1) vote on all matters subject to vote at general
meetings of our company, which is Class C ordinary shares.
Conversion
Each Class C ordinary share is convertible into one (1) Class A ordinary share at any time at the option of the holder thereof. In
no event shall Class A ordinary shares be convertible into Class C ordinary shares.
Upon any sale, transfer, assignment or disposition of any Class C ordinary share by a shareholder to any person who is not an
existing shareholder of Class C ordinary shares and any affiliate of such shareholder or NIO Users Trust, or upon a change of ultimate
beneficial ownership of any Class C ordinary share to any person who is not an existing shareholder of Class C ordinary shares and any
affiliate of such shareholder or NIO Users Trust, each such Class C ordinary share shall be automatically and immediately converted into
one (1) Class A ordinary share.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, subject to our
thirteenth amended and restated memorandum articles of association. In addition, our shareholders may by ordinary resolution declare a
dividend, but no dividend may exceed the amount recommended by our directors. In either case, under the laws of the Cayman Islands,
our company may pay a dividend out of either profits or share premium account, provided that in no circumstances may a dividend be
paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.
Voting Rights
Voting at any shareholders’ meeting is by show of hands unless a poll is demanded. Each Class A ordinary share shall entitle the
holder thereof to one (1) vote on all matters subject to vote at general meetings of our company, and each Class C ordinary share shall
entitle the holder thereof to eight (8) votes on all matters subject to vote at general meetings of our company. A poll may be demanded by
the chairman of such meeting or any one or more shareholders present in person or by proxy at the meeting. However, during the
Relevant Period, each Class A ordinary share and each Class C ordinary share shall entitle its holder to one vote on a poll at a general
meeting in respect of a resolution on any of the following matters: (i) any amendment of our memorandum or articles of association,
including the variation of the rights attached to any class of shares; (ii) the appointment, election or removal of any independent non-
executive director; (iii) the appointment or removal of the auditors; or (iv) the voluntary liquidation or winding-up of our company.
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An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the
votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than three-
fourths of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important
matters such as a change of name or making changes to our thirteenth amended and restated memorandum and articles of association.
Holders of our ordinary shares may effect certain changes by ordinary resolution, including increasing the amount of our authorized
share capital, consolidating all or any of our share capital into shares of larger amount than our existing shares, sub-dividing our shares or
any of them into shares of an amount smaller than that fixed by our thirteenth amended and restated memorandum and articles of
association, and cancelling any unissued shares. Both ordinary resolution and special resolution may also be passed by a unanimous
written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our thirteenth amended and
restated memorandum and articles of association.
Appointment and Removal of Directors
Our board of directors may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting,
(i) appoint any person as a director, to fill a casual vacancy on the board or, (ii) subject to the maximum size of the board of directors
being nine (9) directors, appoint any person as an addition to the existing board. Directors may be removed by ordinary resolution of our
shareholders. Subject to the code, rules and regulations applicable to us as a result of our listing in the United States applicable to the
composition of the board and qualifications and appointment of directors, (i) NIO Users Trust shall be entitled to nominate one (1)
director to the board; and (ii) in the event that Mr. Bin Li is not an incumbent director and the board is composed of no less than six (6)
directors, NIO Users Trust shall be entitled to nominate one (1) extra director to the Board. Such director nomination right of NIO Users
Trust were ceased to be effective at the First AGM, and shall only be restored when our company is no longer listed on the Hong Kong
Stock Exchange. In addition, for so long as CYVN Investments and its affiliates beneficially own no less than 15% of our total issued
and outstanding share capital, CYVN Investments is entitled to nominate two directors; if the beneficial ownership of CYVN
Investments and its affiliates decreases to less than 15% but remains above 5%, CYVN Investments retains the right to nominate one
director. The foregoing director nomination rights of CYVN Investments are subject to compliance with the Company’s articles and
requirements of relevant stock exchanges.
General Meetings of Shareholders
As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general
meetings. However, our thirteenth amended and restated memorandum and articles of association provide that we shall in each financial
year hold a general meeting as our annual general meeting in addition to any other meeting in that year and shall specify the meeting as
such in the notice calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors.
Shareholders’ general meetings may be convened by the chairman of board of directors or a majority of our board of directors.
Advance notice of at least twenty - one calendar days is required for the convening of our annual general shareholders’ meeting and
advance notice of at least fourteen calendar days is required for any other general meeting of our shareholders. A quorum required for
any general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all
votes attaching to all of our shares in issue and entitled to vote.
The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide
shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles
of association. Our thirteenth amended and restated memorandum and articles of association provide that upon the requisition of
shareholders representing in aggregate not less than one-tenth of all votes (on a one vote per share basis) attaching to the outstanding
shares of our company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the
resolutions so requisitioned to a vote at such meeting, and such shareholders may add resolutions to the meeting agenda.
Transfer of Ordinary Shares
Subject to the restrictions in our thirteenth amended and restated memorandum and articles of association set out below, any of
our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in writing and in the usual or common
form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully
paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
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● the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and
such other evidence as our board of directors may reasonably require to show the right of the transferor to make the
transfer;
● the instrument of transfer is in respect of only one class of ordinary shares;
● the instrument of transfer is properly stamped, if required;
● in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does
not exceed four; and
● a fee of such maximum sum as the New York Stock Exchange or the Hong Kong Stock Exchange may determine to be
payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was
lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the New York Stock Exchange or the Hong Kong
Stock Exchange, be suspended and the register closed at such times and for such periods as our board of directors may from time to time
determine; provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in
any year as our board of directors may determine.
Liquidation
On the winding-up of our company, if the assets available for distribution among our shareholders shall be more than sufficient
to repay the whole of the share capital at the commencement of the winding-up, the surplus shall be distributed amongst our shareholders
in proportion to the par value of the shares held by them at the commencement of the winding-up, subject to a deduction from those
shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets
available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by
our shareholders in proportion to the par value of the shares held by them.
Calls on Shares and Forfeiture of Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice
served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and
remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these
shares, on such terms and in such manner as may be determined by our board of directors or by special resolution of our shareholders.
Our company may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors
or by an ordinary resolution of our shareholders. Under the Companies Act, the redemption or repurchase of any share may be paid out
of our company’s profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of
capital (including share premium account and capital redemption reserve) if our company can, immediately following such payment, pay
its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or
repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if
the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.
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Variations of Rights of Shares
If at any time, our share capital is divided into different classes of shares, the rights attached to any class of shares (unless
otherwise provided by the terms of issue of the shares of that class), may only be varied with the consent in writing of holders of three-
fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the
shares of that class by holders of three-fourths of the issued shares of that class present in person or by proxy and voting at such meeting.
The rights conferred upon the holders of the shares of any class issued shall not, subject to any rights or restrictions for the time being
attached to the shares of that class, be deemed to be varied by, inter alia, the creation, allotment or issue of further shares ranking pari
passu with such existing class of shares.
Issuance of Additional Shares
Our thirteenth amended and restated memorandum of association authorizes our board of directors to issue additional ordinary
shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.
Our thirteenth amended and restated memorandum of association also authorizes our board of directors, at any time after the
Relevant Period, to establish from time to time one or more series of preference shares and to determine, with respect to any series of
preference shares, the terms and rights of that series, including:
● the designation of the series;
● the number of shares of the series;
● the dividend rights, dividend rates, conversion rights and voting rights; and
● the rights and terms of redemption and liquidation preferences.
At any time after the Relevant Period, our board of directors may issue preference shares without action by our shareholders to
the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.
Inspection of Books and Records
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of
shareholders or our corporate records (except for our thirteenth amended and restated memorandum and articles of association and our
register of mortgages and charges) except as conferred by law or authorized by the directors or by ordinary resolution.
However, as a company that is subject to the periodic reporting and other informational requirements of the Exchange Act, we
file annual reports with the SEC that include annual audited financial statements. See “Item 10. Additional Information—H. Documents
on Display.”
Changes in Capital
Our shareholders may from time to time by ordinary resolution:
● increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall
prescribe;
● consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
● sub-divide our existing shares, or any of them into shares of a smaller amount; provided that in the subdivision the
proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in
case of the share from which the reduced share is derived; or
● cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person
and diminish the amount of our share capital by the amount of the shares so cancelled.
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Our shareholders may, by special resolution and subject to confirmation by the Grand Court of the Cayman Islands on an
application by our company for an order confirming such reduction, reduce our share capital and any capital redemption reserve in any
manner authorized by law.
Anti-Takeover Provisions
Some provisions of our thirteenth amended and restated memorandum and articles of association may discourage, delay or
prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:
● at any time after the Relevant Period, authorize our board of directors to issue preference shares in one or more series and
to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or
action by our shareholders; and
● at any time after the Relevant Period, limit the ability of shareholders to requisition and convene general meetings of
shareholders.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our thirteenth
amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the
best interests of our company.
Exempted Company
We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between
ordinary resident companies, ordinary non-resident companies and exempted companies. Any company that is registered in the Cayman
Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The
requirements for an exempted company are essentially the same as for an ordinary resident/non-resident company except that an
exempted company:
● does not have to file an annual return detailing its shareholders with the Registrar of Companies of the Cayman Islands;
● is not required to open its register of members for inspection;
● does not have to hold an annual general meeting;
● may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 30 years
in the first instance);
● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
● may register as a limited duration company; and
● may register as a segregated portfolio company.
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares
of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or
improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Differences in Corporate Law
The Companies Act (As Revised) is derived, to a large extent, from the older Companies Acts of England but does not follow
recent United Kingdom statutory enactments, and accordingly there are significant differences between the Companies Act (As Revised)
and the current Companies Act of England.
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In addition, the Companies Act (As Revised) differs from laws applicable to United States corporations and their shareholders.
Set forth below is a summary of certain significant differences between the provisions of the Companies Act (As Revised) applicable to
us and the laws applicable to United States corporations and companies incorporated in the State of Delaware.
Mergers and Similar Arrangements
The Companies Act (As Revised) permits mergers and consolidations between Cayman Islands companies and between
Cayman Islands companies and non-Cayman Islands companies. For these purposes, (1) “merger” means the merging of two or more
constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company
and (2) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of
the undertaking, property and liabilities of such companies in the consolidated company.
In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of
merger or consolidation, which must then be authorized by (1) a special resolution of the shareholders of each constituent company, and
(2) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger
or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or
surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of
merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or
consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their
shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures,
subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these
statutory procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a
resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary
to be merged unless that member agrees otherwise. For this purpose, a company is a “parent” of a subsidiary if it holds issued shares that
together represent at least 90% of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement
is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or
consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the
Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the
procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any
other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that
the merger or consolidation is void or unlawful.
Separate from the statutory provisions relating to mergers and consolidations, the Companies Act (As Revised) also contains
statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that
the arrangement is approved by (a) 75% in value of the shareholders or class of shareholders, as the case may be, or (b) a majority in
number representing 75% in value of the creditors or each class of creditors, as the case may be, with whom the arrangement is to be
made, that are, in each case, present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The
convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a
dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the Grand Court can be
expected to approve the arrangement if it determines that:
● the statutory provisions as to the required majority vote have been met;
● the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide
without coercion of the minority to promote interests adverse to those of the class;
● the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of
his interest; and
● the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.
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The Companies Act (As Revised) also contains a statutory power of compulsory acquisition which may facilitate the “squeeze
out” of dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares
affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period,
require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the
Grand Court of the Cayman Islands, but this is unlikely to succeed in the case of an offer which has been so approved unless there is
evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved, the dissenting shareholder would have
no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware
corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits
In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a
derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be
of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles
(namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a
class action against or derivative actions in the name of our company to challenge actions where:
● a company acts or proposes to act illegally or ultra vires;
● the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority
vote that has not been obtained; and
● an act which constitutes a fraud against the minority where the wrongdoer are themselves in control of the company.
Indemnification of Directors and Executive Officers and Limitation of Liability
The Companies Act does not limit the extent to which a company’s memorandum and articles of association may provide for
indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be
contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our
thirteenth amended and restated memorandum and articles of association provide that we shall indemnify our officers and directors
against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer,
other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our company’s business or affairs
(including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions,
including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer
in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the
Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law
for a Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons
with additional indemnification beyond that provided in our thirteenth amended and restated memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons
controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders.
This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with
the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of,
and disclose to shareholders, all material information reasonably available regarding a significant transaction.
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The duty of loyalty requires that a director acts in a manner he or she reasonably believes to be in the best interests of the
corporation. He or she must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director
and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director,
officer or controlling shareholder and not shared by the shareholders generally.
In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that
the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one
of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural
fairness of the transaction and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the
company and therefore it is considered that he or she owes the following duties to the company:
● a duty to act in good faith in the best interests of the company,
● a duty not to make a personal profit based on his or her position as director (unless the company permits him or her to do
so),
● a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest
or his or her duty to a third party, and
● a duty to exercise powers for the purpose for which such powers were intended.
A director of a Cayman Islands company owes to the company a duty of care, diligence and skill. It was previously considered
that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a
person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard
with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent
by amendment to its certificate of incorporation. Cayman Islands law and our currently effective memorandum and articles of association
provide that our shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of all
shareholders who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of
shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board
of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special
meetings.
The Companies Act (As Revised) does not provide shareholders with an express right to put forth any proposal before a general
meeting of the shareholders. However, the Companies Act (As Revised) may provide shareholders with limited rights to requisition a
general meeting but such rights must be stipulated in the articles of association of the company.
Any one or more shareholders holding not less than one-tenth of the voting rights on a one vote per share basis, in the share
capital of the company at the date of deposit of the requisition shall at all times have the right, by written requisition to the board of
directors or the secretary of the company, to require an extraordinary general meeting to be called by the board of directors for the
transaction of any business specified in such requisition.
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Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for election of directors is not permitted unless the
corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of
minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is
entitled on a single director, which increases the shareholder’s voting power with respect to electing such director.
There are no prohibitions relating to cumulative voting under the laws of the Cayman Islands, but our thirteenth amended and
restated memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any
less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for
cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
Under our thirteenth amended and restated memorandum and articles of association, directors may be removed with or without
cause, by an ordinary resolution of our shareholders. A director will also cease to be a director if he or she (i) becomes bankrupt or makes
any arrangement or composition with his or her creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office
by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive
meetings and our board resolves that his office be vacated; or (v) is removed from office pursuant to any other provision of our thirteenth
amended and restated articles of association.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations
whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of
incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following
the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which
owns or owned 15% or more of the target’s outstanding voting shares within the past three years.
This statute has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all
shareholders would not be treated equally. The statute does not apply if, prior to the date on which such shareholder becomes an
interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person
becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any
acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the
Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and
its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and
for a proper purpose and not with the effect of constituting a fraud on the minority shareholders.
Restructuring
A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on
the grounds that the company:
(a)
is or is likely to become unable to pay its debts; and
(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act,
the law of a foreign country or by way of a consensual restructuring.
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The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with
such powers and to carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment
of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the
appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than
criminal proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be
passed, and no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding
the presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who
has security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and
without reference to the restructuring officer appointed.
Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must
be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board
of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by
the board.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special
resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The
court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and
equitable to do so.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a
majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law
and our thirteenth amended and restated memorandum and articles of association, if our share capital is divided into more than one class
of shares, we may vary the rights attached to any class with the sanction of a special resolution passed by a majority of not less than
three-fourths of the votes cast at a separate meeting of the holders of the shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a
majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
Under Cayman Islands law, our thirteenth amended and restated memorandum and articles of association may only be amended
with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders
There are no limitations imposed by our thirteenth amended and restated memorandum and articles of association on the rights
of non-resident or foreign shareholders to hold or exercise voting rights on our shares.
In addition, there are no provisions in our thirteenth amended and restated memorandum and articles of association governing
the ownership threshold above which shareholder ownership must be disclosed.
Inspection of Books and Records
Under the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose inspect or make
copies of the corporation’s stock ledger, list of shareholders and other books and records.
Shareholders of Cayman Islands exempted companies like us have no general right under Cayman Islands law to inspect
corporate records (other than the memorandum and articles of association, the register of mortgages and charges and any special
resolutions passed by our shareholders) or obtain copies of the list of shareholders of these companies. However, we intend to provide
our shareholders with annual reports containing audited financial statements.
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C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in
“Item 4. Information on the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” or
elsewhere in this annual report.
D. Exchange Controls
See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations on Foreign Exchange.”
E. Taxation
The following discussion of Cayman Islands, PRC and United States federal income tax consequences of an investment in our
ADSs or ordinary shares is based upon laws and interpretations thereof in effect as of the date of this annual report, all of which are
subject to change or differing interpretation, possibly with retroactive effect. This summary does not deal with all possible tax
consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under U.S. state and local tax laws
or under the tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of China and the United States.
Cayman Islands Taxation
The Cayman Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift
tax. There are no other taxes likely to be material to holders of our ADSs or ordinary shares levied by the government of the Cayman
Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction
of the Cayman Islands. The Cayman Islands are not party to any double tax treaties that are applicable to any payments made to or by our
company. There are no exchange control regulations under Cayman Islands law.
Payments of dividends and capital in respect of our Class A ordinary shares and ADSs will not be subject to taxation in the
Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A ordinary shares
or ADSs, nor will gains derived from the disposal of our Class A ordinary shares or ADSs be subject to Cayman Islands income or
corporation tax.
People’s Republic of China Taxation
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a
“de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the
rate of 25% on its global income. The implementation rules define the term “de facto management body” as the body that exercises full
and substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In
April 2009, the State Taxation Administration issued the Circular on Issues Relating to Identification of PRC-Controlled Overseas
Registered Enterprises as Resident Enterprises in Accordance With the De Facto Standards of Organizational Management, or Circular
82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that
is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or
PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the State
Taxation Administration’s general position on how the “de facto management body” test should be applied in determining the tax
resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or
a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China only if all of
the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating
to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC;
(iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or
maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. Further to
Circular 82, the State Taxation Administration issued the Bulletin on Promulgation of the Administrative Measures for Income Tax of
Chinese-Controlled Offshore-Incorporated Resident Enterprises (Trial Implementation), which took effect in September 2011, to provide
more guidance on the implementation of Circular 82. This bulletin provides for procedures and administration details of determination on
resident status and administration on post-determination matters.
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We believe that NIO Inc. is not a PRC resident enterprise for PRC tax purposes. NIO Inc. is not controlled by a PRC enterprise
or PRC enterprise group and we do not believe that NIO Inc. meets all of the conditions above. NIO Inc. is a company incorporated
outside the PRC. As a holding company, NIO Inc.’s key assets are its ownership interests in its subsidiaries, and its key assets are
located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside
the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax
resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the
interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view
that is consistent with us.
If the PRC tax authorities determine that NIO Inc. is a PRC resident enterprise for enterprise income tax purposes, we may be
required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the
holders of our ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to a 10% PRC tax on
gains realized on the sale or other disposition of ADSs or Class A ordinary shares, if such income is treated as sourced from within the
PRC. It is unclear whether our non-PRC individual shareholders (including our ADS holders) would be subject to any PRC tax on
dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If
any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under
an applicable tax treaty. It is also unclear whether non-PRC shareholders of NIO Inc. would be able to claim the benefits of any tax
treaties between their country of tax residence and the PRC in the event that NIO Inc. is treated as a PRC resident enterprise. Pursuant to
the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment
in China, or has set up an organization or establishment but the income derived has no actual connection with such organization or
establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between
Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income,
the tax rate in respect to dividends paid by a PRC enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if
the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to STA Circular 81, a Hong Kong resident
enterprise must meet the following conditions, among others, in order to enjoy the reduced tax rate: (i) it must directly own the required
percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the
PRC resident enterprise throughout the 12 months prior to receiving the dividends. Furthermore, the Administrative Measures for Non-
Resident Enterprises to Enjoy Treatments under Treaties, which took effect in January 2020, require that non-resident enterprises must
obtain approval from the tax authority in order to enjoy the reduced tax rate. There are also other conditions for enjoying the reduced tax
rate according to other tax rules and regulations. Accordingly, our subsidiaries may be able to enjoy the 5% tax rate for the dividends it
receives from its PRC incorporated subsidiaries if they satisfy the conditions prescribed under STA Circular 81 and other tax rules and
regulations and obtain the approvals as required. However, according to STA Circular 81, if the tax authorities determine our transactions
or arrangements are for the primary purpose of enjoying a favorable tax treatment, the tax authorities may adjust the favorable tax rate on
dividends in the future.
Provided that our Cayman Islands holding company, NIO Inc., is not deemed to be a PRC resident enterprise, holders of our
ADSs and Class A ordinary shares who are not PRC residents will not be subject to PRC income tax on dividends that we distributed or
gains realized from the sale or other disposition of our shares or ADSs. Circular 7 further clarifies that, if a non-resident enterprise
derives income by acquiring and selling shares in an offshore listed enterprise in the public market, such income will not be subject to
PRC tax. However, there is uncertainty as to the application of Circular 7, we and our non-PRC resident investors may be at risk of being
required to file a return and being taxed under Circular 7 and we may be required to expend valuable resources to comply with Circular 7
or to establish that we should not be taxed under Circular 7. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing
Business in China—We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-
PRC holding companies.”
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United States Federal Income Taxation
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and
disposition of our ADSs or Class A ordinary shares by a U.S. Holder (as defined below) that acquires our ADSs and holds our ADSs as
“capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). This
discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive
effect. There can be no assurance that the Internal Revenue Service (the “IRS”) or a court will not take a contrary position. This
discussion, moreover, does not address the U.S. federal estate, gift, Medicare, minimum tax, and other non-income tax considerations or
any state, local and non-U.S. tax considerations, relating to the ownership or disposition of our ADSs or Class A ordinary shares. The
following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of
their individual circumstances or to persons in special tax situations such as:
● banks and other financial institutions;
● insurance companies;
● pension plans;
● cooperatives;
● regulated investment companies;
● real estate investment trusts;
● broker-dealers;
● traders that elect to use a mark-to-market method of accounting;
● certain former U.S. citizens or long-term residents;
● tax-exempt entities (including private foundations);
● holders who acquire their ADSs or Class A ordinary shares pursuant to any employee share option or otherwise as
compensation;
● investors that will hold their ADSs or Class A ordinary shares as part of a straddle, hedge, conversion, constructive sale or
other integrated transaction for U.S. federal income tax purposes;
● investors that have a functional currency other than the U.S. dollar;
● persons that actually or constructively own 10% or more of our stock (by vote or value); or
● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or
Class A ordinary shares through such entities.
All of the foregoing may be subject to tax rules that differ significantly from those discussed below.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular
circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our ADSs or Class A
ordinary shares.
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General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or Class A ordinary shares that is, for U.S.
federal income tax purposes:
● an individual who is a citizen or resident of the United States;
● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under
the law of the United States or any state thereof or the District of Columbia;
● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S.
persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be
treated as a U.S. person under the Code.
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ADSs
or Class A ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the
activities of the partnership. Partnerships holding our ADSs or Class A ordinary shares and their partners are urged to consult their tax
advisors regarding an investment in our ADSs or Class A ordinary shares.
For U.S. federal income tax purposes, a U.S. Holder of ADSs will generally be treated as the beneficial owner of the underlying
shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner.
Accordingly, deposits or withdrawals of Class A ordinary shares for ADSs will generally not be subject to U.S. federal income tax.
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any
taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more
of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce
or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized as passive
assets and the company’s goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among
other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a
proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or
indirectly, 25% or more (by value) of the stock.
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Although the law in this regard is not entirely clear, we treat the VIEs as being owned by us for U.S. federal income tax
purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with
these entities, and as a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were
determined, however, that we do not own the VIEs for U.S. federal income tax purposes, we may be treated as a PFIC for the current
taxable year and any subsequent taxable year.
Assuming that we are the owner of the VIEs for U.S. federal income tax purposes, and based upon our current and expected
income and assets, we do not believe that we were a PFIC for the taxable year ended December 31, 2023. However, no assurance can be
given that we will not be or become a PFIC in the current or future taxable years because the determination of whether we will be or
become a PFIC is a factual determination made annually that will depend, in part, upon the nature and composition of our income and
assets (in particular, the retention of substantial amounts of cash and investments). Fluctuations in the market price of our ADSs or Class
A ordinary shares may cause us to be classified as a PFIC for the current or future taxable years because the value of our assets for
purposes of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the
market price of our ADSs or Class A ordinary shares, which may be volatile. In particular, recent declines in the market price of the
ADSs and Class A ordinary shares increased our risk of becoming a PFIC. The market price of the ADSs and Class A ordinary shares
may continue to fluctuate considerably and, consequently, we cannot assure you of our PFIC status for any taxable year. Furthermore, the
composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances
where our passive income significantly increases relative to our non-passive income, or where we determine not to deploy significant
amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase.
If we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or Class A ordinary shares, the PFIC
rules discussed below under “—Passive Foreign Investment Company Rules” generally will apply to such U.S. Holder for such taxable
year, and unless the U.S. Holder makes certain elections, will apply in future years even if we cease to be a PFIC.
The discussion below under “—Dividends” and “—Sale or Other Disposition” is written on the basis that we will not be or
become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are
treated as a PFIC are discussed below under “—Passive Foreign Investment Company Rules.”
Dividends
Subject to the discussion below under “—Passive Foreign Investment Company Rules,” any cash distributions (including the
amount of any PRC tax withheld) paid on our ADSs or Class A ordinary shares out of our current or accumulated earnings and profits, as
determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend
income on the day actually or constructively received by the U.S. Holder, in the case of Class A ordinary shares, or by the depositary, in
the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any
distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on our ADSs or
Class A ordinary shares will not be eligible for the dividends received deduction allowed to corporations. A non-corporate U.S. Holder
will be subject to tax at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are
satisfied, including that (1) our ADSs are readily tradeable on an established securities market in the United States, or, in the event that
we are deemed to be a PRC resident enterprise under the PRC tax law, we are eligible for the benefit of the United States-PRC income
tax treaty (the “Treaty”), (2) we are neither a PFIC nor treated as such with respect to such a U.S. Holder (as discussed below) for the
taxable year in which the dividend was paid and the preceding taxable year, and (3) certain holding period requirements are met. We
expect our ADSs (but not our Class A ordinary shares) will be considered to be readily tradeable on the New York Stock Exchange,
which is an established securities market in the United States. There can be no assurance, however, that our ADSs will be considered
readily tradeable on an established securities market in later years.
In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “—People’s
Republic of China Taxation” above), we may be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we
pay on our Class A ordinary shares, regardless of whether such shares are represented by the ADSs, would be eligible for the reduced
rates of taxation described in the preceding paragraph.
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Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally
constitute passive category income. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible,
subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on
dividends received on our ADSs or Class A ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign
tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in
which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their
outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are urged to consult
their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Sale or Other Disposition
Subject to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize
capital gain or loss upon the sale or other disposition of ADSs or Class A ordinary shares in an amount equal to the difference between
the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or Class A ordinary shares. Any capital gain or
loss will be long-term if the ADSs or Class A ordinary shares have been held for more than one year and will generally be U.S.-source
gain or loss for U.S. foreign tax credit purposes. Long-term capital gain of non-corporate U.S. Holders is generally eligible for a reduced
rate of taxation. In the event that gain from the disposition of the ADSs or Class A ordinary shares is subject to tax in the PRC, such gain
may be treated as PRC-source gain under the Treaty. Pursuant to Treasury Regulations, however, if a U.S. Holder is not eligible for the
benefits of the Treaty or does not elect to apply the Treaty, then such holder may not be able to claim a foreign tax credit arising from any
PRC tax imposed on the disposition of our ADSs or Class A ordinary shares. The deductibility of a capital loss may be subject to
limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a
disposition of our ADSs or Class A ordinary shares, including the availability of the foreign tax credit or deduction under their particular
circumstances, their eligibility for benefits under the Treaty and the potential impact of the Treasury Regulations.
Passive Foreign Investment Company Rules
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares, and
unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax
rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to
a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter,
the U.S. Holder’s holding period for the ADSs or Class A ordinary shares), and (ii) any gain realized on the sale or other disposition of
ADSs or Class A ordinary shares. Under the PFIC rules:
● the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or Class A
ordinary shares;
● the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first
taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;
● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in
effect for individuals or corporations, as appropriate, for that year; and
● an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax
attributable to each prior taxable year, other than a pre-PFIC year.
If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares and any of our
subsidiaries, the VIEs or any of the subsidiaries of the VIEs are also a PFIC, such U.S. Holder would be treated as owning a
proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged
to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries, the VIEs or any of the subsidiaries of
the VIEs.
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As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election
with respect to such stock, provided that such stock is regularly traded on a qualified exchange, as defined in applicable U.S. Treasury
regulations. For those purposes, our ADSs, but not our Class A ordinary shares, are traded on the New York Stock Exchange which is a
qualified exchange. We anticipate that our ADSs should qualify as being regularly traded, but no assurances may be given in this regard.
If a U.S. Holder makes this election, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the
excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii)
deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the
end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of
the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting
from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and
such corporation ceases to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above
during any period that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S.
Holder recognizes upon the sale or other disposition of our ADSs in a year when we are a PFIC will be treated as ordinary income and
any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously
included in income as a result of the mark-to-market election.
Because a mark-to-market election technically cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may
continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated
as an equity interest in a PFIC for U.S. federal income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if
available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described
above.
If a U.S. Holder owns our ADSs or Class A ordinary shares during any taxable year that we are a PFIC, the holder must
generally file an annual IRS Form 8621. You should consult your tax advisors regarding the U.S. federal income tax consequences of
owning and disposing of our ADSs or Class A ordinary shares if we are or become a PFIC.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we
are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than
four months after the close of each fiscal year. All information we file with the SEC can be obtained over the internet at the SEC’s
website at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and
content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
We will furnish Deutsche Bank Trust Company Americas, the depositary of our ADSs, with our annual reports, which will
include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all
notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The
depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all
record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.
In accordance with NYSE Rule 203.01, we will post this annual report on our website, http://ir.nio.com/. In addition, we will
provide hardcopies of our annual report to shareholders, including ADS holders, free of charge upon request.
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I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange Risk
We expect that, in the foreseeable future, the majority of our revenues will be denominated in RMB while our expenses are
denominated in RMB and other currencies. As a result, we are exposed to risk related to movements between the RMB and such other
currencies. In addition, the value of our ADSs and Class A ordinary shares will be affected by the exchange rate between U.S. dollar and
RMB because the value of our business is effectively denominated in RMB, while our Class A ordinary shares and the ADSs will be
traded in Hong Kong dollars and U.S. dollars, respectively. Furthermore, we have purchased certain financial products issued by banks,
the returns of which could also be affected by the exchange rate between RMB and other currencies.
The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China.
The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces
or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.
To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the
U.S. dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert
Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A ordinary shares or ADSs or for other
business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amounts
available to us.
Interest Rate Risk
Our exposure to interest rate risk relates primarily to the interest rates associated with the outstanding convertible notes we
issued and bank loans that bear floating interest rates. The interest rate risk may result from many factors, including, among others,
government monetary and tax policies, domestic and international economic and political considerations that are beyond our control. We
may incur additional loans or other financing facilities in the future. The objective of interest rate risk management is to minimize
financial costs and uncertainties associated with interest rate changes. We strive to effectively manage our interest rate risk by periodic
monitoring and responding to risk factors on a timely basis, improve the structure of long-term and short-term borrowings and maintain
the appropriate balance between loans with floating interest rates and fixed interest rates.
We are subject to interest rate sensitivity on our outstanding 2026 Notes, 2027 Notes, 2029 Notes and 2030 Notes. We account
for our convertible notes on an amortized cost basis and our recognized value of the convertible notes does not reflect changes in fair
value. Also, because convertible notes we have issued either bear interest at a fixed rate or bear no interest, we have not incurred
financial statement impact resulting from changes in interest rates. However, changes in market interest rates impact the fair value of the
convertible notes along with other variables such as our credit spreads and the market price and volatility of our ADSs and ordinary
shares. Increases in market interest rates would result in a decrease in the fair value of our outstanding convertible notes and decreases in
market interest rates would result in an increase in the fair value of our outstanding convertible notes. For information on the maturities
and other contractual terms of our convertible notes, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Cash Flows and Working Capital.”
With regard to interest rate sensitivity on our bank loans, we present the sensitivity analysis below based on the exposure to
interest rates for interest bearing bank loans with variable interest rates as of December 31, 2023. The analysis is prepared assuming that
those balances outstanding as of December 31, 2023 were outstanding for the whole financial year. A 1.0% increase or decrease which
represents our management’s assessment of the reasonably possible change in interest rates is used. Assuming no change in the
outstanding balance of our existing interest-bearing bank loans balances with floating interest rates as of December 31, 2023, a 1.0%
increase or decrease in each applicable interest rate would add or deduct RMB2.0 million (US$0.3 million) to our interest expense for the
year ended December 31, 2023. We have not used any derivative financial instruments to manage our interest risk exposure.
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In addition, we may from time to time invest in interest-earning instruments. Investments in both fixed rate and floating rate
interest-earning instruments carry certain interest rate risk associated with our investment return. Fixed rate securities may have their fair
market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if
interest rates fall.
Inflation
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for
December 2021, 2022 and 2023 were an increase of 1.5%, an increase of 1.8% and a decrease of 0.3%, respectively. Although we have
not been materially affected by inflation in the PRC in the past, we may be affected in the future by higher rates of inflation in the PRC.
In addition, as we expand our global presence and offer products and services to markets outside China, we may be affected by
inflationary pressures in Europe or the U.S. or other parts of the world.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Fees and Charges Our ADS holders May Have to Pay
Holders of our ADSs will be required to pay the following service fees to the depositary bank and certain taxes and
governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited
securities represented by any of ADSs held):
Service
● To any person to which ADSs are issued or to any person to which a distribution is made in
respect of ADS distributions pursuant to stock dividends or other free distributions of stock,
bonus distributions, stock splits or other distributions (except where converted to cash)
Fees
Up to US$0.05 per ADS issued
● Cancellation of ADSs, including the case of termination of the deposit agreement
● Distribution of cash dividends
● Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale
Up to US$0.05 per ADS cancelled
Up to US$0.05 per ADS held
Up to US$0.05 per ADS held
of rights, securities and other entitlements
● Distribution of ADSs pursuant to exercise of rights
● Distribution of securities other than ADSs or rights to purchase additional ADSs
● Depositary services
Up to US$0.05 per ADS held
Up to US$0.05 per ADS held
Up to US$0.05 per ADS held on
the applicable record
date(s) established by the
depositary bank
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Holders of our ADSs will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes
and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited
securities represented by any of your ADSs) such as:
● Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in
Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares).
● Expenses incurred for converting foreign currency into U.S. dollars.
● Expenses for cable, telex and fax transmissions and for delivery of securities.
● Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or
withholding taxes (i.e., when ordinary shares are deposited or withdrawn from deposit).
● Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit.
● Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory
requirements applicable to ordinary shares, deposited securities, ADSs and ADRs.
● Any applicable fees and penalties thereon.
The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers
(on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients)
delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees
payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the
depositary bank to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion
of distributable property to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank
charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of
the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date
ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees
through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and
custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn
charge their clients’ accounts the amount of the fees paid to the depositary banks.
In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreements, refuse the
requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS
holder.
The depositary may make payments to us or reimburse us for certain costs and expenses, by making available a portion of the
ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree
from time to time.
Fees and Other Payments Made by the Depositary to Us
Deutsche Bank Trust Company Americas, as the depositary, has agreed to reimburse us for certain expenses we incur that are
related to establishment and maintenance of the ADR program upon such terms and conditions as we and the depositary may agree from
time to time. The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR
program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. In 2023, we received an
after-tax reimbursement payment of US$29.1 million from the depositary.
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Conversion Between Class A Ordinary Shares in Hong Kong and ADSs
A.
Dealings and Settlement of Class A Ordinary Shares in Hong Kong
Our Class A ordinary shares are traded on the Hong Kong Stock Exchange in board lots of 10 Class A ordinary shares. Dealings
in our Class A ordinary shares on the Hong Kong Stock Exchange will be conducted in Hong Kong dollars.
The transaction costs of dealings in our Class A ordinary shares on the Hong Kong Stock Exchange include:
● Hong Kong Stock Exchange trading fee of 0.00565% of the consideration of the transaction, charged to each of the buyer
and seller;
● Securities and Futures Commission transaction levy of 0.0027% of the consideration of the transaction, charged to each of
the buyer and seller;
● AFRC Transaction Levy of 0.00015%, charged per side of the consideration of a transaction, collected for the Accounting
and Financial Reporting Council (AFRC);
● transfer deed stamp duty of HK$5.00 per transfer deed (if applicable), payable by the seller;
● ad valorem stamp duty at a total rate of 0.2% of the value of the transaction, with 0.1% payable by each of the buyer and
the seller;
● stock settlement fee, which is currently 0.002% of the gross transaction value, subject to a minimum fee of HK$2.00 and a
maximum fee of HK$100.00 per side per trade;
● brokerage commission, which is freely negotiable with the broker (other than brokerage commissions for IPO transactions
which are currently set at 1% of the subscription or purchase price and will be payable by the person subscribing for or
purchasing the securities); and
● charge by the Hong Kong share registrar between HK$2.50 to HK$20, depending on the speed of service (or such higher
fee as may from time to time be permitted under the Hong Kong Listing Rules), for each transfer of Class A ordinary
shares from one registered owner to another, each share certificate canceled or issued by it and any applicable fee as stated
in the share transfer forms used in Hong Kong.
Investors in Hong Kong must settle their trades executed on the Hong Kong Stock Exchange through their brokers directly or
through custodians. For an investor in Hong Kong who has deposited his or her Class A ordinary shares in his or her stock account or in
his or her designated Participant’s stock account of the Central Clearing and Settlement System established and operated by Hong Kong
Securities Clearing Company Limited, or CCASS, maintained with CCASS, settlement will be effected in CCASS in accordance with
the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. For an investor who holds the physical
certificates, settlement certificates and the duly executed transfer forms must be delivered to his or her broker or custodian before the
settlement date.
An investor may arrange with his or her broker or custodian on a settlement date in respect of his or her trades executed on the
Hong Kong Stock Exchange. Under the Hong Kong Listing Rules and the General Rules of CCASS and CCASS Operational Procedures
in effect from time to time, the date of settlement must be the second business day (a day on which the settlement services of CCASS are
open for use by CCASS Participants) following the trade date (T+2). For trades settled under CCASS, the General Rules of CCASS and
CCASS Operational Procedures in effect from time to time provided that the defaulting broker may be compelled to compulsorily buy-in
by HKSCC the day after the date of settlement (T+3), or if it is not practicable to do so on T+3, at any time thereafter. HKSCC may also
impose fines from T+2 onwards.
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B.
Conversion between Class A Ordinary Shares Trading in Hong Kong and ADSs
We have established a branch register of members in Hong Kong, or the Hong Kong share register, which are maintained by our
Hong Kong share registrar, Computershare Hong Kong Investor Services Limited. Our principal register of members, or the Cayman
share register, are maintained by our principal share registrar, Maples Fund Services (Cayman) Limited in the Cayman Islands.
Holders of Class A ordinary shares registered on the Hong Kong share register are able to exchange these Class A ordinary
shares into ADSs, and vice versa.
In connection with the listing of our Class A ordinary shares on the Hong Kong Stock Exchange, and to facilitate fungibility and
conversion between ADSs and Class A ordinary shares and trading between the NYSE and the Hong Kong Stock Exchange, we moved a
portion of our issued Class A ordinary shares from our register of members maintained in the Cayman Islands to our Hong Kong share
register. We are not under any obligation to maintain or increase the number of Class A ordinary shares on the Hong Kong share register
to facilitate any withdrawals of ADSs to convert into Class A ordinary shares listed on the Hong Kong Exchange.
C.
Converting Class A Ordinary Shares Trading in Hong Kong into ADSs
An investor who holds Class A ordinary shares registered in Hong Kong and who intends to convert them to ADSs to trade on
the NYSE must deposit or have his or her broker deposit the Class A ordinary shares with the depositary’s Hong Kong custodian,
Deutsche Bank AG, Hong Kong Branch, or the custodian, in exchange for ADSs.
A deposit of Class A ordinary shares trading in Hong Kong in exchange for ADSs involves the following procedures:
● If Class A ordinary shares have been deposited with CCASS, the investor must transfer the Class A ordinary shares to the
depositary’s account with the custodian within CCASS by following the CCASS procedures for transfer and submit and
deliver a duly completed and signed letter of transmittal to the custodian via his or her broker.
● If Class A ordinary shares are held outside CCASS, the investor must arrange to deposit his or her Class A ordinary shares
into CCASS for delivery to the depositary’s account with the custodian within CCASS, and must submit and deliver a duly
completed and signed letter of transmittal to the custodian via his or her broker.
● Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, if
applicable, and subject in all case to the terms of the deposit agreement, the depositary will register the corresponding
number of ADSs in the name(s) requested by an investor and will deliver the ADSs as instructed in the letter of transmittal.
For Class A ordinary shares deposited in CCASS, under normal circumstances, the above steps generally require two business
days, provided that the investor has provided timely and complete instructions. For Class A ordinary shares held outside CCASS in
physical form, the above steps may take 14 business days, or more, to complete. Temporary delays may arise. For example, the transfer
books of the depositary may from time to time be closed to ADS issuances. The investor will be unable to trade the ADSs until the
procedures are completed.
D.
Converting ADSs to Class A Ordinary Shares Trading in Hong Kong
An investor who holds ADSs fungible with the ADSs listed on the NYSE and who intends to convert his/her ADSs into Class A
ordinary shares that trade on the Hong Kong Stock Exchange must cancel the ADSs the investor holds and withdraw Class A ordinary
shares from our ADS program and cause his or her broker or other financial institution to trade such Class A ordinary shares on the Hong
Kong Stock Exchange.
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An investor that holds ADSs indirectly through a broker or other financial institution should follow the procedure of the broker
or financial institution and instruct the broker to arrange for cancelation of the ADSs to the depositary for cancelation, and transfer of the
underlying Class A ordinary shares from the depositary’s account with the custodian within the CCASS system to the investor’s Hong
Kong stock account. A cancellation fee of up to US$0.05 per ADS cancelled will apply.
For investors holding ADSs directly, subject to the applicable transfer restrictions, the following steps must be taken:
● To withdraw Class A ordinary shares from our ADS program, an investor who holds ADSs may turn in such ADSs at the
office of the depositary (and the applicable ADR(s) if the ADSs are held in certificated form), and send an instruction to
cancel such ADSs to the depositary.
● Upon payment or net of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or
fees, if applicable, and subject in all cases to the terms of the deposit agreement, the depositary will instruct the custodian
to deliver Class A ordinary shares underlying the canceled ADSs to the CCASS account designated by an investor.
● If an investor prefers to receive Class A ordinary shares outside CCASS, he or she must receive Class A ordinary shares in
CCASS first and then arrange for the withdrawal from CCASS. Investors can then obtain a transfer form signed by
HKSCC Nominees Limited (as the transferor) and register Class A ordinary shares in their own names with the Hong Kong
share registrar. For Class A ordinary shares to be received in CCASS, under normal circumstances, the above steps
generally require two business days, provided that the investor has provided timely and complete instructions.
For Class A ordinary shares to be received outside CCASS in physical form, the above steps may take 14 business days, or
more, to complete. The investor will be unable to trade the Class A ordinary shares on the Hong Kong Stock Exchange until the
procedures are completed.
Temporary delays may arise. For example, the transfer books of the depositary may from time to time be closed to ADS
cancelations. In addition, completion of the above steps and procedures for delivery for Class A ordinary shares in a CCASS account is
subject to there being a sufficient number of Class A ordinary shares on the Hong Kong share register to facilitate a withdrawal from the
ADS program directly into the CCASS system. We are not under any obligation to maintain or increase the number of Class A ordinary
shares on the Hong Kong share register to facilitate such withdrawals.
E.
Depositary Requirements
Before the depositary issues and delivers ADSs or permits withdrawal of Class A ordinary shares, the depositary may require:
● production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary;
● compliance with terms and procedures it may establish, from time to time, consistent with the deposit agreement, including
completion and presentation of transfer documents; and
● compliance with U.S. securities law requirements.
The depositary may refuse to deliver, transfer, or register issuances, transfers, and cancellations of ADSs generally when the
transfer books of the depositary or our Hong Kong share registrar or Cayman Islands share registrar are closed or at any time if the
depositary or we determine it advisable to do so, subject to such refusal complying with U.S. federal securities laws.
All costs attributable to the transfer of Class A ordinary shares to effect a withdrawal from or deposit of Class A ordinary shares
into our ADS program will be borne by the investor requesting the transfer. In particular, holders of Class A ordinary shares and ADSs
should note that the Hong Kong share registrar will charge between HK$2.50 to HK$20, depending on the speed of service (or such
higher fee as may from time to time be permitted under the Hong Kong Listing Rules), for each transfer of Class A ordinary shares from
one registered owner to another, each share certificate canceled or issued by it and any applicable fee as stated in the share transfer forms
used in Hong Kong. In addition, holders of Class A ordinary shares and ADSs must pay up to US$5.00 per 100 ADSs (or portion
thereof) for each issuance of ADSs and each cancelation of ADSs, as the case may be, in connection with the deposit of Class A ordinary
shares into, or withdrawal of Class A ordinary shares from, our ADS program.
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Conversion Between Class A Ordinary Shares in Singapore and ADSs
A.
Clearance and Settlement on the Singapore Exchange
Our Class A ordinary shares are traded on the Singapore Exchange in board lots of 10 Class A ordinary shares. Our Class A
ordinary shares that are traded on the Singapore Exchange will be cleared and settled under the scripless book-entry settlement system of
the Central Depository (Pte) Limited, or CDP, and all dealings in and transactions of the Class A ordinary shares through the Singapore
Exchange will be effected in accordance with the terms and conditions for the operation of securities accounts maintained by a depositor
with CDP and the terms and conditions for CDP to act as depository for foreign securities, as amended from time to time.
Under the Cayman Islands Companies Act, only a person who agrees to become a shareholder of a Cayman Islands company
and whose name is entered in the register of members of such company is considered a member with rights to attend and vote at
shareholders’ meetings of such company.
Our Class A ordinary shares trading on the Singapore Exchange are registered in the name of CDP or its nominee and held by
CDP for and on behalf of persons who maintain, either directly or through depository agents, securities accounts. Accordingly, under
Cayman Islands laws, a shareholder who maintains, either directly or through depository agents, securities accounts with CDP, or a NIO
CDP depositor, holding our Class A ordinary shares through CDP would not be recognized as our shareholder but may be appointed by
CDP as its proxy and have the direct right to attend and cast votes at such shareholders’ meetings. Shareholders are to take note that no
option shall be provided to shareholders for them to withdraw or deposit the Class A ordinary shares from or with the CDP in scrip form.
Accordingly, in the event that a NIO CDP depositor wishes to attend and vote at the shareholders’ meetings in his own name, the NIO
CDP depositor would have to first convert his Class A ordinary shares trading on the Singapore Exchange to ADS trading on the NYSE,
before cancelling the ADS with the ADS depositary, being Deutsche Bank Trust Company Americas, and receiving the corresponding
number of underlying Class A ordinary shares in certificated form in his own name from the Cayman share registrar. The NIO CDP
depositor must be a registered holder of Class A ordinary shares on the Cayman share register prior to the record date for the
shareholders’ meeting.
Our shareholders and ADS holders can convert and transfer shares trading on the Singapore Exchange to ADS trading on the
NYSE (and vice versa) only on a scripless basis, which involves a transfer of shares through the CDP electronic system between the CDP
accounts of the Singapore custodian of the ADS Depositary, namely DB Nominees (Singapore) Pte Ltd, and the shareholder (or his
depository agent). In this regard, the shares listed and traded on the Singapore Exchange shall be solely Class A ordinary shares
underlying ADSs which have been registered with the SEC (or exempted, as the case may be) and listed and traded on the NYSE, which
are unrestricted shares. For the avoidance of doubt, unrestricted shares which are not represented by ADSs will not be accepted for
deposit into CDP.
Our shareholders will not be given an option to deposit and/or withdraw the Class A ordinary shares from and/or with the CDP
in scrip form, or the Option, in order to ensure that the Class A ordinary shares trading on the Singapore Exchange are strictly
unrestricted shares. If our shareholders are given the Option, there may be a risk of shares which are unregistered with the SEC and/or
have yet to be approved by the NYSE for listing, which we refer to as the Restricted Shares, being deposited directly into CDP.
Thereafter, it would be practically impossible for our company and the ADS depositary to differentiate between unrestricted shares and
Restricted Shares once shares are admitted for trading in scripless form on the Singapore Exchange. Any conversion of Restricted Shares
into ADS, without registration with the SEC (or exemption, as the case may be) may further result in non-compliance with the U.S.
securities law.
Accordingly, the following mechanisms have been put in place to ensure that the Restricted Shares are not listed and traded on
the Singapore Exchange:
(1) Shareholders would not be given an option to deposit and/or withdraw the Class A ordinary shares from and/or with the
CDP in scrip form to prevent shareholders from depositing Restricted Shares into CDP, and accordingly introducing
Restricted Shares to the Singapore Exchange for trading; and
(2) Before the ADS depositary accepts deposits of shares to issue new ADSs, the ADS depositary would ensure, inter alia,
compliance with U.S. securities law requirements, and compliance with the terms and procedures of the ADS depositary
which are consistent with the deposit agreement (including completion and presentation of transfer documents).
Accordingly, through this process, only unrestricted shares would be permitted for deposit with the ADS depositary for the
issuance of the corresponding ADSs for trading on the NYSE.
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NIO CDP depositors must have their respective securities accounts credited with the number of Class A ordinary shares
deposited before they can effect the desired trades. A fee of S$10.00 is payable upon the deposit of each instrument of transfer with CDP
and the ADS depositary reserves the right to charge additional fees imposed by the ADS depositary, CDP and any brokers to ADS
holders and NIO CDP depositors who have made requests for the conversion of ADSs into Class A ordinary shares and vice versa. The
above fees may be subject to such charges as may be imposed in accordance with CDP’s prevailing policies or the current tax policies,
including GST that may be in force in Singapore from time to time.
Transactions in our Class A ordinary shares under the CDP book-entry settlement system will be reflected by the seller’s
securities account being debited with the number of Class A ordinary shares sold and the buyer’s securities account being credited with
the number of Class A ordinary shares acquired and no transfer stamp duty is currently payable for our Class A ordinary shares that are
settled on a book-entry basis.
The Class A ordinary shares traded on the Singapore Exchange will not be fungible with the Class A ordinary shares traded on
the Hong Kong Stock Exchange as there is no mechanism in place to facilitate such transfer of Class A ordinary shares between the
Singapore Exchange and the Hong Kong Stock Exchange.
B.
Clearing Fees
A Singapore clearing fee for trades in our Class A ordinary shares on the Singapore Exchange is payable at the rate of 0.0325%
of the contract value. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may be subject to GST at the
prevailing rate of 9.0% (or such other rate prevailing from time to time).
Dealings in our Class A ordinary shares will be carried out in U.S. dollars and will be effected for settlement in CDP on a
scripless basis. Settlement of trades on a normal “ready” basis on the Singapore Exchange generally takes place on the second (2nd)
market day following the transaction date and payment for the securities between member companies of the Singapore Exchange and
NIO CDP depositors is generally settled on the following business day. CDP holds securities on behalf of depositors in securities
accounts. An investor may open a direct account with CDP or a sub-account with any depository agent. A depository agent may be a
member company of the Singapore Exchange, bank, merchant bank or trust company.
C.
Dealing of Shares on the Singapore Exchange
Dealing of Class A ordinary shares on the Singapore Exchange should be conducted with member companies of the Singapore
Exchange by NIO CDP depositors who hold direct securities accounts with CDP or a sub-account with a depository agent.
Dealings in, and transactions of, Class A ordinary shares on the Singapore Exchange will be due for settlement on the second
market day following the date of transaction (T+2, or the Settlement Date), and payment for the securities is generally settled on the
following business day. NIO CDP depositors selling Class A ordinary shares should ensure that there are sufficient Class A ordinary
shares in their direct securities account with CDP or their sub-account with a depository agent on the Settlement Date. Settlement of
dealings through the CDP direct securities account or sub-account with a depository agent shall be made in accordance with CDP’s
“Terms and Conditions for Operation of Securities Accounts with CDP,” and the “Terms and Conditions for CDP to Act as Depository
for Foreign Securities,” as amended from time to time. Investors should take note that they would need to maintain a direct account with
CDP or a sub-account with any depository agent before they can hold and/or trade the Class A ordinary shares on the Singapore
Exchange. If you do not currently have a direct account with CDP or a sub-account with a depository agent through which you can trade
securities on the Singapore Exchange, please open an account with CDP or contact a broker to open an account.
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D.
Certificates
Instructions for the Cancellation of ADS Traded on NYSE and Withdrawal of Physical Class A Ordinary Share
ADS holders may turn in their ADS at the ADS depositary’s corporate trust office or by providing appropriate instructions to
their U.S. broker for cancellation and withdrawal of the underlying shares. In cases where the ADS holder would like to cancel their
ADS and withdraw the underlying shares in the form of physical Class A share certificates, the ADS holder or the holder’s U.S. broker
would need to inform us and the ADS depositary that they would like to receive the shares in this form. Upon payment of its fees,
expenses and any taxes or charges, such as stamp taxes or stock transfer taxes or fees, and subject in all cases to the terms and conditions
of the deposit agreement, the ADS depositary will deliver the Class A ordinary shares on the Cayman share register and any other
deposited securities underlying the ADSs to the ADS holder or a person designated by the ADS holder at the office of the custodian of
the ADS depositary. Or, at the request, risk and expense of the ADS holder, the ADS depository will deliver the deposited securities at its
corporate trust office, to the extent permitted by law. The mechanism for cancelling ADSs and receiving Class A ordinary shares for
trading on the Singapore Exchange is described below.
Temporary delays may arise. For example, the transfer books of the ADS depositary may from time to time be closed to ADS
cancellations.
E.
No Withdrawal or Deposit of Class A Ordinary Shares in Scrip Form from or with the CFP
Shareholders should note that they will not be permitted to withdraw or deposit the Class A ordinary shares from or with the
CDP in scrip form, so as to ensure that the fungible ADSs and Class A ordinary shares trading on the NYSE and the Singapore Exchange
respectively have either been registered under the Securities Act or are otherwise freely tradable pursuant to an exemption from
registration under the Securities Act. In the event that any NIO CDP depositor wishes to withdraw his Class A ordinary shares in scrip
form for whatsoever reason, the NIO CDP depositor would have to first convert his Class A ordinary shares trading on the Singapore
Exchange to ADS trading on the NYSE, before cancelling the ADS with the ADS depositary and receiving such Class A ordinary shares
in physical share certificates as registered holder. The instructions for the cancellation of ADSs traded on the NYSE and withdrawal of
physical certificates of Class A ordinary shares are as set out above.
F.
Mechanism for Conversion and Transfer of Class A Ordinary Shares Trading on the Singapore Exchange to ADSs for
trading on the NYSE
Conversion of Class A ordinary shares on the Singapore Exchange to ADSs for trading on the NYSE will only be carried out on
a scripless basis. A NIO CDP depositor whose Class A ordinary shares are held through CDP (either directly or through a depository
agent) and wishes to convert and transfer his Class A ordinary share to ADS for trading on the NYSE, shall first provide ADS issuance
instructions to the Singapore custodian of the ADS depositary, namely DB Nominees (Singapore) Pte Ltd, in the form of a letter of
transmittal (LOT) through his Singapore broker, providing key information including but not limited to the number of ADSs to be issued,
the ADS delivery information, and such other documentation as the ADS depositary may require pursuant to the deposit agreement.
Immediately thereafter, the Singapore broker, on behalf of the NIO CDP depositor, shall make a Free of Payment (FOP) transfer of the
relevant number of the Class A ordinary shares to DB Nominees (Singapore) Pte Ltd through the CDP electronic system. The cut-off
time for providing the ADS issuance instructions in the form of a letter of transmittal and for the Singapore broker to make the FOP
transfer is 11:30 a.m. (Singapore time).
Such issuances are subject in all cases to the terms of the deposit agreement. All forms and declarations required by the ADS
depositary must be fully completed, provided in a timely manner, duly signed and submitted to the ADS depositary with the instruction
to credit the relevant number of ADSs in DTC. Upon receipt of the relevant number of Class A ordinary shares, DB Nominees
(Singapore) Pte Ltd shall forward the corresponding letter of transmittal to the ADS depositary. Following which, the ADS depositary
shall issue the relevant number of ADSs as instructed by the letter of transmittal for delivery through the DTC settlement system to the
designated DTC securities account (whether held directly by the NIO CDP depositor or through a U.S. broker) upon payment of its fees,
expenses and any taxes or charges such as stamp taxes or stock transfer taxes or fees.
The conversion and transfer of Class A ordinary shares in a securities account held with CDP to ADS in the NIO CDP
depositor’s securities account opened with his U.S. broker would normally take approximately two (2) business days from the time the
ADS depositary (and/or any of its agents in Singapore) receives the underlying Class A ordinary shares and the ADS issuance
instructions with the necessary documents, barring any closure of the transfer books of the ADS depositary or any other unforeseen
circumstances and assuming that all requisite forms/instructions have been duly completed and provided, and necessary payment for all
associated fees has been made.
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Please note that in all cases of transfers referred to in this section, there should not be any change or difference, or purported
change or difference, in the beneficial owner of the underlying Class A ordinary share before and after transfer of Class A ordinary
shares trading on the Singapore Exchange to ADSs for trading on the NYSE.
You may be charged with applicable fees by your broker or custodian in Singapore. Please note that the transfer process and/or
fees payable are subject to change. For further information or copies of the forms, please contact the Company and the ADS depositary
directly. For the avoidance of doubt, all fees and taxes (including stamp duties) incurred during the transfer process shall be borne by the
ADS holder.
G.
Mechanism for Conversion and Transfer of ADSs Trading on NYSE to Class A Ordinary Shares for Trading on the
Singapore Exchange
Conversion and transfer of ADSs to Class A ordinary shares for trading on the Singapore Exchange will only be carried out on a
scripless basis. As an ADS holder, if you wish to trade your underlying Class A ordinary shares on the Singapore Exchange, you must
first instruct your U.S. broker to convert the ADSs which you hold in NYSE into Class A ordinary shares through the submission of an
ADR cancellation instruction for the purpose of cancellation and withdrawal. The U.S. broker will subsequently surrender the ADSs to
the ADS Depositary (through DTC), and provide the ADS Depositary with the ADR cancellation instruction and pay the ADS
Depositary’s fees, expenses and any applicable taxes or charges, such as stamp taxes or stock transfer taxes or fees.
Such cancellations and withdrawals are subject in all cases to the terms of the Deposit Agreement. All forms and declarations
required by the ADS Depositary must be fully completed, provided in a timely manner, duly signed and submitted to the ADS
Depositary with the instruction to credit the relevant number of Class A ordinary shares into a securities account opened with CDP. The
ADS Depositary and its custodian shall electronically transfer the relevant number of Class A ordinary shares through the scripless
system operated by CDP from their securities account to your designated securities account (either in your direct name or maintained
under your Singapore broker as a depository agent).
The conversion and transfer of ADSs on NYSE to Class A ordinary shares in the NIO CDP depositor’s securities account
opened with CDP or his securities sub-account maintained with a Depository Agent would normally take approximately two (2) business
days to complete from the time the ADS Depositary receives the ADSs for cancellation, any applicable fees and the ADS cancellation
instructions with the necessary documents, barring any closure of the transfer books of the ADS Depositary or any other unforeseen
circumstances and assuming that all requisite forms/instructions have been duly completed and provided, and necessary payment for all
associated fees has been made.
Please note that in all cases of transfers referred to in this section, there should not be any change or difference, or purported
change or difference, in the beneficial owner of the underlying Class A ordinary share before and after transfer of ADSs trading on the
NYSE to Class A ordinary shares trading on the Singapore Exchange.
You may be charged with applicable fees by your broker or custodian in the U.S. Please note that the transfer process and/or
fees payable are subject to change. For further information or copies of the forms, please contact the Company and the ADS Depositary
directly. For the avoidance of doubt, all fees and taxes (including stamp duties) incurred during the transfer process shall be borne by the
ADS holder. For the avoidance of doubt, no specific consent or approval by the Company will be required for the conversion and transfer
of ADS on the NYSE to Class A ordinary shares for trading on the Singapore Exchange by shareholders and vice versa.
H.
Voting Instructions
ADS holders are not treated as shareholders and accordingly, do not have shareholder rights. As the ADS depositary holds the
legal title to our Class A ordinary shares represented by the ADSs, ADS holders must rely on the ADS depositary to exercise the rights of
a shareholder. The obligations of the ADS depositary, rights and obligations of the ADS holders, including processes related to the voting
of the Class A ordinary shares underlying the ADSs, are governed by the conditions of the deposit agreement. Under the Cayman Islands
law, every other person who has agreed to become a member of a Cayman Islands company and whose name is entered in the register of
members of such company is considered a member. Accordingly, a NIO CDP depositor holding Class A ordinary shares through CDP
would not be recognized as our shareholder under the laws of the Cayman Islands but would be appointed as a proxy of CDP (which is a
registered shareholder), and have the right to attend general meetings of our shareholders and to cast any votes at such meetings.
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Where applicable and/or required, we will coordinate with the Singapore share transfer agent to mail to NIO CDP depositors, in
English, any notice of shareholders’ meetings, together with instruction form, or the Voting Instruction Form. The Voting Instruction
Form would in turn be consolidated by the Singapore share transfer agent. NIO CDP depositors will be able to vote on such matters
tabled for shareholders’ approval at the shareholders’ meetings by (i) attending the meetings and casting votes in person as a proxy
appointed by CDP, or (ii) returning the Voting Instruction Form by the deadline to CDP or the Singapore share transfer agent, as the case
may be.
NIO CDP depositors who wish to attend shareholders’ meetings and exercise their voting rights directly under their own names
with regard to Class A ordinary shares beneficially owned by them, shall first convert their Class A ordinary shares to ADSs in
accordance with the above section on “F. Mechanism for Conversion and Transfer of Class A Ordinary Shares Trading on the Singapore
Exchange to ADSs for Trading on the NYSE.” Thereafter, they would need to cancel the ADSs and withdraw the underlying physical
Class A ordinary share certificate in accordance with the above section on “D. Instructions for the Cancellation of ADS Traded on NYSE
and Withdrawal of Physical Class A Ordinary Share Certificates,” and make appropriate arrangements to hold the shares directly prior to
the record date for the shareholders’ meeting.
I.
ADS Depositary Requirements
Before the ADS depositary accepts deposits of Class A ordinary shares, delivers ADSs or permits withdrawal of Class A
ordinary shares, the ADS depositary requires:
● production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary;
● compliance with terms and procedures it may establish, from time to time, consistent with the Deposit Agreement,
including completion and presentation of required transfer documents; and
● compliance with U.S. securities law requirements.
The ADS depositary may refuse to deliver, transfer, or register issuances, transfers and cancellations of ADSs generally when
the transfer books of the ADS depositary are closed, or at any time if the ADS depositary or our company determines it advisable to do
so. In addition, procedures for delivery of Class A ordinary shares in CDP are subject to there being a sufficient number of Class A
ordinary shares to facilitate a withdrawal from the ADS program directly into the CDP system. The Company, the ADS depositary and
the CDP are not under any obligation to maintain or increase the number of Class A ordinary shares in the CDP system to facilitate such
withdrawals.
Any affiliate of the Company (as defined in Rule 144(a)(1) of the Securities Act) can only deposit Class A ordinary shares into
the ADR program in connection with a contemporaneous sale of such ADSs issued on deposit or related shares on CDP, should they
cancel such ADSs and receive the underlying Class A ordinary shares.
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
PART II.
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares” for a description of the
rights of securities holders, which remain unchanged.
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ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of
the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the
period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our management, with
the participation of our chief executive officer and chief financial officer, has concluded that, as of December 31, 2023, our disclosure
controls and procedures were effective in ensuring that the information we are required to disclose in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms,
and that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our chief executive officer, as appropriate, to allow timely decisions regarding required
disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial
statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America
and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of our
company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance
regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company’s assets that could have a
material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all potential
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the SEC, our management
including our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of internal control over financial reporting
as of December 31, 2023 using the criteria set forth in the report “Internal Control—Integrated Framework (2013)” published by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the management concluded that our
internal control over financial reporting was effective as of December 31, 2023.
Changes in Internal Control over Financial Reporting
As required by Rule 13a-15(d), under the Exchange Act, our management, including our chief executive officer and our chief
financial officer, also conducted an assessment of our internal control over financial reporting to determine whether any changes
occurred during the period covered by this report have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting. Based on that assessment, it has been determined that there has been no such change during the period
covered by this annual report.
Attestation Report of the Registered Public Accounting Firm
Our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, has audited the effectiveness of
our company’s internal control over financial reporting as of December 31, 2023, as stated in its report, which appears on page F-2 of
this annual report on Form 20-F.
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ITEM 16.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Denny Ting Bun Lee, a member of our audit committee and independent director
(under the standards set forth in Section 303A of the Corporate Governance Rules of the NYSE and Rule 10A-3 under the Securities
Exchange Act of 1934), is an audit committee financial expert.
ITEM 16B. CODE OF ETHICS
Our board of directors has adopted a code of ethics that applies to all of the directors, officers and employees of us and our
subsidiaries, whether they work for us on a full-time, part-time, consultative, or temporary basis. Certain provisions of the code apply
specifically to our chief executive officer, chief financial officer, senior finance officer, controller, senior vice presidents, vice presidents
and any other persons who perform similar functions for us. We have posted a copy of our code of business conduct and ethics on our
website at https://www.nio.com/policies/compliance-policies.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by the categories specified below in connection with certain professional
services rendered by PricewaterhouseCoopers Zhong Tian LLP and its affiliates, our principal external auditor, for the years indicated.
We did not pay any other fees to our principal external auditors during the years indicated below.
Audit fees(1)
Audit related fees(2)
Tax fees(3)
Other fees(4)
Total
Note:
For the Year Ended December 31,
2023
2022
(in RMB thousands )
17,150
—
1,393
1,070
19,613
17,338
—
3,488
660
21,486
(1) “Audit fees” means the aggregate fees billed for professional services rendered by our principal external auditor, including the audits
of our annual financial statements and our internal controls over financial reporting and the quarterly reviews of our condensed
consolidated financial information, statutory audits for certain of our subsidiaries, and provision of comfort letters, consents and
other professional services in relation to our equity and debt offering, Hong Kong listing and Singapore listing.
(2) “Audit related fees” means the aggregate fees billed for professional services rendered by our principal external auditor that are
reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
(3) “Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal
external auditor for tax compliance, tax advice and tax planning.
(4) “All other fees” means the aggregate fees billed for professional services rendered by our principal external auditor associated with
other advisory services.
The policy of our audit committee is to pre-approve all audit and other service provided by PricewaterhouseCoopers Zhong Tian
LLP and its affiliates, including audit services, tax services and other services described above, other than those for de minimis services
which are approved by the Audit Committee prior to the completion of the audit.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
As a Cayman Islands company listed on the New York Stock Exchange, we are subject to the NYSE corporate governance
listing standards. However, NYSE rules permit a foreign private issuer like us to follow the corporate governance practices of its home
country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the
NYSE corporate governance listing standards.
We have chosen to (i) rely on the home country exemption from Section 303A.01 of the NYSE Listed Company Manual, which
requires a listed company to have a majority of independent directors, (ii) rely on the home country exemption from Section 303A.05 of
the NYSE Listed Company Manual, which requires a listed company to have a compensation committee composed entirely of
independent directors, and (iii) rely on the home country exemption from Section 303A.08 of the NYSE Listed Company Manual, which
requires that shareholders be given the opportunity to vote on all equity-compensation plans and material revisions thereto. In these
respects, and in such other respects where we choose to follow home country practice in the future, our shareholders may be afforded less
protection than they otherwise would under the NYSE corporate governance listing standards applicable to U.S. domestic issuers. See
“Item 3. Key Information—D. Risk Factors—Risks related to our ADSs and Class A Ordinary Shares—Our shareholders may face
difficulties in protecting their interests, and ability to protect their rights through U.S. courts may be limited, because we are incorporated
under Cayman Islands law.”
Other than the home country practice described above, we are not aware of any significant differences between our corporate
governance practices and those followed by U.S. domestic companies under the NYSE corporate governance listing standards.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Not applicable.
ITEM 16K. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have implemented comprehensive cybersecurity risk assessment procedures to ensure effectiveness in cybersecurity
management, strategy and governance and reporting cybersecurity risks. We have also integrated cybersecurity risk management into our
overall enterprise risk management system.
We have developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This
system encompasses various levels, including network, host and application security and incorporates systematic security capabilities for
threat defense, monitoring, analysis, response, deception and countermeasures. We strive to manage cybersecurity risks and protect
sensitive information through various means, such as technical safeguards, procedural requirements, an intensive program of monitoring
on our corporate network, continuous testing of aspects of our security posture internally and with outside vendors, a robust incident
response program and regular cybersecurity awareness training for employees. Our cybersecurity-related departments regularly monitors
the performance of our apps, platforms and infrastructure to enable us to respond quickly to potential problems, including potential
cybersecurity threats.
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As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material
cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or
financial condition.
Cybersecurity Governance
Our board of directors is responsible for overseeing risks related to cybersecurity. Our board of directors shall (i) maintain
oversight of the disclosure related to cybersecurity matters in current reports or periodic reports of our company, (ii) review updates to
the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and the disclosure issues, if
any, presented by our management on a quarterly basis, and (iii) review disclosure concerning cybersecurity matters in our annual report
on Form 20-F presented by our management.
At the management level, our CEO, CFO and the head of the departments in connection with cybersecurity-related matters,
including our chief digital safety and security officer, who is an expert in cybersecurity with over 15 years of academic and industrial
experience in security research and development, operations and management, are responsible for assessing, identifying and managing
cybersecurity risks and monitoring the prevention, detection, mitigation, and remediation of cybersecurity incidents. Our CEO and CFO
report to our board of directors (i) on a quarterly basis on updates to the status of any material cybersecurity incidents or material risks
from cybersecurity threats to our company, and the disclosure issues, if any, and (ii) in connection with disclosure concerning
cybersecurity matters in our annual report on Form 20-F.
If a cybersecurity incident occurs, our cybersecurity-related departments will promptly organize personnel for internal
assessment. If it is further determined that the incident could potentially be a material cybersecurity event, the cybersecurity-related
departments will promptly report the incident and assessment results to our CEO and CFO, and, to the extent appropriate, involve
external legal counsels to provide advice. Our management shall prepare disclosure material on the cybersecurity incident for review and
approval by our board of directors before it is disseminated to the public.
ITEM 17. FINANCIAL STATEMENTS
PART III.
We have elected to provide financial statements pursuant to “Item 18. Financial Statements.”
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements of NIO Inc. and its subsidiaries and the related notes are included at the end of this annual
report.
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ITEM 19. EXHIBITS
Exhibit Number
1.1
2.1
2.2
2.3
2.4
2.5
2.6
4.1
4.2
4.3
4.4
4.5
4.6
4.7†
4.8
4.9
4.10
4.11
4.12
4.13
Description of Document
Thirteenth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein
by reference to Exhibit 3.1 to the current report on Form 6-K (File No. 001-38638), furnished with the SEC on
August 25, 2022)
Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3)
Registrant’s Specimen Certificate for Class A ordinary shares (incorporated herein by reference to Exhibit 4.2 to the
registration statement on Form F-1 (File No. 333-226822), as amended, initially filed with the SEC on August 13,
2018)
Deposit Agreement, dated as of September 11, 2018, among the Registrant, Deutsche Bank Trust Company
Americas, as the depositary, and all holders and beneficial owners of the American Depositary Shares issued
thereunder (incorporated herein by reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-
229952), filed with the SEC on February 28, 2019)
Fifth Amended and Restated Shareholders’ Agreement, dated as of November 10, 2017, among the Registrant and
the other signatories thereto (incorporated herein by reference to Exhibit 4.4 to the registration statement on Form F-
1 (File No. 333226822), as amended, initially filed with the SEC on August 13, 2018)
Description of American Depositary Shares of the Registrant (incorporated herein by reference to Exhibit 2.5 to the
Company’s Report on Form 20-F (File No. 001-38638), filed with the SEC on May 14, 2020)
Description of Class A ordinary shares of the Registrant (incorporated herein by reference to Exhibit 2.6 to the
Company’s Report on Form 20-F (File No. 001-38638), filed with the SEC on May 14, 2020)
2015 Share Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-
1 (File No. 333-226822), as amended, initially filed with the SEC on August 13, 2018)
2016 Share Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-
1 (File No. 333-226822), as amended, initially filed with the SEC on August 13, 2018)
2017 Share Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the registration statement on Form F-
1 (File No. 333-226822), as amended, initially filed with the SEC on August 13, 2018)
2018 Share Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-
1 (File No. 333-226822), as amended, initially filed with the SEC on August 13, 2018)
2024 Share Incentive Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on
Form 6-K (File No. 001-38638), filed with the SEC on February 7, 2024)
Form of Indemnification Agreement, between the Registrant and its directors and executive officers (incorporated
herein by reference to Exhibit 10.5 to the registration statement on Form F-1 (File No. 333-226822), as amended,
initially filed with the SEC on August 13, 2018)
English translation of Manufacture Cooperation Agreement, dated as of May 23, 2016, between the Registrant and
Anhui Jianghuai Automobile Co., Ltd. (incorporated herein by reference to Exhibit 10.10 to the registration
statement on Form F-1 (File No. 333-226822), as amended, initially filed with the SEC on August 13, 2018)
Form of Employment Agreement, between the Registrant and its executive officers (Non-PRC citizens)
(incorporated herein by reference to Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-226822), as
amended, initially filed with the SEC on August 13, 2018)
Form of Employment Agreement, between the Registrant and its executive officers (PRC citizens) (incorporated
herein by reference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-226822), as amended,
initially filed with the SEC on August 13, 2018)
English translation of Power of Attorney, dated as of April 12, 2021, executed by the shareholders of Beijing NIO,
Beijing NIO and Shanghai NIO (incorporated herein by reference to Exhibit 4.10 to the Company’s Report on Form
20-F (File No. 001-38638), filed with the SEC on April 29, 2022)
English translation of Loan Agreements, dated April 12, 2021, between shareholders of Beijing NIO and Shanghai
NIO (incorporated herein by reference to Exhibit 4.11 to the Company’s Report on Form 20-F (File No. 001-38638),
filed with the SEC on April 29, 2022)
English translation of Equity Pledge Agreements, dated as of April 12, 2021, among shareholders of Beijing NIO,
Beijing NIO and Shanghai NIO (incorporated herein by reference to Exhibit 4.12 to the Company’s Report on Form
20-F (File No. 001-38638), filed with the SEC on April 29, 2022)
English translation of Exclusive Business Cooperation Agreement, dated as of April 12, 2021, between Beijing NIO
and Shanghai NIO (incorporated herein by reference to Exhibit 4.13 to the Company’s Report on Form 20-F (File
No. 00138638), filed with the SEC on April 29, 2022)
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4.14
4.15
4.16
4.17
4.18†
4.19†
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27†
4.28†
4.29
English translation of Exclusive Option Agreements, dated as of April 12, 2021, among shareholders of Beijing
NIO, Beijing NIO and Shanghai NIO (incorporated herein by reference to Exhibit 4.14 to the Company’s Report on
Form 20-F (File No. 001-38638), filed with the SEC on April 29, 2022)
English translation of Confirmation and Undertaking Letters, dated as of April 12, 2021, executed by shareholders of
Beijing NIO (incorporated herein by reference to Exhibit 4.15 to the Company’s Report on Form 20-F (File No. 001-
38638), filed with the SEC on April 29, 2022)
English translation of Consent Letters, dated as of April 12, 2021, executed by the spouses of the shareholders of
Beijing NIO (incorporated herein by reference to Exhibit 4.16 to the Company’s Report on Form 20-F (File No. 001-
38638), filed with the SEC on April 29, 2022)
Deposit Agreement for Restricted Securities, dated as of February 4, 2019, among the Registrant, Deutsche Bank
Trust Company Americas, as the depositary, and all holders and beneficial owners of the American Depositary
Shares issued thereunder (incorporated herein by reference to Exhibit 4.24 to the Company’s Report on Form 20-F
(File No. 001-38638), filed with the SEC on April 2, 2019)
English translation of NIO ES6 Manufacture Cooperation Agreement, dated as of April 30, 2019, between the
Registrant and Anhui Jianghuai Automobile Co., Ltd. (incorporated herein by reference to Exhibit 4.23 to the
Company’s Report on Form 20-F (File No. 001-38638), filed with the SEC on May 14, 2020)
English translation of NIO Fury (EC6) Manufacture Cooperation Agreement, dated as of March 10, 2020, between
the Registrant and Anhui Jianghuai Automobile Co., Ltd. (incorporated herein by reference to Exhibit 4.24 to the
Company’s Report on Form 20-F (File No. 001-38638), filed with the SEC on May 14, 2020)
English translation of Investment Agreement, dated April 29, 2020, among Hefei Construction Investment Holdings
(Group) Co., Ltd., the Registrant, Nio Nextev Limited, NIO Power Express Limited, NIO (Anhui) Holding Co., Ltd.
and other parties thereto (incorporated herein by reference to Exhibit 4.35 to the Company’s Report on Form 20-F
(File No. 001-38638), filed with the SEC on May 14, 2020)
English translation of Amendment and Supplementary Agreement to Investment Agreement, dated May 29, 2020,
among Hefei Construction Investment Holdings (Group) Co., Ltd., the Registrant, Nio Nextev Limited, NIO Power
Express Limited, NIO (Anhui) Holding Co., Ltd. and other parties thereto (incorporated herein by reference to
Exhibit 99.1 to the Company’s Current Report on Form 6-K (File No. 001-38638), furnished with the SEC on June
9, 2020)
English translation of Amendment and Supplementary Agreement II to Investment Agreement, dated June 18, 2020,
among Hefei Construction Investment Holdings (Group) Co., Ltd., the Registrant, Nio Nextev Limited, NIO Power
Express Limited, NIO (Anhui) Holding Co., Ltd. and other parties thereto (incorporated herein by reference to
Exhibit 99.1 to the Company’s Current Report on Form 6 - K (File No. 001 - 38638), furnished with the SEC on
June 30, 2020)
Indenture, dated as of January 15, 2021, by and between the Registrant, as issuer, and Deutsche Bank Trust
Company Americas, as trustee, constituting US$750 million 0.00% Convertible Senior Notes due 2026
(incorporated herein by reference to Exhibit 4.39 to the Company’s Report on Form 20-F (File No. 001-38638), filed
with the SEC on April 6, 2021)
Form of 0.00% Convertible Senior Notes due 2026 (included in Exhibit 4.23)
Indenture, dated as of January 15, 2021, by and between the Registrant, as issuer, and Deutsche Bank Trust
Company Americas, as trustee, constituting US$750 million 0.50% Convertible Senior Notes due 2027
(incorporated herein by reference to Exhibit 4.41 to the Company’s Report on Form 20-F (File No. 001-38638), filed
with the SEC on April 6, 2021)
Form of 0.50% Convertible Senior Notes due 2027 (included in Exhibit 4.25)
English translation of Renewal Joint Manufacturing Agreement, by and between the Registrant, Anhui Jianghuai
Automobile Co., Ltd. and Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd., dated May 22, 2021
(incorporated herein by reference to Exhibit 4.45 to the Company’s Report on Form 20-F (File No. 001-38638), filed
with the SEC on April 29, 2022)
English translation of Manufacturing Cooperation Agreement, by and among NIO Technology (Anhui) Co., Ltd.,
NIO (Anhui) Co., Ltd., and Anhui Jianghuai Automobile Co., Ltd. dated September 2022 (incorporated by reference
to Exhibit 4.46 of the Company’s Report on Form 20 - F (File No. 001 - 38638), filed with the SEC on April 28,
2023)
English translation of NIO Park (Phase I) Assets Transfer Agreement and its supplementary agreement, each dated
December 23, 2022, executed by and between NIO (Anhui) Co., Ltd. and Anhui Jianghuai Automobile Co., Ltd.
(incorporated by reference to Exhibit 4.47 of the Company’s Report on Form 20 - F (File No. 001 - 38638), filed
with the SEC on April 28, 2023)
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Table of Contents
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44*
4.45*
4.46*
4.47*†
4.48*†
4.49*
English translation of Power of Attorney, dated November 30, 2022, executed by the shareholders of Anhui NIO AT,
Anhui NIO AT and Anhui NIO AD. (incorporated by reference to Exhibit 4.48 of the Company’s Report on Form 20
- F (File No. 001 - 38638), filed with the SEC on April 28, 2023)
English translation of Loan Agreements, dated November 30, 2022, between shareholders of Anhui NIO AT and
Anhui NIO AD (incorporated by reference to Exhibit 4.49 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
English translation of Equity Pledge Agreements, dated November 30, 2022, among shareholders of Anhui NIO AT,
Anhui NIO AT and Anhui NIO AD (incorporated by reference to Exhibit 4.50 of the Company’s Report on Form 20-
F (File No. 001-38638), filed with the SEC on April 28, 2023)
English translation of Exclusive Business Cooperation Agreement, dated November 30, 2022, between Anhui NIO
AT and Anhui NIO AD (incorporated by reference to Exhibit 4.51 of the Company’s Report on Form 20-F (File No.
001-38638), filed with the SEC on April 28, 2023)
English translation of Exclusive Option Agreements, dated November 30, 2022, among shareholders of Anhui NIO
AT, Anhui NIO AT and Anhui NIO AD (incorporated by reference to Exhibit 4.52 of the Company’s Report on Form
20 - F (File No. 001 - 38638), filed with the SEC on April 28, 2023)
English translation of Confirmation and Undertaking Letters, dated November 30, 2022, executed by shareholders of
Anhui NIO AT (incorporated by reference to Exhibit 4.53 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
English translation of Consent Letters, dated November 30, 2022, executed by the spouses of the shareholders of
Anhui NIO AT (incorporated by reference to Exhibit 4.54 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
English translation of Power of Attorney, dated December 12, 2022, executed by the shareholders of Anhui NIO DT,
Anhui NIO DT and NIO China (incorporated by reference to Exhibit 4.55 of the Company’s Report on Form 20 - F
(File No. 001 - 38638), filed with the SEC on April 28, 2023)
English translation of Loan Agreements, dated December 12, 2022, between shareholders of Anhui NIO DT and
NIO China (incorporated by reference to Exhibit 4.56 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
English translation of Equity Pledge Agreements, dated December 12, 2022, among shareholders of Anhui NIO DT,
Anhui NIO DT and NIO China (incorporated by reference to Exhibit 4.57 of the Company’s Report on Form 20 - F
(File No. 001 - 38638), filed with the SEC on April 28, 2023)
English translation of Exclusive Business Cooperation Agreement, dated December 12, 2022, between Anhui NIO
DT and NIO China (incorporated by reference to Exhibit 4.58 of the Company’s Report on Form 20 - F (File No.
001 - 38638), filed with the SEC on April 28, 2023)
English translation of Exclusive Option Agreements, dated December 12, 2022, among shareholders of Anhui NIO
DT, Anhui NIO DT and NIO China (incorporated by reference to Exhibit 4.59 of the Company’s Report on Form 20
- F (File No. 001 - 38638), filed with the SEC on April 28, 2023)
English translation of Confirmation and Undertaking Letters, dated December 12, 2022, executed by shareholders of
Anhui NIO DT (incorporated by reference to Exhibit 4.60 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
English translation of Consent Letters, dated December 12, 2022, executed by the spouses of the shareholders of
Anhui NIO DT (incorporated by reference to Exhibit 4.61 of the Company’s Report on Form 20 - F (File No. 001 -
38638), filed with the SEC on April 28, 2023)
Share Subscription Agreement, dated June 20, 2023, by and between the Registrant and CYVN Holdings L.L.C.
Registration Rights Agreement, dated June 20, 2023, by and between the Registrant and CYVN Holdings L.L.C.
Share Subscription Agreement, dated December 18, 2023, by and between the Registrant and CYVN Investments
RSC Ltd
English translation of Asset Transaction Agreements, dated December 5, 2023, by and between NIO Technology
(Anhui) Co., Ltd. and Anhui Jianghuai Automobile Group Co., Ltd.
Technology License Agreement, dated February 26, 2024, by and between NIO Technology (Anhui) Co., Ltd. and
Forseven Limited
English translation of NIO China Shareholders Agreement, dated March 30, 2024, by and among Hefei Jianheng
New Energy Automobile Investment Fund Partnership (Limited Partnership), Advanced Manufacturing Industry
Investment Fund II (Limited Partnership), Anhui Provincial Sanzhong Yichuang Industry Development Fund Co.,
Ltd., Anhui Jintong New Energy Automobile II Fund Partnership (Limited Partnership), the Registrant, Nio Nextev
Limited, NIO User Enterprise Limited, NIO Power Express Limited and NIO Holding Co., Ltd.
8.1*
11.1*
List of Principal Subsidiaries and Consolidated Variable Interest Entities
Global Code of Business Conduct and Ethics of the Registrant
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12.1*
12.2*
13.1**
13.2**
15.1*
15.2*
97.1*
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104*
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Consent of PricewaterhouseCoopers Zhong Tian LLP
Consent of Han Kun Law Offices
Clawback Policy of the Registrant
Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
** Furnished herewith.
† Confidential treatment has been requested for certain portions of this exhibit pursuant to Rule 406 under the Securities Act and
Division of Corporation Finance Staff Legal Bulletin No. 1. In accordance with Rule 406 and Staff Legal Bulletin No. 1, these
confidential portions have been omitted and filed separately with the SEC.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.
Date: April 9, 2024
NIO Inc.
By: /s/ Bin Li
Name: Bin Li
Title: Chairman of the Board of Directors
and Chief Executive Officer
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1424)
Consolidated Balance Sheets as of December 31, 2022 and 2023
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021, 2022 and 2023
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2021, 2022 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2022 and 2023
Notes to Consolidated Financial Statements
Page
F-2
F-4
F-6
F-7
F-10
F-11
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of NIO Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of NIO Inc. and its subsidiaries (the “Company”) as of December 31,
2023 and 2022, and the related consolidated statements of comprehensive loss, of shareholders’ equity and of cash flows for each of the
three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial
statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s
Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F-2
Table of Contents
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Accrual of warranty liabilities
As described in Notes 2(p), 12 and 14 to the consolidated financial statements, the Company provides warranty to its customers for all
new vehicles it sold. For the year ended December 31, 2023, the Company accrued warranty costs of RMB1,222.9 million. As of
December 31, 2023, the Company recorded warranty liabilities of RMB3,912.2 million. The warranty cost is accrued based on the
Company’s assumptions related to the nature and frequency of future claims and the estimate of the projected costs to repair or replace
items under warranty. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of
future claims.
The principal considerations for our determination that performing procedures relating to the accrual of warranty liabilities is a critical
audit matter are the significant judgment by management and estimates used in determining the accrual of warranty liabilities; this in turn
led to significant auditor judgment, subjectivity, and effort in designing and performing procedures relating to evaluating the
reasonableness of management’s estimate of the nature, frequency and costs of future claims. In addition, the audit effort included the
involvement of professionals with specialized skills and knowledge to assist in performing these procedures.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate
of the accrual of warranty liabilities, including controls over management’s estimate of the nature, frequency and costs of future claims as
well as the completeness and accuracy of actual claims incurred to date. These procedures also included, among others, testing
management’s process for determining the accrual of warranty liabilities by (a) evaluating the appropriateness of the model applied by
management for the accrual of warranty liabilities; (b) evaluating the reasonableness of significant assumptions related to the nature and
frequency of future claims and the related projected costs to repair or replace items under warranty, considering current and past
performance, including a lookback analysis comparing prior period forecasted claims to actual claims incurred; and (c) testing the
completeness, accuracy and relevance of management’s data used in the estimation of future claims. These procedures also included
developing an independent estimate of the accrual of warranty liabilities and comparing this estimate to management’s estimate to
evaluate its reasonableness. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of
the model applied by management for the accrual of warranty liabilities and developing an independent estimate of the accrual of
warranty liabilities.
/s/PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
April 9, 2024
We have served as the Company’s auditor since 2016.
F-3
Table of Contents
NIO INC.
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Trade and notes receivables, net (Allowance for expected credit losses of RMB39.6 million and
RMB46.2 million, respectively)
Amounts due from related parties, net (Allowance for expected credit losses of RMB6.7 million and
RMB8.8 million, respectively)
Inventory
Prepayments and other current assets, net (Allowance for expected credit losses of RMB4.0 million and
RMB5.4 million, respectively)
Total current assets
Non-current assets:
Long-term restricted cash
Property, plant and equipment, net
Intangible assets, net
Land use rights, net
Long-term investments
Right-of-use assets – operating lease
Other non-current assets, net (Allowance for expected credit losses of RMB89.6 million and RMB53.4
million, respectively)
Total non-current assets
Total assets
LIABILITIES
Current liabilities:
Short-term borrowings
Trade and notes payable
Amounts due to related parties
Taxes payable
Current portion of operating lease liabilities
Current portion of long-term borrowings
Accruals and other liabilities
Total current liabilities
Non-current liabilities:
Long-term borrowings
Non-current operating lease liabilities
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies (Note 28)
F-4
2022
RMB
As of December 31,
2023
RMB
2023
USD
Note 2(e)
19,887,575
3,154,240
19,171,017
32,935,111
5,542,271
16,810,107
4,638,813
780,613
2,367,654
5,118,170
4,657,652
656,017
1,380,956
8,191,386
1,722,603
5,277,726
242,624
743,352
2,246,408
59,149,752
3,434,763
70,380,233
483,776
9,912,849
113,478
15,658,666
—
212,603
6,356,411
7,374,456
144,125
24,847,004
29,648
207,299
5,487,216
11,404,116
20,300
3,499,627
4,176
29,197
772,858
1,606,236
7,398,559
37,114,173
96,263,925
4,883,561
47,002,969
117,383,202
687,835
6,620,229
16,533,078
4,039,210
25,223,687
384,611
286,300
1,025,968
1,237,916
13,654,362
45,852,054
10,885,799
6,517,096
218,189
5,144,027
22,765,111
68,617,165
5,085,411
29,766,134
561,625
349,349
1,743,156
4,736,087
15,556,354
57,798,116
13,042,861
10,070,057
212,347
6,663,805
29,989,070
87,787,186
716,265
4,192,472
79,103
49,205
245,518
667,064
2,191,067
8,140,694
1,837,049
1,418,338
29,908
938,578
4,223,873
12,364,567
Table of Contents
NIO INC.
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data)
MEZZANINE EQUITY
Redeemable non-controlling interests
Total mezzanine equity
SHAREHOLDERS’ EQUITY
Class A Ordinary Shares (US$0.00025 par value; 2,632,030,222 and 2,632,030,222
shares authorized; 1,531,720,892 and 1,925,022,118 shares issued; 1,513,659,868 and
1,906,961,094 shares outstanding as of December 31, 2022 and 2023, respectively)
Class C Ordinary Shares (US$0.00025 par value; 148,500,000 shares authorized, issued
and outstanding as of December 31, 2022 and 2023)
Less: Treasury shares (18,061,024 shares as of December 31, 2022 and 2023)
Additional paid in capital
Accumulated other comprehensive income
Accumulated deficit
2022
RMB
As of December 31,
2023
RMB
2023
USD
Note 2(e)
3,557,221
3,557,221
3,860,384
3,860,384
543,724
543,724
2,668
3,368
474
254
(1,849,600)
94,593,062
1,036,011
(69,914,230)
254
(1,849,600)
117,717,254
432,991
(90,758,034)
36
(260,511)
16,580,128
60,986
(12,783,002)
Total NIO Inc. shareholders’ equity
23,868,165
25,546,233
3,598,111
Non-controlling interests
Total shareholders’ equity
221,374
189,399
26,676
24,089,539
25,735,632
3,624,787
Total liabilities, mezzanine equity and shareholders’ equity
96,263,925
117,383,202
16,533,078
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
NIO INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(All amounts in thousands, except for share and per share data)
Revenue:
Vehicle sales
Other sales
Total revenues
Cost of sales:
Vehicle sales
Other sales
Total cost of sales
Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Other operating income
Total operating expenses
Loss from operations
Interest and investment income
Interest expenses
Gain on extinguishment of debt
Share of income of equity investees
Other income/(loss), net
Loss before income tax expense
Income tax expense
Net loss
Accretion on redeemable non-controlling interests to redemption value
Net loss attributable to non-controlling interests
Net loss attributable to ordinary shareholders of NIO Inc.
Net loss
Other comprehensive income/(loss)
Change in unrealized gains/(losses) related to available-for-sale debt securities,
net of tax
Foreign currency translation adjustment, net of nil tax
Total other comprehensive (loss)/income
Total comprehensive loss
Accretion on redeemable non-controlling interests to redemption value
Net loss/(profit) attributable to non-controlling interests
Other comprehensive (income)/loss attributable to non-controlling interests
Comprehensive loss attributable to ordinary shareholders of NIO Inc
Weighted average number of ordinary shares used in computing net loss
per share
Basic and diluted
Net loss per share attributable to ordinary shareholders
Basic and diluted
Weighted average number of ADS used in computing net loss per ADS
Basic and diluted
Net loss per ADS attributable to ordinary shareholders
Basic and diluted
For the Year Ended December 31,
2021
RMB
2022
RMB
2023
RMB
33,169,740
2,966,683
36,136,423
45,506,581
3,761,980
49,268,561
49,257,270
6,360,663
55,617,933
(26,516,643)
(2,798,347)
(29,314,990)
6,821,433
(4,591,852)
(6,878,132)
152,248
(11,317,736)
(4,496,303)
911,833
(637,410)
—
62,510
184,686
(3,974,684)
(42,265)
(4,016,949)
(6,586,579)
31,219
(10,572,309)
(4,016,949)
24,224
(230,345)
(206,121)
(4,223,070)
(6,586,579)
31,219
(4,727)
(10,783,157)
(39,271,801)
(4,852,767)
(44,124,568)
5,143,993
(10,836,261)
(10,537,119)
588,728
(20,784,652)
(15,640,659)
1,358,719
(333,216)
138,332
377,775
(282,952)
(14,382,001)
(55,103)
(14,437,104)
(279,355)
157,014
(14,559,445)
(14,437,104)
746,336
717,274
1,463,610
(12,973,494)
(279,355)
157,014
(151,299)
(13,247,134)
(44,587,572)
(7,978,565)
(52,566,137)
3,051,796
(13,431,399)
(12,884,556)
608,975
(25,706,980)
(22,655,184)
2,210,018
(403,530)
170,193
64,394
155,191
(20,458,918)
(260,835)
(20,719,753)
(303,163)
(124,051)
(21,146,967)
(20,719,753)
(770,560)
11,514
(759,046)
(21,478,799)
(303,163)
(124,051)
156,026
(21,749,987)
2023
USD
Note 2(e)
6,937,741
895,881
7,833,622
(6,280,028)
(1,123,757)
(7,403,785)
429,837
(1,891,773)
(1,814,752)
85,772
(3,620,753)
(3,190,916)
311,275
(56,836)
23,971
9,070
21,858
(2,881,578)
(36,738)
(2,918,316)
(42,700)
(17,472)
(2,978,488)
(2,918,316)
(108,531)
1,622
(106,909)
(3,025,225)
(42,700)
(17,472)
21,976
(3,063,421)
1,572,702,112
1,636,999,280
1,700,203,886
1,700,203,886
(6.72)
(8.89)
(12.44)
(1.75)
1,572,702,112
1,636,999,280
1,700,203,886
1,700,203,886
(6.72)
(8.89)
(12.44)
(1.75)
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
NIO INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(All amounts in thousands, except for share and per share data)
Ordinary Shares
Shares
Par value
Treasury Shares
Additional
Paid in
Amount Capital
Shares
Accumulated
Other
Total
Non-
Comprehensive Accumulated Shareholders’ Controlling
Loss
Deficit
Equity
Total
Interests Equity
1,529,031,103
2,679
(2,491,715)
— 78,880,014
(65,452)
(51,648,410)
27,168,831
2,125
27,170,956
Balance as of
December 31,
2020
Accretion on
redeemable
non-controlling
interests to
redemption
value
Settlement of
capped call
options and
zero strike call
options (Note
13(ii))
Conversion of
convertible
senior notes to
ordinary shares
- related parties
Conversion of
convertible
senior notes to
ordinary shares
-third party
Capital injection
from non-
controlling
interests
Shareholder’s
contribution
(Note 9)
Issuance of
ordinary shares
Exercise of share
options
Share based
compensation
of the restricted
shares
Issuance of
restricted
shares (Note
24(a)(ii))
Share based
compensation
of the share
options
Cancellation of
restricted
shares
Foreign currency
translation
adjustment
Change in fair
value of
available-for-
sale debt
securities (Note
9)
Net loss
Balance as of
December 31,
2021
—
—
—
— (6,586,579)
—
—
(6,586,579)
— (6,586,579)
—
—
(16,402,643)
(1,849,600)
1,849,600
—
—
—
—
—
7,219,872
12
—
—
148,381
—
—
148,393
—
148,393
62,508,996
101
—
—
4,199,718
—
—
—
—
—
—
53,292,401
8,891,011
—
85
14
—
—
—
18,535
— 12,677,469
228,037
—
120,925
—
—
—
—
—
—
4,199,819
—
4,199,819
—
—
100,000
100,000
—
—
—
18,535
—
18,535
12,677,554
— 12,677,554
120,939
—
120,939
842,742
1
—
—
457,985
—
—
457,986
—
457,986
549,376
—
—
—
—
—
—
148,869
—
552,155
—
—
—
—
148,869
—
148,869
552,155
—
552,155
(586,068)
—
586,068
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(230,345)
—
(230,345)
—
(230,345)
19,497
—
—
(3,985,730)
19,497
(3,985,730)
4,727
(31,219)
24,224
(4,016,949)
1,661,749,433
2,892
(18,080,253)
(1,849,600)
92,467,072
(276,300)
(55,634,140)
34,709,924
75,633
34,785,557
F-7
Table of Contents
NIO INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(All amounts in thousands, except for share and per share data)
Ordinary Shares
Shares
Par value
Treasury Shares
Additional
Paid in
Amount Capital
Shares
Accumulated
Other
Total
Non-
Comprehensive Accumulated Shareholders’ Controlling
(Loss)/Income
Deficit
Equity
Total
Interests Equity
1,661,749,433
2,892
(18,080,253)
(1,849,600)
92,467,072
(276,300)
(55,634,140)
34,709,924
75,633
34,785,557
Balance as of
December 31,
2021
Accretion on
redeemable
non-
controlling
interests to
redemption
value
Conversion of
convertible
senior notes to
ordinary
shares -
related parties
Conversion of
convertible
senior notes to
ordinary
shares - third
party
Distributions to
non-
controlling
interests
Transactions
with non-
controlling
interests (Note
23)
Exercise of
share options
Share based
compensation
of the
restricted
shares
Share based
compensation
of the share
options
Foreign
currency
translation
adjustment
Change in fair
value of
available-for-
sale debt
securities
(Note 9)
Net loss
Balance as of
December 31,
2022
—
—
—
—
(279,355)
—
—
(279,355)
—
(279,355)
8,805,770
15
—
—
207,457
—
—
207,472
—
207,472
172,631
—
—
—
10,450
—
—
—
—
—
—
—
—
—
(184,085)
19,229
—
75,627
—
—
—
—
—
10,450
—
10,450
—
—
(32,629)
(32,629)
—
—
(184,085)
184,085
—
75,634
—
75,634
4,514,461
4,978,597
7
8
—
— 1,863,412
—
—
1,863,420
—
1,863,420
—
—
—
—
432,484
—
—
432,484
—
432,484
—
—
—
—
—
717,274
—
717,274
—
717,274
—
—
—
—
—
—
—
—
—
—
595,037
—
— (14,280,090)
595,037
(14,280,090)
151,299
(157,014)
746,336
(14,437,104)
1,680,220,892
2,922
(18,061,024)
(1,849,600)
94,593,062
1,036,011
(69,914,230)
23,868,165
221,374
24,089,539
F-8
Table of Contents
NIO INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(All amounts in thousands, except for share and per share data)
Balance as of
December
31, 2022
Accretion on
redeemable
non-
controlling
interests to
redemption
value
Issuance of
ordinary
shares
Exercise of
share options
Share based
compensation
of the
restricted
shares
Share based
compensation
of the share
options
Foreign
currency
translation
adjustment
Recycling of
unrealized
gain of
available-for-
sale debt
security
(Note 9)
Net loss
Balance as of
December
31, 2023
Ordinary Shares
Shares
Par value
Treasury Shares
Additional
Paid in
Amount Capital
Shares
Accumulated
Other
Total
Non-
Comprehensive Accumulated Shareholders’ Controlling
Income
Deficit
Equity
Total
Interests Equity
1,680,220,892
2,922
(18,061,024)
(1,849,600)
94,593,062
1,036,011
(69,914,230)
23,868,165
221,374
24,089,539
—
378,695,543
4,242,054
10,363,629
—
—
—
—
—
674
8
18
—
—
—
—
—
—
—
—
—
—
—
—
—
(303,163)
— 20,961,615
—
96,699
—
2,089,401
279,640
—
—
—
—
—
—
—
—
—
—
—
—
(303,163)
—
(303,163)
20,962,289
— 20,962,289
96,707
—
96,707
—
2,089,419
—
2,089,419
—
—
279,640
—
279,640
11,514
—
11,514
—
11,514
—
—
(614,534)
—
— (20,843,804)
(614,534)
(20,843,804)
(156,026)
124,051
(770,560)
(20,719,753)
2,073,522,118
3,622
(18,061,024)
(1,849,600)
117,717,254
432,991
(90,758,034)
25,546,233
189,399
25,735,632
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Table of Contents
NIO INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except for share and per share data)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Depreciation and amortization
Expected credit loss expense/(reversal)
Inventory write-downs
Impairment on long-term assets
Foreign exchange loss/(gain)
Share-based compensation expenses
Investment income
Gain on extinguishment of debt
Share of income of equity investees, net of tax
Amortization of right-of-use assets
Loss/(gain) on disposal of property, plant and equipment
Deferred income tax expense
Changes in operating assets and liabilities:
Prepayments and other current assets
Inventory
Other non-current assets
Amounts due from related parties
Operating lease liabilities
Taxes payable
Trade and notes receivable
Trade and notes payable
Accruals and other liabilities
Amounts due to related parties
Other non-current liabilities
Net cash provided by/(used in)operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, land use rights and intangible assets
Proceeds from disposal of property, plant and equipment
Purchase of short-term investments
Proceeds from maturities of short-term investments
Purchase of available-for-sale debt investment
Proceeds from disposal of available-for-sale debt investment
Acquisitions of equity investees
Proceeds from disposal of equity investees
Withdrawal of long-term investment
Purchase of held to maturity debt investments
Purchase of retained asset-backed securities
Proceeds from maturities of retained asset-backed securities
Loan repayment from related parties
Net cash(used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options
Capital withdrawal by non-controlling interests
Distributions to non-controlling interests
Capital injection from non-controlling interests
Redemption and repurchase of redeemable non-controlling interests
Proceeds from issuance of convertible senior notes
Repurchase of convertible senior notes
Proceeds from borrowings from third parties
Repayments of borrowings from third parties
Principal payments on finance leases
Proceeds from issuance of ordinary shares, net of issuance costs
Net cash provided by/(used in) financing activities
Effects of exchange rate changes on cash, cash equivalents and restricted cash
NET (DECREASE)/ INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at beginning of the year
Cash, cash equivalents and restricted cash at end of the year
NON-CASH INVESTING AND FINANCING ACTIVITIES
Accruals related to purchase of property, plant and equipment
Issuance of restricted shares
Conversion of convertible senior notes to ordinary shares
Accretion on redeemable non-controlling interests to redemption value
Settlement of capped call options and zero strike call options (Note 13(ii))
Shareholder’s contribution (Note 9)
Supplemental Disclosure
Interest paid
Income taxes paid
For the Year Ended December 31,
2021
RMB
2022
RMB
2023
RMB
2023
USD
Note 2(e)
(4,016,949)
(14,437,104)
(20,719,753)
(2,918,316)
1,708,019
54,332
1,105
—
10,111
1,010,140
(105,608)
—
(62,510)
643,895
31,107
25,199
(38,908)
(990,550)
(3,705,762)
(1,444,122)
(748,799)
446,984
(1,717,747)
6,260,311
2,485,101
342,597
1,778,440
1,966,386
(4,078,764)
1,126
(134,316,219)
101,121,723
(650,000)
—
(592,570)
—
—
(1,300,000)
—
—
50,000
(39,764,704)
144,562
(1,000)
—
100,000
(8,000,000)
9,560,755
—
6,112,000
(2,432,255)
(32,873)
12,677,554
18,128,743
(500,959)
(20,170,534)
38,545,098
18,374,564
1,458,767
148,869
4,348,212
6,586,579
1,849,600
18,535
218,830
6,007
2,852,315
48,707
148,729
35,011
282,888
2,295,896
(174,854)
(138,332)
(377,775)
1,141,740
12,807
192,990
(1,239,921)
(6,257,514)
(1,849,518)
167,692
(1,016,571)
(341,592)
(2,303,364)
11,650,850
4,119,375
(299,339)
1,620,876
(3,866,008)
(6,972,854)
3,622
(87,631,686)
106,658,218
(120,000)
270,000
(279,043)
286,760
—
(1,830,000)
—
—
—
10,385,017
78,726
(3,250)
(32,629)
—
—
—
(1,202,365)
6,918,564
(7,347,941)
(27,489)
—
(1,616,384)
(121,896)
4,780,729
18,374,564
23,155,293
4,172,758
—
217,922
279,355
—
—
274,347
77,187
3,377,977
(26,315)
65,362
—
(55,458)
2,369,041
(969,134)
(170,193)
(64,394)
1,529,464
(4,473)
200,892
279,387
2,895,477
2,600,019
(329,704)
(1,255,825)
61,014
453,382
4,870,777
1,827,860
177,264
1,505,787
(1,381,546)
(14,340,771)
73,064
(43,899,109)
47,753,555
—
—
(421,729)
—
10,750
(35,000)
(43,000)
16,865
—
(10,885,375)
86,820
(250)
—
—
—
8,120,765
(3,387,648)
8,014,434
(6,096,018)
(37,511)
20,962,289
27,662,881
70,254
15,466,214
23,155,293
38,621,507
4,445,749
—
—
303,163
—
—
285,479
35,975
475,778
(3,706)
9,206
—
(7,811)
333,672
(136,500)
(23,971)
(9,070)
215,420
(630)
28,295
39,351
407,819
366,205
(46,438)
(176,879)
8,594
63,858
686,035
257,449
24,967
212,085
(194,587)
(2,019,855)
10,290
(6,183,060)
6,725,948
—
—
(59,399)
—
1,514
(4,930)
(6,056)
2,375
—
(1,533,173)
12,228
(35)
—
—
—
1,143,786
(477,140)
1,128,809
(858,606)
(5,283)
2,952,477
3,896,236
9,895
2,178,371
3,261,355
5,439,726
626,171
—
—
42,700
—
—
40,209
5,067
The accompanying notes are an integral part of these consolidated financial statements.
F-10
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
1. Organization and Nature of Operations
NIO Inc. (“NIO”, or the “Company”) was incorporated under the laws of the Cayman Islands in November 2014, as an exempted
company with limited liability. The Company was formerly known as NextCar Inc. It changed its name to NextEV Inc. in December
2014, and then changed to NIO Inc. in July 2017. The Company, its subsidiaries and consolidated variable interest entities (the “VIEs”)
are collectively referred to as the “Group”.
The Group designs and develops electric vehicles and jointly manufactures its vehicles through strategic collaboration with other
Chinese vehicle manufacturers during the reporting periods. The Group also offers power solutions and comprehensive value-added
services to its users. As of December 31, 2023, the Group’s primary operations are conducted in the People’s Republic of China (the
“PRC”) and the Company’s principal subsidiaries and VIEs are as follows:
Subsidiaries
Nio Nextev Limited (“NIO HK”) (formerly known as Nextev Limited)
NIO GmbH (formerly known as NextEV GmbH)
NIO Co., Ltd. (“NIO SH”) (formerly known as NextEV Co., Ltd.)
NIO USA, Inc. (“NIO US”) (formerly known as NextEV USA, Inc.)
XPT Limited (“XPT”)
XPT (Jiangsu) Investment Co., Ltd. (“XPT Jiangsu”)
Shanghai XPT Technology Limited
XPT (Nanjing) E-Powertrain Technology Co., Ltd. (“XPT NJEP”)
XPT (Nanjing) Energy Storage System Co., Ltd. (“XPT NJES”)
NIO Power Express Limited (“PE HK)
NIO User Enterprise Limited (“UE HK”)
NIO Sales and Services Co., Ltd. (“UE CNHC”) (formerly known as Shanghai
NIO Sales and Service Co., Ltd. )
NIO Energy Investment (Hubei) Co., Ltd. (“PE CNHC”)
Wuhan NIO Energy Co., Ltd. (“PE WHJV”)
NIO Holding Co., Ltd. (“NIO China”) (formerly known as NIO (Anhui) Holding
Co., Ltd.) (Note (a))
XPT (Jiangsu) Automotive Technology Co., Ltd. (“XPT AUTO”)
NIO Financial Leasing Co., Ltd. (“NIO Leasing”)
NIO (Anhui) Co., Ltd. (“NIO AH”)
NIO Technology (Anhui) Co., Ltd. (“NIO R&D”)
New Horizon B.V.
NIO Nextev Europe Holding B.V.(“NIO NL”)
NEU Battery Asset Co., Ltd. (“BAC Cayman”)
Instant Power Europe B.V. (“BAC NL”) Co., Limited
NEU Battery Asset (Hong Kong) Co.Limited (“BAC HK”)
NIO AI Technology Limited (“NIO AI Technology”)
NIO AI Technology Limited
Anhui NIO Autonomous Driving Technology Co., Ltd. (“Anhui NIO AD”)
XTRONICS (Nanjing) Automotive Intelligent Technologies Co. Ltd. (“XPT
NJWL”) (Note (b))
Equity
interest held
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Place and Date of incorporation
or date of acquisition
Hong Kong, February 2015
Germany, May 2015
Shanghai, PRC, May 2015
United States, November 2015
Hong Kong, December 2015
Jiangsu, PRC, May 2016
Shanghai, PRC, May 2016
Nanjing, PRC, July 2016
Nanjing, PRC, October 2016
Hong Kong, January 2017
Hong Kong, February 2017
Principal activities
Investment holding
Design and technology development
Headquarter and technology development
Technology development
Investment holding
Investment holding
Technology development
Manufacturing of E-Powertrain
Manufacturing of battery
Investment holding
Investment holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
96.970%
96.970%
96.970%
Shanghai, PRC, March 2017
Wuhan PRC, April 2017
Wuhan, PRC, May 2017
Investment holding and sales and after sales management
Investment holding
Investment holding
Anhui, PRC, November 2017
Nanjing, PRC, May 2018
Shanghai, PRC, August 2018
Anhui, PRC, August 2020
Anhui, PRC, August 2020
Netherlands, November 2022
Netherlands, December 2020
Cayman Islands, May 2021
Netherlands, June 2021
Hong Kong, July 2021
Cayman Islands, March 2021
Hong Kong, May 2021
Anhui, PRC, June 2021
Headquarter and technology development
Investment holding
Financial Leasing
Industrialization and technology development
Design and technology development
Investment holding
Investment holding
Investment holding
Battery Subscription Service
Investment holding
Investment holding
Investment holding
Technology development
50%
Nanjing, PRC, June 2017
Manufacturing of components
VIE and VIE’s subsidiaries
Prime Hubs Limited (“Prime Hubs”)
Beijing NIO Network Technology Co., Ltd. (“Beijing NIO”)
Anhui NIO AI Technology Co., Ltd. (“Anhui NIO AT”)
Anhui NIO Data Technology Co., Ltd. (“Anhui NIO DT”)
NIO Insurance Broker Co., Ltd(“NIO IB”) (formerly known as Huiding Insurance Broker Co., Ltd)
Place and Date of incorporation
or date of acquisition
BVI, October 2014
Beijing, PRC, July 2017
Anhui, PRC, April 2021
Anhui, PRC, October 2022
Anhui, PRC, January 2023
F-11
Table of Contents
Note (a) - NIO China
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
As of December 31, 2022 and 2023, the Company held 92.114% of total paid-in capital of NIO China. In accordance with NIO
China’s share purchase agreement, the redemption of the non-controlling interests is at the holders of non-controlling interests’ option
and is upon the occurrence of the events that are not solely within the control of the Company. Therefore, these redeemable non-
controlling interests in NIO China were classified as mezzanine equity and are subsequently accreted to the redemption price using the
agreed interest rate as a reduction of additional paid in capital (Note 21). With the redemption feature of the non-controlling interests, the
Company is considered to effectively have 100% equity interest of NIO China as of December 31, 2022 and 2023.
Note (b) - XPT NJWL
In accordance with the Article of Association of XPT NJWL, the Company has the power to control the board of directors of XPT
NJWL to unilaterally govern the financial and operating policies of XPT NJWL, and the non-controlling shareholder does not have
substantive participating rights. As a result, the Group consolidates XPT NJWL.
Variable interest entities
Prime Hubs
In October 2014, Prime Hubs, a British Virgin Islands (“BVI”) incorporated company, was established by Li Bin, the shareholder of
the Group, to facilitate the adoption of the Company’s employee stock incentive plans on behalf of the Company. The Company entered
into a management agreement with Prime Hubs and Li Bin. The agreement enables the Company to direct the activities that most
significantly impact Prime Hubs’s economic performance and enable the Company to obtain substantially all of the economic benefits
arising from Prime Hubs. As of December 31, 2022 and 2023, Prime Hubs held 4,250,002 Class A Ordinary Shares of the Company,
respectively, other than which, Prime Hubs did not have any operations, nor any material assets or liabilities. All restricted shares granted
under the Company’s Prime Hubs Restricted Shares Plan have been fully vested.
Beijing NIO
In April 2018, the Group entered into a series of contractual arrangements with Beijing NIO and its individual shareholders (the
“Nominee Shareholders”), including, among others, an exclusive business cooperation agreement, a loan agreement, an equity pledge
agreement, an exclusive call option agreement and a power of attorney, which enable the Company to direct the activities that most
significantly impact Beijing NIO’s economic performance and obtain substantially all of the economic benefits arising from Beijing NIO.
Management concluded that Beijing NIO is a variable interest entity and the Company is the ultimate primary beneficiary of Beijing NIO
and hence consolidates the financial results of Beijing NIO. The Group operates value-added telecommunication services, including
without limitation, performing internet information services, as well as holding certain related licenses, through Beijing NIO. For the
years ended December 31, 2021, 2022 and 2023, the financial position, result of operations and cash flow activities of Beijing NIO were
immaterial to the consolidated financial statements.
F-12
Table of Contents
Anhui NIO AT
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
In April 2021, Anhui NIO AT, was established by individual shareholders (the “Nominee Shareholders”). Anhui NIO AD entered
into a management agreement with Nominee Shareholders. The agreement enables the Company to direct the activities that most
significantly impact Anhui NIO AT’s economic performance, and enabled the Company to obtain substantially all of the economic
benefits arising from them. Management concluded that Anhui NIO AT is a variable interest entity and the Company is the ultimate
primary beneficiary of Anhui NIO AT and hence consolidates the financial results of Anhui NIO AT. In November 2022, concurrent with
the termination of the said management agreement, the Group entered into a series of contractual arrangements with the Nominee
Shareholders as well as Anhui NIO AT, including, among others, an exclusive business cooperation agreement, a loan agreement, an
equity pledge agreement, an exclusive call option agreement and a power of attorney. These agreements enable the Company to direct the
activities that most significantly impact Anhui NIO AT’s economic performance and enable the Company to obtain substantially all of
the economic benefits arising from Anhui NIO AT. Management concluded that Anhui NIO AT continues to be a variable interest entity
and the Company remains as the ultimate primary beneficiary of Anhui NIO AT. Therefore, the Group continues to consolidate the
financial results of Anhui NIO AT’s financial statements. The Group intends to obtain requisite licenses for certain supporting functions
during the development of autonomous driving technology through Anhui NIO AT. For the years ended December 31, 2021, 2022 and
2023, the financial position, result of operations and cash flow activities of Anhui NIO AT were immaterial to the consolidated financial
statements.
Anhui NIO DT and NIO IB
In October 2022, the Group entered into a series of contractual arrangements with Anhui NIO DT and its individual shareholders
(the “Nominee Shareholders”), including, among others, an exclusive business cooperation agreement, a loan agreement, an equity
pledge agreement, an exclusive call option agreement and a power of attorney, which enable the Group to direct the activities that most
significantly impact Anhui NIO DT’s economic performance and obtain substantially all of the economic benefits arising from Anhui
NIO DT. Management concluded that Anhui NIO DT is a variable interest entity and the Company is the ultimate primary beneficiary of
Anhui NIO DT and hence consolidates the financial results of Anhui NIO DT in the Group’s consolidated financial statements. In
January 2023, Anhui NIO DT acquired NIO IB. NIO IB was a company holding the insurance brokerage license and does not meet the
criteria necessary to be defined as a business under US GAAP. Accordingly, the Group accounted for this transaction as an asset
acquisition.The Group provides insurance brokerage services which are mainly vehicle-related and property-related and holds requisite
licenses through Anhui NIO DT and NIO IB. For the years ended December 31, 2022 and 2023, the financial position, result of
operations and cash flow activities of Anhui NIO DT were immaterial to the consolidated financial statements.
Shanghai Anbin
The Company, the ultimate shareholder of NIO SH, was the ultimate primary beneficiary of Shanghai Anbin Technology Co., Ltd.
(“Shanghai Anbin”) and its subsidiary and hence consolidated the financial results of Shanghai Anbin and its subsidiary in the Group’s
consolidated financial statements, pursuant to a series of contractual agreements, including, among others, an exclusive business
corporation agreements, a loan agreement, an equity pledge agreement, an exclusive call option agreement and a power of attorney
entered into among NIO SH, Shanghai Anbin and its nominee shareholders in April 2018. On March 31, 2021, all parities agreed to
terminate above mentioned contractual agreements, after which, the Company was no longer the ultimate primary beneficiary of
Shanghai Anbin and deconsolidated the financial results of Shanghai Anbin and its subsidiary. The deconsolidation of Shanghai Anbin
and its subsidiary did not have significant impact on the Group’s consolidated financial statements. Before the deconsolidation, the
financial position, result of operations and cash flow activities of Shanghai Anbin and its subsidiary were immaterial to the consolidated
financial statements.
Liquidity and Going Concern
The Group’s consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will
continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal
course of operations as they come due.
The Group has been incurring losses from operations since inception. The Group incurred net losses of RMB4.0 billion and
RMB14.4 billion and RMB20.7 billion for the years ended December 31, 2021, 2022 and 2023, respectively. The Group incurred
operating cash outflow of RMB3.9 billion and RMB1.4 billion for the years ended December 31, 2022 and 2023, respectively.
Accumulated deficit amounted to RMB69.9 billion and RMB90.8 billion as of December 31, 2022 and 2023, respectively.
F-13
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
As of December 31, 2023, the Group’s balance of cash and cash equivalents was RMB32.9 billion and short-term investments of
RMB16.8 billion and the Group had net current assets of RMB12.6 billion. Management has evaluated the sufficiency of its working
capital and concluded that the Group’s available cash and cash equivalents and short-term investments will be sufficient to support its
continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of
issuance of these consolidated financial statements. Accordingly, management continues to prepare the Group’s consolidated financial
statements on going concern basis.
2. Summary of Significant Accounting Policies
(a) Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”). Significant accounting policies followed by the Group in the preparation of the
accompanying consolidated financial statements are summarized below.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIEs for which the
Company is the ultimate primary beneficiary.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the
power to appoint or remove the majority of the members of the board of directors (the “Board”): to cast majority of votes at the meeting
of the Board or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or
equity holders.
The Company applies the guidance under Accounting Standard Codification 810, Consolidations (“ASC 810”) on accounting for the
VIEs. A VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to
permit the entity to finance its activities without additional financial support; (b) as a group, the holders of the equity investment at risk
lack the ability to make certain decisions, the obligation to absorb expected losses or the right to receive expected residual returns, or (c)
an equity investor has voting rights that are disproportionate to its economic interest and substantially all of the entity’s activities are on
behalf of the investor. ASC 810 requires variable interest entities to be consolidated by the primary beneficiary which has a controlling
financial interest of variable interest entities. The Company is considered as the primary beneficiary of the VIEs and thus consolidates
the financial statements each of these entities under U.S. GAAP.
All significant transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon
consolidation. The non-controlling interests in consolidated subsidiaries are shown separately in the consolidated financial statements.
(c) Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance
sheet date, and the reported revenue and expenses during the reported period in the consolidated financial statements and accompanying
notes. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to,
standalone selling price of each distinct performance obligation in revenue recognition, warranty liabilities, fair value of available-for-
sale debt security investments and equity securities using fair value option investments, lower of cost and net realizable value of
inventories, inventory valuation for excess and obsolete inventories, losses on purchase commitments, allowance for current expected
credit loss, depreciable lives of property, equipment and software, impairment of long-lived assets, determination and allocation of
standalone transaction price regarding multiple performance obligations, subsequent measurement of equity securities measured under
measurement alternatives, discount rate of lease liabilities, fair value of short-term investments, valuation of deferred tax assets,
valuation and recognition of share-based compensation arrangements, as well as current or non-current classification of receivables.
Actual results could differ from those estimates.
F-14
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(d) Functional currency and foreign currency translation
The Group’s reporting currency is the Renminbi (“RMB”). The functional currency of the Company and its subsidiaries which are
incorporated in HK is United States dollars (“US$”), except NIO Sport which operates mainly in United Kingdom and uses Great Britain
pounds (“GBP”). The functional currencies of the other subsidiaries and the VIEs are their respective local currencies. The determination
of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters.
Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the
exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into
functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of
historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or
losses arising from foreign currency transactions are included in the consolidated statements of comprehensive loss.
The financial statements of the Group’s entities of which the functional currency is not RMB are translated from their respective
functional currency into RMB. Assets and liabilities denominated in foreign currencies are translated into RMB at the exchange rates at
the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the appropriate
historical rates. Income and expense items are translated into RMB using the periodic average exchange rates. The resulting foreign
currency translation adjustments are recorded in other comprehensive loss in the consolidated statements of comprehensive income or
loss, and the accumulated foreign currency translation adjustments are presented as a component of accumulated other comprehensive
loss in the consolidated statements of shareholders’ equity. Total foreign currency translation adjustment (losses)/ income were a loss of
RMB230,345, an income of RMB717,274, and an income of RMB11,514 for the years ended December 31, 2021, 2022 and 2023,
respectively. The grant-date fair value of the Group’s share-based compensation expenses is reported in US$ as the respective valuation
is conducted in US$ and the shares are denominated in US$.
(e) Convenience translation
Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated
statements of cash flows from RMB into US$ as of and for the years ended December 31, 2023 are solely for the convenience of the
reader and were calculated at the rate of US$1.00 = RMB7.0999, representing the noon buying rate in The City of New York for cable
transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 29, 2023. No representation
is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on, or
December 31, 2023, or at any other rate.
(f) Fair value
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or
permitted to be either recorded or disclosed at fair value, the Group considers the principal or most advantageous market in which it
would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based
upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs
that may be used to measure fair value:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — Observable, market-based inputs, other than quoted prices, in active markets for identical assets or liabilities.
Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets
or liabilities.
As disclosed in Note 2(n), the Group’s equity securities with readily determinable fair values are carried at fair value using quoted
market prices that currently available on a securities exchange and classified within Level 1.
F-15
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Group’s investments in money market funds, financial products issued by banks and certain retained asset-backed securities are
carried at fair value, which are classified within Level 2 and valued using directly or indirectly observable inputs in the market place. As
of December 31, 2022 and 2023, such investments aggregately amounted to RMB12,781,060 and RMB8,473,612, respectively.
As disclosed in Note 2(q), the Group’s derivative instruments are carried at fair value, which are classified within Level 2 and valued
using indirectly observable inputs in the market place.
As disclosed in Note 9, the Group’s available-for-sale debt security investments include investments the Group made in private
companies which contains substantive redemption and preferential rights. The Group’s equity securities investments measured using fair
value option include an investment the Group made in a private company which contains certain preferential rights. Such investments are
classified within Level 3 for fair value measurement. As of December 31, 2022 and 2023, the carrying values of the investments were
RMB1,648,861. The Group re-measured the respective fair values using a market approach by adopting a backsolve method, which
determined the estimated fair value of the investments through comparison to a recent transaction and applied significant unobservable
inputs and assumptions. For the years ended December 31, 2022 and 2023, RMB746,336 and nil, respectively, of fair value changes, net
of tax, were recorded in either comprehensive income, in the case of available-for-sale debt security investments, or investment
income/(losses), in the case of equity securities investments using fair value option . The significant unobservable inputs adopted in the
valuation as of December 31, 2022 and 2023 are as follows:
Unobservable Input
Expected volatility
Probability
December 31, 2022
December 31, 2023
54%-61%
44%-51%
Liquidation scenario: 25%-40%
Redemption scenario: 25%-40%
IPO scenario: 20%-50%
Liquidation scenario: 35%-40%
Redemption scenario: 0%-35%
IPO scenario: 30%-60%
Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, restricted cash, short-term investments,
trade receivable, amounts due from related parties, deposits and other receivables, available-for-sale debt security investments, retained
asset-backed securities, trade and notes payable, amounts due to related parties, other payables, derivative instruments, short-term
borrowings, lease liabilities and long-term borrowings. As of December 31, 2022 and 2023, other than as discussed above, the carrying
values of these financial instruments approximated to their respective fair values.
(g) Cash, cash equivalents and restricted cash
Cash and cash equivalents represent cash at hand, time deposits and highly-liquid investments placed with banks or other financial
institutions, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.
Cash which is restricted to withdrawal for use or pledged as security is reported separately on the face of the consolidated balance
sheets. The Group’s restricted cash mainly represents (a) secured deposits held in designated bank accounts for borrowings and corporate
bank credit cards, bank acceptance notes,letter of credit and letters of guarantee; and (b) time deposits that are pledged for property
leases. The restricted cash is classified according to the contractual term of the restriction imposed.
Cash, cash equivalents and restricted cash as reported in the consolidated statements of cash flows are presented separately on our
consolidated balance sheets as follows:
Cash and cash equivalents
Restricted cash
Long-term restricted cash
Total
F-16
December 31,
2022
19,887,575
3,154,240
113,478
23,155,293
December 31,
2023
32,935,111
5,542,271
144,125
38,621,507
Table of Contents
(h) Short-term investments
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Short-term investments consist primarily of investments in fixed deposits with maturities between three months and one year, which
are stated at amortised cost, and investments in money market funds and financial products issued by banks, which are measured at fair
value. As of December 31, 2022 and 2023, the short-term investments amounted to RMB19,171,017 and RMB16,810,107, respectively,
among which, RMB12,259,459 and RMB11,520,514, were restricted as collateral for notes payable, bank borrowings and letter of
guarantee as of December 31, 2022 and 2023, respectively.
(i) Expected credit losses
The Group accounts for the impairment of financial instruments in accordance with ASU No. 2016-13, “Financial Instruments —
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), effective from January 1, 2020.
The Group’s trade and notes receivable, receivables of installment payments, deposits and other receivables are within the scope of ASC
Topic 326. The Group has identified the relevant risk characteristics of its customers and the related receivables, prepayments, deposits
and other receivables which include size, type of the services or the products the Group provides, or a combination of these
characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the
historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in
assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer
demographics, payment terms offered in the normal course of business to customers, and industry-specific factors that could impact the
Group’s receivables. Additionally, external data and macroeconomic factors are also considered. This is assessed at each quarter based on
the Group’s specific facts and circumstances.
For the years ended December 31, 2021, 2022 and 2023, the Group recorded RMB54,332, RMB48,707 and reversed RMB26,315,
respectively, in expected credit loss provisions in selling, general and administrative expenses. As of December 31, 2023, the expected
credit loss reserve for current and non-current assets are RMB60,384 and RMB53,357, respectively. As of December 31, 2022, the
expected credit loss reserve for current and non-current assets are RMB50,415 and RMB89,641, respectively.
Balance as at December 31, 2022
Current assets:
Trade and notes receivable
Amounts due from related parties
Prepayments and other current assets
Non-current assets:
Other non-current assets
Balance as at December 31, 2023
Current assets:
Trade and notes receivable
Amounts due from related parties
Prepayments and other current assets
Non-current assets:
Other non-current assets
Original
amount
Expected
credit loss
Rate
Expected
credit loss
provision
5,157,814
1,387,694
2,250,441
0.77 % 39,644
0.49 % 6,738
0.18 % 4,033
7,488,200
1.20 % 89,641
Original
amount
Expected
credit loss
Rate
Expected
credit loss
provision
4,703,829
1,731,399
3,440,174
0.98 % 46,177
0.51 % 8,796
5,411
0.16 %
4,936,918
1.08 % 53,357
F-17
Table of Contents
(j) Inventory
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the average basis and includes all costs to
acquire and other costs to bring the inventories to their present location and condition. The Group records inventory write-downs for
excess or obsolete inventories or accrues costs of inventory commitments based upon assumptions on current and future demand
forecasts. If the inventory on hand or inventory purchase commitments is in excess of future demand forecast, the excess amounts are
written down or accrued. The Group also reviews inventory to determine whether its carrying value exceeds the net amount realizable
upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the vehicles less the estimated
cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is
established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost
basis.
(k) Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property, plant and
equipment are depreciated at rates sufficient to write off their costs less impairment and residual value, if any, over their estimated useful
lives on a straight-line basis. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the
related assets.
The estimated useful lives are as follows:
Buildings and constructions
Production facilities
Charging & battery swap equipment
R&D equipment
Computer and electronic equipment
Purchased software
Leasehold improvements
Vehicles for corporate use or customers’ subscription
Others (office equipment, after-sales equipment, etc)
Useful lives
20 years
10 years
5 to 8 years
5 years
3 years
3 to 5 years
Shorter of the estimated useful life or remaining lease term (ranging from
1-10 years)
5 years
3 to 5 years
Depreciation for mold and tooling is computed using the units-of-production method, including capitalized interest costs which are
amortized over the total estimated units of production of the related assets.
The cost of maintenance and repairs is expensed as incurred, whereas the cost of renewals and betterment that extends the useful
lives of property, plant and equipment is capitalized as additions to the related assets. Interest expense on outstanding debt is capitalized
during the period of significant capital asset construction. Capitalized interest on construction-in-progress is included within property,
plant and equipment and is amortized over the useful life or units of production of the related assets. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation and amortization are removed from their respective accounts, and any gain or
loss on such sale or disposal is reflected in the consolidated statements of comprehensive loss.
(l) Intangible assets, net
Definite lived intangible assets are carried at cost less accumulated amortization and impairment, if any. Definite lived intangible
assets are amortized using the straight-line method over the estimated useful lives as below:
Domain name
5 years
Useful lives
The Group estimates the useful life of the domain name to be 5 years based on the contract terms, expected technical obsolescence
and innovations and industry experience of such intangible assets.The estimated useful lives of amortized intangible assets are reassessed
if circumstances occur that indicate the original estimated useful lives have changed.
F-18
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Intangible assets with an indefinite useful life represent the insurance brokerage license, and is carried at cost less any subsequent
impairment loss. The Group expects, based upon regulatory precedent, the license can be renewed, on a perfunctory basis, upon
expiration and believes that the license is unlikely to be terminated and will continue to contribute revenue in the future. Therefore, the
Group considers the useful life of this intangible asset to be indefinite.
(m) Land use rights, net
Land use rights are recorded at cost less accumulated amortization. Amortization is provided on a straight-line basis over the
respective lease period ranging from 491 to 536 months.
(n) Long-term investments
The Group’s long-term investments include equity investments in entities and debt security investments.
Investments in entities in which the Group can exercise significant influence and holds an investment in voting common stock or in
substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the
equity method of accounting in accordance with ASC topic 323, Investments — Equity Method and Joint Ventures (“ASC 323”). Under
the equity method, the Group initially records its investments at fair value. The Group subsequently adjusts the carrying amount of the
investments to recognize the Group’s proportionate share of each equity investee’s net income or loss into earnings after the date of
investment. The Group evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity
method investments is recognized in earnings when the decline in value is determined to be other-than-temporary.
Equity securities with readily determinable fair values and over which the Group has neither significant influence nor control
through investments in common stock or in-substance common stock are measured at fair value, with changes in fair value reported
through earnings.
Equity securities without readily determinable fair values and over which the Group has neither significant influence nor control
through investments in common stock or in-substance common stock are measured and recorded using a measurement alternative that
measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.
The Group elected the fair value option (“FVO”) at the date of initial recognition under ASC 825 for certain equity securities, with
changes in fair value reported through earnings.
Available-for-sale debt security investments are reported at estimated fair value with the aggregate unrealized gains and losses, net
of tax, reflected in accumulated other comprehensive loss in the consolidated balance sheets. Gain or losses are realized when the
investments are sold or when dividends are declared or payments are received or when other than temporarily impaired.
Held-to-maturity debt security investment are reported at amortized cost. The securities are held to collect contractual cash flows,
and the Group has the positive intent and ability to hold those securities to maturity.
Trading securities are acquired and held principally for the purpose of selling them. The securities are reported at fair value, and
subsequent changes in the fair value are recognized through net income. As disclosed in Note 9, the Group elects to classify the retained
asset-backed securities as trading securities. Subsequent changes in the fair value are recognized through net income.
The Group monitors its investments measured under equity method for other-than-temporary impairment by considering factors
including, but not limited to, current economic and market conditions, the operating performance of the companies including current
earnings trends and other company-specific information. No impairment charge was recognized for the years ended December 31, 2021,
2022 and 2023.
F-19
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(o) Impairment of long-lived assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change
to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that
the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment by
comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the
assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the
assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets.
Impairment charges recognized for the years ended December 31, 2021, 2022 and 2023 was nil,RMB35,011 and nil, respectively.
(p) Warranty liabilities
The Group accrues a warranty reserve for all new vehicles sold by the Group, which includes the Group’s best estimate of the
projected costs to repair or replace items under warranty. These estimates are based on actual claims incurred to date and an estimate of
the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Group’s relatively short history of
sales, and changes to the historical or projected warranty experience may cause material changes to the warranty reserve when the Group
accumulates more actual data and experience in the future.
The portion of the warranty reserve expected to be incurred within the next 12 months is included within accruals and other
liabilities, while the remaining balance is included within other non-current liabilities on the consolidated balance sheets. Warranty
expense is recorded as a component of cost of revenues in the consolidated statements of comprehensive loss.
The following table shows a reconciliation in the current reporting period related to carried-forward warranty liabilities.
Warranty – beginning of year
Provision for warranty
Warranty costs incurred
Warranty– end of year
(q) Derivatives instruments and hedging
For the Year Ended December 31,
2022
1,962,977
1,128,920
(144,960)
2,946,937
2021
952,946
1,078,854
(68,823)
1,962,977
2023
2,946,937
1,222,916
(257,629)
3,912,224
Derivative instruments are carried at fair value, which generally represent the estimated amounts expect to receive or pay upon
termination of the contracts as of the reporting date. Derivative financial instruments are not used for trading or speculative purposes.
The Group has entered into several currency exchange forward contracts with certain commercial banks in PRC to mitigate the risks
of foreign exchange gain/loss generated from the Group’s balances of cash and cash equivalents and short-term investments denominated
in US dollars. As such instruments do not qualify for hedge accounting treatment, the Group records the changes in fair value of the
derivatives in other (loss)/income, net, the same line item in which foreign exchange gain/loss is recognised, with offsetting effect. Total
changes in fair value of the derivatives recorded in other (loss)/income, net, were a loss of RMB668,051 for the year ended December
31, 2022. As of December 31, 2022, all the currency exchange forward contracts have been fully executed and the Group did not enter
into any currency exchange forward contracts during the year ended December 31, 2023.
The Group has entered into several swap contracts with a commercial bank to hedge the risks of commodity price associated with
the forecasted purchasing transactions. The Group applies cash flow hedge accounting since the hedge relationship is effective. The
changes in fair value of the hedging instruments are initially recorded in other comprehensive income, and the amounts in accumulated
other comprehensive income related to the fair value changes in the hedging instruments are released into the Group’s earnings when the
hedged items affect earnings. For the years ended December 31, 2022 and 2023, both the changes in fair value of the hedging
instruments through other comprehensive income and the amounts in accumulated other comprehensive income related to the fair value
changes in the hedging instruments that were released into earnings were immaterial.
F-20
Table of Contents
(r) Revenue recognition
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Revenue is recognized when or as the control of the goods or services is transferred to a customer. Depending on the terms of the
contract and the laws that apply to the contract, control of the goods and services may be transferred over time or at a point in time.
Control of the goods and services is transferred over time if the Group’s performance:
● provides all of the benefits received and consumed simultaneously by the customer;
● creates and enhances an asset that the customer controls as the Group performs; or
● does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance
completed to date.
If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the
progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the
customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Group allocates revenue to
each performance obligation based on its relative standalone selling price. The Group determines standalone selling prices based on the
prices charged to customers. If the standalone selling price is not directly observable, it is estimated using expected cost plus a margin or
adjusted market assessment approach, depending on the availability of observable information. Assumptions and estimations have been
made in estimating the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and
estimates may impact the revenue recognition.
When either party to a contract has performed, the Group presents the contract in the consolidated balance sheets as a contract asset
or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment.
A contract asset is the Group’s right to consideration in exchange for goods and services that the Group has transferred to a
customer. A receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional
if only the passage of time is required before payment of that consideration is due. As of December 31, 2022 and 2023, the Group did not
record any contract assets.
A contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. The Group’s contract liabilities primarily resulted from the
multiple performance obligations identified in the customer contract, which is recorded as deferred revenue and advance from customers.
The Group generates revenue from (i) vehicle sales, (ii) parts, accessories and after-sales vehicle services, (iii) provision of power
solutions and (iv) others. The Group’s revenue sources for the comparative periods as disclosed in Note (16) have been revised to
conform with the current year classification which depicts the nature and amounts of the Group’s major revenue streams for the most
recent period.
Vehicle sales
The Group generates revenue from sales of electric vehicles, together with a number of embedded products and services through a
series of contracts. The Group identifies the users who purchase the vehicle as its customers. In general, there are multiple distinct
performance obligations explicitly stated in a series of contracts in addition to sales of vehicles, which may include home chargers,
vehicle connectivity services, extended warranty services and battery swapping services which are accounted for in accordance with
ASC 606. In the PRC, initial users are entitled to vehicle connectivity services, extended warranty services and battery swapping
services. The standard warranty provided by the Group is accounted for in accordance with ASC 460, Guarantees, and the estimated
costs are recorded as a liability when NIO transfers the control of vehicle to a user.
F-21
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Customers only pay the amount after deducting the government subsidies to which they are entitled for the purchase of electric
vehicles. The government subsidies are applied and collected by the Group or Jianghuai Automobile Group Co., Ltd. (“JAC”) from the
government. The government subsidy is considered as a part of the transaction price it charges the customers for the electric vehicle, as
the subsidy is granted to the buyer of the electric vehicle instead of the Group and the buyer remains liable for such amount to the Group
in the event the subsidies were not received by the Group. The Group or JAC applies and collects the payment on behalf of the
customers.
In the instance that some eligible customers elect installment payment for battery or the auto financing arrangements, the Group
believes such arrangement contains a significant financing component and as a result adjusts the transaction price to reflect the impact of
time value on the transaction price using an appropriate discount rate (i.e. the interest rates of the loan reflecting the credit risk of the
borrower). Interest income from such arrangements with a significant financing component is presented as other sales. Receivables
related to the battery installment payment and auto financing programs that are expected to be repaid by customers beyond one year of
the dates of the financial statements are recognized as non-current assets. The difference between the gross receivable and the respective
present value is recorded as unrealized finance income. Interest income from such arrangements with a significant financing component
is presented separately from revenue from contracts with customers.
The Group generally determines standalone selling prices based on the prices charged to customers. If the standalone selling price is
not directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach, considering the
Group’s pricing policies and practices, and the data utilized in making pricing decisions. The overall contract price is then allocated to
each distinct performance obligation based on the relative estimated standalone selling price in accordance with ASC 606. The revenue
for vehicle sales and home chargers are recognized at a point in time when the control of the product is transferred to the customer. For
the vehicle connectivity services and battery swapping services, the Group recognizes the revenue over time using a straight-line method
during the estimated beneficial period, based on the estimated length of time that the initial owner owns the vehicles before it is re-sold
to secondary market. As for the extended warranty services, given limited operating history and lack of historical data, the Group decides
to recognize the revenue over time based on a straight-line method initially, and will continue monitoring the cost pattern periodically
and adjust the revenue recognition pattern to reflect the actual cost pattern as it becomes available.
As the consideration for the vehicle and all embedded services are generally paid in advance, which means the payments received
are prior to the transfer of goods or services by the Group, the Group records a contract liability (deferred revenue) for the allocated
amount regarding those unperformed obligations. As of December 31, 2022 and 2023, the balances of contract liabilities (deferred
revenue) from vehicle sales contracts were RMB3,740,108 and RMB5,040,125 respectively.
Battery as a Service (BaaS)
The Battery as a Service (the “BaaS”), allows users to purchase electric vehicles without batteries and subscribe for the usage of
batteries separately. In PRC, under the BaaS, the Group sells batteries to Wuhan Weineng Battery Asset Co., Ltd. (the “Battery Asset
Company”), an equity investee of the Group, on a back-to-back basis when the Group sells the vehicle to the BaaS users and the BaaS
users subscribe for the usage of the batteries from the Battery Asset Company by paying a monthly subscription fee to the Battery Asset
Company. The promise to transfer the control of the batteries to the Battery Asset Company is the only performance obligation in the
contract with the Battery Asset Company for the sales of batteries. The Group recognizes revenue from the sales of batteries to the
Battery Asset Company when the vehicles (together with the batteries) are delivered to the BaaS users which is the point considered then
the control of the batteries is transferred to the Battery Asset Company.
Together with the sales of the batteries, the Group entered into service agreements with the Battery Asset Company, pursuant to
which the Group provides services to the Battery Asset Company including batteries monitoring, maintenance, upgrade, replacement, IT
system support, etc., with monthly service charges. In case of any default in payment of monthly rental fees from users, the Battery Asset
Company also has right to request the Group to track and lock down the battery subscribed by the users to limit its usage. In addition, in
furtherance of the BaaS, the Group agreed to provide guarantee to the Battery Asset Company for the default in payment of monthly
subscription fees from users. The maximum amount of guarantee that can be claimed by the Battery Asset Company for the users’
payment default shall not be higher than the accumulated service fees the Group receives from the Battery Asset Company.
For services provided to the Battery Asset Company, revenue is recognized over the period when services are rendered. As for
financial guarantee liabilities, the provision of guarantee is linked to and associated with services rendered to the Battery Asset Company
and the payment of guarantee amount is therefore accounted for as the reduction to the revenue from the Battery Asset Company.
F-22
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The fair value of the guarantee liabilities is determined by taking considerations of the default pattern of the Group’s existing battery
installment programs provided to users. At each period end, the financial liabilities are remeasured with the corresponding changes
recorded as the reduction to the revenue. For the years ended December 31, 2023 and 2022, both service revenue and guarantee liability
were immaterial.
Since 2022, the BaaS users are also provided with the option to buy out the batteries in PRC. Under this arrangement, BaaS users
and the Battery Asset Company enter into battery subscription termination agreement, and the Group purchases the outgoing batteries
from the Battery Asset Company, after which the Group sells batteries with qualified performance to the BaaS users. These transactions
are arranged on back-to-back basis under which the Group is in substance rendering the agency service to facilitate the BaaS users which
are also the customers of the Group to complete the purchase of batteries from the Battery Asset Company. The Group therefore
recognizes revenue of the service to facilitate the BaaS batteries buy out transactions on net basis with the amount of the difference
between the consideration the Group receives from the BaaS users for the battery sales and the price of batteries the Group pays to the
Battery Asset Company. Upon the completion of BaaS buy-out, the Group stops to provide battery service and is not obliged to provide
guarantee and warranty related to the relevant batteries to the Battery Asset Company.
Practical expedients and exemptions
The Group follows the guidance on immaterial promises when identifying performance obligations in the vehicle sales contracts and
concludes that roadside assistance is not performance obligation considering that it is value-added service to enhance user experience
rather than critical item for vehicle driving and forecasted that usage of this service will be very limited. The Group also performs an
estimation on the standalone fair value of each promise applying a cost plus margin approach and concludes that the standalone fair value
of roadside assistance is insignificant individually and in aggregate, representing less than 1% of vehicle gross selling price and
aggregate fair value of each individual promise.
Considering the qualitative assessment and the result of the quantitative estimate, the Group concluded not to assess whether
promises are performance obligations as they are immaterial in the context of the contract and the relative standalone fair value
individually and in aggregate is less than 3% of the contract price.
Parts, accessories and after-sales vehicle services
The Group sells parts and accessories to the third party authorized service centers and its users, and provides after-sales vehicle
services to users, including, repair, maintenance, extended warranty services and other vehicle services. Revenue from the sales of parts
and accessories is recognized when the control of the products is transferred to the customers. Revenue from after-sales services is
recognized when the services are rendered.
Provision of power solutions
The Group provides power solutions to users, including, sale of charging piles, provision of battery charging and swapping services,
battery upgrade service, BaaS battery buy-out service and other power solution services. Revenue from the services is recognized when
relevant services are rendered. Revenue from the sales of charging piles is recognized when the control of the products is transferred to
the customers.
Battery swapping service
The Group provides battery swapping service to users with convenient “recharging” experience by swapping the user’s battery for
another one. The battery swapping service is in substance a charging service instead of non-monetary exchanges or sales of batteries as
the batteries involved in such swapping are the same in capacity and very similar in performance. For performance obligation of the
battery swapping service sold together with the vehicles (i.e. monthly free-of-charge quota), the Group recognizes the revenue over time
using a straight-line method in the estimated beneficial period, being the estimated length of time that the initial owner owns the vehicle.
For the battery swapping beyond monthly free-of-charge quota for which additional considerations are paid by the users, the Group
recognizes revenue when the battery swapping service is completed.
F-23
Table of Contents
Battery upgrade service
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Group provides battery upgrade service to both BaaS users and non-BaaS users. The users can exchange their batteries with
lower capacity for the batteries with higher capacity from the Group with a fixed cash consideration. The battery upgrade service is in
substance the provision of incremental battery capacity service to the users instead of non-monetary battery exchanges or sales of battery.
Therefore, under non-BaaS model, the revenue from the battery upgrade service is recognized at the amount of cash consideration paid
by users at a point in time when the service is rendered. Under the BaaS model, since the ownership of originally installed battery
belongs to the Battery Asset Company, when a user requests battery upgrade, the Group actually upgrades the battery that belongs to the
Battery Asset Company and recognize revenue for the battery upgrade service at the amount paid by the Battery Asset Company when
upgrade service is rendered. BaaS users will then pay a higher monthly subscription fee to the Battery Asset Company for subscribing for
the battery with higher capacity.
Others
Other revenues consists of sales of used vehicles, auto financing services, retail merchandise, automotive regulatory credits,
embedded products and services offered together with vehicle sales, including vehicle connectivity services, and other products and
services. Revenue is recognized when relevant services are rendered or control of the products is transferred.
Sales of automotive regulatory credits
New Energy Vehicle (“NEV”) mandate policy launched by China’s Ministry of Industry and Information Technology (“MIIT”)
specifies the NEV credit targets and as all of the Group’s products are NEVs, the Group is able to generate NEV credits above target. The
credits earned per vehicle is dependent on various metrics such as vehicle driving range and battery energy efficiency, and is calculated
based on the MIIT published formula. Excess positive NEV credits are tradable to other vehicle manufacturers through a credit
management system established by the MIIT on a separately negotiated basis. The Group sells these credits at agreed price to other
vehicle manufacturers.
Considerations for automotive regulatory credits are typically received at the point control transfers to the customer, or in
accordance with payment terms customary to the business. The Group recognizes revenue on the sale of automotive regulatory credits at
the time control of the regulatory credits is transferred to the purchasing party as other sales revenue in the consolidated statements of
comprehensive loss.
Incentives
The Group offers a self-managed customer loyalty program in the form of “NIO points”, which can be redeemed to acquire free or
discounted goods or services provided by the Group, including accessories, branded merchandise, and other services. The Group
determines the standalone selling price of each point based on estimated incremental cost. Customers, and NIO users and, fans and
employees have a variety of ways to earn the points. The major accounting policy for its points program is described as follows:
F-24
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(i) Points issued in connection with sales transactions
The Group concludes the points issued in connection with the sales transaction is a material right and accordingly a separate
performance obligation according to ASC 606, and is taken into consideration when allocating the transaction price of the sales. The
Group also estimates the probability of points redemption when performing the allocation based on the historical redemption pattern. The
amount allocated to the points as separate performance obligation is recorded as contract liability (deferred revenue) and revenue should
be recognized when future goods or services are transferred or when the points expire.
(ii) Points issued in other scenarios
NIO users and fans can also earn points through other ways such as inviting friends to test drive or purchase a vehicle, frequent sign-
ins to the Group’s mobile application, participating in NIO community activities, etc. The Group believes these points are to encourage
user engagement and generate market awareness. As a result, the Group accounts for such points as selling, general and administrative
expenses with a corresponding liability recorded under other current liabilities of its consolidated balance sheets upon the points are
issued. The Group estimates liabilities under the customer loyalty program based on cost of the products and services that can be
redeemed, and its estimate of probability of redemption. At the time of redemption, the Group records a reduction of inventory and other
current liabilities. In certain cases where merchandise is sold for cash in addition to points, the Group records revenue of other sales for
the amount of cash received.
For the years ended December 31, 2021, 2022 and 2023, the revenue portion allocated to the points as a separate performance
obligation was RMB371,849, RMB492,925 and RMB863,627, respectively, which is recorded as contract liability (deferred revenue).
For the years ended December 31, 2021, 2022 and 2023, the total points recorded as selling, general and administrative expenses were
RMB155,884, RMB215,201 and RMB162,875, respectively.
As of December 31, 2022 and, 2023, liabilities recorded related to unredeemed points were RMB680,660, and RMB954,709,
respectively.
(s) Cost of Sales
Vehicle
Cost of vehicle sales includes parts, materials, processing fee, labor costs, manufacturing cost (including depreciation of assets
associated with the production) and losses from production related purchase commitments. Cost of vehicle sales also includes reserves
for estimated warranty expenses and charges to write-down the carrying value of the inventory when it exceeds its estimated net
realizable value and to provide for on-hand inventory that is either obsolete or in excess of forecasted demand.
Service and Other
Cost of service and other sales includes direct parts, materials, labor costs, vehicle connectivity costs, depreciation of associated
assets used for providing services, and other cost associated with sales of service and others.
(t) Sales and marketing expenses
Sales and marketing expenses consist primarily of advertising expenses, marketing and promotional expenses, salaries and other
compensation-related expenses to sales and marketing personnel. Advertising expenses consist primarily of costs for the promotion of
corporate image and product marketing. The Group expenses all advertising costs as incurred and classifies these costs under sales and
marketing expenses. For the years ended December 31, 2021, 2022 and 2023, advertising costs totaled RMB529,057, RMB815,619 and
RMB1,242,941, respectively.
F-25
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(u) Research and development expenses
Certain costs associated with developing internal-use software are capitalized when such costs are incurred within the application
development stage of software development. Other than that, all costs associated with research and development (“R&D”) are expensed
as incurred. R&D expenses are primary comprised of charges for R&D and consulting work performed by third parties; salaries, bonuses,
share-based compensation, and benefits for those employees engaged in research, design and development activities; costs related to
design tools; license expenses related to intellectual property, supplies and services; and allocated costs, including depreciation and
amortization, rental fees, and utilities.
(v) General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses, share-based compensation and benefits for employees
involved in general corporate functions, depreciation and amortization of fixed assets which are used in general corporate activities, legal
and other professional services fees, rental and other general corporate related expenses.
(w) Employee benefits
Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which
certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor
regulations require that the PRC subsidiaries and VIEs of the Group make contributions to the government for these benefits based on
certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal
obligation for the benefits beyond the contributions made. Total amounts of such employee benefit expenses, which were expensed as
incurred, were approximately RMB761,417, RMB1,578,273 and RMB2,349,966 for the years ended December 31, 2021, 2022 and
2023, respectively.
(x) Government grants
The Company’s subsidiaries received government subsidies from certain local governments. The Group’s government subsidies
consisted of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has provided for a specific
purpose, such as product development and renewal of production facilities. Other subsidies are the subsidies that the local government
has not specified its purpose for and are not tied to future trends or performance of the Group; receipt of such subsidy income is not
contingent upon any further actions or performance of the Group and the amounts do not have to be refunded under any circumstances.
The Group recorded specific purpose subsidies as advances payable when received. For specific subsidies, upon government acceptance
of the related project development or asset acquisition, the specific purpose subsidies are recognized to reduce related R&D expenses or
the cost of asset acquisition. Other subsidies are recognized as other operating income upon receipt as further performance by the Group
is not required.
(y) Income taxes
Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Group accounts for income
taxes under the asset and liability method in accordance with ASC 740, Income Tax. Deferred income taxes are recognized for the tax
consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their
respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive loss in the period of change.
Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not
that amount of the deferred tax assets will not be realized.
The Group records liabilities related to uncertain tax positions when, despite the Group’s belief that the Group’s tax return positions
are supportable, the Group believes that it is more likely than not that those positions may not be fully sustained upon review by tax
authorities. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense. The Group did not
recognize uncertain tax positions as of December 31, 2022 and 2023.
F-26
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(z) Share-based compensation
The Company grants restricted shares and share options of the Company and its subsidiary to eligible employees and non-employee
consultants and accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation and ASU
2018-07-Compensation-stock compensation (Topic 718)-Improvements to non-employee share-based payment accounting.
Employees’ share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses a)
immediately at the grant date if no vesting conditions are required; or b) for share options or restricted shares granted with only service
conditions, using the straight-line vesting method, net of estimated forfeitures, over the vesting period; or c) for share options where the
underlying share is liability within the scope of ASC 480, using the graded vesting method, net of estimated forfeitures, over the vesting
period, and re-measuring the fair value of the award at each reporting period end until the award is settled.
All transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value
of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
In April 2019, the Group adopted ASU 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Non-
employee Share-Based Payment Accounting”. Upon the adoption of this guidance, the Group no longer re-measures equity-classified
share-based awards granted to consultants or non-employees at each reporting date through the vesting period and the accounting for
these share-based awards to consultants or non-employees and employees was substantially aligned. Share-based compensation expenses
for share options and restricted shares granted to non-employees are measured at fair value at the date when such awards are granted and
recognized over the period during which the service from the non-employees is provided.
The binomial option-pricing model is used to measure the value of share options. The determination of the fair value is affected by
the fair value of the ordinary shares as well as assumptions including the expected share price volatility, actual and projected employee
and non-employee share option exercise behavior, risk-free interest rates and expected dividends.
The assumptions used in share-based compensation expense recognition represent management’s best estimates, but these estimates
involve inherent uncertainties and application of management judgment. If factors change or different assumptions are used, the share-
based compensation expenses could be materially different for any period. Moreover, the estimates of fair value of the awards are not
intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and
subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Group for accounting
purposes.
For restricted shares granted by one of the Company’s subsidiaries to employees, determination of related estimated fair values (the
subsidiaries are not publicly traded) requires complex and subjective judgments due to limited financial and operating history, unique
business risks and limited comparable public information. Key inputs and assumptions underlying the determined fair value of these
restricted shares include but are not limited to the pricing of recent rounds of financing, future cash flow forecasts, discount rates, and
liquidity factors relevant to each of the respective subsidiaries.
Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The
Group uses historical data to estimate pre-vesting options and records share-based compensation expenses only for those awards that are
expected to vest.
(aa) Comprehensive income/(loss)
The Group applies ASC 220, Comprehensive Income, with respect to reporting and presentation of comprehensive loss and its
components in a full set of financial statements. Comprehensive loss is defined to include all changes in equity of the Group during a
period arising from transactions and other event and circumstances except those resulting from investments by shareholders and
distributions to shareholders. For the years presented, the Group’s comprehensive loss includes net loss and other comprehensive
income/(loss), which mainly consists of the foreign currency translation adjustment that have been excluded from the determination of
net loss, change in fair value of available-for-sale debt securities.
F-27
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(ab) Leases
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
As the lessee, the Group recognizes in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use
asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, the Group makes an
accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities and recognizes lease expenses for
such lease generally on a straight-line basis over the lease term. The Group primarily uses the discount rate at the lease commencement
date using the rate implicit in the lease. If the information necessary to determine the rate implicit in the lease is not readily available, the
Group uses its incremental borrowing rate(“IBR”). The IBR is determined by the Group’s best understanding of the interest rate the
Group would bear to borrow an amount equal to the lease payments in a similar economic environment over the lease term based on its
credit rating. Operating lease assets are included within right-of-use assets— operating lease, and the corresponding operating lease
liabilities are included within operating lease liabilities on the consolidated balance sheets. Finance lease assets are included within other
non-current assets, and the corresponding finance lease liabilities are included within accruals and other liabilities for the current portion,
and within other non-current liabilities on the consolidated balance sheets.
(ac) Dividends
Dividends are recognized when declared. No dividends were declared for the the years ended December 31, 2021, 2022 and 2023.
(ad) Earnings/(loss) per share
Basic earnings/(loss) per share is computed by dividing net income/(loss) attributable to holders of ordinary shares, considering the
accretions to redemption value of the preferred shares, by the weighted average number of ordinary shares outstanding during the period
using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating
securities based on their participating rights. Diluted earnings/(loss) per share is calculated by dividing net income/(loss) attributable to
ordinary shareholders, as adjusted for the accretion and allocation of net income related to the preferred shares, if any, by the weighted
average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of
shares issuable upon the conversion of the preferred shares using the if-converted method, unvested restricted shares, restricted share
units and ordinary shares issuable upon the exercise of outstanding share options (using the treasury stock method). Ordinary equivalent
shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-
dilutive.
(ae) Segment reporting
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating
segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280, the Group’s chief operating decision maker (“CODM”) has been identified as the
Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance
of the Group as a whole and hence, the Group has only one reportable segment. The Group does not distinguish between markets or
segments for the purpose of internal reporting. As the Group’s long-lived assets are substantially located in the PRC, no geographical
segments are presented.
F-28
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
3. Recent Accounting Pronouncements
(a) Recently adopted accounting pronouncements
In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-02, Troubled Debt Restructurings and
Vintage Disclosures. This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted ASU
2016-13, Measurement of Credit Losses on Financial Instruments, which we adopted on January 1, 2020. This ASU also enhances the
disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.
In addition, the ASU amends the guidance on vintage disclosures to require entities to disclose current period gross write-offs by year of
origination for financing receivables and net investments in leases within the scope of ASC 326-20. The ASU is effective for annual
periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU would be applied
prospectively. Early adoption is also permitted, including adoption in an interim period. The Group adopted ASU 2022-02 from January
1, 2023, which did not have a material impact on the Group’s consolidated financial statements.
In September 2022, the FASB issued Accounting Standards Update (“ASU”) ASU 2022- 04, Liabilities - Supplier Finance Programs
(Subtopic 405-50) Disclosure of Supplier Finance Program Obligations. The ASU requires that a buyer in a supplier finance program
disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity
during the period, changes from period to period, and potential magnitude. This ASU is effective for fiscal years beginning after
December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is
effective for fiscal years beginning after December 15, 2023. The Group adopted ASU 2022-04 from January 1, 2023 and disclosed
related impact on Note 11. The adoption of ASU did not have a material impact on the Group’s consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with
Customers (Topic 805). This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract
liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the
acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after
December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early
adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all
business combinations for which the acquisition date occurred during the fiscal year of adoption. The Group adopted ASU 2021-08 from
January 1, 2023, which did not have a material impact on the Group’s consolidated financial statements.
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832). This ASU requires business entities to
disclose information about government assistance they receive if the transactions were accounted for by analogy to either a grant or a
contribution accounting model. The disclosure requirements include the nature of the transaction and the related accounting policy used,
the line items on the balance sheets and statements of operations that are affected and the amounts applicable to each financial statement
line item and the significant terms and conditions of the transactions. The ASU is effective for annual periods beginning after December
15, 2021. The disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the
amendments that are reflected in the financial statements at the date of initial application and new transactions that are entered into after
the date of initial application. The Group adopted ASU No. 2020-01 from January 1, 2022, which did not have a material impact on the
Group’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting”, which provides optional expedients and exceptions for applying U.S. GAAP on contract modifications
and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected
to be discontinued because of reference rate reform, if certain criteria are met. These optional expedients and exceptions provided in
ASU 2020-04 are effective for the Group as of March 12, 2020 through December 31, 2022. The Group adopted this from January 1,
2022, which did not have a material impact on the Group’s consolidated financial statements.
F-29
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(b) Recently issued accounting pronouncements not yet adopted
In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities
Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not
considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also
clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires
certain additional disclosures for equity securities subject to contractual sale restrictions. The amendments in this update are effective for
the Group beginning January 1, 2024 on a prospective basis. Early adoption is permitted for both interim and annual financial statements
that have not yet been issued or made available for issuance. The Group is in the process of evaluating the impact of the new guidance on
its consolidated financial statements. This ASU is currently not expected to have a material impact on the Group’s consolidated financial
statements.
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU
updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly
provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss.
This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the
CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate
resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial
statements. Early adoption is also permitted. This ASU is currently not expected to have a material impact on the Group’s consolidated
financial statements.
In December 2023, the FASB issued ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60). This
ASU requires certain crypto assets to be measured at fair value separately in the balance sheet and income statement each reporting
period. This ASU also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and
number of units for each significant crypto holding. The ASU is effective for annual periods beginning after December 15, 2024,
including interim periods within those fiscal years. Adoption of the ASU requires a cumulative-effect adjustment to the opening balance
of retained earnings as of the beginning of the annual reporting period in which an entity adopts the amendments. Early adoption is also
permitted, including adoption in an interim period. This ASU is currently not expected to have a material impact on the Group’s
consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires
disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes
paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted
for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required
additional disclosures being included in our consolidated financial statements, once adopted. This ASU is currently not expected to have
a material impact on the Group’s consolidated financial statements.
4. Concentration and Risks
(a) Concentration of credit risk
Assets that potentially subject the Group to significant concentrations of credit risk primarily consist of cash and cash equivalents,
restricted cash, short-term investment, trade receivable, amount due from related parties, deposits and other receivables. The maximum
exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates. As of December 31, 2022 and 2023, the
great majority of the Group’s cash and cash equivalents, restricted cash and short-term investments were held by major financial
institutions located in the PRC and the United States which management believes are of high credit quality based on their credit ratings.
F-30
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(b) Currency convertibility risk
The PRC government imposes controls on the convertibility of RMB into foreign currencies. The Group’s cash and cash equivalents
and restricted cash denominated in RMB that are subject to such government controls amounted to RMB13,012,259 and
RMB12,472,010 as of December 31, 2022 and 2023, respectively. The value of RMB is subject to changes in the central government
policies and to international economic and political developments affecting supply and demand in the PRC foreign exchange trading
system market. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial
institutions at exchange rates set by the People’s Bank of China (the “PBOC”). Remittances in currencies other than RMB by the Group
in the PRC must be processed through PBOC or other Chinese foreign exchange regulatory bodies which require certain supporting
documentation in order to process the remittance.
(c) Foreign currency exchange rate risk
Since July 21, 2005, the RMB has been permitted to fluctuate within a narrow and managed band against a basket of certain foreign
currencies. While the international reaction to the RMB appreciation has generally been positive, there remains significant international
pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant
appreciation of the RMB against other currencies.
(d) Concentration of customers and suppliers
The following tables summarized the customer with greater than 10% of the total revenue and account receivables:
Percentage of the total revenue
Customer A
Percentage of the account receivables
Customer A
* Less than 10%
For the Year Ended December 31,
2021
2022
2023
12 %
*
*
December 31,
2022
December 31,
2023
21 %
27 %
The following tables summarizes the supplier with greater than 10% of the total purchase and payables:
Percentage of the total purchase
Supplier A
Percentage of the payables
Supplier A
For the Year Ended December 31,
2021
2022
2023
20 %
20 %
15 %
December 31,
2022
December 31,
2023
31 %
20 %
F-31
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5. Inventory
Raw materials
Work in process
Finished Goods
Merchandise
Less: inventory provision
Total
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
December 31,
2022
December 31,
2023
2,974,125
170,995
4,685,790
510,143
(149,667)
8,191,386
2,245,076
90,035
2,646,287
480,174
(183,846)
5,277,726
Raw materials primarily consist of materials for volume production as well as spare parts used for aftersales services.
Finished goods include vehicles ready for transit at production factory, vehicles in transit to fulfill customer orders, new vehicles
available for immediate sale at the Group’s sales and service center locations and charging piles.
Merchandise includes accessories and branded merchandise which can be redeemed by customer loyalty program.
Inventory write-downs recorded in cost of sales for the years ended December 31, 2021, 2022 and 2023 were RMB1,105,
RMB148,729 and RMB65,362, respectively.
6. Prepayments and Other Current Assets
Prepayments and other current assets consist of the following:
Deductible VAT input
Prepayment to vendors
Deposits
Receivables from third party online payment service providers
Interest receivable
Receivables from JAC
Receivables of reimbursement from the depositary bank
Other receivables
Less: Allowance for credit losses
Total
F-32
December 31,
2022
779,694
541,457
349,651
154,264
10,167
196,075
87,170
131,963
(4,033)
2,246,408
December 31,
2023
2,271,162
575,016
240,769
160,030
42,340
—
—
150,857
(5,411)
3,434,763
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
7. Property, Plant and Equipment, Net
Property, plant and equipment and related accumulated depreciation were as follows:
Charging & battery swap equipment
Mold and tooling
Production facilities
Leasehold improvements
Construction in process
Computer and electronic equipment
R&D equipment
Purchased software
Buildings and constructions
Subscription vehicles
Corporate vehicles
Others
Subtotal
Less: Accumulated depreciation
Less: Accumulated impairment
Total property, plant and equipment, net
December 31,
2022
3,393,603
3,901,436
3,252,362
3,408,731
3,114,345
1,250,861
939,586
985,141
890,576
387,619
473,602
603,978
22,601,840
(6,901,232)
(41,942)
15,658,666
December 31,
2023
6,442,827
6,341,011
6,025,654
5,160,732
2,894,333
1,767,634
1,469,604
1,281,685
912,378
890,044
833,355
1,150,042
35,169,299
(10,288,331)
(33,964)
24,847,004
The Group recorded depreciation expenses of RMB1,702,559, RMB2,874,912 and RMB3,372,673 for the years ended December
31, 2021, 2022 and 2023, respectively.
As disclosed in Note 18, in December 2023, the Group completed the purchase of the production facilities in the first advanced
manufacturing base, or the F1 Plant, from JAC at the consideration of RMB1.9 billion, inclusive of tax.
F-33
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
8. Land Use Rights, Net
Land use rights and related accumulated amortization were as follows:
Land use rights
Less: Accumulated amortization—land use rights
Total land use rights, net
December 31,
2022
235,198
(22,595)
212,603
December 31,
2023
235,198
(27,899)
207,299
The Group recorded amortization expense for land use rights of RMB4,847, RMB5,227 and RMB5,304 for the years ended
December 31, 2021, 2022 and 2023, respectively.
9. Long-term investments
The Group’s long-term investments consisted of the following:
Equity investments:
Equity method investments (i)
Equity securities using fair value option (iv)
Equity securities without readily determinable fair value (ii)
Equity securities with readily determinable fair value
Debt investments:
Held-to-maturity debt securities – time deposit (iii)
Available-for-sale debt securities (iv)
Retained asset-backed securities(v)
Total
(i) Equity method investments
December 31, December 31,
2022
2023
1,325,800
—
101,536
48,290
3,231,924
1,648,861
—
6,356,411
1,505,509
1,528,861
391,205
45,323
1,875,318
120,000
21,000
5,487,216
In August 2020, the Group and three other third party investors jointly established the Battery Asset Company. The Group invested
RMB200,000 in the Battery Asset Company and held 25% of the Battery Asset Company’s equity interests. In December 2020, the
Battery Asset Company entered into an agreement with the other third-party investors for a total additional investment of RMB640,000
by those investors. In 2021, the Group invested an additional RMB270,000 and owned approximately 19.8% equity interests of the
Battery Asset Company. In July 2022, the Battery Asset Company entered into an agreement with the other third-party investors for a
total additional investment of RMB40,000 by those investors. As of December 31, 2023, the Group owns approximately 19.4% equity
interests of the Battery Asset Company. The Group, as a major shareholder of the Battery Asset Company, is entitled to appoint one out
of eight directors in the Battery Asset Company’s board of directors and can exercise significant influence over the Battery Asset
Company. Therefore, the investment in the Battery Asset Company is accounted for using the equity method of accounting.
In November 2021, the Group purchased an equity investment in an investment fund held by Ningbo Meishan Bonded Port Area
Weilan Investment Co., Ltd. (“Weilan”), a company controlled by the principal shareholder (and Chief Executive Officer) of the Group
(Note 27), with the total consideration of RMB50,000. As at the date of purchase, such investment was recorded at fair value of
RMB68,535 with the excessive amount of RMB18,535 over the purchase consideration of RMB50,000 being recorded as an additional
paid in capital contribution from the shareholder. The Group has ownership interest of 1.03% in this fund but has the ability to exercise
significant influence over this fund through its capacity as a member of its investment committee which determines the investment
strategies and makes investment decisions for this fund. Therefore, the Group accounts for this investment under equity method.
F-34
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
In April 2018, the Group and certain other third party investors jointly established a private company. The Group invested
RMB112,500 and held 22.5% of its equity interests. The Group was entitled to appoint one out of five directors in its board of directors
and could exercise significant influence over the private company. Therefore, the investment was accounted for under equity method. As
of December 31, 2020, the carrying amount of the investment was nil due to the share of losses of the investee. In February 2021, with
the dilution of the Group’s ownership in the investee to 4.5% as a result of a financing transaction completed by the investee which
issued new shares to new investors, the Group, after taking into consideration unrecognized losses of the investee (any losses
cumulatively in excess of carrying value), recognized a dilution gain of RMB104,653 in the share of income of equity investee as an
indirect disposal with a like adjustment to the investment carrying amount. This gain became an addition to the Group’s new cost basis in
this investment. Upon the completion of the financing transaction of the investee, the Group was no longer entitled to appoint director to
this investee and hence lost the ability to exercise significant influence. As a result, the Group discontinued the equity method accounting
and elected to account for this investment as an equity investment without a readily determinable fair value. Immediately following the
discontinuation of the equity method accounting, the Group remeasured the investment at fair value of RMB133,767 with reference to
the price of the financing and recorded a gain of RMB29,114.
In 2022 and 2023, the Group invested in several private funds as a limited partner with a total amount of RMB192,723 and
RMB94,849, respectively. The Group is not able to control the investment committee which determines the investment strategies and
makes investment decisions for these funds, nor is the Group entitled to replace the general partner through kick-out rights. However,
with certain voting rights the Group is entitled to exercise significant influence over the funds. Therefore, the Group accounts for these
investments under equity method.
During the years ended December 31, 2021, 2022 and 2023, the Group recognized RMB62,510, RMB377,775 and RMB64,394 of
shares of income of equity investees, respectively, from all of its equity method investments.
As of December 31, 2022 and 2023, none of the Group’s equity method investment, both individually or in aggregate, was
considered as significant under Reg S-X Rules.
(ii) Equity securities without readily determinable fair value
Equity securities without readily determinable fair value:
Initial cost
Net cumulative fair value adjustments
Carrying value
December 31,
2022
December 31,
2023
9,477
92,059
101,536
304,134
87,071
391,205
The Group has certain equity investments which are measured under the measurement alternative. During the years ended December
31, 2021, 2022 and 2023, in addition to the transaction discussed above, the Group invested RMB4,000, RMB35 and RMB294,657 in
equity securities without readily determinable fair value, respectively. The Group re-measured these investments based on recent
financing transactions of these investees, which were considered as observable transactions, and recorded fair value gain of RMB94,711,
losses of RMB2,652 and RMB4,988 in investment income during the years ended December 31, 2021, 2022 and 2023, respectively.
(iii) Held-to-maturity debt securities – time deposit
Held-to-maturity investments represent time deposits in commercial banks with maturities of more than one year with carrying
amounts of RMB3.2 billion and RMB1.9 billion as of December 31, 2022 and 2023 respectively. As of December 31, 2022 and 2023, the
weighted average maturities periods are 1.9 and 1.5 years, respectively.
F-35
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(iv) Available-for-sale debt securities
Available-for-sale debt securities:
Initial cost
Net cumulative fair value adjustments
Carrying value
December 31,
December 31,
2022
2023
671,567
977,294
1,648,861
120,000
—
120,000
In July 2022, the Group invested in a private company with total consideration of RMB120,000. Since the investment contains
certain substantive preferential rights, including redemption at the holders’ option upon occurrence of certain contingent events that are
out of the investee’s control and liquidation preference over the rights of common shareholders, it is not considered as common stock or
in-substance common stock and is therefore classified as available-for-sale debt investment which is measured at its fair value with the
change of fair value recognized as other comprehensive income. For the year ended December 31, 2023, the fair value change of the
investment was immaterial.
In July 2021, the Group, together with several third party investors, established a fund with total capital contributions of
RMB650,000, among which the Group contributed RMB550,000. According to the fund agreement, the fund is established for the sole
purpose of investing in a pre-determined private company and the Group is able to unilaterally determine the operation and investment
strategy of the fund. Therefore, the Group consolidated the financial statements of the fund. The investments provided by other investors
to the fund with amount of RMB100,000 are classified as non-controlling interest. The fund purchased a minority interest of a private
company that was pre-determined with total consideration of RMB650,000. Since the investment contained certain substantive
preferential rights, including redemption at the holders’ option upon occurrence of certain contingent events that were out of the
investee’s control and liquidation preference over the common shareholders, it was not considered as common stock or in-substance
common stock and was therefore classified as available-for-sale debt investment which was measured at its fair value with the change of
fair value recognized as other comprehensive income. In 2022, the Group entered into agreements with other third-party investors and
disposed certain equity interests of this private company with the total consideration of RMB270,000 and recognized investment gain of
RMB171,567, among which RMB4,652 were released from unrealized gains of other comprehensive income. In November 2023, all
shareholders of the investee entered into agreements and agreed to terminate their redemption rights, with other preferential rights being
remained effective, including the rights to request the investee’s founders’ to repurchase shares from certain shareholders upon the
achievement of certain contingent events (the “Put option”) and liquidation preference over the rights of common shareholders. As a
result of these changes, the Group determined that the fund should no longer be considered a debt investment, but rather now included
terms more akin to an equity investment.As a result, the Group discontinued available-for-sale debt investment accounting and accounted
for this investment as an equity investment using the fair value option. Due to the change in the character of the investment and as a
result of the related remeasurement, a gain on the previously held available-for-sale debt security was recognized by recycling a
previously unrealized gain of RMB977,294 from other comprehensive income to investment income. Correspondingly, the deferred tax
impact associated with this unrealised gain of RMB206,734 that was previously recorded in other comprehensive income was recognized
in deferred income tax expenses.
As of December 31, 2022 and 2023, the Group valued available-for-sale debt securities using a market approach by adopting a
backsolve method which benchmarked to recent comparable financing transactions of these investments, and recognized a gain from the
increase of the fair value of RMB946,571 and nil, respectively. After deducting the tax impact of RMB200,235 and nil, the Group
recorded RMB746,336 and nil in other comprehensive income, among which RMB151,299 and nil was attributed to non-controlling
interests.
(v) Retained asset-backed securities
In August 2023, the Company, through its wholly owned subsidiary, entered into an asset-backed securitization arrangement and
securitized receivables arising from auto financing arrangements through the transfer of those assets to a third party securitization entity.
The securitization entity initially issued debt securities to investors at the total amount of RMB859 million. It is a revolving arrangement
where the Group provides management, administration and collection services at market rates on the transferred financial assets, but only
retains an insignificant economic interest in the securitization entity. As a result, the Group does not have control over the securitization
entity and the transferred receivables were derecognized. The Group elects to classify the retained asset-backed securities as trading
securities.
F-36
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
No impairment charges were recognized for the years ended December 31, 2021, 2022 and 2023.
10. Other Non-current Assets
Other non-current assets consist of the following:
Non-current portion of auto financing receivables
Long-term deposits
Non-current portion of prepayments for long-term assets
Non-current portion of receivables of installment payments for battery
Non-current portion of right of use assets – finance lease
Non-current portion of national subsidy receivable
Others
Less: Allowance for credit losses
Total
December 31,
2022
4,501,168
944,768
433,750
221,089
49,205
1,227,270
110,950
(89,641)
7,398,559
December 31,
2023
2,486,326
1,092,550
1,173,248
59,853
55,985
—
68,956
(53,357)
4,883,561
Long-term deposits mainly consists of deposits to vendors for guarantee of production capacity as well as rental deposits which will
not be collectible within one year.
11. Trade and Notes Payable
Trade and notes payable consist of the following:
Trade payable
Notes payable (i)
Total
December 31,
December 31,
2022
12,709,285
12,514,402
25,223,687
2023
14,111,853
15,654,281
29,766,134
(i) As of December 31, 2022 and 2023, notes payable includes certain supply chain financing program offered by banks
to the Group’s suppliers. In connection with this program, the Group issues notes to participating suppliers which can elect
to assign such notes, at a discount, to the banks for payment at or before the maturity of each note. The maturity of each note
is consistent with the original supplier payment terms. All terms related to the Group’s payment obligations to participating
suppliers (which may be assigned to the banks) remain unchanged as part of this program. As of December 31, 2022 and
2023, the outstanding amount of the supply chain financing channels program is insignificant.
F-37
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
12. Accruals and Other Liabilities
Accruals and other liabilities consist of the following:
Payables for purchase of property, plant and equipment
Payable for R&D expenses
Salaries and benefits payable
Current portion of deferred revenue/income
Payables for marketing events
Advance from customers
Warranty liabilities
Accrued costs on purchase commitments
Accrued expenses
Interest payables
Current portion of finance lease liabilities
Other payables
Total
December 31,
2022
4,172,758
1,814,746
1,525,366
1,273,779
1,075,693
833,779
669,793
792,786
857,639
32,271
30,609
575,143
13,654,362
December 31,
2023
4,445,749
2,318,679
1,902,119
1,945,021
1,636,911
911,006
709,288
521,443
422,730
135,492
25,311
582,605
15,556,354
As of December 31, 2022, as a result of the planned products upgrade of certain existing vehicle models, the Group provided a
provision for purchase commitments specifically related to these vehicles with amount of RMB792,786. As of December 31, 2023, the
unsettled amount was RMB521,443.
13. Borrowings
Borrowings consist of the following:
Short-term borrowing:
Bank loan (i)
Other short-term financing arrangements
Current portion of long-term borrowings:
Current portion of convertible notes (ii)
Current portion of long-term borrowings (iii)
Current portion of Asset-backed Securities and Notes (iv)
Current portion of other financing arrangements
Long-term borrowings:
Bank loan (iii)
Convertible notes (ii)
Asset-backed Securities and Notes (iv)
Other financing arrangements
Total
December 31, December 31,
2022
2023
4,039,210
—
4,783,000
302,411
—
108,320
1,129,596
—
3,286,640
1,144,420
278,823
26,204
430,460
10,155,599
293,945
1,198,380
11,575,725
—
268,756
16,162,925 22,864,359
5,795
(i) Short-term bank loan
As of December 31, 2022, the Group obtained short-term borrowings from several banks of RMB4,039,210 in aggregate. The
annual interest rate of these borrowings is approximately 1.95% to 3.5%.
As of December 31, 2023, the Group obtained short-term borrowings from several banks of RMB4,783,000 in aggregate. The
annual interest rate of these borrowings is approximately 2.35% to 2.95%.
F-38
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The short-term borrowings contain covenants including, among others, limitation on liens, consolidation, merger, sale of the Group’s
assets and certain financial measures which include liabilities to assets ratio. The Group is in compliance with all of the loan covenants as
of December 31, 2022 and 2023. As of December 31, 2022 and 2023, certain of the Group’s short-term borrowings were guaranteed by
the Company’s subsidiaries or pledged with short-term investments of RMB348,230 and RMB354,135, and restricted cash of
RMB355,197 and nil, respectively.
(ii) Convertible notes
2024 Notes
In February 2019, the Company issued US$650,000 convertible senior notes and additional US$100,000 senior notes (collectively
the “2024 Notes”) to the Notes purchasers (the “Notes Offering”). The 2024 Notes bears interest at a rate of 4.50% per year, payable
semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2019. The 2024 Notes is convertible into the
Company’s American Depositary Shares at the pre-agreed fixed conversion price at the discretion of the holders and will mature for
repayment on February 1, 2024. Holders of the 2024 Notes are entitled to require the Company to repurchase all or part of the 2024
Notes in cash on February 1, 2022 or in the event of certain fundamental changes. In connection with the Notes Offering, the Company
entered into capped call transactions with certain Notes purchasers and/or their respective affiliates and/or other financial institutions (the
“Capped Call Option Counterparties”) and used a portion of the net proceeds of the Notes Offering to pay the cost of such transactions.
In addition, the Company also entered into privately negotiated zero-strike call option transactions with certain Notes purchasers or their
respective affiliates (the “Zero-Strike Call Option Counterparties”) and used a portion of the net proceeds of the Notes Offering to pay
the aggregate premium under such transactions. The Company accounts for the 2024 Notes as a single instruments as a long-term debt.
The debt issuance cost were recorded as reduction to the long-term debts and are amortized as interest expenses using the effective
interest method. The value of the 2024 Notes are measured by the cash received. The cost for the capped call transactions have been
recorded as deduction of additional paid-in capital within total shareholders’ deficit. The zero-strike call option was deemed as a prepaid
forward to purchase the Company’s own shares and recognized as permanent equity at its fair value at inception as a reduction to
additional paid in capital in the consolidated balance sheet. In November 2020, US$7.0 in aggregate principal amount of such Notes were
converted, pursuant to which the Company issued 735 Class A ordinary shares to the holders of such Notes. The balance of the Notes
converted were derecognized and recorded as ordinary shares and additional paid-in capital.
On January 15, 2021, the Company entered into separate and individually privately negotiated agreements with certain holders of its
outstanding 2024 Notes to exchange US$581,685 principal amount of the outstanding 2024 Notes for 62,192,017 ADSs with a
conversion premium of US$56,359 (the “2024 Notes Exchanges”). In connection with the 2024 Notes Exchanges, the Company also
entered into agreements with certain financial institutions to terminate a portion of the capped call transactions and Zero-Strike Call
transactions with the amount corresponding to the portion of the principal amount of the 2024 Notes that were exchanged. With above
termination of the capped call transactions and Zero-Strike Call transactions, the Company received 16,402,643 treasury shares
accordingly.
For the 2024 Notes Exchanges, the 2024 Notes with carrying amount of US$578,902 were derecognised with a corresponding
amount being recognised as share capital and additional paid-in capital. The conversion premium of US$56,359 was recorded as interest
expenses according to ASC 470-20-40-16, which requires a reporting entity to recognize an expense equal to the fair value of the shares
or other consideration issued to induce conversion, i.e., the excess of the fair value of all consideration transferred over the fair value of
the securities transferred pursuant to the original conversion terms. For the terminations of the capped call transactions and Zero-Strike
Call transactions, the amount of the purchase price of the capped call transactions and Zero-Strike Call transactions terminated of
RMB1,849,600 that was previously recorded in the additional paid-in capital was reclassified to treasury stock.
During the years ended December 31, 2022 and 2023, US$1,642 and nil in aggregate principal amount of such Notes were
converted, pursuant to which the Company issued 172,631 and nil Class A ordinary shares to the holders of such Notes respectively. The
balance of the Notes converted were derecognized in January and March 2022 and was recorded as ordinary shares and additional paid-
in capital.
As of December 31, 2022, the carrying value of the remaining 2024 Notes with the amount of RMB1,144,464 was classified in non-
current liabilities. As of December 31, 2023, the carrying value of the remaining 2024 Notes with the amount of RMB1,165,244 were
classified in current liabilities as the 2024 Notes will mature in February 2024.
F-39
Table of Contents
Affiliate Notes
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
On September 5, 2019, the Company issued US$200,000 convertible senior notes to an affiliate of Tencent Holdings Limited and
Mr. Bin Li, chairman and chief executive officer of the Company (collectively the “Affiliate Notes”). Tencent and Mr. Li each subscribed
for US$100,000 principal amount of the convertible notes, each in two equally split tranches. The 360-day Notes would be convertible
into Class A ordinary shares (or ADSs) of the Company at a conversion price of US$2.98 per ADS at the holder’s option from the 15th
day immediately prior to maturity, and the 3-year Notes will be convertible into Class A ordinary shares (or ADSs) of the Company at a
conversion price of US$3.12 per ADS at the holder’s option from the first anniversary of the issuance date. The holders of the 3-year
Notes will have the right to require the Company to repurchase for cash all of the Notes or any portion thereof on February 1, 2022.
In September and December 2020, all of the 360-day Notes due in 2020 and US$50,000 in aggregate principal amount of the 3-year
Notes due in 2022 were converted, pursuant to which the Company issued 49,582,686 Class A ordinary shares to the holders of such
Notes. Such Notes were derecognized and recorded as ordinary shares and additional paid-in capital. In January 2021, US$22,526
(RMB148,393) in aggregate principal amount of the 3-year Notes due in 2022 were converted, pursuant to which the Company issued
7,219,872 Class A ordinary shares to the holders of such Notes. Such Notes were derecognized and recorded as ordinary shares and
additional paid-in capital. As of December 31, 2021, the balances of these convertible notes outstanding were RMB175,166 in current
liabilities. In August 2022, US$27,474 (RMB189,494) in aggregate principal amount of the 3-year Notes due in 2022 were converted,
pursuant to which the Company issued 8,805,770 Class A ordinary shares to the holders of such Notes. Such Notes were derecognized
and recorded as ordinary shares and additional paid-in capital with amount of RMB15 and RMB207,457 respectively. As of December
31, 2022, all of the the 3-year Notes have been converted.
2026 and 2027 Notes
In January 2021, the Company issued US$750,000 convertible senior Notes due 2026 (the “2026 Notes”) and US$750,000
convertible senior Notes due 2027 (the “2027 Notes”). The 2026 Notes bears no interest and the 2027 Notes bears interest at a rate of
0.50% per year, which is payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021.
Holders may convert their 2026 Notes at their option prior to the close of business on the business day immediately preceding August 1,
2025, and holders may convert their 2027 Notes at their option prior to the close of business on the business day immediately preceding
August 1, 2026. The initial conversion price is US$93.06 per ADS for the Notes, subject to customary anti-dilution adjustments. Upon
conversion, the Company will pay or deliver, as the case may be, cash, ADSs, or a combination of cash and ADSs, at the Company’s
discretion. Holders of the 2026 Notes have the right to require the Company to repurchase in cash for all or part of their Notes on
February 1, 2024 or in the event of certain fundamental changes at a repurchase price equal to 100% of the principal amount of the Notes
to be repurchased. Holders of the 2027 Notes have the right to require the Company to repurchase in cash for all or part of their Notes on
February 1, 2025 or in the event of certain fundamental changes at a repurchase price equal to 100% of the principal amount of the Notes
to be repurchased, plus accrued and unpaid interest.
The Company early adopted ASU 2020-06 which eliminates the cash conversion accounting models for 2026 Notes and 2027 Notes.
Accordingly, the principal amount of these Notes was reported as one single unit of account in long-term borrowings at its principal
amount, net of debt issuance costs of US$26,340, on the basis of not electing fair value option for the Notes and no substantial premium
to be offered. The Notes are subsequently measured at amortized cost with interest expenses accrued over the term of these Notes using
the effective interest method.
In 2022, the Company repurchased the aggregated portion of 2026 Notes with the carrying amount of US$190,962 (RMB1,317,106).
As of December 31, 2022, the carrying amount of the Notes were RMB9,011,135.
In 2023, the Company repurchased the aggregated portion of 2026 Notes and 2027 Notes with the carrying amount of US$ 253,762
(RMB1,801,685) and US$242,249 (RMB1,719,944), respectively. As of December 31, 2023, the carrying amount of the remaining 2026
Notes and 2027 Notes were RMB2,121,397 and RMB3,552,323, respectively. The Company reclassified the carrying value of the
remaining 2026 Notes with the amount of RMB2,121,397 in current liabilities to reflect the early redemption right by 2026 Notes holders
on February 1, 2024.
F-40
Table of Contents
2029 and 2030 Notes
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
In September and October 2023, the Company issued US$575,000 convertible senior Notes due 2029 (the “2029 Notes”) and
US$575,000 convertible senior Notes due 2030 (the “2030 Notes”). The 2029 Notes bears interest at a rate of 3.875% per year, payable
semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2024. The 2030 Notes bears interest at a rate of
4.625% per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2024. Holders may
convert their 2029 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding
October 15, 2029, and holders may convert their 2030 Notes at their option prior to the close of business on the second scheduled trading
day immediately preceding October 15, 2030. The initial conversion price is US$11.12 per ADS for the Notes, subject to customary anti-
dilution adjustments. Upon conversion, the Company will pay or deliver, as the case may be, cash, ADSs, or a combination of cash and
ADSs, at the Company’s discretion. Holders of the 2029 Notes have the right to require the Company to repurchase in cash for all or part
of their Notes on October 15, 2027 or in the event of certain fundamental changes at a repurchase price equal to 100% of the principal
amount of the Notes to be repurchased. Holders of the 2030 Notes have the right to require the Company to repurchase in cash for all or
part of their Notes on October 15, 2028 or in the event of certain fundamental changes at a repurchase price equal to 100% of the
principal amount of the Notes to be repurchased, plus accrued and unpaid interest.
The Company accounted for 2029 Notes and 2030 Notes in accordance with ASU 2020-06 which eliminates the cash conversion
accounting models. Accordingly, the principal amount of these Notes was reported as one single unit of account in long-term borrowings
at its principal amount, net of debt issuance costs of US$17,855, on the basis of not electing fair value option for the Notes and no
substantial premium to be offered. The Notes are subsequently measured at amortized cost with interest expenses accrued over the term
of these Notes using the effective interest method. As of December 31, 2023, the carrying amount of the Notes were RMB8,023,401.
(iii) Long-term bank loan
Ref. Date of borrowing Lender/Banks Repayment date
Maturity/
As of December 31, 2022
Current portion
according to the
Long-term Outstanding
As of December 31, 2023
Current portion
according to the
Long-term
repayment schedule portion
loan
repayment schedule portion
Outstanding
loan
1
2
3
4
5
6
7
8
9
10
11
March 7,2022
June 15, 2022
June 22, 2022
July 25, 2022
July 26, 2022
August 24, 2022
January 19,2023
January 20,2023
February 24, 2023
March 31,2023
September 18,2023
Total
Bank of
Beijing
Bank of
Shanghai
Hang Seng
Bank
China
Construction
Bank
Industrial and
Commercial
Bank of China
China
Construction
Bank
China
Construction
Bank
Industrial and
Commercial
Bank of China
Bank of
Beijing
Bank of
Shanghai
Bank of
Shanghai
March 6,2024
June 15, 2025
June 22, 2024
149,000
172,980
180,000
2,000
147,000
147,000
147,000
—
46,320
126,660
126,660
46,320
80,340
60,000
120,000
120,000
120,000
—
July 25, 2029
6,800
—
6,800
6,800
340
6,460
July 25, 2029
10,200
—
10,200
10,200
510
9,690
July 25, 2029
19,800
July 25, 2029
July 25, 2029
February 24, 2025
April 30, 2024
September 18,2026
—
—
—
—
—
—
—
—
—
—
—
19,800
19,800
990
18,810
—
—
—
—
—
313,400
499,800
127,500
650,000
15,670
297,730
24,990
474,810
30,000
97,500
650,000
—
321,640
2,342,800
108,600
1,144,420
213,040
1,198,380
538,780
108,320
430,460
F-41
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The long-term borrowings contain covenants including, among others, limitation on liens, consolidation, merger and sale of the
Group’s assets and certain financial measures which includes liabilities to assets ratio. The Group is in compliance with all of the loan
covenants as of December 31, 2022 and 2023.
As of December 31, 2022, the Group had bank facilities with aggregated amount of RMB56,121,492 which consists of non-
collateral based bank facilities of RMB28,411,492 and collateral-based bank facilities of RMB27,710,000. Out of the total non-collateral
bank facilities, RMB2,838,780, RMB3,264,275 and RMB350,000 were used for bank borrowing, issuance of letters of guarantee and
bank’s acceptance notes, respectively. Out of the total collateral-based bank facilities, RMB2,650,000, RMB5,884,500 and RMB300,000
were used for issuance of letters of guarantee, bank’s acceptance notes and letter of credit, respectively.
As of December 31, 2023, the Group had bank facilities with aggregated amount of RMB64,464,118 which consists of non-
collateral based bank facilities of RMB16,348,270 and collateral-based bank facilities of RMB48,115,848. Out of the total non-collateral
bank facilities, RMB5,492,800, RMB1,201,226 and RMB250,000 were used for bank borrowing, issuance of letters of guarantee and
bank’s acceptance notes, respectively. Out of the total collateral-based bank facilities, RMB2,588,913, RMB14,713,855 and nil were
used for issuance of letters of guarantee, bank’s acceptance notes and letter of credit, respectively.
(iv) Asset-backed securities and notes
The Group entered into several asset-backed securitization arrangements with third-party financial institutions and set up
securitization vehicles to issue the senior debt securities and notes to third party investors, which are collateralized by the auto financing
receivables (the “transferred financial assets”). The Group also acts as servicer to provide management, administration and collection
services on the transferred financial assets. The Group consolidated the securitization vehicles when significant economic interests are
retained in the form of subordinated interests. The proceeds from the issuance of debt securities and notes are reported as securitization
debt. The securities and notes are due for repayment when collections on the underlying collateralized assets occur and the amounts are
included in “Current portion of long-term borrowings” or “Long-term borrowings” according to the contractual maturities date of the
debt securities and notes. As of December 31, 2022 and 2023, the balance of current portion of asset-backed securities and notes are
RMB1,129,596 and RMB278,823, and the balance of non-current portion of asset-backed securities and notes are RMB293,945 and nil,
respectively.
14. Other Non-Current Liabilities
Other non-current liabilities consist of the following:
Deferred revenue
Warranty liabilities
Deferred government grants
Non-current finance lease liabilities
Others
Total
December 31,
2022
2,288,111
2,277,144
309,762
14,457
254,553
5,144,027
December 31,
2023
3,051,022
3,202,936
323,980
22,173
63,694
6,663,805
Deferred government grants mainly consist of specific government subsidies for purchase of land use right and buildings, charging
and battery swap equipment, which is amortized using the straight-line method as a deduction of the amortization or depreciation
expense of the relevant assets over their remaining estimated useful life.
15. Leases
The Group has entered into various non-cancellable operating and finance lease agreements for certain offices, factory, warehouses,
retail and service locations, equipment and vehicles worldwide. The Group determines if an arrangement is a lease, or contains a lease, at
inception and record the leases in the financial statements upon lease commencement, which is the date when the underlying asset is
made available for use by the lessor.
F-42
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The balances for the operating and finance leases where the Group is the lessee are presented as follows within the consolidated
balance sheet:
Operating leases:
Right-of-use assets - operating lease
Current portion of operating lease liabilities
Non-current operating lease liabilities
Total operating lease liabilities
Finance leases:
Right-of-use assets - finance lease
Current portion of finance lease liabilities
Non-current finance lease liabilities
Total finance lease liabilities
The components of lease expenses were as follows:
Lease cost:
Amortization of right-of-use assets
Interest of operating lease liabilities
Expenses for short-term leases within 12 months and other non-lease component
Total lease cost
Other information related to leases where the Group is the lessee is as follows:
December 31,
2022
December 31,
2023
7,374,456
1,025,968
6,517,096
7,543,064
49,205
30,609
14,457
45,066
11,404,116
1,743,156
10,070,057
11,813,213
55,985
25,311
22,173
47,484
Year Ended December 31,
2023
2022
1,529,463
1,141,740
566,704
310,701
544,640
407,850
2,640,807
1,860,291
As of December 31,
2022
As of December 31,
2023
Weighted-average remaining lease term:
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
Supplemental cash flow information related to leases where we are the lessee is as follows:
Operating cash outflows from operating leases
Operating cash outflows from finance leases (interest payments)
Financing cash outflows from finance leases
Right-of-use assets obtained in exchange for lease liabilities
F-43
11.6 years
2.9 years
12.0 years
4.4 years
5.09 %
5.58 %
4.92 %
5.22 %
For the Year Ended December 31,
2022
1,280,125
4,906
27,489
5,820,041
2023
2,220,978
2,122
37,511
6,339,111
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
As of December 31, 2022 and 2023, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as
follows:
2023
2024
2025
2026
2027
2028
Thereafter
Total minimum lease payments
Less: Interest
Present value of lease obligations
Less: Current portion
Long-term portion of lease obligations
As of December 31,
2022
As of December 31,
2023
Operating
Leases
1,574,692
1,426,176
1,213,535
1,038,903
837,505
768,279
4,499,959
11,359,049
(3,815,985)
7,543,064
(1,025,968)
6,517,096
Finance
Leases
Operating
Leases
Finance
Leases
—
35,151
17,299
2,658,392
6,717 1,949,316
6,277 1,724,905
1,449,608
4,737
1,173,595
294
1,856 8,241,769
72,331 17,197,585
(27,265) (5,384,372)
45,066 11,813,213
(30,609) (1,743,156)
14,457 10,070,057
—
28,395
11,342
10,588
8,899
4,880
2,319
66,423
(18,939)
47,484
(25,311)
22,173
As of December 31, 2022 and 2023, the Group had future minimum lease payments for non-cancelable short-term operating leases
of RMB304,213 and RMB537,432, respectively.
16. Revenue
Revenue by source consists of the following:
Vehicle sales
Parts, accessories and after-sales vehicle services
Provision of power solution
Others
Total
2021
33,169,740
806,079
811,809
1,348,795
36,136,423
Year Ended December 31,
2022
45,506,581
1,228,385
1,016,094
1,517,501
49,268,561
2023
49,257,270
2,337,490
1,666,346
2,356,827
55,617,933
For the years ended December 31, 2021, 2022 and 2023, revenue recognised at a point in time was RMB35,416,050,
RMB47,734,716 and RMB53,401,464, respectively, and revenue recognised over time was RMB720,373, RMB1,533,845 and
RMB2,216,470, respectively.
17. Deferred Revenue/Income
The following table shows a reconciliation in the current reporting period related to carried-forward deferred revenue/income.
Deferred revenue/income–beginning of year
Additions
Recognition
Effects on foreign exchange adjustment
Deferred revenue/income–end of year
F-44
2021
1,061,254
1,934,086
(795,878)
(1,696)
2,197,766
Year Ended December 31,
2022
2,197,766
2,483,462
(1,124,186)
4,848
3,561,890
2023
3,561,890
3,138,343
(1,705,134)
944
4,996,043
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Deferred revenue mainly includes the transaction price allocated to the performance obligations that are unsatisfied, or partially
satisfied, which mainly arises from the undelivered home chargers, the vehicle connectivity services, the extended warranty services,
battery swapping services as well as the points offered to customers, with unrecognized deferred revenue balance of RMB3,546,849 and
RMB4,996,043 as of December 31, 2022 and 2023, respectively.
The Group expects that approximately 39% of the transaction price allocated to unsatisfied performance obligation as at December
31, 2023 will be recognized as revenue during the period from January 1, 2024 to December 31, 2024. The remaining 61% will be
recognized during the period from January 1, 2025 to June 30, 2028.
Deferred income includes the reimbursement from a depository bank in connection with the advancement of the Company’s ADS
and investor relations programs in the next five years. The Company initially recorded the payment from the depository bank as deferred
income and then recognized as other income over the beneficial period, with unrecognized deferred income balance of RMB15,041 and
nil as of December 31, 2022 and 2023, respectively.
18. Manufacturing in collaboration with JAC
Since 2016, the Group have been partnering with Jianghuai Automobile Group Ltd., or JAC, a major state-owned automobile
manufacturer in China, for the joint manufacturing of the Group’s vehicles. JAC built the JAC-NIO manufacturing plant in Hefei, Anhui
province, the first advanced manufacturing base, or the F1 Plant, for the production of the ES8, the ES6, the EC6, the ET7 and
potentially the Group’s other vehicle models. Further, in September 2022, the Group entered into a manufacturing cooperation agreement
with JAC, under which JAC will jointly manufacture the ET5 and potentially the Group’s other vehicle models in the second advanced
manufacturing base, or the F2 Plant, in NeoPark, a smart electric vehicle industry park at Xinqiao, Hefei. The fees payable to JAC under
the above agreements consist of the following: (i) asset depreciation and amortization with regard to the assets JAC invested and to
invest for the manufacture of NIO models as actually incurred, payable monthly and subject to adjustment annually; (ii) vehicle
production and processing fees recorded on per-vehicle basis, payable monthly and subject to adjustment annually; (iii) purchase amount
of certain production materials; and (iv) relevant tax. In addition, the Group also agreed to pay certain compensation up to a capped
amount for JAC’s investment in F1 Plant, including for the land, factory and equipment.
In conjunction with the aforementioned manufacturing cooperation agreement, in December 2022, the Group and JAC entered into
an Asset Transfer Agreement where the Group agreed to sell and JAC agreed to acquire certain production facilities (the “Transferred
Assets”) with a total consideration of RMB1.7 billion inclusive of tax. As of December 31, 2022, JAC had accepted the Transferred
Assets and assumed the legal title of the Transferred Assets. Considering that (1) the Transferred Assets are designated to be used for the
manufacturing of the Group’s vehicle models only and do not have substantive alternative use; (2) all costs incurred in relation to the
Transferred Assets, including depreciation and maintenance costs and relevant tax and surcharges, are undertaken by and charged to the
Group; (3) the Group also has the right to obtain the economic benefits from all outputs of the Transferred Assets, management
concluded that the Group still retained the control of the Transferred Assets and this transaction was a failed sale and leaseback
transaction with no sales of the Transferred Assets recognized by the Group. The Transferred Assets continue to be accounted for as the
Group’s property, plant and equipment subject to depreciation. The sales consideration from JAC will be recorded as a financing payable
when the Group receives the cash. As of December 31, 2023, JAC had fully paid the consideration. In December 2023, pursuant to an
asset transfer agreement with JAC, the Group agreed to purchase the Transferred Assets back at the consideration of RMB1.7
billion,inclusive of tax, and the consideration was paid in full by end of December 2023. In December 2023, the Group also agreed to
purchase the production facilities in F1 Plant from JAC at the consideration of RMB1.9 billion, inclusive of tax. As of December 31,
2023, both purchases of the Transferred Assets and F1 Plant have been consummated.
For the years ended December 31, 2021, 2022 and 2023, the aggregate fees to JAC under the above collaboration arrangement were
RMB715,118, RMB1,126,523 and RMB1,318,524, respectively, and were included in cost of sales.
F-45
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
19. Research and Development Expenses
Research and development expenses consist of the following:
Employee compensation
Design and development expenses
Depreciation and amortization expenses
Rental and related expenses
Travel and entertainment expenses
Others
Total
20. Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the following:
Employee compensation
Marketing and promotional expenses
Rental and related expenses
Professional services
IT consumable, office supply and other low value consumable
Depreciation and amortization expenses
Other Taxes and Surcharges
Travel and entertainment expenses
Expected credit losses
Others
Total
F-46
For the Year Ended December 31,
2022
6,684,971
3,276,915
333,097
193,132
111,531
236,615
10,836,261
2021
2,658,158
1,572,834
214,312
53,846
43,732
48,970
4,591,852
2023
8,998,415
3,019,403
720,737
273,493
135,891
283,460
13,431,399
2021
2,894,308
1,428,290
845,512
521,327
247,828
337,708
198,572
80,726
54,332
269,529
For the Year Ended December 31,
2022
4,532,553
1,775,539
1,336,575
944,160
545,498
484,363
285,076
162,924
48,707
421,724
2023
5,929,888
2,642,531
1,683,929
550,011
581,193
672,669
290,456
218,396
(26,315)
341,798
6,878,132 10,537,119 12,884,556
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
21. Redeemable non-controlling interests
Investment in NIO China
On April 29, 2020, the Company and certain of its subsidiaries entered into definitive agreements, as amended and supplemented in
May and June 2020, for investments in NIO China, with a group of investors (collectively, the “Strategic Investors”), pursuant to which,
the Strategic Investors agreed to invest an aggregate of RMB7.0 billion in cash into NIO China for its non-controlling interest. In June
and July 2020, the Company received RMB5.0 billion. On September 16, 2020, pursuant to a share transfer agreement, the Company
repurchased 8.612% equity interests owned by one of the Strategic Investors with the total consideration of RMB511,458, consisting of
the actual capital investment plus accrued interest, and the Group assumed the remaining cash consideration obligation of RMB2.0
billion of the Strategic Investors. On February 2021, the Group, purchased from two of the Strategic Investors an aggregate of 3.305%
equity interests in NIO China for a total consideration of RMB5.5 billion and subscribed for newly increased registered capital of NIO
China at a subscription price of RMB10.0 billion. In September 2021, the Company repurchased 1.418% equity interests from the
Strategic Investors for a total consideration of RMB2.5 billion and recorded an amount of RMB2,023,534 in accretion on redeemable
non-controlling interests to redemption value. As of December 31, 2023, the Company held 92.114% controlling equity interests in NIO
China.
Each of the Strategic Investors has the right to request the Company to redeem their equity interests in NIO China at an agreed price
in case of NIO China’s failure to submit the application for a qualified initial public offering in 48 months commencing from June 29,
2020, failure to complete a qualified initial public offering in 60 months commencing from June 29, 2020, or other events as set forth in
the share purchase agreement. The agreed price is calculated based on each non-controlling shareholder’s cash investment to NIO China
plus an annual interest rate of 8.5%.
As the redemption is at the holders’ option and is upon the occurrence of the events that are not solely within the control of the
Company, these Strategic Investors’ contributions in NIO China were classified as mezzanine equity and is subsequently accreted to the
redemption price using the effective interest method with accretion recorded as a reduction of additional paid in capital.
For the years ended December 31, 2021, 2022 and 2023, the Company recorded RMB6,586,579,RMB279,355 and RMB303,163 of
accretion on redeemable non-controlling interests to redemption value. As of December 31, 2022 and 2023, the balance of redeemable
non-controlling interests was RMB3,557,221 and RMB3,860,384, respectively.
22. Ordinary Shares
Upon inception, each ordinary share was issued at a par value of US$0.00025 per share. Various numbers of ordinary shares have
been issued to share-based compensation award recipients since inception. Each Class A ordinary share shall entitle the holder thereof to
one (1) vote on all matters subject to vote at general meetings of the Company, each Class B ordinary share shall entitle the holder
thereof to four (4) votes on all matters subject to vote at general meetings of the Company, and each Class C ordinary share shall entitle
the holder thereof to eight (8) votes on all matters subject to vote at general meetings of the Company.
Each Class C ordinary share is convertible into one Class A ordinary share, whereas Class A ordinary shares are not convertible into
Class C ordinary shares under any circumstances. Upon any transfer of Class C ordinary shares by a holder thereof to any person or
entity which is not an affiliate of such holder, such Class C ordinary shares are automatically and immediately converted into the equal
number of Class A ordinary shares.
As of December 31, 2022 and 2023, the authorized share capital of the Company is US$1,000 divided into 4,000,000,000 shares,
comprising of: 2,632,030,222 Class A Ordinary Shares, nil Class B Ordinary Shares and 148,500,000 Class C Ordinary Shares, each at a
par value of US$0.00025 per share, and 1,219,469,778 shares of a par value of US$0.00025 each of such class or classes as the board of
directors may determine.
In 2020, the Company consummated the follow-on offerings of a total of 82,800,000, 101,775,000 and 78,200,000 American
depositary shares (the “ADSs”) at a price of US$ 5.95, US$17.00 and US$ 39.00 per ADS, respectively.
In 2021, the Company completed the issuance of 53,292,401 ADSs with net proceeds of RMB12,677,554 (US$1,974,000) through
an at-the-market offering.
F-47
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
In 2023, the Company completed a US$2,943.5 million strategic equity investment from CYVN Investments RSC Ltd, an affiliate of
CYVN Holdings L.L.C., an investment vehicle majority owned by the Abu Dhabi Government (collectively referred to as “CYVN
Entities”) which subscribed 378,695,543 newly issued Class A ordinary shares from the Company.
As disclosed in Note 13 (ii), in 2022 and 2023, certain convertible notes were converted by respective holders, pursuant to which the
Company issued 8,978,401 and nil ADSs, respectively.
Upon the Company’s listing of Class A ordinary shares on the Hong Kong Stock Exchange, all of the Company’s Class B ordinary
shares were converted to Class A ordinary shares pursuant to the conversion notice delivered by the relevant shareholders. The
shareholding structure of Class B ordinary shares and provisions related to Class B ordinary shares have been removed in the Company’s
amended and restated memorandum and articles of association, as approved by the Company’s shareholders at the annual general
meeting held at August 25, 2022.
As of December 31, 2022 and 2023, 4,000,000,000 ordinary shares were authorized, 1,680,220,892 shares and 2,073,522,118 shares
were issued, and 1,662,159,868 shares and 2,055,461,094 shares were outstanding, respectively. The share number excludes 24,279,105
Class A Ordinary Shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuance upon the exercise or
vesting of awards granted under the Company’s share incentive plans.
23. Non-controlling interest
Investment in NIO AI Technology
In March 2021, the Group established a subsdiary named NIO AI Technology by subscribing its ordinary shares with equity interests
of 51% and the remaining interests held by an employee of the Group. In August 2022, the Group subscribed a certain number of Series
Seed Preferred Shares issued by NIO AI Technology. Upon the completion of this transaction, the Group held 96.97% equity interests in
NIO AI Technology and continued to control NIO AI Technology. The Group accounted for the change of equity interests in NIO AI as
an equity transaction by adjusting the carrying value of the non-controlling interests and the Group’s additional paid-in capital with an
amount of RMB184,085.
24. Share-based Compensation
Compensation expenses recognized for share-based awards granted by the Company were as follows:
Cost of sales
Research and development expenses
Selling, general and administrative expenses
Total
For the Year Ended December 31,
2023
2022
2021
83,972
66,914
34,009
1,517,206
1,323,370
406,940
767,863
905,612
569,191
2,369,041
2,295,896
1,010,140
There was no income tax benefit recognized in the consolidated statements of comprehensive loss for share-based compensation
expenses and the Group did not capitalize any of the share-based compensation expenses as part of the cost of any assets in the years
ended December 31, 2021, 2022 and 2023.
(a) NIO Incentive Plans
In 2015, the Company adopted the 2015 Stock Incentive Plan (the “2015 Plan”), which allows the plan administrator to grant share
options and restricted shares of the Company to its employees, directors, and consultants.
F-48
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Company granted both share options and restricted shares to the employees. The share options and restricted shares of the
Company under 2015 Plan have a contractual term of ten years from the grant date, and vest over a period of four years of continuous
service, one fourth (1/4) of which vest upon the first anniversary of the stated vesting commencement date and the remaining vest ratably
over the following 36 months. Under the 2015 Plan, share options granted to the non-NIO US employees of the Group are only
exercisable upon the occurrence of an initial public offering by the Company.
In 2016, 2017 and 2018, the Board of Directors further approved the 2016 Stock Incentive Plan (the “2016 Plan”), the 2017 Stock
Incentive Plan (the “2017 Plan”) and the 2018 Stock Incentive Plan (the “2018 Plan”). The share options of the Company under the 2016
Plan, 2017 Plan and 2018 Plan have a contractual term of seven or ten years from the grant date, and vest immediately or over a period of
four or five years of continuous service.
The Group recognized the share options and restricted shares of the Company granted to the employees of the Group on a straight-
line basis over the vesting term of the awards, net of estimated forfeitures.
(i) Share Options
The following table summarizes activities of the Company’s share options under the 2016, 2017 and 2018 Plans for the years ended
December 31, 2021, 2022 and 2023:
Number of
Options
Outstanding
Weighted Weighted
Average
Remaining
Contractual Life
In Years
Average
Exercise
Price
US$
Outstanding as of December 31, 2020
Granted
Exercised
Cancelled
Expired
Outstanding as of December 31, 2021
Granted
Exercised
Cancelled
Expired
Outstanding as of December 31, 2022
Granted
Exercised
Cancelled
Expired
Outstanding as of December 31, 2023
Vested and expected to vest as of December 31,2023
Exercisable as of December 31, 2023
79,318,499
2,468,150
(9,119,048)
(2,143,711)
(25,940)
70,497,950
1,685,000
(4,533,690)
(1,197,777)
(467,608)
65,983,875
1,487,000
(4,242,054)
(482,775)
(126,634)
62,619,412
62,553,567
58,961,360
3.59
13.89
2.31
12.59
19.03
4.76
3.03
2.58
10.76
12.03
3.57
2.39
2.63
10.25
37.34
3.48
3.48
3.35
6.39
—
—
—
—
5.44
—
—
—
—
4.51
—
—
—
—
3.56
3.56
3.43
F-49
Aggregate
Intrinsic
Value
US$
3,581,119
—
—
—
—
1,944,597
—
—
—
—
465,353
—
—
—
—
423,637
403,072
399,989
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The total share-based compensation expenses recognized for share options during the years ended December 31, 2021, 2022 and
2023 was RMB534,641, RMB379,178 and RMB201,023, respectively. The weighted-average grant date fair value for options granted
under the Company’s 2016, 2017 and 2018 Plans during the years ended December 31, 2021, 2022 and 2023 was US$33.54, US$19.27
and US$6.66, respectively, computed using the binomial option pricing model with the assumptions (or ranges thereof) in the following
table:
Exercise price (US$)
Fair value of the ordinary shares on the date of option grant
(US$)
Risk-free interest rate
Exercise multiple
Expected dividend yield
Expected volatility
Expected forfeiture rate (post-vesting)
2021
For the Year Ended December 31,
2022
2.39
- 42.20
2.39
- 19.91
2.39
2023
-
2.39
39.54
- 42.20
10.34
- 19.61
1.08 % -
2.50 % -
1.47 %
2.5 x
0 %
55 %
2 %
2.56 %
2.5 x
0 %
56 %
1.5 %
6.66
-
3.70 % -
6.66
3.70 %
2.5 x
0 %
57 %
1.8 %
Risk-free interest rate is estimated based on the yield curve of US Sovereign Bond as of the option valuation date. The expected
volatility at the grant date and each option valuation date is estimated based on annualized standard deviation of daily stock price return
of comparable companies with a time horizon close to the expected expiry of the term of the options. The Company has never declared
or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future.
Expected term is the contract life of the options.
As of December 31, 2022 and 2023, there were RMB219,781 and RMB62,135 of unrecognized compensation expenses related to
the stock options granted to the employees, which is expected to be recognized over a weighted-average period of 0.77 and 0.18 years,
respectively.
(ii) Restricted shares
The fair value of each restricted share granted with service conditions is estimated based on the fair market value of the underlying
ordinary shares of the Company on the date of grant.
Share-based compensation expenses of RMB20,820, RMB118,700 and RMB89,581 related to restricted shares granted to the
employees of NIO US was recognized for the years ended December 31, 2021, 2022 and 2023, respectively.
The following table summarizes activities of the Company’s restricted shares to US employees under the 2016 Plan:
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2023
Number of Restricted
Weighted Average
Shares Outstanding Grant Date Fair Value
US$
1,138,196
2,353,714
(291,069)
(232,483)
2,968,358
1,190,820
(574,621)
(1,299,475)
2,285,082
41.93
16.00
36.44
29.70
23.87
10.02
23.97
20.66
16.45
As of December 31, 2022 and 2023, there were RMB428,463 and RMB256,410 of unrecognized compensation expenses related to
restricted shares granted to the employees of NIO US, which is expected to be recognized over a weighted-average period of 3.48 and
3.23 years, respectively.
F-50
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The following table summarizes activities of the Company’s restricted shares to non-US employees under the 2017 and 2018 plan:
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2023
Number of Restricted
Weighted Average
Shares Outstanding Grant Date Fair Value
US$
22,899,941
31,944,551
(4,687,528)
(3,172,211)
46,984,753
23,749,757
(9,789,008)
(7,166,686)
53,778,816
33.02
15.12
34.49
28.42
22.88
8.67
23.32
18.79
16.15
As of December 31, 2022 and 2023, there were RMB6,525,925 and RMB5,366,095 of unrecognized compensation expenses related
to restricted shares granted to the non-US employees, which is expected to be recognized over a weighted-average period of 3.32 and
3.02 years, respectively.
Share-based compensation expenses of RMB437,166 and RMB1,744,712 and RMB1,999,820 related to restricted shares granted to
the non-US employees was recognized for years ended December 31, 2021, 2022 and 2023, respectively.
(b) Share-based compensation of subsidiaries
In November 2021, a subsidiary of the Company (“Subsidiary A”) adopted the 2021 Share Incentive Plan (the “A Plan”) which
allows Subsidiary A to grant share options to its employees.
Under the A plan, the share options have a contractual term of ten years from the grant date, and vest over a period of four years of
continuous service, one fourth (1/4) of which vest upon the first anniversary of the stated vesting commencement date and the remaining
vest ratably over the following 36 months.
Before the completion of Subsidiary A’s possible future initial public offering and listing, its employees are entitled to convert the
vested share options to the Class A ordinary shares of the Company at a fixed conversion rate. The corresponding share options will be
cancelled if the conversion right is exercised.
The following table summarizes activities of A Plan for the year ended December 31, 2023:
Outstanding as of December 31, 2021
Vested
Outstanding as of December 31, 2022
Granted
Exercised
Cancelled
Outstanding as of December 31, 2023
Number of
Options
Outstanding
31,931,249
(1,387,401)
30,543,848
7,525,378
(3,663,406)
(5,401,320)
29,004,500
Weighted
Average
Exercise
Price
US$
Weighted
Average
Remaining
Contractual Life
In Years
0.00001
0.00001
0.00001
0.00001
—
—
0.00001
9.84
—
8.84
—
—
—
7.87
Aggregate
Intrinsic
Value
US$
35,888
—
34,337
—
—
—
43,526
F-51
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
For the year ended December 31, 2021, 2022 and 2023, the weighted average grant date fair values of options granted were
US$1.12, US$1.12 and US$1.10 per share respectively. The estimated fair value of each option granted is estimated on the date of grant
using the binominal option-pricing model with the assumptions (or ranges thereof) in the following table:
Fair value of the ordinary shares on the date of option grant (US$)
Risk-free interest rate
Expected term (in years)
Expected dividend yield
Expected volatility
Expected forfeiture rate (post-vesting)
For the Year Ended
December 31,
2021, 2022 and 2023
1.00-1.01
1.58 %
10
0 %
52 %
2 %
For the years ended December 31, 2021, 2022 and 2023, total share-based compensation expenses for the share options granted
under A Plan were RMB17,513,RMB53,306 and RMB78,617 respectively. As of December 31, 2022 and 2023, there were RMB170,091
and RMB155,843 of unrecognized share-based compensation expenses related to the share options granted. The expenses were expected
to be recognized over a weighted-average period of 2.2 and 1.3 years, respectively.
25. Taxation
(a) Income taxes
Cayman Islands
The Company was incorporated in the Cayman Islands and conducts most of its business through its subsidiaries located in
Mainland China, Hong Kong, United States, United Kingdom, Germany, Norway and Netherlands. Under the current laws of the
Cayman Islands, the Company is not subject to tax on either income or capital gain. Additionally, upon payments of dividends to the
shareholders, no Cayman Islands withholding tax will be imposed.
PRC
Effective January 1, 2008, the Enterprise Income Tax Law (the “EIT Law”) in China unifies the enterprise income tax rate for the
entities incorporated in China at 25%, unless they are eligible for preferential tax treatment, which will be granted to companies
conducting businesses in certain encouraged sectors. NIO R&D, the Company’s subsidiary engaging in design and technology
development activities, was qualified as a “high and new technology enterprise” (“HNTE”) for the fiscal years from 2022 to 2024, which
entitled the entity a preferential tax rate of 15%. The qualification as HNTE is subject to self-evaluation, and the relevant documents
should be retained for future examination purpose. Upon the expiration of qualification, re-accreditation of certification from the relevant
authorities is necessary for the entities to continue enjoying the preferential tax treatment. The remaining Chinese companies are subject
to enterprise income tax (“EIT”) at a uniform rate of 25%.
Under the EIT Law enacted by the National People’s Congress of PRC on March 16, 2007 and its implementation rules which
became effective on January 1, 2008, dividends generated after January 1, 2008 and payable by a foreign investment enterprise in the
PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s
jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. Under the taxation
arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which is the “beneficial owner” and directly holds
25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5%. The Cayman Islands,
where the Company was incorporated, does not have a tax treaty with PRC.
F-52
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto
management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC
income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto
management body” as “the place where the exercising, in substance, of the overall management and control of the production and
business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts
and circumstances, the Group does not believe that it is likely that its operations outside of the PRC will be considered a resident
enterprise for PRC tax purposes. However, due to limited guidance and implementation history of the EIT Law, there is uncertainty as to
the application of the EIT Law. Should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be
subject to PRC income tax on worldwide income at a uniform tax rate of 25%.
According to relevant laws and regulations promulgated by the State Administration of Tax of the PRC effective from 2023
onwards, enterprises engaging in research and development activities are entitled to claim 200% of their qualified research and
development expenses so incurred as tax deductible expenses when determining their assessable profits for the year (‘Super Deduction’).
The additional deduction of 100% of qualified research and development expenses can only be claimed directly in the annual EIT filing
and subject to the approval from the relevant tax authorities.
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance, the subsidiaries of the Group incorporated in Hong Kong are subject to
8.25% profit tax on the first HKD2,000 taxable income and 16.5% profit tax on the remaining taxable income generated from operations
in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to
any Hong Kong withholding tax.
Other Countries
The statutory income tax rates of other countries where the Company’s subsidiaries having significant operations for the years ended
December 31, 2021, 2022 and 2023 are as follows:
United States
United Kingdom
Germany
Norway
Netherlands
Composition of income tax expense for the periods presented are as follows:
Current income tax expense
Deferred income tax expense/(benefit)
Total
F-53
2023
For the Year Ended December 31,
2022
29.84 %
19.00 %
32.98 %
22.00 %
25.80 %
2021
29.84 %
19.00 %
32.98 %
22.00 %
25.00 %
29.84 %
19.00 %
32.98 %
22.00 %
25.80 %
For the Year Ended December 31,
2022
62,348
(7,245)
55,103
2021
23,565
18,700
42,265
2023
59,943
200,892
260,835
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Reconciliations of the income tax expense computed by applying the PRC statutory income tax rate of 25% to the Group’s income
tax expense of the years presented are as follows:
Loss before income tax expense
Income tax benefit computed at PRC statutory income tax rate of 25%
Non-deductible expenses
Foreign tax rates differential
Additional 100%/75% tax deduction for qualified research and development expenses
FDII Deduction
Tax exempted interest income
US tax credits
Prior year True-ups
Effect of tax rate change
Others
Change in valuation allowance
Income tax expense
2021
(3,974,684)
(993,671)
29,325
100,690
(546,805)
—
(2,194)
(30,273)
286,693
—
(1,206)
1,199,706
42,265
For the Year Ended December 31,
2022
(14,382,001)
(3,595,500)
23,484
395,543
(750,736)
(10,356)
(8,847)
(45,446)
110,581
490,855
(5,154)
3,450,679
55,103
2023
(20,458,918)
(5,114,730)
58,852
481,318
(1,432,723)
—
(25,017)
(36,746)
242,392
—
316
6,087,173
260,835
The PRC statutory income tax rate was used because the majority of the Group’s operations are based in PRC.
(b) Deferred tax
The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be
more-likely-than-not realized. This assessment primarily considers the nature, frequency and extent of the losses incurred and other
historical objective evidences, as well as the considerations of forecasts of future profitability. These assumptions require significant
judgment on the forecasts of future taxable income. The PRC statutory income tax rate of 25% or applicable preferential income tax rates
were applied when calculating deferred tax assets.
F-54
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NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Group’s deferred tax assets and liabilities consist of the following components:
Deferred tax assets
Net operating loss carry-forwards
Accrued and prepaid expenses
Deferred revenue
Tax credit carry-forwards
Property, plant and equipment, net
Unrealized financing expense
Intangible assets
Allowance against receivables
Deferred rent
Share-based compensation
Write-downs of inventory
Advertising expenses in excess of deduction limit
Equity securities without readily determinable fair value
Equity securities with readily determinable fair value
Unrealized foreign exchange loss
Others
Less: Valuation allowance
Subtotal
Deferred tax liabilities
Equity securities without readily determinable fair value
Equity securities with readily determinable fair value
Equity method investments
Available for sale debt investment
Equity securities
Property, plant and equipment, net
Deferred rent
Unrealized foreign exchange gain
Subtotal
Total deferred tax liabilities, net
2021
As of December 31,
2022
2023
7,294,844
1,136,278
559,815
243,198
—
28,796
85,439
19,500
—
10,695
713
705
—
—
—
711
(9,216,725)
163,969
(15,975)
(2,725)
—
(6,499)
—
(143,512)
(18,752)
(1,705)
(189,168)
(25,199)
9,711,744
1,666,519
940,633
301,437
—
33,140
89,328
27,386
29,731
6,951
452
188
—
150
1,704
4,224
(12,727,355)
86,232
14,850,298
1,635,032
1,241,114
347,340
158,609
64,870
59,375
28,435
80,240
19,846
47,733
33
953
717
2,364
3,539
(18,538,828)
1,670
(6,435)
—
(5,170)
(206,734)
—
(86,082)
—
—
(304,421)
(218,189)
—
—
(7,283)
—
(206,734)
—
—
—
(214,017)
(212,347)
Full valuation allowances have been provided where, based on all available evidence, management determined that deferred tax
assets are not more likely than not to be realizable in future tax years. Movement of valuation allowance is as follow:
Valuation allowance
Balance at beginning of the year
Additions
Balance at end of the year
As of December 31,
2021
2022
2023
8,019,519
1,197,206
9,216,725
9,216,725
3,510,630
12,727,355
12,727,355
5,811,473
18,538,828
F-55
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Group has tax losses arising in Mainland China of RMB61,331,790 that will expire in one to ten years for deduction against
future taxable profit.
Loss expiring in 2024
Loss expiring in 2025
Loss expiring in 2026
Loss expiring in 2027
Loss expiring in 2028
Loss expiring in 2029
Loss expiring in 2030
Loss expiring in 2031
Loss expiring in 2032
Loss expiring in 2033
Total
2,045,428
3,860,354
2,380,002
9,180,600
14,701,895
5,334,423
156,199
4,833,296
7,153,295
11,686,298
61,331,790
The Group has tax losses arising in Hong Kong of RMB3,178,917 for which could be carried forward indefinitely against future
taxable income. The Group has tax losses arising in United States of RMB4,323, RMB593,406 and RMB1,866,675 that will expire in
thirteen, fourteen and infinite years for deduction against future taxable income. As of December 31, 2022 and 2023, the Group provided
full valuation allowances for the above net operating loss carry-forwards.
Uncertain Tax Position
The Group did not identify any significant unrecognized tax benefits for each of the periods presented. The Group did not incur any
interest related to unrecognized tax benefits, did not recognize any penalties as income tax expense and also does not anticipate any
significant change in unrecognized tax benefits within 12 months from December 31, 2023.
Tax years subject to examination by major jurisdictions
In general, the PRC tax authorities have up to five years to review a company’s tax filings. Accordingly, tax filings of the Company’s
PRC subsidiaries and VIEs for tax years 2019 through 2023 remain subject to the review by the relevant PRC tax authorities.
26. Loss Per Share
Basic loss per share and diluted loss per share have been calculated in accordance with ASC 260 on computation of earnings per
share for the years ended December 31, 2021, 2022 and 2023 as follows:
Numerator:
Net loss
Accretion on redeemable non-controlling interests to redemption value
Net loss attributable to non-controlling interests
Net loss attributable to ordinary shareholders of NIO Inc. for basic/dilutive net loss
per share
Denominator:
For the Year Ended December 31,
2022
2023
2021
(4,016,949)
(6,586,579)
31,219
(14,437,104)
(279,355)
157,014
(20,719,753)
(303,163)
(124,051)
(10,572,309)
(14,559,445)
(21,146,967)
Weighted-average number of ordinary shares outstanding – basic and diluted
Basic and diluted net loss per share attributable to ordinary shareholders of NIO
1,572,702,112
1,636,999,280
1,700,203,886
Inc.
(6.72)
(8.89)
(12.44)
F-56
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
For the years ended December 31, 2021, 2022 and 2023, the Company had potential ordinary shares, including non-vested restricted
shares, option granted and convertible notes. As the Group incurred losses for the years ended December 31, 2021, 2022 and 2023, these
potential ordinary shares were anti-dilutive and excluded from the calculation of diluted net loss per share of the Company. The weighted
average numbers of these potential ordinary shares outstanding are as following:
For the Year Ended December 31,
2022
2023
2021
Restricted shares
Outstanding weighted average options granted
Convertible notes
Total
27. Related Party Balances and Transactions
1,358,110
56,768,907
45,323,169
103,450,186
4,051,753
55,132,378
37,671,003
96,855,134
—
43,876,236
57,008,080
100,884,316
The principal related parties with which the Group had transactions during the years presented are as follows:
Name of Entity or Individual
Beijing Welion New Energy Technology Co., Ltd.
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Nanjing Weibang Transmission Technology Co., Ltd.
Wuhan Weineng Battery Assets Co., Ltd.
Xunjie Energy (Wuhan) Co., Ltd.
Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd.
Beijing Bit Ep Information Technology Co., Ltd.
Beijing Weixu Business Consulting Co., Ltd.
Beijing Yiche Interactive Advertising Co., Ltd.
Hefei Chuangwei Information Consultation Co., Ltd.
Huang River Investment Limited
Ningbo Meishan Bonded Port Area Weilan Investment Co., Ltd.
Ningbo Meishan Free Trade Port Weilai Xinneng Investment
Management Co., Ltd.
Shanghai Weishang Business Consulting Co., Ltd.
Tianjin Boyou Information Technology Co., Ltd.
Wistron Info Comm (Kunshan) Co., Ltd.
Xtronics Innovation Ltd.
Relationship with the Group
An investee of the Group
An investee of the Group
An investee of the Group
An investee of the Group
An investee of the Group
An investee of the Group
Controlled by Principal Shareholder
Significantly influenced by Principal Shareholder
Controlled by Principal Shareholder
Controlled by Principal Shareholder
Controlled by Principal Shareholder
Controlled by Principal Shareholder
Significantly influenced by Principal Shareholder
Significantly influenced by Principal Shareholder
Controlled by Principal Shareholder
Non-controlling shareholder of subsidiary
Non-controlling shareholder of subsidiary
In February 2022, the Group disposed its equity interests in Suzhou Zenlead XPT New Energy Technologies Co., Ltd.. Since then,
Suzhou Zenlead was no longer the Group’s related party.
(a) The Group entered into the following significant related party transactions:
(i) Provision of service
For the years ended December 31, 2021, 2022 and 2023, service income was primarily generated from property management ，
administrative support, research and development services and BaaS battery buy-out services the Group provided to its related parties.
Wuhan Weineng Battery Assets Co., Ltd.
Nanjing Weibang Transmission Technology Co., Ltd.
Beijing Weixu Business Consulting Co., Ltd.
Total
F-57
For the Year Ended December 31,
2022
120,967
1,683
37
122,687
2021
56,095
1,586
220
57,901
2023
166,027
1,153
—
167,180
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(ii) Acceptance of advertising and IT support services
Tianjin Boyou Information Technology Co., Ltd.
Beijing Bit Ep Information Technology Co., Ltd.
Beijing Yiche Interactive Advertising Co., Ltd.
Total
(iii) Cost of manufacturing consignment
Suzhou Zenlead XPT New Energy Technologies Co., Ltd.
For the Year Ended December 31,
2022
2023
2021
217
4,533
472
5,222
8,984
—
—
8,984
7,823
—
—
7,823
For the Year Ended December 31,
2022
2023
2021
89,286
—
—
As of December 31, 2023, the outstanding warranty obligations have been fully repaid by the Group.
(iv) Purchase of raw material or property, plant and equipment
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Xunjie Energy (Wuhan) Co., Ltd.
Nanjing Weibang Transmission Technology Co., Ltd.
Total
F-58
For the Year Ended December 31,
2022
728,096
90,132
248,604
1,066,832
2021
876,510
67,350
213,867
1,157,727
2023
1,062,521
111,875
73,071
1,247,467
Table of Contents
(v) Sales of goods
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Wuhan Weineng Battery Assets Co., Ltd.
Shanghai Weishang Business Consulting Co., Ltd.
Hefei Chuangwei Information Consultation Co., Ltd.
Beijing Yiche Interactive Advertising Co., Ltd.
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Total
(vi) Acceptance of R&D and maintenance service
Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd.
Beijing Welion New Energy Technology Co., Ltd.
Wuhan Weineng Battery Assets Co., Ltd.
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Xunjie Energy (Wuhan) Co., Ltd.
Ningbo Meishan Free Trade Port Weilai Xinneng Investment Management Co., Ltd.
Total
(vii) Sale of raw material or property, plant and equipment
For the Year Ended December 31,
2022
3,103,871
2021
4,138,187
157
—
485
370
229
1,798
—
—
4,139,199
3,105,898
2023
1,457,500
199
194
—
—
1,457,893
2021
For the Year Ended December 31,
2022
107,144
—
8,508
13,956
3,735
3,015
136,358
—
—
—
7,265
929
—
8,194
2023
184,279
34,016
23,878
—
—
—
242,173
For the Year Ended December 31,
2022
2023
2021
Wuhan Weineng Battery Assets Co., Ltd.
—
1,012
5,597
(viii) Convertible notes issued to related parties and interest accrual
Huang River Investment Limited
(ix) Purchase of equity investee
Weilan (Note 9)
F-59
For the Year Ended December 31,
2022
13,712
2021
15,316
2023
11,234
Year Ended December 31,
2022
—
2023
—
2021
50,000
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(b) The Group had the following significant related party balances:
(i) Amounts due from related parties
Wuhan Weineng Battery Assets Co., Ltd.
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Hefei Chuangwei Information Consultation Co., Ltd.
Nanjing Weibang Transmission Technology Co., Ltd.
Shanghai Weishang Business Consulting Co., Ltd.
Total
(ii) Amounts due to related parties
Kunshan Siwopu Intelligent Equipment Co., Ltd.
Xunjie Energy (Wuhan) Co., Ltd.
Wuhan Weineng Battery Assets Co., Ltd.
Beijing WeLion New Energy Technology Co., Ltd.
Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd.
Nanjing Weibang Transmission Technology Co., Ltd.
Tianjin Boyou Information Technology Co., Ltd.
Shanghai Weishang Business Consulting Co., Ltd.
Ningbo Meishan Free Trade Port Weilai Xinneng Investment Management Co., Ltd.
Wistron Info Comm (Kunshan) Co., Ltd.
Xtronics Innovation Ltd.
Total
(iii) Short-term borrowing and interest payable
Huang River Investment Limited
(iv) Long-term borrowing
Huang River Investment Limited
F-60
As of December 31,
2022
1,376,584
8,647
2,032
283
148
1,387,694
2023
1,714,659
13,050
2,249
1,440
—
1,731,398
As of December 31,
2022
262,712
14,517
58,497
—
23,279
22,293
48
—
3,015
167
83
384,611
2023
358,083
75,157
60,187
25,843
19,869
16,099
6,200
186
—
—
—
561,624
As of December 31,
2022
3,918
2023
216,465
As of December 31,
2022
208,938
2023
—
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
28. Commitment and Contingencies
(a) Capital commitments
Capital expenditures contracted for at the balance sheet dates but not recognized in the Group’s consolidated financial statements are
as follows:
Property, plant and equipment
Leasehold improvements
Total
(b) Contingencies
As of December 31,
2022
4,541,383
807,666
5,349,049
2023
5,465,192
552,626
6,017,818
Between March and July 2019, several securities class action lawsuits were filed against the Group, certain of the Group’s directors
and officers, the underwriters in the IPO and the process agent. Some of these actions have been withdrawn, transferred, consolidated or
dismissed. One action commenced during the aforementioned time period remains pending, under the caption In re NIO, Inc. Securities
Litigation, 1:19-cv-01424, in the U.S. District Court for the Eastern District of New York (E.D.N.Y.). The plaintiffs in this case allege, in
sum and substance, that the Group’s statements in the registration statement and/or other public statements were false or misleading and
in violation of the U.S. federal securities laws. The Court denied the Group’s motion to dismiss in August 2021, and granted plaintiffs’
motion for class certification in August 2023. Discovery is ongoing.
Between August and September 2022, two complaints were filed against the Group, its CEO and its CFO in the federal district court
for the Southern District of New York (S.D.N.Y.), in the actions captioned Saye v. NIO Inc. et al., Case No. 1:22-cv-07252 (S.D.N.Y.)
and Bohonok v. NIO Inc. et al., Case No. 1:22-cv-07666 (S.D.N.Y.). Relying on a short seller report, these complaints allege that certain
of the Group’s public disclosures between August 2020 and July 2022 contained false statements or omissions in violation of the
Exchange Act. On December 14, 2022, the court consolidated the two actions and appointed a lead plaintiff. Briefing on the Group’s
motion to dismiss was completed on July 31, 2023. The Court’s decision on the motion to dismiss is pending.
The aforementioned actions remain in their preliminary stages. The Group is currently unable to determine the outcomes of these
actions or any estimate of the amount or range of any potential loss, if any, associated with resolution of such lawsuits, if they proceed.
On March 22, 2021, two individual plaintiffs filed a complaint in the Superior Court of the State of California, County of Santa
Clara against the Company, several of its subsidiaries and certain unnamed individual defendants. Plaintiffs allege that they were former
employees or contractors of the Company and its subsidiaries and that they had been discriminated and wrongfully terminated by the
Company and its subsidiaries, allegedly in violation of various state and federal laws. Plaintiffs seek compensatory damages, including
back pay, equity and lost earnings, the amounts of which have yet to be ascertained. On July 7, 2021, two of the Company’s subsidiaries
filed a request to remove the case from state to federal court. Plaintiffs opposed the removal. On May 3, 2022, the Federal District Court
remanded the case to the state court. On June 2, 2022, the Company filed a motion to quash service of the complaint for lack of personal
jurisdiction with the Superior Court of the State of California. On September 22, 2022, the Court issued an order finding that Plaintiffs
have not met their burden to establish the court's jurisdiction over NIO Inc., but also granted limited jurisdictional discovery with respect
to the relationship between NIO Inc. and its U.S.-based subsidiaries. Document production has been paused as Plaintiffs and the
Defendants have engaged in mediation and settlement discussions. The Parties are now in the processof final settelement. The settlement
amount is not considered to be significant.
The Group is subject to legal proceedings and regulatory actions in the ordinary course of business, such as disputes with landlords,
suppliers, employees, etc. The results of such proceedings cannot be predicted with certainty, but the Group does not anticipate that the
final outcome arising out of any of such matters will have a material adverse effect on the consolidated balance sheets, comprehensive
loss or cash flows on an individual basis or in the aggregate. As of December 31, 2022 and 2023, other than as disclosed above, the
Group is not a party to any material legal or administrative proceedings.
F-61
Table of Contents
29. Subsequent Events
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
(a) Completion of the Repurchase Right Offer for Convertible Senior Notes due 2026
On February 1, 2024, the Group completed the repurchase right offer relating to its 0.00% Convertible Senior Notes due 2026 (the
“2026 Notes”). US$300,536 aggregate principal amount of the 2026 Notes were validly surrendered and not withdrawn prior to the
expiration of the repurchase right offer. Following settlement of the repurchase, US$912 aggregate principal amount of the 2026 Notes
remain outstanding and continue to be subject to the existing terms of the Indenture and the Notes.
(b) Completion of the Asset-backed Notes Issuance
In January 2024, the Group entered into another asset-backed securitization arrangement with issuance of the notes at the total
amount of RMB2,450,000 and securitized receivables arising from auto financing arrangements through the transfer of those assets to a
securitization vehicle. It is a revolving arrangement where the Group provides management, administration and collection services (at
market rates) on the transferred financial assets, but only retains an insignificant economic interest in the securitization vehicle. As a
result, the Group will not consolidate the securitization vehicle (thereby derecognizing transferred receivables) under US GAAP.
(c) Amended shareholders agreement for NIO China
On March 30, 2024, the Company and certain of its subsidiaries entered into a shareholders agreement with the Strategic Investors,
which amended certain shareholders’ rights in NIO China, including the redemption rights. In particular, if NIO China fails to complete
the listing application or to issue the material assets restructuring plan related to the qualified initial public offering before December 31,
2027, or fails to complete the qualified initial public offering before December 31, 2028, the Strategic Investors may request the
Company to redeem the equity interest in NIO China then held by them.
30. Parent Company (the “Company”) Only Financial Information
The Company performed a test on the restricted net assets of its consolidated subsidiaries and VIEs in accordance with Securities
and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was
applicable for the Company to disclose the financial information for the Company only.
The subsidiaries did not pay any dividends to the Company for the years presented. Certain information and footnote disclosures
generally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The footnote disclosures contain
supplemental information relating to the operations of the Company, as such, these statements are not the general-purpose financial
statements of the reporting entity and should be read in conjunction with the notes to the consolidated financial statements of the
Company.
F-62
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Company did not have significant capital and other commitments, or guarantees as of December 31, 2023.
Condensed Balance Sheets
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Amounts due from subsidiaries of the Company
Amounts due from related parties
Prepayments and other current assets
Total current assets
Non-current assets:
Investments in subsidiaries and VIEs
Total non-current assets
Total assets
LIABILITIES
Current liabilities:
Amounts due to subsidiaries of the Company
Current portion of long-term borrowings
Accruals and other liabilities
Total current liabilities
Long-term borrowings
Total non-current liabilities
Total liabilities
SHAREHOLDERS’ EQUITY
Class A Ordinary Shares
Class C Ordinary Shares
Treasury shares
Additional paid in capital
Accumulated other comprehensive loss
Accumulated deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
F-63
2022
RMB
As of December 31,
2023
RMB
7,076,550
—
696,460
6,657,631
87
114,263
14,544,991
21,328,304
21,328,304
35,873,295
1,775,951
—
73,580
1,849,531
10,155,599
10,155,599
12,005,130
22,676,489
—
1,499,939
15,453,012
89
70,356
39,699,885
2,783,143
2,783,143
42,483,028
1,928,100
3,286,640
146,330
5,361,070
11,575,725
11,575,725
16,936,795
2023
US$
Note 2(e)
3,193,917
—
211,262
2,176,511
13
9,909
5,591,612
391,997
391,997
5,983,609
271,567
462,914
20,610
755,091
1,630,407
1,630,407
2,385,498
2,668
254
(1,849,600)
94,593,062
1,036,011
(69,914,230)
23,868,165
35,873,295
3,368
254
(1,849,600)
117,717,254
432,991
(90,758,034)
25,546,233
42,483,028
474
36
(260,511)
16,580,128
60,986
(12,783,002)
3,598,111
5,983,609
Table of Contents
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
Condensed Statements of Comprehensive Loss
Operating expenses:
Selling, general and administrative
Total operating expenses
Loss from operations
Interest and investment income
Interest expense
Gain on extinguishment of debt
Equity in loss of subsidiaries and VIEs
Other income/(loss), net
Loss before income tax expense
Income tax benefit/(expense)
Net loss
Accretion on redeemable non-controlling interests to redemption value
Net loss attributable to ordinary shareholders of NIO Inc.
Net loss
Total comprehensive loss
Accretion on redeemable non-controlling interests to redemption value
Comprehensive loss attributable to ordinary shareholders of NIO Inc.
Condensed Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash (used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by/(used in) financing activities
Effects of exchange rate changes on cash, cash equivalents and restricted cash
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS
For the Year ended December 31,
2021
RMB
2022
RMB
2023
RMB
(4,735)
(4,735)
(4,735)
61,292
(471,270)
—
(3,632,893)
61,876
(3,985,730)
—
(3,985,730)
(6,586,579)
(10,572,309)
(3,985,730)
(4,196,578)
(6,586,579)
(10,783,157)
(24,039)
(24,039)
(24,039)
207,057
(113,277)
138,332
(14,138,689)
(351,874)
(14,282,490)
2,400
(14,280,090)
(279,355)
(14,559,445)
(14,280,090)
(12,967,779)
(279,355)
(13,247,134)
(99,587)
(99,587)
(99,587)
524,173
(207,649)
170,193
(21,349,555)
121,800
(20,840,625)
(3,179)
(20,843,804)
(303,163)
(21,146,967)
(20,843,804)
(21,446,824)
(303,163)
(21,749,987)
2023
US$
Note 2(e)
(14,027)
(14,027)
(14,027)
73,828
(29,247)
23,971
(3,007,022)
17,155
(2,935,342)
(446)
(2,935,788)
(42,700)
(2,978,488)
(2,935,788)
(3,020,721)
(42,700)
(3,063,421)
For The Year ended December 31,
2021
RMB
2022
RMB
2023
RMB
2023
US$
Note 2(e)
(8,697)
(4,949,308)
(8,262,167)
(1,163,702)
(40,770,898)
9,140,766
(1,972,672)
(277,845)
22,382,871
(445,787)
(1,135,316)
689,465
25,782,226
52,552
3,631,351
7,402
AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at beginning of the year
Cash, cash equivalents and restricted cash at end of the year
(18,842,511)
22,173,454
3,330,943
3,745,607
3,330,943
7,076,550
15,599,939
7,076,550
22,676,489
2,197,206
996,711
3,193,917
F-64
Table of Contents
Basis of presentation
NIO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
The Company’s accounting policies are the same as the Group’s accounting policies with the exception of the accounting for the
investments in subsidiaries and VIEs.
For the company only financial information, the Company records its investments in subsidiaries and VIEs under the equity method
of accounting as prescribed in ASC 323, Investments—Equity Method and Joint Ventures.
Such investments are presented on the Balance Sheets as “Investments in subsidiaries and VIEs” and shares in the subsidiaries and
VIEs’ loss are presented as “Equity in loss of subsidiaries and VIEs” on the Statements of Comprehensive Loss. The parent company
only financial information should be read in conjunction with the Group’s consolidated financial statements.
F-65
Exhibit 4.44
SHARE SUBSCRIPTION AGREEMENT
dated as of June 20, 2023
by and between
NIO INC.
and
CYVN HOLDINGS L.L.C.
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
DEFINITIONS
PURCHASE AND SALE OF SECURITIES
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
COVENANTS AND ADDITIONAL AGREEMENTS
CONDITIONS TO THE COMPANY’S OBLIGATIONS
CONDITIONS TO THE PURCHASER’S OBLIGATIONS
TERMINATION
MISCELLANEOUS
1
5
6
9
13
15
16
17
18
SHARE SUBSCRIPTION AGREEMENT
SHARE SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of June 20, 2023, by and between NIO Inc., an exempted
company incorporated in the Cayman Islands (the “Company”), and CYVN Holdings L.L.C., a limited liability company organized
under the laws of Abu Dhabi, United Arab Emirates (the “Purchaser”).
WHEREAS
The Company desires to issue, sell and deliver to the Purchaser, and the Purchaser desires to purchase and acquire from the
Company, upon the terms and conditions set forth in this Agreement, an aggregate of 84,695,543 Class A Ordinary Shares, par value
US$0.00025 per share, of the Company (the “Securities”).
Concurrently with the sale of the Securities, the Company and the Purchaser will execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company will agree
to provide the Purchaser certain registration rights under the Securities Act (as defined below).
The Purchaser has entered into a share purchase agreement with Image Frame Investment (HK) Limited (the “Existing
Shareholder”) pursuant to which the Purchaser purchased 40,137,614 Class A Ordinary Shares beneficially owned by the Existing
Shareholder (the “Secondary Share Transfer”).
NOW, THEREFORE, in consideration of the foregoing and representations, warranties, covenants and agreements set forth herein
as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and
intending to be legally bound, the Company and the Purchaser hereby agree as follows:
1. DEFINITIONS
The following capitalized terms shall have the following meanings for purposes of this Agreement:
“1934 Act” means the United States Securities Exchange Act of 1934, as amended;
“Act” means the Companies Act (As Revised) of the Cayman Islands;
“ADS” means American Depositary Share, each representing one (1) Class A Ordinary Shares of the Company as of the date hereof;
“Affiliate” means an “affiliate” within the meaning of Rule 405 under the Securities Act;
“Aggregate Purchase Price” has the meaning set forth in Section 2(a);
“Agreement” has the meaning set forth in the preamble;
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, and any other
applicable laws or regulations related to bribery or corruption;
1
“Anti-Money Laundering Laws” means the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956-1957), the USA
PATRIOT ACT ((Pub. L. No. 107-56), and the Bank Secrecy Act (31 U.S.C. §§5311-5332)), the UK Proceeds of Crime Act 2002, the
UK Terrorism Act 2000, the Proceeds of Crime Act (Revised) of the Cayman Islands, the Anti-Money Laundering Regulations (Revised)
of the Cayman Islands, the Terrorism Act (Revised) of the Cayman Islands, the Proliferation Financing (Prohibition) Act (Revised) of the
Cayman Islands, the Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation
Financing in the Cayman Islands, and any other applicable laws or regulations related to terrorist financing or money laundering;
“Board” means the Company’s Board of Directors;
“Business Day” means any weekday that is not a day on which banking institutions in the Cayman Islands, the Hong Kong Special
Administrative Region, New York City, Abu Dhabi or the PRC are authorized or required by law, regulation or executive order to be
closed;
“Change of Control” means the consummation of any bona fide third party tender offer, merger, consolidation or other similar
transaction the result of which is that any “person” (as defined in Section 13(d)(3) of the 1934 Act), or group of persons, other than the
Company, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the 1934 Act) of a majority of the total voting power of
the voting stock of the Company;
“Class A Ordinary Shares” means the Company’s Class A ordinary shares, par value US$0.00025 per share;
“Closing” has the meaning set forth in Section 2(b)(i);
“Closing Date” has the meaning set forth in Section 2(b)(i);
“Company” has the meaning set forth in the preamble;
“Company Articles” means the Thirteenth Amended and Restated Memorandum and Articles of Association of the Company, as
may be amended from time to time;
“Contract” means any agreement, contract, lease, indenture, instrument, note, debenture, bond, mortgage or deed of trust or other
agreement, arrangement or understanding;
“Encumbrance” means any mortgage, lien, pledge, charge, security interest, title defect, preemptive or similar right or other
encumbrance;
“Ex-Im Laws” means (a) the U.S. Export Administration Regulations administered by the U.S. Department of Commerce, the
International Traffic in Arms Regulations administered by the U.S. Department of State, and any other applicable laws or regulation
related to export controls administered or enforced by an applicable Governmental Entity; and (b) import controls and customs laws
administered by U.S. Customs and Border Protection and any other applicable Governmental Entity.
“Existing Shareholder” has the meaning set forth in the Recitals;
“GAAP” means generally accepted accounting principles in the United States;
2
“Governmental Entity” means any supranational, national, provincial, state, municipal, local or other government, whether U.S.,
PRC or otherwise, any instrumentality, subdivision, administrative agency or commission thereof, court, other governmental authority or
regulatory body or instrumentality, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority or any self-regulatory agency (including any stock exchange);
“Hong Kong Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited,
as amended or supplemented from time to time;
“Hong Kong Stock Exchange” means The Stock Exchange of Hong Kong Limited;
“Hong Kong Stock Exchange Documents” means all announcements, proxy statements and other statements, reports, forms and
other documents that are either required to be or have otherwise been filed by the Company with the Hong Kong Stock Exchange or
published on the website of the Hong Kong Stock Exchange from time to time;
“HKIAC” has the meaning set forth in Section 9(b);
“Indemnifiable Loss” means, with respect to any Person, any action, claim, cost, damage, deficiency, disbursement, expense,
liability, loss, obligation, penalty, settlement, suit, or Tax of any kind or nature, together with all interest, penalties, legal, accounting and
other professional fees and expenses reasonably incurred in the investigation, collection, prosecution and defense of claims and amounts
paid in settlement, imposed on or otherwise actually incurred or suffered by such Person, whether directly or indirectly;
“Lock-Up Period” has the meaning set forth in Section 5(e);
“Material Adverse Effect” means any event, occurrence, fact, condition, change or development, individually or together with
other events, occurrences, facts, conditions, changes or developments, that has or would reasonably be expected to have a material
adverse effect on (a) the business or operations of the Company and its Subsidiaries (taken as a whole) as presently conducted, or the
condition (financial or otherwise), assets or results of operation of the Company and its Subsidiaries (taken as a whole) or (b) the ability
of the Company to consummate the transactions contemplated by this Agreement; provided, however, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the business of the Company or any Subsidiary relating to or
arising in connection with (i) any action expressly required to be taken pursuant to the terms and conditions of this Agreement or taken at
the written direction of the Purchaser, (ii) economic changes affecting the industry in which the Company and its Subsidiaries operate
generally or the economy of the PRC or any other market where the Company and its Subsidiaries have material operations or sales
generally, (iii) the execution, announcement or disclosure of this Agreement or the pendency or consummation of the transactions
contemplated hereunder, (iv) changes in generally accepted accounting principles, (v) changes in general legal, tax or regulatory
conditions, (vi) changes in national or international political or social conditions, including any engagement in hostilities or the
occurrence of any military or terrorist attack or civil unrest, or (vii) earthquakes, hurricanes, floods, epidemic-induced public health
crises or other disasters; provided further, however, that any event, occurrence, fact, condition, change or development referred to in
clauses (ii), (vi) and (vii) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred
or would reasonably be expected
3
to occur to the extent that such event, occurrence, fact, condition, change or development has a disproportionate effect on the Company
or its Subsidiaries (taken as a whole) compared to other similarly situated participants in the industries and geographies in which the
Company and its Subsidiaries operate (in which case, only the incremental disproportionate adverse effect may be taken into account in
determining whether a Material Adverse Effect has occurred).
“NYSE” means the New York Stock Exchange;
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency thereof;
“PRC” means the People’s Republic of China;
“Public Documents” means, collectively, the SEC Documents, the Hong Kong Stock Exchange Documents and the Singapore
Exchange Documents;
“Purchaser” has the meaning set forth in the preamble;
“Purchaser Designee” has the meaning set forth in Section 5(c);
“Registration Rights Agreement” has the meaning set forth in the Recitals;
“Sanctioned Country” means any country or territory that is itself the target of comprehensive Sanctions (including Cuba, Iran,
North Korea, Syria, Crimea and those portions of the Donetsk People’s Republic or Luhansk People’s Republic regions (and such other
regions) of Ukraine over which any Sanctions authority imposes comprehensive Sanctions), or any country or territory whose
government is the subject of Sanctions (including Venezuela) or that is otherwise the subject of broad Sanctions restrictions (including
Afghanistan, Russia and Belarus).
“Sanctioned Person” means any Person that is (a) the target of Sanctions, including any Person identified on the U.S. Department
of the Treasury’s Office of Foreign Assets Control (“OFAC”) Specially Designated Nationals and Blocked Persons List, Sectoral
Sanctions Identifications List, or any other Sanctions-related list maintained by a Sanctions authority; (b) a Person that is organized,
located or resident in a Sanctioned Country; or (c) any Person owned or controlled by any Person(s) described in clause(s) (a) and/or (b).
“Sanctions” means economic, financial and trade sanctions administered or enforced by the United States (including OFAC, U.S.
Department of State, and U.S. Department of Commerce); European Union and each member state thereof; United Kingdom (including
Her Majesty’s Treasury); and United Nations Security Council.
“SEC” means the U.S. Securities and Exchange Commission;
“SEC Documents” means all registration statements, proxy statements and other statements, reports, schedules, forms and other
documents that are either required from time to time to be or have otherwise been filed or furnished by the Company with or to the SEC,
and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein;
4
“Secondary Share Transfer” has the meaning set forth in the Recitals;
“Securities” has the meaning set forth in the Recitals;
“Securities Act” means the United States Securities Act of 1933, as amended, and all of the rules and regulations promulgated
thereunder;
“SFC” has the meaning set forth in Section 4(o);
“SFO” has the meaning set forth in Section 4(o);
“Singapore Exchange” means The Singapore Exchange Securities Trading Limited;
“Singapore Exchange Documents” means all announcements, proxy statements and other statements, reports, forms and other
documents that are either required to be or have otherwise been filed by the Company with the Singapore Exchange or published on the
website of the Singapore Exchange from time to time.
“Subsidiary” means any entity of which a majority of the outstanding equity securities or other ownership interests representing a
majority of the outstanding equity interests or otherwise having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at the time directly or indirectly owned or controlled by the Company, and includes any
entity which is directly or indirectly controlled by the Company (including, for the avoidance of doubt, any variable interest entities that
are consolidated into the financial statements of the Company);
“Transaction Documents” means this Agreement, the Registration Rights Agreement and any other agreement, document or
instrument entered into or delivered in connection with the transactions contemplated hereby or thereby;
“Transfer” means directly or indirectly, offer, sell, contract to sell, pledge, transfer, assign, give, hypothecate, encumber, grant a
security interest in, convey in trust, gift, devise or descent, or otherwise dispose of, or suffer to exist (whether by operation of law of
otherwise) any Encumbrance on, any of the Securities or any right, title or interest therein or thereto, or enter into a transaction which
would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of any of the Securities, whether any such aforementioned transaction is to be settled by delivery of the
Company’s securities, in cash or otherwise, or publicly disclose the intention to make any such disposition or to enter into any such
transaction, swap, hedge or other arrangement, including transfers pursuant to divorce or legal separation, transfers to receivers, levying
creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly, of any of the Securities; and
“U.S.” or “United States” means the United States of America.
2. PURCHASE AND SALE OF SECURITIES
(a) Purchase of Shares. Subject to the terms and conditions of this Agreement, at the Closing (as defined below), the Company shall
issue and sell to the Purchaser, and the Purchaser shall subscribe for and purchase from the Company, the Securities, free and clear of
5
all Encumbrances (except for restrictions created by virtue of transactions contemplated by this Agreement), for the aggregate purchase
price of US$738,545,134.96 (the “Aggregate Purchase Price”), representing US$8.72 per Class A Ordinary Share, which is the volume
weighted average price of Class A Ordinary Shares (as adjusted for the American depository share-to-Class A Ordinary Share ratio) on
the NYSE over the seven consecutive trading days immediately preceding June 19, 2023.
(b) Closing.
(i)
Date and Time. Subject to satisfaction or, to the extent permissible, waiver of the conditions set forth in Sections 6 and
7 (other than conditions that by their nature are to be satisfied upon the Closing, but subject to the satisfaction or, to the extent
permissible, waiver of those conditions at the Closing by the applicable parties), the closing of the sale and purchase of the Securities
(the “Closing”) shall take place remotely via exchange of documents and signatures on such date that is no later than five (5) Business
Days after each of the conditions set forth in Sections 6 and 7 has been fulfilled or waived (other than those conditions that can be
fulfilled only at the Closing), as is specified by the Company and the Purchaser or at such other date and location as may be mutually
agreed in writing by the Company and the Purchaser (such date, the “Closing Date”).
(ii)
Payment and Delivery. At the Closing:
(A)
the Purchaser shall pay or caused to be paid the Aggregate Purchase Price to the Company by electronic bank
transfer of immediately available funds to a bank account designated in writing by the Company at least three (3) Business Days prior to
the Closing Date;
Company kept in accordance with the Act evidencing the ownership of the Securities by the Purchaser;
(B)
the Company shall deliver to the Purchaser an updated certified extract of the register of members of the
the Company shall deliver to the Purchaser a certificate, executed on behalf of the Company by an executive
officer or other authorized person, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Sections 7(b),
7(c), 7(d), 7(f) and 7(g); and
(C)
the Purchaser shall deliver to the Company a certifciate, executed on behalf of the Purchaser by an executive
or other authorized person, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Sections 6(b), 6(c) and
6(d).
(D)
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as of the date hereof and as of the Closing Date that:
(a) Organization. The Purchaser is a company duly organized and validly existing in good standing under the laws of the
jurisdiction in which it is organized.
(b) Authorization; Enforcement; Validity. The Purchaser has the requisite entity power and authority to enter into and perform this
Agreement and to consummate the transactions contemplated by this Agreement and each other Transaction Document to which it is a
party.
6
The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions contemplated by and in
compliance with the provisions of this Agreement have been, or at the Closing will be, duly authorized by all necessary entity action on
the part of the Purchaser. This Agreement has been and, at or prior to the Closing, and each other Transaction Document to be delivered
at the Closing will be, duly executed and delivered by the Purchaser and constitute the legal, valid and binding obligations of the
Purchaser. This Agreement constitutes and, upon the execution and delivery thereof by the Purchaser, each other Transaction Document
will constitute, the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies.
(c) No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and the other Transaction
Documents and the consummation by the Purchaser of the transactions contemplated hereby and thereby do not and will not (i) result in
a violation of the organizational or constitutional documents of the Purchaser, or (ii) result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state, and any other applicable, securities laws) applicable to the Purchaser, except
in the case of clause (ii) above, for such violations which would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Purchaser to perform its obligations hereunder.
(d) Consents and Approvals. Neither the execution and delivery by the Purchaser of this Agreement or any other Transaction
Document, nor the consummation by the Purchaser of any of the transactions contemplated hereby or thereby, nor the performance by the
Purchaser of this Agreement or any other Transaction Document in accordance with its respective terms, requires the consent, approval,
order or authorization of, or registration with, or the giving notice to, any Governmental Entity or any third party prior to the Closing,
except (i) any filing or report required to be made with or submitted to the SEC, the Hong Kong Stock Exchange or the Singapore
Exchange and (ii) for such that would not have a material adverse effect on the Purchaser’s ability to consummate the transactions
contemplated by this Agreement.
(e) Status and Investment Intent.
(i)
Investment Experience. The Purchaser is a sophisticated investor with knowledge and experience in financial and
business matters such that the Purchaser is capable of evaluating the merits and risks of the investment in the Securities. The Purchaser is
able to bear the economic risks of an investment in the Securities. The Purchaser has carefully reviewed all documents relating to the
transactions contemplated by this Agreement and has been provided with all other materials that it considers relevant to the transactions
contemplated by this Agreement, has had a full opportunity to ask questions of and receive answers from the Company or any person
acting on behalf of the Company concerning the terms and conditions of transactions contemplated by this Agreement. In making its
decision to invest in the Company, the Purchaser is not relying upon, and has not relied upon, any statement, representation or warranty
made by any person, except for the statements, representations and warranties contained in this Agreement.
7
(ii)
Restricted Securities. The Purchaser acknowledges that the Securities are “restricted securities” that have not been
registered under the Securities Act or any applicable state securities law. The Purchaser further acknowledges that, absent an effective
registration under the Securities Act, the Securities may only be offered, sold or otherwise transferred (x) to the Company, (y) outside the
United States in accordance with Rule 904 of Regulation S under the Securities Act, or (z) pursuant to an exemption from registration
under the Securities Act.
(iii)
Not U.S. Person. Such Purchaser is not a “U.S. person” as defined in Rule 902 of Regulation S.
(f) No Public Sale or Distribution. The Purchaser is acquiring the Securities for its own account and not with a view to, or with any
intention of, resale, distribution or other disposition thereof in a manner that would violate the registration requirements of the Securities
Act. The Purchaser does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of
the Securities. The Purchaser is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.
(g) Legends. The Purchaser understands that the Securities and the register of members of the Company shall bear, in addition to
any other legends required under applicable laws, the following legend:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE PURCHASER: (1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS LOCATED
OUTSIDE THE UNITED STATES AND NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT), AND (2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THE SECURITIES, OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BECOME EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (D) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED UNDER THE SECURITIES ACT (IF AVAILABLE). THE SECURITIES ARE ALSO SUBJECT
TO LOCK-UP PURSUANT TO THAT CERTAIN SHARE SUBSCRIPTION AGREEMENT, DATED AS OF JUNE 20, 2023, BY
AND AMONG THE HOLDER OF SUCH SECURITIES, AND NIO INC., AND MAY ONLY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCK-UP PURSUANT TO THE
TERMS SET FORTH IN SUCH SHARE SUBSCRIPTION AGREEMENT.
(h) Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid
right, interest or claim against or upon the Purchaser for any commission, fee or other compensation pursuant to any agreement,
8
arrangement or understanding with a placement agent entered into by or on behalf of the Purchaser.
(i) Sufficient Funding. The Purchaser has at its disposal sufficient funding to pay the Aggregate Purchase Price and consummate
the transactions contemplated hereby.
(j) No Additional Representations. The Purchaser makes no representations or warranties as to any matter whatsoever except as
expressly set forth in the Transaction Documents or in any certificate delivered by the Purchaser to the Company in accordance with the
terms thereof.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date (except for such
representations and warranties made only as of a specific date), that, except as otherwise disclosed in the Public Documents:
(a) Organization and Qualification. The Company is a corporation duly incorporated and validly existing in good standing under the
laws of the Cayman Islands, and has the requisite corporate power and authorization to own its properties and to carry on its business as
now being conducted.
(b) Capitalization. The authorized share capital of the Company is US$1,000,000 divided into 4,000,000,000 shares comprising of
(i) 2,632,030,222 Class A Ordinary Shares, (ii) 148,500,000 Class C ordinary shares of a par value of US$0.00025 each and (iii)
1,219,469,778 shares of a par value of US$0.00025, each of such class or classes (however designated) as the Board may determine in
accordance with the Company Articles. As of June 18, 2023, 1,545,410,843 Class A Ordinary Shares and 148,500,000 Class C ordinary
shares are issued and outstanding. All of the outstanding ordinary shares of the Company are duly authorized, validly issued, fully paid
and non-assessable, have been issued in compliance with the then effective memorandum and articles of association of the Company, the
Act and all applicable securities laws, including the rules and regulations of each of NYSE, the Singapore Exchange and the Hong Kong
Stock Exchange, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as set forth in the Public Documents, the Company has no outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to
vote) with the shareholders of the Company on any matter.
(c) Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform
its obligations under this Agreement and each other Transaction Document to which it is a party and to issue the Securities in accordance
with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and thereby, including, the issuance of the Securities,
has been duly authorized by the Board and no further filing, consent or authorization (including any shareholder approval) is required by
the Board or otherwise, except for any required filing regarding the issuance of additional securities with NYSE, Hong Kong Stock
Exchange or Singapore Exchange. This Agreement has been and, at or prior to the Closing, each other Transaction Document to be
delivered at the Closing will be, duly executed and delivered by
9
the Company. This Agreement constitutes and, upon the execution and delivery thereof by the Company, each other Transaction
Document to which it is a party will constitute the legal, valid and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation
by the Company of the transactions contemplated hereby and thereby (including, the issuance of the Securities) will not (i) result in a
violation of the Company Articles, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any Contract to which
the Company is a party, or (iii) subject to the terms of this Agreement, result in a violation of any law, rule, regulation, order, judgment or
decree (including U.S. federal and state securities laws and regulations, and the rules and regulations of NYSE, the Hong Kong Stock
Exchange and the Singapore Exchange applicable to the Company or by which any property or asset of the Company is bound or
affected), except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(e) Consents. Assuming the accuracy of the representations and warranties of the Purchaser under this Agreement and other
Transaction Documents, in connection with the entering into and performance of this Agreement and the other Transaction Documents,
the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, (i) any
Governmental Entity in order for it to execute and deliver the Transaction Documents or perform any of its obligations under or
contemplated by the Transaction Documents or (ii) any third party pursuant to any agreement, indenture or instrument to which the
Company is a party, in each case in accordance with the terms hereof or thereof other than such as have been made or obtained, and
except for (x) any required filing or notifications regarding the issuance of additional securities with the SEC, NYSE, the Hong Kong
Stock Exchange or the Singapore Exchange; or (y) the failure to obtain such consent, authorization, order, or make such filing or
registration that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(f)
Issuance of Securities. The Securities, when issued and paid for in accordance with the terms hereof, will be duly authorized,
validly issued and non-assessable and free from any Encumbrance and the Securities will be fully paid with the holders being entitled to
all rights accorded to a holder of the Company’s Class A Ordinary Shares. Assuming the accuracy of the representations and warranties
set forth in Section 3 of this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the
Securities Act.
(g) No Direct Selling Efforts. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or direct selling efforts as that terms is defined in Rule 902 of Regulation S in connection
with the offer or sale of the Securities.
(h) Public Documents. The Company has timely filed all the Public Documents.
10
(i)
As of their respective effective dates (in the case of the SEC Documents that are registration statements filed pursuant
to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other SEC Documents), or in each case,
if amended prior to the date hereof, as of the date of the last such amendment, (A) each of the SEC Documents complied in all material
respects with the requirements of the Securities Act or the 1934 Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder, and, (B) none of the SEC Documents contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the material statements therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this Agreement, there are no material outstanding or unresolved
comments in comment letters received by the Company from the staff of the SEC with respect to any SEC Document.
(ii)
As of their respective dates of submission or publication of the Hong Kong Stock Exchange Documents, or in each
case, if amended prior to the date hereof, as of the date of the last such amendment, (A) each of the Hong Kong Stock Exchange
Documents complied in all material respects with the applicable requirements of the Hong Kong Listing Rules and (B) none of the Hong
Kong Stock Exchange Documents contained any untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the material statements therein, in the light of the circumstances under which they were
made, not misleading.
(iii)
As of their respective dates of submission or publication of the Singapore Exchange Documents, or in each case, if
amended prior to the date hereof, as of the date of the last such amendment, (A) each of the Singapore Exchange Documents complied in
all material respects with the applicable requirements of the listing manual of the Singapore Exchange and the Singapore Code of
Corporate Governance and (B) none of the Singapore Exchange Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the material statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) Financial Statements. As of their respective dates, the financial statements of the Company included in the Public Documents
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC,
the Hong Kong Stock Exchange and the Singapore Exchange with respect thereto. The consolidated financial statements (including any
related notes thereto) included or incorporated by reference in the Public Documents fairly presented in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the dates indicated therein and the consolidated results of their
operations and cash flows for the periods specified therein. Such financial statements were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby (except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or
summary statements).
(j)
Internal Controls. The Company and its Subsidiaries maintain (and have maintained), with respect to the operations of the
business of the Company and its Subsidiaries a system of internal control over financial reporting (as defined in Rule 13a-15 or 15d-15,
as applicable, under the 1934 Act) that is sufficient to provide reasonable assurance that (A) transactions are recorded as necessary to
permit preparation of consolidated financial statements of the Company in accordance with GAAP, (B) receipts and expenditures of the
11
Company are being made only in accordance with appropriate authorizations of management and the Board, and (C) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its
Subsidiaries.
(k) No Material Adverse Effect. Since December 31, 2022, no event or circumstance has occurred that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse Effect.
(l) Litigation. Except as disclosed in the Public Documents, there are no claims, suits, actions or proceedings pending or, to the
Company’s knowledge, threatened against the Company or any of its Subsidiaries before any Governmental Entity or any arbitrator that
seeks to restrain or enjoin the consummation of the transactions contemplated by the Transaction Documents or which would reasonably
be expected, to have, individually or in the aggregate, a Material Adverse Effect.
(m) Compliance with Applicable Laws. Except as set forth in the Public Documents, each of the Company and its Subsidiaries has
conducted its businesses in compliance with all applicable laws, regulations and applicable stock exchange requirements, except where
the failure to be in compliance, individually or in the aggregate, do not and would not reasonably be expected to have, a Material
Adverse Effect, and as of the date of this Agreement, the Company has not received any comment letter from the SEC or the staff thereof
or any notices from NYSE, the Singapore Exchange or the Hong Kong Stock Exchange regarding non-compliance with any of such
Governmental Entity’s rules or regulations.
(n) Sanctions, Anti-Corruption, Ex-Im Laws and Anti-Money Laundering. Neither the Company nor any of its Subsidiaries, or any
of their respective directors, officers, employees is a Sanctioned Person. The Company and its Subsidiaries, and to the knowledge of the
Company, their respective directors, officers and employees have been for the past five (5) years prior to the date hereof and are currently
in compliance with Sanctions, Anti-Corruption Laws, Ex-Im Laws and Anti-Money Laundering Laws. For the past five (5) years prior to
the date hereof, neither the Company nor its Subsidiaries (i) has had or currently has assets located in, or otherwise directly or indirectly
has derived or currently derives revenues from or has engaged or currently engages in investments in or with, any Sanctioned Country; or
(ii) directly or indirectly has derived or currently derives revenues from or has engaged or currently engages in investments, dealings,
activities or transactions in or with any Sanctioned Person. For the past five (5) years prior to the date hereof, there has not been, and
there is no, pending or, to the Company’s knowledge, threatened action, suit, proceeding or investigation before any court or other
Governmental Entity against the Company or any Subsidiary or Affiliate of the Company, or any of their respective officers, directors,
employees, or, to the knowledge of the Company, agents (with respect to such agents’ activities or transactions that were within the scope
of their authorized agency relationship with the Company or its Subsidiaries), or any investigation by the Company, a Subsidiary or
Affiliate of the Company, or their respective legal or other representatives involving the foregoing, that relates to a potential or actual
violation of Sanctions, Anti-Corruption Laws, Ex-Im Laws or Anti-Money Laundering Laws; nor does a basis for any such claim exist.
(o) Securities and Futures Ordinance. The conditions on which the Hong Kong Securities and Futures Commission (the “SFC”)
granted a partial exemption under section 309(2) of the Securities and Futures Ordinance (the “SFO”) to the Company, its substantial
12
shareholders, directors and chief executive from strict compliance with the provisions of Part XV of the SFO continue to be satisfied and
there has been no material change that has caused the SFC to withdraw or reconsider such exemption.
(p) Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid
right, interest or claim against or upon the Company or any of its Subsidiaries for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding with a placement agent entered into by or on behalf of the Company or any of its
Subsidiary.
(q) No Additional Representations. The Company makes no representations or warranties as to any matter whatsoever except as
expressly set forth in the Transaction Documents or in any certificate delivered by the Company to the Purchaser in accordance with the
terms thereof.
5. COVENANTS AND ADDITIONAL AGREEMENTS
(a) Business Cooperation Agreements. Following the Closing Date, the Company and the Purchaser (or any of their respective
Affiliates) shall use their respective commercially reasonable efforts to discuss, negotiate and enter into one or more detailed definitive
agreements after Closing reflecting the business cooperation arrangements specified in Exhibit B attached hereto.
(b) Consents and Approvals. The Purchaser shall take all necessary actions to obtain all requisite internal consents, approvals, or
authorizations with respect to Closing as soon as practicable after the date hereof and in any event prior to the Closing Date.
(c) Director Nomination Right.
(i)
Upon the Closing, the Purchaser shall be entitled to nominate one (1) director to the Board (such Person, the
“Purchaser Designee”), subject to requirements of the NYSE, the Hong Kong Stock Exchange, the Singapore
Exchange or any other applicable securities exchange, and the Company shall, take all necessary actions to add such
Purchaser Designee to the Board at the next regularly scheduled meeting of the Board after the Closing. The Purchaser
may exercise its director nomination rights hereunder through delivery of a written notice to the Company regarding
the nomination, and the appointment of the Purchaser Designee by the Board shall be subject to the Company Articles
and requirements of the NYSE, the Hong Kong Stock Exchange, the Singapore Exchange or any other applicable
securities exchange applicable to the composition of the Board and qualifications and appointment of directors. The
Company and the Board shall take customary and reasonable actions to obtain shareholder approval of the Purchaser
Designee as a director of the Board to the extent such approval is required under applicable law. The Company shall
take all necessary actions to ensure that, at all times when a Purchaser Designee is eligible to be appointed or
nominated, there are sufficient vacancies on the Board to permit such designation.
13
(ii)
(iii)
The Purchaser shall have the right to request (by written notice to the Board) the removal of the Purchaser Designee,
following which the Company and the Board shall take all necessary actions to cause the removal of such Purchaser
Designee as a director of the Company. If any Purchaser Designee ceases to serve on the Board for any reason during
his or her term, the vacancy created thereby shall be filled, and the Company shall cause the Board to fill such vacancy,
with a new Purchaser Designee eligible to serve on the Board in accordance with Section 5(c)(i); provided, however,
notwithstanding anything to the contrary in this Agreement, in the event that the Purchaser’s rights under this
Section 5(c) are terminated, any Purchaser Designee serving on the Board shall tender his or her resignation to the
Board.
For the avoidance of doubt, a Purchaser Designee shall be entitled (A) to the same retainer, equity compensation and
other fees or compensation, including travel and expense reimbursement, paid to the directors of the Company for his
or her service as a director and (B) to the same indemnification rights as other directors of the Company, and the
Company shall maintain, in full force and effect, directors’ and officers’ liability insurance in reasonable amounts to
the same extent it now indemnifies and provides insurance for the directors on the Board.
(iv)
The rights of the Purchaser under this Section 5(c) shall terminate automatically if the Purchaser and its Affiliates
beneficially own less than five percent (5%) of the then total issued and outstanding share capital of the Company.
(d) Expenses. Each party shall bear and pay its own costs, fees and expenses incurred by it in connection with the Transaction
Documents and the transactions contemplated by the Transaction Documents.
(e) Purchaser Lockup. The Purchaser shall not, during the period commencing on the date hereof and ending six (6) months after
the Closing Date (the “Lock-Up Period”), Transfer any portion or interest of the Securities purchased hereunder without the prior
written consent of the Company, other than (A) to any Affiliate of the Purchaser or to any investment fund or other entity controlling,
controlled by, managing or managed by or under common control with the Purchaser or as part of a distribution to members or
shareholders of the Purchaser upon liquidation, (B) pursuant to tenders, sales or other transfers pursuant to a bona fide third-party tender
offer, merger, consolidation or other similar transaction made to all holders of ADS or Class A Ordinary Shares or involving a Change of
Control of the Company, (C) Class A Ordinary Shares and ADSs acquired by the Purchaser in open market transactions subsequent to
the Closing or (D) to the Company. Any purported sale, transfer, pledge, encumbrance, assignment, loan, or disposal of the Securities in
violation of the foregoing sentence without prior written consent of the Company shall be null and void.
(f) Public Disclosure. Without limiting any other provision of this Agreement, the Company and Purchaser, to the extent permitted
by applicable law, will consult with each other before issuance of, and provide each other the opportunity to review and comment upon,
any press release or public statement with respect to the Transaction Documents and the transactions contemplated hereby and thereby,
and will not (to the extent practicable) issue any such press release or make any such public statement prior to such consultation with and
14
consent of the other party, which shall not be unreasonably withheld, conditioned or delayed, except as to such press release or public
statement (and information contained therein) that the Company or the Purchaser determines, after consultation with outside legal
counsel, is required by law, rules, regulations or any listing agreement with or requirement of the SEC, NYSE, the Hong Kong Stock
Exchange, the Singapore Exchange or any other applicable securities exchange; provided that the disclosing party shall, to the extent
permitted by applicable law, rules, regulations or any listing agreement with or requirement of the SEC, NYSE, the Hong Kong Stock
Exchange, the Singapore Exchange or any other applicable securities exchange and if reasonably practicable, inform the other parties
about the disclosure to be made pursuant to such requirements prior to the disclosure. Notwithstanding the foregoing, this Section 5(f)
shall not apply to any press release or other public statement made by the Company that does not contain any information relating to this
Agreement that has not been previously announced or made public in accordance with the terms of this Agreement and that is made in
the ordinary course of business.
(g) Sanctions, Anti-Corruption, Ex-Im Laws and Anti-Money Laundering. The Company and each of its Subsidiaries shall not,
directly or indirectly, use any proceeds of the Aggregate Purchase Price, or use, lend, contribute or otherwise make available any such
proceeds, to any Subsidiary, Affiliate, joint venture partner or other Person (i) to fund any investments, activities or transactions
involving any Sanctioned Country or Sanctioned Person or (ii) if such use, loan, contribution, or the making available of any such
proceeds would be prohibited under Sanctions for a Person subject to U.S., EU or UK jurisdiction; or otherwise in any manner in
violation of Sanctions, Anti-Corruption Laws, Ex-Im Laws or Anti-Money Laundering Laws by any Person (including Purchaser,
nominee, financial institution, arranger or advisor). The Company will maintain policies and procedures reasonably designed to ensure
compliance with Sanctions, Ex-Im Laws Anti-Corruption Laws and Anti-Money Laundering Laws.
(h) Use of Proceeds. The Company shall designate the proceeds from the sale of the Securities for research and development and
expansion of business internationally.
6. CONDITIONS TO THE COMPANY’S OBLIGATIONS
The obligation of the Company hereunder to issue and sell the Securities to the Purchaser at the Closing is subject to the satisfaction
or waiver by the Company, on or before the Closing Date, of each of the following conditions:
(a) Execution of Transaction Documents. The Purchaser shall have duly executed and delivered to the Company each of the
Transaction Documents to which it is a party. The execution and delivery of this Agreement by the Purchaser and the consummation of
the transactions contemplated by and in compliance with the provisions of the Transaction Documents have been duly authorized by all
necessary entity action on the part of the Purchaser.
(b) Performance. The Purchaser shall have performed and complied in all material respects with all agreements, obligations and
conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before the Closing.
(c) Representations and Warranties; Covenants. The representations and warranties of the Purchaser shall be true and correct in all
material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which shall
be true
15
and correct in all respects) as of the date of this Agreement and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date); provided that
each representation or warranty made by the Purchaser in this Agreement under Sections 3(a), 3(b) and 3(c) shall be true and correct in
all respects as of the date of this Agreement and as of the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as of such specified date).
(d) No Stop Order. There shall not be in force and effect any (A) law, rule or regulation (whether temporary, preliminary or
permanent) or (B) order, judgment, verdict, subpoena, injunction, decree, ruling, determination or award by any Governmental Entity of
competent jurisdiction, in either case, enjoining, prohibiting or having the effect of making illegal the consummation of the transactions
contemplated by this Agreement.
(e) Closing of the Secondary Share Transfer. The closing of the Secondary Share Transfer shall have occurred prior to the Closing.
7. CONDITIONS TO THE PURCHASER’S OBLIGATIONS
The obligation of the Purchaser hereunder to purchase the Securities at the Closing is subject to the satisfaction or waiver by the
Purchaser, on or before the Closing Date, of each of the following conditions:
(a) Execution of Transaction Documents. The Company shall have duly executed and delivered to the Purchaser each of the
Transaction Documents to which it is a party.
(b) Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and
conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before the Closing.
(c) Representations and Warranties; Covenants. The representations and warranties of the Company contained in the Transaction
Documents shall be true and correct in all material respects (except for those representations and warranties that are qualified by
materiality or material adverse effect, which shall be true and correct in all respects) as of the date of this Agreement and as of the
Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct in all material respects as of such specified date); provided that each representation or warranty made by the Company in this
Agreement under Sections 4(a), 4(b), 4(c), 4(f) and 4(g) shall be true and correct in all respects as of the date of this Agreement and as of
the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be
true and correct as of such specified date).
(d) No Stop Order. There shall not be in force and effect any (A) law, rule or regulation (whether temporary, preliminary or
permanent) or (B) order, judgment, verdict, subpoena, injunction, decree, ruling, determination or award by any Governmental Entity of
competent jurisdiction, in either case, enjoining, prohibiting or having the effect of making illegal the consummation of the transactions
contemplated by this Agreement.
(e) Closing of the Secondary Share Transfer. The closing of the Secondary Share Transfer shall have occurred prior to the Closing.
16
(f) No Material Adverse Effect. No Material Adverse Effect shall have occurred since the date of this Agreement.
(g) Exchange Listing. The Company shall have filed a supplemental listing application for the ADSs representing the Securities
with NYSE and shall have received no objection thereto from NYSE.
8. TERMINATION
(a) Subject to Section 8(b) below, this Agreement may be terminated and the transactions contemplated by this Agreement
abandoned at any time prior to the Closing:
(i)
by either the Company or the Purchaser, by written notice to the other party, if Closing does not occur by July 14,
2023;
(ii)
by mutual agreement of the Company and the Purchaser;
(iii)
by the Company or the Purchaser if there is in force and effect any (A) law, rule or regulation (whether temporary,
preliminary or permanent) or (B) order, judgment, verdict, subpoena, injunction, decree, ruling, determination or award by any
Governmental Entity of competent jurisdiction, in either case, enjoining, prohibiting or having the effect of making illegal the
consummation of the transactions contemplated by this Agreement;
(iv)
by the Purchaser if any representation or warranty made by the Company under this Agreement shall have become
untrue or there has been a breach of any covenant or agreement by the Company under this Agreement, which breach cannot be cured or,
if it is capable of being cured, that is not cured within seven (7) Business Days of its occurrence, in either case such that the conditions
set forth in Section 7 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have
become untrue; provided, however, that the Purchaser shall not have the right to terminate this Agreement pursuant to this Section 8(a)
(iv) if the Purchaser shall have materially breached or failed to perform any of its representation or warranty or covenant or agreement
under any Transaction Document which breach or failure to perform would give rise to the failure of the condition set forth in Section 7;
or
(v)
by the Company if any representation or warranty made by the Purchaser under this Agreement shall have become
untrue or there has been a breach of any covenant or agreement by the Purchaser under this Agreement, which breach cannot be cured or,
if it is capable of being cured, that is not cured within seven (7) Business Days of its occurrence, in either case such that the conditions
set forth in Section 6 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have
become untrue; provided, however, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8(a)(v)
if the Company shall have materially breached or failed to perform any of its representation or warranty or covenant or agreement under
any Transaction Document which breach or failure to perform would give rise to the failure of the condition set forth in Section 6.
(b) In the event of termination of this Agreement as provided in Section 8(a) above, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of the parties hereto and, as applicable, the officers, directors and shareholders of
each
17
party, except that the provisions of Sections 8 and 9 hereof shall remain in full force and effect; provided that nothing herein shall relieve
any party hereto from liability for any breach of this Agreement that occurred prior to such termination.
9. MISCELLANEOUS
(a) No Survival. None of the representations, warranties, covenants or agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing and all rights, claims and causes of action (whether in contract or in tort or
otherwise, or whether at law or in equity) with respect thereto shall terminate at the Closing. Notwithstanding the foregoing, neither this
Section 9(a) nor anything else in this Agreement to the contrary shall limit: (a) the survival of any covenant or agreement of the parties
which by its terms is required to be performed or complied with in whole or in part after the Closing, which covenants and agreements
shall survive the Closing in accordance with their respective terms; or (b) the liability of any Person with respect to fraud.
(b) Governing Law; Arbitration. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to any choice
or conflict of law provision or rule thereof. Any dispute, controversy or claim arising out of or relating to this Agreement, or the
interpretation, breach, termination or validity hereof, shall be submitted to arbitration upon the request of any party with notice to the
other party. The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre
(“HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in effect, which rules are deemed to be incorporated by
reference into this Section 9(b). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select
one arbitrator within thirty (30) days after giving or receiving the demand for arbitration. The Chairman of the HKIAC shall select the
third arbitrator, who shall be qualified to practice law in Hong Kong. If either party to the arbitration does not appoint an arbitrator who
has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the
Chairman of the HKIAC. The arbitration proceedings shall be conducted in English. Each party irrevocably waives, to the fullest extent
it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such arbitration in Hong Kong
and the HKIAC, and hereby submits to the exclusive jurisdiction of HKIAC in any such arbitration. The award of the arbitration tribunal
shall be conclusive and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for
enforcement of such award. Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of
competent jurisdiction pending the constitution of the arbitral tribunal.
(c) Remedies and Waivers. No delay or omission by any party to this Agreement in exercising any right, power or remedy provided
by law or under this Agreement or any other documents referred to in it shall: (i) affect that right, power or remedy; or (ii) operate as a
waiver thereof. The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude
any other or further exercise or any other right, power or remedy. Except as otherwise expressly provided in this Agreement, the rights,
powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.
18
(d) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
Signatures in the form of electronically imaged “.pdf” shall be considered due execution and shall be binding upon the signatory thereto
with the same force and effect as if the signatures were original.
(e) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(f) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(g) Interpretation. When a reference is made in this Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the
words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. All references to “$”
mean the lawful currency of the U.S. The definitions contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Except as specifically stated herein,
any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. Except as otherwise specified herein, references to a person are also to its
permitted successors and assigns. Each of the parties has participated in the drafting and negotiation of this Agreement. If an ambiguity
or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
(h) Entire Agreement; Amendments. This Agreement (including all schedules and exhibits hereto), together with the other
Transaction Documents constitute the entire agreement, and supersede all other prior oral or written agreements between the Purchaser,
the Company, their Affiliates and Persons acting on their behalf with respect to the subject matter hereof and thereof. No provision of this
Agreement may be amended other than by an instrument in writing signed by the Company and the Purchaser. No provision hereof may
be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
(i) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally or by
internationally recognized overnight courier service; (ii) upon receipt, when sent by email if sent during
19
normal business hours of the recipient, and if not, then on the next Business Day, in each case properly addressed to the party to receive
the same. The addresses and email addresses for such communications shall be:
If to the Company:
NIO Inc.
Address:
Telephone:
Email:
Attention:
Building 19, No. 889, Tianlin Road
Minhang District
Shanghai, People’s Republic of China
[***]
[***]
[***]
with a copy (for informational purposes only) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Address:
46/F, Tower II, Jing An Kerry Centre
1539 Nanjing West Road
Shanghai 200040, People’s Republic of China
[***]
[***]
[***]
Telephone:
Email:
Attention:
If to the Purchaser:
CYVN Holdings L.L.C.
Address:
Telephone:
Email:
Attention:
Building No.51B, Al Bateen Executive Airport,
Abu Dhabi, United Arab Emirates
[***]
[***]
[***]
with a copy (for informational purposes only) to:
Akin Gump Strauss Hauer & Feld LLP
Address:
Telephone:
Email:
Attention:
One Bryant Park
New York, NY 10036
[***]
[***]
[***]
(j) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the
parties
20
hereto (whether by operation of law or otherwise) without the prior written consent of the other parties; provided, however, that the
Purchaser may assign its rights and obligations under this Agreement to one or more of its Affiliates in connection with the Purchaser’s
assignment of Securities to such Affiliates with prior written notice to the Company.
(k) Further Assurances. Each of the Purchaser and the Company shall, in good faith, cooperate and consult with the other and use
commercially reasonable efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by,
all Governmental Entities, necessary or advisable to consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(l) Adjustment of Share Numbers. If there is a subdivision, split, stock dividend, combination, reclassification or similar event with
respect to any of the shares of Company’s Class A Ordinary Shares referred to in this Agreement, then, in any such event, the numbers
and types of shares of such Class A Ordinary Shares referred to in this Agreement shall be equitably adjusted as appropriate to the
number and types of shares of such stock that a holder of such number of shares of such stock would own or be entitled to receive as a
result of such event of such holder had held such number of shares immediately prior to the record date for, or effectiveness of, such
event.
(m) Specific Performance. The parties hereto acknowledge and agree irreparable harm would occur for which money damages
would not be an adequate remedy in the event that any of the provisions of the Transaction Documents were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed that the parties to the Transaction Documents shall be
entitled, in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise, to an injunction
or injunctions, without posting a bond or undertaking and without proof of damages, to prevent breaches of the Transaction Documents
and to enforce specifically the terms and provisions of the Transaction Documents.
[Signature Pages Follow]
21
IN WITNESS WHEREOF, the Company and the Purchaser have caused their respective signature page to this Share
Subscription Agreement to be duly executed as of the date first written above.
COMPANY:
NIO INC.
By: /s/ Bin Li
Name: Bin Li
Title: Chairman of the Board of Directors
and Chief Executive Officer
[Signature Page to Share Subscription Agreement]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their respective signature page to this Share
Subscription Agreement to be duly executed as of the date first written above.
PURCHASER:
CYVN HOLDINGS L.L.C.
By: /s/ Jassem Mohamed Obaid Bu Ataba Alzaabi
Name: Jassem Mohamed Obaid Bu Ataba Alzaabi
Title: Chairman
Exhibit A
Registration Rights Agreement
Exhibit B
Key Scope and Objectives of Business Cooperation
Following the Closing Date, the Parties hereby agree to cooperate with each other in the following areas if and only to the extent
such cooperation (a) would not be prohibited under Sanctions for a Person subject to U.S., EU or UK jurisdiction; (b) would not be
prohibited under Anti-Corruption Laws, Ex-Im Laws or Anti-Money Laundering Laws; (c) does not involve a Sanctioned Country; and
(d) does not otherwise violate or contradict with any applicable local law or regulations: (i) the Investor shall have the right to participate
in future investments and strategic expansions of the Company in connection with its international business, subject to the Company’s
expansion planning, market entry strategies and transaction structures to be tailored for the applicable jurisdictions. In particular, the
Company undertakes to prioritize its expansion in the MENA market and will form a business plan with regards to MENA in
consultation with the Investor within six (6) months of Closing; and (ii) the Company or its Affiliate to provide technology, engineering
and supply chain support to CYVN Automotive, with detailed cooperation plan to be further discussed. The Company or its Affiliates
will also consider potential investment into CYVN Automotive subject to the progress of development of CYVN Automotive and status
of the Parties’ technical cooperation.
Exhibit 4.45
REGISTRATION RIGHTS AGREEMENT
between
NIO INC.
and
CYVN Holdings L.L.C.
_______________________________
Dated as of June 20, 2023
_______________________________
TABLE OF CONTENTS
SECTION 1 EFFECTIVENESS; DEFINITIONS
1.1.
1.2.
Effective Date
Definitions
SECTION 2 DEMAND REGISTRATION
2.1.
2.2.
2.3.
Demand Registration
Right of Deferral
Underwritten Offerings
SECTION 3 PIGGYBACK REGISTRATIONS
3.1.
3.2.
3.3.
3.4.
Registration of the Company’s Securities
Right to Terminate Registration
Underwriting Requirements
Exempt Registrations
SECTION 4 REGISTRATION PROCEDURES
4.1.
4.2.
4.3.
Registration Procedures and Obligations
Information from Investor
Expenses of Registration
SECTION 5 REGISTRATION-RELATED INDEMNIFICATION
5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
Company Indemnity
Investor Indemnity
Notice of Indemnification Claim
Contribution
Underwriting Agreement
Survival
SECTION 6 ADDITIONAL REGISTRATION-RELATED UNDERTAKINGS
6.1.
6.2.
6.3.
Reports under the Exchange Act.
Limitations on Subsequent Registration Rights
Termination
SECTION 7 DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT
7.1.
7.2.
Certain Matters of Construction
Definitions
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SECTION 8 MISCELLANEOUS
8.1.
8.2.
8.3.
8.4.
8.5.
8.6.
8.7.
8.8.
8.9.
Authority; Effect
Notices
Descriptive Heading
Counterparts
Successors and Assigns
No Third-Party Beneficiaries
Entire Agreement
Amendments and Waivers
Severability
SECTION 9 GOVERNING LAW; JURISDICTION, ETC.
9.1.
9.2.
9.3.
Governing Law; Arbitration.
Remedies and Waivers
Specific Performance
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14
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15
15
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of June 20, 2023, by and
between NIO Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands
(the “Company”), and CYVN Holdings L.L.C., a limited liability company organized under the laws of Abu
Dhabi, United Arab Emirates (the “Investor”).
BACKGROUND
A.
WHEREAS, the Company and the Investor have entered into that certain Share Subscription
Agreement, dated as of June 20, 2023 (the “Share Subscription Agreement”), pursuant to which the Investor has
agreed to subscribe for and purchase from the Company a certain number of Class A Ordinary Shares.
B.
WHEREAS, the Investor has entered into a share purchase agreement (the “Secondary Transfer
Agreement”) on June 20, 2023 with Image Frame Investment (HK) Limited (the “Existing Shareholder”),
pursuant to which the Investor purchased Class A Ordinary Shares beneficially owned by the Existing
Shareholder. The Class A Ordinary Shares to be subscribed for by the Investor under the Share Subscription
Agreement, together with the Class A Ordinary Shares purchased by the Investor from the Existing Shareholder
pursuant to the Secondary Transfer Agreement, are collectively referred to hereunder as the “Subject Securities”.
C.
WHEREAS, reference is made to the Fifth Amended and Restated Shareholders’ Agreement
among the Company and other parties thereto, dated November 10, 2017 (the “Shareholders Agreement”).
D.
WHEREAS, the Company and the Investor desire to set forth their agreements regarding certain
registration rights with respect to the Subject Securities and other Registrable Securities.
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
AGREEMENT
SECTION 1
EFFECTIVENESS; DEFINITIONS
1.1.
Effective Date. This Agreement shall become effective upon the closing of the transactions
contemplated by the Share Subscription Agreement (the “Closing”).
1.2.
Definitions. Certain terms are used in this Agreement as specifically defined herein. These
definitions are set forth or referred to in Section 7 hereof.
SECTION 2
SHELF REGISTRATION
2.1.
Shelf Registration. (1) No later than the thirtieth (30th) day immediately following the six (6)
month anniversary of Closing, and (2) at any time thereafter, no later than the thirtieth (30th) day immediately
following a written demand by the Investor, in case the Company does not already have an effective Registration
Statement on Form F-3 on file, the Company shall prepare and file with the Commission one Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act registering
the resale from time to time pursuant to any method or combination of methods legally available to, and requested
by, the Investor of all of the Registrable Securities then held by the Investor that are not covered by an effective
Registration Statement. Such Registration Statement also shall cover, to the extent allowable under the Securities
Act (including Rule 416 under the Securities Act), such indeterminate number of additional Registrable Securities
resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. The
Registration Statement (and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof, if applicable) shall be provided in accordance with Section 4.1 to the Investor prior to its
filing or other submission. Notwithstanding any other provision of this Section 2.1, if the Commission Staff does
not permit all of the Registrable Securities to be registered on the Registration Statement filed pursuant to this
Section 2.1 or Section 2.2 or requires the Investor to be named as an “underwriter”, then the Company shall use its
reasonable best efforts to persuade the Commission Staff that the offering contemplated by the Registration
Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415
under the Securities Act and that the Investor is not an “underwriter” or that the number of shares the Company is
eligible to register on the Registration Statement should not be so limited.
2.2.
Right of Deferral.
i.
The Company shall not be obligated to Register or qualify the Registrable Securities held by
the Investor pursuant to Section 2.1 if (1) during the period starting with the date of filing by
the Company of, and ending six (6) months following the effective date of any Registration
Statement filed pursuant to Section 2.1; provided that the Investor is entitled to join such
Registration in accordance with Section 3 (Piggyback Registrations); (2) the aggregate
anticipated price to the public of any Registrable Securities proposed to be sold pursuant to
such Registration is less than US$50,000,000 (or the equivalent thereof in other currencies); or
(3) in any jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such Registration or qualification, unless the Company is
already subject to service of process in such jurisdiction.
ii.
If, after receiving a request from the Investor pursuant to Section 2.1 hereof, the Company
furnishes to the Investor a certificate signed by the chief executive officer of the Company
stating that, in the good faith judgment of the board of directors of the Company, it would be
materially detrimental to
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the Company or its members for a Registration Statement to be filed in the near future, then
the Company shall have the right to defer such filing for a period during which such filing
would be materially detrimental, provided that the Company may not utilize this right for a
Registration under Section 2.1 for more than sixty (60) days, on any one occasion or more
than once during any twelve (12) month period; provided further that the Company may not
Register any other of its Equity Securities during such period (except for Exempt
Registrations).
2.3.
Underwritten Offerings. If, in connection with a request to Register Registrable Securities under
Section 2.1, the Investor seeks to distribute such Registrable Securities in an underwritten offering, it shall so
advise the Company as a part of the request, and the Company shall include such information in the written notice
to be promptly sent to the Holders. The Company shall, as soon as practicable, cause the Registrable Securities
specified in the request, together with any NIO Securities of any Holder who requests in writing to join such
Registration within fifteen (15) days after the Company’s delivery of written notice, to be Registered and qualified
for the applicable sale and distribution. In such event, the right of any Registration Rights Holder, including the
Investor, to include its NIO Securities in such Registration shall be conditioned upon such Registration Rights
Holder’s participation in such underwritten offering and the inclusion of such Registration Rights Holder’s NIO
Securities in the underwritten offering to the extent provided herein. All Registration Rights Holders proposing to
distribute their securities through such underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters of internationally recognized standing selected for such
underwritten offering by the Company and reasonably acceptable to the holders of a majority of the voting power
of all NIO Securities proposed to be included in such Registration. Notwithstanding any other provision of this
Agreement, if the managing underwriter(s) advises(s) the Company that marketing factors (including without
limitation the aggregate number of securities requested to be Registered, the general condition of the market, and
the status of the Persons proposing to sell securities pursuant to the Registration) require a limitation of the
number of NIO Securities to be underwritten in a Registration, the underwriters may exclude up to seventy-five
percent (75%) of the NIO Securities requested to be Registered but only after first excluding all other Equity
Securities from the Registration and underwritten offering, provided that the number of shares to be included in
the Registration on behalf of the non-excluded Registration Rights Holders is allocated among all Registration
Rights Holders in proportion, as nearly as practicable, to the respective amounts of NIO Securities requested by
such Registration Rights Holders to be included. If the Investor disapproves the terms of any underwriting, the
Investor may elect to withdraw therefrom by written notice to the Company and the underwriters delivered at least
ten (10) days prior to the effective date of the Registration Statement. Any Registrable Securities excluded or
withdrawn from such underwritten offering shall be withdrawn from the Registration. To facilitate the allocation
of shares in accordance with the above provisions, the Company or the underwriters may round the number of
shares allocated to a Holder to the nearest one hundred (100) shares.
-3-
SECTION 3
PIGGYBACK REGISTRATIONS
3.1.
Registration of the Company’s Securities. Subject to the terms of this Agreement, if the Company
proposes to Register for its own account any of its Equity Securities, or for the account of any holder of Equity
Securities any of such holder’s Equity Securities, in connection with the public offering of such securities (except
for Exempt Registrations), the Company shall promptly give the Investor written notice of such Registration and,
upon the written request of the Investor given within fifteen (15) days after delivery of such notice, the Company
shall include in such Registration any Registrable Securities thereby requested to be Registered by the Investor. If
the Investor decides not to include all or any of its Registrable Securities in such Registration by the Company, the
Investor shall nevertheless continue to have the right to include any Registrable Securities in any subsequent
Registration Statement or Registration Statements as may be filed by the Company, all upon the terms and
conditions set forth herein.
3.2.
Right to Terminate Registration. The Company shall have the right to terminate or withdraw any
Registration initiated by it under Section 3.1 prior to the effectiveness of such Registration, whether or not the
Investor has elected to participate therein. The expenses of such withdrawn Registration shall be borne by the
Company in accordance with Section 4.3.
3.3.
Underwriting Requirements.
i.
In connection with any offering involving an underwriting of the Company’s Equity Securities,
the Company shall not be required to Register any Registrable Securities under this Section 3
(Piggyback Registrations) unless the Registrable Securities are included in the underwritten
offering and the Investor enters into an underwriting agreement in customary form with the
underwriter or underwriters of internationally recognized standing selected by the Company
and setting forth such terms for the underwritten offering as have been agreed upon between
the Company and the underwriters. In the event the managing underwriter(s) advise(s) the
Company and the Registration Rights Holders seeking Registration of their respective NIO
Securities pursuant to this Agreement and the Shareholders Agreement, as applicable, in
writing that, in their opinion, market factors (including the aggregate number of Registrable
Securities requested to be Registered, the general condition of the market, and the status of the
Persons proposing to sell securities pursuant to the Registration) require a limitation of the
number of NIO Securities to be underwritten, the underwriters may exclude up to seventy-five
percent (75%) of the total NIO Securities requested to be Registered but only after first
excluding all other Equity Securities (except for securities sold for the account of the
Company) from the Registration and underwriting, provided that the number of shares to be
included in the Registration on behalf of the non-excluded Registration Rights Holders is
allocated among all Registration Rights Holders in proportion, as nearly as practicable, to the
respective amounts of NIO Securities requested by such Registration Rights Holders to be
included. To facilitate the allocation of
-4-
shares in accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to a Registration Rights Holder to the nearest one hundred
(100) shares.
ii.
If the Investor disapproves the terms of any underwriting, the Investor may elect to withdraw
therefrom by written notice to the Company and the underwriters delivered at least ten
(10) days prior to the effective date of the Registration Statement. Any Registrable Securities
excluded or withdrawn from the underwritten offering shall be withdrawn from the
Registration.
3.4.
Exempt Registrations. The Company shall have no obligation to Register any Registrable
Securities under this Section 3 in connection with a Registration by the Company (i) on Form S-8 relating solely
to the sale of securities to participants in a share incentive plan of the Company, or (ii) relating to a corporate
reorganization or other transaction under Rule 145 of the Securities Act (or comparable provision under the laws
of another jurisdiction, as applicable) (collectively, “Exempt Registrations”).
SECTION 4
REGISTRATION PROCEDURES
4.1.
Registration Procedures and Obligations. Whenever required under this Agreement to effect the
Registration of any Registrable Securities held by the Investor, the Company shall, as expeditiously as reasonably
possible:
i.
Prepare and file with the Commission a Registration Statement with respect to those
Registrable Securities and, to the extent the Registration Statement is not automatically
effective, use its reasonable best efforts to cause that Registration Statement to become
effective as soon as practicable, and, upon the request of the Investor, keep the Registration
Statement effective until the distribution thereunder has been completed. The Company shall
notify the Investor as promptly as practicable after any Registration Statement is declared
effective (to the extent such Registration Statement is not automatically effective);
ii. Prepare and file with the Commission amendments and supplements to that Registration
Statement and the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of Applicable Securities Laws with respect to the
disposition of all securities covered by the Registration Statement;
iii. Within a reasonable time before filing a Registration Statement, prospectus or amendments or
supplements thereto with the Commission, furnish to one counsel selected by the Investor
copies of such documents proposed to be filed, and the Company shall reasonably consider the
comments of such counsel;
-5-
iv. Furnish to the Investor the number of copies of a prospectus, including a preliminary
prospectus, required by Applicable Securities Laws, and any other documents as the Investor
may reasonably request in order to facilitate the disposition of Registrable Securities owned by
the Investor;
v. Use its reasonable best efforts to Register and qualify the securities covered by the
Registration Statement under the securities laws of any jurisdiction, as reasonably requested
by the Investor, provided, that the Company shall not be required to qualify to do business or
file a general consent to service of process in any such jurisdictions;
vi. Use reasonable best efforts to cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange, interdealer quotation system or other
market on which similar securities issued by the Company are then listed;
vii. In the event of any underwritten public offering (including for the avoidance of doubt, any
“bought deal,” “registered direct offering” or “overnight transaction”), enter into and perform
its obligations under an underwriting agreement, in customary form, with the managing
underwriter(s) of the offering, and take all such other customary actions as the Investor or the
managing underwriter of such offering reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation, making appropriate
officers of the Company available to participate in “road show” and other customary
marketing activities);
viii. Promptly notify the Investor at any time when a prospectus relating to the Registrable
Securities held by the Investor is required to be delivered under Applicable Securities Laws of
(a) the issuance of any stop order by the Commission, or (b) the happening of any event or the
existence of any condition as a result of which any prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, or if in the opinion
of counsel for the Company it is necessary to supplement or amend such prospectus to comply
with law, and at the request of the Investor promptly prepare and furnish to the Investor a
reasonable number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made or such prospectus, as supplemented or
amended, shall comply with law;
ix. Furnish, at the request of the Investor requesting Registration of the Registrable Securities
pursuant to this Agreement, on the date that such
-6-
Registrable Securities are delivered for sale in connection with a Registration pursuant to this
Agreement, (A) an opinion and negative assurance letter, dated the date of the sale, of the
counsel representing the Company for the purposes of the Registration, in form and substance
as is customarily given to underwriters in an underwritten public offering; and (B) comfort
letters dated as of (x) the effective date of the Registration Statement covering such
Registrable Securities, and (y) the closing date of the offering, from the independent certified
public accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters;
x. Otherwise comply with all applicable rules and regulations of the Commission to the extent
applicable to the applicable Registration Statement and use its reasonable best efforts to make
generally available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act, no later than forty-five (45) days after the end of a twelve
(12) month period (or ninety (90) days, if such period is a fiscal year) beginning with the first
month of the Company’s first fiscal quarter commencing after the effective date of such
registration statement, which statement shall cover such twelve (12) month period, subject to
any proper and necessary extensions;
xi. Not, without the written consent of the Investor, make any offer relating to the Registrable
Securities that would constitute a “free writing prospectus,” as defined in Rule 405
promulgated under the Securities Act;
xii. Take all reasonable action necessary to list the Registrable Securities on the primary exchange
on which the Company’s securities are then traded; and
xiii. Subject to the terms and conditions hereof, otherwise use its reasonable efforts to take all other
steps necessary to effect the Registration of such Registrable Securities contemplated hereby.
4.2.
Information from Investor. It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Section 2 (Shelf Registration) and Section 3 (Piggyback Registrations) hereof with
respect to Registrable Securities of the Investor that the Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method of disposition of such Registrable
Securities as shall be required by applicable law to effect the Registration of the Registrable Securities held by the
Investor.
4.3.
Expenses of Registration. All expenses, other than the underwriting discounts and selling
commissions applicable to the sale of Registrable Securities pursuant to this Agreement, incurred in connection
with Registrations, filings or qualifications pursuant to this Agreement, including (without limitation) all
Registration, filing and qualification fees, stock exchange fees,
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Financial Industry Regulatory Authority fees, printers’ and accounting fees, fees and disbursements of counsel
and other advisors for the Company and fees and disbursement of counsels for the Investor, shall be borne by the
Company. The Company shall not, however, be required to pay for any expenses of any Registration initiated
pursuant to Section 2.1 of this Agreement if the Registration request is subsequently withdrawn at the request of
the Investor; provided, however, that if at the time of such withdrawal, the Investor has learned of a material
adverse change in the condition, business or prospects of the Company from that known to the Investor at the time
of their request and have withdrawn the request with reasonable promptness following disclosure by the Company
of such material adverse change, then the Investor shall not be required to pay any of such expenses and the
Company shall pay any and all such expenses.
SECTION 5
REGISTRATION-RELATED INDEMNIFICATION
5.1.
Company Indemnity. To the maximum extent permitted by law, the Company will indemnify and
hold harmless the Investor, its partners, officers, directors, shareholders, members and any affiliates that control
the Investor, against any losses, claims, damages, liabilities or expenses (joint or several) to which they may
become subject under laws which are applicable to the Company and relate to action or inaction required of the
Company in connection with any Registration, qualification, or compliance, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (each a “Violation”): (a) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (unless the Investor has actual knowledge and consents to the
making of such alleged untrue statement or omission), on the effective date thereof (including any preliminary
prospectus or final prospectus contained therein or any amendments or supplements thereto), (b) the omission or
alleged omission to state in the Registration Statement, on the effective date thereof (including any preliminary
prospectus or final prospectus contained therein or any amendments or supplements thereto), a material fact
required to be stated therein or necessary to make the statements therein not misleading, or (c) any violation or
alleged violation by the Company of Applicable Securities Laws, or any rule or regulation promulgated under
Applicable Securities Laws.
5.2.
Investor Indemnity.
i.
To the maximum extent permitted by law, the Investor, so long as it includes the Registrable
Securities in a Registration, will, severally and not jointly with the other Persons who included
securities of the Company (including the Holders who included NIO Securities) in the
Registration, indemnify and hold harmless the Company, its directors and officers, and each
Person, if any, who controls (within the meaning of the Securities Act) the Company, against
any losses, claims, damages, liabilities or expenses (joint or several) to which any of the
foregoing persons may become subject, under Applicable Securities Laws, or any rule or
regulation promulgated under Applicable Securities Laws, insofar as such losses, claims,
damages, liabilities or
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expenses (or actions in respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs solely in reliance upon
and in conformity with written information furnished by the Investor expressly for use in
connection with such Registration; and the Investor will reimburse, as incurred, any Person
intended to be indemnified pursuant to this Section 5.2 (Investor Indemnity), for any legal or
other expenses reasonably incurred by such Person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Investor’s liability under this
Section 5.2 (Investor Indemnity) (when combined with any amounts paid by the Investor
pursuant to Section 5.4 (Contribution)) shall not exceed the net proceeds actually received by
the Investor from the offering of securities made in connection with that Registration.
ii. The indemnity contained in this Section 5.2 (Investor Indemnity) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Investor (which consent shall not be unreasonably withheld
or delayed).
iii. The indemnity contained in this Section 5.2 (Investor Indemnity) shall be in addition to any
liability the Investor may otherwise have in connection with selling the Registrable Securities.
5.3.
Notice of Indemnification Claim. Promptly after receipt by an indemnified party under Section 5.1
(Company Indemnity) or Section 5.2 (Investor indemnity) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under Section 5.1 (Company Indemnity) or Section 5.2 (Investor indemnity), deliver to the
indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the indemnifying parties. An
indemnified party (together with all other indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the reasonably incurred fees and expenses to be
paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability to
the indemnified party under this Section 5, but the omission to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 5. No
indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
-9-
5.4.
Contribution. If any indemnification provided for in Section 5.1 (Company Indemnity) or
Section 5.2 (Investor indemnity) is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other,
in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case:
(A) the Investor will not be required to contribute any amount (after combined with any amounts paid by the
Investor pursuant to Section 5.2 (Investor indemnity)) in excess of the net proceeds to the Investor from the sale of
all such Registrable Securities offered and sold by the Investor pursuant to such Registration Statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
5.5.
Underwriting Agreement. To the extent that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
5.6.
Survival. The obligations of the Company and the Investor under this Section 5 shall survive the
completion of any offering of Registrable Securities in a Registration Statement under this Agreement, regardless
of the expiration of any statutes of limitation or extensions of such statutes.
SECTION 6
ADDITIONAL REGISTRATION-RELATED UNDERTAKINGS
6.1.
Reports under the Exchange Act. With a view to making available to the Investor the benefits of
Rule 144 promulgated under the Securities Act and any comparable provision of any Applicable Securities Laws
that may at any time permit the Investor to sell securities of the Company to the public without Registration or
pursuant to a Registration on Form F-3 (or any comparable form in a jurisdiction other than the United States), the
Company agrees to:
i. make and keep public information available, as those terms are understood and defined in Rule
144 (or comparable provision, if any, under Applicable Securities Laws in any jurisdiction
where the Company’s securities are listed), at all times;
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ii.
file with the Commission in a timely manner all reports and other documents required of the
Company under all Applicable Securities Laws; and
iii. upon the reasonable request of the Investor, the Company will deliver to the Investor a written
statement as to whether it has complied with such information requirements, and, if not, the
specific reasons for non-compliance.
6.2.
Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the
Company shall not, without the written consent of holders of at least seventy-five percent (75%) of the voting
power of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective
holder of any Equity Securities of the Company that would allow such holder or prospective holder (i) to include
such Equity Securities in any Registration filed under Section 2 (Shelf Registration) or Section 3 (Piggyback
Registrations), (ii) to demand Registration of their Equity Securities, or (iii) cause the Company to include such
Equity Securities in any Registration filed under Section 2 (Shelf Registration) or Section 3 (Piggyback
Registrations) hereof on a basis pari passu with or more favorable to such holder or prospective holder than is
provided to the Investor.
6.3.
Termination. This Agreement shall terminate and be of no further force and effect on the date that
the Investor owns less than 3% of the Class A Ordinary Shares outstanding (or any substitute securities issued or
issuable as a dividend or other distribution with respect to, by way of a stock split, in exchange for, or in
replacement of, or otherwise in connection with a combination of shares, distribution, recapitalization, merger,
consolidation, other reorganization or other similar event with respect to the Class A Ordinary Shares). This
Agreement may also be terminated upon the mutual written consent of the Company and the Investor.
Notwithstanding this Section 6.3, no termination under this Agreement shall relieve any Person of liability for
breach prior to termination or any obligations set forth in Section 5.
SECTION 7
DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT
7.1.
Section 7:
Certain Matters of Construction. In addition to the definitions referred to or set forth below in this
(1)
The words “hereof”, “herein”, “hereunder” and words of similar import shall
refer to this Agreement as a whole and not to any particular Section or provision of this Agreement,
and reference to a particular Section of this Agreement shall include all subsections thereof;
(2)
(3)
The word “including” shall mean including, without limitation;
Definitions shall be equally applicable to both nouns and verbs and the
singular and plural forms of the terms defined; and
-11-
(4)
The masculine, feminine and neuter genders shall each include the other.
7.2.
Definitions. The following terms shall have the following meanings:
“Affiliate” means an “affiliate” within the meaning of Rule 405 under the Securities Act.
“Agreement” has the meaning set forth in the Recitals.
“Applicable Securities Laws” means (i) with respect to any offering of securities in the United States, or
any related act or omission within that jurisdiction, the securities laws of the United States, including the
Exchange Act and the Securities Act, and any applicable law of any state of the United States, and (ii) with
respect to any offering of securities in any jurisdiction other than the United States, or any related act or omission
in that jurisdiction, the applicable laws of that jurisdiction.
“Business Day” means any weekday that is not a day on which banking institutions in New York City or
the PRC are authorized or required by law, regulation or executive order to be closed.
“Class A Ordinary Shares” means the Company’s Class A ordinary shares, par value US$0.00025 per
share.
“Closing” has the meaning set forth in Section 1.1.
“Commission” means the U.S. Securities and Exchange Commission.
“Company” has the meaning set forth in the Recitals.
“Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital
stock, membership interests, profits interests, ownership interests, equity interests, registered capital, and other
equity securities of such Person, and any right, warrant, option, call, commitment, note, conversion privilege,
preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or
exercisable for any of the foregoing, or any contract providing for the acquisition of any of the foregoing.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Exempt Registration” has the meaning set forth in Section 3.4
“HKIAC” has the meaning set forth in Section 9.1.
“Holders” means the holders of NIO Securities who are parties to the Shareholders Agreement, and their
permitted transferees that become parties to Shareholders Agreement from time to time.
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“Investor” has the meaning set forth in the Recitals and includes the Investor’s permitted transferees that
become parties to this Agreement from time to time.
“NIO Securities” means, collectively, (i) the Registrable Securities and (ii) the Equity Securities with
respect to which the Holders have registration rights pursuant to the Shareholders Agreement.
“Person” means any individual, natural person, corporation, partnership, limited partnership,
proprietorship, association, limited liability company, firm, trust, estate or other enterprise or entity.
“Registrable Securities” means, collectively, (a) (i) the Subject Securities, (ii) any Class A Ordinary
Shares purchased by the Investor after the Closing and (iii) any other securities issued or issuable as a dividend or
other distribution with respect to, by way of a stock split, in exchange for, or in replacement of, or otherwise in
connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization
or other similar event with respect to the securities described in (i) and (ii), and (b) any American Depositary
Shares representing the Subject Securities or other Class A Ordinary Shares described in the foregoing clause (a);
provided, that, a security shall cease to be a Registrable Security upon sale to the public pursuant to a Registration
Statement or Rule 144 under the Securities Act.
“Registration” means a registration effected by preparing and filing a Registration Statement and the
declaration or ordering of the effectiveness of that Registration Statement; and the terms “Register” and
“Registered” have meanings concomitant with the foregoing.
“Registration Rights Holders” means, collectively, the Investor and the Holders.
“Registration Statement” means a registration statement of the Company prepared on Form F-1, F-3, S-
1, or S-3 under the Securities Act (including, without limitation, Rule 415 under the Securities Act) pursuant to
the provisions of this Agreement filed with, or to be filed with, the Commission under the Securities Act,
including the related prospectus, amendments and supplements to such registration statement, including pre- and
post- effectiveness amendments, and all exhibits and material incorporated by reference in such registration
statement.
“Secondary Transfer Agreement” has the meaning set forth in the Recitals.
“Securities Act” means the United States Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.
“Share Subscription Agreement” has the meaning set forth in the Recitals.
“Subject Securities” has the meaning set forth in the Recitals.
“Transaction Documents” has the meaning as set forth in the Share Subscription Agreement.
“Violation” has the meaning set forth in Section 5.1.
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SECTION 8
MISCELLANEOUS
8.1.
Authority; Effect. Each party hereto represents and warrants to and agrees with each other party
that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized on behalf of such party and do not violate any agreement or other instrument applicable
to such party or by which its assets are bound. This Agreement does not, and shall not be construed to, give rise to
the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a
joint venture or other association.
8.2.
Notices. Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally or sent with an internationally recognized courier service; or (ii) upon receipt, when
sent by email (if sent during normal business hours of the recipient, and if not, then on the next Business Day, in
each case properly addressed to the party to receive the same. The addresses and email addresses for such
communications shall be:
if to the Company:
NIO Inc.
Address:
Telephone:
Email:
Attention:
Building 19, No. 889, Tianlin Road
Minhang District
Shanghai, People’s Republic of China
[***]
[***]
[***]
with a copy (for informational purposes only) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Address:
46/F, Tower II, Jing An Kerry Centre
1539 Nanjing West Road
Shanghai 200040, People’s Republic of China
[***]
[***]
[***]
Telephone:
Email:
Attention:
if to Investor:
CYVN Holdings L.L.C.
Address:
Telephone:
Email:
Attention:
Building No.51B, Al Bateen Executive Airport,
Abu Dhabi, United Arab Emirates
[***]
[***]
[***]
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with a copy (for informational purposes only) to:
Akin Gump Strauss Hauer & Feld LLP
Address:
Telephone:
Email:
Attention:
One Bryant Park
New York, NY 10036
[***]
[***]
[***]
8.3.
Descriptive Heading. The descriptive headings of this Agreement are for convenience of reference
only, are not to be considered a part hereof and shall not be construed to define or limit any of the terms or
provisions hereof.
8.4.
Counterparts. This Agreement may be executed in any number of counterparts and signatures may
be delivered in electronic format, all of which together shall constitute one instrument.
8.5.
Successors and Assigns. Except as otherwise provided in this Agreement, the provisions of this
Agreement shall inure to the benefit of and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties; provided, however, that the Company shall not assign this Agreement or any of its
rights herein to any Person without the prior written consent of the Investor. The Investor may assign its rights
hereunder to any purchaser or transferee of Registrable Securities; provided, that such purchaser or transferee
shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this
Agreement agreeing to be treated as an Investor, whereupon such purchaser or transferee shall have the benefits
of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was
originally included in the definition of an Investor herein and had originally been a party hereto. In the event
there is more than one Investor party to this Agreement, such Persons shall act as requested by the holders of a
majority of the voting power of the Registrable Securities to the extent that any decision is required to be made by
the Investor hereunder with respect to any participation in a Registration or any offering pursuant to a Registration
Statement.
8.6.
No Third-Party Beneficiaries. Except as explicitly specified in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than the parties any rights, remedies,
obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement
(including any partner, member, stockholder, director, officer, employee or other beneficial owner of any party, in
its or his own capacity as such or in bringing a derivative action on behalf of a party) shall have any standing as
third-party beneficiary with respect to this Agreement or the transactions contemplated by this Agreement.
-15-
8.7.
Entire Agreement. This Agreement and the other Transaction Documents constitute the full and
entire understanding and agreement among the parties with regard to the subjects hereof and thereof.
8.8.
Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to
any party hereto under this Agreement shall impair any such right, power, or remedy of such party, nor shall it be
construed to be a waiver of or acquiescence to any breach or default, or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default.
All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
8.9.
Amendments and Waivers. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or
prospectively), only if such amendment or waiver is in writing and signed, in the case of an amendment, by the
Company and the Investor or, in the case of a waiver, by the party against whom the waiver is to be effective.
8.10. Severability. If any provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable, or void, portions of such provision, or such provision in its entirety, to the
extent necessary, shall be severed from this Agreement and the balance of this Agreement shall be enforceable in
accordance with its terms.
SECTION 9
GOVERNING LAW; JURISDICTION, ETC.
9.1.
Governing Law; Arbitration. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to any choice or conflict of law provision or rule thereof. Any dispute,
controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or
validity hereof, shall be submitted to arbitration upon the request of any party with notice to the other party. The
arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration
Centre (“HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in effect, which rules are
deemed to be incorporated by reference into this Section 9.1. There shall be three (3) arbitrators. The complainant
and the respondent to such dispute shall each select one arbitrator within thirty (30) days after giving or receiving
the demand for arbitration. The Chairman of the HKIAC shall select the third arbitrator, who shall be qualified to
practice law in Hong Kong. If either party to the arbitration does not appoint an arbitrator who has consented to
participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by
the Chairman of the HKIAC. The arbitration proceedings shall be conducted in English. Each party irrevocably
waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such arbitration in Hong Kong and the HKIAC, and hereby submits to the exclusive
jurisdiction of HKIAC in any such arbitration. The award of the arbitration tribunal shall be conclusive and
binding upon the disputing parties, and any party to the dispute may apply to a court of
-16-
competent jurisdiction for enforcement of such award. Any party to the dispute shall be entitled to seek
preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the
arbitral tribunal.
9.2.
Remedies and Waivers. No delay or omission by any party to this Agreement in exercising any
right, power or remedy provided by law or under this Agreement or any other documents referred to in it shall: (i)
affect that right, power or remedy; or (ii) operate as a waiver thereof. The single or partial exercise of any right,
power or remedy provided by law or under this Agreement shall not preclude any other or further exercise or any
other right, power or remedy. Except as otherwise expressly provided in this Agreement, the rights, powers and
remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law.
9.3.
Specific Performance. The parties hereto acknowledge and agree irreparable harm may occur for
which money damages would not be an adequate remedy in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed
that the parties to this Agreement shall be entitled, in addition to any other remedy to which such party is entitled
at law, in equity, in contract, in tort or otherwise, to an injunction or injunctions, without posting a bond or
undertaking and without proof of damages, to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement.
[Signature pages follow]
-17-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.
NIO INC.
/s/ Bin Li
By:
Name: Bin Li
Title: Chairman of the Board of Directors
and Chief Executive Officer
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.
CYVN HOLDINGS L.L.C.
/s/ Jassem Mohamed Obaid Bu Ataba Alzaabi
By:
Name: Jassem Mohamed Obaid Bu Ataba Alzaabi
Title: Chairman
[Signature Page to Registration Rights Agreement]
Exhibit 4.46
SHARE SUBSCRIPTION AGREEMENT
dated as of December 18, 2023
by and between
NIO INC.
and
CYVN Investments RSC Ltd
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
DEFINITIONS
PURCHASE AND SALE OF SECURITIES
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
COVENANTS AND ADDITIONAL AGREEMENTS
CONDITIONS TO THE COMPANY’S OBLIGATIONS
CONDITIONS TO THE PURCHASER’S OBLIGATIONS
TERMINATION
MISCELLANEOUS
i
1
6
6
9
13
18
19
19
20
SHARE SUBSCRIPTION AGREEMENT
SHARE SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of December 18, 2023, by and between NIO Inc., an
exempted company incorporated in the Cayman Islands (the “Company”), and CYVN Investments RSC Ltd, a restricted scope company
incorporated in the Abu Dhabi Global Market, Abu Dhabi, United Arab Emirates (the “Purchaser”).
WHEREAS
The Company desires to issue, sell and deliver to the Purchaser, and the Purchaser desires to purchase and acquire from the
Company, upon the terms and conditions set forth in this Agreement, an aggregate of 294,000,000 Class A Ordinary Shares, par value
US$0.00025 per share, of the Company (the “Securities”).
NOW, THEREFORE, in consideration of the foregoing and representations, warranties, covenants and agreements set forth
herein as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and
intending to be legally bound, the Company and the Purchaser hereby agree as follows:
1.
DEFINITIONS
The following capitalized terms shall have the following meanings for purposes of this Agreement:
“1934 Act” means the United States Securities Exchange Act of 1934, as amended;
“Acceptance Notice” has the meaning set forth in Section 5(c)(iii);
“Act” means the Companies Act (As Revised) of the Cayman Islands;
“ADS” means American Depositary Share, each representing one (1) Class A Ordinary Shares of the Company as of the date
hereof;
“Affiliate” means an “affiliate” within the meaning of Rule 405 under the Securities Act;
“Aggregate Purchase Price” has the meaning set forth in Section 2(a);
“Agreement” has the meaning set forth in the preamble;
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, and any other
applicable laws or regulations related to bribery or corruption;
“Anti-Money Laundering Laws” means the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956-1957), the USA
PATRIOT ACT ((Pub. L. No. 107-56), and the Bank Secrecy Act (31 U.S.C. §§5311-5332)), the UK Proceeds of Crime Act 2002, the
UK Terrorism Act 2000, the Proceeds of Crime Act (Revised) of the Cayman Islands, the Anti-Money Laundering Regulations (Revised)
of the Cayman Islands, the Terrorism Act (Revised) of the Cayman Islands, the Proliferation Financing (Prohibition) Act (Revised) of the
Cayman Islands, the Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing
1
and Proliferation Financing in the Cayman Islands, and any other applicable laws or regulations related to terrorist financing or money
laundering;
“Board” means the Company’s Board of Directors;
“Business Day” means any weekday that is not a day on which banking institutions in the Cayman Islands, the Hong Kong
Special Administrative Region, New York City, Abu Dhabi or the PRC are authorized or required by law, regulation or executive order to
be closed;
“Change of Control” means the consummation of any bona fide third party tender offer, merger, consolidation or other similar
transaction the result of which is that any “person” (as defined in Section 13(d)(3) of the 1934 Act), or group of persons, other than the
Company, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the 1934 Act) of a majority of the total voting power of
the voting stock of the Company;
“Class A Ordinary Shares” means the Company’s Class A ordinary shares, par value US$0.00025 per share;
“Closing” has the meaning set forth in Section 2(b)(i);
“Closing Date” has the meaning set forth in Section 2(b)(i);
“Company” has the meaning set forth in the preamble;
“Company Articles” means the Thirteenth Amended and Restated Memorandum and Articles of Association of the Company,
as may be amended from time to time;
“Company Lock-Up Period” has the meaning set forth in Section 5(i);
“Contract” means any agreement, contract, lease, indenture, instrument, note, debenture, bond, mortgage or deed of trust or
other agreement, arrangement or understanding;
“Encumbrance” means any mortgage, lien, pledge, charge, security interest, title defect, preemptive or similar right or other
encumbrance;
“Equity Securities” means any and all (i) shares, interests, participations, or other equivalents (however designated) of capital
stock, equity interests, registered capital, joint venture interest, partnership interest, equity-linked debt obligation or other voting or
equity securities of the Company and any and all equivalent or analogous ownership (or profit) or voting interests in the Company,
including in each case any such shares, interests, participations or other equivalents issued upon any conversion, (ii) securities
convertible into or exchangeable for shares, interests, participations, or other equivalents (however designated) of capital stock or voting
securities of (or other ownership or profit or voting interests in) the Company, and (iii) any and all warrants, rights or options to purchase
any of the foregoing, whether voting or nonvoting, and, in each case, whether or not such shares, interests, participations, equivalents,
securities, warrants, options, rights, or other interests are authorized or otherwise existing on any date of determination;
“Ex-Im Laws” means (a) the U.S. Export Administration Regulations administered by the U.S. Department of Commerce, the
International Traffic in Arms Regulations administered by the U.S. Department of State, and any other applicable laws or regulation
related to export controls administered or enforced by an applicable Governmental Entity; and (b) import
2
controls and customs laws administered by U.S. Customs and Border Protection and any other applicable Governmental Entity;
“Exercise Period” has the meaning set forth in Section 5(c)(iii);
“GAAP” means generally accepted accounting principles in the United States;
“Governmental Entity” means any supranational, national, provincial, state, municipal, local or other government, whether
U.S., PRC or otherwise, any instrumentality, subdivision, administrative agency or commission thereof, court, other governmental
authority or regulatory body or instrumentality, or any quasi-governmental or private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority or any self-regulatory agency (including any stock exchange);
“HKIAC” has the meaning set forth in Section 9(b);
“Hong Kong Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited, as amended or supplemented from time to time;
“Hong Kong Stock Exchange” means The Stock Exchange of Hong Kong Limited;
“Hong Kong Stock Exchange Documents” means all announcements, proxy statements and other statements, reports, forms
and other documents that are either required to be or have otherwise been filed by the Company with the Hong Kong Stock Exchange or
published on the website of the Hong Kong Stock Exchange from time to time;
“Issuance Notice” has the meaning set forth in Section 5(c)(iii);
“Material Adverse Effect” means any event, occurrence, fact, condition, change or development, individually or together with
other events, occurrences, facts, conditions, changes or developments, that has or would reasonably be expected to have a material
adverse effect on (a) the business or operations of the Company and its Subsidiaries (taken as a whole) as presently conducted, or the
condition (financial or otherwise), assets or results of operation of the Company and its Subsidiaries (taken as a whole) or (b) the ability
of the Company to consummate the transactions contemplated by this Agreement; provided, however, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the business of the Company or any Subsidiary relating to or
arising in connection with (i) any action expressly required to be taken pursuant to the terms and conditions of this Agreement or taken at
the written direction of the Purchaser, (ii) economic changes affecting the industry in which the Company and its Subsidiaries operate
generally or the economy of the PRC or any other market where the Company and its Subsidiaries have material operations or sales
generally, (iii) the execution, announcement or disclosure of this Agreement or the pendency or consummation of the transactions
contemplated hereunder, (iv) changes in generally accepted accounting principles, (v) changes in general legal, tax or regulatory
conditions, (vi) changes in national or international political or social conditions, including any engagement in hostilities or the
occurrence of any military or terrorist attack or civil unrest, or (vii) earthquakes, hurricanes, floods, epidemic-induced public health
crises or other disasters; provided further, however, that any event, occurrence, fact, condition, change or development referred to in
clauses (ii), (vi) and (vii) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred
or would reasonably be expected to occur to the extent that such event, occurrence, fact, condition, change or development has
3
a disproportionate effect on the Company or its Subsidiaries (taken as a whole) compared to other similarly situated participants in the
industries and geographies in which the Company and its Subsidiaries operate (in which case, only the incremental disproportionate
adverse effect may be taken into account in determining whether a Material Adverse Effect has occurred).
“NYSE” means the New York Stock Exchange;
“OEMs” has the meaning set forth in Section 5(e);
“Offer Notice” has the meaning set forth in Section 5(d);
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization or a government or any department or agency thereof;
“PRC” means the People’s Republic of China;
“Proposed Issuance” has the meaning set forth in Section 5(c)(i);
“Public Documents” means, collectively, the SEC Documents, the Hong Kong Stock Exchange Documents and the Singapore
Exchange Documents;
“Purchase Price” has the meaning set forth in Section 2(a);
“Purchaser” has the meaning set forth in the preamble;
“Purchaser Designee” has the meaning set forth in Section 5(a);
“Purchaser Lock-Up Period” has the meaning set forth in Section 5(h);
“Sanctioned Country” means any country or territory that is itself the target of comprehensive Sanctions (including Cuba, Iran,
North Korea, Syria, Crimea and those portions of the Donetsk People’s Republic, Luhansk People’s Republic, Kherson and Zaporizhzhia
regions (and such other regions) of Ukraine over which any Sanctions authority imposes comprehensive Sanctions), or any country or
territory whose government is the subject of Sanctions (including Venezuela) or that is otherwise the subject of broad Sanctions
restrictions (including Afghanistan, Russia and Belarus).
“Sanctioned Person” means any Person that is (a) the target of Sanctions, including any Person identified on the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) Specially Designated Nationals and Blocked Persons List,
Sectoral Sanctions Identifications List, or any other Sanctions-related list maintained by a Sanctions authority; (b) a Person that is
organized, located or resident in a Sanctioned Country; or (c) any Person owned or controlled by any Person(s) described in clause(s) (a)
and/or (b).
“Sanctions” means economic, financial and trade sanctions administered or enforced by the United States (including OFAC,
U.S. Department of State, and U.S. Department of Commerce); European Union and each member state thereof; United Kingdom
(including Her Majesty’s Treasury); and United Nations Security Council.
“SEC” means the U.S. Securities and Exchange Commission;
4
“SEC Documents” means all registration statements, proxy statements and other statements, reports, schedules, forms and other
documents that are either required from time to time to be or have otherwise been filed or furnished by the Company with or to the SEC,
and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein;
“Securities” has the meaning set forth in the Recitals;
“Securities Act” means the United States Securities Act of 1933, as amended, and all of the rules and regulations promulgated
thereunder;
“SFC” has the meaning set forth in Section 4(p);
“SFO” has the meaning set forth in Section 4(p);
“Singapore Exchange” means The Singapore Exchange Securities Trading Limited;
“Singapore Exchange Documents” means all announcements, proxy statements and other statements, reports, forms and other
documents that are either required to be or have otherwise been filed by the Company with the Singapore Exchange or published on the
website of the Singapore Exchange from time to time;
“Strategy Committee” has the meaning set forth in Section 5(b);
“Subject Transaction” has the meaning set forth in Section 5(d);
“Subsidiary” means any entity of which a majority of the outstanding equity securities or other ownership interests representing
a majority of the outstanding equity interests or otherwise having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at the time directly or indirectly owned or controlled by the Company, and includes any
entity which is directly or indirectly controlled by the Company (including, for the avoidance of doubt, any variable interest entities that
are consolidated into the financial statements of the Company);
“Transaction Documents” means this Agreement and any other agreement, document or instrument entered into or delivered in
connection with the transactions contemplated hereby or thereby;
“Transfer” means directly or indirectly, offer, sell, contract to sell, pledge, transfer, assign, give, hypothecate, encumber, grant a
security interest in, convey in trust, gift, devise or descent, or otherwise dispose of, or suffer to exist (whether by operation of law of
otherwise) any Encumbrance on, any of the Securities or any right, title or interest therein or thereto, or enter into a transaction which
would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of any of the Securities, whether any such aforementioned transaction is to be settled by delivery of the
Company’s securities, in cash or otherwise, or publicly disclose the intention to make any such disposition or to enter into any such
transaction, swap, hedge or other arrangement, including transfers pursuant to divorce or legal separation, transfers to receivers, levying
creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly, of any of the Securities; and
5
“U.S.” or “United States” means the United States of America.
2.
PURCHASE AND SALE OF SECURITIES
(a)
Purchase of Shares. Subject to the terms and conditions of this Agreement, at the Closing (as defined below), the
Company shall issue and sell to the Purchaser, and the Purchaser shall subscribe for and purchase from the Company, the Securities, free
and clear of all Encumbrances (except for restrictions created by virtue of transactions contemplated by this Agreement), for the
aggregate purchase price of US$2,205,000,000 (the “Aggregate Purchase Price”), representing US$7.50 per Class A Ordinary Share
(the “Purchase Price”), which took reference of and factored in the volume weighted average price of Class A Ordinary Shares (as
adjusted for the American depository share-to-Class A Ordinary Share ratio) on the NYSE over the 21 consecutive trading days
immediately preceding December 18, 2023.
(b)
Closing.
(i)
Date and Time. Subject to satisfaction or, to the extent permissible, waiver of the conditions set forth in
Sections 6 and 7 (other than conditions that by their nature are to be satisfied upon the Closing, but subject to the satisfaction or, to the
extent permissible, waiver of those conditions at the Closing by the applicable parties), the closing of the sale and purchase of the
Securities (the “Closing”) shall take place remotely via exchange of documents and signatures on such date that is no later than ten (10)
Business Days after each of the conditions set forth in Sections 6 and 7 has been fulfilled or waived (other than those conditions that can
be fulfilled only at the Closing), as is specified by the Company and the Purchaser or at such other date and location as may be mutually
agreed in writing by the Company and the Purchaser (such date, the “Closing Date”).
(ii)
Payment and Delivery. At the Closing:
the Purchaser shall pay or caused to be paid the Aggregate Purchase Price to the Company by
electronic bank transfer of immediately available funds to a bank account designated in writing by the Company at least three (3)
Business Days prior to the Closing Date;
(A)
the Company kept in accordance with the Act evidencing the ownership of the Securities by the Purchaser;
(B)
the Company shall deliver to the Purchaser an updated certified extract of the register of members of
the Company shall deliver to the Purchaser a certificate, executed on behalf of the Company by an
executive officer or other authorized person, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 7(b), 7(c), 7(d), 7(e) and 7(f); and
(C)
the Purchaser shall deliver to the Company a certificate, executed on behalf of the Purchaser by an
executive or other authorized person, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 6(b), 6(c) and 6(d).
(D)
3.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as of the date hereof and as of the Closing Date that:
6
(a)
Organization. The Purchaser is a company duly organized and validly existing in good standing under the laws of the
jurisdiction in which it is organized.
(b)
Authorization; Enforcement; Validity. The Purchaser has the requisite entity power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated by this Agreement and each other Transaction Document to
which it is a party. The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions
contemplated by and in compliance with the provisions of this Agreement have been, or at the Closing will be, duly authorized by all
necessary entity action on the part of the Purchaser. This Agreement has been and, at or prior to the Closing, and each other Transaction
Document to be delivered at the Closing will be, duly executed and delivered by the Purchaser and constitute the legal, valid and binding
obligations of the Purchaser. This Agreement constitutes and, upon the execution and delivery thereof by the Purchaser, each other
Transaction Document will constitute, the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(c)
No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and the other Transaction
Documents and the consummation by the Purchaser of the transactions contemplated hereby and thereby do not and will not (i) result in
a violation of the organizational or constitutional documents of the Purchaser, or (ii) result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state, and any other applicable, securities laws) applicable to the Purchaser, except
in the case of clause (ii) above, for such violations which would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Purchaser to perform its obligations hereunder.
(d)
Consents and Approvals. Neither the execution and delivery by the Purchaser of this Agreement or any other
Transaction Document, nor the consummation by the Purchaser of any of the transactions contemplated hereby or thereby, nor the
performance by the Purchaser of this Agreement or any other Transaction Document in accordance with its respective terms, requires the
consent, approval, order or authorization of, or registration with, or the giving notice to, any Governmental Entity or any third party prior
to the Closing, except (i) any filing or report required to be made with or submitted to the SEC, the Hong Kong Stock Exchange or the
Singapore Exchange and (ii) for such that would not have a material adverse effect on the Purchaser’s ability to consummate the
transactions contemplated by this Agreement.
(e)
Status and Investment Intent.
(i)
Investment Experience. The Purchaser is a sophisticated investor with knowledge and experience in financial
and business matters such that the Purchaser is capable of evaluating the merits and risks of the investment in the Securities. The
Purchaser is able to bear the economic risks of an investment in the Securities. The Purchaser has carefully reviewed all documents
relating to the transactions contemplated by this Agreement and has been provided with all other materials that it considers relevant to
the transactions contemplated by this Agreement, has had a full opportunity to ask questions of and receive answers from the Company
or any person acting on behalf of the Company concerning the terms and conditions of transactions contemplated by this Agreement. In
making its decision to invest in the
7
Company, the Purchaser is not relying upon, and has not relied upon, any statement, representation or warranty made by any person,
except for the statements, representations and warranties contained in this Agreement.
(ii)
Restricted Securities. The Purchaser acknowledges that the Securities are “restricted securities” that have not
been registered under the Securities Act or any applicable state securities law. The Purchaser further acknowledges that, absent an
effective registration under the Securities Act, the Securities may only be offered, sold or otherwise transferred (x) to the Company, (y)
outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, or (z) pursuant to an exemption from
registration under the Securities Act.
(iii)
Not U.S. Person. Such Purchaser is not a “U.S. person” as defined in Rule 902 of Regulation S.
(f)
No Public Sale or Distribution. The Purchaser is acquiring the Securities for its own account and not with a view to, or
with any intention of, resale, distribution or other disposition thereof in a manner that would violate the registration requirements of the
Securities Act. The Purchaser does not presently have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities. The Purchaser is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a
business that would require it to be so registered as a broker-dealer.
(g)
Legends. The Purchaser understands that the Securities and the register of members of the Company shall bear, in
addition to any other legends required under applicable laws, the following legend:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE PURCHASER: (1) REPRESENTS THAT IT AND
ANY ACCOUNT FOR WHICH IT IS ACTING IS LOCATED OUTSIDE THE UNITED STATES AND NOT A U.S.
PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT), AND (2) AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE
TRANSFER THE SECURITIES, OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BECOME EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A NON-U.S. PERSON OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (D) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT (IF AVAILABLE). THE
SECURITIES ARE ALSO SUBJECT TO LOCK-UP PURSUANT TO THAT CERTAIN SHARE SUBSCRIPTION
AGREEMENT, DATED AS OF DECEMBER 18, 2023, BY AND BETWEEN THE HOLDER OF SUCH
SECURITIES, AND NIO INC., AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED
8
DURING THE TERM OF THE LOCK-UP PURSUANT TO THE TERMS SET FORTH IN SUCH SHARE
SUBSCRIPTION AGREEMENT.
(h)
Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents,
any valid right, interest or claim against or upon the Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding with a placement agent entered into by or on behalf of the Purchaser.
(i)
Sufficient Funding. The Purchaser has at its disposal sufficient funding to pay the Aggregate Purchase Price and
consummate the transactions contemplated hereby.
(j)
No Additional Representations. The Purchaser makes no representations or warranties as to any matter whatsoever
except as expressly set forth in the Transaction Documents or in any certificate delivered by the Purchaser to the Company in accordance
with the terms thereof.
4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date (except for such
representations and warranties made only as of a specific date), that, except as otherwise disclosed in the Public Documents:
(a)
Organization and Qualification. The Company is a corporation duly incorporated and validly existing in good standing
under the laws of the Cayman Islands, and has the requisite corporate power and authorization to own its properties and to carry on its
business as now being conducted.
(b)
Capitalization. The authorized share capital of the Company is US$1,000,000 divided into 4,000,000,000 shares
comprising of (i) 2,632,030,222 Class A Ordinary Shares, (ii) 148,500,000 Class C ordinary shares of a par value of US$0.00025 each
and (iii) 1,219,469,778 shares of a par value of US$0.00025, each of such class or classes (however designated) as the Board may
determine in accordance with the Company Articles. As of December 14, 2023, 1,637,474,374 Class A Ordinary Shares and 148,500,000
Class C ordinary shares are issued and outstanding. All of the outstanding ordinary shares of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance with the Company Articles, the Act and all applicable securities
laws, including the rules and regulations of each of NYSE, the Singapore Exchange and the Hong Kong Stock Exchange, and none of
such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except
as set forth in the Public Documents, the Company has no outstanding bonds, debentures, notes or other obligations, the holders of which
have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the shareholders of the
Company on any matter.
(c)
Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and each other Transaction Document to which it is a party and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, the issuance of the
Securities, has been duly authorized by the Board and no further filing, consent or authorization (including
9
any shareholder approval) is required by the Board or otherwise, except for any required filing regarding the issuance of additional
securities with NYSE, Hong Kong Stock Exchange or Singapore Exchange. This Agreement has been and, at or prior to the Closing,
each other Transaction Document to be delivered at the Closing will be, duly executed and delivered by the Company. This Agreement
constitutes and, upon the execution and delivery thereof by the Company, each other Transaction Document to which it is a party will
constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(d)
No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the
consummation by the Company of the transactions contemplated hereby and thereby (including, the issuance of the Securities) will not
(i) result in a violation of the Company Articles, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any
Contract to which the Company is a party, or (iii) subject to the terms of this Agreement, result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws and regulations, and the rules and regulations of NYSE, the
Hong Kong Stock Exchange and the Singapore Exchange applicable to the Company or by which any property or asset of the Company
is bound or affected), except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which, individually
or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(e)
Consents. Assuming the accuracy of the representations and warranties of the Purchaser under this Agreement and
other Transaction Documents, in connection with the entering into and performance of this Agreement and the other Transaction
Documents, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, (i) any
Governmental Entity in order for it to execute and deliver the Transaction Documents or perform any of its obligations under or
contemplated by the Transaction Documents or (ii) any third party pursuant to any agreement, indenture or instrument to which the
Company is a party, in each case in accordance with the terms hereof or thereof other than such as have been made or obtained, and
except for (x) any required filing or notifications regarding the issuance of additional securities with the SEC, NYSE, the Hong Kong
Stock Exchange or the Singapore Exchange; or (y) the failure to obtain such consent, authorization, order, or make such filing or
registration that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(f)
Issuance of Securities. The Securities, when issued and paid for in accordance with the terms hereof, will be duly
authorized, validly issued and non-assessable and free from any Encumbrance and the Securities will be fully paid with the holders being
entitled to all rights accorded to a holder of the Company’s Class A Ordinary Shares. Assuming the accuracy of the representations and
warranties set forth in Section 3 of this Agreement, the offer and issuance by the Company of the Securities is exempt from registration
under the Securities Act.
(g)
No Direct Selling Efforts. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or direct selling efforts as that term is defined in Rule 902 of Regulation S in connection
with the offer or sale of the Securities.
10
(h)
Public Documents. The Company has timely filed all the Public Documents.
(i)
As of their respective effective dates (in the case of the SEC Documents that are registration statements filed
pursuant to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other SEC Documents), or in
each case, if amended prior to the date hereof, as of the date of the last such amendment, (A) each of the SEC Documents complied in all
material respects with the requirements of the Securities Act or the 1934 Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder, and, (B) none of the SEC Documents contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the material statements therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this Agreement, there are no material outstanding or unresolved
comments in comment letters received by the Company from the staff of the SEC with respect to any SEC Document.
(ii)
As of their respective dates of submission or publication of the Hong Kong Stock Exchange Documents, or in
each case, if amended prior to the date hereof, as of the date of the last such amendment, (A) each of the Hong Kong Stock Exchange
Documents complied in all material respects with the applicable requirements of the Hong Kong Listing Rules and (B) none of the Hong
Kong Stock Exchange Documents contained any untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the material statements therein, in the light of the circumstances under which they were
made, not misleading.
(iii)
As of their respective dates of submission or publication of the Singapore Exchange Documents, or in each
case, if amended prior to the date hereof, as of the date of the last such amendment, (A) each of the Singapore Exchange Documents
complied in all material respects with the applicable requirements of the listing manual of the Singapore Exchange and the Singapore
Code of Corporate Governance and (B) none of the Singapore Exchange Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the material statements therein, in the light of
the circumstances under which they were made, not misleading.
(i)
Financial Statements. As of their respective dates, the financial statements of the Company included in the Public
Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC, the Hong Kong Stock Exchange and the Singapore Exchange with respect thereto. The consolidated financial statements
(including any related notes thereto) included or incorporated by reference in the Public Documents fairly presented in all material
respects the consolidated financial position of the Company and its Subsidiaries as of the dates indicated therein and the consolidated
results of their operations and cash flows for the periods specified therein. Such financial statements were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements).
(j)
Internal Controls. The Company and its Subsidiaries maintain (and have maintained), with respect to the operations of
the business of the Company and its Subsidiaries a system of internal control over financial reporting (as defined in Rule 13a-15 or 15d-
15, as applicable, under the 1934 Act) that is sufficient to provide reasonable assurance that (A) transactions are recorded as necessary to
permit preparation of consolidated financial
11
statements of the Company in accordance with GAAP, (B) receipts and expenditures of the Company are being made only in accordance
with appropriate authorizations of management and the Board, and (C) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries.
(k)
No Material Adverse Effect. Since December 31, 2022, no event or circumstance has occurred that, individually or in
the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.
(l)
Litigation. Except as disclosed in the Public Documents, there are no claims, suits, actions or proceedings pending or,
to the Company’s knowledge, threatened against the Company or any of its Subsidiaries before any Governmental Entity or any
arbitrator that seeks to restrain or enjoin the consummation of the transactions contemplated by the Transaction Documents or which
would reasonably be expected, to have, individually or in the aggregate, a Material Adverse Effect.
(m)
Compliance with Applicable Laws. Except as set forth in the Public Documents, each of the Company and its
Subsidiaries has conducted its businesses in compliance with all applicable laws, regulations and applicable stock exchange
requirements, except where the failure to be in compliance, individually or in the aggregate, do not and would not reasonably be
expected to have, a Material Adverse Effect, and as of the date of this Agreement, the Company has not received any comment letter
from the SEC or the staff thereof or any notices from NYSE, the Singapore Exchange or the Hong Kong Stock Exchange regarding non-
compliance with any of such Governmental Entity’s rules or regulations.
(n)
Sanctions, Anti-Corruption, Ex-Im Laws and Anti-Money Laundering. Neither the Company nor any of its
Subsidiaries, or any of their respective directors, officers, employees is a Sanctioned Person. The Company and its Subsidiaries, and to
the knowledge of the Company, their respective directors, officers and employees have been for the past five (5) years prior to the date
hereof and are currently in compliance with Sanctions, Anti-Corruption Laws, Ex-Im Laws and Anti-Money Laundering Laws. For the
past five (5) years prior to the date hereof, neither the Company nor its Subsidiaries (i) has had or currently has assets located in, or
otherwise directly or indirectly has derived or currently derives revenues from or has engaged or currently engages in investments,
dealings, activities or transactions in or with, any Sanctioned Country; or (ii) directly or indirectly has derived or currently derives
revenues from or has engaged or currently engages in investments, dealings, activities or transactions in or with any Sanctioned Person.
For the past five (5) years prior to the date hereof, there has not been, and there is no, pending or, to the Company’s knowledge,
threatened action, suit, proceeding or investigation before any court or other Governmental Entity against the Company or any
Subsidiary or Affiliate of the Company, or any of their respective officers, directors, employees, or, to the knowledge of the Company,
agents (with respect to such agents’ activities or transactions that were within the scope of their authorized agency relationship with the
Company or its Subsidiaries or Affiliates), or any investigation by the Company, a Subsidiary or Affiliate of the Company, or their
respective legal or other representatives involving the foregoing, that relates to a potential or actual violation of Sanctions, Anti-
Corruption Laws, Ex-Im Laws or Anti-Money Laundering Laws; nor does a basis for any such claim exist.
(o)
Committee on Foreign Investment in the United States. The Company is not engaging in activities that would cause it
to become in the future, a “TID U.S. business,” as that term is defined at 31 C.F.R. 800.248. For avoidance of doubt, the Company does
not (a)
12
produce, design, test, manufacture, fabricate or develop any “critical technologies,” as defined at 31 C.F.R. 800.215; (b) perform any
functions related to “covered investment critical infrastructure” as defined at 31 C.F.R. 800.212 and as set forth in Appendix A to 31
C.F.R. Part 800; or (c) maintain or collect, directly or indirectly, any “sensitive personal data” of U.S. citizens as defined at 31 C.F.R.
800.241.
(p)
Securities and Futures Ordinance. The conditions on which the Hong Kong Securities and Futures Commission (the
“SFC”) granted a partial exemption under section 309(2) of the Securities and Futures Ordinance (Cap. 571) (the “SFO”) to the
Company, its substantial shareholders, directors and chief executive from strict compliance with the provisions of Part XV of the SFO
continue to be satisfied and there has been no material change that has caused the SFC to withdraw or reconsider such exemption.
(q)
Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents,
any valid right, interest or claim against or upon the Company or any of its Subsidiaries for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding with a placement agent entered into by or on behalf of the Company or any of
its Subsidiary.
(r)
No Additional Representations. The Company makes no representations or warranties as to any matter whatsoever
except as expressly set forth in the Transaction Documents or in any certificate delivered by the Company to the Purchaser in accordance
with the terms thereof.
5.
COVENANTS AND ADDITIONAL AGREEMENTS
(a)
Director Nomination Right.
(i)
Upon the Closing, for so long as the Purchaser and its Affiliates beneficially own (A) not less than fifteen percent
(15%) of the then total issued and outstanding share capital of the Company (on a non-fully diluted basis), the
Purchaser shall be entitled to nominate two (2) directors to the Board (each such Person, a “Purchaser Designee”
and collectively, the “Purchaser Designees”), and (B) less than fifteen percent (15%) but not less than five
percent (5%) of the then total issued and outstanding share capital of the Company (on a non-fully diluted basis),
the Purchaser shall be entitled to nominate one (1) Purchaser Designee, in each case subject to the Company
Articles and requirements of the NYSE, the Hong Kong Stock Exchange, the Singapore Exchange or any other
applicable securities exchange, and the Company shall, upon the exercise of such director nomination right by the
Purchaser, take all necessary actions to add such Purchaser Designee(s) to the Board at the next regularly
scheduled meeting of the Board after the Closing, including but not limited to arranging for the register of
directors and officers of the Company to be updated forthwith. The Purchaser may exercise its director nomination
right hereunder through delivery of a written notice to the Company regarding the nomination, and the
appointment of the Purchaser Designee(s) by the Board shall be subject to the Company Articles and requirements
of the NYSE, the Hong Kong Stock Exchange, the Singapore Exchange or any other applicable securities
exchange applicable to the composition of the Board and qualifications and appointment of directors. The
Company and the Board shall take customary and reasonable
13
actions to obtain shareholder approval of the Purchaser Designee(s) as director(s) of the Board to the extent such
approval is required under applicable law. The Company shall take all necessary actions to ensure that, at all times
when a Purchaser Designee is eligible to be appointed or nominated, there are sufficient vacancies on the Board to
permit such designation.
The Purchaser shall have the right to request (by written notice to the Board) the removal of the Purchaser
Designee(s), following which the Company and the Board shall take all necessary actions to cause the removal of
such Purchaser Designee(s) as director(s) of the Company. If any Purchaser Designee ceases to serve on the Board
for any reason during his or her term, the vacancy created thereby shall be filled, and the Company shall cause the
Board to fill such vacancy, with a new Purchaser Designee eligible to serve on the Board in accordance with
Section 5(a)(i); provided, however, notwithstanding anything to the contrary in this Agreement, in the event that
the Purchaser ceases to be entitled to nominate one or both of the two (2) directors to the Board pursuant to
Section 5(a)(iv), the applicable Purchaser Designee(s) serving on the Board shall tender his or her resignation to
the Board, and the Purchaser shall take all necessary actions to cause such number of the Purchaser Designee(s)
serving on the Board to tender his or her resignation to the Board to stay compliant with Section 5(a)(iv).
For the avoidance of doubt, a Purchaser Designee shall be entitled (A) to the same retainer, equity compensation
and other fees or compensation, including travel and expense reimbursement, paid to the other directors of the
Company for his or her service as a director and (B) to the same indemnification rights as other directors of the
Company, and the Company shall maintain, in full force and effect, directors’ and officers’ liability insurance in
reasonable amounts to the same extent it now indemnifies and provides insurance for the directors on the Board.
The rights of the Purchaser under this Section 5(a) shall terminate automatically if the Purchaser and its Affiliates
beneficially own less than five percent (5%) of the then total issued and outstanding share capital of the Company
(on a non-fully diluted basis).
For the avoidance of doubt, this Section 5(a) shall supersede, and replace in its entirety, Section 5(c) of the Share
Subscription Agreement, dated as of June 20, 2023, by and between the Company and the Purchaser.
(ii)
(iii)
(iv)
(v)
(b)
Board Committee. The Board shall establish a strategy committee (the “Strategy Committee”) chaired by Mr. Bin Li.
The Strategy Committee shall consist of Mr. Li, one Purchaser Designee, and up to three (3) other members as determined by the Board
from time to time. In addition, for as long as there are two (2) Purchaser Designees on the Board (in accordance with Section 5(a)), the
additional Purchaser Designee shall be an observer on the Strategy Committee. Unless otherwise determined by the vote of a majority of
the members of the Strategy Committee, the Strategy Committee shall meet at least once every quarter, and more frequently upon the
reasonable request of any member of the Strategy Committee, provided that any such meeting may be held by teleconference or
videoconference. The Strategy Committee shall be responsible for overseeing the development and
14
implementation of the Company’s overall business strategies proposed or approved by the Board in the areas of (A) brand and product
development, portfolio and design, (B) technology roadmap, (C) international market entry and expansion, and (D) other areas that the
Board deems appropriate. The primary objective of the Strategy Committee will be to facilitate the decision-making process of the
Board, and it shall perform periodic reviews of the implementation of its proposals relating to the Company’s overall business strategies
in the areas described in this Section 5(b).
(c)
Preemptive Rights.
(i)
(ii)
For so long as the Purchaser and its Affiliates beneficially own not less than fifteen percent (15%) of the then total
issued and outstanding share capital of the Company (on a non-fully diluted basis), the Purchaser is entitled to a
pre-emptive right to purchase up to its pro rata share of any new Equity Securities which the Company may, from
time to time, propose to sell, offer or issue to any party (the “Proposed Issuance”), for the same purchase price
and on substantially the same terms as are offered to other participants in such issuance. The Purchaser’s pro rata
share, for purposes of the pre-emptive right under this Section 5(c), shall be a fraction, the numerator of which
shall be the number of Class A Ordinary Shares held by the Purchaser and its Affiliates immediately prior to the
issuance of such new Equity Securities and the denominator of which shall be the total number of ordinary shares
of the Company issued and outstanding immediately prior to such issuance of new Equity Securities.
For the avoidance of doubt, the pre-emptive right hereunder shall not apply to any sale, offer or issuance of Equity
Securities: (A) to employees, officers or consultants as compensation for their services to the Company pursuant to
any employee benefit plan, employee stock option plan or similar share-based plan of the Company duly adopted
for such purpose by a majority of the members of the Board or a majority of the members of a committee of
directors established for such purpose, (B) in connection with any exercise of conversion rights by any Person
holding any convertible securities of the Company that are outstanding as of the date of this Agreement or were
issued in compliance with this Section 5(c) after the date of this Agreement, (C) in connection with any share split,
share dividend or any share subdivision or other similar event in which all of the shareholders of the Company are
entitled to participate on a pro rata basis, or (D) issued pursuant to any transaction or any series of transactions that
constitute a Change of Control so long as such sale, offer or issuance of Equity Securities is not primarily for the
purpose of raising capital and such sale, offer or issuance is not to any Affiliate or any entity whose primary
business is investing in securities.
(iii)
The Company shall deliver a written notice, in accordance with the provisions of Section 9(i) hereof (the
“Issuance Notice”), of any Proposed Issuance to the Purchaser not less than ten (10) Business Days prior to the
earlier of the commencement of such Proposed Issuance and the entering into definitive documentation pursuant to
which such Proposed Issuance would occur. The Issuance Notice shall set forth the material terms and conditions
of the Proposed Issuance, including, to the extent applicable and available, (A) the number and description of the
new Equity Securities proposed to be
15
issued and the percentage interest in the Company such issuance would represent, as well as the Purchaser’s pro
rata share, (B) the proposed closing date of the Proposed Issuance, (C) the proposed purchase price, and (D) the
proposed method of sale. The Purchaser shall for a period of five (5) Business Days following the receipt of an
Issuance Notice (the “Exercise Period”) have the right to elect to purchase up to the Purchaser’s pro rata share of
the new Equity Securities at the purchase price set forth in the Issuance Notice by delivering a written notice to the
Company (an “Acceptance Notice”), which Acceptance Notice shall include the number of new Equity Securities
the Purchaser elects to purchase. The failure of the Purchaser to deliver an Acceptance Notice by the end of the
Exercise Period shall constitute a waiver of its rights under this Section 5(c) with respect to the purchase of such
new Equity Securities, but shall not affect its rights with respect to any Proposed Issuance in the future.
(d)
Right of First Refusal. Subject to any applicable local laws or regulations, for so long as the Purchaser and its Affiliates
beneficially own not less than fifteen percent (15%) of the then total issued and outstanding share capital of the Company (on a non-
fully diluted basis), the Purchaser is entitled to a right of first refusal with respect to any transaction or series of related transactions
involving the issuance and sale of any equity or equity-linked interest in any newly established joint ventures or Subsidiaries (whether
existing or newly established) of the Company in global jurisdictions other than mainland China, Hong Kong, Macau and Taiwan (the
“Subject Transaction”) in accordance with the following provisions of this Section 5(d).
(i)
(ii)
The Company shall deliver a written notice, in accordance with the provisions of Section 9(i) hereof (the “Offer
Notice”), of its bona fide intent to pursue any Subject Transaction to the Purchaser. The Offer Notice shall set
forth the material terms and conditions of the Subject Transaction, including (A) as applicable, the amount of
financing sought, the number and description of any securities (including any Equity Securities) proposed to be
issued and the purchase price therefor with respect to the Subject Transaction, (B) the proposed timing of the
Subject Transaction, and (C) the jurisdiction(s) involved in the Subject Transaction.
The Purchaser may exercise its right of first refusal by delivering to the Company written notice within ten (10)
Business Days after its receipt of the Offer Notice to participate in the Subject Transaction at the same price and
subject to the same terms and conditions as described in the Offer Notice. If and to the extent that the Purchaser
fails to exercise its right hereunder timely or at all, the Company may proceed with the Subject Transaction at the
price and on the terms specified in the Offer Notice.
(iii)
To the extent that the Purchaser duly exercised its right of first refusal hereunder, the Purchaser and the Company
shall use their commercially best efforts to complete the Subject Transaction at the same price and subject to the
same terms and conditions as described in the Offer Notice.
(e)
Technology Licensing. Except for the Company’s battery swapping technology, for so long as the Purchaser and its
Affiliates beneficially own not less than fifteen percent (15%) of the then total issued and outstanding share capital of the Company (on a
non-fully
16
diluted basis), the Company shall not license its technologies to any other original equipment manufacturers (“OEMs”), for purposes of
utilizing such technologies in connection with the development and manufacturing of vehicle models with starting manufacturer’s
suggested retail price (MSRP) of over US$50,000, without the prior written consent of the Purchaser. If the Purchaser consents to any
such proposed licensing of the Company’s technologies to an OEM, the Company shall ensure that the terms of the licensing agreement
with such OEM will not be more favorable than those offered to the Purchaser and its Affiliates.
(f)
Consents and Approvals. The Purchaser shall take all necessary actions to obtain all requisite internal consents,
approvals, or authorizations with respect to Closing as soon as practicable after the date hereof and in any event prior to the Closing
Date.
(g)
Expenses. Each party shall bear and pay its own costs, fees and expenses incurred by it in connection with the
Transaction Documents and the transactions contemplated by the Transaction Documents.
(h)
Purchaser Lockup. The Purchaser shall not, during the period commencing on the date hereof and ending six (6)
months after the Closing Date (the “Purchaser Lock-Up Period”), Transfer any portion or interest of the Securities purchased hereunder
without the prior written consent of the Company, other than (A) to any Affiliate of the Purchaser or to any investment fund or other
entity controlling, controlled by, managing or managed by or under common control with the Purchaser or as part of a distribution to
members or shareholders of the Purchaser upon liquidation, (B) pursuant to tenders, sales or other transfers pursuant to a bona fide third-
party tender offer, merger, consolidation or other similar transaction made to all holders of ADS or Class A Ordinary Shares or involving
a Change of Control of the Company, (C) Class A Ordinary Shares and ADSs acquired by the Purchaser in open market transactions
subsequent to the Closing or (D) to the Company. Any purported sale, transfer, pledge, encumbrance, assignment, loan, or disposal of the
Securities in violation of the foregoing sentence without prior written consent of the Company shall be null and void.
(i)
Company Lockup. Without the prior written consent of the Purchaser, the Company shall not, during the period
commencing on the date hereof and ending six (6) months after the Closing Date (the “Company Lock-Up Period”), offer, sell, contract
to sell, or grant any option, right or warrant to purchase with respect to, any Company’s Equity Securities at a purchase price per Class A
Ordinary Share (as adjusted for the American depository share-to-Class A Ordinary Share ratio) or a conversion price per Class A
Ordinary Share (in the case of any security convertible into, exchangeable or exercisable for the Class A Ordinary Share) that is below
the Purchase Price.
(j)
Public Disclosure. Without limiting any other provision of this Agreement, the Company and Purchaser, to the extent
permitted by applicable law, will consult with each other before issuance of, and provide each other the opportunity to review and
comment upon, any press release or public statement with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and will not (to the extent practicable) issue any such press release or make any such public statement prior to such
consultation with and consent of the other party, which shall not be unreasonably withheld, conditioned or delayed, except as to such
press release or public statement (and information contained therein) that the Company or the Purchaser determines, after consultation
with outside legal counsel, is required by law, rules, regulations or any listing agreement with or requirement of the SEC, NYSE, the
Hong Kong Stock Exchange, the Singapore Exchange or any other applicable securities exchange; provided that the disclosing party
shall, to the extent permitted by applicable law,
17
rules, regulations or any listing agreement with or requirement of the SEC, NYSE, the Hong Kong Stock Exchange, the Singapore
Exchange or any other applicable securities exchange and if reasonably practicable, inform the other parties about the disclosure to be
made pursuant to such requirements prior to the disclosure. Notwithstanding the foregoing, this Section 5(j) shall not apply to any press
release or other public statement made by the Company that does not contain any information relating to this Agreement that has not
been previously announced or made public in accordance with the terms of this Agreement and that is made in the ordinary course of
business.
(k)
Sanctions, Anti-Corruption, Ex-Im Laws and Anti-Money Laundering. The Company and each of its Subsidiaries shall
not, directly or indirectly, use any proceeds of the Aggregate Purchase Price, or use, lend, contribute or otherwise make available any
such proceeds, to any Subsidiary, Affiliate, joint venture partner or other Person (i) to fund any investments, activities or transactions
involving any Sanctioned Country or Sanctioned Person or (ii) if such use, loan, contribution, or the making available of any such
proceeds would be prohibited under Sanctions for a Person subject to U.S., EU or UK jurisdiction; or otherwise in any manner in
violation of Sanctions, Anti-Corruption Laws, Ex-Im Laws or Anti-Money Laundering Laws by any Person (including Purchaser,
nominee, financial institution, arranger or advisor). The Company will maintain policies and procedures reasonably designed to ensure
compliance with Sanctions, Ex-Im Laws Anti-Corruption Laws and Anti-Money Laundering Laws.
6.
CONDITIONS TO THE COMPANY’S OBLIGATIONS
The obligation of the Company hereunder to issue and sell the Securities to the Purchaser at the Closing is subject to the
satisfaction or waiver by the Company, on or before the Closing Date, of each of the following conditions:
(a)
Execution of Transaction Documents. The Purchaser shall have duly executed and delivered to the Company each of
the Transaction Documents to which it is a party. The execution and delivery of this Agreement by the Purchaser and the consummation
of the transactions contemplated by and in compliance with the provisions of the Transaction Documents have been duly authorized by
all necessary entity action on the part of the Purchaser.
(b)
Performance. The Purchaser shall have performed and complied in all material respects with all agreements,
obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before
the Closing.
(c)
Representations and Warranties; Covenants. The representations and warranties of the Purchaser shall be true and
correct in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect,
which shall be true and correct in all respects) as of the date of this Agreement and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date);
provided that each representation or warranty made by the Purchaser in this Agreement under Sections 3(a), 3(b) and 3(c) shall be true
and correct in all respects as of the date of this Agreement and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date).
(d)
No Stop Order. There shall not be in force and effect any (A) law, rule or regulation (whether temporary, preliminary or
permanent) or (B) order, judgment, verdict,
18
subpoena, injunction, decree, ruling, determination or award by any Governmental Entity of competent jurisdiction, in either case,
enjoining, prohibiting or having the effect of making illegal the consummation of the transactions contemplated by this Agreement.
7.
CONDITIONS TO THE PURCHASER’S OBLIGATIONS
The obligation of the Purchaser hereunder to purchase the Securities at the Closing is subject to the satisfaction or waiver by the
Purchaser, on or before the Closing Date, of each of the following conditions:
(a)
Execution of Transaction Documents. The Company shall have duly executed and delivered to the Purchaser each of
the Transaction Documents to which it is a party.
(b)
Performance. The Company shall have performed and complied in all material respects with all agreements,
obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before
the Closing.
(c)
Representations and Warranties; Covenants. The representations and warranties of the Company contained in the
Transaction Documents shall be true and correct in all material respects (except for those representations and warranties that are qualified
by materiality or material adverse effect, which shall be true and correct in all respects) as of the date of this Agreement and as of the
Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct in all material respects as of such specified date); provided that each representation or warranty made by the Company in this
Agreement under Sections 4(a), 4(b), 4(c), 4(f) and 4(g) shall be true and correct in all respects as of the date of this Agreement and as of
the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be
true and correct as of such specified date).
(d)
No Stop Order. There shall not be in force and effect any (A) law, rule or regulation (whether temporary, preliminary or
permanent) or (B) order, judgment, verdict, subpoena, injunction, decree, ruling, determination or award by any Governmental Entity of
competent jurisdiction, in either case, enjoining, prohibiting or having the effect of making illegal the consummation of the transactions
contemplated by this Agreement.
(e)
(f)
No Material Adverse Effect. No Material Adverse Effect shall have occurred since the date of this Agreement.
Exchange Listing. The Company shall have filed a supplemental listing application for the ADSs representing the
Securities with NYSE and shall have received no objection thereto from NYSE.
8.
TERMINATION
(a)
Subject to Section 8(b) below, this Agreement may be terminated and the transactions contemplated by this Agreement
abandoned at any time prior to the Closing:
(i)
December 31, 2023;
by either the Company or the Purchaser, by written notice to the other party, if Closing does not occur by
(ii)
by mutual agreement of the Company and the Purchaser;
19
(iii)
by the Company or the Purchaser if there is in force and effect any (A) law, rule or regulation (whether
temporary, preliminary or permanent) or (B) order, judgment, verdict, subpoena, injunction, decree, ruling, determination or award by
any Governmental Entity of competent jurisdiction, in either case, enjoining, prohibiting or having the effect of making illegal the
consummation of the transactions contemplated by this Agreement;
(iv)
by the Purchaser if any representation or warranty made by the Company under this Agreement shall have
become untrue or there has been a breach of any covenant or agreement by the Company under this Agreement, which breach cannot be
cured or, if it is capable of being cured, that is not cured within seven (7) Business Days of its occurrence, in either case such that the
conditions set forth in Section 7 would not be satisfied as of the time of such breach or as of the time such representation or warranty
shall have become untrue; provided, however, that the Purchaser shall not have the right to terminate this Agreement pursuant to this
Section 8(a)(iv) if the Purchaser shall have materially breached or failed to perform any of its representation or warranty or covenant or
agreement under any Transaction Document which breach or failure to perform would give rise to the failure of the condition set forth in
Section 7; or
(v)
by the Company if any representation or warranty made by the Purchaser under this Agreement shall have
become untrue or there has been a breach of any covenant or agreement by the Purchaser under this Agreement, which breach cannot be
cured or, if it is capable of being cured, that is not cured within seven (7) Business Days of its occurrence, in either case such that the
conditions set forth in Section 6 would not be satisfied as of the time of such breach or as of the time such representation or warranty
shall have become untrue; provided, however, that the Company shall not have the right to terminate this Agreement pursuant to this
Section 8(a)(v) if the Company shall have materially breached or failed to perform any of its representation or warranty or covenant or
agreement under any Transaction Document which breach or failure to perform would give rise to the failure of the condition set forth in
Section 6.
(b)
In the event of termination of this Agreement as provided in Section 8(a) above, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of the parties hereto and, as applicable, the officers, directors and
shareholders of each party, except that the provisions of Sections 8 and 9 hereof shall remain in full force and effect; provided that
nothing herein shall relieve any party hereto from liability for any breach of this Agreement that occurred prior to such termination.
9.
MISCELLANEOUS
(a)
No Survival. None of the representations, warranties, covenants or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Closing and all rights, claims and causes of action (whether in contract or in tort or
otherwise, or whether at law or in equity) with respect thereto shall terminate at the Closing. Notwithstanding the foregoing, neither this
Section 9(a) nor anything else in this Agreement to the contrary shall limit: (a) the survival of any covenant or agreement of the parties
which by its terms is required to be performed or complied with in whole or in part after the Closing, which covenants and agreements
shall survive the Closing in accordance with their respective terms; or (b) the liability of any Person with respect to fraud. For the
avoidance of doubt, all of the covenants and agreements contained in Section 9(a) herein shall survive the Closing.
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(b)
Governing Law; Arbitration. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to any choice
or conflict of law provision or rule thereof. Any dispute, controversy or claim arising out of or relating to this Agreement, or the
interpretation, breach, termination or validity hereof, shall be submitted to arbitration upon the request of any party with notice to the
other party. The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre
(“HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in effect, which rules are deemed to be incorporated by
reference into this Section 9(b). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select
one arbitrator within thirty (30) days after giving or receiving the demand for arbitration. The Chairman of the HKIAC shall select the
third arbitrator, who shall be qualified to practice law in Hong Kong. If either party to the arbitration does not appoint an arbitrator who
has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the
Chairman of the HKIAC. The arbitration proceedings shall be conducted in English. Each party irrevocably waives, to the fullest extent
it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such arbitration in Hong Kong
and the HKIAC, and hereby submits to the exclusive jurisdiction of HKIAC in any such arbitration. The award of the arbitration tribunal
shall be conclusive and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for
enforcement of such award. Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of
competent jurisdiction pending the constitution of the arbitral tribunal.
(c)
Remedies and Waivers. No delay or omission by any party to this Agreement in exercising any right, power or remedy
provided by law or under this Agreement or any other documents referred to in it shall: (i) affect that right, power or remedy; or (ii)
operate as a waiver thereof. The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall
not preclude any other or further exercise or any other right, power or remedy. Except as otherwise expressly provided in this Agreement,
the rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law.
(d)
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party. Signatures in the form of electronically imaged “.pdf” shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signatures were original.
(e)
Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(f)
Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
Interpretation. When a reference is made in this Agreement to an Article, Section or Exhibit, such reference shall be to
an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this
(g)
21
Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the
words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. All references to “$”
mean the lawful currency of the U.S. The definitions contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Except as specifically stated herein,
any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. Except as otherwise specified herein, references to a person are also to its
permitted successors and assigns. Each of the parties has participated in the drafting and negotiation of this Agreement. If an ambiguity
or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
(h)
Entire Agreement; Amendments. This Agreement (including all schedules and exhibits hereto), together with the other
Transaction Documents constitute the entire agreement, and supersede all other prior oral or written agreements between the Purchaser,
the Company, their Affiliates and Persons acting on their behalf with respect to the subject matter hereof and thereof. No provision of this
Agreement may be amended other than by an instrument in writing signed by the Company and the Purchaser. No provision hereof may
be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
(i)
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally or by
internationally recognized overnight courier service; (ii) upon receipt, when sent by email if sent during normal business hours of the
recipient, and if not, then on the next Business Day, in each case properly addressed to the party to receive the same. The addresses and
email addresses for such communications shall be:
If to the Company:
NIO Inc.
Address:
Telephone:
Email:
Attention:
Building 19, No. 889, Tianlin Road
Minhang District
Shanghai, People’s Republic of China
[***]
[***]
[***]
with a copy (for informational purposes only) to:
22
Skadden, Arps, Slate, Meagher & Flom LLP
Address:
46/F, Tower II, Jing An Kerry Centre
1539 Nanjing West Road
Shanghai 200040, People’s Republic of China
[***]
[***]
[***]
Telephone:
Email:
Attention:
If to the Purchaser:
CYVN Investments RSC Ltd
Address:
Office at 9th Floor, Level 9, Al Khatem Tower
Abu Dhabi Global Market Square, Al Maryah Island
Abu Dhabi, United Arab Emirates
[***]
[***]
[***]
Telephone:
Email:
Attention:
with a copy (for informational purposes only) to:
Akin Gump Strauss Hauer & Feld LLP
Address:
Telephone:
Email:
Attention:
100 Pine St Suite 3200
San Francisco, CA 94111
[***]
[***]
[***]
(j)
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties; provided,
however, that the Purchaser may assign its rights and obligations under this Agreement to one or more of its Affiliates in connection with
the Purchaser’s assignment of Securities to such Affiliates with prior written notice to the Company.
(k)
Further Assurances. Each of the Purchaser and the Company shall, in good faith, cooperate and consult with the other
and use commercially reasonable efforts to prepare and file all necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any
exemption by, all Governmental Entities, necessary or advisable to consummate the transactions contemplated by this Agreement and the
other Transaction Documents. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(l)
Adjustment of Share Numbers. If there is a subdivision, split, stock dividend, combination, reclassification or similar
event with respect to any of the shares of Company’s Class A Ordinary Shares referred to in this Agreement, then, in any such event, the
numbers
23
and types of shares of such Class A Ordinary Shares referred to in this Agreement shall be equitably adjusted as appropriate to the
number and types of shares of such stock that a holder of such number of shares of such stock would own or be entitled to receive as a
result of such event of such holder had held such number of shares immediately prior to the record date for, or effectiveness of, such
event.
(m)
Specific Performance. The parties hereto acknowledge and agree irreparable harm would occur for which money
damages would not be an adequate remedy in the event that any of the provisions of the Transaction Documents were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties to the Transaction Documents
shall be entitled, in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise, to an
injunction or injunctions, without posting a bond or undertaking and without proof of damages, to prevent breaches of the Transaction
Documents and to enforce specifically the terms and provisions of the Transaction Documents.
[Signature Pages Follow]
24
IN WITNESS WHEREOF, the Company and the Purchaser have caused their respective signature page to this Share
Subscription Agreement to be duly executed as of the date first written above.
COMPANY:
NIO INC.
By: /s/ Bin Li
Name: Bin Li
Title: Chairman of the Board of Directors
and Chief Executive Officer
[Signature Page to Share Subscription Agreement]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their respective signature page to this Share
Subscription Agreement to be duly executed as of the date first written above.
PURCHASER:
CYVN INVESTMENTS RSC LTD
By: /s/ Samer Salah Mohammad Abdelhaq
Name: Samer Salah Mohammad Abdelhaq
Title: Director
By: /s/ Eddy Skaf
Name: Eddy Skaf
Title: Director
[Signature Page to Share Subscription Agreement]
THE SYMBOL “[***]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED
FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii) IS THE TYPE THAT THE REGISTRANT
TREATS AS PRIVATE OR CONFIDENTIAL
Exhibit 4.47
Assets Transaction Agreement for the Project of Transfer of Structures
and Equipment of Xinqiao Plant of Anhui Jianghuai Automobile Group
Co., Ltd. Passenger Car Company
Notice for Use of the Contract
I.
This Contract is a model text formulated in accordance with the Civil Code of the People’s Republic of China, the
Measures for the Supervision and Administration of the Trading of State-owned Assets of Enterprises (Order No. 32 of the State-owned
Assets Supervision and Administration Commission of the State Council and the Ministry of Finance) and other relevant laws and
regulations governing the trading of state-owned assets of enterprises.
II.
All the terms hereof are exemplary. The parties to this Contract can amend, adjust or supplement this Contract in light
of the actualities. Anhui Assets and Equity Exchange Co., Ltd. (“AAEE”), as the provider of this model contract, shall take no legal
responsibility therefor.
III.
To better protect the rights and interests of both parties hereto, the parties hereto shall exercise caution in entering into
this Contract and shall endeavor to make the terms and conditions hereof specific and meticulous. Where the specific transaction does
not concern any circumstance set out in any provision hereof, such provision shall be marked with “this provision does not relate
to this Contract”.
IV.
Assets Transaction Fees: means the service charges payable to AAEE by a transferor or transferee of a trading
of state-owned assets of enterprises at AAEE in accordance with the requirements of the administration of commodity prices or
other relevant requirements.
V.
The materials relating to the text of this Contract shall be set out in the appendix to this Contract.
VI.
AAEE solemnly declares that this sample contract is only for use at their election by the parties to the assets transaction
at AAEE in light of the actualities. AAEE shall not be under any guarantee obligation required in connection with the preparation
and provision of this sample contract, including but not limited to the guarantee for the completeness of the terms and conditions
of this sample contract, the authenticity of the purposes of the parties to the transaction entering into this Contract, the eligibility
of the parties to the transaction as signatories, the truthfulness and accuracy of the representations and covenants made, and the
documents and information provided, by the parties to the transaction for the execution of this Contract, and all other relevant
guarantee liabilities.
- 1 -
Party A (Transferor): Anhui Jianghuai Automobile Group Co., Ltd.
Party B (Transferee): NIO Technology (Anhui) Co., Ltd.
In accordance with the Civil Code of the People’s Republic of China and the relevant laws, regulations and policies governing
the trading of state-owned assets of enterprises, Party A and Party B have, in adherence to the principles of voluntariness, equality,
fairness and good faith, and upon public listing, agreed on matters relating to the transfer of the structures and equipment of Xinqiao
Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company, and enter into this transaction contract (this “Contract”)
as follows:
Article 1
Transferred Assets
1.1 Transferred Assets: structures and equipment of Xinqiao Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger
Car Company.
1.2 Party A has entrusted Zhonghua Certified Public Accountants LLP (Special General Partnership) Anhui Branch and Anhui
Zhonglian Guoxin Assets Appraisal Co., Ltd. with the audit and appraisal of the transferred assets in detail, and Party B acknowledges
the audit and appraisal. The auditor and the appraisal firm have issued the Special Audit Report on the Assets to be Transferred by
Anhui Jianghuai Automobile Group Co., Ltd. (Zhong Hui Zi (2023) No. [***]) and the Asset Appraisal Report on the Project of
Appraisal of the Value of the Structures and Equipment of Xinqiao Plant of Passenger Car Company Involved in the Assets to be
Transferred by Anhui Jianghuai Automobile Group Co., Ltd. (Wan Zhong Lian Guo Xin Ping Bao Zi (2023) No. [***]) (the “Appraisal
Report”); the details of the transferred assets are as set forth in the list of assets (attached hereto as Appendix 1).
1.3 Except for the matters already disclosed by Party A to Party B, there is no matter undisclosed or omitted in the asset
appraisal report or audit report that may affect the appraisal result or have material adverse effect on the determination of the value of the
transferred assets.
Article 2
Transfer Price
2.1 Party A and Party B agree that the transfer price of the transferred assets shall be the price resulting from the public listing
on AAEE of the transferred assets in the amount of RMB[***] (exclusive of VAT: Renminbi [***]).
2.2 The deposit in the amount of RMB[***] paid by Party B to AAEE shall become a part of the transfer price after this
Contract becomes effective.
Article 3
Payment Method for Transfer Price
3.1 The Parties agree to pay the transfer price specified in Article 2.1 hereof to the account designated by AAEE by the
following method within 5 business days from the effective date of this Contract:
- 2 -
Lump-sum Payment Method: Party B agrees to pay the balance of the transfer price in the amount of RMB[***] (balance of the
transfer price = transfer price of RMB[***] - deposit of RMB[***]) to the account designated by AAEE within 5 business days from the
effective date of this Contract.
3.2 Party B shall be deemed to have performed its payment obligation specified herein after Party B has paid the full amount of
the transaction price to the account designated by AAEE and has paid all taxes to the account designated by Party A. Within 5 business
days after Party B has fully paid the transfer price, AAEE will transfer the full amount of the transfer price to the account designated by
Party A, to which Party B must respond without raising any objection.
Article 4
Closing of Assets and Assumption of Taxes
4.1 Party B has fully understood and acknowledged the status of and the agreements on the transferred assets, and voluntarily
accepts the current status of the transferred assets in its entirety and the defects disclosed in the Announcement on Transfer of Structures
and Equipment of Xinqiao Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company (the “Transfer
Announcement”), and is willing to bear all liabilities and risks.
4.2 After handover of the transferred assets by Party A to Party B, Party A warrants that it will render necessary assistance to
Party B to complete the required approvals and amendments (including but not limited to change in the special equipment verification
certificate, change in the relevant certificates for imported (duty-free) equipment) by and with relevant competent governmental
authorities to which the transfer of the transferred assets hereunder may relate.
4.3 Party A shall, within 4 months following the Assets Closing Date, hand over the data and archives concerning the
transferred assets to Party B.
4.4 Within 7 business days after the effective date of this Contract, the Parties shall complete the handover of the transferred
assets (the day on which the Parties complete the handover of the assets shall be the “Assets Closing Date”), sign for confirmation the
Handover Checklist of Transferred Assets, and have the transferred assets handed over on an “as-is” basis at the time of delivery.
4.5 The type, quantity and status of the transferred assets to be delivered shall be in their “as-is” condition at the time of
delivery. Party B shall not raise any objection to the transferred assets after the acquisition thereof.
4.6 The overall layout, planning, operations and relevant existing facilities and equipment within the area where the transferred
assets are located shall be in their “as-is” condition at the time of delivery, and Party B shall not raise any objection to the transferred
assets after the acquisition thereof.
4.7 Party B shall inform itself about, and check against, other conditions including but not limited to the requirements of the
relevant competent authorities of the locality of the transferred assets on the transfer of ownership and use of the transferred assets. If the
transfer of ownership of, or amendment or other formalities for, the transferred assets fail to be completed due to any reason attributable
to Party B, or the transferred assets fail to be used
- 3 -
as expected, Party B shall solely bear all consequences arising therefrom, including but not limited to costs, risks and losses.
4.8 Party B shall, in respect of its qualifications, comply with local policies and regulations on the qualifications for purchase of
the transferred assets, and shall check its own qualifications against the relevant regulations and requirements, consult professionals,
relevant parties and regulatory authorities, and solely bear all consequences arising therefrom, including but not limited to costs, risks
and losses.
4.9 The appraised price, listed price and transaction price of the transferred assets are all exclusive of tax. After completion of
the transaction, Party A (or a branch company of Party A) shall issue a VAT invoice to Party B within two days after the Assets Closing
Date in accordance with the tax law of the PRC, and the VAT (i.e., the VAT on the transfer price under the Project) shall be borne by
Party B. Party B shall transfer the relevant VAT amount to the account designated by Party A while paying the transfer price.
4.10 Except that the amount of tax stated in the VAT invoice for the transfer price under the Project issued by Party A to Party B
shall be borne by Party B, the Parties shall each pay VAT and its surcharges, stamp duty and all other taxes incurred in connection with
the transfer of the transferred assets respectively in accordance with the law. If no laws or regulations provide for the payer of such
taxes, and the Parties have not agreed on the payer either, the Parties shall jointly bear such taxes in equal proportion, unless otherwise
agreed by the Parties.
4.11 The transferred assets are currently used for the manufacturing of new energy vehicles, and Party B shall cooperate with
Party A in completing the subsequent construction, inspection and acceptance of the Project, and in performing relevant contractual
obligations. If it intends to continue to use the transferred assets for the original purposes, Party B shall inform itself about, and check
against, the requirements including but not limited to project investment filing and licensing requirements under the law, national
industry policies of China and the layout requirements on automobile industry in Anhui Province.
4.12 In accordance with Article 21 of the Measures for the Administration of Automobile Sales which provides that “A supplier
shall announce to the public in a timely manner the model of which the production or sale has been discontinued, and shall guarantee the
supply of parts and relevant after-sales services for at least 10 years thereafter”, Party B undertakes and warrants that it will continuously
supply the relevant models manufactured currently in relation to the transferred assets, and guarantees a continuous and sufficient supply
of after-sales parts of the relevant models for after-sales services and maintenance within 10 years after the cessation of the production or
sale of those models.
All Assets Transaction Fees arising from the transactions contemplated hereunder shall be borne by Party B according to the
agreements of the Parties.
Article 5
Assets Transaction Fees
- 4 -
Article 6
Representations and Warranties of Party A
6.1 Party A warrants that it has the full right to dispose of the transferred assets hereunder, that the ownership of the transferred
assets is clear, that the transferred assets have not been sealed up by judicial authorities or been subject to other compulsory measures,
and that the transfer of the transferred assets is not prohibited or restricted by laws. All material defects in the transferred assets and
Party A’s rights therein or other major matters which may affect the determination of the value of the transferred assets have been
disclosed by Party A to Party B, and Party A undertakes that all risks and liabilities arising from such defects shall be solely borne by
Party A.
6.2 Party A warrants that all materials (including originals and copies) provided and all statements of facts made by it to Party B
and AAEE for the purpose of entering into this Contract are true, accurate, complete and valid, and do not contain any false document or
material omission. Party A shall be responsible for the consistency between the materials provided by it and the actual conditions of the
transferred assets, and shall bear all legal liabilities arising from any concealment or false statement in such materials.
6.3 Party A warrants that all procedures necessary for its execution of this Contract (including but not limited to internal
decisions, authorizations and approvals) have been legally and validly obtained by it, and all the conditions precedent to the formation of
this Contract and the transfer of the transferred assets by it have been satisfied.
Article 7
Representations and Warranties of Party B
7.1 Party B is a legal person in legal and valid existence, and has independent legal personality and the ability to assume civil
liabilities independently; it is in a good financial position, and has good payment ability and commercial credit; the transaction funds are
from legal sources and it is in compliance with the eligibility requirements on transferee under laws, regulations and the Transfer
Announcement of the Project.
7.2 Party B warrants that all materials (including originals and copies) provided and all statements of facts made by it to Party A
and AAEE for the purpose of entering into this Contract are true, accurate, complete and valid.
7.3 Party B warrants that all procedures necessary for its execution of this Contract (including but not limited to internal
decisions, authorizations and approvals) have been legally and validly obtained by it, and all the conditions precedent to the formation of
this Contract and the transfer of the transferred assets to it have been satisfied.
7.4 Party B has completed a site inspection of the transferred assets, has carefully read, fully understood and fully accepted all
the contents and requirements of the Announcement on Transfer of Structures and Equipment of Xinqiao Plant of Anhui Jianghuai
Automobile Group Co., Ltd. Passenger Car Company, voluntarily and entirely accepts the current status and disclosed defects of the
transferred assets, and is willing to bear all liabilities and risks.
7.5 With respect to the approvals or filings required for the assets transaction, including those relating to the examination of
eligibility of parties to the transaction, antitrust clearance, concession, use right to allocated state-owned land, exploration right and
mining
- 5 -
right, Party B has understood the provisions of relevant laws and administrative regulations and regulatory requirements, has determined
on its own that it is eligible to act as the transferee to this assets transfer project in accordance with such provisions and regulatory
requirements and upon consultation with professionals, relevant parties and regulatory authorities, and shall solely bear all consequences
arising therefrom, including expenses, risks and losses.
7.6 Party B’s acceptance of the confirmation of its eligibility by Party A and AAEE does not imply that Party B’s eligibility has
complied with the provisions of relevant laws and administrative regulations and regulatory requirements. The final determination of
Party B’s eligibility to act as transferee to the Project shall be subject to the examination opinions of relevant regulatory authorities.
7.7 Other undertakings required to be made by Party B in the Announcement on Transfer of Structures and Equipment of
Xinqiao Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company.
Article 8
Notices and Delivery
All notices, demands and other communications required by this Contract shall generally be sent by courier, text message or
email. A notice shall be deemed to have been duly delivered three business days after sending if sent by courier, or when the text
message is sent by the sender to the correct mobile phone number of the other party (to the extent such message is not returned by the
operator) if sent by text message, or when the email is sent by the sender to the correct email address of the other party (to the extent the
email is not returned by the system) if sent by email. Notices shall be sent to the domicile, contact details or email address of the parties
set forth on the signature page to this Contract.
Article 9
Liability for Breach of Contract
9.1 If Party B delays in paying the transfer price, Party B shall pay liquidated damages to Party A in an amount equal to 5‰ of
the overdue amount of purchase price for each day of delay. If Party B fails to make full payment of the transfer price within 30 days of
the receipt of a reminder of late payment, Party A shall be entitled to terminate this Contract, request Party B to bear its liability for
breach by paying 30% of the transfer price under this Contract, and request Party B to compensate Party A for its losses.
9.2 If either Party delays in cooperating with the other Party in closing the assets transaction or delivering the assets, the
breaching Party shall pay liquidated damages to the non-breaching Party in an amount equal to 5‰ of the transfer price for each day of
delay. If the breaching Party fails to cooperate with the non-breaching Party in closing the assets transaction within 30 days of the receipt
of a reminder, the non-breaching Party shall be entitled to terminate this Contract and request the breaching Party to compensate the non-
breaching Party for its losses.
9.3 If either Party hereto breaches any obligation or responsibility set forth in this Contract, which causes any loss to the other
Party, the breaching Party shall be liable to compensate the non-breaching Party; if the purposes of this Contract cannot be effected due
to any material adverse effect of the breaching Party’s breach on the transferred assets or the
- 6 -
transferor, the non-breaching Party shall be entitled to terminate this Contract and request the breaching Party to compensate the non-
breaching Party for its losses.
Article 10
Modification and Termination of Contract
10.1 This Contract may be modified in writing upon mutual agreement of the Parties; provided that such modification shall not
violate the provisions of the laws of the PRC and the Transfer Announcement.
10.2 This Contract may be modified or terminated by either Party if:
(1) the Parties agree to terminate this Contract in writing upon mutual agreement due to any change in the circumstances,
without prejudice to the national or social public interests;
(2) the conditions to termination by operation of law as provided for in the Civil Code of the People’s Republic of China
are satisfied;
(3) any of the circumstances set forth in this Contract where this Contract shall be modified or terminated occurs.
10.3 Either Party that terminates this Contract in accordance with Article 10.2 shall notify the other Party in writing.
10.4 In the event of any termination or modification of the main provisions of this Contract, Party A and Party B shall also
notify AAEE in writing of the termination or modification of this Contract. If the modification or termination of this Contract involves
any amount temporarily kept in the fund settlement account of AAEE, a written application for the transfer of such amount shall be
submitted to AAEE, and AAEE shall have the right to deduct the Assets Transaction Fees payable by the breaching Party directly from
such amount.
Article 11
Jurisdiction and Dispute Resolution
11.1 All actions under this Contract shall be governed by the laws of the People’s Republic of China.
11.2 Any dispute arising from the performance of this Contract by the Parties hereto shall be resolved by the Parties through
negotiation; if no agreement can be reached through negotiation, such dispute shall be resolved in accordance with (2) below:
(1) the dispute shall be referred to arbitration administered by the Hefei Arbitration Commission;
(2) a lawsuit shall be filed to the people’s court of competent jurisdiction in the place where the transferred assets are
located.
Article 12
Miscellaneous
12.1 In respect of any matter not mentioned herein, a written supplementary agreement may be entered into by the Parties upon
mutual agreement which shall have the
- 7 -
same legal effect as this Contract; provided that such supplementary agreement shall not violate the provisions of the laws of the PRC
and the Transfer Announcement.
12.2 This Contract shall take effect as of the date when it is signed and affixed with the seals of Party A and Party B and affixed
with the seal of AAEE, unless the effectiveness of this Contract is subject to approval or filing under laws and administrative regulations.
If any administrative approval is required for the assets transaction, including those relating to examination of eligibility of parties to the
transaction and antitrust clearance, the effectiveness of this Assets Transaction Agreement shall not be affected. If Party B fails to obtain
the approval or filing within a reasonable time limit, Party A shall be entitled to terminate this Contract and otherwise dispose of the
transferred assets. The deposit or transfer price paid by Party B, net of the Assets Transaction Fees payable to AAEE, shall be paid to
Party A and relevant parties as compensation. If such amount of compensation is not sufficient to cover the losses of relevant parties, the
relevant parties shall be entitled to request Party B to further make compensation for their losses.
12.3 The appendices to this Contract shall have the same legal effect as this Contract.
12.4 This Contract shall be executed in nine counterparts, and each of Party A and Party B shall hold four counterparts. One
counterpart shall be kept by AAEE for record purpose, and the remaining counterparts shall be used to complete the approval or
registration procedures for the assets transaction. All counterparts shall have the same legal effect.
(Remainder intentionally left blank; signature page follows)
- 8 -
Party A (Transferor): (seal)
Anhui Jianghuai Automobile Group Co., Ltd.
Party B (Transferee): (seal)
NIO Technology (Anhui) Co., Ltd.
(Signature page without main text)
Legal Representative: (signature) or
Authorized Representative: (signature)
/s/ Authorized Representative
Domicile: No. 176, Dongliu Road, Hefei,
Anhui Province
Telephone: [***]
Fax:
Email:
Unified Social Credit Code:
913400007117750489
Bank Account No.: [***]
Legal Representative: (signature) or
Authorized Representative: (signature)
/s/ Authorized Representative
Domicile: Building F, Hengchuang
Intelligent Technology Park, No. 3963,
Susong Road, Economic and Technological
Development Zone, Hefei, Anhui Province
Telephone: [***]
Fax:
Email:
Unified Social Credit Code:
91340111MA2W48B2X6
Bank Account No.: [***]
Account Opening Bank: Industrial and
Commercial Bank of China, Hefei
Wangjiang Road Sub-branch
Account Opening Bank: Bank of China
Limited, Hefei Economic and Technological
Development Zone Sub-branch
Signing Date: December 5, 2023
Signing Date: December 5, 2023
Signing Place: Hefei City, Anhui Province
Transaction Organizer: Anhui Assets and Equity Exchange Co., Ltd.
Date of Witness: December 5, 2023
- 1 -
THE SYMBOL “[***]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED
FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii) IS THE TYPE THAT THE REGISTRANT
TREATS AS PRIVATE OR CONFIDENTIAL
Assets Transaction Agreement for the Project of Transfer of Inventories,
Fixed Assets and Construction Works in Progress of No. 3 Plant of Anhui
Jianghuai Automobile Group Co., Ltd. Passenger Car Company
Notice for Use of the Contract
VII.
This Contract is a model text formulated in accordance with the Civil Code of the People’s Republic of China, the
Measures for the Supervision and Administration of the Trading of State-owned Assets of Enterprises (Order No. 32 of the State-owned
Assets Supervision and Administration Commission of the State Council and the Ministry of Finance) and other relevant laws and
regulations governing the trading of state-owned assets of enterprises.
VIII.
All the terms hereof are exemplary. The parties to this Contract can amend, adjust or supplement this Contract in light
of the actualities. Anhui Assets and Equity Exchange Co., Ltd. (“AAEE”), as the provider of this model contract, shall take no legal
responsibility therefor.
IX.
To better protect the rights and interests of both parties hereto, the parties hereto shall exercise caution in entering into
this Contract and shall endeavor to make the terms and conditions hereof specific and meticulous. Where the specific transaction does
not concern any circumstance set out in any provision hereof, such provision shall be marked with “this provision does not relate
to this Contract”.
X.
Assets Transaction Fees: means the service charges payable to AAEE by a transferor or transferee of a trading
of state-owned assets of enterprises at AAEE in accordance with the requirements of the administration of commodity prices or
other relevant requirements.
XI.
The materials relating to the text of this Contract shall be set out in the appendix to this Contract.
XII.
AAEE solemnly declares that this sample contract is only for use at their election by the parties to the assets transaction
at AAEE in light of the actualities. AAEE shall not be under any guarantee obligation required in connection with the preparation
and provision of this sample contract, including but not limited to the guarantee for the completeness of the terms and conditions
of this sample contract, the authenticity of the purposes of the parties to the transaction entering into this Contract, the eligibility
of the parties to the transaction as signatories, the truthfulness and accuracy of the representations and covenants made, and the
documents and information provided, by the parties to the transaction for the execution of this Contract, and all other relevant
guarantee liabilities.
- 1 -
Party A (Transferor): Anhui Jianghuai Automobile Group Co., Ltd.
Party B (Transferee): NIO Technology (Anhui) Co., Ltd.
In accordance with the Civil Code of the People’s Republic of China and the relevant laws, regulations and policies governing
the trading of state-owned assets of enterprises, Party A and Party B have, in adherence to the principles of voluntariness, equality,
fairness and good faith, and upon public listing, agreed on matters relating to the transfer of the inventories, fixed assets and construction
works in progress of No. 3 Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company, and enter into this transaction
contract (this “Contract”) as follows:
Article 1
Transferred Assets
1.1 Transferred Assets: inventories, fixed assets and construction works in progress of No. 3 Plant of Anhui Jianghuai
Automobile Group Co., Ltd. Passenger Car Company
1.2 Party A has entrusted Zhonghua Certified Public Accountants LLP (Special General Partnership) Anhui Branch and Anhui
Zhonglian Guoxin Assets Appraisal Co., Ltd. with the audit and appraisal of the transferred assets in detail, and Party B acknowledges
the audit and appraisal. The auditor and the appraisal firm have issued the Special Audit Report on the Assets to be Transferred by
Anhui Jianghuai Automobile Group Co., Ltd. (Zhong Hui Zi (2023) No. [***]) and the Asset Appraisal Report on the Project of
Appraisal of the Value of the Inventories, Fixed Assets and Construction Works in Progress of No. 3 Plant of Passenger Car Company
Involved in the Assets to be Transferred by Anhui Jianghuai Automobile Group Co., Ltd. (Wan Zhong Lian Guo Xin Ping Bao Zi (2023)
No. [***]) (the “Appraisal Report”); the details of the transferred assets are as set forth in the list of assets (attached hereto as Appendix
1).
1.3 Except for the matters already disclosed by Party A to Party B, there is no matter undisclosed or omitted in the asset
appraisal report or audit report that may affect the appraisal result or have material adverse effect on the determination of the value of the
transferred assets.
Article 2
Transfer Price
2.1 Party A and Party B agree that the transfer price of the transferred assets shall be the price resulting from the public listing
on AAEE of the transferred assets in the amount of RMB[***] (exclusive of VAT) [in letters: Renminbi [***]).
2.2 The deposit in the amount of RMB[***] paid by Party B to AAEE shall become a part of the transfer price after this
Contract becomes effective.
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Article 3
Payment Method for Transfer Price
3.1 The Parties agree to pay the transfer price specified in Article 2.1 hereof to the account designated by AAEE by the
following method within 5 business days from the effective date of this Contract:
Lump-sum Payment Method: Party B agrees to pay the balance of the transfer price in the amount of RMB[***] (balance of the
transfer price = transfer price of RMB[***] - deposit of RMB[***]) to the account designated by AAEE within 5 business days from the
effective date of this Contract.
3.2 Party B shall be deemed to have performed its payment obligation specified herein after Party B has paid the full amount of
the transaction price to the account designated by AAEE and has paid all taxes to the account designated by Party A. Within 5 business
days after Party B has fully paid the transfer price, AAEE will transfer the full amount of the transfer price to the account designated by
Party A, to which Party B must respond without raising any objection.
Article 4
Closing of Assets and Assumption of Taxes
4.1 Party B has fully understood and acknowledged the status of and the agreements on the transferred assets, and voluntarily
accepts the current status of the transferred assets in its entirety and the defects disclosed in the Announcement on Transfer of
Inventories, Fixed Assets and Construction Works in Progress of No. 3 Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger
Car Company (the “Transfer Announcement”), and is willing to bear all liabilities and risks.
4.2 After handover of the transferred assets by Party A to Party B, Party A warrants that it will render necessary assistance to
Party B to complete the required approvals and amendments (including but not limited to change in the special equipment verification
certificate, change in the relevant certificates for imported (duty-free) equipment) by and with relevant competent governmental
authorities to which the transfer of the transferred assets hereunder may relate.
4.3 Party A shall, within 4 months following the Assets Closing Date, hand over the data and archives concerning the
transferred assets to Party B.
4.4 The specific date of the closing by the Parties of the transferred assets shall be determined by the Parties through negotiation
(the day on which the Parties complete the handover of the assets shall be the “Assets Closing Date”). Party A and Party B shall sign for
confirmation the Handover Checklist of Transferred Assets on the Assets Closing Date. The relevant expenses (i.e., water, electricity,
property, sanitation and other relevant charges) incurred in connection with the transferred assets, and the risks of damage to and loss of,
responsibilities for the management of, and proceeds derived from, the transferred assets, from the date on which this Contract becomes
effective and Party B has fully paid the transfer price and the VAT (i.e., the VAT on the transfer price under the Project), shall be borne or
enjoyed by the Transferee.
- 3 -
4.5 The type, quantity and status of the transferred assets to be delivered shall be in their “as-is” condition at the time of
delivery. Party B shall not raise any objection to the transferred assets after the acquisition thereof.
4.6 The overall layout, planning, operations and relevant existing facilities and equipment within the area where the transferred
assets are located shall be in their “as-is” condition at the time of delivery, and Party B shall not raise any objection to the transferred
assets after the acquisition thereof.
4.7 Party B shall inform itself about, and check against, other conditions including but not limited to the requirements of the
relevant competent authorities of the locality of the transferred assets on the transfer of ownership and use of the transferred assets. If the
transfer of ownership of, or amendment or other formalities for, the transferred assets fail to be completed due to any reason attributable
to Party B, or the transferred assets fail to be used as expected, Party B shall solely bear all consequences arising therefrom, including
costs, risks and losses.
4.8 Party B shall, in respect of its qualifications, comply with local policies and regulations on the qualifications for purchase of
the transferred assets, and shall check its own qualifications against the relevant regulations and requirements, consult professionals,
relevant parties and regulatory authorities, and solely bear all consequences arising therefrom, including but not limited to costs, risks
and losses.
4.9 The appraised price, listed price and transaction price of the transferred assets are all exclusive of tax. After completion of
the transaction, Party A (or a branch company of Party A) shall issue a VAT invoice to Party B in accordance with the tax law of the
PRC, and the VAT (i.e., the VAT on the transfer price under the Project) shall be borne by Party B. Party B shall transfer the relevant
VAT amount to the account designated by Party A while paying the transfer price.
4.10 During the transition period from the date of this Contract to the Assets Closing Date, Party A shall properly use the
transferred assets and shall not perform any act that would infringe upon the legitimate rights and interests of Party B (including but not
limited to transfer, mortgage, pledge, lease and other disposal of the transferred assets). Given that there are physical items used for the
manufacture such as spare parts in the transferred assets, in the event of any consumption of the spare parts or other physical items from
the appraisal reference date to the Assets Closing Date, Party A shall compensate Party B at the appraised price of the items actually
consumed (the price of the spare parts and other physical items shall not be adjusted based on the result of the public listing) which is
provided in the Asset Appraisal Report on the Project of Appraisal of the Value of the Inventories, Fixed Assets and Construction Works
in Progress of No. 3 Plant of Passenger Car Company Involved in the Assets to be Transferred by Anhui Jianghuai Automobile Group
Co., Ltd. [Wan Zhong Lian Guo Xin Ping Bao Zi (2023) No. [***]].
4.11 The outstanding construction payment (the “Final Payment”) payable for the construction works in progress in the
transferred assets has been included in the listed price of the transferred assets hereunder, and such Final Payment shall be paid by Party
A to the construction contractor.
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4.12 As the audit of the final project accounts of the fixed assets recognized from construction works in progress and the
construction works in progress in the transferred assets has not been completed, if there is any compensation for expenses other than
those specified in the construction contract, or any loss or indemnification caused by any change of project quantity, Party A shall be
responsible for the relevant project endorsements (including all endorsements completed and not completed before and after the appraisal
reference date) and the final accounts audit, and Party B shall cooperate in this regard. Party A shall provide Party B with the documents
of the aforesaid final accounts audit, pursuant to which, in respect of sums, etc., the construction and other relevant payments and
relevant liabilities arising from the endorsements before and after the appraisal reference date shall be paid by Party B to Party A, and
Party B shall be responsible for the services fees for final accounts audit (including service fees for audit of final accounts of construction
works in progress) paid by Party A.
4.13 The project endorsement fees and the service fees for final accounts audit mentioned in Article 4.12 above shall be paid by
Party B to Party A within 10 business days after delivery by Party A to Party B of the aforesaid documents of final accounts audit and the
invoices issued in accordance with laws and regulations.
4.14 Except that the amount of tax stated in the VAT invoice for the transfer price under the Project issued by the Transferor to
the Transferee shall be borne by Party B, the Parties shall each pay VAT and its surcharges, stamp duty and all other taxes incurred in
connection with the transfer of the transferred assets respectively in accordance with the law. If no laws or regulations provide for the
payer of such taxes, and the Parties have not agreed on the payer either, the Parties shall jointly bear such taxes in equal proportion,
unless otherwise agreed by the Parties.
4.15 Party A shall be responsible for the outstanding quality assurance and repair and maintenance relating to the transferred
assets after the date of this Contract.
4.16 The transferred assets are currently used for the manufacturing of new energy vehicles, and Party B shall cooperate with
Party A in completing the subsequent construction, inspection and acceptance of the Project, and in performing relevant contractual
obligations. If it intends to continue to use the transferred assets for the original purposes, Party B shall inform itself about, and check
against, the requirements including but not limited to project investment filing and licensing requirements under the law, national
industry policies of China and the layout requirements on automobile industry in Anhui Province.
4.17 In accordance with Article 21 of the Measures for the Administration of Automobile Sales which provides that “A supplier
shall announce to the public in a timely manner the model of which the production or sale has been discontinued, and shall guarantee the
supply of parts and relevant after-sales services for at least 10 years thereafter”, Party B undertakes and warrants that it will continuously
supply the relevant models manufactured currently in relation to the transferred assets, and guarantees a continuous and sufficient supply
of after-sales parts of the relevant models for after-sales services and maintenance within 10 years after the cessation of the production or
sale of those models.
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Article 5
Assets Transaction Fees
All Assets Transaction Fees arising from the transactions contemplated hereunder shall be borne by Party B according to the
agreements of the Parties.
Article 6
Representations and Warranties of Party A
6.1 Party A warrants that it has the full right to dispose of the transferred assets hereunder, that the ownership of the transferred
assets is clear, that the transferred assets have not been sealed up by judicial authorities or been subject to other compulsory measures,
and that the transfer of the transferred assets is not prohibited or restricted by laws. All material defects in the transferred assets and
Party A’s rights therein or other major matters which may affect the determination of the value of the transferred assets have been
disclosed by Party A to Party B, and Party A undertakes that all risks and liabilities arising from such defects shall be solely borne by
Party A.
6.2 Party A warrants that all materials (including originals and copies) provided and all statements of facts made by it to Party B
and AAEE for the purpose of entering into this Contract are true, accurate, complete and valid, and do not contain any false document or
material omission. Party A shall be responsible for the consistency between the materials provided by it and the actual conditions of the
transferred assets, and shall bear all legal liabilities arising from any concealment or false statement in such materials.
6.3 Party A warrants that all procedures necessary for its execution of this Contract (including but not limited to internal
decisions, authorizations and approvals) have been legally and validly obtained by it, and all the conditions precedent to the formation of
this Contract and the transfer of the transferred assets by it have been satisfied.
Article 7
Representations and Warranties of Party B
7.1 Party B is a legal person in legal and valid existence, and has independent legal personality and the ability to assume civil
liabilities independently; it is in a good financial position, and has good payment ability and commercial credit; the transaction funds are
from legal sources and it is in compliance with the eligibility requirements on transferee under laws, regulations and the Transfer
Announcement of the Project.
7.2 Party B warrants that all materials (including originals and copies) provided and all statements of facts made by it to Party A
and AAEE for the purpose of entering into this Contract are true, accurate, complete and valid.
7.3 Party B warrants that all procedures necessary for its execution of this Contract (including but not limited to internal
decisions, authorizations and approvals) have been legally and validly obtained by it, and all the conditions precedent to the formation of
this Contract and the transfer of the transferred assets to it have been satisfied.
7.4 Party B has completed a site inspection of the transferred assets, has carefully read, fully understood and fully accepted all
the contents and requirements of the Announcement on Transfer of Inventories, Fixed Assets and Construction Works in Progress of No.
3 Plant
- 6 -
of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company, voluntarily and entirely accepts the current status and
disclosed defects of the transferred assets, and is willing to bear all liabilities and risks.
7.5 With respect to the approvals or filings required for the assets transaction, including those relating to the examination of
eligibility of parties to the transaction, antitrust clearance, concession, use right to allocated state-owned land, exploration right and
mining right, Party B has understood the provisions of relevant laws and administrative regulations and regulatory requirements, has
determined on its own that it is eligible to act as the transferee to this assets transfer project in accordance with such provisions and
regulatory requirements and upon consultation with professionals, relevant parties and regulatory authorities, and shall solely bear all
consequences arising therefrom, including expenses, risks and losses.
7.6 Party B’s acceptance of the confirmation of its eligibility by Party A and AAEE does not imply that Party B’s eligibility has
complied with the provisions of relevant laws and administrative regulations and regulatory requirements. The final determination of
Party B’s eligibility to act as transferee to the Project shall be subject to the examination opinions of relevant regulatory authorities.
7.7 Other undertakings required to be made by Party B in the Announcement on Transfer of Inventories, Fixed Assets and
Construction Works in Progress of No. 3 Plant of Anhui Jianghuai Automobile Group Co., Ltd. Passenger Car Company.
Article 8
Notices and Delivery
All notices, demands and other communications required by this Contract shall generally be sent by courier, text message or
email. A notice shall be deemed to have been duly delivered three business days after sending if sent by courier, or when the text
message is sent by the sender to the correct mobile phone number of the other party (to the extent such message is not returned by the
operator) if sent by text message, or when the email is sent by the sender to the correct email address of the other party (to the extent the
email is not returned by the system) if sent by email. Notices shall be sent to the domicile, contact details or email address of the parties
set forth on the signature page to this Contract.
Article 9
Liability for Breach of Contract
9.1 If Party B delays in paying the transfer price, Party B shall pay liquidated damages to Party A in an amount equal to 5‰ of
the overdue amount of purchase price for each day of delay. If Party B fails to make full payment of the transfer price within 30 days of
the receipt of a reminder of late payment, Party A shall be entitled to terminate this Contract, request Party B to bear its liability for
breach by paying 30% of the transfer price under this Contract, and request Party B to compensate Party A for its losses.
9.2 If either Party delays in cooperating with the other Party in closing the assets transaction or delivering the assets, the
breaching Party shall pay liquidated damages to the non-breaching Party in an amount equal to 5‰ of the transfer price for each day of
delay. If the breaching Party fails to cooperate with the non-breaching Party in closing the assets
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transaction within 30 days of the receipt of a reminder, the non-breaching Party shall be entitled to terminate this Contract and request the
breaching Party to compensate the non-breaching Party for its losses.
9.3 If either Party hereto breaches any obligation or responsibility set forth in this Contract, which causes any loss to the other
Party, the breaching Party shall be liable to compensate the non-breaching Party; if the purposes of this Contract cannot be effected due
to any material adverse effect of the breaching Party’s breach on the transferred assets or the transferor, the non-breaching Party shall be
entitled to terminate this Contract and request the breaching Party to compensate the non-breaching Party for its losses.
Article 10
Modification and Termination of Contract
10.1 This Contract may be modified in writing upon mutual agreement of the Parties; provided that such modification shall not
violate the provisions of the laws of the PRC and the Transfer Announcement.
10.2 This Contract may be modified or terminated by either Party if:
(1) the Parties agree to terminate this Contract in writing upon mutual agreement due to any change in the circumstances,
without prejudice to the national or social public interests;
(2) the conditions to termination by operation of law as provided for in the Civil Code of the People’s Republic of China
are satisfied;
(3) any of the circumstances set forth in this Contract where this Contract shall be modified or terminated occurs.
10.3 Either Party that terminates this Contract in accordance with Article 10.2 shall notify the other Party in writing.
10.4 In the event of any termination or modification of the main provisions of this Contract, Party A and Party B shall also
notify AAEE in writing of the termination or modification of this Contract. If the modification or termination of this Contract involves
any amount temporarily kept in the fund settlement account of AAEE, a written application for the transfer of such amount shall be
submitted to AAEE, and AAEE shall have the right to deduct the Assets Transaction Fees payable by the breaching Party directly from
such amount.
Article 11
Jurisdiction and Dispute Resolution
11.1 All actions under this Contract shall be governed by the laws of the People’s Republic of China.
11.2 Any dispute arising from the performance of this Contract by the Parties hereto shall be resolved by the Parties through
negotiation; if no agreement can be reached through negotiation, such dispute shall be resolved in accordance with (2) below:
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(1) the dispute shall be referred to arbitration administered by the Hefei Arbitration Commission;
(2) a lawsuit shall be filed to the people’s court of competent jurisdiction in the place where the transferred assets are
located.
Article 12
Miscellaneous
12.1 In respect of any matter not mentioned herein, a written supplementary agreement may be entered into by the Parties upon
mutual agreement which shall have the same legal effect as this Contract; provided that such supplementary agreement shall not violate
the provisions of the laws of the PRC and the Transfer Announcement.
12.2 This Contract shall take effect as of the date when it is signed and affixed with the seals of Party A and Party B and affixed
with the seal of AAEE, unless the effectiveness of this Contract is subject to approval or filing under laws and administrative regulations.
If any administrative approval is required for the assets transaction, including those relating to examination of eligibility of parties to the
transaction and antitrust clearance, the effectiveness of this Assets Transaction Agreement shall not be affected. If Party B fails to obtain
the approval or filing within a reasonable time limit, Party A shall be entitled to terminate this Contract and otherwise dispose of the
transferred assets. The deposit or transfer price paid by Party B, net of the Assets Transaction Fees payable to AAEE, shall be paid to
Party A and relevant parties as compensation. If such amount of compensation is not sufficient to cover the losses of relevant parties, the
relevant parties shall be entitled to request Party B to further make compensation for their losses.
12.3 The appendices to this Contract shall have the same legal effect as this Contract.
12.4 This Contract shall be executed in nine counterparts, and each of Party A and Party B shall hold four counterparts. One
counterpart shall be kept by AAEE for record purpose, and the remaining counterparts shall be used to complete the approval or
registration procedures for the assets transaction. All counterparts shall have the same legal effect.
(Remainder intentionally left blank; signature page follows)
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Party A (Transferor): (seal)
Anhui Jianghuai Automobile Group Co., Ltd.
Party B (Transferee): (seal)
NIO Technology (Anhui) Co., Ltd.
(Signature page without main text)
Legal Representative: (signature) or
Authorized Representative: (signature)
/s/ Authorized Representative
Domicile: No. 176, Dongliu Road, Hefei,
Anhui Province
Telephone: [***]
Fax:
Email:
Unified Social Credit Code:
913400007117750489
Bank Account No.: [***]
Legal Representative: (signature) or
Authorized Representative: (signature)
/s/ Authorized Representative
Domicile: Building F, Hengchuang
Intelligent Technology Park, No. 3963,
Susong Road, Economic and Technological
Development Zone, Hefei, Anhui Province
Telephone: [***]
Fax:
Email:
Unified Social Credit Code:
91340111MA2W48B2X6
Bank Account No.: [***]
Account Opening Bank: Industrial and
Commercial Bank of China, Hefei
Wangjiang Road Sub-branch
Account Opening Bank: Bank of China
Limited, Hefei Economic and Technological
Development Zone Sub-branch
Signing Date: December 5, 2023
Signing Date: December 5, 2023
- 10 -
Signing Place: Hefei City, Anhui Province
Transaction Organizer: Anhui Assets and Equity Exchange Co., Ltd.
Date of Witness: December 5, 2023
- 11 -
THE SYMBOL “[***]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED
FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii) IS THE TYPE THAT THE REGISTRANT
TREATS AS PRIVATE OR CONFIDENTIAL
Exhibit 4.48
TECHNOLOGY LICENCE AGREEMENT
This TECHNOLOGY LICENCE AGREEMENT (hereinafter referred to as this “Agreement”) is entered into as of
February 26, 2024 (“Effective Date”) by and between the following parties:
NIO Technology (Anhui) Co., Ltd., a company incorporated under the laws of the People’s Republic of China and having
its registered address at Building F, Hengchuang Intelligent Technology Park, No. 3963, Susong Road, Economic and
Technological Development Zone, Hefei City, Anhui Province, PRC (hereinafter referred to as “NIO”); and
Forseven Limited, a company incorporated under the laws of England and Wales and having its registered address at Suite
1, 7th Floor 50 Broadway, London, United Kingdom, SW1H 0DB (hereinafter referred to as “LICENSEE”).
NIO and LICENSEE shall hereinafter be referred to collectively as the “Parties” and individually as a “Party”.
WHEREAS, NIO owns or controls Licensed Technologies (as defined below) in connection with NIO’s or its Affiliates’
electric vehicle platforms (the “SEV Platforms”) technologies.
WHEREAS, LICENSEE desires to research and develop, manufacture, sell, offer to sell, import and export the Licensed
Product(s) (as defined below) and provide or procure the Associated Services (as defined below), and desires to obtain
authorisation from NIO to use the Licensed Technologies solely for the Licensed Purpose (as defined below).
WHEREAS, the Technology Licence Fees will relate to sales of Licensed Products inside China and outside of China.
NOW, THEREFORE, the Parties agree as follows regarding the licence of the technology:
1.
1.1
DEFINITIONS AND INTERPRETATION
“Additional Deliverables” means any deliverables or other Materials that NIO provides to LICENSEE under or in
relation to this Agreement (including Modifications and New Versions which have been provided to LICENSEE),
excluding the Initial Deliverables.
1
1.2
1.3
“Affiliate” means in relation to a Party or any other entity, any person or entity that directly or indirectly Controls, is
Controlled by, or is under common Control with, that Party or entity.
“Applicable Law” means, in relation to any person or matter, any and all applicable laws, legislation, statutes,
treaties, by-laws, regulations, rules, policies, ordinances, and codes, and any and all applicable notifications, orders,
notices, awards, injunctions, judgments, directions, determinations, requirements, decrees and undertakings of any
governmental, trade, administrative, statutory or regulatory body, agency, commission, authority or department or any
court, tribunal, arbitral or judicial body, in each case, anywhere in the world, in force and as amended or modified
from time to time and to which such person (or such person's business(es) or operation(s)) or such matter is subject.
1.4
“Associated Services” mean:
1.4.1
1.4.2
after-sales services for the Licensed Product(s) provided by LICENSEE (or its Affiliates) to consumers, such
as providing maintenance and repair services, maintenance instructions or replacement parts (“After-Sales
Services”);
technical services provided by NIO (“Technical Services”) under the Standard Technical Services
Framework Agreement entered into on or around the date of this Agreement by the Parties (or their
Affiliates) (together with its relevant ancillary agreements and corresponding orders, “Standard Technical
Services Framework Agreement”). During the provision of Technical Services, deliverables provided by
NIO may contain certain Background Intellectual Property Rights (which shall have the same meaning as in
the Standard Technical Services Framework Agreement) owned or controlled by NIO. LICENSEE may have
the right to use such Background Intellectual Property Rights, to the extent necessary, on terms and
conditions as stipulated in the Standard Technical Services Framework Agreement.
“Business Days” means any day other than Saturdays and Sundays on which the banks in Shanghai and London are
open for business.
“Claim” any claim, action, proceeding or investigation of any nature or kind.
“Claims Procedure” means the procedure set out in Annex IV.
“Control” means, in relation to a person or entity:
1.5
1.6
1.7
1.8
2
(i)
(ii)
(iii)
the direct or indirect beneficial ownership of, or the right to exercise, directly or indirectly, more than fifty
per cent. (50%) of the voting rights attributable to the shares or other equity securities of such person or
entity;
the right to, directly or indirectly, elect or control a majority of the board of directors or equivalent body
governing the affairs of such person or entity; or
the power to, directly or indirectly, direct or cause the direction of the management or policies of such person
or entity,
and “Controlling” and “Controlled” shall be construed accordingly.
1.9
“Core Technologies” means those Licensed Technologies specifically identified as “Core Technologies” in Annex I.
1.10 “Cyber Security Requirements” means the requirements set out in Annex III.
1.11 “Deliverables” means the Initial Deliverables and any Additional Deliverables.
1.12 “Endorsement Letter” has the meaning given in Section 4.4.2.
1.13 “Improvement” means any discovery, enhancement, improvement, invention, addition, amplification, modification,
derivative technology, or alterations related to the Licensed Technologies (whether patentable or not) developed by or
on behalf of LICENSEE or its Affiliate(s) or developed by a Third Party for LICENSEE or its Affiliate(s).
1.14 “Initial Deliverables” means those Materials specified in Annex I as at the Effective Date.
1.15 “Initial Upfront Payment” has the meaning given in Annex X.
1.16 “Intellectual Property Rights” means any and all worldwide intellectual property rights, whether arising under law
or agreement and whether registered or unregistered, including (i) patents, rights to inventions, copyrights, design
rights, database rights, and rights to protect and use confidential information (including know-how and trade secrets);
(ii) any rights similar to the foregoing; and (iii) all applications, divisions, renewals and extensions of the foregoing.
For the avoidance of doubt, the Intellectual Property Rights referred to in this Agreement do not include trade marks,
rights in get-up and trade dress, goodwill or the right to sue for passing off or unfair competition.
3
1.17 “IPR Claim” means any Claim brought by a Third Party that the provision or Use by the LICENSEE or any SUB-
LICENSEE of the Licensed Technology in accordance with the terms of this Agreement infringes the Intellectual
Property Rights of such Third Party.
1.18 “Know-How” means trade secrets and any other technical, practical or other knowledge, techniques, methods and
other information (whether or not patentable or protected as a trade secret or as confidential information), in the SEV
Platforms.
1.19 “Licence Term” has the meaning given in Section 5.3.
1.20 “Licensed Patents” means any Patents held by NIO (or any of its Affiliates) during the Licence Term which claim all
or part of the SEV Platform, or use thereof.
1.21 “Licensed Product” has the meaning given in Section 4.5.
1.22 “Licensed Purpose” means: (i) the research and development, manufacture, sale, offering to sell, import and export of
the Licensed Product(s); and (ii) to provide or procure the provision of Associated Services.
1.23 “Licensed Software” means the Software forming part of the Licensed Technologies, including as specified in Annex
I.
1.24 “Licensed Technologies” means: (i) the technical information, technical solutions, and Software relating to or
comprised within the SEV Platforms that have passed the Pre-Production Gate and are in existence as at the Effective
Date or that come into existence [***], including the Deliverables, any Part-Developed Technologies and, in respect
of the forgoing, any Modifications and New Versions; and (ii) any Intellectual Property Rights subsisting in or related
to any of the forgoing, including the Know-How and the Licensed Patents, in each case excluding Third-Party
Intellectual Property Rights.
1.25 “Loss” means any loss, expense, fine, penalty, award, damages or cost.
1.26 “Materials” means any document, methodology or process, documentation, data or other material in whatever form,
including any reports, business rules or requirements, user manuals, user guides, operations manuals, training
materials and instructions, but excluding Software.
1.27 “Modification” means any amendment, change, patch, bug fix, upgrade, modification, enhancement, replacement or
addition made to the Deliverables by or on behalf of NIO or any NIO Affiliate, independently of providing any
services to LICENSEE under any
4
Standard Technical Services Framework Agreement, prior to the tenth anniversary of the Effective Date.
1.28 “New Version” means any new versions of the SEV Platforms, released by NIO prior to the tenth anniversary of the
Effective Date. As at the Effective Date, versions of the SEV Platform are designated by the prefix “NT” and then a
version number, with the current version of the SEV Platform being NT3 so that (for example) NT4 would be a New
Version.
1.29 “OEM” means a company that owns one or more automotive brands and sells vehicles under such brand(s) to any
market, including those entities listed in Annex VIII (for so long as they fall under the foregoing description).
1.30 “Open Source Software” means any Software which is licensed under any form of open-source licence meeting the
Open Source Initiative's open source definition from time to time.
1.31 “Patent” means any patent, including but not limited to any patent application, granted patent, continuation,
continuation-in part or division based on the patent application.
1.32 “Part Developed Technologies” means the technical information, technical solutions, and Licensed Software relating
to or comprised within the SEV Platforms, which have not passed the Pre-Production Gate, but which are identified as
being Part Developed Technologies in Annex 1.
1.33 "Permitted Entity” means any person or entity that is listed in Annex IX (as agreed by the Parties from time-to-time,
following the provision by LICENSEE to NIO of details of the proposed Licensed Technologies to be sublicensed and
the scope of such sublicence).
1.34 “Pre-Production Gate” means, in the context of ‘passing’ the Pre-Production Gate, the occurrence of both: (i) the
completion of engineering sign-off for all relevant parts and systems; and (ii) product scalable PPAP (including
interim PPAP) meeting requirements to begin user delivery.
1.35 “Prohibited Sublicensee” means any person or entity that is listed in Annex V.
1.36 “Project” has the meaning given in Section 2.
1.37 “Quarter” means a calendar quarter.
1.38 “SEV Platforms” has the meaning given in the Recitals.
5
1.39 “Software” means any software or computer program or code (in object code form), program interfaces and any tools
or object libraries embedded in any software.
1.40 “Specific Supplier” means: (i) an Affiliate of the LICENSEE; or (ii) Third Party supplier, in each case that provides
research and development, assembly and/or manufacturing services and/or engineering, maintenance or repair
services, and/or distribution, sales, import and export services, for the Licensed Products and/or any components of
the Licensed Product(s) under the sole instruction of LICENSEE to facilitate LICENSEE to achieve the Licensed
Purpose.
1.41 “SUB-LICENSEE” means a Specific Supplier to whom LICENSEE has granted a sublicense of the rights in the
Licensed Technologies granted to it under this Agreement in accordance with Section 5.4, which shall include any
Specific Suppliers to which LICENSEE provides NIO’s Intellectual Property Rights or Confidential Information
(whether or not such Specific Supplier has separately received such Intellectual Property Rights or Confidential
Information from NIO).
1.42 “Supplier Confirmation” has the meaning given in Section 4.4.1.
1.43 “Standard Essential Patent” means any Patent necessary for the compliance and implementation of a technical
standard, including but not limited to Patents related to standard technologies of wireless communication (including
but not limited to 2G, 3G, 4G, and 5G cellular communications), audio and/or video encoders and decoders, wireless
charging, semiconductor devices, and CAN bus communication involved in whole vehicle.
1.44 “Technology License Fees” has the meaning given to it in Annex X.
1.45 “Third Party” means entities other than NIO, NIO’s Affiliate(s), LICENSEE’s Affiliate(s), and LICENSEE.
1.46 “Third-Party Intellectual Property Rights” means Intellectual Property Rights related to the Licensed Technologies
that are owned or controlled by a Third Party. This includes the Standard Essential Patents and open source software
involved in the implementation of the Licensed Technologies, any Intellectual Property Rights related to the
manufacture of components provided by NIO’s direct or indirect suppliers in connection with Licensed Technologies
that are owned or controlled by NIO’s existing direct or indirect suppliers, and other Third-Party Intellectual Property
Rights involved in the process of
6
implementing the Licensed Technologies that are currently known to NIO (specified in Annex II of this Agreement).
1.47 “Upfront Payments” has the meaning given to it in Annex X;
1.48 “Use” means to load, execute, store, transmit, display, copy, modify, develop, adapt, configure, incorporate or
implement, in each case within or in respect of any Licensed Product only and in respect of: (i) Licensed Software,
subject to the restrictions in Section 5.2, and (ii) other Licensed Technologies, subject to the restrictions set out in Part
B of Annex I.
1.49 “VAT” means value added tax charged or imposed pursuant to the UK Value Added Tax Act 1994 and any related
secondary legislation, and any other value added, goods and services, sales, turnover, or equivalent tax imposed in any
jurisdiction.
1.50 “VP Gateway” means when the design of the relevant Licensed Product is frozen and long-lead engineering release
has been completed for the relevant validation prototype, and the LICENSEE’s business approves the validation
prototype tooling spend.
1.51 If there is any conflict between the terms in the main body of this Agreement and:
1.51.1 Annex I, Annex II or Annex X, then Annex I, Annex II or Annex X (as applicable) shall prevail; or
2.
2.1
1.51.2 Annex III, the terms setting the highest standard shall prevail.
SCOPE OF THIS AGREEMENT
The Parties are engaged in a collaboration (the “Project”) which, amongst other things, will entail:
2.1.1
2.1.2
NIO providing and licensing the Licensed Technologies in the SEV Platforms to LICENSEE for Use in
Licensed Products in accordance with Section 5.1 and providing LICENSEE with information and
reasonable assistance to the extent necessary for LICENSEE to utilise the Licensed Technologies in
accordance with general industry practice; and
NIO’s willingness to provide LICENSEE with opportunities to acquire relevant hardware for use in the SEV
Platforms in the Licensed Products, provided that while NIO shall use reasonable endeavours to facilitate the
LICENSEE’s engagement of suppliers of relevant hardware and take the steps set out in
7
Section 4.4 in respect of Core Technologies, NIO does not guarantee that any such suppliers will agree to
supply hardware to LICENSEE.
3.
3.1
3.2
3.3
PROVISION OF THE LICENSED TECHNOLOGY
Initial Deliverables
The Parties acknowledge that, as at the Effective Date, the Parties intend for Annex I to reflect the Parties’
understanding of the Initial Deliverables, after which Annex I may only be updated by the Parties’ mutual written
agreement.
Subject to Section 3.10, NIO shall provide the Initial Deliverables from the Effective Date in accordance with the
timetable set out in Annex I.
Following receipt of any Deliverables from NIO, LICENSEE shall be entitled to evaluate the completeness of the
Deliverables. If the LICENSEE, acting reasonably and in good faith, believes that the Deliverables provided are
insufficient to enable LICENSEE to use the relevant part of the SEV Platform to which they relate in a Licensed
Product, without the need for material additional information or assistance from NIO (an “Insufficiency”), it shall
notify NIO accordingly.
3.4
If LICENSEE notifies NIO of any Insufficiency under Section 3.3:
3.4.1
3.4.2
LICENSEE shall provide NIO with details of such Insufficiency (including any Materials which LICENSEE
reasonably believes may have been missing from the relevant Deliverable(s) which would resolve the
Insufficiency); and
provided that NIO has in its possession any information and/or Materials which would assist in resolving the
Insufficiency, and NIO is not precluded from sharing such information and/or materials with LICENSEE
(whether under the terms of any license, Applicable Law, or otherwise), NIO shall provide such Materials
and/or information to LICENSEE.
3.5
For the avoidance of doubt:
3.5.1
NIO shall not be required to create new Materials in order to comply with its obligations under Section 3.4
(except as may be required to comply with Section 3.11 (Form of Deliverables));
8
3.5.2
3.5.3
this Section 3.5 shall be without prejudice to NIO’s obligations to provide Modifications and New Versions
to LICENSEE under Section 3.7; and
upon sharing Deliverables as set out in this Agreement that comprise a ‘major release’ of the SEV Platforms
(e.g. 1.0, 2.0, 3.0) to the dedicated recipient account via the NIO Data Exchange Platform, NIO will be
deemed to have completed its ‘major’ obligation of providing and licensing the Licensed Technologies in
such Deliverables to the LICENSEE, except that this shall not extinguish NIO’s ‘minor’ obligations in
respect of such Deliverables as set forth in Sections 3.2, 3.3, 3.4, 3.7, and 3.8. NIO may further provide
limited follow up Q&A to LICENSEE thereafter, if reasonably requested.
3.6
In the event that LICENSEE disputes whether NIO is in compliance with its obligation to provide Materials,
information or any Deliverables as required by this Agreement (and NIO is not entitled to withhold such Deliverables
under Section 3.10), LICENSEE shall be entitled to notify NIO in writing accordingly and, within 5 days of receiving
such notification, the Engineering Operations Director (for LICENSEE) and the Head of Product and Technology
Alliance (for NIO) shall meet to seek to resolve the dispute. If they are unable to do so, the dispute will be resolved in
accordance with Section 22 (Governing Law and Dispute Resolution).
Modifications and New Versions
3.7
Subject to Section 3.10, in the event that NIO makes any Modification to the SEV Platform, releases a New Version or
creates any new Licensed Technologies during the Licence Term, NIO shall promptly notify LICENSEE accordingly
and provide LICENSEE with such Modifications, New Versions or new Licensed Technology (including changes in or
additions to the Licensed Technology) on an “AS IS” basis.
Third Party Content
3.8
If requested by LICENSEE from time to time during the Licence Term, NIO shall promptly provide LICENSEE with
the following information (in writing) in respect of any Open Source Software incorporated into the SEV Platform, to
the extent such details are not already provided in Annex II:
3.8.1
the purpose for which the Open Source Software is used;
3.8.2
the licences applicable to the Open Source Software; and
9
3.8.3
any other information regarding the Open Source Software reasonably requested by LICENSEE.
Withholding Deliverables
3.9 On request from NIO (not more than once per Quarter), LICENSEE shall provide NIO with written confirmation that
LICENSEE is in compliance with the Cyber Security Requirements, and shall provide reasonable written evidence to
NIO supporting such confirmation of compliance at NIO’s written request. LICENSEE shall also notify NIO in
writing promptly if LICENSEE experiences a material security breach of its IT systems and/or data.
3.10 Without prejudice to its other rights and remedies, NIO will be entitled to withhold any Deliverables (including New
Versions and Modifications, and will not be in breach of its obligations to provide any such Deliverables, New
Versions or Modifications) in the event that NIO reasonably believes that LICENSEE is not in compliance with the
Cyber Security Requirements or if LICENSEE has experienced a material security breach of its IT systems and/or
data. In such circumstances:
3.10.1 NIO shall notify LICENSEE of the non-compliance or security breach, the specific details of it, and NIO’s
intention to withhold Deliverables; and
3.10.2
once the non-compliance or underlying cause of the security breach has been rectified to NIO’s reasonable
satisfaction, NIO shall promptly provide the relevant Deliverables which were being withheld.
Form of Deliverables
3.11 All Deliverables provided by NIO shall:
3.11.1
be in the English language (with the original language versions being available to LICENSEE on written
request); and
3.11.2
be in the format agreed in writing between the Parties.
3.12 To the extent there are any Third-Party Intellectual Property Rights which relate to or likely to be involved in the
process of implementing the Licensed Technologies comprised within the Deliverables:
3.12.1 NIO shall at the time of delivery of such Deliverables use reasonable endeavours to update Annex II to refer
to any such Third-Party Intellectual Property Rights;
10
3.12.2
after delivery of such Deliverables, Annex II may only be updated by the Parties in respect of Third-Party
Intellectual Property Rights relating to such Deliverables by the Parties’ written agreement (acting
reasonably), provided that, for the avoidance of doubt, NIO may update Annex II in respect of New Versions
and Modifications in accordance with Section 3.12.1.
NIO shall not be deemed to provide any warranties, representations or guarantees in respect of the completeness or
accuracy of Annex II.
4.
4.1
CO-OPERATION
The Parties shall work constructively and co-operate with each other with a view to ensuring that:
4.1.1
4.1.2
the Licensed Technology is provided in accordance with this Agreement;
LICENSEE is able to exercise the rights granted to it under Section 4.6.
4.2 Without limiting NIO’s obligations under Section 4.1, NIO shall:
4.2.1
4.2.2
provide such assistance as is reasonably requested by LICENSEE in relation to the Project; and
provide information as necessary to assist LICENSEE to utilise the SEV Platform in the Licensed Products
in accordance with general industry practice.
4.3 Notwithstanding the foregoing, NIO gives no guarantee of any form that LICENSEE can or will be able to fully
exercise or Use the Licensed Technologies or SEV Platform, even with NIO’s full performance of its obligations
hereunder.
4.4 NIO shall:
4.4.1
promptly after the Effective Date, make contact with each Third Party supplier of components incorporating
the Core Technologies (as at the Effective Date), introducing LICENSEE as a potential purchaser of such
components from such Third Party supplier and request that such Third Party Supplier provide written
confirmation of its willingness to engage in further commercial discussions with LICENSEE in respect of
the supply of such components (each such confirmation being “Supplier Confirmation”); and
4.4.2
promptly after the beginning of the Licence Term, provide LICENSEE with a letter, on NIO-headed paper,
that confirms that LICENSEE is licensed to the SEV Platform and has NIO’s endorsement to procure
relevant components from NIO’s supply chain (the “Endorsement Letter”), provided that
11
LICENSEE shall be responsible for the content of each Endorsement Letter, such content to be subject to
NIO’s express written approval (acting reasonably). However, NIO will not guarantee LICENSEE’s
successful procurement of the relevant components.
4.5
The Parties agree that LICENSEE may only use the Licensed Technologies to produce vehicle models which are sold
or marketed:
4.5.1
under one LICENSEE brand, which LICENSEE shall notify to NIO as soon as reasonably practicable, with
an MSRP of over USD $50,000 (excluding tax), provided that this shall include any region-specific
variations of such designated brand;
4.5.2
under any additional LICENSEE brand:
1) with an MSRP of over USD $100,000 (excluding tax); or
2)
provided LICENSEE has obtained NIO’s prior written consent to production of such vehicle model
under such additional LICENSEE brand, with an MSRP between USD $50,000 and USD $100,000
(excluding tax),
(each such vehicle model that incorporates all or part of the Licensed Technologies, a “Licensed Product”). For the
purpose of this Section 4.5, a LICENSEE brand includes a brand used by LICENSEE but where Intellectual Property
Rights in such brand are owned by an Affiliate of LICENSEE.
4.6
LICENSEE shall maintain Annex VII to include a list of Licensed Products that have passed the VP Gateway,
including the brands under which each such Licensed Product is (or is proposed to be) sold or marketed. LICENSEE
shall, without undue delay: (i) update Annex VII on the removal or addition of any Licensed Products or changes to
the details of any such Licensed Products; and (ii) notify NIO in writing of the same.
5.
GRANT OF LICENSE
5.1 NIO hereby grants to LICENSEE a non-exclusive, non-transferable, non-sublicensable (except as permitted under
Section 5.2.3 and 5.4), worldwide licence to Use the Licensed Technologies, during the Licence Term, on the terms
and conditions stipulated in this Agreement, for the Licensed Purpose only.
12
5.2
In relation to any Licensed Software provided by NIO under this Agreement, the licence that NIO grants to
LICENSEE under Section 5.1 with respect to the Licensed Software shall be limited by the following restraints:
5.2.1
5.2.2
5.2.3
NIO will provide Licensed Software in object code form only;
LICENSEE shall not attempt to derive or use the source code of such object code by any means, such as
decompiling, disassembling, reverse engineering, or any other means, except that for the avoidance of doubt,
LICENSEE shall be entitled to integrate and interface the Licensed Software with its own software and
systems (including in the Licensed Products), but shall not amend or modify the Licensed Software, and NIO
shall provide the LICENSEE with all applicable interface documentation which NIO has in its possession to
assist the LICENSEE in this regard; and
for the purpose of manufacturing, selling, offering to sell, importing and/or exporting the Licensed Product,
LICENSEE may reproduce, transmit and distribute the Licensed Software to Third Parties, provided that: (1)
the Licensed Software is provided in object code only; (2) the Licensed Software is provided only as part of
the Licensed Product(s); and (3) LICENSEE must enter into a licence agreement with any such Third Party
that is consistent with or provide at least the same level of protection as NIO’s Intellectual Property Rights
and Confidential Information under this Agreement.
5.3
Licence Term
The “Licence Term” starts on the date the Licensee pays the Initial Upfront Payment to NIO and, subject to early
termination in accordance with Section 11 shall continue until the following periods expire:
5.3.1
5.3.2
in respect of the Use for the purposes of research and development, manufacture, sale, offering to sell,
import and export of any Licensed Product(s), until the end of production of the Licensed Product; and
in respect of any Use for the purposes of providing After-Sales Services, until the expiration of LICENSEE’s
or any of its Affiliates’ obligation to provide or procuring the provision of After-Sales Services to its
customers.
5.4
Sublicence to Specific Suppliers: LICENSEE shall have the right to sublicense its right to Use the Licensed
Technology to Specific Suppliers, provided that:
13
5.4.1
5.4.2
5.4.3
5.4.4
5.4.5
5.4.6
5.4.7
5.4.8
LICENSEE may not grant a sublicence to any Prohibited Sublicensees;
LICENSEE may not grant a sublicence to a Specific Supplier that it is aware (having made reasonable
enquiries) is Controlled (directly or indirectly) by an OEM without NIO’s express prior written consent,
provided that this restriction shall not apply in respect of a Permitted Entity;
any sublicence granted to a Specific Supplier shall be limited to the scope necessary for such Specific
Supplier to perform research, development, assembly and/or manufacturing services in respect of the
Licensed Products or any components of the Licensed Product(s), and/or selling such components or
solution of such components to LICENSEE, in each case only to the extent required for LICENSEE to
achieve the Licensed Purpose;
any sublicence granted to a Specific Supplier that is a distributor shall be limited to the scope necessary to
fulfil the purpose of selling, offering to sell, importing and exporting of Licensed Product(s) solely for
LICENSEE to achieve the Licensed Purpose;
LICENSEE is not permitted to sublicense its right to Use Licensed Technology to manufacture components
incorporating Core Technologies to any Third Party other than suppliers designated by NIO in writing;
the exercise of such sublicensing right by LICENSEE shall be in writing and signed by LICENSEE and
SUB-LICENSEE(s) (each such sublicence agreement a “Sublicence Agreement”);
each Sublicence Agreement shall be consistent with the terms and conditions of this Agreement, and provide
protections in respect of NIO’s Intellectual Property Rights and Confidential Information that are no less
onerous than those set out in this Agreement;
LICENSEE shall promptly notify NIO in writing if it becomes aware that any SUB-LICENSEE that
provides engineering and/or technical services to LICENSEE is or has become Controlled by an OEM, and
LICENSEE shall cease engaging such SUB-LICENSEE in respect of such engineering and/or technical
services no later than the date six months after receipt of written notice from NIO;
14
5.4.9
5.4.10
5.4.11
5.4.12
LICENSEE shall promptly notify NIO in writing if it becomes aware that any SUB-LICENSEE has
committed a material breach of the terms of a relevant Sublicence Agreement which relate to the grant of the
licence, information security and/or confidentiality. Following such notice, LICENSEE shall exercise its
right to terminate a Sublicence Agreement immediately at NIO’s written request;
no SUB-LICENSEE shall be permitted to further sublicense or assign any of its rights under its Sublicence
Agreement, except as expressly authorised by NIO in writing;
no SUB-LICENSEE may use the Licensed Technology for the purposes of any other brand (other than those
identified in Annex VII (Licensed Products)) or OEM;
LICENSEE shall procure that each SUB-LICENSEE shall comply with the limitations and restrictions
imposed on LICENSEE in relation to the use of the Licensed Technology and NIO’s Confidential
Information under this Agreement, including but not limited to the Cyber Security Requirements, and any
breach thereof by any SUB-LICENSEE shall be deemed a breach hereof by LICENSEE; and
5.4.13
LICENSEE shall be liable to NIO for any breach of this Agreement (in accordance with Section 5.4.12)
arising out of the acts and omissions any such SUB-LICENSEE as if they were the LICENSEE’s own acts
and omissions.
5.5
LICENSEE shall maintain Annex VI to include a list of SUB-LICENSEEs, including the identity of each such SUB-
LICENSEE and the purpose of the relevant sublicence. LICENSEE shall, without undue delay following the grant of a
sublicence to a SUB-LICENSEE, update Annex VI to include details of such SUB-LICENSEE and notify NIO in
writing of such update.
5.6 NIO may update Annex V (Prohibited Sublicensees) from time to time if:
5.6.1
5.6.2
there is any ongoing litigation or dispute between NIO or its Affiliate and a person or entity to be included in
Annex V; or
NIO reasonably believes that there are any sanctions, compliance or other issues under Applicable Law with
such person or entity,
15
and such updated Annex V shall become binding and effective on thirty (30) days' advance written notice from NIO.
5.7
LICENSEE shall either:
5.7.1
5.7.2
if NIO: (i) provides notice to LICENSEE that the prospective Prohibited Sublicensee is engaged in a dispute
with NIO or its Affiliate in respect of NIO’s confidential information or NIO’s Intellectual Property Rights,
or (ii) updates Annex V in accordance with Section 5.6.2 above, where LICENSEE is able to do so under the
terms of the relevant Sublicence Agreement, terminate its Sublicence Agreement(s) with such prospective
Prohibited Sublicensee no later than the expiry of such thirty (30) days’ advance notice; or
otherwise, not order any further goods and/or services under the relevant Sublicence Agreement(s) and not
agree to extend the term of any such Sublicence Agreement(s), until otherwise notified in writing by NIO
that it can resume ordering such goods and/or services. If LICENSEE’s failure to order any further goods
and/or services under the relevant Sublicence Agreement would cause LICENSEE to fail to meet any
minimum order commitments under such Sublicence Agreement, LICENSEE shall: (i) only be permitted to
order the minimum amounts of goods and/or services required to fulfil such minimum order commitments;
(ii) not order any new types of goods or services under such Sublicence Agreement; and (iii) not share any
further Licensed Technologies or NIO Confidential Information with such Prohibited Sublicensee.
5.8
If NIO adds a Prohibited Sublicensee to Annex V in accordance with Section 5.6.1 and the relevant dispute ends: (i)
NIO has no obligation to remove such Prohibited Sublicensee from Annex V; and (ii) LICENSEE must terminate its
Sublicence Agreement with such Prohibited Sublicensee (if not already expired or terminated) no later than the expiry
of thirty (30) days’ advance written notice from NIO.
5.9
If LICENSEE requires the services provided by such prospective Prohibited Sublicensee, NIO shall assist LICENSEE
in identifying a replacement Specific Supplier.
5.10 The Parties acknowledge that the LICENSEE and NIO may independently develop similar improvements to the
Licensed Technologies concurrently (“Independent Improvements”), and that the Parties may independently seek to
obtain Patent rights in respect of any such Independent Improvements that that they have developed. Each Party
16
agrees not to assert any Patent it may have in any Independent Improvement against the other Party creating or
exploiting its own Independent Improvement.
6.
IPR OWNERSHIP
6.1 As between the Parties, NIO owns all the Intellectual Property Rights, titles, and other legal rights and interests in and
to any Licensed Technologies provided by NIO to LICENSEE in connection with the performance of this Agreement
(including without limitation, any documents, materials, responses, or other content containing NIO’s intellectual
property, whether provided in written or oral form). The ownership of these rights and interests shall remain
unchanged as a result of the performance of this Agreement.
6.2 Unless expressly agreed otherwise in writing between the Parties, LICENSEE will own all Intellectual Property Rights
in and relating to the Improvements.
6.3 Nothing in this Agreement will operate to transfer, assign or otherwise grant any Party any ownership right or interest
in any other Party’s Intellectual Property Rights.
7.
FEES, REPORTS AND PAYMENTS
7.1
The terms of Annex X shall apply in respect of fees, payments, reports, and tax.
8. WARRANTIES
8.1 NIO warrants and represents that it possesses legal ownership or control over the Licensed Technologies and shall
have the right to grant LICENSEE the licence to use the Licensed Technologies in accordance with Section 5.1. If
there is any change of NIO’s ownership of the Licensed Technologies (including but not limited to partial or complete
transfer of ownership), NIO warrants and represents that the licence under this Agreement remains valid for the
subsequent owners obtaining the rights pertaining to the Licensed Technologies.
For the avoidance of doubt, LICENSEE acknowledges and agrees that the process of implementing the Licensed
Technologies may involve Third-Party Intellectual Property Rights. NIO has not granted LICENSEE any rights in
respect of Third-Party Intellectual Property Rights under this Agreement and no warranty of non-infringement of
Third-Party Intellectual Property Rights is provided. It is LICENSEE’s sole responsibility to obtain any licenses of
Third-Party Intellectual Property Rights required to exercise the rights under this Agreement at LICENSEE’s own
cost.
17
8.2
8.3
8.4
The Parties acknowledge that (without prejudice to the express obligations of NIO under this Agreement or any other
agreement between the Parties) the research and development, manufacture, sale, offer to sell, import and export
(including but not limited to product homologation) of the Licensed Product(s) and providing Associated Service, are
the responsibility of the LICENSEE and the LICENSEE shall solely bear all the risks and liabilities arising from the
aforementioned process, including in respect of product liability, personal injury, and property damage claims relating
to Licensed Products sold or marketed by LICENSEE or its Affiliates.
Except as expressly provided under this Agreement or to the extent required by Applicable Law, LICENSEE will not,
and will not permit or authorise Third Parties to: (a) provide, disclose, or permit the use of the Licensed Technologies
by or for any Third Party; (b) reproduce, modify, translate, enhance, decompile, disassemble, reverse engineer, or in
any other way attempt to obtain the source code or algorithms of the Licensed Software; (c) alter, encode, copy,
distribute, or transmit any data using the Licensed Software; (d) circumvent or disable any technical features or
measures in the Licensed Software, or remove copyright declarations from the Licensed Software; or (e) attempt to
remove, alter, or access/activate any feature in the Licensed Software without NIO’s express written permission.
If either Party discovers that a Third Party infringes upon the rights related to the Licensed Technologies, such Party
shall immediately notify the other Party. NIO shall have the right, but not the obligation, to take any legal action it
deems appropriate against such Third Parties and to obtain all income and proceeds therefrom. Without NIO’s prior
written consent, LICENSEE has no right, unilaterally or jointly with other Third Parties, to take any legal action with
respect to such infringement.
8.5
LICENSEE warrants and represents that, as at the Effective Date, LICENSEE does not have any direct or indirect
OEM shareholders.
9.
INDEMNITIES
9.1 NIO shall indemnify the LICENSEE from and against any and all Losses suffered or incurred in connection with any
IPR Claim: (i) in respect of which a court of competent jurisdiction has finally found that the Licensed Technologies
infringe the Intellectual Property Rights of a Third Party; or (ii) that LICENSEE has settled with a Third Party with
NIO’s prior written consent. Notwithstanding the foregoing, NIO shall not be liable
18
for Losses suffered or incurred in connection with any IPR Claim to the extent relating to or resulting from any of the
following circumstances:
9.1.1
9.1.2
9.1.3
9.1.4
9.1.5
use of the Licensed Technologies beyond the scope permitted under this Agreement, including but not
limited to combining with any product that is not a Licensed Product for research and development,
manufacturing, selling, offering to sell, import or export;
modifications to the Licensed Technologies made (directly or indirectly) by or on behalf of LICENSEE,
including modifications carried out by NIO under the instruction of LICENSEE (where the infringement was
a necessary result of compliance with those instructions);
Third-Party Intellectual Property Rights, including but not limited to breach of Third-Party licence terms by
LICENSEE or any SUB-LICENSEE;
provision of any promise, compromise, or self-admission with respect to a Third Party’s claim or related
facts without NIO’s prior written consent;
continued use of all or any part of the Licensed Technology if it is subject to any existing or threatened
claim, accusation or assertion and NIO notifies LICENSEE to stop LICENSEE and its SUB-LICENSEEs’
use of the Licensed Technology(ies) concerned in writing and works to provide an alternative solution.
9.2
9.3
If an IPR Claim is made, the Claims Procedure shall apply.
LICENSEE shall indemnify NIO from and against any and all Losses suffered or incurred in connection with
LICENSEE’s breach of Section 12 (Confidentiality).
10. DISCLAIMER AND LIMITATION OF LIABILITY
10.1 LICENSEE acknowledges that Licensed Technologies are provided “as is” at the Effective Date of this Agreement.
The warranties provided by NIO under Section 8 of this Agreement replaces any other express, implied, or statutory
warranties regarding such Licensed Technologies and LICENSEE’s use of technical information, including but not
limited to the merchantability, fitness for any particular purpose, non-infringement, accuracy, and completeness of the
involved technical information, the stability of the involved patents, the prospect of authorisation of the involved
patent
19
applications, and the quality and performance of the Licensed Product(s), and NIO assumes no liability in this regard.
Further, notwithstanding NIO’s undertakings in Section 15, NIO makes no representations or warranties about
whether any Licensed Products, Licensed Technologies or Deliverables would be subject to any export controls in
relation to the provision of such Licensed Technologies or Deliverables or the production, transport and sale of any
Licensed Products.
10.2 LICENSEE expressly acknowledges that any Open Source Software involved in the Licensed Technologies or the
process of implementing the Licensed Technologies is provided “as is” at the Effective Date of this Agreement, and
expressly subject to the disclaimer in Section 10.1.
10.3 Nothing in this Agreement will operate so as to exclude or limit the liability of either Party to the other for:
10.3.1
death or personal injury arising out of negligence;
10.3.2
fraud or fraudulent misrepresentation; or
10.3.3
any other liability which cannot be excluded or limited by law.
10.4 Nothing in this Agreement will operate so as to exclude or limit LICENSEE’s liability for its intentional breach of
Section 12 (Confidentiality) or liability under the indemnity given by LICENSEE in Section 9.3 in connection with an
intentional breach of Section 12 (Confidentiality).
10.5 NIO's liability in respect of the indemnity given by NIO in Section 9.1 will be capped at an amount equal to [***],
provided that such liability shall not exceed [***].
10.6 Subject to Sections 10.3 to 10.5 (inclusive) and LICENSEE’s liability to pay the Technology License Fees, the total
aggregate liability of each Party to the other Party (in aggregate) under or in relation to this Agreement, including
liability for breach of contract, misrepresentation (whether tortious or statutory), tort (including negligence), breach of
statutory duty, liability under the indemnity given by LICENSEE in Section 9.3 in connection with a non-intentional
breach of Section 12 (Confidentiality) or otherwise, will be capped at [***].
10.7 Subject to Sections 10.3 and 10.4 and excluding NIO’s liability under the indemnity given by NIO in Section 9.1,
LICENSEE’s liability under the indemnity given by LICENSEE in Section 9.3, and LICENSEE’s liability to pay the
Technology License Fees, neither Party will be liable to the other Party for:
20
10.7.1
any loss of profits, revenue, business opportunities or damage to goodwill (whether direct or indirect); or
10.7.2
any indirect or consequential loss or damage,
arising under or in relation to this Agreement, even if the first Party was aware of the possibility that such loss or
damage might be incurred by the other Party.
11.
TERM AND TERMINATION
11.1 This Agreement is valid from the Effective Date of this Agreement until the earlier of: (i) expiration of the Licence
Term for all Licensed Products or (ii) termination in accordance with this Section 11.
11.2 Either Party may terminate this Agreement on written notice to the other Party in any of the following circumstances:
11.2.1
if the other Party: (i) voluntarily applies for insolvency, liquidation, receivership, bankruptcy, or any other
similar procedure for the purpose of debt settlement (other than solvent mergers or reorganisations); (ii)
involuntarily applies for insolvency, liquidation, receivership, bankruptcy, or any other similar procedure,
and such procedures are not revoked or reversed within sixty (60) days; (iii) makes a general assignment for
the benefit of its creditors; (iv) dissolves; or (v) suspends or threatens to suspend payment of its debts, or is
unable to pay debts as they fall due, or admits inability to pay its debts;
11.2.2
if the other Party commits a material breach of this Agreement and (i) such breach is irremediable; or (ii) if
the breach is remediable, the Party in breach fails to rectify the breach within 60 days after receiving written
notice from the non-breaching Party detailing the breach and requesting a remedy; or
11.2.3
in accordance with Section 15.3 or 16.2.
For the avoidance of doubt, given the research and development process of the Licensed Product(s) is based on all or
part of the Licensed Technologies provided or disclosed by NIO, even though the Intellectual Property Rights relating
to the Licensed Technologies may cease to exist in part during the performance of this Agreement by reason of
expiration, invalidation, revocation, disclosure, this Agreement shall not be invalid or terminated by reason of the fact
that some of the aforementioned Intellectual Property Rights cease to exist, and LICENSEE shall nonetheless continue
to pay the Technology
21
License Fees to NIO in accordance with this Agreement and to fulfil its obligations of confidentiality and other
obligations under this Agreement.
11.3 NIO may terminate this Agreement on written notice to LICENSEE in any of the following circumstances:
11.3.1
LICENSEE commits a material breach of Section 5 (Grant of License) or Section 12 (Confidentiality);
11.3.2
LICENSEE’s fails to meet its payment obligations in accordance with Annex X, only where the relevant
delinquent amounts are: (i) overdue and remain overdue 30 days after NIO has provided written notice to
LICENSEE informing it that such amounts are overdue and that it intends to invoke its right to terminate this
Agreement should such amounts not be paid; (ii) over USD $500,000 in aggregate; and (iii) not the subject
of a good faith dispute between the Parties;
11.3.3
LICENSEE or any of its Affiliates challenges the validity of any of the Licensed Technology in any
jurisdiction, except in respect of any challenge by LICENSEE or any of its Affiliates arising as part of a
counterclaim against NIO; or
11.3.4
an OEM gains Control of LICENSEE.
11.4 Subject to Sections 11.5 and 11.6, upon the expiration or termination of this Agreement, neither Party shall continue to
bear their respective obligations and liabilities under this Agreement, except for: (i) terms expressly or implicitly
intended to survive after the termination of this Agreement (including such terms as set out in Section 11.7); (ii) fees
incurred and other obligations that arose prior to the termination of this Agreement and (iii) any liabilities arising from
prior breaches, or any rights or remedies that should have accrued, none of which shall be affected thereby.
11.5 Subject to Section 11.6, upon the expiration of the Licence Term or termination of this Agreement: (i) the licence
granted to LICENSEE pursuant to Section 5.1 shall immediately terminate; and (ii) LICENSEE and all its SUB-
LICENSEEs shall immediately stop using the Licensed Technologies and NIO’s Confidential Information, and
promptly destroy all copies of the Licensed Technologies and NIO’s Confidential Information in their possession, and
promptly provide a certification of destruction to NIO.
11.6 The licence granted to LICENSEE pursuant to Section 5.1 shall survive termination of this Agreement for the duration
of the Licence Term for all Licensed Products that have passed the VP Gateway, provided that the LICENSEE’S
obligation to pay Royalties in
22
respect of such Licensed Products (and its associated obligations, including to provide Declaration Reports) shall also
survive.
11.7 The rights and obligations of the Parties under this Agreement shall terminate upon the termination or expiration of
this Agreement. Notwithstanding the foregoing, Section 1 (Definitions), Sections 5.1 and 5.2 (Grant of License) but
only to the extent provided in Section 11.6, Section 5.10 (Improvement), Section 6 (IPR Ownership), Section 8
(Warranties), Section 10 (Disclaimer and Limitation of Liability), Sections 11.5 and 11.6 (Effect of Termination),
Section 11.7 (Survival), Section 12 (Confidentiality), Section 17 (Notices), Section 21 (Third Party Rights), Section
22 (Governing Law and Disputes Resolution), Section 23 (Severability and Entire Agreement), Section 24 (Headings),
Section 25 (Modification, Amendment, Supplement or Waiver), Section 25 (Effectiveness) and any other section in
this Agreement which, by its nature and context should survive, will survive any such termination or expiration.
12. CONFIDENTIALITY
12.1 During the term of this Agreement, the Parties acknowledge that Confidential Information may be mutually disclosed
for the Licensed Purpose and in the performance of the Parties’ obligations under this Agreement. The term
“Confidential Information” under this Agreement shall mean all Materials and information concerning the business
and affairs of one Party (including its Affiliate(s) and related personnel (collectively “Disclosing Party”), as well as
any content of this Agreement and the existence of this Agreement, that the other Party (“Receiving Party”) obtains
or receives through written, oral, or other means in the course of negotiation for this Agreement, or performance of
this Agreement. To the extent disclosed in connection with this Agreement, Confidential Information includes but is
not limited to: specifications; testing results; data; know-how; formulas; compositions; processes; workflows; designs;
prints; sketches; photographs; samples; prototypes; test vehicles; inventions; concepts; ideas; past, current and planned
research and development; past, current and planned manufacturing or distribution methods and processes; the identity
of or other information about actual or potential customers; customer contact methods; customer sales strategies;
market studies, penetration data and other market information; sales and marketing plans, programs and strategies;
sales, costs and other financial data; sources of supply for products, raw materials, and components; descriptions of
plants and production equipment; price lists; business plans; financial reports and statements; computer software and
programs (including object code and source code); databases, internal reports, memoranda, notes,
23
analyses, compilations, studies and other data, information, materials or intangible assets that relate to the Disclosing
Party’s business and/or products. Confidential Information also includes any materials or information that contains or
is based on any other Confidential Information, whether prepared by the Disclosing Party, the Receiving Party, or any
other personnel.
Without limiting the generality of the foregoing provisions, except as otherwise expressly agreed or as should be
interpreted based on the nature of the Licensed Technologies, the Licensed Technologies and list of Third-Party
Intellectual Property Rights under this Agreement shall be considered NIO’s Confidential Information. The existence
and terms and conditions of this Agreement, as well as the cooperation relationship between NIO and LICENSEE,
shall also be treated as Confidential Information.
12.2 The Parties agree that Confidential Information shall be used only for the sole purpose of discussions concerning this
Agreement or the performance of this Agreement and shall not disclose such Confidential Information, whether
directly or indirectly, to any Third Party without prior written approval of the Disclosing Party. However, the
Receiving Party may disclose the Confidential Information to its employees or, in the case of the LICENSEE to its
SUB-LICENSEES, to whom the access to such Confidential Information is necessary for the purpose of fulfilling
obligations or exercising rights under this Agreement (excluding shareholders, consultants, investors, potential
funding parties, and potential investors), provided that the Receiving Party shall ensure that such employees (and the
SUB-LICENSEES, where relevant) are bound by confidentiality obligations at least as stringent as the terms of this
Agreement. In the event of a breach of confidentiality obligations by such employees, it shall be deemed as a breach
by the Receiving Party, and the Receiving Party shall be liable for any such breach in accordance with the terms of
this Agreement.
12.3 To prevent the disclosure of Confidential Information, the Parties agree to implement measures for the Disclosing
Party’s Confidential Information, which shall be at least as protective as those employed to protect its own
confidential information similarly sensitive and important (provided that such measures shall not be less than
reasonable care). Upon discovering or suspecting any unauthorised disclosure or use of the Disclosing Party’s
Confidential Information, the Receiving Party shall promptly notify the Disclosing Party and take necessary actions to
prevent or limit further dissemination of such Confidential Information.
24
In particular, LICENSEE’s confidentiality measures for NIO’s Confidential Information shall comply with the Cyber
Security Requirements. NIO reserves the right to inspect the confidentiality measures implemented by LICENSEE
and its compliance with the Cyber Security Requirements after the execution of this Agreement and at any time
thereafter upon agreement with the LICENSEE (such agreement not to be unreasonably withheld or delayed).
12.4 Restrictions on the use or disclosure of Confidential Information under this Agreement shall not apply to such
information which:
12.4.1
12.4.2
12.4.3
12.4.4
prior to the Receiving Party’s receipt thereof was publicly available or in the Receiving Party’s possession
from a source other than the Disclosing Party without any accompanying confidentiality obligations, and the
entity disclosing such information has not breached any confidentiality obligations; or
after the Receiving Party’s receipt thereof becomes publicly available through no fault of either the
Disclosing Party or the Receiving Party; or
is independently developed by the Receiving Party entirely without reliance on the Confidential Information
disclosed by the Disclosing Party and such independent development can be proved without doubt; or
is required to be disclosed pursuant to a subpoena or similar order from a court, agency, or other similar
authority, or as required under any stock exchange rules or regulations, provided that the Receiving Party
required to disclose such information gives to the Disclosing Party as early notice as is reasonably
practicable and allows the Disclosing Party as much opportunity as is reasonably practicable to defend
against such subpoena or order.
12.5 The obligations in this Section 12 shall be perpetual and will survive termination or expiry of this Agreement.
13. DATA COMPLIANCE
13.1 The Parties shall comply with Applicable Laws related to cyber security, data security, data protection and data
privacy during the performance of this Agreement.
13.2 If either Party’s breach of the above obligations causes Losses or other adverse impacts to the other Party, subject to
Section 10, the breaching Party shall be fully responsible
25
for resolving the matter and bearing the corresponding contractual liabilities as stipulated in this Agreement.
14.
PUBLICITY
14.1 Subject to Section 14.2, neither Party shall issue any press release or other public document, or make any public
statement, with respect to the subject matter of this Agreement or the Project or otherwise disclose to any Third Party
that they are involved in the provision of technology, products or services to each other, without the prior written
consent of the other Party. The foregoing restriction shall not prevent LICENSEE from presenting, or providing a
copy of, the Endorsement Letter to Third Parties in NIO’s supply chain or from notifying such Third Parties that
LICENSEE is licensed to use the Licensed Technologies and has NIO’s endorsement to procure relevant components
from Third Parties in NIO’s supply chain.
14.2 Section 14.1 does not apply to the extent that the statement or release is required to be made by Applicable Law or any
stock exchange rules or regulations, in which case, either Party shall consult with the other Party about the contents of
that announcement or release before it is made or issued provided that such consultation is permitted by Applicable
Law.
15.
EXPORT CONTROL AND SANCTIONS
15.1 The Parties hereby declare and warrant to each other that, at the time of entering into this Agreement and throughout
the term of this Agreement, they and their Affiliate(s), along with their respective directors, executives, shareholders,
agents, or employees, are not and will not be: (i) listed as sanctioned parties by the United Nations, the People’s
Republic of China, the United States, the European Union (including its member states), the United Kingdom, and/or
any other relevant institutions; (ii) located or resident in or organised under the laws of a country or territory that is the
target of sanctions; or (iii) Controlled by one or more aforementioned sanctioned parties. NIO shall use its reasonable
efforts at LICENSEE’s expense to cooperate with LICENSEE by providing any supporting documentation,
certifications and information regarding the Licensed Products, Licensed Technologies or Deliverables as may be
requested reasonably by LICENSEE in support of LICENSEE’s export control compliance.
15.2 During the performance of this Agreement, NIO, LICENSEE and its SUB-LICENSEE(s) shall all comply with any
export controls and economic sanctions resolutions, laws and regulations of the United Nations, the People’s Republic
of China, the United States, the
26
United Kingdom, the European Union (including its member states) and any other relevant international organisations
or countries and shall not engage in any activities that would violate export control and trade compliance laws and
regulations or that would risk placing any other Party in breach of any export control and trade compliance laws and
regulations.
15.3 If either Party violates any of the aforementioned obligations, the other Party shall be entitled to unilaterally and
immediately terminate this Agreement and, subject to Section 10, the breaching Party shall be responsible for any and
all Losses arising from such termination.
16. ANTI-CORRUPTION
16.1 The Parties shall, and shall procure that their employees, representatives, agents, and subcontractors will, comply with
all Applicable Laws relating to anti-corruption and anti-bribery in the People’s Republic of China and other
jurisdictions that are binding on the Parties. If required by Applicable Law, each Party shall provide the other Party
relevant information or document in connection with its compliance under this Section 16.1.
16.2 If either Party materially violates any of the aforementioned obligations, the other Party shall be entitled to unilaterally
and immediately terminate this Agreement and, subject to Section 10, the breaching Party shall be responsible for any
and all losses arising from such termination.
17. NON-SOLICITATION
17.1 In order to protect the legitimate business interests of each Party, each Party covenants with the other Party that it shall
not (and shall procure that none of its Affiliates shall), during the term of this Agreement and for a period of 12
months after termination or expiry of this Agreement, without the other Party’s prior written consent:
17.1.1
attempt to solicit or entice away; or
17.1.2
solicit or entice away,
from the employment or service of the other Party the services of any person who has been engaged in the
performance or management of this Agreement (as principal, agent, employee, independent contractor or in any other
form of employment or engagement) other than by means of an advertising campaign open to all-comers and not
specifically targeted at such staff of the other Party. For the avoidance of doubt, a Party will not be deemed to have
solicited or enticed away such person (or attempted to do so), if their
27
subsequent employment or engagement results from such person first approaching the relevant Party.
18. NOTICES
18.1 Subject to Section 18.2, any notice, demand, waiver, consent, or approval under this Agreement “Notice”) shall be
made in writing and sent by onsite delivery, email, or through domestically recognised courier services. The Notice
shall be deemed delivered if sent to the contact details provided by the Party as indicated in this Agreement or other
written notices.
18.2 The following Notices may not be delivered by email:
18.2.1
any notice terminating this Agreement; and
18.2.2
any notice of Dispute.
18.3 Contact details for NIO are as follows:
Contact Person: [***]
Address: [***]
Email: [***]
18.4 Contact details for LICENSEE are as follows:
Contact Persons: [***]
Address: [***]
Email: [***]
18.5 If any Party’s aforementioned contact details change, that Party shall provide written notice to the other Party within
48 hours of the change. Any consequences resulting from failure to fulfil the notification obligation in a timely
manner shall be solely borne by that Party.
19.
INDEPENDENT CONTRACTOR
Nothing in this Agreement shall be construed as to create any partnership, joint venture, employment, or agency
relationship between the Parties hereto or any of their Affiliate(s), subsidiaries, related business entities, agents,
contractors, or subcontractors, or to provide
28
either Party with any right, power or authority, whether express or implied, to create any such duty or obligation on
behalf of the other Party.
20. ASSIGNMENT
20.1 Neither Party may assign or transfer any interests, rights and/or obligations under this Agreement without the other
Party’s prior written consent (such consent not to be unreasonably withheld or delayed). No such assignment or
transfer shall take legal effect prior to the date on which other Party gives written consent to such assignment or
transfer.
20.2 All provisions of this Agreement shall be binding upon the respective successors and assignees of the Parties.
21.
THIRD PARTY RIGHTS
21.1 No one other than a Party to this Agreement, their successors and permitted assignees, shall have any right to enforce
any of its terms.
22. GOVERNING LAW AND DISPUTES RESOLUTION
22.1 This Agreement shall be governed in all respect, including the formation, validity, construction and performance of
this Agreement, by the laws of Singapore, excluding the application of its conflict of law rules.
22.2 In the event of any disputes arising out of or relating to this Agreement, the Party claiming that the dispute has arisen
must give written notice to the other Party (the “Notice of Dispute”) and Parties shall seek resolution through
amicable negotiation. If negotiation fails after 10 Business Days of one Party issuing the Notice of Dispute, any
dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration administered by the Singapore International
Arbitration Centre in accordance with the Arbitration Rules of the Singapore International Arbitration Centre for the
time being in force, which rules are deemed to be incorporated by reference in this Section. The Tribunal shall consist
of three arbitrators. The seat of the arbitration shall be Singapore. The arbitration proceedings shall be conducted in
English. The arbitration award shall be final and binding upon the Parties.
22.3 Without prejudice to any other rights or remedies that the other Party may have, each Party acknowledges and agrees
that damages alone would not be an adequate remedy for any breach of the terms of this Agreement by them.
Accordingly, each Party shall be
29
entitled to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach
of the terms of this Agreement.
23.
SEVERABILITY AND ENTIRE AGREEMENT
23.1 In the event any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, the remaining provisions of this Agreement shall remain unaffected and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable provision, which being valid, legal and
enforceable, comes closest to the intention of the Parties underlying the invalid, illegal or unenforceable provision.
23.2 This Agreement constitutes the complete and exclusive statement of the entire agreement between the Parties
regarding the subject matter hereto and supersedes all proposals, prior agreements, statements, declarations,
warranties, or communications, whether oral or written, unless such proposals, prior agreements, statements,
declarations, warranties, or communications are expressly incorporated into this Agreement or are specifically referred
to under this Agreement.
24. HEADINGS
The headings under this Agreement are for purposes of reference only and shall not in any way limit or otherwise
affect the meaning or interpretation of any of the terms hereof.
25. MODIFICATION, AMENDMENT, SUPPLEMENT OR WAIVER
25.1 No modification, amendment, supplement to or waiver of this Agreement shall be binding upon the Parties hereto
unless made in writing and duly executed by the Parties.
25.2 A failure or delay of either Party to this Agreement at any time to enforce any of the provisions of this Agreement, or
to exercise any option which is herein provided, or to require performance of any of the provisions hereof at any time,
shall in no way be construed to be a waiver of any rights conferred under such terms of this Agreement, or as a waiver
of the right to later held the other Party accountable for breach of contract or any other remedies available.
26.
EFFECTIVENESS
26.1 Upon signatures by the duly authorised representatives of the Parties or affixation with appropriate company chops of
the Parties, this Agreement shall become legally binding on the Parties. This Agreement may be signed in any number
of counterparts and by the
30
Parties on separate counterparts, each of which, when so executed, shall be an original, but all counterparts shall
together constitute one and the same document. Signatures may be exchanged by e-mail, with original signatures to
follow. Each Party agrees to be bound by its own electronic signature and that it accepts the electronic signature of the
other Parties.
26.2 This Agreement is made in duplicate, with each Party holding one copy. Each copy shall be equally authentic.
(There is no text below)
31
IN WITNESS WHEREOF, this Agreement has been duly signed and sealed by the authorised representatives of
the Parties on the date indicated below:
NIO Technology (Anhui) Co.，Ltd.
On behalf of NIO Technology (Anhui) Co., Ltd.
Signature:
Name:
Title:
Date:
Seal:
32
Forseven Limited
On behalf of Forseven Limited
Signature:
Name:
Title:
Date:
33
Annex I: Licensed Technologies and Deliverables
[***]
34
Annex II: Third-Party Intellectual Property Rights and Supply Chain Information
[***]
35
Annex III: Cyber Security Requirements
[***]
36
Annex IV: Claims Procedure
[***]
37
Annex V: Prohibited Sublicensees
[***]
38
Annex VI: SUB-LICENSEES
INTENTIONALLY BLANK AS AT THE EFFECTIVE DATE
39
Annex VII: Licensed Products
INTENTIONALLY BLANK AS AT THE EFFECTIVE DATE
40
Annex VIII: OEMs
[***]
41
Annex IX: Permitted Entities
[***]
42
Annex X: Fees, Reports and Payments
[***]
43
NIO CHINA SHAREHOLDERS AGREEMENT
Exhibit 4.49
BY AND AMONG
HEFEI JIANHENG NEW ENERGY AUTOMOBILE INVESTMENT FUND
PARTNERSHIP (LIMITED PARTNERSHIP)
ADVANCED MANUFACTURING INDUSTRY INVESTMENT FUND II (LIMITED
PARTNERSHIP)
ANHUI PROVINCIAL SANZHONG YICHUANG INDUSTRY DEVELOPMENT FUND
CO., LTD.
ANHUI JINTONG NEW ENERGY AUTOMOBILE II FUND PARTNERSHIP (LIMITED
PARTNERSHIP)
AND
NIO INC.
NIO NEXTEV LIMITED
NIO USER ENTERPRISE LIMITED
NIO POWER EXPRESS LIMITED
AND
NIO HOLDING CO., LTD.
Hefei, China
Date: March 30, 2024
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TABLE OF CONTENTS
DEFINITIONS AND INTERPRETATIONS
SHAREHOLDERS OF THE TARGET COMPANY
OVERVIEW OF THE TARGET COMPANY
PURPOSE AND SCOPE OF BUSINESS OF THE TARGET COMPANY
REGISTERED CAPITAL
PROTECTIVE RIGHTS
RIGHT OF FIRST REFUSAL
RIGHT OF CO-SALE
PRE-EMPTIVE RIGHTS
VALUE ASSURANCE AND ANTI-DILUTION RIGHTS
REDEMPTION RIGHT
LIQUIDATION PREFERENCE
DRAG-ALONG RIGHT
RESTRICTION ON EQUITY TRANSFER
EQUITY INCENTIVE
INFORMATION RIGHTS AND INSECTION RIGHTS
RIGHT TO PARTICIPATE IN RESTRUCTURING
UNDERTAKINGS AND CONVANTS
CORPORATE GOVERNANCE
TAXES, FINANCE, AUDIT AND DISTRIBUTION OF PROFIT
DURATION AND TERMINATION OF THE TARGET COMPANY
FORCE MAJEURE
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
CONFIDENTIALITY
GOVERNING LAW AND DISPUTE RESOLUTION
EFFECTIVENESS, MODIFICATION AND VALIDITY
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BREACH
NOTICES AND DELIVERY
MISCELLANEOUS
Exhibit I: Joinder Agreement
Exhibit II: List of the Core Management Team
Exhibit III: List of the Competitive Entities where the Actual Controller holds Interest
Exhibit IV: List of the NIO Parties Competitors
2
56
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58
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This NIO China Shareholders Agreement (this “Agreement”) dated as of March 30, 2024 (the “Execution
Date”) is made by and among:
1.
2.
3.
4.
Hefei Jianheng New Energy Automobile Investment Fund Partnership (Limited Partnership), a limited
partnership duly established and existing under the Laws of the People’s Republic of China (the “PRC”, for
the purpose of this Agreement, excluding the Hong Kong Special Administrative Region, the Macao Special
Administrative Region and Taiwan), holding a business license with unified social credit code of
91340111MA2UU69EX8, and with its executive partner being Hefei Construction Investment Capital
Management Co., Ltd., and registered office at Room 101, Area G, Intelligent Equipment Technology Park,
No. 3963 Susong Road, Economic and Technological Development Area, Hefei City, Anhui Province
(“Jianheng New Energy Fund”);
Advanced Manufacturing Industry Investment Fund II (Limited Partnership), a limited partnership duly
established and existing under the Laws of the PRC, holding a business license with unified social credit
code of 91320191MA1YK7YA6J, and with its executive partner being CMG-SDIC Capital Management
Co., Ltd., and registered office at Room 1380, Fuying Building, No. 99 Tuanjie Road, Research and
Innovation Park, Jiangbei New Area, Nanjing City (“Advanced Manufacturing Industry Fund”);
Anhui Provincial Sanzhong Yichuang Industry Development Fund Co., Ltd., a limited liability company
duly established and existing under the Laws of the PRC, holding a business license with unified social
credit code of 91340100 MA2NUJ2A1H, and with its legal representative being XU Xianlu, and registered
address at Room 424, Technology and Innovation Center, No. 860 West Wangjiang Road, High-tech
District, Hefei City (“Anhui Sanzhong Yichuang”);
Anhui Jintong New Energy Automobile II Fund Partnership (Limited Partnership), a limited partnership
duly established and existing under the Laws of the PRC, holding a business license with unified social
credit code of 91340800MA2UE54B3J, and with its executive partner being Anhui JinTong New Energy II
Investment Management Partnership (Limited Partnership), and registered office at Room 616-1, NO.1
Building, Zhumeng New Area, No. 188 Wenyuan Road, Yixiu District, Anqing City, Anhui Province (“New
Energy Automobile Fund”, together with Jianheng New Energy Fund,
1
Advanced Manufacturing Industry Fund and Anhui Sanzhong Yichuang, collectively referred to as the
“Investors”);
5.
6.
7.
8.
9.
NIO Inc., a company duly established and existing under the Laws of the Cayman Islands, with its registered
address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“NIO Group” or
“NIO Inc.”);
Nio Nextev Limited, a private company limited by shares duly established and existing under the Laws of
the Hong Kong of the PRC, with its company number of 2199750, and registered office at 30th Floor,
Jardine House, Once Connaught Place, Central, Hong Kong (“NIO HK”);
NIO User Enterprise Limited, a private company limited by shares duly established and existing under the
laws of the Hong Kong of the PRC, with its company number of 2487823 and registered office at 30th
Floor, Jardine House, Once Connaught Place, Central, Hong Kong (“UE HK”);
NIO Power Express Limited, a private company limited by shares duly established and existing under the
Laws of the Hong Kong of the PRC, with its company number of 2472480 and registered office at 30th
Floor, Jardine House, Once Connaught Place, Central, Hong Kong (“PE HK”, together with NIO HK and
UE HK, the “NIO HK Holding Platforms”; the NIO HK Holding Platforms, together with NIO Group, the
“NIO Parties”); and
NIO Holding Co., Ltd., a limited liability company duly established and existing under the Laws of the
PRC, holding a business license with unified social credit code of 91340111MA2RAD3M4R, and with its
legal representative being LI Bin, and registered address at Building F, Hengchuang Intelligent Technology
Park, No. 3963 Susong Road, Economic and Technological Development Area, Hefei City, Anhui Province
(“NIO China”, or the “Target Company”, or the “Company”).
Each of the above parties shall be referred to individually as a “Party” and collectively as the “Parties”.
WHEREAS:
2
1.
2.
3.
4.
5.
The Target Company is a limited liability company established and existing under the Laws of the PRC, and
is a company controlled by NIO Inc. in the PRC through the NIO HK Holding Platforms with its current
registered capital of RMB 6,428,815,699.3.
CMG-SDIC Capital Management Co., Ltd. (“SDIC”), Anhui Provincial Emerging Industry Investment Co.,
Ltd. (“Anhui High-tech Co.”), Hefei Construction Investment Holdings (Group) Co., Ltd. (“Hefei
Construction Co.” or the “Hefei Investor”), the NIO Parties and the Company entered into an Investment
Agreement in respect of NIO China (the “Investment Agreement”) and a Shareholders Agreement in
respect of NIO China (the “Shareholders Agreement”) on April 29, 2020.
SDIC, Advanced Manufacturing Industry Fund, Anhui High-tech Co., New Energy Automobile Fund, the
Hefei Investor, Jianheng New Energy Fund, the NIO Parties and the Company entered into an Amendment
and Supplementary Agreement to the Shareholders Agreement in respect of NIO China (the “Amendment
and Supplementary Agreement I”) on June 5, 2020. In accordance with the Amendment and
Supplementary Agreement I, Advanced Manufacturing Industry Fund designated by SDIC, New Energy
Automobile Fund designated by Anhui High-tech Co., and Jianheng New Energy Fund designated by the
Hefei Investor shall succeed to all or part of their respective rights and obligations under the Shareholders
Agreement.
SDIC, Advanced Manufacturing Industry Fund, Anhui High-tech Co., New Energy Automobile Fund, the
Hefei Investor, Jianheng New Energy Fund, Anhui Sanzhong Yichuang, the NIO Parties and the Company
entered into an Amendment and Supplementary Agreement to the Shareholders Agreement in respect of
NIO China (the “Amendment and Supplementary Agreement II”) on June 18, 2020. In accordance with
the Amendment and Supplementary Agreement II, Anhui Sanzhong Yichuang designated Anhui High-tech
Co. to succeed to part of its rights and obligations under the Shareholders Agreement and the Amendment
and Supplementary Agreement I pursuant to the Amendment and Supplementary Agreement II.
Jianheng New Energy Fund and NIO HK entered into an Equity Purchase Agreement on September 16,
2020, pursuant to which, NIO HK exercised its NIO Parties’ Redemption Right under Shareholders
Agreement, Amendment and Supplementary Agreement I and Amendment and Supplementary Agreement
II, to purchase RMB 437,062,937.06 of the
3
6.
7.
registered capital of the Company from Jianheng New Energy Fund; SDIC, Advanced Manufacturing
Industry Fund, Anhui High-tech Co., New Energy Automobile Fund, the Hefei Investor, Jianheng New
Energy Fund, Anhui Sanzhong Yichuang, the NIO Parties and the Company entered into an Amendment
and Supplementary Agreement III to the Shareholders Agreement in respect of NIO China (the
“Amendment and Supplementary Agreement III”) on September 16, 2020 to make certain amendments
and supplements to the Shareholders Agreement, Amendment and Supplementary Agreement I and
Amendment and Supplementary Agreement II.
The Company, the NIO Parties, Advanced Manufacturing Industry Fund, New Energy Automobile Fund,
Anhui Sanchong Yichuang, and Jianheng New Energy Fund entered into an Capital Increase Agreement on
September 25, 2020, pursuant to which, NIO HK exercised its NIO Parties’ Capital Increase Right under the
Shareholders Agreement, to subscribe for RMB 742,153,846.15 of the Company’s increased registered
capital; SGIC, Advanced Manufacturing Industry Fund, Anhui High-tech Co., New Energy Automobile
Fund, the Hefei Investor, Jianheng New Energy Fund, Anhui Sanchong Yichuang, the NIO Parties and the
Company entered into the Amendment and Supplementary Agreement IV to the Shareholders Agreement in
respect of NIO China (the “Amendment and Supplementary Agreement IV”) on September 25, 2020 to
make certain amendments and supplements to the Shareholders Agreement, the Amendment and
Supplementary Agreement I, the Amendment and Supplementary Agreement II and the Amendment and
Supplementary Agreement III.
The Company, the NIO Parties, Advanced Manufacturing Industry Fund, New Energy Automobile Fund,
Anhui Sanchong Yichuang, and Jianheng New Energy Fund entered into a Capital Increase and Equity
Transfer Agreement on January 26, 2021, pursuant to which, NIO HK shall purchase RMB 174,825,174.83
of the registered capital of the Company from Jianheng New Energy Fund, purchase RMB 17,482,517.48 of
the registered capital of the Company from Advanced Manufacturing Industry Fund, and subscribe for RMB
349,650,349.65 of the Company’s increased registered capital; SGIC, Advanced Manufacturing Industry
Fund, Anhui High-Tech Co., New Energy Automobile Fund, the Hefei Investor, Jianheng New Energy
Fund, Anhui Sanchong Yichuang, the NIO Parties and the Company entered into an Amendment and
Supplementary Agreement V to the Shareholders Agreement in respect of NIO China (the “Amendment
and Supplementary Agreement V”) on January 26, 2021 to make certain amendments and supplements to
the Shareholders Agreement, Amendment and Supplementary Agreement I, Amendment and Supplementary
Agreement II, Amendment and Supplementary Agreement III and Amendment and Supplementary
Agreement IV.
4
8.
The Company, the NIO Parties, Advanced Manufacturing Industry Fund, New Energy Automobile Fund,
Anhui Sanchong Yichuang and Jianheng New Energy Fund entered into an Capital Increase and Equity
Transfer Agreement on September 24, 2021, pursuant to which, NIO HK shall purchase RMB
87,412,587.41 of the registered capital of the Company from Anhui Sanchong Yichuang and subscribe for
RMB 262,237,762.24 of the Company’s increased registered capital at a subscription price of RMB
7,500,000,000 or equivalent in USD in cash; SGIC, Advanced Manufacturing Industry Fund, Anhui High-
Tech Co., New Energy Automobile Fund, the Hefei Investor, Jianheng New Energy Fund, Anhui Sanzhong
Yichuang, the NIO Parties and the Company entered into an Amendment and Supplementary Agreement VI
to the Shareholders Agreement in respect of NIO China (the “Amendment and Supplementary
Agreement VI”) on September 24, 2021 to make certain amendments and supplements to the Shareholders
Agreement, Amendment and Supplementary Agreement I, Amendment and Supplementary Agreement II,
Amendment and Supplementary Agreement III, Amendment and Supplementary Agreement IV and
Amendment and Supplementary Agreement V.
The Parties intend to make an agreement on the governance of the Target Company, the rights and obligations of
the Parties and other matters through this Agreement.
NOW, THEREFORE, based on equality and mutual benefit and in accordance with the Company Law of the PRC
and other relevant PRC Laws and Regulations, with respect to the governance of the Target Company and the
rights and obligations of the Parties and other matters, the Parties hereby agree as follows:
1.1
Unless otherwise required by the context, the following terms shall have the meanings ascribed to them:
1 DEFINITIONS AND INTERPRETATIONS
Previous Transaction
means
the Capital Increase in Cash and the asset
5
This Agreement
Changing Party
Force Majeure
Restructuring
contribution by the Investors in the Target Company in
accordance with the Investment Agreement and its amendments
and supplements
means
this NIO China Shareholders Agreement and the exhibits or
schedules hereto
means
the definition in Clause 28.2 hereof
means
the definition in Clause 22.1 hereof
means
the definition in Clause 17 hereof
Laws/Laws and Regulation
means
local
applicable
treaties
regulations,
concluded, judgments or orders of any Governmental Authority
regulations, departmental
rules, normative documents,
laws,
local
rules,
Co-Sale Feedback Period
means
the definition in Clause 8.1.1 hereof
Shareholders
means
the definition in Clause 2.1 hereof
Core Management Team
means
the personnel specified in Exhibit II hereof
Redemption Price
means
the definition in Clause 11.2 hereof
Joinder Agreement
means
the definition in Clause 14.2 hereof
Competing Business
means
the definition in Clause 18.4 hereof
Transaction Documents
means
Group Members
means
this Agreement, the Investment Agreement and its amendments
and supplements, the articles of association of the Target
Company and other agreements or documents entered into by
the Parties in connection with the Previous Transaction.
the Target Company, NIO Energy Investment (Hubei) Co., Ltd.,
NIO Sales and Services Co., Ltd., NIO Co., Ltd., Wuhan NIO
Energy Co., Ltd., NIO (Anhui) Co., Ltd., NIO Technology
(Anhui) Co., Ltd., NIO Financial Leasing Co., Ltd., Anhui NIO
Data Technology Co., Ltd. and Beijing NIO Network
Technology Co., Ltd.
Controlling Shareholders
means NIO Group and the NIO HK Holding Platforms
Investors
means
Jianheng New Energy Fund, Advanced
6
Manufacturing Industry Fund, Anhui Sanzhong Yichuang and
New Energy Automobile Fund
US Dollar/USD
Target Company
means
the lawful currency of the United States of America
means NIO Holding Co., Ltd.
Holdco of the Target Company
means
the person who directly or
interest/shares in the Target Company
indirectly holds equity
Term of the Target Company
means
the definition in Clause 21.1 hereof
Proposed Transfer
means
the definition in Clause 7.1 hereof
Proposed Capital Increase
means
the definition in Clause 9.1 hereof
Platform
Term
Execution Date
Qualified IPO
means
the definition in Clause 17 hereof
means
the definition in Clause 21.1 hereof
means March 30, 2024
means
the Target Company is directly or indirectly listed on the
Shanghai/Shenzhen Stock Exchange or other overseas stock
exchange approved by the Parties by means of initial public
offering or material assets restructuring with a listed company
Renminbi/RMB
means
the lawful currency of the PRC
Remaining Property
means
the definition in Clause 12.1 hereof
Actual Controller
means
LI Bin, a PRC citizen, with his ID card number of [***] and
address at [***]
Deemed Liquidation Event
means
the definition in Clause 12.5 hereof
Transferee
means
the definition in Clause 7.1 hereof
Investors Subscription Price
means
the definition in Clause 10.1.2 hereof
Guaranteed Minimum Return on
Investment
means
the definition in Clause 12.1 hereof
Hong Kong
Material or Major
means
the Hong Kong Special Administrative Region of the PRC
means
any act or circumstance which may result in any single or
accumulative losses of more than RMB
7
Preferential Distribution
means
the definition in Clause 12.1 hereof
50 million suffered by the Investors
ROFR Holder
Yuan
Main Business
means
the definition in Clause 7.1 hereof
means Renminbi yuan (unless the context otherwise requires)
means
technical
technical services,
(i) Manufacturing, sale, purchase, after-sale repair and other
supporting services of finished new-energy automobiles,
supporting products for energy sources, parts, materials,
components, machinery and equipment, as well as the technical
development,
transfer and
technical consulting services relating thereto; (ii) Investing in
accordance with the law in the fields in which foreign
investment is allowed by the State; (iii) Import and export of
machinery and equipment, auto parts, goods and technology;
automobile sale,
leasing, designated driving, repair and
maintenance (limited to branch operation), agent and after-sale
service of automobile insurance services; (iv) Sale of auto
supplies and parts, machinery and equipment, daily articles,
clothes and accessories, toys, beverages, handicrafts gifts and
second-hand automobiles; (v) Research and development,
production, sale and operation of equipment and components
relating to battery swap stations, charging piles and energy
storage system; design, development, technical service and
consulting of vehicle system and software; (vi) Automobile
exhibition activities and marketing planning; conference,
exhibition, catering services, self-operation and agency of the
import and export of various commodities and technologies
8
Capital Increase Feedback Period
means
the definition in Clause 9.1.2 hereof
Capital Increase Notice
means
the definition in Clause 9.1.1 hereof
Government Authority
means
any PRC or non-PRC international organization, national, state,
provincial,
local, or other government, governmental,
regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body
Governmental Approval
means means any approval, authorization, consent, franchise, permit
or registration by any Governmental Authority, or any report,
circular, statement or other correspondences required to be filed
with or submitted to any Governmental Authority
Transfer Feedback Period
means
the definition in Clause 7.1.2 hereof
Transferring Shareholders
means
the definition in Clause 7.1 hereof
Transfer Notice
means
the definition in Clause 7.1.1 hereof
PRC
CSRC
1.2
1.3
1.4
1.5
1.6
means
the definition in recitals hereof
means
the China Securities Regulatory Commission
Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to
them in the Investment Agreement, unless otherwise required by the context of this Agreement.
“Section”, “Clause” and “Exhibit” mean the clause and section of, and the exhibit to, this Agreement,
respectively. Any reference to “this Agreement” shall be construed to include its exhibits.
“Include”, “includes” or “including” and similar words are not intended to be restrictive and shall be
construed as if followed by the words “without limitation”.
The headings in this Agreement are inserted for the convenience of reference only and shall not be taken
into consideration in the interpretation or construction of this Agreement.
Any reference to this Agreement or any other agreement shall be construed to include this Agreement or
such other agreement as may be amended, modified, supplemented
9
or novated.
2 SHAREHOLDERS OF THE TARGET COMPANY
2.1
Shareholders of the Target Company
The shareholders of the Target Company (the “Shareholders”) are as follows:
NIO HK:
UE HK:
PE HK:
Jianheng New
Energy Fund:
Nio Nextev Limited, a company established and existing under
the Laws of Hong Kong, the PRC, with its office at 30th Floor,
Jardine House, Once Connaught Place, Central, Hong Kong.
Authorized Representative: LI Bin
NIO User Enterprise Limited, a company established and
existing under the Laws of Hong Kong, the PRC, with its office at
30th Floor, Jardine House, Once Connaught Place, Central, Hong
Kong.
Authorized Representative: LI Bin
NIO Power Express Limited, a company established and existing
under the Laws of Hong Kong, the PRC, with its office at 30th
Floor, Jardine House, Once Connaught Place, Central, Hong
Kong.
Authorized Representative: LI Bin
(Limited Partnership),
Hefei Jianheng New Energy Automobile Investment Fund
Partnership
limited partnership
established and existing under the Laws of the PRC, with its
registered address at Room 101, Area G, Intelligent Equipment
Technology Park, No. 3963 Susong Road, Economic and
Technological Development Area, Hefei City, Anhui Province,
and a unified social credit code of 91340111MA2UU69EX8.
a
Executive Partner: Hefei Construction
Management Co., Ltd.
Investment Capital
Advanced
Manufacturing
Advanced Manufacturing Industry Investment Fund II (Limited
Partnership), a limited partnership established and existing
10
Industry Fund:
under the Laws of the PRC, with its registered address at Room
1380, Fuying Building, No. 99 Tuanjie Road, Research and
Innovation Park, Jiangbei New Area, Nanjing City, and a unified
social credit code of 91320191MA1YK7YA6J.
Anhui Sanzhong
Yichuang:
New Energy
Automobile Fund:
Executive Partner: CMG-SDIC Capital Management Co., Ltd.
Anhui Provincial Sanzhong Yichuang Industry Development Fund
Co., Ltd., a limited liability company duly established and existing
under the Laws of the PRC, with its registered address at Room
424, Technology and Innovation Center, No. 860 West Wangjiang
Road, High-tech District, Hefei City, and a unified social credit
code of 91340100MA2NUJ2A1H.
Legal Representative: XU Xianlu
Anhui Jintong New Energy Automobile II Fund Partnership
(Limited Partnership), a limited partnership duly established and
existing under the Laws of the PRC, with its registered address at
Room 616-1, NO.1 Building, Zhumeng New Area, No. 188
Wenyuan Road, Yixiu District, Anqing City, Anhui Province, and
a unified social credit code of 91340800MA2UE54B3J.
Executive Partner: Anhui JinTong New Energy II Investment
Management Partnership (Limited Partnership)
3 OVERVIEW OF THE TARGET COMPANY
3.1
Basic Information of the Target Company
3.1.1
In accordance with the applicable PRC Laws, the Shareholders agree to hold the equity
interests in the Target Company jointly pursuant to the terms and conditions of this
Agreement.
3.1.2
The name of the Target Company in Chinese shall be “蔚来控股有限公司”.
3.1.3
The name of the Target Company in English shall be “NIO Holding Co., Ltd.”.
11
3.1.4
The registered address of the Target Company shall be Building F, Hengchuang Intelligent
Technology Park, No. 3963 Susong Road, Economic and Technological Development Area,
Hefei City, Anhui Province.
3.2
Nature of the Target Company
The Target Company is a limited liability company with the status of an enterprise legal person. The
establishment of and conduct of all activities by the Target Company shall comply with the relevant
provisions of the PRC Laws. Its lawful rights and interests shall be protected by the PRC Laws.
3.3
Limited Liability
As the Target Company is a limited liability company under the PRC Laws, it shall be liable to its debts to
the extent of all of its assets. Under any circumstance, the liabilities and risks of each Shareholder of the
Target Company shall be limited to the amount of their respective contributions to the registered capital of
the Target Company expressly subscribed by it under Clause 5.1 below. Furthermore, none of the
Shareholders shall have liability whatsoever, jointly or severally, for any debts or obligations of the Target
Company.
4 PURPOSE AND SCOPE OF BUSINESS OF THE TARGET COMPANY
4.1
Purpose of the Target Company
The purposes of the Shareholders in jointly investing in the Target Company shall be as follows: the
Shareholders are committed to making the Target Company achieve good economic performance through
the operation and management of the business of the Target Company.
4.2
Scope of Business of the Target Company
The business scope of the Target Company is as follows: 1. Investment in the fields in which foreign
investors are allowed by the state; 2. Provision of the following services to the enterprise it invests in as
engaged by such investee in writing: (1) assisting or acting as agent for the enterprise it invests in to
purchase, from both home and abroad, any machinery equipment and office equipment for such
enterprise’s own use, or any material, components and parts needed in manufacturing, and to sell the
products manufactured by the enterprise it invests in at both home and abroad, and to provide after-sale
service; (2) providing the enterprise it invests in with technological support and other services in the
process of as manufacturing, sale and market development of
12
product; (3) establishing scientific research and development center or department within the territory of
the PRC to engage in the research and development of new products and high technologies, to transfer its
research and development achievements, and to provide corresponding technical services; (4) providing its
investors with consulting services, and to provide its affiliates with consulting services such as market
information and investment policies in relation to its investment; (5) undertaking the outsourcing services
of its parent company and affiliates; (6) providing technical development, technical services, technical
transfer and technical consultation services for finished new-energy automobiles and the relevant parts
thereof; wholesale and commission agent (excluding auction) of automobile parts; import and export of
machinery equipment, automobile parts, goods and technologies; sale, lease, designated driving, repair and
maintenance (limited to the operations by its branches) and after-sale service of automobiles; sale of
automobile supplies and accessories, mechanical equipment, general merchandise, clothing accessories,
toys, beverages, gifts and crafts, second-hand automobiles; operation of charging pile facilities; vehicle
insurance agent; design, development, technical services and consultation of vehicle-mounted system and
software; automobile exhibition activities and marketing; conference, exhibition and catering services;
design, production, publication and agent of domestic advertisements; production and sale of food; and
import and export of commodities and technologies of all kinds (excluding commodities or technology of
which export or import is forbidden or is limited to certain corporation as required by the state) (Business
items subject to approval in accordance with laws shall not be carried out unless approved by relevant
authorities).
The business scope of the Target Companies shall be subject to the descriptions on the business license
issued by the Registration Authority.
5.1
Registered Capital
5 REGISTERED CAPITAL
The registered capital of the Target Company shall be RMB 6,428,815,699.3, of which:
5.1.1
NIO HK shall subscribe to RMB 4,609,855,439.81, representing 71.705% of the registered
capital of the Target Company, of which RMB 372,632,867.14 shall be contributed in cash in
RMB, RMB 2,293,891,006.40 shall be contributed in the form of equity interests in NIO Co.,
Ltd., RMB 1,441,454,545.44 shall be contributed in cash in RMB or in cash in equivalent
USD, RMB 239,639,258.59 shall be contributed in the form of intellectual property rights,
and RMB 262,237,762.24 shall be contributed in cash in RMB, all of which have been paid
up as of the Execution Date hereof;
13
5.1.2
5.1.3
5.1.4
5.1.5
5.1.6
5.1.7
UE HK shall subscribe to RMB 1,252,136,433.60, representing 19.478% of the registered
capital of the Target Company, of which RMB 5,500,000 shall be contributed in cash in
RMB, RMB 744,755,244.76 shall be contributed in cash in USD equivalent, and RMB
501,881,188.84 shall be contributed in the form of equity interests in NIO Sales and Services
Co., Ltd., all of which have been paid up as of the Execution Date hereof;
PE HK shall subscribe to RMB 59,830,818.88, representing 0.931% of the registered capital
of the Target Company, which shall be contributed in the form of equity interests in NIO
Energy Investment (Hubei) Co., Ltd., all of which have been paid up as of the Execution Date
hereof;
Advanced Manufacturing Industry Fund shall subscribe
to RMB 157,342,657.35,
representing 2.447% of the registered capital of the Target Company, which shall be
contributed in cash in RMB, all of which have been paid up as of the Execution Date hereof;
Anhui Sanzhong Yichuang shall subscribe to RMB 52,447,552.45, representing 0.816% of
the registered capital of the Target Company, which shall be contributed in cash in RMB, all
of which have been paid up as of the Execution Date hereof;
New Energy Automobile Fund shall subscribe to RMB 34,965,034.97, representing 0.544%
of the registered capital of the Target Company, which shall be contributed in cash in RMB,
all of which have been paid up as of the Execution Date hereof;
Jianheng New Energy Fund shall subscribe to RMB 262,237,762.24, representing 4.079% of
the registered capital of the Target Company, which shall be contributed in cash in RMB, all
of which have been paid up as of the Execution Date hereof.
6.1
Protective Rights
6 PROTECTIVE RIGHTS
6.1.1
During the period in which the Investors hold equity interests in the Target Company,
resolutions in respect of the following matters of major importance to the Target Company
shall require approval by more than three-fourths (3/4) of the directors before the same is
submitted to the Shareholders’ meeting for resolution:
14
(1) any amendment to the articles of association of the Target Company;
(2) any increase or decrease in the registered capital of the Target Company; and
(3) any merger, split-off, dissolution and/or change of corporate form of the Target
Company.
6.1.2
During the period in which the Investors hold equity interests in the Target Company,
resolutions in respect of the following matters material to the Target Company shall be
adopted by affirmative votes of not less than three-fourths (3/4) of the directors of the Target
Company before implementation (if such matters shall be submitted to the Shareholders’
meeting for resolution as required by relevant Laws and Regulations or the articles of
association of the Target Company, such matters shall be submitted to the Shareholders’
meeting for resolution and approval before implementation, and the following matters shall
not be directly submitted to the Shareholders’ meeting for resolution without resolution and
approval by the Board of Directors):
(1) any merger, split-off, dissolution and liquidation of the Target Company, or the Target
Company applying for its bankruptcy and restructuring, and/or any decision on change of
corporate form of the Target Company;
(2) termination of the Main Business of the Target Company or any change to its current
Main Business;
(3) any equity financing plan of the Target Companies, or any increase, decrease or
cancellation of any authorized share capital, issued shares or registered capital of the
Target Companies, or any issuance, distribution, purchase or redemption of any
shares/equity interests or convertible securities, or any share warrants, or issuance of
options or any other matters that may result in the future issuance of new shares or the
dilution of the ownership percentage of the Investors in the Target Company;
(4) any related-party transaction beyond the annual budget between the Target Company and
any of its affiliate whose financial statement is not included in a consolidated statement
of the Target Company, with the amount in excess of RMB 300 million individually or in
aggregate within one (1) year;
15
(5) any borrowing or any other security arrangement by the Target Company beyond the
bank credit granted prior to the Previous Transaction or beyond the annual budget
approved by the Shareholders’ meeting or the Board of Directors of the Target Company
after the Previous Transaction, in excess of RMB 300 million individually or in
aggregate within one (1) fiscal year;
(6) any contract beyond the annual budget between the Target Company and any third party
whose financial statement is not included in a consolidated statement of the Target
Company out of the ordinary course of business of the Target Company, in excess of
RMB 300 million;
(7) any expenditure or payment beyond the annual budget including construction projects,
establishment of any subsidiary or acquisition of equity interest in other companies, in
excess of RMB 300 million individually or in aggregate within one (1) fiscal year;
(8) any non-controlling long-term equity investment or any disposal of such investment
made by the Target Company beyond the annual budget, in excess of RMB 300 million
individually or in aggregate within one (1) fiscal year;
(9) any sale or disposal of assets or equity interests to any third party whose financial
statement is not included in a consolidated statement of the Target Company, in excess of
RMB 300 million;
(10) any lending of money in any form (including without limitation, inter-lending and bridge
loan for purposes rather than operation) to any third party whose financial statement is
not included in a consolidated statement of the Target Company;
(11) any provision of guarantee, mortgage, pledge and security of any kind to any third party
whose financial statement is not included in a consolidated statement of the Target
Company;
(12) any sale, transfer, exclusive license, pledge or disposition of any kind of any material
brand, trademark, patent, copyright, non-patent technology or other intellectual
properties of the Target Company and/or its controlled subsidiaries to any third party
whose financial statement is not included in a consolidated statement of the Target
Company, with the amount in excess of RMB 300 million;
16
(13) formulation and submission of any proposal of any amendment to the articles of
association of the Target Company to the Shareholders’ meeting for its approval;
(14) formulation and submission of any proposal of any adjustment to the number and
composition of the Board of Directors of the Target Company to the Shareholders’
meeting for approval;
(15) any merger, Deemed Liquidation Event, drag-along event involving the Target Company
and any other matter that may result in change of control of the Target Company;
(16) determination of the application time of listing, percentage of issuance and stock
exchange in connection with the Qualified IPO of the Target Company; and
(17) amendment or change of the rights and priorities of the Investors hereunder, or any
restriction on such rights, or enabling any other Shareholders to enjoy rights more
favorable than or equivalent to those of the Investors.
6.1.3
During the period in which the Investors hold equity interests in the Target Company,
resolutions in respect of the following matters material to the Target Company shall be
adopted by affirmative votes of not less than two-thirds (2/3) of the directors of the Target
Company before implementation (if such matters shall be submitted to the Shareholders’
meeting for resolution as required by relevant Laws and Regulations or the articles of
association of the Target Company, such matters shall be submitted to the Shareholders’
meeting for resolution and approval before implementation, and the following matters shall
not be directly submitted to the Shareholders’ meeting for resolution without resolution and
approval by the Board of Directors):
(1) approval of the annual budget and final accounts of the Target Company; and
(2) appointment or removal of CEO and CFO of the Target Company.
6.1.4
During the period in which the Investors hold equity interests in the Target Company,
resolutions in respect of the following matters of major importance to the Target Company
shall be adopted by not less than one-half (1/2) of the directors of the Target Company before
implementation
17
(if such matters shall be submitted to the Shareholders’ meeting for resolution as required by
relevant Laws and Regulations or the articles of association of the Target Company, such
matters shall be submitted to the Shareholders’ meeting for resolution and approval before
implementation, and the following matters shall not be directly submitted to the
Shareholders’ meeting for resolution without resolution and approval by the Board of
Directors):
(1) to amend and approve the adoption of material accounting policies or change the fiscal
year, and select and change the auditing firm among the “Big Four” accounting firms
(i.e., PwC, DTT, KPMG and EY);
(2) to distribute profits to the Shareholders and converse capital reserve into share capital;
and
(3) to establish, amend or implement any equity incentive plan/employee stock ownership
plan of the Target Company.
6.1.5
During the preparation and formulation of the annual budget of the Target Company, the
Investors shall be entitled to arrange observers to make observations and provide suggestions.
Prior to the completion of the Qualified IPO of the Target Company, in respect of the annual
budget, the annual final accounts, selection and appointment of CEO and CFO of the Target
Company and other related matters, the directors nominated by the NIO Parties and the
directors nominated by the Investors shall carry out a full consultation before such matters are
formally submitted to the Board of Directors or the Shareholders’ meeting for resolution.
6.1.6
The aforesaid protective right mechanism shall apply to other Group Members, and none of
such Group Members shall engage in the aforesaid matters without the prior written review
and approval by the Target Company in accordance with the aforesaid provisions.
6.2
Unless otherwise agreed in the Transaction Documents, the aforesaid clauses shall become void
automatically as of the date of the acceptance of the application for the Qualified IPO of the Target
Company. However, if such application for the Qualified IPO of the Target Company fails to be approved
by the examination authority of the CSRC or relevant stock exchanges, or the Target Company fails to be
listed on relevant stock exchanges, the full validity of such provision entitling rights to the Investors shall
restore automatically and immediately.
6.3
The Parties hereto agree to amend the articles of association of the Target Company in
18
accordance with this Clause.
7.1
Grant and Exercise of the Right of First Refusal
7 RIGHT OF FIRST REFUSAL
Prior to the Qualified IPO of the Target Company and as long as the Investors hold equity interests in the
Target Company, if the NIO Parties intend to indirectly transfer its equity interests in / shares of the Target
Company to any third party other than its affiliate (the “Transferee”) by transferring the equity interests in
the Holdco of the Target Company, or if any Shareholders of the Target Company intends to transfer its
equity interests in / shares of in the Target Company to any non-affiliated third party except for the
Investors (the “Proposed Transfer”), the NIO Parties shall give a prior written notice to the other
Shareholders of the Target Company, which shall specify the terms and conditions of the Proposed
Transfer or proposed disposal. Each of the other Shareholders of the Target Company (the “ROFR
Holder”) shall have the right of first refusal to purchase the equity interests in / shares of the Target
Company under the same conditions in proportion to their then respective ratio of paid-in capital
contribution (each of the aforesaid Shareholder who intends to transfer equity interests shall be referred to
individually as a “Transferring Shareholder”).
7.1.1 If any Transferring Shareholder intends to transfer, directly or indirectly, any registered capital of
the Target Company held by it, it shall give a written notice (the “Transfer Notice”) to the
ROFR Holders fifteen (15) working days before it enters into any binding agreement with such
transferee with respect to the Proposed Transfer. The Transfer Notice shall include, without
limitation, the number and price of the registered capital to be transferred, and the payment
method of the price.
7.1.2 The ROFR Holders shall reply, in writing within fifteen (15) working days (the “Transfer
Feedback Period”) following the receipt of the aforesaid Transfer Notice, whether they opt to
exercise the right of first refusal and the amount of registered capital to be purchased by them. If
any ROFR Holder fails to reply within such Transfer Feedback Period, it shall be deemed to
have waived the right of first refusal, consented to the Proposed Transfer, and waived the co-sale
right enjoyed by it (if any).
If any ROFR Holder proposes to exercise the right of first refusal, it shall purchase all or part of
the equity interests to be transferred at the proposed transfer price and on other same terms and
conditions. If the total number of the equity interests to be transferred of which the ROFR
Holder propose to exercise the right of first refusal is in excess of the number of the equity
19
interests to be transferred, the maximum number of the equity interests to be transferred which
each ROFR Holder is entitled to purchase shall be equal to the product of the equity interests to
be transferred multiplied by a fraction, of which the numerator is the total registered capital of
the Target Company held by such ROFR Holder as of the date of the Transfer Notice, and the
denominator is the total registered capital of the Target Company then held by all ROFR Holders
that have elected to exercise the right of first refusal as of the date of the Transfer Notice. The
delivery of a written notice from the ROFR Holders exercising the right of first refusal shall
constitute a formal agreement between the Transferring Shareholders and such ROFR Holders in
respect of sell and purchase all or part of the equity interests to be transferred (the amount of
which to be subject to the adjustment as described above, if necessary) at the proposed transfer
price and in accordance with other applicable terms and conditions set forth in the Transfer
Notice. However, to clarify the transaction arrangement and facilitation of the change
registration with competent administration for market regulation, the parties shall cooperate to
enter into a written contract in accordance with the formal agreement between them.
7.1.3 If the ROFR Holders waive the right of first refusal in writing during the Transfer Feedback
Period or fails to response within the Transfer Feedback Period, the Proposed Transfer shall be
completed within thirty (30) working days from the earlier of the occurrence of the forgoing
circumstances (the completion date shall be the date on which the re-registration with competent
administration for market regulation is completed, if applicable); if the Proposed Transfer is not
completed within such period, the Transferring Shareholders shall re-issue a Transfer Notice in
accordance with Clause 7.1.1 hereof and the ROFR Holders shall have the right of first refusal
and the right of co-sale (if applicable) with respect to such transfer.
7.1.4 If (a) any ROFR Holder waives the right of first refusal in writing during the Transfer Feedback
Period, or (b) any ROFR Holder fails to response within the Transfer Feedback Period, or (c) any
ROFR Holder elects to exercise the right of first refusal under Clause 7.1.2 above but does not
purchase all of the equity interests to be transferred, after the expiration of the Transfer Feedback
Period, the Transferring Shareholders may sell the equity interests to be transferred (or, under the
circumstance (c) above, the remaining equity interests to be transferred of which the ROFR
Holders are not exercised) to the Transferee at a price and on terms and conditions not less
favorable than that of the Proposed Transfer and those set forth in the Transfer Notice.
7.1.5 If the Investors agree to acquire the NIO Parties’ equity interest in the Holdco
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of the Target Company in accordance with this clause and after the Qualified IPO of the Target
Company, the NIO Parties undertake to procure, when the Investors decide to exit from the
Target Company, the Holdco of the Target Company to sell the shares of the Target Company
indirectly held by the Investors at an amount calculated on a basis of ratio of the Investors’
interest in the Holdco of the Target Company, and cooperate with the Investors in completing the
procedures for capital reduction by the Holdco of the Target Company; or the NIO Parties or any
third party designated by them shall acquire the interests of the Holdco of the Target Company
held by the Investors at a price calculated on a basis of sales price of the shares of the Target
Company by the Holdco of the Target Company.
7.1.6 This Clause 7.1 shall not apply to the following circumstances: (i) the equity transfer in
accordance with Clause 10 (Anti-dilution) hereof; and (ii) any direct or indirect transfer of equity
interests or any interests therein of the Target Company to the participants pursuant to any equity
incentive plan duly approved in accordance with Clause 6.1.2 hereof, or any acquisition or
transfer of the equity interests or any interests therein of the Target Company directly or
indirectly held by the participants pursuant to any duly approved equity incentive plan
mentioned above.
7.2
Infringement on the Right of First Refusal and the Remedies
If the Proposed Transfer infringes the ROFR Holders’ right of first refusal:
7.2.1 The Proposed Transfer shall be invalid, and none of the Parties shall cooperate in any manner on
the registration or filing with the competent administration for market regulation and commerce
bureau in respect of the Proposed Transfer;
7.2.2 The Transferee of the Proposed Transfer is not entitled to any right and interest as a shareholder
of the Target Company; and
7.2.3 For the purpose of this Agreement, if the Transferring Shareholder intending to make the
Proposed Transfer fails to give the Transfer Notice in accordance with Clause 7.1.1 hereof, or if
there is material difference or material omission in the conditions of the Proposed Transfer from
those given in the Transfer Notice, it shall constitute an infringement of the ROFR Holders’ right
of first refusal.
8 RIGHT OF CO-SALE
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8.1
Grant and Exercise of Co-sale Right
As long as the Investors hold equity interests in the Target Company, if the NIO Parties intend to directly
or indirectly conduct a Proposed Transfer and the Investor fails to exercise the right of first refusal in
accordance with Clause 7 hereof, such Investors shall have the co-sale right, i.e., the right to sell the
registered capital of the Target Company held by them at the same price and on the same terms and
conditions in accordance with this Agreement.
8.1.1 The Investors reply in writing within fifteen (15) working days (the “Co-Sale Feedback
Period”) from the date of receipt of the Transfer Notice of the Proposed Transfer from the
Transferring Shareholders, stating whether they intend to exercise the co-sale right and the
amount of the registered capital proposed to be co-sold. If such Investors fail to reply within
such time limit, they shall be deemed to have waived the co-sale right enjoyed by them.
8.1.2 Each Investor shall be entitled to simultaneously transfer to such third party all or part of its
equity interest in / shares of the Target Company at the same price and under the same conditions
under the same conditions in proportion to their respective shareholding percentage at the time.
If more than two Investors propose to exercise the co-sale right, the number of the registered
capital of which each Investor exercising the co-sale right shall be equal to the product of the
registered capital of the Target Company proposed to be transferred by the Transferring
Shareholders to the Transferee multiplied by a fraction, of which the numerator is the total
registered capital of the Target Company then held by such Investor exercising the co-sale right
as of the date of the Transfer Notice, and the denominator is the total registered capital of the
Target Company then held by all the Investors that have elected to exercise the co-sale right and
the Transferring Shareholders as of the date of the Transfer Notice. If the equity interests in /
shares of the Target Company that the NIO Parties and the Investors intend to sell exceed the
equity interests Holdco of/shares proposed to be transferred to such third party, the Investors
shall have the right of priority to sell the equity interests/shares to such third party. If the subject
matter of the Proposed Transfer is the equity interest in the Holdco of the Target Company, the
amount of the equity interests to be sold of which the Investors exercising co-sale right shall be
calculated on a basis of the number of equity interest in / shares of the Target Company
representing the subject matter of the Proposed Transfer.
8.1.3 If, in any Proposed Transfer, the Transferee does not agree to purchase the equity interest held by
the Investors in the Target Company, and as a result of which the Investors are unable to exercise
the co-sale right, the Proposed
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Transfer shall be terminated and shall not continue, unless such Investors exercising the co-sale
right consent in advance in writing.
8.1.4 If any Investor waives the co-sale right in writing during the Co-Sale Feedback Period or fails to
response within the Co-Sale Feedback Period, the Proposed Transfer shall be completed within
thirty (30) working days from the earlier of the occurrence of the forgoing circumstances (the
completion date shall be the date on which the re-registration with competent administration for
market regulation is completed, if applicable); if the Proposed Transfer is not completed within
such period, the Transferring Shareholders shall give a new Transfer Notice in accordance with
Clause 7.1.1 hereof and the Investors shall have the co-sale right with respect to such transfer.
8.1.5 This Clause 8.1 shall not apply to the following circumstances: (i) the equity transfer in
accordance with Clause 10 (Anti-dilution) hereof; and (ii) any direct or indirect transfer of equity
interests or any interests therein of the Target Company to the participants pursuant to any equity
incentive plan duly approved in accordance with Clause 6.1.2 hereof, or any acquisition or
transfer of the equity interests or any interests therein of the Target Company directly or
indirectly held by the participants pursuant to any duly approved equity incentive plan
mentioned above.
8.2
Infringement on the Co-Sale Rights and the Remedies
If the Proposed Transfer infringes the Investors’ co-sale right:
8.2.1 The Proposed Transfer shall be invalid, and none of the Parties shall cooperate in any manner on
the registration or filing with the competent administration for market regulation and commerce
bureau in respect of the Proposed Transfer;
8.2.2 The Transferee of the Proposed Transfer is not entitled to any right and interest as a shareholder
of the Target Company; and
8.2.3 For the purpose of this Agreement, if the Transferring Shareholder intending to make the
Proposed Transfer fails to give the Transfer Notice in accordance with Clause 7.1.1 hereof, or if
there is material difference or material omission in the conditions of the Proposed Transfer from
those given in the Transfer Notice, it shall constitute an infringement of the Investors’ co-sale
right.
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9.1
Grant and Exercise of the Pre-emptive Right
9 PRE-EMPTIVE RIGHTS
In the event of increase in the registered capital of the Target Company (the “Proposed Capital
Increase”), the Shareholders shall have the pre-emptive right to subscribe for the newly increased
registered capital or newly issued shares of the Target Company in proportion to their respective ratio of
paid-in capital contribution under the same conditions.
9.1.1 The Target Company shall give a written notice (the “Capital Increase Notice”) to each
Shareholder fifteen (15) working days before it enters into any binding agreement or convenes a
Board’s meeting and/or Shareholders’ meeting in respect of the Proposed Capital Increase,
which shall specify, including without limitation, the amount of the registered capital to be
increased, the price of the Proposed Capital Increase, and the payment method of price of the
registered capital to be increased. If two or more Shareholders with pre-emptive right propose to
exercise the pre-emptive rights, the maximum amount of the registered capital for which each
Shareholder is entitled to subscribe shall be the product of the newly increased registered capital
of the Target Company multiplied by a fraction, of which the numerator is the total paid-in
capital contribution to the Target Company then held by such Shareholder exercising the pre-
emptive right as of the date of the Capital Increase Notice issued by the Target Company, and the
denominator is the total paid-in capital contribution to the Target Company then held by all
Shareholders that have elected to exercise the pre-emptive right as of the date of the Capital
Increase Notice issued by the Target Company.
9.1.2 Each Shareholder shall reply in writing within fifteen (15) working days (the “Capital Increase
Feedback Period”) after the receipt of the aforesaid Capital Increase Notice whether it elects to
exercise the pre-emptive right and the amount of the registered capital to be subscribed for by it.
If any Shareholder fails to reply within the Capital Increase Feedback Period, it shall be deemed
to have waived the pre-emptive right.
9.1.3 If any Shareholder waives the pre-emptive right in writing during the Capital Increase Feedback
Period set forth in Clause 9.1.2 or fails to make response during the Capital Increase Feedback
Period, the Proposed Capital Increase shall be completed within thirty (30) working days after
the earlier of the occurrence of the foregoing circumstances (the completion date shall be the
date on which the re-registration with competent administration for market
24
regulation is completed); if the Proposed Capital Increase is not completed within such period,
the Target Company shall re-issue a Capital Increase Notice in accordance with Clause 9.1.1
hereof and such Shareholder shall obtain the pre-emptive right with respect to such capital
increase.
9.1.4 This Clause 9.1 shall not apply to the newly increased registered capital resulting from the equity
incentive plan duly approved in accordance with Clause 6.1.2, the conversion of profits into
registered capital on a pro rata basis to all Shareholders, the conversion of capital reserves into
registered capital on a pro rata basis to all Shareholders, and the issuance of shares in connection
with the restructuring of a joint stock company and the Qualified IPO.
9.2
Infringement on the Pre-emptive Right and the Remedies
If the Proposed Capital Increase infringes the Shareholders’ pre-emptive right:
9.2.1 The Proposed Capital Increase shall be invalid, and none of the Parties shall cooperate in any
manner on the registration or filing with the competent administration for market regulation and
commerce bureau in respect of the Proposed Capital Increase;
9.2.2 The subscriber to the registered capital of the Target Company in respect of the Proposed Capital
Increase is not entitled to any right and interest as a shareholder of the Target Company; and
9.2.3 For the purpose of this Agreement, if the Target Company fails to give the Capital Increase
Notice in accordance with Clause 9.1.1 hereof, or if there is material difference or material
omission in the conditions of the Proposed Capital Increase from those given in the Capital
Increase Notice, it shall constitute an infringement of the Shareholders’ pre-emptive right.
10 VALUE ASSURANCE AND ANTI-DILUTION RIGHTS
10.1 Value Assurance
10.1.1 Prior to the Qualified IPO of the Target Company, upon prior written consent of the Investors,
the Target Company may issue new shares or increase its registered capital that may result in
dilution of the percentage of the Investors’ shareholding or equity interest in any form.
10.1.2 After the closing of the Previous Transaction and prior to the date on which
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the Target Company obtains the guidance filing notice in connection with the Qualified IPO
from the provincial securities regulatory bureau at the place where the Target Company is
located, if the Investors consent in writing to the issuance of new shares or increase in the
registered capital of the Target Company, the NIO Parties shall guarantee that the price of the
subsequent financing shall not be lower than the the price at the time when the Investors invested
in the Target Company (specifically, as of the Execution Date hereof, the subscription price paid
by the Investors for their acquisition of equity interests is RMB5.72 for one (1) Yuan registered
capital, hereinafter referred to as the “Investors Subscription Price”).
10.2 Anti-dilution Compensation
If the final price or cost paid by any Investor (including the existing Shareholders and any newly joined
shareholders) in any new round of investment of the Target Company in the future (either by means of
equity interest transfer or capital increase) is lower than the Investors Subscription Price in accordance
with certain agreement or arrangement entered into by and among the Target Company, the NIO Parties
and the persons acting in concert with the Target Company and the NIO Parties, the Investors Subscription
Price shall be re-calculated based on the following formula: P2 = P1 × (A + B) ÷ (A + C), of which, P2 =
the Investors Subscription Price after the adjustment; P1 = the initial Investors Subscription Price; A = the
registered capital of the Target Company prior to the above mentioned capital increase on a fully diluted
basis (i.e., assuming that each Shareholder or any other party has exercised its subscription right,
convertible loan or other rights convertible into any equity interest in the Target Company); B = the
registered capital of the Target Company that can be acquired at P1 price with the above mentioned capital
increase; C = the registered capital of the Target Company actually increased in the above mentioned
capital increase. The Investors shall have the right to re-calculate the amount of the registered capital of
the Target Company that they are entitled to, based on the adjusted Investors Subscription Price. To the
extent permitted by Laws, the difference between such amount and the registered capital of the Target
Company that the Investors subscribe for in accordance with the Investment Agreement shall be made up
by the Target Company and the NIO Parties as follows: (i) the additional issuance of equity interests by the
Target Company to the Investors at the lowest price permitted by applicable Laws; and (ii) the transfer by
the NIO Parties of their equity interests in the Target Company to the Investors at the lowest price
permitted by applicable Laws. If such compensation is made by means of subclause (i) above, the
subscription price for the equity interests that the Investors shall pay to the Target Company shall be borne
by the NIO Parties. Other expenses and costs incurred in the process of compensation (if any) shall be
borne by the NIO Parties.
10.3
Implementation of the Anti-dilution Compensation
26
The implementation of anti-dilution compensation shall be fully completed within one hundred and twenty
(120) days after the date on which the Investors exercise the anti-dilution right in accordance with Clause
10.2 hereof and notify the NIO Parties in writing (if additional time is required due to the performance of
any public procedure such as appraisal and/or bidding, auction or listing in respect of the transfer of state-
owned assets, such time shall not be included in one hundred and twenty (120) days). The completion date
shall be the date on which the registration with competent administration for market regulation is
completed.
10.4 Anti-dilution Compensation Overdue Penalty
If the NIO Parties fail to fully implement the anti-dilution compensation within the period specified in
Clause 10.3 hereof, the NIO Parties shall pay the overdue penalty to the Investors from the first day of
such delay. The overdue penalty shall be calculated at the rate of 0.02% of the outstanding amount of cash
compensation payable for each day of such delay.
The Parties agree that, if the Target Company incurs changes in the share capital of the Target Company
due to conversion of capital reserves to the registered capital, equity split or consolidation, issuance of
equity dividends and other similar events, the price per share for the equity interests of the Target
Company obtained by the corresponding Investors shall be adjusted accordingly.
This Clause 10 shall not apply to the newly increased registered capital resulting from the equity incentive
plan duly approved in accordance with Clause 6.1.2, the conversion of profits into registered capital on a
pro rata basis to all Shareholders, the conversion of capital reserves into registered capital on a pro rata
basis to all Shareholders, and the issuance of shares in connection with the restructuring of a joint stock
company and the Qualified IPO.
10.5
10.6
11.1
Triggering Events of Investor Redemption Right
11 REDEMPTION RIGHT
Upon the occurrence of any of the following events, the Investors shall obtain a redemption right, i.e., the
right to request NIO Inc. or the NIO HK Holding Platforms to redeem all or part of the equity interest then
held by the Investors in the Target Company. The Target Company shall assume an unlimited joint and
several liabilities for the performance of the redemption obligations of NIO Inc. and the NIO HK Holding
Platforms, and shall cause the Actual Controller to give a written undertaking of using his reasonable
efforts to cause NIO Inc. and the NIO HK Holding Platforms to perform the redemption obligations
hereunder:
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11.1.1
The Target Company fails to complete the listing application or to issue the material assets
restructuring plan related to the Qualified IPO before December 31, 2027, or fails to complete
the Qualified IPO before December 31, 2028;
11.1.2 With respect to any Mature Investor (as defined below), the Target Company fails to
complete the Qualified IPO prior to the maturity date of the fund corresponding to such
Investor (the “Fund Maturity Date”, i.e., the expiration date of the fund duration of such
Investor as determined by the registration with competent administration for market
regulation /filing with the Asset Management Association of China; if the fund duration of
such Investor is extended after the Execution Date hereof, the extended fund duration of such
Investor as determined by the registration with competent administration for market
regulation/filing with the Asset Management Association of China shall apply; such Investor
is hereinafter referred to as the “Mature Investor”), and the Mature Investor shall notify the
NIO Parties and the Target Company of the Fund Maturity Date in writing in advance;
11.1.3
11.1.4
11.1.5
The NIO Parties or the Target Company has significant concealment, misleading, false
statement or suspected fraud in the process of information disclosure for the transactions
conducted in accordance with the Investment Agreement;
The NIO Parties’ capital contribution in the Target Company and the Group Members is
false, fraudulent or has been withdrawn, or there is a Material breach in any provision in the
formally executed Transaction Documents or any representations, warranties or undertakings
thereunder by the NIO Parties and/or the Target Company;
The Actual Controller of the Target Company and the core management team of the Target
Company as listed in Exhibit II (the “Core Management Team”) encounter Material
integrity problems, which lead to the Material internal control loopholes in the Target
Company, including without limitation, the off-balance-sheet sales income in cash which is
unknown to the Investors, misappropriation of funds and unfair related-party transactions; or
the Target Company has Material internal control loopholes, which cause Material adverse
impact on the Target Company, even though such loopholes are not caused by the Actual
Controller or the Core Management Team of the Target Company intentionally;
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11.1.6
11.1.7
11.1.8
There are major changes in the current Main Business of the Target Company as agreed in the
Transaction Documents, or any license and permit of the Target Company necessary for
operating such current Main Business is rescinded or the Target Company is not able to
obtain and maintain such license or permit;
The Target Company breaches the provisions with respect to the use of the Capital Increase
Price as agreed in the Investment Agreement;
There is a change of the Actual Controller of the Target Company or the actual controller of
NIO Inc. due to any circumstance;
11.1.9 More than half of the Core Management Team resigns within two (2) years prior to the date
of submission of the application for the Qualified IPO by the Target Company;
11.1.10 Any event for redemption of the equity interests agreed between any Investor or other
Shareholders of the Target Company (other than the Investors) and the Target Company or
the NIO Parties is triggered, and such Investor or other Shareholders of the Target Company
request the Target Company or the NIO Parties to redeem their equity interests in the Target
Company;
11.1.11 Any event for redemption of the equity interests agreed between the shareholders of NIO Inc.
and NIO Inc. is triggered, or the shareholders of NIO Inc. request NIO Inc. or the actual
controller of NIO Inc. to redeem the shares held by them, provided that the performance of
such redemption obligations may result in change of the actual controller of NIO Inc. or the
Actual Controller of the Target Company;
11.1.12 The Target Company or any of its creditors applies to a PRC court for bankruptcy and
reorganization of the Target Company; or NIO Inc. or any of its creditors applies to a
competent judicial authority for bankruptcy and reorganization of NIO Inc., which may result
in change of the actual controller of NIO Inc. or the Actual Controller of the Target
Company; and
11.1.13 The Target Company fails to complete the overall change from a limited liability company to
a joint stock limited company (the “Share Reform”) by December 31, 2026 (or other date
agreed upon by the Parties), and the completion date of the Share Reform shall be the date on
which the Target Company obtains the business license of a joint stock limited company
29
issued by the competent administration for market regulation.
11.2
Price of Redemption
If the Investors obtain the redemption right pursuant to Clause 11.1 hereof, and they request NIO Inc.
and/or the NIO HK Holding Platforms to redeem all or part of the equity interest in the Target Company
then they held, the price of redemption (the “Redemption Price”) shall be: with respect to each Investor,
the sum of the total amount of the investment price paid by the Investors to the Target Company for the
purpose of acquiring the equity interest in the Target Company plus an investment income calculated at a
compound interest rate of 8.5% per annum on basis of the total amount of the investment price (for
purpose of calculation, one year shall be calculated as 360 days, and if the time period is less than one
year, it shall be calculated based on actual days); in particular, with respect to each Investor, if the
investment prices paid by such Investor are paid to the Target Company in installment, the amount of the
forging investment income of each installment of the investment price shall be calculated from the actual
capital injection date of such batch of investment price. The Redemption Price shall be paid in cash.
The Investors shall have pari-passu redemption right. The Investors shall be entitled to the aforesaid
Redemption Price by requesting NIO Inc. and/or the NIO HK Holding Platforms to purchase the equity
interest held by the Investors in the Target Company.
11.2.1
NIO Inc. or the NIO HK Holding Platforms shall complete the payment of the Redemption
Price within one hundred and twenty (120) days from the date of receipt of the Investor’s
notice requesting to exercise the redemption right, the Party obliged to pay the Redemption
Price shall pay additional overdue penalty to the Investors, until the later of (i) the NIO
Parties has fulfilled the redemption obligation; (ii) the Investor expressly states that it elects
to transfer its equity to a third party in accordance with Clause 11.2.2; and (iii) the date on
which the Investor enters into an equity transfer agreement with a third party. In particular, in
the circumstances set forth in items (ii) and (iii) above, the calculation of the overdue penalty
shall cease to be made only for the portion of the consideration corresponding to the transfer
by the Investor to a third party. The overdue penalty shall be calculated at the rate of 0.02%
of the outstanding amount of cash compensation payable for each day of delay. The relevant
parties shall otherwise agree on the time of redemption through consultation, if additional
time is required due to the performance of any public procedure such as appraisal and/or
bidding, auction or listing in respect of the transfer of state-owned assets, or the performance
of any mandatory procedures of announcement in respect of the reduction in registered
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11.2.2
capital in the Target Company.
If NIO Inc. or the NIO HK Holding Platforms fail to pay the Redemption Price and the
overdue penalty in full within one hundred and twenty (120) days from the receipt of the
notice of the Investors requesting to exercise the redemption right, the Investors shall have
the right to transfer all or part of the equity interest in the Target Company held by it to any
third party at any time, and all the then-current Shareholders, the Target Company and the
Actual Controller of the Target Company shall cooperate with such transfer. Notwithstanding
the foregoing, if NIO Inc. or the NIO HK Holding Platforms fail to comply with the provision
in respect of the redemption right, and if the Investors intend to transfer the equity interest in /
shares of the Target Company to any NIO Parties Competitor, the Investors shall give a prior
notice to the NIO Parties and consult with the NIO Parties in respect of the same, and the
NIO Parties shall have the right of first refusal under the same conditions.
Under the circumstance that the NIO Parties elect not to exercise the right of first refusal or
fail to notify the Investors in writing of its exercise of the right of first refusal within ten (10)
days after the receipt of the notice, the Investors may transfer their equity interest in /shares
of the Target Company to such NIO Parties Competitor under conditions no less than those
for notifying the NIO Parties to exercise the right of first refusal. For the avoidance of doubt,
unless expressly indicated by the Investors in writing, no negotiation or execution of any
legal document by the Investors in respect of the transfer of equity interests / shares to any
third party shall be deemed as a waiver of their rights of claiming obligations of the
redemption in accordance with the provision of redemption right hereof against any entity
who has the redemption obligations. If the price received by the Investors for the transfer of
equity interest/shares in the Target Company to a third party under this clause is less than the
Redemption Price and overdue penalty entitled to the Investors in accordance with Clause
11.2, NIO Inc. or the NIO HK Holding Platforms shall make up the shortfall in cash to the
Investors within thirty (30) days from the date on which the Investors and the third party
enter into relevant equity transfer agreement.
11.2.3
If NIO Inc. or the NIO HK Holding Platforms fail to pay the Redemption Price in full within
one hundred and twenty (120) days from the receipt of the notice of the Investors requesting
to exercise the redemption right, the Investors shall have the right to give a notice to the
Target Company requesting the Target Company to assume joint and several liability with
31
NIO Inc. or the NIO HK Holding Platforms in respect of the payment of the Redemption
Price and overdue penalty under Clause 11 hereof, and the Target Company shall complete
the payment within thirty (30) days after receipt of the notice as required.
11.3
If, after the completion of the Previous Transaction, the Investors intend to acquire more equity interests
in/ shares of the Target Company by means of capital increase or transfer of equity interests/ shares, the
Redemption Price of such further increased equity interests/ shares shall be agreed by the relevant parties
through negotiations.
12.1 Guaranteed Minimum Return on Investment
12 LIQUIDATION PREFERENCE
If the Target Company is to be liquidated due to bankruptcy, reorganization, dissolution, merger, split-off,
acquisition or any other reasons, after the Target Company has paid up expenses and costs in all kinds, all
debts and taxes in accordance with Laws, the Target Company shall first distribute such Remaining
Property to the Investors in cash (the “Remaining Property”), and the amount of the Remaining Property
which shall be distributed first to the Investors shall be the higher of (the “Allocation Priority Amount”):
(1) the amount of Remaining Property to be distributed to the Investors in proportion to their respective
paid-in capital contribution to the Target Company; or (2) the sum of the total amount of the investment
price paid by the Investors to the Target Company for the purpose of acquiring the equity interest in the
Target Company plus an investment income calculated at a compound interest rate of 8.5% per annum on
basis of the total amount of the investment price (the “Guaranteed Minimum Investment Return”). If
the Remaining Property of the Target Company is not sufficient to be distributed among the Investors
according to the Allocation Priority Amount of the Investors, the Target Company shall distribute the
Remaining Property among the Investors in proportion to the Investors’ respective Allocation Priority
Amounts.
12.2 Audit of Remaining Property
The Parties unanimously agree that, in the event of the liquidation of the Target Company, an accounting
firm recognized by the Parties shall be engaged to audit the balance sheet and property list prepared by the
Target Company, and the book value of the Remaining Property shall be subject to the audit results of the
auditor so appointed.
12.3 Distribution of Remaining Property
If the Investors have received the Allocation Priority Amount in full, the remaining
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property of the Target Company distributable to its Shareholders in accordance with the Laws shall be
distributed to the other Shareholders of the Target Company in proportion to their respective shareholding
percentages.
12.4 Compensation of Insufficient Distribution
If the Allocation Priority Amount received by the Investors in accordance with Clause 12.1 is less than the
Guaranteed Minimum Investment Return, NIO Inc. and the NIO HK Holding Platforms shall compensate
the Investors in cash with the amount they obtained in the liquidation. The amount of such compensation
equals to the Guaranteed Minimum Investment Return minus the amount the Investors obtained in the
liquidation. If the aggregate amounts obtained by NIO Inc. and the NIO HK Holding Platforms in the
liquidation are not sufficient to make up the difference between the Guaranteed Minimum Investment
Return and the amount the Investors obtained in the liquidation, the Investors shall be entitled to the
amount which NIO Inc. and the NIO HK Holding Platforms should have obtained in the liquidation in
proportion to the Investors' respective Allocation Priority Amount and in accordance with the order agreed
in Clause 12.1.
12.5 Deemed Liquidation Event
Any of the following events shall be deemed as the liquidation of the Target Company (the “Deemed
Liquidation Event”):
12.5.1
Any merger, split-off, acquisition, reorganization, equity transfer, share swap, capital and
share increase or other similar one or a series of transactions of the Target Company, which
may result in change of control of the Target Company (subject to a legal opinion issued by a
law firm recognized by the NIO Parties and the Investors and affixed with the official seal of
such firm);
12.5.2
Any sale, transfer, lease or disposal of all or substantially all of the business or assets of the
Target Company (or a series of transactions that may result in sale, transfer, lease or disposal
of all or substantially all of the business or assets of the Target Company); and
12.5.3
Exclusive and irrevocable license to a third Party all or substantially all of the intellectual
property of the Target Company.
12.6 Distributions in a Deemed Liquidation Event
In case of a Deemed Liquidation Event, the Investors shall have the right to require the
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Target Company and/or all Shareholders of the Target Company to realize in substance the policies of
distribution set forth in Clause 12.1 and Clause 12.3 hereof in a reasonable manner in accordance with
Laws and Regulations, so as to ensure the priority liquidation right of the Investors or the distribution of
the Guaranteed Minimum Investment Return. In the event that the total consideration received by the
Investors in such Deemed Liquidation Events is not sufficient to realize the Guaranteed Minimum
Investment Return of the Investors, NIO Inc. and the NIO HK Holding Platforms undertake to compensate
separately the shortfall to the Investors in cash, and to assume joint and several liabilities for such
compensation.
12.7 Application of Conflicts of Agreement
Notwithstanding the provisions of this Clause 12, upon occurrence of the events set forth in Clause 13, the
Parties agree and acknowledge that the relevant transaction consideration shall be allocated in the manner
described in Clause 13.
13.1
Exercise of Drag-along Right
13 DRAG-ALONG RIGHT
If the Investors fail to exit through exercising the redemption right set forth in Clause 11 hereof due to any
breach or other fault or negligence of the NIO Parties, and if the third party intends to purchase more than
fifty percent (50%) of equity interest in the Target Company or all or substantially all/most of the assets or
business of the Target Company (collectively, the “Co-Sale”), then the Investors that individually or in the
aggregate hold more than two-thirds (2/3) of the then total equity interests held by all Investors (the
“Drag-along Party”) shall have the right to give a written notice (the “Drag-along Notice”) to the NIO
Parties, which shall specify the basic information of such third party, the number of equity interest or
description of assets that they intend to purchase, the proposed purchase price and other material terms and
conditions, and request the NIO Parties, together with the Drag-along Party, to sell to such third party the
assets of the Target Company or equity interests in the Target Company respectively held by them at the
same price and under the same conditions:
13.1.1
If a third party intends to purchase the equity interest in the Target Company, the NIO Parties
shall have the right to decide and notify the Drag-along Party in writing within thirty (30)
days after the receipt of the Drag-along Notice whether they elect to purchase all of the Target
Company’s equity interests held by the Drag-along Party at the proposed purchase price and
on other equivalent terms and conditions, and to deliver a written decision to the Drag-along
Party. Such written decision shall constitute a contract between the NIO Parties and the Drag-
along
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13.1.2
Party for the acquisition of all of the Drag-along Party’s equity interest in the Target
Company. If, upon the expiration of the forgoing thirty (30)-day period, or if the NIO Parties
reply in writing not to exercise their first refusal right, the Drag-along Party shall have the
right to request the NIO Parties to sell, together with the Drag-along Party, their respective
equity interest in the Target Company that such third party intends to purchase at the same
price and under the same conditions (the “Drag-along Equity Interest Transaction”). If the
consideration obtained by each Drag-along Party through the Drag-Along Equity Interest
Transaction is less than the Redemption Price receivable by such Drag-along Party, all
transaction consideration obtained by the NIO Parties through the Drag-along Equity Interest
Transaction shall be distributed to each Drag-along Party in proportion to the Redemption
Price receivable by such Drag-along Party in order to make up the shortfall.
If a third party intends to purchase the assets of the Target Company, the Drag-along Party
shall have the right to request the Target Company to sell to such third party the assets of the
Target Company that such third party intends to purchase at the proposed purchase price and
on other terms and conditions (the “Drag-along Assets Transaction”, together with the
Drag-along Equity Transaction, the “Drag-along Transaction”). After such third party has
paid up the consideration for the Drag-along Assets Transaction in full to the Target
Company, the Target Company shall redeem all equity interests held by each Drag-along
Party in the Target Company. In consideration of such payment, the Target Company shall
pay to each Drag-along Party with transaction consideration for the Drag-along Assets in
proportion to the shareholding percentage on the basis of Redemption Price that each Drag-
along Party shall receive. If the consideration received by each Drag-along Party through the
Drag-along Asset Transaction is less than the Redemption Price receivable by such Drag-
along Party, all transaction consideration obtained by the NIO Parties through the Drag-along
Asset Transaction shall be distributed to each Drag-along Party in proportion to the
Redemption Price receivable by such Drag-along Party so as to make up the shortfall.
13.2
The NIO Parties shall use their best efforts to cooperate with the Drag-along Party to consummate the
Drag-along Transaction, including without limitation, to vote in favor of such Drag-along Transaction at
the Shareholders’ (general) meeting and the Board meeting, to execute all necessary resolutions and
documents at the request of the Drag-along Party or take all reasonable actions as the Drag-along Party
considers necessary, and to make representations and warranties customary for transactions to the third
party in the relevant transaction documents in connection with the Drag-along Transaction.
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If the consideration obtained by the Investors through the above Drag-along Transaction is less than the
Redemption Price, all transfer prices obtained through the Drag-along Transaction shall be distributed to
the Investors in proportion to the respective Redemption Price to which the Investors shall be entitled.
14.1 Consent Right to Equity Transfer
14 RESTRICTION ON EQUITY TRANSFER
Prior to the completion of the Qualified IPO of the Target Company, without prior written consent of the
Investors or unless otherwise agreed in the Transaction Documents, the NIO Parties shall not, directly or
indirectly, transfer, pledge or otherwise dispose the equity interests in / shares of the Target Company if
such act may cause the total (direct and indirect) shareholding percentage of NIO Inc. in the Target
Company to be decreased to less than sixty percent (60%). For the avoidance of doubt, provided that
without prejudice to the foregoing, the NIO Parties have the right to transfer all or part of its equity
interests in the Target Company to any of its affiliates without prior written consent of the Investors, and
the Investors agree to waive their respective right of first refusal, co-sale right and other pre-emptive rights
hereunder with respect to such transfer.
Prior to the completion of the Qualified IPO of the Target Company, unless otherwise approved by the
Board of Directors of the Target Company, the NIO Parties shall use their best efforts to cause the equity
interests in the Target Company or shares of the management / employee shareholding platform directly or
indirectly held by the Core Management Team, and the equity interests in the Target Company directly or
indirectly held by the NIO HK Holding Platforms, not to be transferred or disposed of during such period
prior to the completion of the Qualified IPO of the Target Company.
14.2 Consent to Transaction Documents
Unless otherwise provided in this Agreement or other Transaction Documents, on the date on which any
new shareholder of the Target Company acquires the equity interests held by the Parties and becomes a
shareholder of the Target Company in the future in accordance with the PRC Laws, such new shareholder
shall execute a binding joinder agreement in the form set forth in the Exhibit I hereto (the “Joinder
Agreement”) to become a party hereto, and shall acknowledge the arrangements under this Agreement
and other Transaction Documents and consent to the restrictions imposed by this Agreement and other
Transaction Documents.
15 EQUITY INCENTIVE
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15.1
Principles of Equity Incentive
The Investors encourage the Target Company to maintain the stability of its management team by adopting
equity incentives, provided that unless with prior written consent of the Investors, the equity incentives
carried out by the Target Company at any time shall satisfy the following requirements:
15.1.1
15.1.2
The equity incentive plan shall not cause any material adverse effect on the Qualified IPO of
the Target Company, including without limitation, that adoption of equity incentive plan shall
not cause the number of direct or indirect shareholders of the Target Company (excluding the
shareholders of NIO Inc.) to exceed 200, and shall not cause any instability in the
shareholding structure of the Target Company.
The equity incentive plan shall be subject to review and approval by the Board of Directors of
the Target Company in accordance with Clause 6.1.2 hereof. The equity incentive plan shall
include, without limitation, the equity incentive prices, shares for the equity incentive
scheme, the scope of the eligible participants, and restrictions on transfer of the equity
interests acquired by the participants through the equity incentive plan. Without the consent
of the Investors, the equity of the Target Company obtained by the participants of the equity
incentive scheme shall not be transferred prior to the completion of the Qualified IPO of the
Target Company. For the avoidance of doubt, the NIO Parties warrant that the aforesaid
equity incentive plan will not cause the shareholding ratio of NIO Inc. in the Target Company
(in the aggregate directly and indirectly) to be decreased to less than sixty percent (60%).
15.2 Method of Equity Incentive
Subject to Clause 15.1 hereof, if equity incentives are realized through transfer of equity interests from one
or more existing Shareholder(s) of the Target company to the equity incentive participants or the employee
stock ownership platform, the transfer price shall be not lower than the audited net asset value per share of
the Target Company as of the end of the then most recent period and shall satisfy the relevant provisions of
the CSRC and the applicable stock exchange. If the Target Company intends to realize the equity
incentives by issuing new shares to the equity incentive participant or on the employee shareholding
platform, the new shares to be issued by the Target Company for the purpose of equity incentives shall not
exceed ten percent (10%) of the audited registered capital / share capital of the Target Company after the
Execution Date hereof, and the capital increase price shall be not lower than the net asset value per share
of the Target Company as of the end of the then most recent period and shall satisfy the relevant
37
regulations of the CSRC.
16 INFORMATION RIGHTS AND INSECTION RIGHTS
16.1
Information Provision
16.1.1
As long as the Investors hold equity interests in the Target Company, the Target Company
shall, and the NIO Parties shall cause the Target Company to, deliver the following
documents in connection with the Target Company in accordance with the requirements of
the Investors:
(1) Within one hundred and twenty (120) days after the end of each fiscal year, submit to the
Investors an annual consolidated audit report which has been prepared by a PRC
accounting firm recognized by the Investors in accordance with the PRC accounting
standards;
(2) Within ninety (90) days after the end of each quarter, submit to the Investors an
unaudited quarterly financial statement of the Company prepared in accordance with the
PRC accounting standards;
(3) Other information, statistical data, transaction, business operation and financial data as
may be required to which the Shareholders are entitled in accordance with the Laws and
Regulations of the PRC, subject to a reasonable request in advance in a manner without
any interference to the normal operation of the Target Company.
Notwithstanding the foregoing, the provision of the above information by the Target
Company and the receipt by the Investors of the above information shall not cause the Target
Company and other Group Members to violate any applicable Laws, Regulations or
regulatory rules.
16.2 Authenticity, Accuracy and Completeness of Information
The legal representative of the Target Company shall verify and confirm that all the information provided
to the Shareholders is true and correct and does not have any misleading effect. The financial statements
provided by the Target Company to the Investors shall cover the consolidated financial statements of the
Target Company and its subsidiaries, and shall have at least the current profit and loss statement, cash flow
statement and balance sheet.
16.3
Provision of Equity Financing Information
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Upon request of the Investors, the Target Company shall promptly provide the Investors with the latest
version of the Investment Agreement, documents relevant to the Subsequent Financing, management of
the Target Company and other matters, including the Articles of Association signed and sealed by the
Parties and filed with competent Governmental Authority.
16.4 Collection of Accounting Information
During the working hours, the Investors may inspect, in a reasonable way, the properties, real properties,
financial books and operation records of the Target Company and discuss the business, finance and
conditions of the Target Company with its officers, provided that the Investors give a prior notice and do
not interfere the normal business of the Target Company. The Investors shall have the right to make
proposals to the Senior Officers of the Company through the directors nominated by them.
17 RIGHT TO PARTICIPATE IN RESTRUCTURING
After the Investors become the Shareholders of the Target Company, if the Target Company and its directly or
indirectly controlled enterprises undertakes any restructuring (the “Restructuring”) and the NIO Parties intend to
change the listing company from the Target Company to another platform company (the “Platform”) after the
completion of the Restructuring, the plan of the aforesaid Restructuring shall be subject to the written consent of
the Investors (for the avoidance of doubt, this provision shall not apply to any Restructuring carried out for the
purpose of the separate listing of the enterprises directly or indirectly controlled by the Target Company after the
Qualified IPO of the Target Company). The Investors shall have the right to participate in such Restructuring, and
to replace their directly or indirectly held equity interests in the Target Company with the equity interests in such
Platform to ensure that the Investors will continue to hold the same interests as those in the Target Company and
its directly or indirectly controlled enterprises prior to the Restructuring.
The NIO Parties and the Target Company hereby respectively covenant and warrant to the Investors as follows:
18 UNDERTAKINGS AND CONVANTS
18.1 Non-mandatory Commitment
The Target Company and the NIO Parties covenant that the Investors shall not make any covenant in
relation to the listing of the Target Company that is not expressly required by the Laws and Regulations,
and neither shall they take any obligation in relation to the listing of the Target Company that is not
expressly required by the Laws
39
and Regulations; in particular, the Investors shall not make any covenant in respect of the performance or
profits of the Target Company due to the listing of the Target Company.
18.2 Cooperation Obligation
In the event that the Investment Agreement and/or this Agreement does not specify any party or parties of
the Target Company or the NIO Parties as the subject of obligations in respect of a certain act, right or
obligation of the Investors, the Target Company or the NIO Parties undertake to make the best reasonable
efforts to cooperate.
18.3
Indemnification Commitment
Each of the Target Company or the NIO Parties shall perform this Agreement and other Transaction
Documents in good faith, and if any party or parties of the Target Company or the NIO Parties violate any
provision of this Agreement or other Transaction Documents, such Party or Parties shall be held liable for
any damages that may be caused to the Investors, and the other Parties except for the Investors shall
assume the joint and several liabilities with respect to such damages.
18.4 Non-Competition
The Controlling Shareholders undertake that unless otherwise agreed by the Investors in writing in
advance, the Controlling Shareholders shall, and shall cause the Actual Controller to, devote sufficient
working time and energy to the operation of the Target Company, and use best efforts to promote the
development of the Target Company and seek profits for the Target Company, and not to take any part-
time job or invest in any other company with the same or similar business type as the Main Business of
Target Company, and to strictly comply with the relevant provisions of the Company Law of the PRC on
non-competition of directors and senior management; from the closing date until the expiration of two (2)
years from the date on which the Actual Controller ceases to hold neither any direct or indirect interest in
the Target Company nor any position in the Target Company, without the prior written consent of the
Investors, the Controlling Shareholders shall not, and shall cause the Actual Controller not to, directly or
indirectly engage in any business similar to or competing with the Main Business of the Target Company
(the “Competing Business”), or directly or indirectly hold any interest in any entity that engages in a
Competing Business with the Target Company or its subsidiaries (the “Competing Entity”), or engage in
any activity detrimental to the interests of the Target Company, including without limitation:
18.4.1
To have a controlling stake in, or indirectly control, any Competing Entity, or hold more than
5% of the equity interests in any Competing Entity (for
40
the avoidance of doubt, the following circumstances are not in violation of the non-
competition provisions in this Clause 18.4: (i) to hold less than 5% of the equity interests in
any Competing Entity; (ii) without affecting the Qualified IPO of the Target Company, to
hold interests in any overseas Competing Entity, provided the products of such overseas
Competing Entity are not sold to the mainland of China; and (iii) as set forth in Exhibit III,
the Actual Controller has directly or indirectly held interests in the Competing Entity as of
the execution date of the Shareholders Agreement; for the avoidance of doubt, Exhibit III
may be updated from time to time by the Controlling Shareholders with the consent of the
Investors);
18.4.2
18.4.3
18.4.4
18.4.5
To provide any loan, customer information, advice or any other form of assistance to any
Competing Entity;
To directly or indirectly obtain benefits from any Competing Business or any Competing
Entity;
To solicit, in any manner, customers relating to any business of the Target Company or its
subsidiaries, or to deal with or attempt to deal with customers relating to the Main Business
of the Target Company or its subsidiaries, regardless of whether such customers are
customers of the Target Company or its subsidiaries prior to or after the closing date;
To employ any member of the Core Management Team who resigns from the Target
Company or its subsidiaries as of the closing date in any manner through any individual or
organization which is directly or indirectly controlled by them or in which they have an
interest; and
18.4.6
To solicit, in any manner, the employment of any employee then employed by the Target
Company or its subsidiaries.
18.5 Qualified IPO
18.5.1
The Target Company shall complete the direct or indirect listing on the Shanghai Stock
Exchange, the Shenzhen Stock Exchange or other overseas securities issuance approval
authorities approved by the Parties by means of initial public offering or material assets
restructuring with a listed company prior to December 31, 2028.
18.5.2
All the Shareholders shall proactively take reasonable efforts, cooperate with the Target
Company to take all necessary actions (including but not limited to cooperate with the Target
Company in clearing any material
41
obstacle to the Qualified IPO) and cooperate with the application for the Qualified IPO in
accordance with the then effective Laws and regulatory policies of listing.
19 CORPORATE GOVERNANCE
19.1
Shareholders’ Meeting
19.1.1
19.1.2
19.1.3
19.1.4
The Shareholders’ meeting of the Target Company shall be attended by all Shareholders and
shall be the highest authority of the Target Company.
Shareholders’ meetings are composed of regular meetings and extraordinary meetings. The
regular Shareholders’ meetings shall be convened at least once a year. An extraordinary
Shareholders’ Meeting shall be convened if so proposed by the Shareholders representing
more than one-tenth (1/10) of the voting rights, or more than one-third (1/3) of the directors,
or the supervisors.
The Shareholders’ meeting shall be convened by the Board of Directors and chaired by the
chairman; where the chairman is unable or fails to perform his/her duties, the Shareholders’
meeting shall be chaired by a director appointed by more than half of the Board of Directors.
If the Board of Directors is unable or fails to convene the Shareholders’ meeting, the meeting
shall be convened and presided over by the supervisors. If the supervisors fail to convene and
preside over the Shareholders’ meeting, the Shareholders representing more than one-tenth
(1/10) of the voting rights may convene and preside over such meeting. A notice of the
Shareholders’ meeting shall be given to all Shareholders at least fifteen (15) days before the
convening of such meeting, unless all Shareholders agree to waive such noticing period.
The Shareholders’ meeting shall maintain complete and correct minutes of its meetings
including copies of all meeting notices. The minutes of the Shareholders’ meeting and the
resolutions adopted by the Shareholders’ meeting shall be recorded by a secretary for a
meeting designated by the Shareholders’ meeting and shall be circulated among all of the
shareholders within ten (10) days after the close of each meeting. All resolutions of the
Shareholders’ meeting shall be signed by all voting Shareholders, and minutes of the
Shareholders’ meeting shall be filed by the secretary and kept in the Shareholders’ meeting
minutes book of the Target Company.
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19.1.5
Resolutions of the Shareholders’ meeting may be adopted by written resolution by the
Shareholders, provided that such a resolution is sent to each Shareholder.
19.2 Board of Directors
19.2.1
19.2.2
19.2.3
The Parties unanimously agree that the board of directors (the “Board of Directors” or
“Board”) of the Target Company shall consist of seven (7) directors; the Investors shall be
entitled to jointly nominate two (2) directors (the “Investor Directors”), of which Advanced
Manufacturing Industry Fund shall be entitled to nominate one (1) Investor Director, and
Jianheng New Energy Fund shall be entitled to nominate one (1) Investor Director; and the
NIO Parties shall be entitled to nominate five (5) directors. If the aggregate percentage of
equity interests in the Target Company held by the Investors in the Target Company is lower
than five percent (5%), the Investors shall not be entitled to nominate any director.
The remuneration to the directors in such capacity and their proxies shall be paid by their
nominating Parties. The costs incurred by the directors or their proxies in connection with
attending Board meetings and performing their obligations as the directors of the Target
Company shall be reimbursed by the Target Company in Renminbi or US Dollar based on
vouchers permissible under the PRC accounting standards. All directors, including the
chairman, shall perform their duties and responsibilities in accordance with the relevant
provisions contained in this Agreement and the articles of association. Each director shall
faithfully fulfil his or her duties in accordance with the provisions of this Agreement and the
Articles of Association, and refrain from any action that would conflict with the interests of
the Target Company.
Each of the directors shall serve a term of office of three (3) years, and may serve consecutive
terms if re-selected. The Parties agree and undertake that if a director nominated by the
Investors or the NIO Parties resigns or is dismissed, or if the seat of the Board becomes
vacant due to other reasons, the Investors or the NIO Parties shall have the right to nominate
another successor and the Parties undertake to in favor of the election of the above
nomination as the director of the Target Company at the Shareholders’ Meeting. The
replacement shall serve on the Board for the remaining term of the replaced director. The
Target Company shall file such change with the registration authority if such filing is so
required under the then applicable PRC Law.
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19.2.4
The Board of Directors shall have one (1) chairman. The chairman shall be appointed by the
NIO Parties from the directors nominated by the NIO Parties. The chairman of the Board of
Directors shall be the legal representative of the Target Company and shall have the following
powers and authorities: convening and presiding over meetings of the Board of Directors; and
other powers and authorities granted by the Board of Directors, this Agreement or the articles
of association.
19.2.5
If a matter requires approval of the Board of Directors in accordance with this Agreement or
the articles of association, the chairman shall not be authorized to take any action or sign any
document on behalf of the Target Company in respect of such matter unless and until it has
been duly approved by the Board of Directors.
19.2.6 When the chairman is unable to perform his or her duties (including convening and presiding
over Board meetings) for any reason, he or she shall designate another director to act on his
or her behalf.
19.2.7
19.2.8
19.2.9
The Board of Directors shall convene at least one (1) regular meeting each quarter. Any one
(1) director of the Target Company shall have the right to propose an extraordinary Board
meeting in writing, and the chairman of the Board shall convene an extraordinary Board
meeting within twenty (20) days after the receipt of such proposal.
The Board of Directors shall maintain complete and correct minutes of its meetings in
Chinese, including copies of all meeting notices. The minutes of the Board meeting and the
resolutions adopted by the Board meeting shall be recorded by a secretary for the meeting
designated by the Board and shall be circulated among all of the directors within twenty (20)
days after the close of each meeting. All resolutions of the Board meeting shall be signed by
all voting directors, and minutes of the Board meeting shall be filed by the secretary and kept
in the Board meeting minutes book of the Target Company. The nomination, election and
replacement of directors shall be recorded in the Board meeting minutes.
The management of the Target Company shall submit quarterly work reports to the Board of
Directors on regular basis. The contents of a quarterly work report shall include but not be
limited to information pertaining to any related-party transactions and any provision of
guarantee of the Target Company, any bank credit and borrowings, any external investment or
Major expenditure, any disposal of Major assets, execution of any Material contracts that is
not related to Main Business, execution
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of any contract in relation to intellectual property rights and etc.
19.2.10 When casting votes on board resolutions, each director shall have one (1) vote.
19.2.11 The quorum for a duly convened board meeting shall be at least one-half (1/2) of all the
directors present in person (including attending via videoconference or other electronic
means) or by proxy. In the absence of a quorum, any resolutions passed at a Board meeting
shall be invalid and have no effect.
19.2.12 Notwithstanding any other provision to the contrary, resolutions may be passed without a
Board meeting if in writing and executed by all directors or a majority of the directors on the
Board (as the case may be) as provided for in Clause 6.1.2, provided that the proposed
resolution is delivered to each of the directors.
19.2.13 Resolutions of the Board shall require the affirmative votes of more than half of Directors
(the term “more than” referred to herein shall be inclusive of the number immediately
following thereto) (provided that, for the matters as provided in Clauses 6.1.1 and 6.1.2, such
matters shall only be adopted or submitted for the review by the Shareholders’ meeting upon
affirmative votes of more than three-fourths (3/4) of the directors; for the matters as provided
in Clause 6.1.3, such matters shall only be adopted or submitted for the review by the
Shareholders’ meeting upon affirmative votes of more than two-third (2/3) of the directors;
for the matters as provided in Clause 6.1.4, such matters shall only be adopted or submitted
for the review by the Shareholders’ meeting upon affirmative votes of more than one-half
(1/2) of the directors). If any independent director will serve on the board of Target Company
or if the number of directors of the Target Company increases in the future, the Parties agree
to renegotiate the special voting mechanism. If required by any of the constitutional
documents of NIO Inc., or any Law or regulatory rules applicable to NIO Inc. (including but
not limited to the securities regulation Laws of the place where NIO Inc. is listed or the
corresponding regulatory rules of the Securities and Exchange Commission/Exchange), the
above matters submitted to the Board of Directors of the Target Company for decision shall
be otherwise submitted to the Board meeting or the general meeting of NIO Inc. for
consideration and resolution.
19.2.14 All Board meetings shall be convened and presided over by the chairman or a director, as the
case may be. The chairman shall give a written notice
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of a Board meeting to each director ten (10) working days (or such other period as agreed to
by the Investors in writing) in advance, which shall specify the time, venue and agenda of the
meeting. The chairman shall deliver documents relevant to a Board meeting, if any, to each
of the directors at least ten (10) days prior to the meeting. Meetings of the Board may be
conducted in person or in the form of telephone conference or video conference as long as
each participant is able to hear the other participants clearly and each director so participating
shall be deemed to be present at such meeting. Each director shall have the right to appoint a
proxy in writing to attend the meeting, who may be another director of the Board, and the
proxy so appointed shall have the right to attend the meeting of the Board and vote on the
matters under consideration on behalf of the director who appointed him or her. Any proxy
so appointed shall have the same rights as the director who appointed him or her, and one
proxy may represent more than one director. Such proxy shall have one vote for each director
he or she represents and an additional vote if he or she is also a director in his or her own
right. The chairman shall have the same right of one vote as accorded to each of the other
directors. If a Board meeting fails to achieve the quorum set forth in Clause 19.2.11, such
Board meeting shall be adjourned to the fifth (5th) working day after the originally scheduled
meeting date. If each director or the proxy appointed by such director still fails to attend the
adjourned Board meeting, more than one-half of the directors attending the adjourned Board
meeting shall be deemed to constitute the quorum.
19.2.15 All reasonable costs incurred by the directors in connection with attending Board meetings
shall be borne by the Target Company. The Investor Directors shall be protected and
indemnified by the Target Company to the fullest extent possible under applicable Laws,
including without limitation from any liability to any third party resulting from their
respective performance of duties.
19.3
Supervisors
19.3.1
The Target Company shall have two (2) supervisors, of which Anhui Sanzhong Yichuang
shall be entitled to nominate one (1) supervisor, and the NIO Parties shall be entitled to
nominate one (1) supervisor. The directors and the Senior Officers of the Target Company
shall not act as the supervisors of the Target Company. The supervisors shall serve a term of
office of three (3) years, and may serve consecutive terms if re-nominated by such original
nominating Party and re-approved by the Shareholders’ meeting.
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19.3.2
The supervisors shall exercise their corresponding power in accordance with the relevant
provisions of the PRC Laws and the articles of association of the Target Company.
19.4 Operation and Management Organization
19.4.1
19.4.2
19.4.3
19.4.4
19.4.5
The Target Company shall have one (1) chief executive officer (“CEO”). The day-to-day
management and operation of the Target Company shall be carried out by the CEO in
accordance with the policies adopted by the Board of Directors from time to time. The CEO
shall be directly responsible to the Board of Directors.
The CEO of the Target Company shall be nominated by the NIO Parties and appointed by the
Board of Directors. The CEO shall serve a term of office of three (3) years, and may serve
consecutive terms upon re-nomination and re-appointment. The CEO may be dismissed and
replaced by the Board of Directors.
The Target Company shall have one (1) chief financial officer who shall be responsible for
internal control and tax matters in respect of finance, accounting and finance (“CFO”). The
CFO of the Target Company shall be nominated by the NIO Parties and appointed by the
Board of Directors. In case the CFO is unable to perform his or her duties properly, the Board
of Directors may dismiss him or her in accordance with the relevant PRC Laws and the labor
contract between the Target Company and the CFO.
The powers and responsibilities of the CEO and the CFO of the Target Company and all
management personnel (collectively, the “Senior Officers”) and the organizational table
indicating the reporting relationship of each Senior Officers are determined by the articles of
association and other internal management documents of the Target Company.
In order to enable the CEO to manage the Target Company duly and effectively, the chairman
or the Board of Directors, as the case may be, shall issue appropriate written authorizations to
the CEO to take actions or sign contracts, agreements or other documents on behalf of the
Target Company within the scope of power conferred upon him under this Agreement, the
articles of association or any Board resolutions.
19.4.6
The CEO, CFO and other Senior Officers of the Target Company shall be exempted from
personal liabilities and indemnified by the Target
47
Company for acts performed in a normal manner within their respective capacity and
authorization, except for claims or charges resulting from any intentional or grossly negligent
acts or omissions, or any fraud, graft or serious dereliction of duties.
20 TAXES, FINANCE, AUDIT AND DISTRIBUTION OF PROFIT
20.1
Taxes
The Target Company shall pay taxes in accordance with the relevant PRC Laws applicable to the Target
Company.
20.2
Individual Income Tax
All employees of the Target Company shall pay individual income tax in accordance with the Individual
Income Tax Law of the PRC and other applicable PRC Laws.
20.3
Financial Accounting System
20.3.1
20.3.2
20.3.3
20.3.4
The Target Company shall establish its financial and accounting systems in accordance with
the PRC accounting standards and other relevant PRC Laws, which shall be submitted to the
Board of Directors for approval.
The Target Company shall adopt the accrual basis and debit and credit method for
bookkeeping and shall prepare complete and accurate monthly, quarterly and annual financial
statements in accordance with the PRC accounting standards.
The Target Company shall adopt calendar year as its fiscal year, commencing on January 1
and ending on December 31 of each year.
Renminbi shall be adopted as the currency of accounts of the Target Company. The Target
Company shall also record accounts in currencies actually used in payments and receipts
where such payments and receipts in cash, bank deposits, other funds, credits and debts, and
gains and expenses are not in Renminbi.
20.3.5
All accounting vouchers, books and statements prepared by the Target Company shall be
written in Chinese.
20.4 Auditing
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The Target Company shall engage its external auditor in accordance with Clause 6.1.4(1). The external
auditor shall audit the Target Company’s accounts and prepare an audit report in accordance with the PRC
accounting standards, which report shall be submitted by the CEO and the CFO to the Board of Directors
for approval. All necessary documents and account books of the Target Company shall be provided to the
external auditor. The external auditor shall agree to keep all information obtained during the course of such
auditing confidential.
20.5 Banking and Foreign Exchange
The Target Company shall open Renminbi and foreign exchange bank accounts (if necessary) after receipt
of its business license. All foreign exchange matters of the Target Company shall be handled in accordance
with relevant PRC Laws in respect of foreign exchange.
20.6 Reserve Funds and Loss Recovery
The Target Company shall pay taxes and retain reserve funds in accordance with relevant PRC Laws. If
the Target Company incurs any loss in any previous year, the profit of the current year shall first be used to
make up such loss. No profits shall be distributed or reinvested unless and until (a) the losses of any
previous year have been fully made up and (b) all reserve funds have been retained in accordance with
relevant PRC Law. Any remaining distributable profit of the Target Company of the previous year that has
been retained by the Target Company and not been used for reinvestment can be distributed together with
the distributable profits of the current year.
21 DURATION AND TERMINATION OF THE TARGET COMPANY
21.1 Duration of the Target Company and Term of this Agreement
The duration of the Target Company shall be fifty (50) years from its incorporation date (the “Duration of
the Target Company”).
The term of this Agreement shall be from the effective date hereof to the expiration or early termination
date of the Duration of the Target Company (the “Term”), which may be renewable upon mutual
agreement of the Parties.
21.2
Extension of the Term
The Parties shall hold consultations to discuss the extension of the Term at least one (1) year prior to the
expiration of the Term. If the Parties agree to extend the Term, an application for relevant procedures shall
be submitted to the registration authority in
49
accordance with applicable Laws.
21.3
Events of Early Termination
This Agreement may be terminated and the Target Company dissolved prior to the expiration of the Term
upon the occurrence of any of the following events and in accordance with the following provisions:
21.3.1
21.3.2
by either Party, if the Target Company is unable to continue operation during any fiscal year
due to an event of Force Majeure and such situation has existed for a period of one hundred
and eighty (180) days or more;
by either Party, upon approval by the Shareholders’ Meeting, if the Target Company becomes
bankrupt or insolvent, or any of its Major assets (including, without limitation, working
capital, any operation license, permit or Governmental Approval) necessary for the conduct
of its operation activities is not obtained, or is withdrawn, forfeited, revoked or expropriated
by any Governmental Authority, or becomes invalid or has expired and is not renewed, as a
result of which the Target Company is unable to conduct normal operation activities or is
unable to attain its business objectives;
21.3.3
by the Investors in any event of any Deemed Liquidation Event set forth in Clause 12.5; and
21.3.4
if the Parties unanimously agree that, the termination of the Target Company is in the best
interests of the Parties, and approved by the Shareholders’ meeting.
21.4
Shareholders’ Meeting to Discuss Early Termination or Dissolution
21.4.1
Upon the occurrence of any of the events of early termination set forth in Clause 21.3 above,
either Party may request that a Shareholders’ Meeting be convened to discuss the early
termination of this Agreement. The Board shall convene a Shareholders’ Meeting within
twenty (20) days of the receipt of such a request in accordance with the provisions regarding
the Shareholders’ Meetings.
21.4.2
At the Shareholders’ meeting, the Shareholders shall use their best efforts to reach a solution
acceptable to all the Parties. If the Shareholders are unable to reach a solution acceptable to
all Shareholders at the Shareholders’ Meeting, the Shareholders shall vote unanimously to
50
dissolve and liquidate the Target Company.
21.5
Effect of the Termination
If the Target Company fails to renew upon expiration or this Agreement is early terminated in accordance
with Clauses 21.3 and 21.4 above, this Agreement shall become void with no further force and effect (for
the avoidance of doubt, if the termination of the Target Company is due to the fact that the NIO Parties
intend to take a platform company other than the Target Company as the listing company after the
completion of the Restructuring in accordance with Clause 17 hereof, the Investors shall be ensured to
have the same rights under the Transaction Documents in the new platform company), and the Target
Company shall be liquidated and dissolved, and the Shareholders’ Meeting shall establish a liquidation
committee to carry out the liquidation of the Target Company in accordance with relevant PRC Laws and
this Agreement. However, no termination of this Agreement pursuant to Clauses 21.3 and 21.4 above shall
have an effect on any right of a Party to claim compensation for losses or receive indemnification due to
any breach of any representations, warranties, covenants or obligations hereunder prior to the termination
of this Agreement. Furthermore, Clause 12 (Liquidation Preference), this Clause 21.5 (Effect of
Termination), Clause 24 (Confidentiality) and Clause 29 (Miscellaneous) shall survive the termination of
this Agreement.
22.1
Events of Force Majeure
22 FORCE MAJEURE
An event of force majeure (“Force Majeure”) shall mean any act or event which is reasonably
unforeseeable and unavoidable and which is beyond the control of the affected Party, including, without
limitation, earthquake, typhoon, flood, or other acts of nature, fire, war, riots, terrorist acts or any other
unforeseeable or unavoidable act or event which is generally accepted as Force Majeure in international
commercial practice.
22.2 Occurrence of Force Majeure Events
If either Party has been prevented from performing its obligations or responsibilities under this Agreement
because of an event of Force Majeure, it shall notify the other Parties in writing within thirty (30) days
after the occurrence of such event, provide the other Parties with detailed information concerning the event
of Force Majeure and documents evidencing such event, including documentary evidence issued by
government authorities or judicial authorities or any other competent authorities, explaining the reason for
its inability to perform, and act to mitigate damages, if
51
possible.
22.3 Disclaimer of Liability
If an event of Force Majeure occurs, none of the Parties shall be liable for any damage, increased costs, or
losses that the other Parties may sustain because of the failure or delay of performance of any of its
obligations under this Agreement, and such failure or delay shall not be deemed a breach of this
Agreement. The Party encountering the Force Majeure event shall take appropriate means to minimize or
mitigate the effects of Force Majeure and, as soon as practicably possible, attempt to resume performance
of the obligation affected by Force Majeure.
23 REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Each of the Parties hereby represents and warrants to the other Parties that, as of the effective date hereof:
23.1
Existence, Authority and Enforceability
It has the power and authority to execute this Agreement and to perform its obligations hereunder. It is an
entity duly organized and validly existing under the Law of the jurisdiction of incorporation, or an
individual with full capacity for civil conduct. Unless otherwise agreed in this Agreement, this Agreement
has been duly executed by it, and constitutes its lawful, valid and binding obligations, enforceable against
it in accordance with its terms upon the execution of this Agreement.
23.2 No Conflict
Its execution and delivery of this Agreement, and the performance of the obligations hereunder will not (a)
conflict with, or result in a breach of any provision of its constitutional documents; (b) result in any
breach, contradiction, default or event of default of, or trigger any acceleration or termination of rights or
any additional payment obligations under, the terms of any contract, agreement or license to which it is a
party or by which its assets or operations are bound or affected; or (c) violate any Law applicable to it.
24.1 General Obligations
24 CONFIDENTIALITY
Unless with the prior written consent of the other Parties or as otherwise provided by
52
this Agreement and Laws, none of the Parties shall, whether directly or indirectly, disclose, use, or permit
its directors, employees, representatives, agents, advisors and counsel to disclose or use, the following
confidential information:
24.1.1
24.1.2
24.1.3
existence of the Transaction Documents and information in connection with the Previous
Transaction;
any discussions between the Parties regarding the execution and performance of this
Agreement, the terms and conditions of this Agreement or any other information in
connection with the Previous Transaction; and
any non-public information relating to the other Parties or any of their affiliates obtained by
either Party in the negotiation of the Previous Transaction with the other Parties or the
performance of this Agreement.
24.2
Special Exemptions
The Parties shall be exempted from the above confidentiality obligations under the following
circumstances:
24.2.1
24.2.2
24.2.3
any confidential information may be disclosed to the officers, representatives, agents,
consultants, counsel and other persons of any Party during the Previous Transaction on the
need-to-know basis, provided that such officers, representatives, agents, consultants, counsel
and other persons have assumed the confidentiality obligations with respect to such
confidential information;
if any confidential information has been disclosed by any third party and becomes available
to the public which is not attributable to or arises out of any Party, the confidentiality
obligations with respect to such confidential information do not apply to such Party; and
any information has been publicly disclosed or any information has been disclosed in
accordance with any Laws, regulations and/or the requirements of any security regulatory
authority, any stock exchanges and any administrative authority that is responsible for filing,
examination and approval.
24.3 Remedies
The Parties agree that if either Party breaches the confidentiality obligation hereunder,
53
such Party shall be in breach of this Agreement, and the other Parties shall have the right to make claim
against the defaulting Party for liability for breach of contract and initiate legal proceedings to prevent
such infringement or take other remedies to prevent further infringement.
24.4
Survival
The confidentiality obligation under this clause shall survive the termination of this Agreement.
25 GOVERNING LAW AND DISPUTE RESOLUTION
25.1 Governing Law
The formation, validity, interpretation, execution of this Agreement and resolution of any disputes arising
hereunder shall be governed by and construed in accordance with the Laws of the PRC.
25.2 Arbitration
25.2.1
Any dispute, controversy, difference or claim arising out of or relating to this Agreement
shall be resolved by the Parties in dispute through amicable consultation. If the Parties fail to
resolve such dispute within thirty (30) days of the date of the written notice given by a Party
to the relevant other Parties indicating the existence of the dispute or requesting the
commencement of negotiation, any Party may refer the dispute to arbitral institution.
25.2.2
25.2.3
Any dispute arising out of performance of this Agreement or relating to this Agreement shall
be submitted to the China International Economic and Trade Arbitration Commission for
arbitration in Beijing in accordance with the arbitration rules of arbitration institution
effective at the time of application for arbitration. The arbitration proceedings shall be
conducted in Chinese.
The arbitration tribunal shall consist of three (3) arbitrators to be appointed in accordance
with the arbitration rules. The applicant and the respondent shall each appoint one (1)
arbitrator, and the two (2) arbitrators so appointed by the parties shall agree upon the third
arbitrator or the China International Economic and Trade Arbitration Commission shall
appoint the third arbitrator.
54
25.2.4
The arbitration award shall be final and binding on the parties to the arbitration.
25.2.5
The losing Party shall be liable for the costs of the arbitration, all costs and expenses of the
arbitration proceedings and all costs and expenses in relation to the enforcement of any
arbitral award. The arbitral tribunal shall rule upon the costs of the parties not expressly
provided for in this section.
25.3 Continued Performance
The Parties shall continue to perform the rights and obligations under this Agreement during the
negotiation and arbitration period, other than the disputed matter.
26 EFFECTIVENESS, MODIFICATION AND VALIDITY
26.1
Effectiveness
This Agreement shall come into force and become binding on the Parties upon the execution by the
individuals and the respective authorized representatives of foreign entities among the Parties and the
execution by the legal representatives or the respective authorized representatives of the Chinese entities
and the affixation of their respective company chops, unless otherwise agreed in this Agreement.
26.2 Amendments in Writing
This Agreement may be amended or modified by the Parties through mutual consultation. Any amendment
or modification shall be made in writing and become effective upon execution by the Parties hereto.
26.3
Supplemental Agreement
If Jianheng New Energy Fund, New Energy Automobile Fund or Anhui Sanzhong Yichuang intend to
amend the provisions of this Agreement during the implementation of the state-owned assets examination
and approval process, the Parties agree to enter into a separate supplemental agreement to reach an
agreement. In case of any inconsistency, such supplemental agreement shall prevail.
26.4 Validity
If any provisions of this Agreement shall be held, declared or deemed to be illegal, invalid or incapable of
being enforced by any arbitral tribunal, judicial or administrative
55
authority, the legality, validity and enforceability of all the other provisions of this Agreement shall not be
affected or impaired. The Parties agrees to modify this Agreement or to enter into a supplemental
agreement as appropriate through consultation in good faith so as to restore the original intent of this
Agreement and the rights or obligations that shall be enjoyed or performed by the Parties as initially
agreed in this Agreement.
If any provisions of this Agreement shall be amended due to changes of relevant Laws, regulations or
policies or as required by any Governmental Authority, the Parties shall use their best efforts to reach an
agreement on such amendment and enter into relevant agreements so as to restore and confirm the rights or
obligations that shall be enjoyed or performed by the Parties as agreed in this Agreement under the
requirements of relevant Laws, regulations or policies.
27.1
Events of Breach
27 BREACH
The Parties hereto shall strictly comply with the provisions of this Agreement. Each of the following
events shall constitute an event of breach:
27.1.1
27.1.2
either Party hereto fails to perform or duly and fully perform any of its obligations or
covenants hereunder; or
any of the representations, covenants, undertakings or warranties given by either Party hereto
under this Agreement is materially untrue, inaccurate or incomplete.
27.2 Damages for Breach
The Parties agree that, unless otherwise agreed in this Agreement, in the event of a breach of this
Agreement, the defaulting Party shall indemnify the non-defaulting Party from and against any losses that
may be incurred by non-defaulting Party arising out of the defaulting Party’s breach.
27.3 Other Remedies
The damages for breach shall not affect the right of the non-defaulting Party to require the breaching party
to continue to perform this Agreement or terminate this Agreement.
28 NOTICES AND DELIVERY
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28.1 Notices
The Parties agree that any notices relating to this Agreement shall only be effective if it is given in writing.
Delivery in written form includes without limitation to delivery by way of facsimile, courier, registered
mail and email. All such notices shall be deemed to have been given or received (a) on the date when the
recipient receives the notice if delivered by courier or personal delivery; (b) on the seventh (7th) working
day after it is sent if delivered by registered mail; and (c) upon successfully delivery if sent by email. All
notices shall be deemed effectively given if delivered or sent to the following addresses or email
addresses:
Jianheng New Energy Fund
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
Advanced Manufacturing Industry Fund
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
Anhui Sanzhong Yichuang
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
New Energy Automobile Fund
57
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
NIO Parties
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
Target Company
Attention:
[***]
Address:
[***]
Telephone:
[***]
Email:
[***]
28.2 Change of Information
If either Party changes its above mailing address or contact information (the “Changing Party”), it shall
notify the other Parties within seven (7) days after the occurrence of such change. If the Changing Party
fails to notify the other Parties of the same in a timely manner, it shall bear the losses arising from such
failure.
29.1
Entire Agreement
29 MISCELLANEOUS
This Agreement, the other Transaction Documents and the exhibits attached hereto shall constitute the
entire agreement of the Parties with respect to the Previous Transaction and shall supersede all prior
written or oral agreements, letter of intent, memorandum
58
of understanding, representations or other obligations of the Parties with respect to the Previous
Transaction (including all forms of communication), including but not limited to the Shareholders
Agreement, Amendment and Supplementary Agreement I, Amendment and Supplementary Agreement II,
Amendment and Supplementary Agreement III, Amendment and Supplementary Agreement IV,
Amendment and Supplementary Agreement V and Amendment and Supplementary Agreement VI. This
Agreement (including any amendments or modifications thereto and the other Transaction Documents)
contains the sole and entire agreement of the Parties with respect to the subject matters hereof.
29.2 No Authorization
Nothing in the Investors’ implementation of the Previous Transaction shall constitute an authorization of
the Investors of the use of any trademark, tradename, service trademark or logo of the Investors or its
affiliates (any abbreviated or imitative forms of the foregoing). Without prior written consent of the
Investors, none of the Target Company, the NIO Parties or any of their affiliates shall directly or indirectly
represent that any goods or services provided by it have been approved or recognized by any Investors or
any of their affiliates.
29.3
Further Action
For the purpose of maintaining and protecting the rights, powers and remedies of the Investors hereunder,
the other Parties shall take all such further acts and actions or cause all such further acts and actions to be
taken and execute or procure the execution of all such further documents, as may be reasonably required
by the Investors from time to time.
29.4
Severability
If any provision of this Agreement is illegal, invalid or incapable of being enforced, in whole or in part, the
legality, validity and enforceability of all the other provisions of this Agreement shall not be affected. The
Parties shall, to the extent reasonable, use their best efforts replace the invalid or unenforceable provision
with a valid and enforceable provision that corresponds as far as possible to the spirit and purpose of the
invalid or unenforceable provision.
29.5 No Waiver
No failure or delay by either Party hereto to exercise and/or enjoy its rights and/or benefits hereunder shall
be deemed as a waiver of such rights and/or benefits, nor shall any partial exercise of such rights and/or
benefits preclude any future exercise of such
59
rights and/or benefits. Any waiver by either Party of any provision of this Agreement shall not be
construed as a waiver of any other provisions of this Agreement, nor shall such waiver be construed as a
waiver of such provision with respect to any other event or circumstances, whether in the past, at present
or in future. Furthermore, the remedies provided in this Agreement be cumulative and not exclusive of any
provided by Laws.
29.6 Assignment
Subject to relevant provisions of this Agreement, the Investors shall have the right to assign or transfer its
equity interest in the Target Company and the rights, interests and obligations hereunder to any third party
except for the competitors of the NIO Parties set forth in Exhibit IV (the “NIO Parties Competitors”). In
the event that the license or consent of any Party hereto is required for such transfer, such Party shall give
its utmost cooperation. In particular, Advanced Manufacturing Industry Fund, New Energy Automobile
Fund, Anhui Sanzhong Yichuang and Jianheng New Energy Fund have the right to transfer all or part of
their rights, interests and obligations under this Agreement to any of their affiliates or any third party
agreed by the NIO Parties, and the relevant transferee shall recognize and consent to all provisions of this
Agreement, and together with the original contracting parties, to re-enter into this Agreement or a
supplementary agreement or joining agreement to clarify the rights, interests and obligations of the
transferee under this Agreement. In respect of such transfer, the other Parties to this Agreement hereby
waive their respective pre-emptive rights and any other prior right or right of priority that they may be
entitled to in accordance with applicable PRC Laws, this Agreement, the articles of association of the
Target Company or any other matters. Unless otherwise agreed in this Agreement, none of the Parties shall
assign or transfer any of its rights, benefits or obligations under this Agreement without the prior written
consent of the other Parties. No assignment of rights, benefits or obligations in violation of this section
shall be valid.
This Agreement shall be binding upon, inure to the benefit of and be effective for the Parties and their
respective successors and assigns permitted hereunder. In addition, unless otherwise set forth herein, no
third party is intended to be a beneficiary of this Agreement.
29.7 Costs and Expenses
Any costs, expenses or fees of any nature incurred by either Party in connection with the preparation and
execution of this Agreement and the articles of association shall be borne by the incurring Party, unless the
Parties agree in writing that such costs, expenses or fees shall be borne by the Target Company.
29.8 No Agency
60
Nothing in this Agreement shall be construed to constitute either Party the agent or partner of the other
Parties. On no account may either Party create (or hold itself out to third person as being able to create)
any binding obligation on behalf of the other Parties without the prior written consent of the Parties.
29.9 Governmental Format Provisions
In the event that a separate agreement is executed in accordance with the forms of any Governmental
Authority is required for the purpose of requesting performance of a specific act by any Governmental
Authority with respect to the Transaction contemplated by this Agreement, this Agreement shall have full
priority over this Agreement and such agreement may only be used to request performance of such specific
act from any Governmental Authority and shall not be used to create and prove the rights and obligations
of the relevant parties with respect to the matters stipulated by this Agreement.
29.10 Suspending and Restoring the Effectiveness
The Parties agree and acknowledge that, the effectiveness of provisions in Clause 6, Clause 7, Clause 8,
Clause 9, Clause 10, Clause 11, Clause 12, Clause 13 and Clause 14 hereof shall be suspended on the date
of acceptance of the application for Qualified IPO of the Target Company, and rights and obligations of all
the Shareholders of the Target Company shall be subject to the provisions of the then effective articles of
association of the Target Company. If the application for Qualified IPO of the Target Company is revoked,
rejected, disapproved or declined, or if the application for the Qualified IPO of the Target Company is
approved, registered or filed but the Qualified IPO fails to be completed within the period of relevant
approval documents, the effectiveness of such provisions in Clause 6, Clause 7, Clause 8, Clause 9, Clause
10, Clause 11, Clause 12, Clause 13 and Clause 14 hereof shall restore, and the effectiveness of such
provisions shall be deemed that they have never become suspended. If a breach of agreement occurs
during the suspension period due to the purpose of this Clause, the non-defaulting Party shall have the
right to claim against the defaulting Party for breach of contract and for damage.
29.11 Priority
In case of conflict between any provisions of this Agreement and the articles of association or other
Transaction Documents, this Agreement shall prevail.
29.12 Counterparts and Languages
This Agreement shall be written in Chinese and be executed in multiple originals, each
61
of which shall have the same legal effect. Each Party shall hold one (1) original.
[SIGNATURE PAGES FOLLOW]
62
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
Hefei Jianheng New Energy Automobile Investment Fund Partnership
(Limited Partnership)
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
Advanced Manufacturing Industry Investment Fund II (Limited
Partnership)
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
Anhui Provincial Sanzhong Yichuang Industry Development Fund
Co., Ltd.
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
Anhui Jintong New Energy Automobile II Fund Partnership (Limited
Partnership)
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
Nio Nextev Limited
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
NIO User Enterprise Limited
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
NIO Power Express Limited
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
NIO Inc.
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
(This is the Signature Page to the Shareholders Agreement in Respect of NIO China)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their duly authorized
representatives as of the date first written above.
NIO Holding Co., Ltd.
(Company Chop)
By:/s/ Authorized Signatory
Name: Authorized Signatory
Title:
Shareholders Agreement in respect of NIO China – Signature Page
List of Principal Subsidiaries and Consolidated Variable Interest Entities
Exhibit 8.1
Subsidiaries:
Nio Nextev Limited
XPT Limited
NEU Battery Asset (Hong Kong) Co., Limited
NIO Power Express Limited
NIO User Enterprise Limited
NIO AI Technology Limited
NIO USA, Inc.
NIO Battery Assets Europe B.V.
New Horizon B.V.
NIO Nextev Europe Holding B.V.
NEU Battery Asset Co., Ltd.
NIO AI Technology Limited
NIO GmbH
NIO Holding Co., Ltd.
NIO Co., Ltd.
NIO (Anhui) Co., Ltd.
NIO Technology (Anhui) Co., Ltd.
NIO Financial Leasing Co., Ltd.
XPT (Jiangsu) Investment Co., Ltd.
Shanghai XPT Technology Limited
XPT (Nanjing) E-Powertrain Technology Co., Ltd.
XPT (Nanjing) Energy Storage System Co., Ltd.
NIO Sales and Services Co., Ltd.
NIO Energy Investment (Hubei) Co., Ltd.
Wuhan NIO Energy Co., Ltd.
XTRONICS (Nanjing) Automotive Intelligent Technologies Co., Ltd.
XPT (Jiangsu) Automotive Technology Co., Ltd.
Anhui NIO Autonomous Driving Technology Co., Ltd.
Consolidated variable interest entities and their subsidiary:
Beijing NIO Network Technology Co., Ltd.
Anhui NIO AI Technology Co., Ltd.
Anhui NIO Data Technology Co., Ltd.
NIO Insurance Broker Co., Ltd
Place of incorporation
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
California, United States
Netherlands
Netherlands
Netherlands
Cayman Islands
Cayman Islands
Germany
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
Place of incorporation
PRC
PRC
PRC
PRC
NIO INC.
GLOBAL CODE OF BUSINESS CONDUCT & ETHICS
Exhibit 11.1
(Adopted by the Board of Directors of NIO Inc. and effective on September 11, 2018, and amended on November 3, 2023)
Contents
1. Applicability of this Code
2. Our Core Values
3. Our Responsibility for Compliance & Ethics
4. Our Responsibility to Each Other and to Our Society
4.1.
Diversity, Respect and Fairness in the Workplace
4.2. Workplace Health and Safety
4.3.
4.4.
Sustainability and Environment
Social Responsibility
5. Our Responsibility for our Business
5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
5.7.
5.8.
Product Quality, Product Safety and Product Compliance
Intellectual Property and Confidentiality
Protection and Use of Company Assets
Company Representation
IT and Information Security
Data Privacy and Protection
Accuracy of Company Records
Business Reports and Public Communications
6. Our Responsibility for Business Integrity
6.1.
6.2.
6.3.
6.4.
6.5.
6.6.
6.7.
6.8.
6.9.
Conflicts of Interests
Prohibition of Bribery and Corruption
Gifts, Meals and Entertainment
Donations and Sponsorships
Political Participation and Contributions
Fair Competition and Fair Dealing
Third Party Intellectual Property and Copyrights
Insider Trading
Trade Compliance
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6.10.
Prohibition of Money Laundering and Terrorism Financing
6.11. Working with Suppliers
7. Living this Code
7.1. Making Ethical Decisions
7.2.
7.3.
7.4.
7.5.
7.6.
Seeking Support
Ethical Decision-Making Model
Raising Concerns & Reporting Violations
No Retaliation
Complementary Resources
8. Final Provisions
8.1. Waivers
8.2.
8.3.
No rights created
Additional Provisions for Senior Officers
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1.
Applicability of this Code
At NIO Inc. (together with its subsidiaries and consolidated affiliated entities, “NIO” or the “Company”), we are committed to
conducting our business legally, ethically and with integrity – and our Global Code of Business Conduct & Ethics (the “Code”)
assists us in the fulfillment of this commitment. It serves to ensure that each one of us, in whatever position we hold, knows,
understands, and performs ethically every day in every aspect of our work.
Though our Code cannot cover every question or issue that may arise, it lays down the main standards of behavior expected
from all of us working at and for NIO in different areas of significant importance. It is formulated as positive statements that
describe how we act and must keep acting at all times. Our Code also instructs us on how to obtain support in case of doubt, and
how to raise concerns about possible illegal or unethical behavior.
This Code applies to all directors, officers and employees of NIO in any of its divisions and subsidiaries, present and future,
globally, whether they work for the Company on a full-time, part-time, consultative or temporary basis. All of us at NIO have a
duty to apply this Code not only to the letter, but also in its spirit.
In certain areas, the Code is supplemented by policies and processes covering specific matters in more detail.
Some of these policies and processes are expressly referenced in this Code. Additional policies may be introduced locally to
deal with legal or regulatory requirements applicable to specific geographic regions in which the Company operates. These
complementary processes and processes, in general, aim at promoting the Code’s effectiveness and legally compliant behavior
in and by the Company. Compliance with them is, to the extent applicable, mandatory to all employees, directors and officers of
the Company.
2.
Our Core Values
Our values express our corporate culture and the NIO way to do business. Together with our good judgment and expertise, our
values serve as internal compass when making decisions in the course of our jobs.
HONESTY. We are honest and act with integrity at all times and situations. We comply with all applicable laws, regulations,
and company policies and procedures. We follow through on commitments made to others. We speak up and timely
communicate thoughts, concerns and feedback. We are accountable for our works, including mistakes in decisions and actions.
We resolve conflicts and miscommunications constructively and proactively.
CARE. In our everyday activities, we take care of our Company, our business, our users, our colleagues, our business partners
and our community. We respect and accept people from diverse backgrounds and with different personalities. We are willing to
invest time into understanding others and lend a helping hand to others in need. We put ourselves in
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others’ shoes when opinions are divided. We acknowledge the strengths in others, and recognize and appreciate their efforts.
VISION. We are inspired by and share our Company’s vision of building an user enterprise towards the mission of shaping a
joyful lifestyle. We set challenging goals and strive to be the best in the industry. We look beyond past experiences and prior
methods to explore innovative ways with no fear of failure. We adapt to changes and new challenges proactively and swiftly. We
take the initiative to increase our efforts and contributions towards achieving our objectives as Company.
ACTION. We work proactively and consistently in the direction of our Company’s vision and mission. We secure resources and
solve problems by breaking down departmental silos and working collaboratively. We consistently deliver effective and high
quality results on time. We identify solutions effectively, communicate accurately, and work with the team efficiently to achieve
the shared objectives. We maintain a broad perspective and, when issues arise, we strive to pinpoint the root cause quickly. We
pursue perfection at work and always strive to do our best.
3.
Our Responsibility for Compliance & Ethics
Compliance means to act in conformity with applicable rules and standards.
Ethical behavior means more than compliance.
Each one of us acknowledges and acts upon the importance of knowing the laws, regulations and our Company’s internal
policies applicable to our particular jobs – including, but not limited to, this Code. We seek support from the Company’s Legal
Department or compliance functions in case of doubt.
We understand that conduct that violates the law or this Code can never be justified on the basis that it had been ordered by a
supervisor, line manager or anyone in higher management positions. Such conduct is strictly prohibited during our employment
at NIO.
Managers and supervisors have a special responsibility for compliance and ethics. Managers and supervisors must ensure that
employees reporting to them are fully aware of this Code and complementary policies relevant to their works. Furthermore, they
must exemplify compliance and ethical behavior through leadership and appropriate own actions and must support employees
who raise concerns or report violations.
Anyone who violates our Code or any applicable laws must expect consequences. Depending on the nature and severity of the
violation, these may range from internal disciplinary actions (up to and including termination of employment) to a claim for
damages under civil law or even penalties under criminal law.
4.
Our Responsibility to Each Other and to Our Society
4.1.
Diversity, Respect and Fairness in the Workplace
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We take pride in the diversity of our workforce and recognize it a key factor to innovation and to our long-term success.
We are firmly committed to providing equal opportunity in all phases of employment and recognize that it is a responsibility of
each of us to promote a workplace free of discrimination and harassment.
We do not tolerate any kind of discrimination or harassment based on age, ancestry, skin color, religious creed, family care or
medical leave status, mental disability, physical disability, marital status, medical condition, genetic information, military or
veteran status, national origin, race, sex, gender, gender identity, gender expression, sexual orientation or preference, or other
legally protected or immutable characteristics.
We treat each other with equal respect, and we do our part to ensure a working atmosphere characterized by respectful
cooperation, mutual trust and fairness.
We do not tolerate any kind of workplace harassment, including but not limited to sexual advances, immoral propositions, and
humiliation of any kind, such as through abusive or disrespectful jokes, comments or actions.
We ensure compensation and social benefits in compliance with applicable labor laws and international standards on human
rights. We reject at any phases of our production or processing any use of child labor, forced labor, human trafficking or any
other kind of human rights violation.
We recognize the rights of our workers to associate freely and believe in open communication and direct engagement between
workers and management as the most effective way to resolve workplace issues.
4.2.
Workplace Health and Safety
NIO strives to provide all of us with a safe and healthy work environment. Our Company has effective safety programs in place
to ensure the safety of workers, emergency preparedness and precautions in the exposure to potentially hazardous substances
and material.
We conduct our work in a safe manner. We follow our Company’s safety instructions and guidelines and look after each other.
We do not work under the influence of any legal or illegal substances that could impair our ability to perform our jobs.
We report any accidents, injuries and unsafe equipment, practices or conditions.
We do not tolerate any form of violence or threats of violence.
Managers and supervisors ensure employees reporting to them are appropriately equipped and support them in meeting their
respective safety responsibilities.
4.3.
Sustainability and Environment
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NIO, which translates to “Blue Sky Coming” in its Chinese name, originated from our vision of a future filled with blue skies.
We strive to meet and exceed all environmental laws, regulations and standards. We aim at continuously contributing to the
comprehensive and green transformation of the economy and the society through environmentally responsible manufacturing
and other practices for the benefit of consumers, employees and the communities.
We are committed to limiting consumption of natural resources through efficient design of our products and processes,
integrating the concept of sustainability to their lifecycles.
Each of us endeavors in our daily activities to use resources and energy economically and efficiently in order to mitigate our
impact on the environment and avoid waste.
Our commitments to sustainability and to the environment are made more concrete in our Global Supply Chain Sustainability
Policy. See also NIO’s annual ESG Report on our global website.
4.4.
Social Responsibility
At NIO, we are committed to make the world a better place.
We do this mostly by pursuing our mission – to shape a joyful lifestyle – with honesty, care, vision and action. We also do this
by innovating to ensure the increasing quality and safety of our products and by proactively taking care of the environment
through the electrification of the automotive industry and multiple initiatives. And we do this by pursuing sustainability in
everything that we do – from designing, developing and producing our products to how we treat our people, our users, our
partners.
In addition, we strive to contribute to the communities where we operate in various ways, including value-driven local
cooperations and, when appropriate, charitable donations. When investing in such projects or making donations, we make sure
they are chosen transparently and in full compliance with the law and our Company’s internal policies and approval procedures
to ensure their legitimacy.
5.
Our Responsibility for our Business
5.1.
Product Quality, Product Safety and Product Compliance
Our products and services are the very heart of our Company’s business.
Ensuring their quality, safety and compliance with legal or regulatory requirements is, therefore, vital to building and
maintaining our Company’s good reputation and long-term success. More importantly, quality, safety and compliance are
essential to maintain the safety of our users, their families and others who rely on the quality of our vehicles and products.
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We are committed to ensure the quality, safety and compliance with all laws, regulations and standards applicable to all our
products and services.
We are committed to developing and implementing design and manufacturing processes with utmost care and in accordance
with all quality control standards governing our responsibilities, across all facilities and at all stages of the product life cycle.
We recognize the importance of being attentive to and are committed to raising any concerns regarding product safety, quality or
conformity with applicable regulations without delay.
We ensure that concerns raised with regard to the safety or quality of our Company’s products are, without exception, duly
verified, investigated and timely addressed.
5.2.
Intellectual Property and Confidentiality
The success of our business relies significantly on our ability to maintain the confidentiality of information regarding our
inventions, trade secrets and know-how. They secure us a fair competitive advantage in the markets where we operate.
We abide by our Company’s rules and policies concerning intellectual property and confidential information. This includes,
among others: all inventions, creative works, computer software, and technical or trade secrets developed in the course of our
duties as employees of NIO or primarily through the use of our Company’s assets or resources while working at NIO constitute
property of our Company.
It is the responsibility of each of us to maintain the confidentiality of information entrusted to us by our Company or its business
partners. We remain vigilant to ensure that we do not intentionally or inadvertently disclose such confidential information
without prior authorization. Confidential information includes all non-public information that might be of use to competitors, or
harmful to the Company or its business partners if disclosed.
We do not use our Company’s confidential information outside the course of our works or for our personal benefit or the benefit
of third parties.
We protect our Company’s intellectual property against unauthorized use by third parties and respect internal rules that restrict
access to certain information to specific authorized persons.
We ensure that scraps and drafts are properly disposed or destroyed in order to prevent their misappropriation by third parties.
We acknowledge that our duty of confidentiality with respect to our Company’s non-public information survives the termination
of our employment until such time as the Company discloses such information publicly, or the information otherwise becomes
available in the public sphere through means other than our own fault.
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Upon termination of our employment, or at such time as the Company requests, we return to the Company all of its property
without exception, including all forms of media containing confidential information, and do not retain copies of them.
5.3.
Protection and Use of Company Assets
We protect our Company’s assets and ensure their efficient use for legitimate business purposes only. We refrain from making
use of our Company’s property for personal purposes, unless such personal use is expressly authorized.
We recognize that theft, carelessness and waste have a direct impact on our Company’s profitability. We exercise reasonable
care to prevent theft, damage or misuse of Company property and promptly report any actual or suspected occurrence.
We acknowledge that any use of the Company’s funds or assets, whether for personal gain or not, for any unlawful or improper
purpose is strictly prohibited.
We safeguard all electronic programs, data, communications and written materials from unauthorized access.
We protect everything of value that our Company owns, benefits from or has right to use, particularly equipment, raw materials,
products and production facilities.
5.4.
Company Representation
Contractual agreements, formal letters and other legally binding actions on behalf of our Company may only be signed by the
Company’s legal representatives or any persons legally authorized by them to perform such actions (e.g. via powers of attorney
and internal authorization rules).
We comply with all representation rules, internal authorization matrixes and approval processes and do not sign any binding
documents on behalf of our Company unless duly authorized.
Only designated individuals within our Company may speak on its behalf. We refrain from making public statements or
statements to media representatives that may appear to be on behalf of the Company, unless authorized to do so.
When affiliation to our Company is disclosed or otherwise expected to be known, we clarify that the ideas and opinions
expressed are personal and may not represent the position of the Company on the issue. This includes communications made
verbally or in writing, including online, such as in internet forums and social media. We do not misrepresent our affiliation to
the Company and, where legally required, duly disclose such affiliation.
5.5.
IT and Information Security
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Our Company has introduced policies to ensure the safe use of hardware, software and networks in order to mitigate significant
risks such as the impairment or loss of important business data as a result of malware (virus) or data misuse (e.g. by action of
hackers).
We acknowledge and commit to comply with such internal information and cyber security regulations and standards.
We are vigilant when sharing or receiving data and opening or downloading attachments to verify that the message and its
sender appear trustworthy.
We recognize that special caution is required when receiving e-mails from unknown sources or suspicious messages from
supposedly known, but not verified, sources (phishing).
5.6.
Data Privacy and Protection
We comply with all applicable privacy and data protection laws as a minimum standard.
We only collect, store, process or otherwise use personal data of employees, users, customers, suppliers and others to the extent
legally permissible.
We recognize that personal data may only be used for defined legitimate purposes to which the Company has a legal basis and
shall not be shared with third parties without informing the affected persons or having their consent. In all cases, personal data
must be secured against unauthorized access. To prevent unauthorized access, personal data may only be transmitted with
adequate safety measures in place.
When processing sensitive data, conducting internal investigations or compliance controls, we adhere to applicable data
protection and labor laws as well as to our Company’s policies.
5.7.
Accuracy of Company Records
Accurate and reliable records are crucial to our Company’s business and form the basis of its earnings statements, financial
reports and other disclosures to the public. Our records are a source of essential data that guides business decision-making and
strategic planning. Company records include, but are not limited to, booking information, payroll, timecards, travel and expense
reports, e-mails, accounting and financial data, measurement and performance records, electronic data files and all other records
maintained in the ordinary course of business.
We ensure that our Company records are complete, accurate and reliable in all material respects.
In particular, we maintain financial integrity by ensuring that our financial records fairly and completely reflect our Company’s
assets, liabilities, revenues and expenses.
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We acknowledge that there is never an acceptable reason to make false or misleading entries. Undisclosed or unrecorded funds,
payments or receipts are strictly prohibited. We are responsible for understanding and complying with the Company’s
recordkeeping policy and seeking internal support when in doubt.
5.8.
Business Reports and Public Communications
Our users and customers, our investors, auditors, public authorities and other third parties frequently receive and rely on
information provided by our Company in different scenarios. This includes, for instance, our financial reports and other public
communications as listed company.
We strictly comply with all applicable laws, regulations, standards and listing requirements for accounting, record keeping,
financial reporting and disclosure of transactions, estimates and forecasts.
We ensure that information publicly provided by our Company is always honest, accurate, reliable and timely.
We promptly report any potential inaccuracy in or incompleteness of our financial reports and other public communications. We
are responsive to potential red flags such as: financial results that seem inconsistent with the performance of the underlying
business; transactions that do not seem to have a legitimate business purpose; requests to circumvent ordinary review and
approval procedures; and others.
We refrain from directly or indirectly taking any action that could be deemed to coerce, manipulate, mislead or fraudulently
influence our Company’s independent auditors in order to render the financial statements of our Company materially
misleading.
6.
Our Responsibility for Business Integrity
6.1.
Conflicts of Interests
A conflict of interests occurs when an employee’s private interest interferes, or appears to interfere, in any way with the interests
of the Company as a whole.
Conflicts of interests may arise, for example, from:
(a)
(b)
Sideline Work: working for a competitor, supplier or customer, or otherwise engage in sideline work that could interfere
with your ability to work effectively at NIO.
Business Opportunities: taking a business opportunity about which you learned through your work at NIO or start a
side business that competes with our Company.
(c)
Financial Interests: having a meaningful financial interest in one of NIO’s competitors or business partners.
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(d)
(e)
Personal Relationships: being in a position to supervise the work of a family member, romantic partner or close friend.
Supplier Relationships: having family ties or close personal ties with someone working at any supplier supervised by
you or receiving excessive gifts and invitations from a supplier.
At NIO, we are loyal to our Company and always act in its best interests. We avoid any situations that present – or create the
appearance of – a conflict between our personal interests and the business interests of our Company.
We avoid any private interest that may impact our ability to perform our work objectively and effectively.
We acknowledge that personal interests or the interests of third parties close to us, such as relatives, may not be elevated above
the interests of the Company when making decisions on behalf of NIO.
We fully disclose any situations that could reasonably be expected to give rise to a conflict of interest before it materializes.
We comply with our Company’s Global Policy on Conflicts of Interests and obtain any necessary approvals before engaging in
certain activities, as described in that policy.
6.2.
Prohibition of Bribery and Corruption
Honesty is one of our core values at NIO and corruption is absolutely incompatible with it. Therefore, we do not tolerate any
kind of corruptive behavior, including any form of fraud or bribery.
We win business ethically and on the merits of our products and services, never by bribing decisionmakers of our customers or
public authorities.
We choose our suppliers and other business partners based on their merits and appropriate business reasons, never improperly
influenced by bribes.
We never offer, give or promise anything in order to obtain an improper business advantage or improper preferential treatment,
or that could appear to have this objective. This applies no matter if the counterparty is someone working at a public agency or
institution or at a customer, business partner or potential customer or business partner.
We never give money, directly or indirectly to public officials or any other person in order to expedite or otherwise facilitate the
performance of governmental actions – the so-called “facilitation payments.” Even if such practice is considered common
business practice in certain countries.
Bribery is the offering, giving, receiving or soliciting of anything of value in exchange for some kind of influence or action to
obtain an improper advantage.
Bribery can take many forms, such as:
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(a)
(b)
(c)
(d)
Cash payments or cash equivalents, such as virtual currencies, gift cards, vouchers, prepaid cards, or other cards
containing credits, points, virtual currencies or anything that can be used to purchase goods or services or that can be
liquidated into cash;
Secret or excessive commissions, kickbacks, sweetheart deals, inappropriate or unwarranted discounts or rebates,
unjustified reimbursements, unwarranted allowances or expenses;
Lavish or overly frequent gifts, meals and entertainment, unwarranted use of company property or facilities, payment
of extravagant travel expenses or travel expenses without an appropriate business purpose;
Job offers, including employment or promise of employment to relatives or friends of someone in position to influence
a decision in favor of NIO;
(e)
Political contributions, charitable donations or sponsorships.
Our Company has introduced certain approval processes to mitigate the risk of bribery and corruption. Please check our Global
Anti-Corruption Policy for more details.
6.3.
Gifts, Meals and Entertainment
Gifts, meals and invitations to events extended to external business partners may under certain circumstances help build trust
and promote good business relationships, and they may be an integral part of common business practice in some countries.
Nonetheless, they can also create conflicts of interests or suggest improper or undue influence prohibited by anti-corruption
laws.
We only offer or accept gifts, meals and invitations which are appropriate to the occasion, infrequent and reasonable in value,
never lavish or extravagant.
We never offer or accept gifts and invitations in exchange for an improper advantage or if they are not in line with local business
customs and applicable laws.
We are particularly careful with benefits to public officials and always obtain the necessary approvals before offering or
granting any benefits.
Employees must observe the Company’s internal approval processes applicable to certain expenses such as gifts, meals,
entertainment, donations and sponsorships. See NIO’s Global Anti-Corruption Policy for more information.
6.4.
Donations and Sponsorships
Donations and sponsorships are legitimate ways through which our Company shows its commitment to society by contributing
to worthy causes or strengthens our brand with selected groups. However, improper or excessive donations and sponsoring may
be seen
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as a form of bribery or corruption and therefore cause serious harm to our Company, the employees involved and the recipient
of the contribution.
We only make donations on a voluntary basis without anything being demanded in return. We donate exclusively to recognized
non-profit organizations whose goals are compatible with our Company’s principles. We ensure that donations are never paid to
private accounts.
We use sponsorships to promote the Company’s reputation and brand. We ensure that they are commensurate with the
consideration being offered in exchange (opportunity to advertise the Company’s products or brand), have a legitimate business
purpose and are based on written agreement. Our Company does not sponsor events organized by individuals or organizations
with goals incompatible with our principles.
We only grant donations and sponsorships in a transparent manner, when the recipient, its purpose and the receipt are
documented and verifiable, and after obtaining the necessary internal approvals.
6.5.
Political Participation and Contributions
Participation in the political decision-making process, whether by individual or corporate citizens, is part of any healthy
democracy. Our Company acknowledges and respects the rights of employees to participate in political activities. At the same
time, it is important that personal political activities are clearly separated from our work at the Company. Political activities on
behalf of our Company may only be carried out by employees specifically authorized to do so.
We only engage in personal political activities in our own time and with our own resources, in compliance with all laws and
regulations.
We do not use our Company’s equipment, facilities or funds to personally support in any way political candidates or campaigns.
We do not do or say anything to give the impression, or that could be seen as giving the impression, that we are representing our
Company or that our Company is endorsing our position, unless duly authorized to do so.
Our Company does not make (directly or through trade associations) political donations to individual candidates or political
parties, nor reimburses political contributions made by employees. Any corporate political contribution to be made by our
Company requires prior approval by the Company’s Chief Executive Officer in consultation with the Company’s Legal
Department or compliance functions and is subsequently processed by the Company’s Government Affairs functions. This
includes monetary contributions or contributions in-kind, such as lending or donating equipment or technical services.
Our Company’s participation in the political decision-making process through lobbying is always carried out in a compliant and
ethical manner, guided by the principles of responsibility and accountability.
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We never attempt to unduly influence policymakers and governments through illegal or unethical means.
6.6.
Fair Competition and Fair Dealing
Our Company believes and is committed to free and fair competition, which leads businesses to compete on the quality and
price of their products, driving innovation and benefiting consumers and the society.
We are committed to complying with all applicable antitrust or competition laws. We never seek to reduce or eliminate
competition through agreements or understandings with competitors or any other kind of anti-competitive behavior. In
particular:
We never agree on or exchange any kind of competitively sensitive information with competitors, including but not limited to
price, costs, discounts, profit, profit margins, inventories, marketing plans, distribution or expansion plans, bidding plans.
We never agree with competitors to divide or assign customers, markets, sales territories, suppliers or distributors.
We never force distributors or resellers to sell our products at a particular price.
We never use illegal or unethical means such as theft, deception or misrepresentation to gather information about our
competitors.
We never enter into exclusive dealings without prior consultation with the Company’s Legal Department or compliance
functions.
We compete, with integrity, based on the merits of our products and services.
We are particularly careful when meeting competitors at trade association meetings and other industry gatherings or social
settings. We refrain from discussing, listening to or even joking about any kind of anti-competitive topic. If in doubt whether a
certain behavior is or was appropriate, we always consult with or report to the Company’s Legal Department or compliance
functions.
We strive to deal fairly at all times with everyone, including our users, customers, suppliers and competitors. We never engage
in abusive or manipulative behavior. We never seek to obtain any kind of unfair advantage from anyone through concealment,
abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.
6.7.
Third Party Intellectual Property and Copyrights
Just as the Company protects its own confidential or proprietary information, it is also committed to respecting and maintaining
the confidentiality of sensitive or proprietary information of third parties, especially our customers, suppliers, investors or other
business partners.
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We never accept confidential information from third parties nor use it unless doing so is transparently agreed by contract (such
as a non-disclosure agreement – NDA) and documented.
We always obtain appropriate licenses or permissions before making use of proprietary information of any business partner or
other third party. We do not utilize trademarks of customers and business partners or publish cooperation with them without
their prior written consent.
6.8.
Insider Trading
In the course of our works, we may have access to confidential information that, once public, could have a relevant impact on
the price of shares and other securities issued by the Company or by its business partners.
We do not, under any circumstances, purchase or sell shares based on such non-public information. Moreover, we never pass on
non-public information to someone who could potentially engage in this behavior (i.e., tipping).
Our Company has introduced a detailed mandatory policy concerning the prevention of insider trading. Please check our
Statement of Policies Governing Material Non-Public Information and the Prevention of Insider Trading for more details.
6.9.
Trade Compliance
Our Company is committed to full compliance with all applicable trade regulations, including sanctions, export and import
controls, customs law and anti-boycott provisions.
In conducting business across borders, employees must be aware of and follow such laws and relevant internal policies,
including the Company’s Global Trade Compliance Policy and other complementary guidance materials.
Trade compliance provisions are complex, often differing from country to country and being frequently subject to changes.
Export controls may also apply to transfers of software, data, and technological know-how via email, cloud, telephone, fax, or
shared drives. Even the temporary cross-border transfer of, for example, technical drawings taken on a business trip may fall
under export control. When making decisions regarding the import or export of goods and services, employees must carefully
consider whether export control laws may apply. In order to ensure compliance, employees must seek advice from the
Company’s Legal Department or compliance functions when in doubt on how trade laws apply to their jobs and responsibilities.
6.10.
Prohibition of Money Laundering and Terrorism Financing
Money laundering is the process through which criminals and terrorists move funds gained from illegal activities through
apparently legitimate businesses, in order to make
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those funds appear legitimate or to disguise their origin. Laws around the world prohibit any involvement in money laundering
activities and even the inadvertent involvement in money laundering may result in severe penalties to the Company and
everyone involved.
We do not tolerate or participate in any misuse of our Company for illegal activities.
We are committed to only doing business with reputable business partners who operate within the law and whose funds are
derived from legal sources. To ensure this, we are vigilant as to who is behind every transaction and exercise good judgment
when checking the identity of our users, customers and other partners.
Even if the Company’s business is not in the financial sector, to prevent money laundering, we acknowledge the need to be
attentive to suspicious behavior (or, red flags) of users, customers, suppliers and other business partners. Red flags may include,
for example:
(a)
(b)
(c)
(d)
overpayment to the Company’s bank account, followed by reimbursement request in cash or to a different bank
account;
payments made in currencies other than those specified in the contract;
payments from multiple accounts or foreign accounts without legitimate reasons;
and other unusual behaviors.
Please check the Company’s intranet for further guidance, policies and procedures in place for the prevention of money
laundering.
We report any kind of questionable conducts or questionable requests in accordance with internal policies. When in doubt, we
seek support by the Company’s Legal Department or compliance functions.
6.11. Working with Suppliers
When selecting suppliers, we are committed to ensuring open competition, objective selection criteria and the best interests of
our Company.
Our Company expects its suppliers and other business partners to share its ethical values, adhere to all applicable laws,
generally accepted standards of social responsibility, and basic principles of integrity. We proactively ensure that our suppliers
abide by those principles and the NIO Partner Code of Conduct, and expect our suppliers to flow down these requirements to
their own subcontractors and suppliers.
In particular, suppliers must, at a minimum:
(a)
(b)
(c)
respect the human and labor rights of their employees;
ban child and forced labor;
ensure health and safety at the workplace;
14
(d)
(e)
(f)
(g)
respect environmental laws and standards;
prohibit corruption;
engage in fair competition;
promote compliance among their suppliers.
We are vigilant to any instances of non-compliance in the course of our Company’s relationship with the supplier and
immediately report any factual or suspected breaches.
7.
Living this Code
7.1.
Making Ethical Decisions
Our Code aims at assisting us in making ethical decisions in our everyday activities. Nevertheless, it does not cover all possible
situations and, sometimes, the right thing to do may not be entirely clear at first.
This is where our commitment to Honesty and ethical and compliant behavior matters most and plays a decisive role.
When confronted with a situation for which our Code and other Company policies do not provide guidance, our ethical
decision-making model on the next page can further assist you in making the optimal decision.
7.2.
Seeking Support
Our line manager or supervisor is always our first point of contact for questions or uncertainties regarding how to live this Code
or how to proceed in a certain situation in an ethical manner. If the situation requires, each of us may also contact the manager
of our line manager or supervisor.
Moreover, if we prefer, we can always seek support from the following sources:
(a)
(b)
our local Human Resources (HR) department or HR business partner;
the Company’s Legal Department or compliance functions.
Please refer to the Compliance page on our Company’s intranet site to find additional compliance resources and specific contact
information for support and advice.
7.3.
Ethical Decision-Making Model
Is this the right decision or course of action? When in doubt, ask yourself the following questions and follow the relevant
arrows:
15
7.4.
Raising Concerns & Reporting Violations
Our Company’s ability to continuously and consistently act with integrity depends on our actions and our ability to speak up
when we see or suspect wrongdoing. Employees and third parties are encouraged to report any situations that may violate this
Code or applicable laws through one of the channels below:
Open Door Policy. Employees are encouraged to raise any issues directly with their managers, or if an employee has reason to
believe that his or her manager is involved or has a conflict of interest, to the next level of management, the local HR, or the
Company’s Legal Department or compliance functions.
Compliance Email. Employees and third parties may raise concerns or report any issues to the Company’s global compliance e-
mail compliance@nio.com or to the relevant local compliance e-mail indicated on NIO’s website. Anonymous reports are
accepted.
Additional resources. Employees and third parties may additionally file any reports via online intake form or through our
Company’s Ethics Helpline (available in local languages). Please visit NIO’s website to find the relevant telephone numbers and
web form. These channels also allow anonymous reports, if preferred.
7.5.
No Retaliation
Our Company is committed to investigate all reported violations and to treat all the persons involved fairly. Submitted reports
are handled with appropriate care and sensitivity and treated confidentially to the extent possible in accordance with our
Company’s Ethics and Compliance Whistleblower Policies and Procedures and applicable laws. Employees are encouraged to
cooperate openly and truthfully during any investigations.
Anyone who seeks support, raises a compliance concern, reports a factual or suspected violation in good faith or provides
information in the course of an investigation must not fear negative consequences for so doing. We do not tolerate any kind of
reprisal behavior
16
against those supporting our compliance efforts. Any form of retaliation is strictly prohibited and may result in disciplinary
measures.
See NIO’s Ethics and Compliance Whistleblower Policies and Procedures for more detailed information on how we handle
reports of potential wrongdoing and protect whistleblowers from retaliation.
7.6.
Complementary Resources
Employees can find on our Company’s intranet additional resources relating to compliance and ethics, including contact
information for obtaining support or raising concerns and complementary policies and guidelines.
8.
Final Provisions
8.1.
Waivers
Waivers of this Code are seldom granted and are reserved for truly exceptional or extraordinary circumstances. All waiver
requests shall be analyzed individually and in light of applicable laws and company policies. Requests for waivers must be
submitted to the Company’s Legal Department or compliance functions. Waivers of this Code for directors or executive officers
may only be granted if approved by the Board of Directors the Company or its appropriate committee, and shall be promptly
disclosed to the public to the extent required by applicable laws, regulations and listing rules.
8.2.
No rights created
Nothing in this Code is intended to or does create any kind of rights in favor of employees, users, customers, vendors, business
partners, investors, competitors, governments, public authorities or any other persons or entities. This Code is a compilation of
ethical principles which shall guide the conduct of business activities within and by or on behalf of NIO.
8.3.
Additional Provisions for Senior Officers
Without prejudice to any of the other provisions of this Code, and in addition to them, NIO’s Chief Executive Officer, Chief
Financial Officer and other senior officers as disclosed in the Company’s public filings for listing on applicable stock exchanges
(together, the “Senior Officers”) have a special responsibility for ensuring that all of the Company’s financial disclosures and
other relevant public communications are full, fair, accurate, timely and understandable. They are required to report any
occurrence that might undermine this objective to the Company’s Disclosure Committee and Audit Committee. Moreover,
Senior Officers must promptly report to the Company’s General Counsel or Chief Compliance Officer and to the Audit
Committee any information they might have concerning, among others:
17
(a)
(b)
(c)
a violation of the Code involving management and employees having a significant role in NIO’s financial reporting,
disclosures or internal controls, including actual or apparent conflicts of interests between personal and professional
relationships or fraudulent behavior;
a material violation of securities or other laws, rules or regulations applicable to NIO and to the operation of its
business, whether by NIO or any agent thereof;
significant deficiencies in the design or operation of internal controls which could adversely affect NIO’s ability to
record, process, summarize and report financial data.
Any instances of violations of this Code, including the Additional Provisions in this section, or of applicable laws, rules and
regulations by a Senior Officer will be handled by the Board of Directors of the Company, which shall determine the appropriate
procedure and discipline, up to termination of employment, with the objective of promoting accountability for adherence to the
Code and legal compliance. In determining the appropriate discipline, the Board of Directors shall consider factors such as the
nature and severity of the violation, whether it was a single occurrence or repeated occurrences, whether it appears to have been
intentional or inadvertent, recidivism and other factors deemed appropriate.
**************************************************
18
Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Bin Li, certify that:
1.
2.
3.
4.
5.
(a)
(b)
(c)
(d)
(a)
(b)
I have reviewed this annual report on Form 20-F of NIO Inc. (the “Company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods
presented in this report;
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons
performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: April 9, 2024
/s/ Bin Li
By:
Name: Bin Li
Title: Chief Executive Officer
Exhibit 12.2
Certification by the Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Wei Feng, certify that:
1.
2.
3.
4.
5.
(a)
(b)
(c)
(d)
(a)
(b)
I have reviewed this annual report on Form 20-F of NIO Inc. (the “Company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods
presented in this report;
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons
performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: April 9, 2024
/s/ Wei Feng
By:
Name: Wei Feng
Title:
Chief Financial Officer
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.1
In connection with the Annual Report of NIO Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2023
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bin Li, Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: April 9, 2024
/s/ Bin Li
By:
Name: Bin Li
Title: Chief Executive Officer
Certification by the Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.2
In connection with the Annual Report of NIO Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2023
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wei Feng, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: April 9, 2024
/s/ Wei Feng
By:
Name: Wei Feng
Title:
Chief Financial Officer
Consent of Independent Registered Public Accounting Firm
Exhibit 15.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-229952 and No. 333-272537)
of NIO Inc. of our report dated April 9, 2024 relating to the financial statements and the effectiveness of internal control over financial
reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
April 9, 2024
Exhibit 15.2
April 9, 2024
Building 19, No. 1355, Caobao Road, Minhang District Shanghai
People’s Republic of China
Dear Sir/Madam:
We hereby consent to the reference of our name under the headings “Item 3. Key Information—D. Risk Factors—Risks Related to Our
Corporate Structure” and “Item 4. Information on the Company—C. Organizational Structure” in NIO Inc.’s Annual Report on Form 20-
F for the year ended December 31, 2023 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the
“SEC”) on the date hereof, and further consent to the incorporation by reference, in NIO Inc.’s registration statements on Form S-8 (File
No. 333-229952) and Form S-8 (File No. 333-272537), of the summary of our opinion under the headings “Item 3. Key Information—D.
Risk Factors—Risks Related to Our Corporate Structure” and “Item 4. Information on the Company—C. Organizational Structure” in the
Annual Report.
We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated
thereunder.
Very truly yours,
/s/ Han Kun Law Offices
Han Kun Law Offices
NIO INC.
CLAWBACK POLICY
Exhibit 97.1
(Adopted by the Board of Directors of NIO Inc. and effective on November 3, 2023)
The board of directors (the “Board”) of NIO Inc. (the “Company”) believes that it is appropriate for the
Company to adopt this Clawback Policy (the “Policy”) to be applied to the Executive Officers (as defined
below) of the Company and implemented by the Compensation Committee of the Board (the
“Committee”), and adopts this Policy to be effective as of the Effective Date.
1. Definitions
For purposes of this Policy, the following definitions shall apply:
(a) “Company Group” means the Company and each of its subsidiaries or consolidated variable interest
entities, as applicable.
(b) “Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a
person who served as an Executive Officer at any time during the performance period for the Incentive-
Based Compensation and that was Received (i) on or after October 2, 2023 (i.e., the effective date of
the NYSE listing standards), (ii) after the person became an Executive Officer, and (iii) at a time that
the Company had a class of securities listed on a national securities exchange or a national securities
association such as the NYSE.
(c) “Effective Date” means November 3, 2023.
(d) “Erroneously Awarded Compensation” means the amount of Covered Compensation granted, vested
or paid to a person during the fiscal period when the applicable Financial Reporting Measure relating to
such Covered Compensation was attained that exceeds the amount of Covered Compensation that
otherwise would have been granted, vested or paid to the person had such amount been determined
based on the applicable Restatement, computed without regard to any taxes paid (i.e., on a pre-tax
basis). For Covered Compensation based on stock price or total shareholder return, where the amount
of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the
information in a Restatement, the Committee will determine the amount of such Covered
Compensation that constitutes Erroneously Awarded Compensation, if any, based on a reasonable
estimate of the effect of the Restatement on the stock price or total shareholder return upon which the
Covered Compensation was granted, vested or paid and the Committee shall maintain documentation
of such determination and provide such documentation to the NYSE.
(e) “Exchange Act” means the U.S. Securities Exchange Act of 1934.
(f) “Executive Officer” means the Company’s president, principal financial officer, principal accounting
officer (or if there is no such accounting officer, the controller), any vice-president of the Company in
charge of a principal business unit, division, or function (such as sales, administration, or finance), any
other officer who performs a policy-making function, or any other person (whether or not an officer or
employee of the Company) who performs
1
similar policy-making functions for the Company. “Policy-making function” does not include policy-
making functions that are not significant. Both current and former Executive Officers are subject to
the Policy in accordance with its terms.
(g) “Financial Reporting Measure” means (i) any measure that is determined and presented in
accordance with the accounting principles used in preparing the Company’s financial statements, and
any measures derived wholly or in part from such measures and may consist of IFRS/U.S. GAAP or
non-IFRS/non-U.S. GAAP financial measures (as defined under Regulation G of the Exchange Act and
Item 10 of Regulation S-K under the Exchange Act),(ii) stock price or (iii) total shareholder return.
Financial Reporting Measures need not be presented within the Company’s financial statements or
included in a filing with the SEC.
(h) “Home Country” means the Company’s jurisdiction of incorporation, i.e., the Cayman Islands.
(i) “Incentive-Based Compensation” means any compensation that is granted, earned or vested based
wholly or in part upon the attainment of a Financial Reporting Measure.
(j) “Lookback Period” means the three completed fiscal years (plus any transition period of less than
nine months that is within or immediately following the three completed fiscal years and that results
from a change in the Company’s fiscal year) immediately preceding the date on which the Company is
required to prepare a Restatement for a given reporting period, with such date being the earlier of: (i)
the date the Board, a committee of the Board, or the officer or officers of the Company authorized to
take such action if Board action is not required, concludes, or reasonably should have concluded, that
the Company is required to prepare a Restatement, or (ii) the date a court, regulator or other legally
authorized body directs the Company to prepare a Restatement. Recovery of any Erroneously Awarded
Compensation under the Policy is not dependent on whether or when the Restatement is actually filed.
(k) “NYSE” means the New York Stock Exchange.
(l) “Received”: Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period
during which the Financial Reporting Measure specified in or otherwise relating to the Incentive-Based
Compensation award is attained, even if the grant, vesting or payment of the Incentive-Based
Compensation occurs after the end of that period.
(m)“Restatement” means a required accounting restatement of any Company financial statement due to
the material noncompliance of the Company with any financial reporting requirement under the
securities laws, including (i) to correct an error in previously issued financial statements that is material
to the previously issued financial statements (commonly referred to as a “Big R” restatement) or (ii) to
correct an error in previously issued financial statements that is not material to the previously issued
financial statements but that would result in a material misstatement if the error were corrected in the
current period or left uncorrected in the current period (commonly referred to as a “little r”
restatement). Changes to the Company’s financial statements that do not represent error corrections
under the then-current relevant accounting standards will not constitute Restatements. Recovery of any
2
Erroneously Awarded Compensation under the Policy is not dependent on fraud or misconduct
by any person in connection with the Restatement.
(n) “SEC” means the U.S. Securities and Exchange Commission.
2. Recovery of Erroneously Awarded Compensation
2.1. In the event of a Restatement, any Erroneously Awarded Compensation Received during the
Lookback Period prior to the Restatement (a) that is then-outstanding but has not yet been paid shall
be automatically and immediately forfeited and (b) that has been paid to any person shall be subject
to reasonably prompt repayment to the Company Group in accordance with Section 3 of this Policy.
The Committee must pursue (and shall not have the discretion to waive) the forfeiture and/or
repayment of such Erroneously Awarded Compensation in accordance with Section 3 of this Policy,
except as provided below.
2.2. Notwithstanding the foregoing, the Committee (or, if the Committee is not a committee of the Board
responsible for the Company’s executive compensation decisions and composed entirely of
independent directors, a majority of the independent directors serving on the Board) may determine
not to pursue the forfeiture and/or recovery of Erroneously Awarded Compensation from any person
if the Committee determines that such forfeiture and/or recovery would be impracticable due to any
of the following circumstances: (i) the direct expense paid to a third party (for example, reasonable
legal expenses and consulting fees) to assist in enforcing the Policy would exceed the amount to be
recovered, including the costs that could be incurred if pursuing such recovery would violate local
laws other than the Company’s Home Country laws (following reasonable attempts by the Company
Group to recover such Erroneously Awarded Compensation, the documentation of such attempts, and
the provision of such documentation to the NYSE), (ii) pursuing such recovery would violate the
Company’s Home Country laws adopted prior to November 28, 2022 (provided that the Company
obtains an opinion of Home Country counsel acceptable to the NYSE that recovery would result in
such a violation and provides such opinion to the NYSE), or (iii) recovery would likely cause any
otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of
the Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a)
and regulations thereunder.
3. Means of Repayment
In the event that the Committee determines that any person shall repay any Erroneously Awarded
Compensation, the Committee shall provide written notice to such person by email or certified mail to the
physical address on file with the Company Group for such person, and the person shall satisfy such
repayment in a manner and on such terms as required by the Committee, and the Company Group shall be
entitled to set off the repayment amount against any amount owed to the person by the Company Group,
to require the forfeiture of any award granted by the Company Group to the person, or to take any and all
necessary actions to reasonably promptly recover the repayment amount from the person, in each case, to
the fullest extent permitted under applicable law, including without limitation, Section 409A of the U.S.
Internal Revenue Code and the regulations and guidance thereunder. If the Committee does not specify a
repayment timing in the written notice described above, the applicable person shall be required to repay
the
3
Erroneously Awarded Compensation to the Company Group by wire, cash, cashier’s check or other means
as agreed by the Committee no later than thirty (30) days after receipt of such notice.
4. No Indemnification
No person shall be indemnified, insured or reimbursed by the Company Group in respect of any loss of
compensation by such person in accordance with this Policy, nor shall any person receive any
advancement of expenses for disputes related to any loss of compensation by such person in accordance
with this Policy, and no person shall be paid or reimbursed by the Company Group for any premiums paid
by such person for any third-party insurance policy covering potential recovery obligations under this
Policy. For this purpose, “indemnification” includes any modification to current compensation
arrangements or other means that would amount to de facto indemnification (for example, providing the
person a new cash award which would be cancelled to effect the recovery of any Erroneously Awarded
Compensation). In no event shall the Company Group be required to award any person an additional
payment if any Restatement would result in a higher incentive compensation payment.
5. Miscellaneous
5.1. This Policy generally will be administered and interpreted by the Committee, provided that the Board
may, from time to time, exercise discretion to administer and interpret this Policy, in which case, all
references herein to “Committee” shall be deemed to refer to the Board. Any determination by the
Committee with respect to this Policy shall be final, conclusive and binding on all interested parties.
Any discretionary determinations of the Committee under this Policy, if any, need not be uniform
with respect to all persons, and may be made selectively among persons, whether or not such persons
are similarly situated.
5.2. This Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, as it may be amended from time to time, and any related rules
or regulations promulgated by the SEC or the NYSE, including any additional or new requirements
that become effective after the Effective Date which upon effectiveness shall be deemed to
automatically amend this Policy to the extent necessary to comply with such additional or new
requirements.
5.3. The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent
that any provision of this Policy is found to be unenforceable or invalid under any applicable law,
such provision will be applied to the maximum extent permitted and shall automatically be deemed
amended in a manner consistent with its objectives to the extent necessary to conform to applicable
law. The invalidity or unenforceability of any provision of this Policy shall not affect the validity or
enforceability of any other provision of this Policy. Recovery of Erroneously Awarded Compensation
under this Policy is not dependent upon the Company Group satisfying any conditions in this Policy,
including any requirements to provide applicable documentation to the NYSE.
5.4. The rights of the Company Group under this Policy to seek forfeiture or reimbursement are in
addition to, and not in lieu of, any rights of recovery, or remedies or rights other than recovery, that
may be available to the Company Group pursuant to the terms of any law,
4
government regulation or stock exchange listing requirement or any other policy, code of conduct,
employee handbook, employment agreement, equity award agreement, or other plan or agreement of
the Company Group.
6. Amendment and Termination
To the extent permitted by, and in a manner consistent with applicable law, including SEC and NYSE
rules, the Committee may terminate, suspend or amend this Policy at any time in its discretion.
7. Successors
This Policy shall be binding and enforceable against all persons and their respective beneficiaries, heirs,
executors, administrators or other legal representatives with respect to any Covered Compensation
granted, vested or paid to or administered by such persons or entities.
5
NIO INC.
CLAWBACK POLICY
ACKNOWLEDGMENT, CONSENT AND AGREEMENT
I acknowledge that I have received and reviewed a copy of the NIO Inc. Clawback Policy (as may be
amended from time to time, the “Policy”) and I have been given an opportunity to ask questions about the
Policy and review it with my counsel. I knowingly, voluntarily and irrevocably consent to and agree to be
bound by and subject to the Policy’s terms and conditions, including that I will return any Erroneously
Awarded Compensation that is required to be repaid in accordance with the Policy. I further acknowledge,
understand and agree that (i) the compensation that I receive, have received or may become entitled to
receive from the Company Group is subject to the Policy, and the Policy may affect such compensation
and (ii) I have no right to indemnification, insurance payments or other reimbursement by or from the
Company Group for any compensation that is subject to recovery and / or forfeiture under the Policy.
Capitalized terms used but not defined herein have the meanings set forth in the Policy.
Signed:
Print Name:
Date: