SEC Filing | NIO Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December 2020

Commission File Number: 001-38638

NIO Inc.

(Registrant’s Name)

Building 20, 56 Antuo Road

Jiading District, Shanghai 201804

People’s Republic of China

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXPLANATORY NOTE

Exhibit 99.1 to this Current Report on Form 6-K and the interactive data files attached as exhibits hereto are hereby incorporated by reference into the Registration Statement on Form F-3 of NIO Inc. (File No. 333-239047) and shall be a part thereof from the date on which this Current Report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NIO Inc.

	By:	/s/ Wei Feng
	Name:	Wei Feng
	Title:	Chief Financial Officer

Date: December 10, 2020

EXHIBIT INDEX


Exhibit Number		Description of Document
99.1*		Unaudited Condensed Consolidated Interim Financial Statements—NIO Inc.
101.INS*		Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

Exhibit 99.1

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Unaudited Interim Condensed Consolidated Financial Statements
Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2019 and September 30, 2020	F-2
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss for the Nine Months Ended September 30, 2019 and 2020	F-4
Unaudited Interim Condensed Consolidated Statements of Shareholders’ (Deficit)/Equity for the Nine Months Ended September 30, 2019 and 2020	F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2020	F-7
Notes to Unaudited Interim Condensed Consolidated Financial Statements	F-8

F-1

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)


	As of December 31,	As of September 30,
	2019	2020	2020
	RMB	RMB	USD
			Note 2(e)
ASSETS
Current assets:
Cash and cash equivalents	862,839	19,327,717	2,846,665
Restricted cash	82,507	184,244	27,136
Short-term investment	111,000	2,718,303	400,363
Trade receivable	1,352,093	1,520,196	223,901
Amounts due from related parties	50,783	86,030	12,671
Inventory	889,528	1,039,091	153,042
Prepayments and other current assets	1,579,258	1,490,213	219,486
Expected credit loss provision – current	—	(40,684)	(5,992)
Total current assets	4,928,008	26,325,110	3,877,272
Non-current assets:
Long-term restricted cash	44,523	43,623	6,425
Property, plant and equipment, net	5,533,064	5,132,587	755,948
Intangible assets, net	1,522	851	125
Land use rights, net	208,815	205,180	30,220
Long-term investments	115,325	340,764	50,189
Amounts due from related parties	—	3,383	498
Right-of-use assets–operating lease	1,997,672	1,376,019	202,666
Other non-current assets	1,753,100	984,655	145,024
Expected credit loss provision – non-current	—	(19,062)	(2,808)
Total non-current assets	9,654,021	8,068,000	1,188,287
Total assets	14,582,029	34,393,110	5,065,559
LIABILITIES
Current liabilities:
Short-term borrowings	885,620	951,957	140,208
Trade payable	3,111,699	4,932,003	726,406
Amounts due to related parties	309,729	447,791	65,952
Taxes payable	43,986	39,231	5,778
Current portion of operating lease liabilities	608,747	522,661	76,980
Current portion of long-term borrowings	322,436	445,038	65,547
Accruals and other liabilities	4,216,641	3,526,194	519,351
Total current liabilities	9,498,858	10,864,875	1,600,222
Non-current liabilities:
Long-term borrowings	7,154,798	6,764,903	996,363
Non-current operating lease liabilities	1,598,372	1,049,698	154,604
Other non-current liabilities	1,151,813	1,541,444	227,031
Total non-current liabilities	9,904,983	9,356,045	1,377,998
Total liabilities	19,403,841	20,220,920	2,978,220
Commitments and contingencies (Note 24)

The accompanying notes are an integral part of these consolidated financial statements.

F-2

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)


	As of December 31,	As of September 30,
	2019	2020	2020
	RMB	RMB	USD
			Note 2(e)
MEZZANINE EQUITY
Redeemable non-controlling interests	1,455,787	6,145,538	905,140
Total mezzanine equity	1,455,787	6,145,538	905,140
SHAREHOLDERS’ (DEFICIT)/EQUITY
Class A Ordinary Shares (US$0.00025 par value; 2,500,000,000 shares authorized; 786,937,655 and 1,127,431,898 shares issued; 783,942,438 and 1,124,835,326 shares outstanding as of December 31, 2019 and September 30, 2020, respectively)	1,347	1,934	286
Class B Ordinary Shares (US$0.00025 par value; 132,030,222 shares authorized, issued and outstanding as of December 31, 2019 and September 30, 2020)	226	226	33
Class C Ordinary Shares (US$0.00025 par value; 148,500,000 shares authorized, issued and outstanding as of December 31, 2019 and September 30, 2020)	254	254	37
Less: Treasury shares (2,995,217 and 2,718,520 shares as of December 31, 2019 and September 30, 2020, respectively)	—	—	—
Additional paid in capital	40,227,856	58,380,028	8,598,449
Accumulated other comprehensive loss	(203,048)	(98,128)	(14,453)
Accumulated deficit	(46,326,321)	(50,262,046)	(7,402,799)

Total NIO Inc. shareholders’ (deficit)/equity	(6,299,686)	8,022,268	1,181,553

Non-controlling interests	22,087	4,384	646

Total shareholders’ (deficit)/equity	(6,277,599)	8,026,652	1,182,199

Total liabilities, mezzanine equity and shareholders’ (deficit)/equity	14,582,029	34,393,110	5,065,559

The accompanying notes are an integral part of these consolidated financial statements.

F-3

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

(All amounts in thousands, except for share and per share data)


	Nine Months Ended September 30,
	2019	2020	2020
	RMB	RMB	USD
			Note 2(e)
Revenue:
Vehicle sales	4,683,192	9,008,474	1,326,805
Other sales	293,383	608,368	89,603
Total revenues	4,976,575	9,616,842	1,416,408
Cost of sales:
Vehicle sales	(5,251,149)	(8,146,439)	(1,199,841)
Other sales	(670,495)	(738,929)	(108,832)
Total cost of sales	(5,921,644)	(8,885,368)	(1,308,673)
Gross (loss)/profit	(945,069)	731,474	107,735
Operating expenses:
Research and development	(3,402,172)	(1,658,327)	(244,245)
Selling, general and administrative	(3,905,772)	(2,725,465)	(401,418)
Other operating loss, net	—	(23,941)	(3,526)
Total operating expenses	(7,307,944)	(4,407,733)	(649,189)
Loss from operations	(8,253,013)	(3,676,259)	(541,454)
Interest income	137,926	89,885	13,239
Interest expenses	(268,213)	(332,174)	(48,924)
Share of losses of equity investees, net of tax	(64,521)	(32,061)	(4,722)
Other income, net	22,343	39,854	5,870
Loss before income tax expense	(8,425,478)	(3,910,755)	(575,991)
Income tax expense	(5,556)	(4,704)	(693)
Net loss	(8,431,034)	(3,915,459)	(576,684)
Accretion on redeemable non-controlling interests to redemption value	(94,682)	(205,864)	(30,320)
Net loss attributable to non-controlling interests	6,416	2,703	398
Net loss attributable to ordinary shareholders of NIO Inc.	(8,519,300)	(4,118,620)	(606,606)
Net loss	(8,431,034)	(3,915,459)	(576,684)
Other comprehensive (loss)/income
Foreign currency translation adjustment, net of nil tax	(260,129)	104,920	15,453
Total other comprehensive (loss)/income	(260,129)	104,920	15,453
Total comprehensive loss	(8,691,163)	(3,810,539)	(561,231)
Accretion on redeemable non-controlling interests to redemption value	(94,682)	(205,864)	(30,320)
Net loss attributable to non-controlling interests	6,416	2,703	398
Comprehensive loss attributable to ordinary shareholders of NIO Inc.	(8,779,429)	(4,013,700)	(591,153)
Weighted average number of ordinary shares used in computing net loss per share
Basic and diluted	1,029,950,645	1,100,928,485	1,100,928,485
Net loss per share attributable to ordinary shareholders
Basic and diluted	(8.27)	(3.74)	(0.55)
Weighted average number of ADS used in computing net loss per ADS
Basic and diluted	1,029,950,645	1,100,928,485	1,100,928,485
Net loss per ADS attributable to ordinary shareholders
Basic and diluted	(8.27)	(3.74)	(0.55)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY/(DEFICIT)

(All amounts in thousands, except for share and per share data)


						Accumulated
					Additional	Other		Total	Non-
	Ordinary Shares		Treasury Shares		Paid in	Comprehensive	Accumulated	Shareholders’	Controlling
	Shares	Par value	Shares	Amount	Capital	Loss	Deficit	Equity/(Deficit)	Interests	Total Equity/(Deficit)
Balance as of December 31, 2018	1,057,731,012	1,809	(6,931,980)	(9,186)	41,918,936	(34,708)	(35,039,810)	6,837,041	(15,896)	6,821,145
Accretion on redeemable non-controlling interests to redemption value	—	—	—	—	—	—	(94,682)	(94,682)	—	(94,682)
Purchase of capped call options and zero-strike call options in connection with issuance of convertible senior notes	—	—	—	—	(1,939,567)	—	—	(1,939,567)	—	(1,939,567)
Exercise of share options	10,738,435	19	1,115,065	—	43,117	—	—	43,136	—	43,136
Vesting of restricted shares	—	—	394,633	—	3,430	—	—	3,430	—	3,430
Vesting of share options	—	—	—	—	278,837	—	—	278,837	—	278,837
Cancellation of restricted shares	(2,218,448)	(4)	2,218,448	9,186	(9,186)	—	—	(4)	—	(4)
Capital injection by non-controlling interests	—	—	—	—	—	—	—	—	47,124	47,124
Foreign currency translation adjustment	—	—	—	—	—	(260,129)	—	(260,129)	—	(260,129)
Net loss	—	—	—	—	—	—	(8,424,618)	(8,424,618)	(6,416)	(8,431,034)
Balance as of September 30, 2019	1,066,250,999	1,824	(3,203,834)	—	40,295,567	(294,837)	(43,559,110)	(3,556,556)	24,812	(3,531,744)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) /EQUITY

(All amounts in thousands, except for share and per share data)


						Accumulated
					Additional	Other		Total	Non-
	Ordinary Shares		Treasury Shares		Paid in	Comprehensive	Accumulated	Shareholders’	Controlling	Total
	Shares	Par value	Shares	Amount	Capital	Loss	Deficit	(Deficit)/Equity	Interests	Deficit/Equity
Balance as of December 31, 2019	1,067,467,877	1,827	(2,995,217)	—	40,227,856	(203,048)	(46,326,321)	(6,299,686)	22,087	(6,277,599)
Cumulative effect of adoption of new accounting standard(Note 2(i))	—	—	—	—	—	—	(22,969)	(22,969)	—	(22,969)
Accretion on redeemable non-controlling interests to redemption value	—	—	—	—	(205,864)	—	—	(205,864)	—	(205,864)
Issuance of ordinary shares	184,575,000	321	—	—	14,923,086	—	—	14,923,407	—	14,923,407
Issuance of restricted shares	2,113,469	4	—	—	54,508	—	—	54,512	—	54,512
Conversion of convertible notes to ordinary shares	142,639,348	243	—	—	3,131,661	—	—	3,131,904	—	3,131,904
Exercise of share options	11,178,942	19	354,181	—	121,886	—	—	121,905	—	121,905
Vesting of restricted shares	—	—	31,948	—	3,114	—	—	3,114	—	3,114
Vesting of share options	—	—	—	—	123,781	—	—	123,781	—	123,781
Cancellation of restricted shares	(12,516)	—	12,516	—	—	—	—	—	—	—
Capital withdrawal by non-controlling interests	—	—	—	—	—	—	—	—	(15,000)	(15,000)
Foreign currency translation adjustment	—	—	—	—	—	104,920	—	104,920	—	104,920
Net loss	—	—	—	—	—	—	(3,912,756)	(3,912,756)	(2,703)	(3,915,459)
Balance as of September 30, 2020	1,407,962,120	2,414	(2,596,572)	—	58,380,028	(98,128)	(50,262,046)	8,022,268	4,384	8,026,652

The accompanying notes are an integral part of these consolidated financial statements.

F-6

NIO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands, except for share and per share data)


	Nine Months Ended September 30,
	2019	2020	2020
	RMB	RMB	USD
			Note 2(e)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	(8,431,034)	(3,915,459)	(576,684)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	677,228	764,820	112,646
Expected credit loss expense	—	5,945	876
Impairment on other assets	82,924	27,943	4,116
Foreign exchange loss	15,743	75,906	11,180
Share-based compensation expenses	282,265	126,895	18,690
Changes in fair value for an equity investment	(12,459)	—	—
Share of losses of equity investees	64,521	32,061	4,722
Loss on disposal of property, plant and equipment	4,887	26,376	3,885
Amortization of right-of-use assets	321,362	349,362	51,455
Changes in operating assets and liabilities:
Prepayments and other current assets	(395,598)	21,473	3,162
Inventory	(357,736)	(151,748)	(22,350)
Other non-current assets	(207,418)	738,687	108,797
Operating lease liabilities	(305,968)	(323,253)	(47,610)
Taxes payable	(15,517)	(11,868)	(1,748)
Trade receivable	(513,332)	(137,580)	(20,263)
Trade payable	192,869	1,860,581	274,033
Long-term receivables	(75,161)	(15,281)	(2,251)
Non-current deferred revenue	38,577	230,560	33,957
Accruals and other liabilities	210,621	(125,996)	(18,557)
Other non-current liabilities	169,703	223,864	32,972
Net cash used in operating activities	(8,253,523)	(196,712)	(28,972)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment and intangible assets	(1,485,842)	(952,357)	(140,267)
Purchases of short-term investments	(2,042,729)	(2,967,610)	(437,082)
Proceeds from sale of short-term investments	6,395,432	352,990	51,990
Acquisitions of equity investees	(17,000)	(257,500)	(37,926)
Proceeds from disposal of property and equipment	—	163,072	24,018
Net cash provided by/(used in) investing activities	2,849,861	(3,661,405)	(539,267)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	43,136	96,395	14,197
Capital injection from redeemable non-controlling interests	—	5,000,000	736,420
Capital withdrawal by non-controlling interests	—	(10,500)	(1,546)
Repurchase of redeemable non-controlling interests	—	(511,458)	(75,330)
Proceeds from issuance of convertible promissory note	3,710,034	3,105,127	457,336
Proceeds from borrowings	1,236,104	645,461	95,066
Repayments of borrowings	(1,588,871)	(721,192)	(106,220)
Principal payments on finance leases	(34,926)	(32,571)	(4,797)
Proceeds from issuance of ordinary shares	—	14,943,840	2,200,990
Net cash provided by financing activities	3,365,477	22,515,102	3,316,116
Effects of exchange rate changes on cash, cash equivalents and restricted cash	11,403	(91,270)	(13,443)
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2,026,782)	18,565,715	2,734,434
Cash, cash equivalents and restricted cash at beginning of the period	3,224,387	989,869	145,792
Cash, cash equivalents and restricted cash at end of the period	1,197,605	19,555,584	2,880,226
NON-CASH INVESTING AND FINANCING ACTIVITIES
Accruals related to purchase of property and equipment	992,769	716,071	105,466
Issuance of restricted shares	—	54,512	8,029
Conversion of convertible notes to ordinary shares	—	3,131,904	461,280
Accretion on redeemable non-controlling interests to redemption value	94,682	205,864	30,320
Supplemental Disclosure
Interest paid	88,043	207,039	30,494
Income taxes paid	18,202	12,902	1,990

The accompanying notes are an integral part of these consolidated financial statements.

F-7

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED 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 (“VIEs”) are collectively referred to as the “Group”.

The Group designs and develops high-performance fully electric vehicles. It launched the first volume manufactured electric vehicle, the ES8, to the public in December 2017. The Group jointly manufactures its vehicles through strategic collaboration with other Chinese vehicle manufacturers. The Group also offers Energy and Service packages to its users. As of December 31, 2019 and September 30, 2020, its primary operations are conducted in the People’s Republic of China (“PRC”). The Group began to sell its first vehicles in June 2018. As of September 30, 2020, the Company’s principal subsidiaries and VIEs are as follows:


	Equity	Place and Date of incorporation
Subsidiaries	interest held	or date of acquisition	Principal activities
NIO NextEV Limited (“NIO HK”) (formerly known as NextEV Limited)	100%	Hong Kong, February 2015	Investment holding
NIO GmbH (formerly known as NextEV GmbH)	100%	Germany, May 2015	Design and technology development
NIO Holding Co., Ltd. ("NIO Holding") (formerly named NIO (Anhui) Holding Co., Ltd.)	100%	Anhui, PRC, November 2017	Headquarter and technology development
NIO Co., Ltd. (“NIO SH”) (formerly known as NextEV Co., Ltd.)	100%	Shanghai, PRC, May 2015	Headquarter and technology development
NIO USA, Inc. (“NIO US”) (formerly known as NextEV USA, Inc.)	100%	United States, November 2015	Technology development
XPT Limited (“XPT”)	100%	Hong Kong, December 2015	Investment holding
NIO Performance Engineering Limited ("NPE")	100%	United Kingdom, July 2019	Marketing and technology development
NIO Sport Limited (“NIO Sport”) (formerly known as NextEV NIO Sport Limited)	100%	Hong Kong, April 2016	Racing management
XPT Technology Limited (“XPT Technology”)	100%	Hong Kong, April 2016	Investment holding
XPT Inc. (“XPT US”)	100%	United States, April 2016	Technology development
XPT (Jiangsu) Investment Co., Ltd. (“XPT Jiangsu”)	100%	Jiangsu, PRC, May 2016	Investment holding
Shanghai XPT Technology Limited	100%	Shanghai, PRC, May 2016	Technology development
XPT (Nanjing) E-Powertrain Technology Co., Ltd. (“XPT NJEP”)	100%	Nanjing, PRC, July 2016	Manufacturing of E-Powertrain
XPT (Nanjing) Energy Storage System Co., Ltd. (“XPT NJES”)	100%	Nanjing, PRC, October 2016	Manufacturing of battery pack
NIO Power Express Limited (“PE HK)	100%	Hong Kong, January 2017	Investment holding
NextEV User Enterprise Limited (“UE HK”)	100%	Hong Kong, February 2017	Investment holding
Shanghai NIO Sales and Services Co., Ltd. (“UE CNHC”)	100%	Shanghai, PRC, March 2017	Investment holding and sales and after sales management
NIO Energy Investment (Hubei) Co., Ltd. (“PE CNHC”)	100%	Wuhan PRC, April 2017	Investment holding
Wuhan NIO Energy Co., Ltd. (“PE WHJV”)	100%	Wuhan, PRC, May 2017	Investment holding
XTRONICS (Nanjing) Automotive Intelligent Technologies Co. Ltd. (“XPT NJWL”)	50%	Nanjing, PRC, June 2017	Manufacturing of components
XPT (Jiangsu) Automotive Technology Co., Ltd. (“XPT AUTO”)	100%	Nanjing, PRC, May 2018	Investment holding


	Economic	Place and Date of incorporation
VIE and VIE’s subsidiaries	interest held	or date of acquisition
Prime Hubs Limited (“Prime Hubs”)	100%	BVI, October 2014
NIO Technology Co., Ltd. (“NIO SHTECH”) (formerly known as Shanghai NextEV Technology Co., Ltd.)	100%	Shanghai, PRC, November 2014
Beijing NIO Network Technology Co., Ltd. (“NIO BJTECH”)	100%	Beijing, PRC, July 2017
Shanghai Anbin Technology Co., Ltd. (“NIO ABTECH”)	100%	Shanghai, PRC, April 2018

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, therefore, the Group consolidates this entity.

F-8

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

Variable interest entity

NIO SHTECH was established by Li Bin and Qin Lihong (the “Nominee Shareholders”) in November, 2014. In 2015, NIO SH, NIO SHTECH, and the Nominee Shareholders of NIO SHTECH entered into a series of contractual agreements, including a loan agreement, an equity pledge agreement, exclusive call option agreement and power of attorney that irrevocably authorized the Nominee Shareholders designated by NIO SH to exercise the equity owner’s rights over NIO SHTECH. These agreements provide the Company, as the only shareholder of NIO SH, with effective control over NIO SHTECH to direct the activities that most significantly impact NIO SHTECH’s economic performance and enable the Company to obtain substantially all of the economic benefits arising from NIO SHTECH. Management concluded that NIO SHTECH is a variable interest entity of the Company and the Company is the ultimate primary beneficiary of NIO SHTECH and shall consolidate the financial results of NIO SHTECH in the Group’s consolidated financial statements. In April 2018, the above mentioned contractual agreements were terminated. On the same date, NIO SHTECH became a subsidiary wholly owned by NIO ABTECH, who also became a VIE of the Group on that day. As of December 31, 2019 and September 30, 2020, NIO SHTECH did not have significant operations, nor any material assets or liabilities.

In October 2014, Prime Hubs, a British Virgin Islands (“BVI”) incorporated company and a consolidated variable interest entity of the Group, was established by the shareholders of the Group to facilitate the adoption of the Company’s employee stock incentive plans. The Company entered into a management agreement with Prime Hubs and Li Bin. The agreement provides the company with effective control over Prime Hubs and enables the Company to obtain substantially all of the economic benefits arising from Prime Hubs. As of December 31, 2019 and September 30, 2020, Prime Hubs held 4,250,002 Class A Ordinary Shares of the Company.

In April 2018, NIO SH entered into a series of contractual arrangements with the Nominee Shareholders as well as NIO ABTECH and NIO BJTECH separately, each including a loan agreement, an equity pledge agreement, exclusive call option agreement and power of attorney that irrevocably authorized the Nominee Shareholders designated by NIO SH to exercise the equity owner’s rights over NIO ABTECH and NIO BJTECH. These agreements provide the Company, as the only shareholder of NIO SH, with effective control over NIO ABTECH and NIO BJTECH to direct the activities that most significantly impact their economic performance and enable the Company to obtain substantially all of the economic benefits arising from them. Management concluded that NIO ABTECH and NIO BJTECH are variable interest entities of the Company and the Company is the ultimate primary beneficiary of them and shall consolidate the financial results of NIO ABTECH and NIO BJTECH in the Group’s consolidated financial statements. As of September 30, 2020, NIO ABTECH and NIO BJTECH did not have significant operations, nor any material assets or liabilities.

Liquidity and Going Concern

The accompanying unaudited interim condensed 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 incurred losses and suffered operating cash outflow since its inception. For the nine months ended September 30, 2019 and 2020, the Group incurred net losses of RMB8,431,034 and RMB3,915,459,respectively, and net cash used in operating activities was RMB8,253,523 and RMB196,712, respectively. As of September 30, 2020, the Group’s balance of cash and cash equivalents was RMB19,327,717 and the Group had net current assets of RMB15,460,235. Management has evaluated the sufficiency of its working capital and concluded that the Group’s available cash and cash equivalents, short-term investments, cash generated from operations 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 unaudited interim condensed consolidated financial statements on going concern basis.

2. Summary of Significant Accounting Policies

(a) Basis of presentation

The unaudited interim condensed 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. The interim financial data as of September 30, 2020 and for the nine months ended September 30, 2019 and 2020 is unaudited. In the opinion of management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary to a fair statement of the results for the interim periods.

F-9

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

(b) Principles of consolidation

The unaudited interim condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE 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.

A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.

All significant transactions and balances between the Company, its subsidiaries and the VIE have been eliminated upon consolidation. The non-controlling interests in consolidated subsidiaries are shown separately in the unaudited interim condensed consolidated financial statements.

The preparation of the unaudited interim condensed 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 unaudited interim condensed 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, the valuation and recognition of share-based compensation arrangements, depreciable lives of property, equipment and software, assessment for impairment of long-lived assets, inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories, valuation of deferred tax assets, recoverability of receivables, warranty liabilities as well as redemption value of the convertible redeemable preferred shares. Actual results could differ from those estimates.

(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 VIE 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 gain 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’ (deficit)/equity. Total foreign currency translation adjustment (losses)/income were negative RMB260,129 and RMB104,920 for the nine months ended September 30, 2019 and 2020, 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$ as the shares are denominated in US$.

F-10

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

(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 nine months ended September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on September 30, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on, or September 30, 2020 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.

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, prepayments and other current assets, long-term investments, trade payable, amounts due to related parties, short-term borrowings, taxes payable, accruals and other liabilities, long-term receivables and long-term borrowings. As of September 30, 2019, and 2020, the carrying values of these financial instruments are approximated to their fair values due to the short-term maturity of these instruments except for long-term receivables, long-term borrowings and certain investments which are carried at fair value at each balance sheet date. Certain long-term investments in equity investees classified within Level 3 are valued based on a model utilizing unobservable inputs which require significant management judgment and estimation.

When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. Below is a description of the valuation techniques that the Group uses to measure the fair value of assets that the Group reports on its consolidated balance sheets at fair value on a recurring basis.

Time deposits. The Group values its time deposits held in certain bank accounts using quoted prices for securities with similar characteristics and other observable inputs, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2.

Short-term borrowings. The rates of interest under the loan agreements with the lending banks were determined based on the prevailing interest rates in the market. The Group classifies the valuation techniques that use these inputs as Level 2.

Short-term receivables and payables. Trade receivable and prepayments and other current assets are financial assets with carrying values that approximate fair value due to their short term nature. Trade payable, accruals and other liabilities are financial liabilities with carrying values that approximate fair value due to their short term nature.

Prepayments and other assets in non-current assets. Prepayments and other assets in non-current assets are financial assets with carrying values that approximates fair value due to the change in fair value after considering the discount rate. The Group estimated fair values of non-current prepayments and other assets using the discount cash flow method.

F-11

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

(g) Cash, cash equivalents and restricted cash

Cash and cash equivalents represent cash on 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.

Restricted cash 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) the secured deposits held in designated bank accounts for issuance of bank credit card; (b) time deposit that are pledged for property lease.

Cash, cash equivalents and restricted cash as reported in the unaudited interim condensed consolidated statement of cash flows are presented separately on our unaudited interim condensed consolidated balance sheet as follows:


	December 31,	September 30,
	2019	2020
Cash and cash equivalents	862,839	19,327,717
Restricted cash	82,507	184,244
Long-term restricted cash	44,523	43,623
Total	989,869	19,555,584

(h) Short-term investment

Short-term investments consist primarily of investments in fixed deposits with maturities between three months and one year and investments in money market funds and financial products issued by banks. As of December 31, 2019 and September 30, 2020, the investment in fixed deposits that were recorded as short-term investments amounted to RMB111,000 and RMB2,718,303, respectively, among which, RMB96,000 and RMB2,000,202 was restricted as collateral for bank borrowings and letter of guarantee as of December 31, 2019 and September 30, 2020 respectively.

(i) Current expected credit losses

In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Company adopted this ASC Topic 326 and several associated ASUs on January 1, 2020 using a modified retrospective approach with a cumulative effect recorded as increase of accumulated deficit with amount of RMB22,968. As of January 1, 2020, upon the adoption, the expected credit loss provision for the current and non-current assets were RMB118,851 and RMB12,899, respectively.

The Company’s trade receivable, receivables of installment payments, deposits and other receivables are within the scope of ASC Topic 326. The Company 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 Company provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company 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 Company’s receivables. Additionally, external data and macroeconomic factors are also considered. This is assessed at each quarter based on the Company’s specific facts and circumstances.

For the nine months ended September 30, 2020, the Company recorded RMB5,945 expected credit loss expense in selling, general and administrative expenses. As of September 30, 2020, the expected credit loss provision for the current and non-current assets were RMB40,684 and RMB19,062, respectively.

(j) Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable primarily include amounts of vehicle sales in relation of government subsidy to be collected from government on behalf of customers, current portion of battery installment and receivables due from vehicle users. The Company recorded a provision for current expected credit losses.

F-12

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

The following table summarizes the activity in the allowance for credit losses related to accounts receivable for the nine months ended September 30, 2020:


		Nine Months Ended
		September 30, 2020
Balance as at December 31, 2019		85,824
Adoption of ASC Topic 326		6,775
Balance as at January 1, 2020		92,599
Current period reversal, net		(1,055)
Current period write-offs		(55,319)
Balance as at September 30, 2020		36,225

Allowance for the accounts receivable recognized for the nine months ended September 30, 2019 was nil.

(k) Inventory

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 based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. 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.

(l) Property, plant and equipment, net

Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property 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:

		Useful lives
Building and constructions		20 years
Production facilities		10 years
Charging & battery swap infrastructure		5 years
R&D equipment		5 years
Computer and electronic equipment		3 years
Purchased software		3 years
Leasehold improvements		Shorter of the estimated useful life or remaining lease term
Others		3 to 5 years

Depreciation for mold and tooling is computed using the units-of-production method whereby capitalized costs are amortized over the total estimated productive life 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 life 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 statements of comprehensive loss.

F-13

NIO INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except for share and per share data)

(m) Intangible assets, net

Intangible assets are carried at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method over the estimated useful lives as below:


		Useful lives
Domain names and others		5 years
License		3 years

The estimated useful lives of amortized intangible assets are reassessed if circumstances occur that indicate the original estimated useful lives have changed.

(n) Land use rights, net

Land use rights are recorded at cost less accumulated amortization. Amortization is provided on a straight-line basis over the estimated useful lives which are 536 months representing the shorter of the estimated usage periods or the terms of the agreements.

(o) Long-term investments

The Group’s long-term investments include equity investments in entities and equity securities without readily determinable fair values. 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. The carrying value of the Group’s long-term investments measured under equity method was RMB115,325 and RMB339,942 as of December 31, 2019 and September 30, 2020, respectively.

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. Prior to the fiscal year of 2018, these securities were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. The carrying value of the Group’s long-term investments measured under this alternative measurement was nil and RMB822 as of December 31, 2019 and September 30, 2020.

No impairment charge was recognized for the nine months ended September 30, 2019 and 2020.

(p) Impairment of long-lived assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse cha