Leases

12 Months Ended

Dec. 31, 2024

Leases Disclosure [Abstract]

Leases

18. Leases

As a lessee

The Group has entered into various operating lease agreements for certain land use rights, offices, retail and service centers, warehouses for finished goods, parking areas for charging infrastructure, and factories for R&D activities which are substantially located in PRC. In 2022, the Group also entered into a finance lease agreement for the Guangzhou manufacturing plant. The Group determines if an arrangement is a lease, or contains a lease, at inception and the group records the leases in the consolidated financial statements upon lease commencement, which is the date when the lessor makes the underlying asset available for use by the lessee.

The Group’s leases, where the Group is the lessee, may include options to extend the lease term and options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Group will exercise such options.

The Group entered into a cooperation agreement and supplementary agreements (collectively “Guangzhou Cooperation Agreements”) in September 2020 and June 2021 for the establishment of the Group’s Guangzhou manufacturing plant with Guangzhou GET Investment and Guangzhou GET New Energy. Pursuant to Guangzhou Cooperation Agreement, the Group intends to construct a new Smart EV manufacturing base which houses a broad range of functions, including research and development, manufacturing, vehicle testing and sales.

The Group entered into a lease contract with Guangzhou GET New Energy to lease the plant and underlying land use right of Guangzhou manufacturing plant with an annual lease payment of RMB57,900 from July 2022 to June 2029, and further obtained an obligation to purchase the plant and underlying land use right at the construction cost of RMB1,300,000 at the end of lease term. Further construction cost amounting to RMB30,670 will be paid subsequently according to the payment schedule. The lease payment made before the lease commencement date was RMB60,443. The initial direct cost made and the incentive received on or before the lease commencement date were immaterial.

The lease of the land use right or a purchased land use right can only be classified as an operating lease under U.S. GAAP. As the Group has an obligation to purchase the plant at cost and the assets are designed for the use of the Group, so the obligation is reasonably certain to be exercised, and accordingly, the lease of the plant was classified as a finance lease and recognized as property, plant and equipment of the Group. Therefore, on the lease commencement date, the land use right and property, plant and equipment for the plant amounted to RMB389,508 and RMB1,001,820, respectively, being the present value of the lease payment and the exercise price of the purchase obligation.

The balances for the leases where the Group is the lessee are presented as follows within the consolidated balance sheets:

	As of December 31,
	2023		2024
Operating lease
Land use rights, net		401,901		410,388
Right-of-use assets, net		1,455,865		1,261,663
Total operating lease assets		1,857,766		1,672,051
Operating lease liabilities - current		365,999		324,496
Operating lease liabilities - non current		1,490,882		1,345,852
Total operating lease liabilities		1,856,881		1,670,348

	As of December 31,
	2023			2024
Finance lease
Property, plant and equipment, at cost		1,001,820			1,001,820
Accumulated depreciation		(75,137	)		(125,228	)
Property, plant and equipment, net		926,683			876,592
Finance lease liabilities - current		34,382			41,940
Finance lease liabilities - non current		777,697			777,697
Total finance lease liabilities		812,079			819,637

The components of lease expense are as follows within the consolidated statements of comprehensive loss:

	For the Year Ended December 31,
	2022		2023		2024
Operating lease expense:
Operating lease expense		595,032		540,688		426,998
Short-term lease expense		265,800		231,467		259,129
Total operating lease expenses		860,832		772,155		686,127
Finance lease expense:
Amortization expense		25,046		50,091		50,091
Interest expense		22,846		40,205		39,325
Total finance lease expenses		47,892		90,296		89,416
Total lease expenses		908,724		862,451		775,543

Short-term leases primarily consist of the parking areas and pop-up stores leases with a term of 12 months or less.

Amortization expense of finance lease, operating lease expense and short-term lease expense are recognized as cost of sales, selling, general and administrative expenses and research and development expenses.

Interest expense on finance lease liabilities is recognized over the lease term as “Interest expenses”.

Other information related to operating leases where the Group is the lessee is as follows:

	For the Year Ended December 31,
	2022			2023			2024
Weighted-average remaining lease term
Operating leases		5.1 years			4.6 years			4.3 years
Finance leases		6.6 years			5.6 years			4.6 years
Land use rights		49.5 years			49.0 years			48.0 years
Weighted-average discount rate
Operating leases		4.78	%		4.85	%		4.85	%
Finance leases		4.90	%		4.90	%		4.90	%
Land use rights		4.90	%		4.90	%		4.90	%

Because most of the leases do not provide an implicit rate of return, the Group used the incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The Group elected to use the mortgage borrowing rate based on a similar borrowing term and amount with associated lease.

Supplemental cash flow information related to leases where the Group is the lessee is as follows:

	For the Year Ended December 31,
	2022		2023			2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases		486,260		268,290			456,697
Operating cash outflows from finance leases (interest payments)		22,846		40,205			—
Financing cash outflows from finance leases		15,355		113,943			31,767
Leased assets obtained in exchange for operating lease liabilities		1,162,151		(316,558	)		186,698
Leased assets obtained in exchange for finance lease liabilities		1,001,820		—			—

As of December 31, 2024, the maturities of the Group’s lease liabilities (excluding short-term leases) are as follows:

	As of December 31, 2024
	Finance Lease			Operating Lease
Within 1 year		31,767			395,180
Between 1 and 2 years		31,767			330,292
Between 2 and 3 years		34,835			224,951
Between 3 and 4 years		31,767			175,619
Between 4 and 5 years		825,955			557,743
Thereafter		—			250,835
Total minimum lease payments		956,091			1,934,620
Less: Interest		(136,454	)		(264,272	)
Present value of lease obligations		819,637			1,670,348
Less: Current portion		(41,940	)		(324,496	)
Non - current portion of lease obligations		777,697			1,345,852

As a lessor

The Group has entered into leases of factories with third parties in December, 2023 and January, 2024, respectively, with lease terms of 15 years, and no extension or termination options included in the lease arrangements. Initial direct costs were insignificant for all periods presented. No residual value guarantees and options at the end of the lease terms to purchase the underlying assets were contained in the lease agreements.

The leases of the factories were classified as sales-type lease as the lease terms were the major part of the remaining economic useful life of the underlying assets. Therefore, on the lease commencement date, the Group derecognized the underlying assets with amount of RMB194,284 and RMB36,743 in December, 2023 and January, 2024, respectively, and recognized accordingly the net investment in the lease with amount of RMB216,218 and RMB4,477, respectively, which represents the present value of the lease receivables and the amount that a lessor expects to derive from the underlying assets following the end of the lease terms. The Group also recorded the gain with amount of RMB2,116 and RMB135 in “Selling, general and administrative expenses” on the consolidated statements of comprehensive loss for the year ended December 31, 2023 and 2024.

The balances for the factory lease where the Group is the lessor are presented as follows within the consolidated balance sheets:

	As of December 31
	2023		2024
Other current assets
Finance lease receivables, current portion, net		11,100		11,388
Other non-current assets
Finance lease receivables, non-current portion, net		205,118		204,435
Total finance lease receivables, net		216,218		215,823

The net investment in sales-type lease consisted of:

	As of December 31
	2023			2024
Total minimum lease payments receivable		240,023			231,621
Less: Unearned income		(51,541	)		(45,796	)
Unguaranteed residuals		27,736			29,998
Net investment in lease payments receivable		216,218			215,823
Current portion		11,100			11,388
Non-current portion		205,118			204,435

Future minimum lease payments to be received for the sales-type lease are as follows:

	As of December 31
	2023			2024
Within 1 year		20,002			27,602
Between 1 and 2 years		16,001			16,002
Between 2 and 3 years		16,001			16,002
Between 3 and 4 years		16,001			16,002
Between 4 and 5 years		16,001			16,002
Thereafter		156,017			140,011
Total minimum lease receivable		240,023			231,621
Less: Unearned income		(51,541	)		(45,796	)
Unguaranteed residuals		27,736			29,998
Net investment in finance lease		216,218			215,823