Leases

12 Months Ended

Dec. 31, 2025

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 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 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 is accounted for 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, 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

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,
	2024		2025
Operating lease
Land use rights, net		410,388		940,928
Right-of-use assets, net		1,261,663		3,730,921

Total operating lease assets		1,672,051		4,671,849

Operating lease liabilities - current		324,496		445,901
Operating lease liabilities - non current		1,345,852		4,246,599

Total operating lease liabilities		1,670,348		4,692,500


	As of December 31,
	2024			2025
Finance lease
Property, plant and equipment, at cost		1,001,820			1,001,820
Accumulated depreciation		(125,228	)		(175,319	)

Property, plant and equipment, net		876,592			826,501

Finance lease liabilities - current		41,940			55,581
Finance lease liabilities - non current		777,697			740,576

Total finance lease liabilities		819,637			796,157

The components of lease expense are as follows:


	For the Year Ended December 31,
	2023		2024		2025
Operating lease expense:
Operating lease expense		540,688		426,998		643,890
Short-term lease expense		231,467		259,129		149,229

Total operating lease expenses		772,155		686,127		793,119

Finance lease expense:
Amortization expense		50,091		50,091		50,091
Interest expense		40,205		39,325		38,321

Total finance lease expenses		90,296		89,416		88,412

Total lease expenses		862,451		775,543		881,531

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,
	2023			2024			2025
Weighted-average remaining lease term
Operating leases		4.6 years			4.3 years			8.7 years
Finance leases		5.6 years			4.6 years			3.6 years
Land use rights		49.0 years			48.0 years			26.1 years
Weighted-average discount rate
Operating leases		4.85	%		4.85	%		4.88	%
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,
	2023			2024		2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases		268,290			456,697		757,331
Operating cash outflows from finance leases (interest payments)		40,205			—		—
Financing cash outflows from finance leases		113,943			31,767		61,801
Leased assets obtained in exchange for operating lease liabilities		(316,558	)		186,698		3,704,284

As of December 31, 2025, the maturities of the Group’s lease liabilities (excluding short-term leases) are as follows:


	As of December 31, 2025
	Operating Lease			Finance Lease
Within 1 year		688,262			31,767
Between 1 and 2 years		579,773			34,835
Between 2 and 3 years		619,573			31,767
Between 3 and 4 years		984,346			825,955
Between 4 and 5 years		544,688			—
Thereafter		2,888,795			—

Total minimum lease payments		6,305,437			924,324
Less: Interest		(1,612,937	)		(128,167	)

Present value of lease obligations		4,692,500			796,157
Less: Current portion		(445,901	)		(55,581	)

Non - current portion of lease obligations		4,246,599			740,576

As a lessor

The Group entered into leases of factories with third parties in December 2023 and January 2024, respectively. Each lease has a term of

years, and contains no extension or termination options. Initial direct costs associated with the leases were immaterial for all periods presented. The lease agreements contain no residual value guarantees, nor do they grant lessees the option to purchase the underlying assets at the end of the lease terms.

The leases were classified as sales-type leases because the lease terms represent a 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 RMB

36,743

in December, 2023 and January, 2024, respectively, and recognized accordingly the net investment in the lease with amount of RMB216,218 and RMB

4,477

, 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 RMB

135

in “Selling, general and administrative expenses” on the consolidated statements of comprehensive loss for the years ended December 31, 2023 and 2024. The Group did not enter into any new sales-type leases arrangement in 2025.

The balances for the factory lease where the Group is the lessor are presented as follows:


	As of December 31
	2024		2025
Other current assets
Finance lease receivable, current portion, net		11,388		11,687
Other non-current assets
Finance lease receivables, non-current portion, net		204,435		194,911

Total finance lease receivables, net		215,823		206,598

The net investment in sales-type lease consisted of:


	As of December 31
	2024			2025
Total minimum lease payments receivable		231,621			215,619
Less: Unearned income		(45,796	)		(40,322	)
Unguaranteed residuals		29,998			31,301

Net investment in lease payments receivable		215,823			206,598

Current portion		11,388			11,687

Non-current portion		204,435			194,911

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


	As of December 31
	2024			2025
Within 1 year		27,602			16,002
Between 1 and 2 years		16,002			16,002
Between 2 and 3 years		16,002			16,002
Between 3 and 4 years		16,002			16,002
Between 4 and 5 years		16,002			16,002
Thereafter		140,011			135,609

Total minimum lease receivable		231,621			215,619
Less: Unearned income		(45,796	)		(40,322	)
Unguaranteed residuals		29,998			31,301

Net investment in finance lease		215,823			206,598