NIO Quality Premium Partner Manual

NIO Quality Premium Partner Manual

18 Aug, 2020 V 1.3

Vision of NIO Quality Premium Partner

As a pioneer in the smart electric vehicle market, NIO has developed cutting-edge proprietary technologies in vehicle, such as E-powertrain, intelligent HMI, and smart connectivity, beyond vehicle and revolutionary charging solutions.

Close and healthy cooperation with our partners in development, manufacturing, and quality is the key to fulfil our vision of“Shape a joyful lifestyle”.

NIO Quality Premium Partner (Hereinafter referred to as NQPP) is a system which comprehensively reviews our partners’ overall performances from three perspectives. It is created to reflect our partners’ operations and management status and to identify opportunities for their continuous improvements. We believe that the NQPP program is also beneficial to the partnersin providing encouragement and support, so as to achieve an excellence standard through continuous communication.

NIO Quality Premium Partner aims at fostering a mutual relationship. To be more specific, when our partners put great efforts into improving themselves to meet NIO quality standards, NIO stands ready to offer our expertise, experience and assistance throughout the NQPP quality journey.

NIO Quality Premium Partner puts the discipline in place to achieve consistent excellence and guides the cooperation between NIO and our partners for superior quality.

To Create Premium Quality Together with Partners.

Content

Content

1. Benefits of NQPP

2. NQPP Overview

3. NQPP Evaluation Items-Score Threshold

4. NQPP Requirements and Score

5. NQPP Application and Revocation Rules

6. NQPP Application vs. NQPP Retention

7. NQPP Status

8. NQPP on NIO Partner Portal

9. Apply for NQPP

10. Abbreviations

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1Benefits of NQPP

Benefits of NQPPWe encourage our partners to manage their own performance with NQPP policy for continuous improvements in quality and a long-term win-win result. NQPP is more than just a title. It will bring the following benefits to our partners:

Premium Quality and ProcessThe NQPP award is a recognition of the partners’ product quality and manufacturing process.

Preferred Partners for New BusinessNQPP partners will be given favorable consideration in NIO’s new business sourcing.

Branding and ReputationNQPP award is a positive reputation for a partner to enhance its own branding.

Representatives of NIO PartnersNQPP is an award for the outstanding representatives among the NIO partner base.

Growing Together with NIONQPP is a bridge to connect partners and NIO. We join hands and achieve great success together.

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2NQPP Overview

NQPP OverviewAny partner’s manufacturing site (including DB and consignment partner manufacturing site) which has at least 6 months of acceptable production and at least 3000 pieces delivered to NIO and NIO production plants, is eligible for NQPP consideration.

A NQPP means the partner’s facility achieves excellence in these key areas: Quality, Logistics and Cooperation. NQPP Score = Quality Score+ Logistics Score + Cooperation Score

If a partner fails to meet one of these metrics, including CSL, Field Performance, System Assurance, APQP Delivery, Integrity (hereafter referred to as revocation triggers), the NQPP award will be revoked regardless of the NQPP score.

A partner with more than 850 NQPP points (680 points for DB partner) and no revocation trigger is eligible to apply for or retain NQPP.

If a NQPP partner has received NQPP score which is no greater than 850 points (680 points for DB partner), the NQPP award revoking process will be triggered.

Logistics

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Quality

Cooperation

3NQPP Evaluation Metrics and Score

Distributions

NQPP Evaluation Metrics and Score Distributions

Section Item Definition Full Score Frequency of Assessment

Quality650 Points

PPM Defects Part Per Million 150 Once a month

CSL Controlled Shipping Level* 50 Once a month

QR Quality Rejection 50 Once a month

Field PerformanceStop shipping, recall or service campaign in the

field caused by partner quality issue *50 Once a month

IPTV in 3 MISIncident Per Thousand Vehicles in 3 Months in

Service50 Once a month

System Assurance

IATF 16949 & other qualifications required by regulations* 50 Once a year

ISO 14001

NPQS Assessment NIO Partner Quality System assessment result 150 Once a year

APQP Delivery APQP achievement* 50 Every 6 months

Integrity Violation of trust* 50 Once a month

Logistics200 Points

LogisticsLogistic performance

(not applicable for DB partner)200 Once a month

Cooperation150 Points

Engineering Engineering performance 100 Every 6 months

Fast Response Fast Response to PQM/CMQ team support 50 Once a month

* Revocation Trigger 10

4NQPP Requirements and Score

NQPP Requirements and Score

PPM NQPP Score Full Score

PPM ≤ Benchmark 150 Points

150 PointsBenchmark < PPM ≤ 2 x Benchmark 100 Points

2 x Benchmark < PPM ≤ 3 x Benchmark 50 Points

3 x Benchmark < PPM 0 Points

QUALITY

NQPP uses nine key metrics in determining a partner’s score in terms of Quality Performance:

Quality is the top priority of a business. We expect our partners to maintain a stable quality, so as to support NIO in providing high quality products to our users.

1.PPM

Parts Per Million. Each manufacturing site has a set benchmark PPM according to the product it has. In NQPP assessment, we compare the partner’s actual total PPM in the past 6 months with the benchmark in order to ensure that the partner is consistently delivering high quality products. The Tier 1 partner is required to submit PPM data of their DB/consignment partner to NIO PQM.

Data Owner: IQC Support Team: Launch PQM

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QUALITY2.CSL

Controlled Shipping Level. It is a special shipping control for a partner when it is confirmed incapable of delivering qualified products. CSL is classified into 2 levels based on the severity of the issue and partner’s coordination.

CSL NQPP Score Full Score

No CSL1 and CSL2 50 Points

50 Points

CSL1 = 1, and no CSL2 30 Points

CSL1 = 2, and no CSL2 10 Points

CSL1 ≥ 3 0 Point

CSL2* ≥ 1 0 Point

*When a CSL2 is triggered, the partner’s NQPP award will be revoked even its score exceeds 850.

Data Owner: PQM Support Team: -13

NQPP Requirements and ScoreQUALITY

3.QR

Quality Reject. The total number of quality rejects in the past 6 months of one partner, which is classified into 4 ranks according to different levels of severity. The Tier 1 partner is required to submit QR data of their DB/consignment partner to NIO PQM. When the QR count number is converted into NQPP score, we grant each QR rank its own conversion rate.

QR number: Number of A50*100%+Number of B20*40%+Number of B10*20% +Number of C5*10%

QR Level Conversion Rate Data Source

A50 100% IQC

B20 40% IQC

B10 20% IQC

C5 10% IQC

QR Count NQPP score Full Score

QR Count = 0 50 points

50 Points0 < QR Count < 0.2 30 points

0.2 ≤QR Count 0 points

Conversion Rate of QR Rank QR Count Score Metrics

Data Owner: IQC Support Team: Launch PQM

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QUALITY

4.Field Performance

We expect our partners to keep paying attention to the quality of the product in the full lifecycle, instead of the quality while in NIO’s plant. A quality performance beyond expectation in the field will bring good reputation to both NIO and our partners. NIO always puts great emphasis on avoiding stop shipping, recall and service campaign which will bring extra cost and have negative impacts on reputation. Any partner’s responsibility related stop shipping, recall or service campaign in the field occurred in the past 12 months will be counted as a Field Performance.

Field Performance NQPP Scoring Full Score

Stop shipping, recall or service campaign = 0 50 Points

50 PointsStop shipping, recall or service campaign * ≥ 1 0 Point

*As long as a recall occurred in the past 12 months, the partner will lose 50 points and the NQPP award will be revoked at the same time.

Data Owner: PQM Support Team: ASQ

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QUALITY

5.IPTV in 3 MIS

Incident Per Thousand Vehicles in 3 Months in Service. The quality we pursuit is not temporary quality or quality in a certain situation, but long-term reliable quality. We set each partner an IPTV in 3 MIS benchmark according to its product supply.

IPTV (3 MIS) Scoring Full Score

IPTV ≤ Benchmark 50 Points

50 PointsBenchmark < IPTV ≤ 2 x Benchmark 20 Points

2 x Benchmark < IPTV 0 Point

Data Owner: PQM Support Team: CMQ

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QUALITY

6.System Assurance

NQPP evaluates this aspect of business management by a third party certification, namely IATF16949 quality management standard. We expect NIO partners to be IATF16949 certified. Only a partner with valid IATF16949 is eligible to apply for NQPP. Partners who are requested to have other qualifications required by regulations, such as CCC/CE, must make sure all these certifications are always valid. PQM conducts a follow-up check for those certifications in annual audit.

System Assurance Content NQPP Score Full Score

IATF 16949 & Other qualifications required by regulations

Obtained Certificate 30 Points

50 PointsNo / Loss* 0 Point

ISO 14001Obtained Certificate 20 Points

No / Loss 0 Point

*If IATF16949 is missing or invalid, the partner’s NQPP award will be revoked regardless of its NQPP score. For those partners requested other qualifications required by regulations such as CCC/CE, if these certifications are missing or invalid, the partner’s NQPP award will be revoked as well.

Data Owner: PQM Support Team: -

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QUALITY

7.NPQS Assessment

NIO Partner Quality System Assessment. It is an overall assessment for a manufacturing site management. A good quality management at the manufacturing site is a strong guarantee of product quality control. We expect our partners to develop and maintain excellent process quality control, so as to lay a solid foundation for product quality. NPQS assessment determines whether the site meets NIO expectations and identifies any opportunity for improvement. Only if the site meets all NIO expectations or has a robust working plan for improvement can the partner become eligible for NQPP nomination.

NPQS Assessment Result NQPP Score Full Score

Green 150 Points

150 PointsYellow 100 Points

Red 0 Point

Data Owner: PQM Support Team: -18

NQPP Requirements and ScoreQUALITY

8.APQP Delivery

Delivery of Advanced Product Quality Planning. We encourage our partners to allocate superior resources to support NIO program development. High quality delivery of all APQP deliverables on time is always highly appreciated. We expect our partners to focus on the following 6 aspects:

Schedule submissions timely Provide the required APQP deliverables for each phase in due time Keep up with the timing, actions and documentations of PPAP Close any nonconformity before the deadline Escalate the open issues if any delay or missing occurs Manage the APQP performance of the sub-contractor if necessaryIf the partner does not undertake NIO’s new projects within the past 6 months, the latest APQP delivery score will be followed.

APQP Delivery Status NQPP Score Full Score

100% APQP completion 50 Points

50 PointsAPQP Phase Review Report is not submitted on time 30 Points

Open Y or R issues in APQP Phase Review are not closed by the due date* 0 Point

*As long as any open issues are not closed by the due date and impact NIO program development, the partner will lose 50 points and the NQPP award will be revoked regardless of total NQPP score it gets.


NQPP Requirements and ScoreQUALITY9.Integrity

Violation of trust. An effective and smooth communication between our partners and NIO is highly appreciated. Any changes of process, material, design and engineering are expected to be timely reported and summitted to NIO’s team in charge for approval. A NQPP eligible partner is requested not to have any violation of trust occurred in the most recent 6 months. If a partner has the following performance, we will consider it to have violated the integrity policy.

Change product design and/or manufacturing process without PQM permission. Change partner’s manufacturing location without PQM permission. Change sub-contractor without PQM permission. Change component or material without PQM permission. Launch ramp-up result fails to meet NIO NPDP milestones or capacity demand. PSW supporting data is not robust.

Content NQPP Score Full Score

No Integrity Violation 50 Points

50 PointsAny violation performance related to:

1) Design/Process; 2) Production site; 3) Sub-contractor;4) Component/ Material; 5) Capacity; 6) PSW supporting data,

etc.*

0 Point

*Once there is violation of trust over the past 6 months, the partner will lose 50 points and the NQPP award will be revoked regardless of total NQPP score it gets.


NQPP Requirements and ScoreLOGISTICS

Logistics

Qualified products are required to be shipped on time, at the correct location, in the proper quantity and with the correct information. The data is input by NIO logistic team and based on the performance in the currentmonth. The score of logistic performance is given from the following 5 aspects and needs to be transferred into NQPP score before being used in NQPP award. If the partner does not deliver in the current month, follow the logistics performance score of the last supply. Logistics score is not applicable for DB partner.

Partner’s preparation Completion and update of partner’s files Supply chain coordination Daily operation Major problems of supply guarantee

*For detailed rating standard of logistic performance, please refer to the logistic team.

Logistics NQPP Score Full Score

LOG = 100 200 points

200 points

95 ≤ LOG < 100 150 points

90 ≤ LOG < 95 100 points

85 ≤ LOG < 90 50 points

LOG < 85 0 points

Data Owner: Logistic Support Team: -21


COOPERATION

We expect our partners to have good cooperation with NIO in various aspects, including engineering and fast response.

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1.Engineering

Continuous product iteration can make contributions to winning the market share rapidly. We expect that our partners are capable of allocating superior resources and providing NIO with high quality engineering development support via engineering. Thus, NQPP also includes the partner performance in engineering and software development. The partner is evaluated from 4 aspects:

New product development progress

Technical issue solving

Engineering quality performance

Technical support cooperation

If the partner does not undertake NIO’s new projects within the past 6 months, the latest engineering score will be followed.


COOPERATION

1.Engineering (Continued)

Definition Content Score Full Score

E1: New product developmentprogress

No delay 30 Points

100 Points

Within 2 delays -10 Points each delay

More than 2 delays 0 Point

E2: Technical issue solving

All technical issues closed on time 30 Points

Within 5 times technical issues closed delays -5 Points each time

More than 5 times technical issues closed delays 0 Point

E3: Engineering quality performance

No engineering quality deviation 20 Points

Within 3 times engineering quality deviation -5 Points each time

More than 3 times engineering quality deviation 0 Point

E4: Technical support cooperation

Provide strong technical support 20 Points

Provide weak technical support 10 Points

No effective support 0 Point

The rating of NQPP engineering consists of 4 aspects as below:

*For detailed rating standard of engineering, please refer to the EQ team.Data Owner: Engineering Support Team: EQ

23


COOPERATION

2.Fast Response

We expect our partners to provide fast response to support NIO in solving issues during the phases of 0km, mass production, aftersales, etc. The partners are also required to submit supporting data and documents to deal with urgent cases. This metric combines the score of each of the following target together :

Content NQPP Score Full Score

No downtime of production line caused by partner’s issue 20 Points

50 Points

Take emergency actions in time and meet NIO requirement 15 Points

Take corrective/preventive actions in time and meet NIO expectation 10 Points

Provide reports in time and meet NIO requirement 5 Points

24Data Owner: PQM Support Team: CMQ

5NQPP Application and Revocation Rules

NQPP Application and Revocation Rules

NQPP Application NQPP Revocation NQPP Re-application

1. 3000 pieces delivery;

2. 6 months delivery;

3. NQPP score is greater than

850 points (680 for DB

partner);

4. No revocation trigger

5. PQM Endorsement

approved

Not eligible to reapply for NQPP in 6

months from revocation date.

As long as partner fails in any of the five

revocation trigger items, NQPP award is

revoked immediately.

The NQPP award will also be revoked from a

partner with NQPP score ≤ 850 points (680 for

DB partner) if it fails in any of the following 3

aspects:

1. Submission of an improvement plan

within 3 months;

2. NPQS Assessment evaluation result is

Green, or Yellow but with acceptable

improvement plan;

3. NQPP score remains above 850 points

(680 for DB partner) in 3 consecutive

months after improvement report

submitted.

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6NQPP Application vs. NQPP Retention

NQPP Application vs. NQPP Retention

Category NQPP Application NQPP Retention

PPM Total PPM in 6M ≤2x benchmark Current month PPM ≤3X benchmark

CSL No CSL occurred in past 6 months No CSL2 occurred in current month

QRCompare total QR count in the past 6 month with QR

threshold range Compare current month QR count with QR threshold

range.

Field Performance No recall or service campaign in the past 12 months No recall or service campaign in current month

IPTV in 3 MIS N/A N/A

System AssuranceValid IATF 16949 & other Regulation Required

QualificationsValid IATF 16949 & other Regulation Required

Qualifications

NPQS AssessmentNPQS assessment result is Green, or Yellow but with

acceptable improvement planNPQS assessment result is Green or Yellow

APQP No APQP Phase Review delay in the past 6 months Y or R issues in APQP Phase Review are closed in time

Integrity No violation of trust issue occurred in the past 6 months No violation of trust issue occurs in current month

Logistics N/A N/A

Engineering N/A N/A

Fast Response N/A N/A

NQPP Score >850 points > 850 points

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7NQPP Status

NQPP Status

All partners’ initial status on the NIO Partner Portal

NQPP Module is “Potential”.

Four categories are defined to show the partner’s status. NQPP Admin changes the status according to the partner’s performance, and updates it in NQPP module on the NIO Partner Portal timely.

Potential

If the average NQPP score for 6 months of the

“Enabled" status partner is higher than 850 points and

at least 3 months’ NQPP score is higher than 850 points

(DB partner above 680 points), and the official

endorsement is signed, the status will be changed to

"Qualified".

Qualified

Partners with performance score over 850 (680 for DB

partner) in current month will be in the status

“Enabled”.

Enabled

It means NQPP is revoked and the partner cannot re-

apply for NQPP in 6 months.

Revoked

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8NQPP on NIO Partner Portal

NQPP Summary NQPP Reviews

NQPP Homepage

NQPP on NIO Partner Portal

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9Apply for NQPP

1. Partner self-evaluates its own performance

2. Partner makes a request to PQM to apply for NQPP

3. Partner prepares NQPP Endorsement and submits it to PQM for signature

4. PQM prepares NQPP Quality Report

5. PQM submits the NQPP management letter for signature, and NQPP Quality Report

6. PQM informs NQPP Admin to change partner’s status in the system

7. PQM sends an approved management letter to the partner as an official notification from NIO

Apply for NQPP

PROCESS

DOCUMENTS NEEDED

Apply for NQPP

Documents for NQPP Application Prepare

Endorsement Letter Partner

NQPP Quality Report PQM

NQPP Management Letter PQM

Documents for NQPP Revocation Prepare

NQPP Revocation Letter PQM

NQPP Revocation Report PQM

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10Abbreviations & Change Log

Abbreviations

Abbreviations Full Name

NQPP NIO Quality Premium Partner

DB Directed Buy Parts

PPM Part Per Million

CSL Controlled Shipping Level

QR Quality Rejection

IPTV in 3 MIS Incident Per Thousand Vehicle in 3 Months in Service

NPQS NIO Partner Quality System

APQP Advanced Product Quality Planning

PQM Partner Quality Management

ASQ Aftersales Quality

CMQ Current Model Quality

IQC Incoming Quality Control

EQ Engineering Quality

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Change Log

38

Page Original Content Changed Content Change DateManual Version

10 Process audit assessment result NIO Partner Quality System assessment result 5 Aug.2019 V1.1

12we evaluate compare the percentage of a partner’s actual total PPM in the past 6 months with against with the benchmark…

we compare the partner’s actual total PPM in the past 6 months with the benchmark

5 Aug.2019 V1.1

20Change sub contractor or Tier 2 partner without PQM permission.

Change sub contractor without PQM permission. 5 Aug.2019 V1.1

23 More than 4 times engineering quality deviation 4 times or more engineering quality deviation 5 Aug.2019 V1.1

26 4. No revocation trigger item. 4. No revocation trigger. 5 Aug.2019 V1.1

30Partners in “Enabled” status who have achieved NQPP performance over 850 and signed the official Endorsement will be in the status Qualified.

Partners in “Enabled” status who have achieved NQPP performance over 850 and signed the officialEndorsement will be in the status “Qualified".

5 Aug.2019 V1.1

37 Sub-title "DOCUMENTS NEEDED" Delete this sub-title 5 Aug.2019 V1.1

Change Log

39

Page Original Content Changed Content Change DateManual Version

10Fast Response to APQM/CPQM/Launch PQM/CMQ/ASQ team support

Fast Response to PQM/CMQ/ASQ team support

9 Dec. 2019 V1.2

13 Data Owner：CPQM Support Team：APQM Data Owner：PQM Support Team：- 9 Dec. 2019 V1.2

15 Data Owner：CPQM Data Owner：PQM 9 Dec. 2019 V1.2

16 Data Owner：CPQM Support Team：ASQ Data Owner：PQM Support Team：CMQ 9 Dec. 2019 V1.2

17 Data Owner：APQM Support Team：APQM Data Owner：PQM Support Team：- 9 Dec. 2019 V1.2

18 Data Owner：PQM System Support Team：APQM Data Owner：PQM Support Team：- 9 Dec. 2019 V1.2



21 Data Owner：Logistic Support Team：Logistic Data Owner：Logistic Support Team：- 9 Dec. 2019 V1.2

24Data Owner：CPQM Support Team：APQM/CPQM/Launch PQM/CMQ/ASQ

Data Owner：PQM Support Team：CMQ/ASQ

9 Dec. 2019 V1.2

37 APQM/CPQM Deleted APQM/CPQM 9 Dec. 2019 V1.2

8，10，12，14，15，16，19，21，22，23，24，26，

30，37- Gray bottom marking content 20 Aug. 2020 V1.3

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