Q1 2021 NIO Inc Earnings Call

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Hello, Ladies and gentlemen, thank you for standing by for the <unk> Incorporated's first quarter. It's 90 to 91 earnings conference call. At this time all participants are in a listen only mode. The <unk> conference call is being recorded I will now turn the call over to your host Ms. Eva Tang from capital markets and <unk>.

The relations. Please go ahead.

Good morning, and a good evening, everyone will come to a new first quarter 2021 earnings conference call the come.

<unk> financial and operating results were published in the press release earlier today and the posters of the company's the IR website on today's call. We have a Mr. Wei bin Li founder Chairman of the board and.

And for the Chief Executive Officer.

Mr Stevens phone Chief Financial Officer missed the spanning true VP of finance and mid stage Wei a VP of capital markets and the investor relation.

Before we continue please be kindly reminded that today's discussion will contain forward looking statements.

Under the Safe Harbor provision after the U S Private Securities Litigation Reform Act of the 1995.

Forward looking statements involve inherent risks and uncertainties of such the company's actual results may be materially different on the views expressed today.

The information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and Exchange Commission.

The company does not assume any obligation to update any forward looking statement, except as required under the applicable law. Please also note that the news earnings press release and the this conference call include discussions of unaudited GAAP financial information as well as a lot.

Non-GAAP financial measures.

Basically referred to a new of the press release, which contains a reconciliation of of the unaudited non-GAAP measures to comparable GAAP measures.

With that I will now turn the call over to oversee OOO Mr. Within Lee William Please go ahead.

At the present time to go a turns out way of life.

And B, if you do the G about it they'll hopefully.

Hello, everyone. Thank you for joining <unk> 2021 Q1 earnings call.

Of our Union digital way of lights, and booms sales for the downwelling loosely a yes, Bob yes, a little for you say deal <unk> zone five minutes of the slip out.

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On the value and cool caveats of Nintendo of which can be the volume.

In the first quarter of a 2021 new delivered the 20000 to 60, yes.

Yes, the six and it's a six representing a strong year over year of growth off of a 400 of 22, 7% and a solid quarter over quarter growth off a 15 point of 6% of.

All three models have achieved outstanding results in their respective segments, especially if a six.

For the comprehensive performance.

The line to silhouette and the superior digital a spirit. It's a six has outperformed the other peers in the Coupe SUV segment and has been well received among users.

The amount of the younger audience.

Unions for children.

We like the one announced downtime.

The downtown push outs in the Eagle Wang Tai.

As a livable, yes, the other one tied to the human that youll be a wait.

Your line.

It's kind of a golden sheets of competitive changes so the.

On April seven 2021 over 100000 production vehicle what rolled off the line a took me of 26 months to roll off of the first 50000 vehicles, but the only nine months for the second 50000 together with all of a users.

You have set a new suite of record from delivering the first a vehicle to the 100 thousands of vehicles amount the premium auto brands.

The key branches and the compelling the tomo and seasonally the time to hook. The Infinity issue. You also the pool of her comes in the some of your most of the Willow.

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Adding a union CRT the words from Joe for the on site.

He is entitled down one day of its impact.

Driven by the growing brand awareness competitive product portfolio industry, leading technology outstanding services and innovative business models.

<unk> has gained the increasing recognition of support from all of our users.

All of the auto momentum remains a solid while the risk of a global chip shortage still looms large in the second quarter. Despite of the challenges we expect to deliver 20000 to 222 thousands of vehicles in the second quarter.

So we flew to positively the gel for the I'll go with Antonio with some of the opinions can go down.

If you do that from Tamale startup items, obviously, there are some commodity to some of the five years of Sidoti.

In terms of the gross margin benefited from a higher deliveries and the salt Lake average selling price of.

Of the vehicle gross margin reached the 21 point of achieve percentage, while the of all gross margin increase the June 19, 5% for in the first quarter.

The other thing in Kenya, and premium for the machines.

Oh womens.

The easy to tissue Suzanne lots in the kind of a June quarter, we've seen the mill. So I appreciate when booties a continuum, Saudi a hood from Q2. So I showed you the push.

From a big G issue 10 being the.

And three of our charters a year of bundling with a total of Egypt outlets a two one day, one law change a food without a push from some of the soldiers.

On top of the positive operating cash flow for the full year of a 2020, we have a continued that you realize positive cash flow from a pricing activities.

In the first quarter of 2021.

While steadily improving operating efficiency and of all of these things efficiency, we remain committed to doubling down on all of our investments in research and development and they determined to accelerate the deployment of all of her swapping them the charging network and offline set of channels.

Since then the.

Total Asia comps the Green Formula you share too many of whom book.

Next I would like to share with you some key operational highlights of the company.

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EBIT the leases so can cut down the stance trillions Angela ETT Archie just for the surgery. So there are many people who come to in a quite a powerful team.

After the launch of a two seven other first a flagship of smart electric sedan at any one day.

The attracted a great attention from the market and the industry all of our teams are fully focused on and the devote at the true of the production and the testing of each of seven.

The pro second the first the starting line of 87 of them wrote off of the production line, Inc. For any manufacturing center.

On April 19, the interior of 87 was unveiled at the Shanghai Auto show showcasing its the second delay being from a design concept, which has been well received the by the media and the public.

Yes.

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Without somebody a somebody your thoughts the table assortment from dentist again, one of the slew of Pompe of the neo.

Neil OS audience.

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A protein.

We kicked off of the deployment of for the power swap station to a point, though the second generation power swap station kind of significantly boost is a survey for the capacity to up to 300 top of swaps for a day by shortening the batteries walking time and the carrying up to 13.

Free pack.

To further improve for the swapping experience Wei.

Operator at the and optimized of a new pallet based on the power swap stations for a point Oh, Inc.

Oh at $2 10, which was released the two users in April to achieve a automatic Wang like park and the swap of experience without getting off of the cars throughout the whole swapping process.

All of Neil user, it's kind of enjoying this feature one so they have updated their vehicle operating system as.

Organic part of the newest holistic charging a walking network.

The power swap station to a point Oh, it will be a great a gradually deployed nationwide in China.

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<unk> has current agents of innovative battery a subscription model based on vehicle batteries separation and Chargeful swappable ex upgrade of both batteries.

A small users gets know better about the benefits of the how do we as a service or paths and a more battery pack options become available.

<unk> has gained increasing popularity, we believe box and the news of a growing charging of the swapping network for further out of it the user experience of owning a electric vehicles and attracting more users to choose electric vehicles.

In addition, since it's a launch but one of her.

100 kilowatt hour battery pack has been widely welcomed by all of our users Wei.

And much higher take rate than we expected.

As of April 16.

10000 users have been using the 100 kilowatt hour battery pack on April 18, we have also officially made the flexible operate the cue 100 kilowatt hour battery pack available for reservations and will offer the upgrade service to users starting.

From June.

None of them yet.

Three of two so Symbian fund trillions of Jonathan where local income fund to look will go come for a good the fintech sort of thing.

The women's suit us in the sense hunkered down for.

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10 point of lithium Tucano, then down for this year, mainly to the other tells us.

Maybe a hurdle for daiichi such a need for Boston, calling in for it.

Timken cuts out of the Tidjane for Mako critical Daiichi, sometimes shifts chinchilla guys, all Wei ETT the downtime.

Out of it.

In terms of the production capacity.

Late March and early April due to the semiconductor supply shortfall chasing new factory hold at the production for a five working days, which has posed a certain negative impact on offer a production and delivery in April in the second quarter, we expect.

The the challenges to the of our supply chain production capacity of well continue to linger.

In spite of of the volatile macro environment, we are working closely and the diligent way we saw for partners to secure a supply chain resources during the production suspension period and holidays of it.

Partners and us have a more defined of a production line to prepare for the mass production of 87 two.

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For 2000 from yet so the hook, so non tailings, who for a tightening of the Panther.

Not long ago, Neil signed further cooperation framework agreement with the.

A copy of government and announced jointly Butte.

The new March a smart electric a vehicle industrial Park, a six house on April 29, 2021, new participated in the kicks off a ceremony offer the new park and organized at the partner conference of 2021 in coffee.

We will strive to collaborate with partners, Inc. Talent attraction and cultivation research and development supply chain and the manufacturing there's a southern state the development of the smart electric a vehicle interface.

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Susan Suncor places of for that the free zone. So you seem a little impact.

To further support the protection also the news the future models together with other partners.

We will plan and a.

A new factory a new parks.

We are in discussion with other partners about the the detailed execution plans and the cooperation model and where share more information at the appropriate time.

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But more of a tissue touched on the way of isolation for well a clean Jim in terms of quota share so when a local guy teco in Saudi <unk> Amit.

It's a great cards to the sellers on the service network Wei.

Now half of 'twenty, three new houses and 211, new spaces, covering 123 cities in China will continue to strengthen the building of a new houses and the new spaces to further expand at the site with the network coverage.

Truth of operational efficiency and the in house a friend input.

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<unk> has built 206 of the swap stations in 77 species, we have a gradually started for the deployment of the power swap stations to a point do we aim to have at least a 500 battery swap stations in all of accretion by the end of this year and a.

Same time, we will ramp up of the availability of the powered Chargers.

For charging piles and the destination targeted up until now we have a deployed over 146, the power charter a station and 1826, the explanation Chargers and a plan to increase of <unk> 615.

<unk>, respectively by the end of a 2021.

Yes.

Some of those swaps of the changed suddenly a couple of sheet cell phone jumped share so continuing to gain share.

So you've kind of cleared the.

Turning yourself out of Whaler <unk> Zealand Houston did notice of it you can put a tier <unk>, Singapore trunk club value of what's sort of going forward.

A profit Ping <unk> signed a strategic cooperation of framing waves of spinal patch to work together building battery charging and the swapping infrastructure based on strategic a collaboration will enhance the efficiency of our site selection for a new charging and the swapping facilities.

Better user experience of owning a E V and help a convert more gasoline card users to the easy way.

Allow me to be part of the tendency that you own the pool.

So the COVID-19 update.

<unk> for <unk>.

We'll move up a lot of Palmas CFO Scott Wheeler.

For the two other total wallpaper cargoes from the truth.

For ebay or funding that you buy a sedan.

Julien Hueber, who buys a total debt cobalt the our incentives total glass.

Would you be a twilio.

While this obviously, Paul most zone to the other guys.

Due to the non she's sort of assumed for year two.

But the boundaries.

The 11 tailored to sort of approach.

In the meantime to provide the users in the northern China region.

And more convenient charging and a swap in services we are now.

Now that the power plant at this year's the Shanghai Auto show and the next for three years in the a northern provinces and autonomous the Regent's place.

Line to deploy 100 power swap station 120 power mobile Rose 500 power charger stations with over 2000 power charges and 10 thousands of destination target.

Fleet for the power plan for significantly improved for the electric vehicle usage of experiences for users in the north and to further capitalize it.

Option of a smart electric vehicles the in those areas.

Some of the sends out a way of life for <unk>.

<unk> for doing some do you put on a piece of the arena the Saudis filing of our linear.

Danielle Mccoy of tissue products, so of London the Bluetooth.

Senior book, So hope for Tc.

Up to now we have the 33, new service centers and a 162 authorized a service.

In the accretion coupled ways the continuously improving operational efficiency.

We will keep expanding of our after sales service network and to further improve for the service operation system.

So as a young who's here.

Shannon.

So, let's say about where the free line, yes, the woman to put a ton of leads for that.

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Latam has some kind of two inches of Wheeler, the yes, mhm seafood hoof, who saw a young.

For higher growth.

The whole populace will top six of the yeung could be for alarm com, yes.

Yes, some growth on the true Io combo, the one who jump of the trying to the equal solution to a net.

Total net.

Well, a young for Boardwalk Duncan so Wade I terms of the simple concept.

As a user enterprise the.

Trust and the support of all of a user's has always been over most of the treasurer at the resources.

The driving force of other growth.

The Jackson of conclude at the Shanghai Auto show 180 user volunteers for from different of Cts came to a route to introduce the concept product technology and a survey of Neil two others <unk>.

Neil users collaborated with experts from various industries to join to the host for a 14th sessions of the big talk to discuss how to shape a go into a lifestyle with the smart technologies many.

Many users display to the orange in the artworks after the new user museums and other auto show.

Two of which they shared that the a joyful lifestyle, Neil advocates and the shapes.

Yeah.

Yes, I don't put a.

Sales of 100, and the lease up well and competing with some growth been singular task of a patent yet, but I think a union. So the whaler part at least some sort.

But until the other Union <unk> book some 200.

Total for all of the tensor core that wait wait wait a year.

For Q3, how the trends in PFS going away from notice it for them.

A quick tilting the charter since hunting the synergies with the impact of Hulu with how long. It was good of other Sasha tends to the tissue.

Yes.

With the support from all of our users and the the efforts of all of a teams in 2020, new has a step onto the right track for the of our operation.

<unk> has embarked on to the stage of the accelerated development.

You're off a 2021 is all of the key importance for new development.

A further improved for the establishment of a power sales and service networks to enhance the news of a brand reputation and provides the best holistic experience to new users more importantly will continue all of a decisive and discussion of the investment in new products and a textbook.

Plenty of research and development to solidify the foundation for news of a long trend of growth.

Go ahead.

The CNS, Steven <unk> D G to the title.

Stephen as always thank you for the support with that I will now turn the call over to Steven to provide for the financial details for the quarter of Stephens. Please go ahead.

Thank you for your day.

I'll now go over all of the key financial results for the first quarter of fiscal 'twenty, one and to be mindful of the length of this call in current business to refer to all of our earnings press release, which is posted online for additional details.

Our total revenue for the first quarter of work to then put a RMB one.

<unk> two 2 billion just donuts.

The decrease of 481, 8%.

A year and increased opportunities for the 2% quarter per quarter.

Our total revenues are made up of two parts vehicle.

Sales and other sales.

Because of the all in the first quarter of 171 billion RMB, one $1 $3 billion accounting for 93% of total revenues in this quarter it.

It represented increase of.

The foundry is nine 8% the over the year, a increase of 20% quarter over quarter the <unk>.

Crazy because sales the opening of new was a unique attributed to hardware deliveries achieved from both product mix offer to all of our users the Inc.

Expansion of sales of <unk> and the slowdown of the could spill into the first quarter of 2020.

The corporate line team Anthemic in China.

The increase is because the all of this quarter per quarter was mainly due to positive rate and the higher average sales price.

On a sales with the first quarter for <unk>.

576 bond the RMB.

RMB.

As many of the stores, representing an increase of 393% per year, an increase of 234% quarter over quarter.

The increase in August.

The year.

But in line with the incremental sales.

The first quarter of Citi took a walk the.

The increase the other fields of quarter one.

It's mainly due to the increased revenues.

From 100 kilowatt hour battery a permanent upgrade service for.

Volume since December 2020, Pops of offset by sales of automotive regulatory credits in the fall.

Fourth quarter of 2020.

Cost of sales in the first quarter, what the fifth Street book 3 billion RMB.

The $8 billion.

The increase of 375% yogurt.

An increase of 69% quarter per quarter. The increase in cost of sales was in line with Germany true, which was meaningfully impact the decrease of the code delivery volume in the first quarter of two to the wall.

Gross profit as the first quarter of what's one box barn billion RMB.

They're a point to for beating the storms.

The increase.

The 2 billion RMB for all.

The gross loss of one 7 billion RMB for the same quarter of 2020 a day.

The increase of.

For the six 2% from fourth quarter of 2020 the <unk>.

The gross profit was mainly contributed by income.

Greece vehicles sales and increase the vehicle margin.

Gross margin first quarter was 19, 5% compared with negative true too.

2% same quarter of 2020.

The 17, 2% in the fourth quarter of 2020 the Inc.

The increase of cross margin was mainly driven by the increase of vehicle margin in the first quarter of two to two to one.

More specifically the vehicle market in the first quarter loss for the one 2% compared with negative seven 4% in the same quarter of 2020.

And 17, 2% in the fourth quarter of 2020.

The increase of the vehicle margin over the years plus the interest embodies free of Veeco delivered volume.

Average sales price.

The lower material cost the Inc.

Create a weaker margin quarter over quarter was mainly attributed to higher ticket rate of new pilot.

100 per 100 kilowatt hour battery package.

On expenses in the first quarter were 686 per farm the RMB for.

$104 eight meaning the stores represent increase of.

For the one 4% year and a decrease of 17, 2% quarter per quarter.

The increase of arent excuses of the EU whilst many.

Attributed that arent research and development activities in the first quarter of 2020 due to COVID-19 pandemic in China the.

The decrease the arent expenses quarter over quarter fluctuations due to different design and development stages of EU.

New products in the call.

Mortgages.

SG&A expenses the first quarter.

One 2 billion RMB the move.

One 8 billion the storms represent an increase of 40 41, 1% of the youth and a decrease of.

8% quarter over quarter the <unk>.

The Crazy SG&A expenses of yoga yield was primary due to the increased marketing activities as a way.

Increased number of people use the sales and instead of a assumption is the first quarter opportunity for new work.

G&A expenses remained relatively stable.

For the fourth quarter of 2020.

Loss from operations of first quarter was.

295, 9 million RMB for.

For the $5 2 million of storms.

Presenting a decrease of 81, 2% year over year and let the.

Increase of 68, 2% quarter over quarter.

Share based compensation expenses in the fourth.

First quarter were $96 1 million RMB.

$47 million, representing increase of 198, 1% of an increase of 63% quarter over quarter the.

The increase in share based compensation expenses.

The prime attributed to incremental options granted to rapidly higher grant date fair values during the period.

Net loss in the first quarter was.

451 million RMB.

Six to $8 8 million Gallstones book.

Is there any of a decrease of 73, 3% net.

And a decrease of 65 per cent quarter over quarter.

Net loss attributable to news on the shareholders from quarter one.

Eight 8 billion RMB.

They are a point for seven $4 billion, representing an increase of 183% year over year increase.

The increase of 206, 7% quarter per quarter.

In the first part of opportunity to walk you for cheap 335% equity interest.

The new China front of Monorchid strategic investors.

Reported a mall.

<unk> of $4 4 billion RMB.

Zero.

The $7 billion Inc.

Accretion of redeemable non controlling interest to redemption value.

Excluding share based compensation expenses.

Accretion of redeemable non controlling interest to redemption pattern lung GAAP adjusted net loss attributable to new orders.

The shareholders.

350 for one RMB.

54 puts a warm in the stores in the first.

First quarter of 2% of one.

Basic and diluted net loss per ads in the first quarter for both street one for RMB.

For the <unk> part of.

It is.

The share based compensation expenses and accretion of redeemable non controlling interest to injection pattern.

Non-GAAP adjusted basic and diluted net loss per ads for Boe.

The quote.

Three RMB.

<unk> per <unk>.

Yes.

The balance of cash and cash equivalents restricted cash and short term investments 145.

<unk> for the RMB.

A simple.

<unk> believes the dawn.

As of March for.

The two one.

Additionally, the achieved positive cash flow from operating activities for the first.

Quarter after the close of one.

Now for all of this outlook.

As William mentioned for it.

Quarter one.

One the complex back from the voice to be between 1022, thousands of vehicles, representing an increase of approximately one 2% to 130% 13% from same quarter of 2020.

And the decrease of approximately 5% to 10% from first quarter of 'twenty to do one day.

The comparable expects the total revenues for the second quarter could the one to be between 815 and eight five ultra the RMB.

Between one two and one three of bidding just donuts.

This would represent increased.

Of a proximity 119% to one counted for.

7% from the same quarter of 2020.

The increase of approximately 1% to six 5% from first quarter of 'twenty two one.

This outlook reflects the current and the preliminary view on the ability to issue and a market condition, which is subject to change.

Now this concludes our prepared remarks, I will now turn the call cohort for the operator for today.

Our cash.

Yeah.

Sure.

I'm sorry, My day to ask a question you will need the class five one of the telephone to withdraw your question. Please press step down or Hashed E. Please standby, while we compile the Q&A roster for the benefit of all participants on today's call. Please limit yourself to two questions and if you have additional questions you have.

Re enter the queue.

Our first question comes from the line of <unk>.

Nick line.

Please ask your question.

Yes, good morning, William Stupid, I mentioned team congratulations for the <unk>.

But you saw my simple two questions first of all of Qantas on gross margin and the second one is really on a chip shortage come quickly embraced by many industrial and <unk>.

This margin indeed, the breakup of improvement on a Samsung for Chuvash of to one two this year. The Coe margin increased from roughly 17% for 'twenty, 1% and of the four percentage point improvement.

I Wonder if you could help us quantify a little bit the underlying driver of how much percentage is driven by a speed of volume and.

On the flip side a room too.

Price of batteries and so on so what the people quite frankly, you have to sit on the 60% of it the veeco margin treat institute on kidney accuse oxy per cent.

Both of which was tied to a shot just to talk to each other each of switches.

Total gross up of for instance would be sort of down the Samsung HP Samsung on the other hand.

So the raw material price being one of a township. That's my first question and second question on the chip shortage is a common issue and I know, it's a very low a two to three months and Allison.

Did a revised style frankly, our two true still volume guidance from previously mentioned.

You mentioned 7500 per month into Q and right now, it's roughly about 21% 22 something to chew on.

Of the chip shortage.

Do we have any visibility of that.

The potential of potential easing of supply.

Happen hopefully in free true yes.

Just as you kind of the timken a bunch.

Who can I see a.

It's a good timken won't be implicated.

Yeah.

So just a couple of months I kind of zone.

So onto the countries don't see some a good took a flight in the conclusion of a search we ship to ship took a downturn.

So Jamie.

Without the Eagle and deal with it at the average.

Nick This is Danny a.

Overall, our a vehicle costs, including bone and also a manufacturer of cost.

Remained stable in Q1, because you can do Wang and the increase of the vehicle margin are mainly a.

Driven by the Inc. The.

The increase of.

A fixed rate of 100 kilowatt hour battery pack and also the new of pilots.

Pilots a.

Of which five.

<unk> is for the 100 kilowatt battery pack.

The eight 8000.

As for the Neo Pilar take rates. So the overall by hundreds of battery pack take rates in Q1, a 25 and we think a.

This trend will keep in the following quarters. So that's the general reason of.

Why we achieved a higher gross profit margin into Webb, okay with them, yes. So some of these omnichannel baldini of women's in a way Q1 chance of bureau of them.

Volume share.

The context on the a download to LTE share okay, pushing the to go down a tick up the debates and GAAP diluted timber in the Ohio.

Hum.

The weighted basis that Jeff.

Women gender us you'll use some of that you can only do it off on the share.

You can follow a in the way of IP that can come about EBIT from that book.

While many of a woman, but downtown which is a simple yes.

The thing that somebody of our Louis and I have to go comfortable kind of a chance to EMEA.

Wei.

Two of them.

Maybe a good piece of a boat season, how would you go coded by how do we go back from there.

All of them in the way of Iot highlighting the Chisholm said somebody that's all of them day to day, showing that the update of the Houston the figure out you'd see a.

Yes.

Hi.

For a minimum volume 10 of them has a jedi per quarter.

A quarter us about the multi day amount minimum wage of appeal of moving forward.

I'm also pleased by the time, Inc.

For about a 12 to do a meso has a state of wealth.

Uh-huh speaking the.

Gross margin in the first quarter of a 2021 as the hire of thing all right. The fact patient that's like a Denny mentioned the facing many driven by the higher take rates for some options like the 100 kilowatt hour battery pack and a new pilot at the same time the costs has also.

As you said to some extent of.

We believe that the current the gross margin.

Around the 20%.

How is the situation for the company's operations.

So we don't actually cut the price and we believe this is a quite comfortable for us but at the same time I would like to urge everyone to manage your expectations of because of.

There's kind of a rapid improvement off of the gross margin.

Both the quite challenging for us.

I believe that there will still be room for improvement for the gross margin, but not as a base.

The margin.

So we should not be too optimistic about the gross margin improvement.

Yeah right now it's a quite good for such a range of 20% of other gross margin and a set earlier than we expected a.

Its still of a focus for the company is the product and the service yes.

The nature of the Thiago engages the simkins line Shadow of the few women of.

For the total development since I took the assist hub the.

For fourth on the has the fifth on behalf of women the tender or chicken don't take a.

It's a good shape for the shortage the community of Michelle anti itch is it a tie in in face of a tough.

So the took a really started to go to Hong Kong, the Hong Kong, China on for Jade.

So for the half day Tayo.

Sure.

So youll see efficiency that you're getting the most of it.

The tablets and look one of the entire either yet it's true.

The it assessing target kind of talk the.

We are the solution for use in adults.

The churn show the true sort of at a tight area.

Well I mentioned the diamond toward later on the on the <unk>.

As soon as I'm, a switching back to the same effect, but at a higher touch of a sea of platinum.

Take a test of the total isn't.

A bit on thought of women.

A total of 10 minutes out of on the.

And then kind of summary of.

Societies, the assortment and Tim.

Good day.

You see a from the two new jobs will for you're getting a shot from a content.

So a net <unk> on the.

Omission.

So I'm going down the term loan or most of the way the Google and then go back she kind of season with the agenda.

Two of them actually you can sell somebody a shelf.

Search for me, but it gets all of my view of a season, but the answer to the Mandel on Battle net I think a.

Sort of a quite India now how much of a hernia.

Some of which is a natural part.

About 1000 ways frankly to quit hall of the ECS.

For the two industrial waste reduction of a member.

We took a big lot of much of the minions from AC many of the Ohio.

Yeah.

So many of the write down of a lot of award manner to go going down a hurdle for a bond film a has improved for the share until 10 for node so kind of for both of them that way.

Women the hook up for them and took a low.

<unk> got a hurdle for that but auto has a show.

Sure Michael.

For the way of life, some type of stuff so yes some.

Some of these answers the question.

Then the woman so many of them most of our non sort of Hyatt will take the billings from people.

How does he can William.

Okay.

The second question and sorry about the the chip shortage of the current situation in the market is a quite a volatile.

And we have been tracking the chip supply every day, they say a half being a very severe issue for the whole industry supply chain. For example of the fire incidents of also one factory has caused some of the day, there's delays of for the chip shortage and.

We believe the states the negative impacts of its going to kick Inc. A run to the middle of May and this is going to affect the whole industry supply chain.

We believe for this kind of the incidence of will happen from time to time that is why we believe is a challenge for the whole industry will still be quite baked in for the.

Following the quarter until the amount of it at the beginning of April and the <unk>.

And from March of waste.

Standard at the production of a tax free for five of working phase, which is going to the impact of a delivery in the production in April.

For the for the fourth quarter with the Liza well a possible still quite challenging to achieve the 7000 to a 7000 a 500 the production unit.

We are training of at bats to secure the supply and the to maintain the protections.

Of course, we're quite confident despite the challenge is there's still quite daunting.

Is that a common situation for the whole industry and the cum of understanding in the industry is a the turning point of will happen around the third quarter and the the of.

Of all the situation is going to improve around the the fourth quarter, but some cosmetic.

<unk> also believes that the property. This as you appreciate it's going to continue to next year.

All of our supply chain partners have shown very strong support to the production of a Neil a yesterday, we had the offer partner conference the incur a fake Wei.

With the attended by a.

Congress off of partners to show their support of the new production and wait for Lisa.

A question is quite challenging but a of a speaking.

Speaking of our operation is a relatively okay.

Thank you.

Yes.

Yeah.

Our next question comes from getting line quite a bit.

Yeah.

Thank you. Our next question comes from the line of bin Wang from Credit Suisse. Please ask your question.

Thank you so much Patrick got to question number one.

I found the amount you have.

About the ESG.

What was the detail and why you chose the none of the ESG, maybe a for the first time.

The one question.

Alright.

The second question of upon the margin outlook.

Actually I found out a few factors may be.

In kind of a second quarter, one is the new product attach rate second instead of what's the penetration of about 100 kilowatt hour pack of number three facts.

The that you offer a free insulate our total balance a number or maybe even a semiconductor pricing hike because most of the supply but also on the pricing of wholesale Inc.

That's a pretty enough of it is the pound.

Battery price can you.

Provide a kind of a balanced on a notional I found a margin in the.

Of a key part of a movement.

Thank you.

Obviously the hill ambien.

The women side towards the end of.

The commvault.

The ETF.

And then the Comstock.

Women to the event the dose coming out of it.

So the paid for them in terms of the way in the.

The <unk> to go to them, so a lots of them, mostly yosef into that's the though a nielsen headphones with interest.

Michelle Anthony value share Doyle.

And the guidance here the question.

A total again took a slippage of ultimately all of us.

For the woman day related to the Neo Joseph Tung EBIT teaming EBIT from so there you've got a Charlie the answer some got them for the approval has the way of polo to the peninsula.

The way that <unk>.

The big boost the slow economy, and the Chinese heat of human does any of the trial.

With all of women say, some sort of as a whole whatnot it sounds to the some of the the hotel of Wichita.

For the bookshelf, the more to really go away a lot of interest in port.

Some of them region take a.

Some of them.

Yeah, the pushing the quarter of these solutions.

The time to do it for the fifth Angola, the momo immune wishing quota to get some good a took a 20 ml should take a bulk of quantify a hung of the search and so for the community banking of the bulk pool.

And the way so most of the shortfall.

For the consequent hung on the synergy of sort of Amit you think the timing of the Chinese <unk>.

Women the cleanup to teach them to go for the equate to some suddenly the kitchen of the market.

So the assumption the sort of a telco.

Yeah, the other cook with all of a football a down the hall.

Doshi of doing all of the either COVID-19.

So whether it's a <unk> some of our meetings, which yet.

Many of them not just the heritage.

She had a single order chi true the easier with share.

You bet you bet the farm.

Some of them.

Okay.

Thanks for your questions. This morning Wei.

Announced that either we're going to organize the a EG M. A there are some important points and they say a gem that we're going to discuss the the first one is aware of going to a.

Increase the number of the.

The actors in the book right now of airports member.

Is a fine of people and with a laggard to increase the number because we want to improve for the diversity and flexibility of course at the same time. Another important a matter is so when you would like it to a.

Good for the user trust has the right to nominate directors of to the book, but this is a a nomination right is not a appointment right. So the board for us to have for the power to a point to the directors and the.

The IPO offered the company I have a transfer to one third of the my share so to establish a day search user trust.

And the use of our trust focus is the environmental protection a.

The industry subcommittees of the.

A social welfare and the use of chair of we believe is a quite important facet to allow the use of a trusted to participate in the decision making process for the company, which is a very important the strategy for the company and that is why we would like to propose a they say in the.

E G M. A from peso a proposal we believe it's going to be quite a beneficial for the long term development of for the company and it's going to serve the best the interest off of all of our shareholders and it's also a showcase of our mission of building a and the vision of a building a user enterprise a win.

You will also help us a to deepen of our relationship with the users for the long run.

Yeah, Glenn good value day.

Okay.

Well I'll make a.

As explained by women in the.

A quick question and a 20 percentage gross profit appropriate margin is quite healthy at the current stage for us. So we don't expect.

The margin will dramatically Inc.

The true.

This year like a quarter on quarter in 2020.

But the the hangar.

<unk> of our battery pack and also the new <unk> features a.

Both the well accepted by other users and we expect a.

This too.

These two of like options will further bring the high profit margin for us.

That's the general trends, we want to.

To explain to you for that okay.

The pseudo Amit. Thank you the next question.

Our next question comes from the line of the South from Morgan Stanley. Please ask your question.

Thanks for taking my questions and congratulations of the retail. So two question from my side of the first question is about the competition because of course, you may notice that a lot of a traditional players launch their models Gerry Holthaus for this year. So take a look at the product pricing channel strategy I think a yeah a quick learner.

What I'm, saying the catching up rapidly maybe.

Maybe a loss of about checked out and say what a smartphone makers.

So a non sterile you'd be claim so I think really has a share a lot of initiate the theory of the call just now.

What will really make a meal.

To be a differentiate us day in the following years.

Are we going to change our pricing a product strategy you could get a bit of long term. So that's my first question and second question is about to launch or a T T. Seven.

Because of a willing just mentioned I think the supply dynamics stay towards the end of my stay challenge of throughout the whole year.

Considering like a more backend loaded second half.

Do we see any reason that the launch of ETE seven might be delayed or a fake any production parts from NEK, especially.

Especially you have the 87 carry quite a lot of new hardware and software features a.

Well, a where could be the potential bottleneck in your view so thank you.

Obviously a hit him.

But it took a phase for the THAAD.

Took a lot of Chester and moncure.

Thank God for Nokia non Chico's Javier the Eagle.

So the.

Moving into Canada does not have forgotten a lot and get to the tune of orders a good condition for this.

The <unk>.

The new the tungsten so the.

The phase on the.

Based on the to go for.

Rita.

In this year's the Shanghai Auto show, we have a witness the vitality of the kind of smart EV industry. If you have ever visited the Shanghai Auto show this year you shoot a.

The 13 base of by yourself for that is a we have a lot of innovations in the smart electric a day for interest rate in China.

Does either.

The other saluzzi the Jim didn't leave the double edged down the line the woman's day.

Neil day women's so a better to the search.

Shipments of the top 10 because of a bit on the line.

Non women, a Google image of cancer women side of that is broadband to the public schools.

The COVID-19 for a minute still has the female condom.

The nickel for Neil.

Linda Chen from the Middle.

A sort of the chairman of the general industrial a bulk of Thompson, a bulk of T mobile a tissue a bulk could tick up a bit of.

Yes, a 10 minutes and then when there's still a Hudson a community.

In the quarter, so cheap on female kind of you.

Some of the Nielsen's a leader in the data.

Uh huh.

Okay.

In terms of other of our competitiveness new is a still quite constant Inc of a specific market segment in the premium market Wei.

I haven't seen any.

The <unk> brand of ways. The at these kinds of the competitiveness a yet in terms of the product to service technology user experience and a user community.

All of them into content on the day. It is a one page for the.

Gordon the pin pad takes of the Vanguards Huntington Bank.

Accordingly, you should.

From a good formulation of MBS.

For the cones and Thats one of the wireless windows for those assets in the lead compared to the other lifestyle, which of the tunnel.

Okay, and the other Jason kind of a high silicon dies.

Yeah.

For the transition of grants, yes, there have been some highlights.

For their premium brands and a premium product.

Still I believe that there are still lagging behind the intent of the digital experience and the autonomous driving capability itself. So.

The quite important for them to be more decisive and a determined to transform themselves into a decent new era of a smart electric vehicles. The tune for the CN a common side, you said seafood a young come in.

Ondemand side take a bulk of a phone.

Well I'd say non quota so choose from quota share that Tim from yet but will.

The figures suggest for you won't put a most of them if you see a follow up.

And then shows the millions of his I'm quite sensitive.

Honest itself the way it sort of you've got a garden of some pie juices.

<unk> got a lung cancer.

The compensating them in the fall.

Wondering how many of the daily about doing so.

The bank.

First of all of us at the level of India. Toyota has done us of the Lemon MPD the things up for you.

He did you state of the.

It's still kind of a hot some highlighting the way if I'm in a hot so you've been the Taliban Oh no woman.

Or more of a minimum wage if she's a hernia.

We'll see the window sort of yet we'll mentioned that's a one two of the CFO class a woman's day.

<unk> partners with a final view.

You guys didn't total youll sort of the beta cell of the lifetime of the heart.

<unk> still has the Ito.

So the disease.

From both a salary of F&B for a call about.

There's a tendency for a quarter of Atlas.

Some of <unk> has a has a condo at a high for us.

Sure.

The other competitors.

Our Ohio class somebody goes from here.

Of course as there have been a many domestic of players.

Following Neil in terms of any of the technology adoption gives a community of contact and a direct answer.

The venture to users and they have been moving very fast as a fee.

Followers, but the I believe it will be quite challenging and difficult for them to deal with a premium brand and they will face a significant pressure in terms of their pricing of course of the auto market is a not a winner takes all of markets, but all of a focus at this moment is still in.

The premium market.

And there's a market or we can see that as the E still accounts for a small share compare with the that off of that gasoline cars. Although in March of the EV penetration has reached the 10% to the.

The majority of the the vehicles in the market are still a gasoline cars. So some of it means that a we still have a lot of the room at the opportunity set for growth.

So it is true.

Currency is tie up out of the other lifetime of a lot when many of them.

Of the wait to see the Chita are a cook instead of importing the mill a ton, but just a woman.

The way near the bigger times in tissue and paid for.

All of which yet.

Median number of a community, especially the absolute a material element the lucci, the xiaomi, but youll should the Golar will then.

How much of the Tianjin John Quealy.

Clay.

Since I'm, the only really a town to the 10% so the door.

Yeah.

When it comes to the long term differentiation and we believe the.

In the auto industry is quite important for that that you should not have the ending a very significant and office of weaknesses of.

With the offer a comprehensive of competitiveness seeking products of the technology of service operations and the use of community. We believe the we can identify off for a position in the market with all of dosage strength and the stood out in the competition a differentiator in the competitiveness of <unk>.

Moving to continue to grow and the space is strong in the long run it's is it a tongue pulp in the sneak up on a per month.

A good idea of Simpson.

This is a a merit.

This is not a spring to sell a we're quite confident of any other long term competition.

Can you just for the E T a seven day downtime.

Not just the Egypt for each of seven 1 million with Hershey day Willa.

Sure. So that's the entire the decline for now.

Tim book.

India is still down further to the sometimes there's a longer you assortments a good deal about Shanghai the types of downtime now of them inside of a tongue in cheek.

<unk> Sunday, if I'm in the similar fiscal union on the.

For comparison behind me a dose.

A dose the dose of the equal but all of them.

Yeah sure.

The other way you shipped also cancel the he said he thought of bundles of hunting.

And so that's all in the history suggests it a break so the either so just out of a next generation.

If not for the downtime the to the challenges is a bit on BARDA for you saw for the Lidar.

The bulk of the to go.

On the other syngenta for a total of about a remnant of the.

The other oriented as a go down the time now on the Swiss on dose of of the Tommy I'll, Let me see the Dubai go till the time on each of these cannot quite of a $2 compel us to debt.

The let's say the Yodlee hydro fleet on the other than so far of all of them as a.

The ways that million of tier one true shelf for easy to use a club.

Yeah sure.

And well go from Endo, so a lot of implemented paid on that.

The two we also benefited from Irma form and some of them.

So the battle of the sell down of the mogul the alcohol two parts of your time in the Tianjin to those amount of ramp up.

Well I mean that is the way line, which will come in a simple the Cartagena enter a new Orleans <unk> question of the Hudson to them the hydrocodone.

Now of the timing of any of it gives us a.

Hiring the industrial type of the good.

There's always the old Linda it's a go down the cabinets.

So the big a passenger level is the pace on the season.

The second question is there a balance of the mass production nothing to seven.

Each of seven will be the first a protector I'll offer a second generation platform <unk> technology platform to the point, though so it means that the this is not just a part of the production of <unk>.

Seven is actually about the mass production of the second generation platform.

We are the first in many aspects of for example of the advanced of sensors, the computing power a S. A.

See if that the and the other advanced the technology of applications.

Some companies have the launched at a a productive ways of some kind of like a one point of bytes of generation technology or transition no technology, which is not going to be of a strategy because the way with the right get to just a leap forward for to the next generation technology and achieved a significant the techno.

All of the breakthrough of course of the this kind of a determination it's going to a raised a lot of of challenges of class a.

For example of what.

Half of food a hats to the production schedule of the many of advanced technologies like the lighter and the in <unk> S. A C.

This has posed a lot of a pressure of all of our teams and is that a partners.

We're still quite confident that that leads the way these possible Pfizer to launch the 87. According to stack a schedule in the first of quarter off of next year all of our teams and other partners are fully focused on achieving the scale and the pushing of hat.

All of the challenges of a protective of it to make sure we can deliver the product. According to all of our quality of requirement and the salt the protection bottlenecks. That's a way can gradually ramp up the production and the delivery of a day of close to the users.

So.

The history tells us that the new has a very strong capabilities that you can lever one new product every year and the other colleague he has already been a proof of a proven that the we are at the top so that's why we're a quite competence of that we should be able to deliver it.

Seven according to the schedule with the high quality sound good team.

Take care of a budget for the energy.

Yeah.

Nextgen Mexico.

Our next question comes from the line of means from Li from <unk> Securities. Please ask your question.

Thank you think of William and the management team and the upgrade a photo of a good result for my first question is regarding the details of the Neill Park also a from the announcement that we saw that Neil part of ultimately you will reach a 1 million units of capacity. So.

I wanted to understand debt you'd probably a near term.

For the sort of Neill Park is a 1 million capacity.

Oh for a meal or probably we will have other EV companies and also for the Neill Park.

Uh-huh, a cooperation a where.

For the current the cooperation matter of continue a J a C. A few of the plant and the <unk>.

The labors, but Neil will purchase the equipment in a mode of syndrome. So.

So that's a question.

And the second question is regarding the battery a.

The true form factor. So we are seeing a slowing of more auto companies start to a a tiny L. A as Pete battery.

Battery too for the country.

Some of the coast the list.

The new price and the to increase the penetration rate of.

From the legions of detail. We also so that's a no it.

We will probably consider to use the L. A S b battery a fight.

The answer of the year.

So could you give a small update regarding a potential pipe I think it would have been the measurement.

So Jamie a day so it can take us.

From the Iot Genesis and Joseph So basically which is the only love Neil Parker the CEO.

So what are the.

All of the antigen you can buy up to each of them.

For the <unk>.

The oil patch.

But it took a cigarette.

Some of them use the dosing.

Hugo in the used to sort of outside of a.

The new bridge diagnosis of it would help us, let's say that the the cheese house of <unk>, So I'm going to need a sofa and pave.

Finally, the pockets of the profit upon the.

John the UNC chairman of the CDN.

Kim from <unk>, so a bit on.

Bobby the puck.

Thank you for your question of me.

Yesterday is a.

Importantly, the because of course, a government has that kicked off of the pivoting off of the new park, but other here, although I got to emphasize.

The spelling of the park is a and E O if not and I O. The.

Chinese name off of this industrial park is a shing Tao or there'll be true of translation as a new.

Great.

The bears at the same line when you say the IFA airports.

As a a very big park occupies a huge the area of antigen.

Two of them the season of Sentimentally, yes, it is a.

You'll see the assumptions around.

Iran. The 11 point of three kilometers per meter yeah.

Yeah.

I'm sure the Honda.

Cash.

A.

Seeker you said.

<unk> a big.

So it's all a bulk.

<unk> is in the a bulk of what you said some of book value share.

The 70 to choose a how are you in the near a places too soon for me out of your Dutch.

Yes.

And not having a qualified yes.

It's harder to buy a good.

The good Sam Glenda tie any of that some governments yes.

Yes.

Based the industrial part to a well be a massive a project in <unk>.

Coding manufacturing facilities the RMB.

The a and a residential areas as well as a culture of areas.

The new is going to be a very important.

The company in this part of it but according to the planning a for the Hefei government.

They will also have a probably hundreds of other companies of joining the Central Park.

It doesn't take a.

Women's the hook.

Basically it's likely a quite a bit of neocart a women timing of the both had a growth path now more than 10 book way to true.

Can you sort of eventually share tissue, so sort of tinnitus.

With the Midland true title the other Chiefs association of out yet.

That's a good answer for you a copay to tabulate total switch with Genesis that won't go through the system coming out of the.

Is it a win for you guys saw the if I wanted to take a tandem <unk> items that we sort of cut them back to us.

The time that you go kind of them.

Okay, Neil what's the most of it.

One of the fiber on a go away no proposal.

From a unit.

Well generate how many network capacity in the south.

So the Zynga you guide to a place of work, but what I choose to June this year.

A strong competition.

But the answer to this.

Wait a while for us the dealer sales.

As you'll chew better sort of convinced that you put the sheets, yes, a couple of women to tell them, what's I mean some of them of.

How are you a place the communication of notes.

Maybe a system and a new one.

So that she sales higher than a dominant share the high twos.

It's a job well.

We believe that means a fair value onto some of the best Shanghai or the desire to sort of tons in GAAP will Miss a beat us initially as a dividend.

So neither of whom.

We should have it on both of them.

So that's the Iota to go to a Toyota comes a little of it and shoot but honestly the how should I.

Well first of all of that a house or two of the Hunter.

A few some of woman the arena show the bulk of a neighborhood of being shouted a rule.

And the you haven't bought when the.

For the adult women dozens of it.

Duncan the figures.

Q2 total angle of attack.

The consolidated the huge for the hapi from when they were getting a showing of excuse me interest rate based on bottom line.

For the claim in the order of what are some of them.

One GW is unknown.

GAAP revenue.

You can find it.

A.

For the planning of the Hefei government regarding the Neill Park, a new it's not going to invest a infrastructure building off at the park a he'll.

The government is going to make this investment by the new is going to be a very important company using this part a.

Just now you asked about the the capacity after the 1 million a year.

And of that 100, a kick out what our whether this is the only for Neil or whether they say, it's going to be available for other companies of course is for Neil is going into developing a very a fastest speeds than I believe for the Hefei government is not going to make it as a matter of very complicated.

A for Neil and themselves then it means that the new should be able to the use of other resources from the capacities and all of the infrastructure.

Viewed by the hope of government in the Neocart.

So but this is a the funding offered a new part of which makes the difference from the actual execution in the future we need keep a look at day says that the sites that are newer.

Neil is going to be a very important the player in this.

Part of them and there's a new pockets of what's going to contribute to the long term development of for Neil because we believe it's a we can attract oh, the talents and to consolidate all of the resources and they sent you a part a will be beneficial for new the development just like a what happens a inc.

And of a Shanghai had a quarter of new is the the Neil was the first company or in a way to a company to build the offices in the Shanghai.

Shanghai had a quarter in hunting and then many other companies the follow suit to join in basic a offices area in <unk>. So we believe the Eva we can consolidate all of the resources together with other partners in this a new parts of this is also for you to help us the team.

The operational efficiency, Inc, Inc.

<unk> operating income, though efficiency because if you imagine that the we have the all the people working in the same place, including a pair of manufacturing teams. The R&D teams and they are also leaving in the same place. So this is going to how about the to significantly improve for debt.

The operational efficiency of the company.

It's a way of with shell.

Of these abuse or mentioned bad debt.

Can you talk could take a.

We welcome again for the home comfort zone.

So the issue that the margin Susan how are you.

There'll be a to go through the time true back.

Thousands of critical top <unk> the income the dose understands the pump a degree of order now contain the hometown San for the AG businesses and Tony It go the other feeling some of those down the class C. You guys. A couple of them Jim Schott quite the opposite of against all of you by making the Toyota is a hurdle field batches of a set of about a beachhead nuomi.

Cody its asset has to figure out and the other thing of being more of a paucity of of a bit on body for the EP.

So let me see the dominant issue a short infusion of mountain Shadows of pay downs.

Mhm.

The next day important a factor, which I consider it to the external operational efficiency.

It's a according to the current funding of with any of part a we will have a debt.

Out of your factory together weighed to the nickel factory Danny means that the after we finished the production of the battery packs of the way it kind of a ship it directly to the vehicle factoring a very short distance and that's the same way as the seat factor in the future and so it means that a we can save for a significant the logistic cost.

For example, the.

The battery or just a court.

It's a around a $100 a pair of battery pack. So imagining the future of the volume is going to be 100, Oh is it going to be 1 million units than they say, it's going to be a huge saving in terms of the largest a cost and this is also going to help us to improve for the all of it.

Our operational efficiency.

A quick order from us.

The women the assumed the women's a quantify some of the.

The bulk of the.

The answer has the price for the Eagle puncture.

<unk> way of focus.

Figure out so it's out of the <unk>.

So the Queen, Indiana, Ohio public for them, a who's number one <unk> equal from a slip of the total.

As a woman scheme booklet of true gourmet too simple a two tenths of a telephone or many of the of postpaid shoes.

Gordon.

Can corner of mcquade from broker cases towards the Gulf.

J S a the Neal.

There's a sort of a.

The likelihood of JC authentic of hooks all.

The second comment is how many of the opponents of met coal.

Pardon me, if I may a how's it with what the debt should see them closer.

When it comes to the operation model of the the cooperation model off of the second the factory.

We will continue to focus on the manufacturing Corporation a it means that the we want to focus a.

On the manufacturing of processes technologies of the quality and the operations off of that of our pumps and well invested and some a dedicated equipment for Neal, but we're not going to invest a building the actual factories.

In terms of off of the operators in the second the factory and they said well the managed by the joint venture between JC and meal a day.

Jim is the sunlight and this joint venture is going to be responsible for the of our operation had a management of also the operators in the plant.

All of a key.

Pest of Io theaters for the.

Coming back to the other time, but value on that.

At the peak.

A lot of deals because of all of you wouldn't attribute of the lymphoma pence of Nucor.

Local accounts, a D wins and close out of the shoe hung will choose tissue of the hot deal. When you have a syndrome, which we kicked it off a.

Now what you didn't take a.

So the young <unk> you Michelle Thomas in the delinquency of yourselves a bit on BARDA, a minimum wage take a.

The ideal inside of it to go see the soon assume them we will.

Sure.

Hugo in the goods, yet you had a hot category.

Cigarette cigarettes, EBIT certainty about scarcity of assets.

Uhm.

And the next question is about the the battery pack.

Many companies, including pet the using the Alex Pease battery pack.

Of course, a there are some inherent advantages off of the I'll have to keep a battery pack and a very important one is of the cost, but they're also some wei.

Weaknesses in the shortcomings of which the basic technology or a home back to them for example, the.

Performance of the debt battery of pack in low temporary true this is going to significantly affect the user experience the especially during the winter if for a weekend of soccer debt performance bottleneck under a low temperature I believe it should be the right timing out of the writing twice by such a use of our cookie battery pack and a form factor.

Next question.

Yeah.

Our next question comes from the line of Lei Wang from CIC T. Please ask your question.

A cavorting, there's just a one way of speaking.

Obviously, there's been a lower.

For a patient to see the date for margin above 20%, so definitely congratulations to the team.

I think most of my question that is being probably the answer it I only have one follow up question regarding the collaborations with a silo pack a group of swap stations. So so we'll sell a pack burden of some of the Capex of investments in the second generation of Substations or we'll sell a per share some of the grabbing Louis as well.

So I will translate my question.

Josh it's a ways off a tranche of a father, they've got plenty of course for anyway, what really the RFID interest it seems that some of the data. So I would tend to see digital total with Homeaway fandango for much of the whole, which I think a hold of to the showroom of Mr. Tricky for putting a tighter Shlomo I don't see fit into a government kind of what you think towards the took a pause.

Okay.

Well, then turn positive for the hard.

The a ton figures with the.

Over the since a lot them would sell them. The hotel has a sunday because getting the benefits of women to output the impact of the deed the.

The amount of 1 billion.

Maybe the downside volume the last one.

Counselor zone on the prominence of conveniently on day one.

No pun intended of Union knowable.

Was that just on the <unk>, which is in the hall.

For men with him for searches.

We can do the sola can do some salaries for Moshe.

EMEA.

Yeah.

Thank you for the question.

Of course in the future of we're going to depend of the compression was a sign of pack, but for now all of a corporation is a quite simple a bit.

We are utilizing their sites and the location of the resources.

And the Guy suspension says of course or they wouldn't need to have a survey of personality. So at the Liza. This is also a opportunities wants to work together to share of the survey is the resources, but at this moment. The we do not have a revenue sharing mechanics sense, a between a new and the final pack.

Is that all of it.

And that's the way the.

Okay.

Next question.

Our next question comes from the line of Edison Chu from Deutsche Bank. Please ask your question.

Okay.

Thank you and congratulations on the for the quarter two questions from the competitive angle of sort of a.

First of coming out of the Shanghai Auto show you, obviously saw a lot.

A lot of product a lot of development.

Has this influenced or set up your your target about bringing in a mass market brand.

For the market also a non neo Brent.

Is that is that effort kind of been accelerated or any of it.

The sort of change to those kind of the.

Our plans for going forward.

The second question.

It seems like a lot of automakers now also.

Potentially considering doing chips themselves I think it's reported that Neil is considered doing that as well what's your latest thinking on cash.

And of moving away from Nvidia and during the trips yourself as well our design of the chips yourself.

Thank you.

Oh yeah.

But I'd say the Edison.

Well then 'twenty in terms.

The total lifetime value.

It was just a color on kind of a.

So the kind of slowed especially like the.

Sure.

Bill what's the deal I thought the impressive with the associated with the data.

Sure.

Anyone who wants to Inc.

So the tie that need a bulge in the bank.

To go with a cave actually the total U S gourmet to sew doubt at school.

It goes.

So a fairly impressive.

But the.

200, and then we'll be in a kind of just said.

Most of the kind of a debt.

Massive market of the hot.

Changes in the door.

Welcome to the tasteful the Asia fit a heart attack.

The machine.

All of which I mentioned, there is there kind of.

What is it the sort of on demand shoots her time, yeah. That's a good chunk of cinema lease of goodness.

I know a military so net gain on she's sort of a producer will dwell on this too.

How many machines in the.

Obviously, a downside trend in the market.

A male or put it on one asset.

Okay.

Okay.

So thank.

Thank you for your question Allison for.

From the competition perspective, I checked out of the hospital.

The competitors entered the new model. So a development that the most impressive is the from owning Hong Kong a.

There's a brand the team that they have the a model of court TV E E.

For the mass market a we.

We believe a.

There arent many companies are launching their new product just like I mentioned in the China of Smart <unk>, that's true thinking of.

<unk> capability has been quite strong so we're quite confident about the.

Okay line.

<unk> entered the adoption of it.

The smart Tvs in the teams share, but in the premium sector right now, we don't actually see any strong competitors.

They are going to use us.

Some good.

<unk> done the dominant in that some of those shortages as hone so long the amongst yourselves that the book.

John for the zone that's out.

Convinced the wound <unk> from immune check on the true right.

The EBIT Communist auto lifestyle.

We shouldn't take a way.

There was a total of two of them for about a total of them for the indirectly tied to the immune against him and the Peru, the with especially the center down.

Down in May of <unk> for the tier for our woman that's sort.

Of the Yemen platform in the total Jason because of the face of an agenda will not create a window.

So from dusk.

The non demos facility.

Sure.

So you've got for sure the country the tool.

Okay.

The second the questions about the the research and development of the <unk>.

Chipset.

In the smart electric vehicle industry, we believe for the industry chain is going to a Knoxville, a chipset software and other smart technology.

For the long term at the top leader, it's going to depend of investments in research and development of the smart hardware. It's a I believe this is a comment on outstanding of for the industry at this moment the way to not have the ending specific plans. So that we can disclose it to the public or share with the public.

But I believe the it is quite obvious to everyone that the new has always been very decisive and investing in the research and development of a new technologies.

We are determined to do it over a full stack of capabilities the surrounding the smart electric vehicle technologies, including autonomous driving and we believe that this is going to periods of the long term competitiveness of the company.

Thank you.

Okay. Thank you.

Next question.

Our next question comes from the line of Paul Gong from UBS. Please ask your question.

Thanks, Wade and thanks for everyone.

Two questions. So first one of your songs the on the second one on a look at the photo Alfonzo a gross margin on the on the ice season. This quarter, it's actually a pretty a moderates a human sequentially declined from the full Q a.

So I'm missing several of them can be it in a I recall on last time, you said youre going to double down on the on the activity in 'twenty or 'twenty, one and sources for the increase on the budget. So can you give a further update on the strategy and more importantly, a week.

Which key areas is going to be the full credit for the R&D and the rough breakdown how much percentage goes to the the co development, what's the percentage goes to a day, maybe autonomous driving extra of Trump. This is my first question.

Second question is I look at the follow up on the gross margin of rest of it. This is a pretty decent gross margin for them relatively young company of my meal, but it would be a true of this margin versus market share.

But if it's for like over the full force on the margin and a little.

It's like the focus on the market share do you think of.

We will strategically they choose to.

The higher specs, a kind of breaking of the vehicle more competitive in the market to balance in between of this margin versus market share and also how do you think about see a rising material cost impacts in the next a few quarters because some battery of made of course machine D of dimensions.

It's possible for a bunch of price to go up.

I think I caught your comments just now that some of the 100 kilowatt hours of of a battery a take about 25 percentage in Q1, what was the new Pinal takes a rating to one for you. Thank you.

This is a pas.

The figure on the phone.

Me and the Hudson sales, because the chest yogurts as the point of sort of double down on the.

And then just the Q1 the big.

Yeah, I'm sorry, the total Rudolph on that sector was the total.

The the call does a woman chooses a balance it out for the Korean bottler on a per hasnt been the type of consultants for the <unk> seven is a good one.

For the third.

So it wasn't until two accounts with a lot the need to seven down from one of the bulk of the bulk.

Both of these here a.

Why I put a hurdle for them the EBITDAR for the headset.

Is it the way some of that.

One 7% up on the cash.

And they'll take a cover for you on that day.

So two of the harm the Tony.

Tony the Tiger the outlook to the.

Kind of on the.

Yes, no doubt.

For the adult.

Non of general admission side by a woman and clarify the times and the C zone.

I hope it onto all of you wouldn't want me of element in Keytruda for the tissue.

Weather in both Sundar.

Susan.

So to conclude okay for no matter of Nintendo.

The MRC unless you do the syngas to the that's a valuable business within the data.

The to go down the path.

Oh shoot for.

First of month.

Tim value of when Sheila number from me at a high level. The way. It also took them just the with US the run chin with other.

The bulk of them they take a tremendous amount of you've made a chime in methodologies for Ts for the Hulu.

Two of the tissue a bulk of them in various value data in Q3 of the Keesler, Peru, and Manitoba, a castle and the EIA.

We think the job.

Of course, you didn't see the woman she's a debt.

The one thing.

Got it.

I would think of it had been diluted by the index.

It's useful that's useful for them in pin Tyson as usual from here.

The bulk of UBS.

And about when we see the pins out of those two.

Yes, it's true that Macquarie.

So your opinion.

Because we see the.

I'm also hearing a partially due to a heart goes out of box with you. The hot yes. Some of your charts on the essential to narrow down from euro sales without I'm kind of of the unified convinced that piece of it.

Thank you for the question Paul.

Regarding the R&D expenses, a yes, so the R&D expenses in the first of quarter is not that high but they sort of follow to the.

The normal pace and the development of stages a.

A J code for example, right now over 87 is still under research and development then it means that the starting from the second quarter, we're going to see a increase in R&D expenses, Inc. A related ways of the testing cost and the the ETD Costa together with the offer.

Suppliers.

The seven R&D expenses, so well Inc.

So gradually as they get closer to the mark of mass production.

At the same time, we're also developing multiple products are in of a pipeline because the way with a laggard to make sure we kind of apply the anti <unk> two point of technology.

A more paradox in different segment and a faster speed. So starting from the first a second quarter are aware.

We're going to see some ramp up a for the R&D expenses.

And they say well the many driven by a the research and development of the other product in the top line I'm just like I mentioned, we are determined to devote the.

Autonomous driving force back at the facilities or the the software capabilities and the smart electric a vehicle technologies.

We will accelerate the development of off of the new technology, a platform two points of <unk> and new technology of profound three point Don.

At the same time, we're also ramping up of all for R&D personnel in the past the first quarter of the R&D personnel in the company has a significantly increased and we believe it is a well continue to increase the in the following quarters.

We have also increased a reimbursement of the intense a for the R&D resources in the platform technologies, including Etfs or the electric a powertrain.

In this year, it won't be quite challenging pfizer to efficiently and effectively spend the 550 million a RMB for the R&D expenses of about a we're quite confident about the where you can achieve.

[noise] achieved for all of our objectives and the.

Proof of our R&D capabilities at a very efficient a manner.

Good day are going to the equation you take a Saudi is for a.

The GM as of March.

Net income of choose the marathon.

Tony you got share the image Atlanta up a half would be the.

The GM a series of gross margin is due to shelter of mineralization the amount of saved him in the sources.

Yeah.

On the dance, a bill or maybe.

That's all of them.

Woman when there's.

Regardless of cause is.

The other woman.

But I think a tonnage of margin getting harder.

The water really didn't choose a bulk of fund in the source of Bogo, a Macy's community somewhat in Asia for tiny element of telecom and upon the Chameleon orders, which included the use of our Peru women being really the way to the market share at the goods to the or.

The on the much of absolutely sure of that.

But you know.

Some of the Port Honda landlord of the to go to.

For the B bench of car the usual to sell a mature followed the the market share also the at a much sure Jade.

Moving from one should be a month or the other support young so does the chita and of course.

Could you know Neill can didn't cut as a woman sorry, a premium for the month city. The in the certainly the Max ship, a nod to the sort of fit them from yada yada.

The brand and the pathway for that kind of that <unk> got to the tough with solar at a branded sales.

She is hurting your sales to agenda to the wisdom of course had a.

Hudson I might put a send someone out of school.

The standard some goodness as a lever.

Cause uncertainty.

The revenues at a PDF of the pit on the call.

So as the book kind of I'm sure of those advisers to the bill.

So two of them.

The call.

Either a long term growth.

And community.

The symptom.

The call that you were you would have been but for you what puts you at a kudos to all of the job too.

<unk> got solid a much a sugar called a pump.

So for the Canadian top of those of the mobile.

Well a minimum with other within the margin coal come out of a pharmacist.

The time to sort of call.

The only a mountain of Colombia, it unclear about the timing for the current call clear of biodiesel sales to hook for.

For the current call did a show a leader comes at a time of it.

From a trend showed a payment market itself a lot of junk.

Top of kind of Bush's share in China.

A number of a June 10.

So the 10 things could see the from the basic.

Well my friend of a comeback from debt.

I'd say there are some of the mcguire onto the market share that either of the.

The Egypt.

Some of them.

That's actually the way the family.

For the market's mattoon, who both of them.

And again book of your knee or the the brand thats in the bathroom.

So the 100%.

Turning the ship.

Mhm.

The second question is about the the balance between gross margin and the market share.

Of course, a for any company.

We wanted to have a sustainable operation and its found meant a we need to maintain a reasonable gross margin for <unk>.

The current the growth margin yes.

Other than a lot of expectation about the we have emphasized a game on again, but we're not going to pass the price.

And the way that I get to a leverage off for margin in basketball a user service Inc.

<unk> the power of infrastructures and also the user community of.

For the market share I believe of we need to look at the market share in different market segments. For example of is not possible for us to compare the market share of a Ferrari and of course in their market segment, a ways that the market share of alcohol and income down in the mass for a mass market segment, so for Neil of a book.

This is a the market share of for the premium market. So we don't want to have for the same strategy like a.

The other brands that the dust cut their price that from time to time, because we believe that this is going to hurt the brand image and the the users for example of course should probably oney south at around the 300 thousands of you asked about.

Did they contribute.

The 40% of for the.

Gross margin of of the Volkswagen net net net.

Net margin medical for the net profit for the.

The votes, a wagon group so we believe the right.

If a wave of <unk>.

A few of a market share in the premium segment a win.

Need to devote more resources on analytics the magnitude the friends enter the user community.

Of our focus is not going to a inc.

Great.

A copy of the price off of the product and the dancing credit to the market share because even if you cut the price off of the product the properly in the end of your still cannot improve the market share and so we believe the after we reach a reasonable margin now when we can use the nice margin shift in proof of a product to all of us.

Services and the the infrastructure set for all of our users that they will be of a long term strategy.

In the global premium market. So right now the market volume is around the 10 million and the way only accounted for a very small share. So it means that that there is still a huge room for us to grow in the future.

For the mass markets. They so while the a different story and the entry of for the mass markets as well a.

Fire, a well require a different strategy, but what I kind of say right now with a 100 per cent of certainty is a we're not going to use a new brand to enter the mass market.

Thank you.

The next question. Thank you very much.

Our next question comes from the line of average Zhang from Daiwa. Please ask your question.

Hello actually is Calvin from Taiwan, So I have a quick questions about.

A company. So a first of all I want to know I noticed that you have a kind of on a Norway launching in Norway Conference next week. So a I want to know would that be I mean at the overseas expansion plan that you can share with US. This is the first question. The second question is that the.

The can know a.

Have a because they already know instead of the raw material cost and also auto chip costs out of all increasing.

Okay.

Do we expect a lack of money for a month point of a week on week increase affecting a component price a.

What's the trend of how how facet of this a salary sir thank you.

Kevin This is Steven.

Sure.

For ease of for stop for our long from globalization strategy.

For the day May 6th conference call.

We will still focus on the language of market.

Just for information equity in March we already set top award National sales company in Norway, and we are still have already built up a local team who will take a charge of our low corporation and a service and in the end.

For the already for that location for a new house, the Oslo and for more details about the Norwegian market a place to join our fixed.

The media conference to get more detail.

Yeah.

Yeah.

I'm wondering if some of those.

Okay.

Yeah.

[noise].

Oh.

As a materials cost of goods.

Oh, okay.

The.

The rollout of course with respect there will be some.

Increase in the coming quarters.

And the comparative is the overall a certain price I think a.

The cost can be well controlled and owns how big impact to our gross profit margin yeah, Yeah, just a little.

You're probably out of home share you can begin some with some of the kind of the chairs of the Yale you share a chance of going back on some of them each of them.

But with two of these shifts out of the assumption and somebody is all of that dawn of a hot women see every other stapleton.

As of the assumption levels since the October shop. So if somebody is on one of the telephone cost of I believe some collateral as of the catch up.

A one challenge we have for some a routine cost of reductions on the other hand, there are some cost increases, especially in terms of for the chipsets.

Lee but of a speaking the saving is the bigger than the cost increases. So we believe that the a b of a material cost of a well continue to go down.

Okay.

Thank you.

Thank you next question.

Our next question comes from the line of Vijay Rakesh from Mizuho. Please ask your question.

Yes.

Hi, William and Steven a good quarter and idea of.

Just had a question on the longer term.

On your partnership with the Sinopec, what's what would be a how do you expect them to roll out the stations I know you have a 500 battery substation targets, but any thoughts from how sinopec would be rolling out the 5000 battery substations. Thanks.

Yeah.

Some debate.

The time of a pass through.

A sham with Homeaway, Tim we tend to a two of them getting the Soc as debt on the to the silos.

Total damages.

The seven Tom how many of Borgwarner for some of them to go so that's all coming at the one of them.

The agenda because of the workstation coming out.

And the station.

So you don't have been for social Goldman for Florida, The one woman.

Cash you want to go a whole slew the.

For me.

<unk> took a fairly nimble for media then well.

Well, let me once of a spend of pedicle assortments of the.

Although the timing of your research.

Unfortunately, there is a low quarter for non side.

From the inside Mexico Vietnam.

In the highest yields will go the amendment.

Thank you you've been doing for them.

Ah, Yes final hack a announced a that they wont do the 5000 does what kind of charging a facilities in the gas restrictions, but Neil is not for the only partner working together with the final pack and they are not just the only going to do it at a swap stations being the cash.

Station said they will also feed of the charging for something of course, we hope to deploy more a charging and the swapping facilities there for a meal in the got the stations, but at the same time wells will have the many other partner as opposed to locally and the National E. So we believe at the site of resources.

Not to be a big issue for us.

Okay.

And also.

Also on the solid state badly roadmap on your own shortage, Jade, but it or can you give us an update.

When do you see that.

The production of a test.

Yeah, that's it thank you.

Yeah.

So that somebody is on a minute.

The Tim Bantle has the Sydney.

All of them materialize the timber.

Of all speaking the current a protest and the.

Testing of the protection of enough of it that's all of the state of the battery is on track.

Thank you.

Okay.

Yes.

Yes.

Okay.

But he told me maybe to conclude our conference call today, I think Ken did add in the sense for all of the quick questions asked by the average.

Yeah.

Yeah.

Operator.

Hi, operator, a way we'd like to conclude the today as a conference call.

Certainly as there are no further questions now I'd like to turn the call back over to the company for closing remarks. Thank you.

Thank you once again for joining US today, if you have a set of questions of please feel free to contact the news the Investor relations team through the contact information provided on the website and basically a concludes the conference call. You may now disconnect. Your line. Thank you.

Yeah.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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Okay.

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