Q1 2021 Xpeng Inc Earnings Call
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Hello, Ladies and gentlemen, thank you for standing by.
For the first quarter 2021 earnings conference call for X. The incorporated at this time all participants are in a listen only mode. At the management remarks, there will be a question and answer session. Today's conference call is being recorded I will now turn the call over to your host Mr. Xylene MA director.
The <unk> of Investor Relations of the company. Please go ahead Mr. <unk>.
Thank you.
Hello, everyone and welcome to the X times first quarter 2021 earnings conference call on.
And then issue on the operating results were issued by Newswire services earlier today and all day.
On line you can almost start of beauty and the gradually by visiting the on a section of our website at IR Docs Shelton and they'll come.
Participants on today's call will include our co founder chairman and CEO with the Hirsch Alpine.
And my Chairman and Patrick and stop the Brian and King Vice President Finance, Mr. Tamiflu, and managing director of strategy at least the child shy and myself.
Management will begin with prepared remarks, and the call will conclude with the Q&A session. A webcast replay of this conference call will be available on the IR section of our website.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements in bulk and having risk and uncertainty.
As such the company's results may be materially different from the views expressed today.
Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U S Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Please.
Please note all of it.
And then of course, you're late on this conference call include that is kind of share of all of it hit GAAP financial measures as well as unaudited non-GAAP financial measures ex pass on.
The press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures on <unk>.
Now I'll turn the call over to our co founder Chairman and CEO, Mr. Ho of telephone. Please go ahead.
Okay I'll take the guys you always kind of <unk> shuffle, and she said the Union D. G to the you have to deal with it.
Hello, everyone. Thank you for joining <unk> first quarter 2021 earnings conference call today.
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Heading into 2020, one electrification is modification and accelerating the disruption of internal combustion vehicles.
Notably in March the penetration rate of high energy passenger vehicles in China as the past the 10% threshold for the first time the EV.
The adoption and top tier city experienced a record high grade and what's the penetration rate of reaching about 20%.
Being part of the unprecedented disruption opportunity I strongly believe that X spine is well poised to beat the development and transformation of the industry.
My belief is for the underpinned by our long term strategic investments and the leadership and Smart E V technology that we have been beating out all of the past year.
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Our strong momentum continued in the first quarter of 2021 with another quarter of record vehicle delivery. Despite traditionally slowest season demand and challenges of industrywide chips and changed all.
Total vehicle delivery number in the first quarter with 13340, representing a 487, 4% year over year increase consisting of 5366 G suite and 7974 P 70.
According to the new car insurance and registration data reported by China Automotive technology and research center in terms of volume the G. Sui revenue number one amongst the class B E V. S V and the P. Seven ranked number three among the class B b the debt in Q1.
We attribute this outstanding performance to our industry, leading full stack in house developed software technology, and I'll start with differentiated product strategy.
Fueled by strong delivery growth of revenue reached RMB viewpoint, and 95 billion in Q1 represented representing year over year and quarter over quarter of growth of 616, 1% and three 5% respectively.
Meanwhile, our profitability continue to improve highlighted by a gross margin of 11, 2% and increase of three 8% from the prior quarter.
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On January 26, we began to push okay updates for part of the T point out to our customers and started to recognize revenues from ex partner software as such on vehicle revenues and the first quarter and now includes software revenue what is the time in our history I believe that extra day is the only China.
The automaker that has to been able to charge full day self operated autonomous driving software separately.
And as Max deliveries of the Pizza oven and began in June 2020, we have delivered over 23000 piece of it and as of March 31st and on accumulative basis, the attach rate of ice and the T point out has exceeded 20% as of March 31.
So to your attach rates on it.
These two of approximately 25 per cent in March 2021.
And I believe that ex pilot software and monetization will become a recurring revenue model and generate profits. In addition to our sales per vehicle.
Going forward and beating on a lucky technology innovation and how is by all the full staff in house R&D capabilities and hardware software integration solutions, well rollout ex part of 2.5 and ex pilots for pointed out.
The next generations of autonomous driving technology and the next for yes.
On the ex pilots will make the events.
Economists and the experience accessible across a wider range of Roes and Oh, yeah, and ultimately bring about Enzo and highly automated driving.
And they will also help to further distinguish our brand leadership in the smart E. The markets.
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And next I'd like to share on latest achievements and technology advancement for smart EV.
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Since launching of navigation guide of pilots for the fund the equal and G. P. In late January this year and G. P.
On customers and driving $2 3 million kilometers, which is approximately 1 million kilometers of months with the N V. P of assistant and wireless penetration rate exceeding 50% amongst of P. Seven debt activated as of March 30, free 2021 the <unk>.
True usage frequency and not only reflects the broad applications of N G P but on.
So testify to the satisfaction and trust customers and using it.
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And much we successfully accomplished all of N G. P guided expedition, the highways from Guangzhou to Beijing.
This expedition of over 3000 kilometers of March the nation's mom gift of time.
During the time of expedition the N G piece of human intervention with only zero seven times for hundreds of kilometers on average.
Notably more than 90% of autonomous main changes overtaking the vehicles switching ramps and going through the China were executed successfully which I believe outperform all other mass produce autonomous driving system and the market.
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Here I would like to highlight the strategic importance of all capability of deploying on autonomous driving technology on that.
And could use vehicles.
And those vehicles equipped with N G. P capabilities, we're able to collect highly vulnerable and the cases, when our customers using and G. P.
Now able to achieve fast iterations of our Alt with them on the weekly basis based on all of them close loop data capabilities.
With the growing number of P. Seven on the road I believe <unk> will have the watches and the fast growing mass E. V fleet was closely data capabilities on China's road networks.
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Recruiting and retaining excellent technical talent is the foundation of our ability to lead innovation in technology and development in the smart EV industry.
As of March 31st 2021 on R&D team represent approximately 40% of all the total head counts.
And without a firm commitment to build a strong R&D team, we aim to strengthen our leadership cutting edge innovations and E.
Including electrification as modifications for smart Tv's and set of technological leadership in the industry.
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We'll be able to continuously introduce new vehicle models, featuring more powerful hardware to support our fast English and of software.
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At the Shanghai Auto show on April 19th we unveiled the P side the work that mass.
The mass produce Marty equipped with light on the market warmly welcomed the P. Five and his enthusiasm supporting people the reservations that exceed our expectations and surpassed 10000, and just 53 hours following its debut.
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The P five designed and E plus class sedan with the room yet in the space.
Most of the B class adapt and our market.
The more it sounds autonomous driving systems, and smart cockpit technology and will be space. We have created for our customers a completely new experience of the March 3rd space beyond their homes and workplaces.
Customers can now use the slate space taken that watch films like and a private cinema and enjoy outdoor choppy and more.
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We plan to start deliveries of the <unk> in the fourth quarter of this year. Additionally, we plan to start and channel user testing of ex policy and fight with N. G. P autonomous driving capabilities on the major out of the end of this year and releasing the OTT updates at the end of next year.
And our continuing efforts to improve software and engineering performance, we provide customers with the most powerful mass produce autonomous driving system available for China's Ro system, and an attractive price point.
Approach significantly differentiate us from many of our peers.
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In addition, we're making all the progress and the research and development of on next generation autonomous driving hardware platform and next generation powertrain system, including high voltage and Super charging system and we look forward to updating you on these developments in due course.
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And the smart E. The market continues to grow fast we are accelerating the build out of our infrastructure facilities as part of the long term strategic roadmap and investment.
As of March 30, free Exane physical sales and service and network consists of 178, South, Georgia and 61 set of centers across the 770 cities in China.
170 stores 88 would directly operated by us.
Normally and Missouri guidance in April the answer into a long term strategic partnership with China's biggest all the dealership company the Joe Schenk correct.
Actually this partnership will serve to provide both expensed and industry, leading smart EV products and functions high quality services to consumers across China and saw the accelerates smart E D at the option.
And we remain committed to expanding our night nationwide sales network to approximately 300 stores covering wounds the intensity by end of the year.
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We also continue to expand and Supercharging network as of March 31st number of ex Pang Brendan Supercharging stations expanded to 172, covering 60 cities and.
Additionally, our free charging program has been available on board and 1000 and Supercharging stations as of April 30 of this year.
And over 160 cities.
And do you expect that there will be more than 500 X men and branded Supercharging stations by the end of this year.
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In terms of production and our Chongqing factory, we have completed upgrading the production line. So that they can produce both of the pizza oven and the of fruit mention P size concurrently.
We now I'm conducting trial production runs of the P. Five model.
We believe our manufacturing cost of would be meaningfully declined when we're able to produce the piece of it.
And the <unk> the same protection plans.
In addition, with financial support from the Wuhan and government in April we entered into a cooperation agreement with the city of why the built our third factory day.
The new manufacturing base will continue also contained both manufacturing and powertrain plants.
And have an annual capacity of 100 thousands of units.
With funding support from local governments, and Wuhan and Guangzhou.
Expedite investment and construction on all three.
And these two cities.
And fully complete sales ex banks three factories located in Chongqing, Guangzhou and Wuhan with a total and the design capacity of 300 thousands of units.
Moreover, with minimal factories be them and increase the watch the potential peak outlets can come close to 500000 units in total the.
This provides us an excellent foundation for which we can catch of widespread demand and the transformation towards smart Tvs.
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Turning to our overseas development and the first quarter, we export of more than 303 east to Norway. We plan to start deliveries of the P seven Norway and the second half of the year.
Moving forward, we will actively boosts our athletes in Norway, and all of the European market to expand our local sales and delivery and service and mechanisms.
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That's the smart E. The designer and manufacturer that no sign of better than any of the peer.
The bank will remain focused on delivery and differentiate it and.
Product built upon all of industry, leading autonomous driving technologies that meet the vast market. The months. This relentless effort will further our mission to shape the mobility experience of the future.
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Now moving on some of our guidance, excluding the orders reservations of the piece price, we're already seeing a historical high of the order backlog was trying to ramp up production and minimize the impact from industry wide shortage.
And the second quarter of 2021, we expect all smart EV deliveries to be approximately 15500 to 16000 units and our total revenue to be approximately RMB three for believed to $3 5 billion.
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Thank you for children with debt.
So with that I'll now turn the call over each of our VP of finance, Mr. Dennis move to discuss our financial performance for the first quarter of 2021.
Thank you the shop on and Hello, everyone.
Extra punish the past couple of months in the first quarter of 2021, mainly based on a strong capability to Mac differentiator of smart EV the appear to various needs of the large and growing customer base. Thanks.
Thanks to all of a record breaking deliveries in the traditional of weak season in quarter, one we witnessed the quarter over quarter increase and our top line and further improve millions of our public beta in particular, our gross margin continue and I will trend sequentially hitting double digits in the quarter.
Additionally for the first time revenue from our <unk> pilot of Subway Award recognizes the top line and the factor in gross margin, making us the kadena and milestone in our Chinese EV industry.
All of our solid financial condition, and a strong cash position enabled us to beta is Q out there of strategies shebang competitive advantages.
And see tremendous growth opportunity in the smart EV sector.
Now I would like to walk you through our detailed financials for the first quarter of tonnage on the one.
Total revenues were RMB 295 billion for the first quarter of 2021 representing an increase of 616% from RMB 400, and tell me and photo of M. P. Eight a year ago and an increase of <unk> five per cent from RMB 285 billion and for the fourth quarter of punted on here.
Revenue from vehicle sales for RMB 281 billion for the first quarter of 'twenty, 'twenty, one and differentiate and increase of 655 per cent from RMB 372 million for the S&P late 2020 and the increase of $2 seven per cent from RMB 274 billion 40.
The first quarter, 2020 the year over year increase of primary due to TWD up the ERP seven which is study at the end of June last year the quarter over quarter increase was primarily attributable to the revenue the condition of X pilot people on the software in the first quarter of 'twenty or 'twenty, one since the functionality was for.
40 debt EBIT of truly accumulated group of the subway of purchases.
Partially offset by the yellow gum and subsidy for the new energy vehicles, starting from January of D. C.
Gross margin was the of en Pointe and 2% for the first quarter of 2021 competitor was negative $4 eight per cent for S and Peter of 2020, and seven four per cent for the first quarter of last year, and we would call margin was $10 one per cent for the first quarter of 2020, one compared to negative five 3% for the same period of time.
<unk> and 'twenty and six four on a per cent for fourth quarter of 2020. The improvement was primarily attributable to the material cost reduction and revenue recognition of the ex parte of software sales.
Research and development expenses and be found that 75 million for the first quarter of the 2021 representing an increase of 72 per se and pharma RMB 311 million for the same period of 2020 and an increase of 16% from RMB 460 million for the first.
<unk> 'twenty 'twenty the year over year increase of mainly due to number one and the increase in employee compensation as a redo of our expanded research and development staff and I'm, a too high expenses relating to the <unk> development and number three share based compensation expense recognized in the first quarter of 'twenty.
The 21 quarter over quarter increase was mainly due to the number why increase the employee compensation in line with the increase in engineering staff and I'm, a true high expenses related to the of development of the of <unk>.
Selling general and admin and trading and administrative expenses were RMB $721 million for the first quarter of 2020, one representing an increase of 124% from RMB 322 of media for F. N P of 2020 and a decrease of 22 per cent from RMB.
918 million for the first quarter of 2020 the year over year increase was mainly due to number one and higher marketing promotion and.
And advertising expenses to support vehicle sales and.
And I'd like to the east.
Spansion all of our sales network and the associated personnel cost lease expenses for the sales and service.
And commission for the year franchise stores and number three the share based compensation expenses recognized in the first quarter of the country 20, while the quarter over quarter decrease was mainly due to lower marketing and promotional and advertising expenses compared with the of peak sales season in the fourth quarter of last year.
Loss from operations worse, I'm being 904 million for the first quarter of 2021 compared with RMB 649 million for same period of 2020 and RMB, one 1 billion and for the fourth quarter of plenty plenty excluding share.
The base compensation expense the non-GAAP loss from operations was the RMB 840 million for the first quarter compared with RMB 649 million for a period of 2020 and RMB, one 1 billion for the fourth quarter of 2020 now.
And then what's the RMB 787 million for the first quarter compared with the RMB 650 million for the same period, a year ago, and RMB 787 million for the first quarter of 2020, excluding share based compensation expense and the fair value change.
And the relative liabilities related to lead retention and why are people shares and non-GAAP. Adjusted net loss was RMB 696 million for the first quarter of 2020, one compared with 645 minutes for a same period, a year ago, and I and be surrounding and therapy and media for the fourth quarter.
2020.
Net loss attributable to the ordinary shareholders of extra tongue and corporation was RMB seven out of the 87 million for the first quarter compared with RMB 900, and certify media for the same period of 2020 and compare the was set on the 87 million for the first quarter of 'twenty of lumpy at school.
Share based compensation expenses fair value change, the Ontario tape liabilities related to the retention dry out people of shares and the accretion of the people of shifts to detention barrier and non-GAAP net loss attributable to the ordinary shareholders of <unk> incorporation was RMB 696.
And for the first quarter of 2021 compared with 645 of many of them for a period of 2020 and also on the 730 of media and for the first quarter of 2020.
Basic and diluted net loss of the American Depositary share were both RMB zero point of 19 nine for the first quarter of 2020, one and the non-GAAP basic and diluted net loss per ads for both I'm being zero point 88 for the first quarter of 2021 H E D.
Yes, great Prudence to class a ordinary shares.
Now I'll turn it back to balance sheet as of March 31st the 20 201, our company had the cash and cash equivalents. The extruded cash short term deposit share to investment and long term deposits in total of.
RMB 36.2 billion compared with 35.3 P and as of December 31st lots of year.
To be mindful of blood and saw all of our on these coal for the first quarter financial results I would encourage listeners to refer to the only of suppressed to the east for the details of.
This concludes our prepared remarks, we went out and open to the code for questions. Operator. Please go ahead.
As a reminder of if you will like to ask a question press Star one that is star one for questions. The first question comes from the line of Jeff chunk with Citi.
And at higher excellent and Vishal.
This is the is it share from C D and so I I have the two questions.
So the first question is about the software of could you breakdown of the software revenue and gross profit for.
First quarter this year.
And of course about civic how much software.
Revenue was derived from the first quarter of this year and how much from the rest of the.
The 2020 and the GP margin.
How should we see these and so for income and the profitability into the second quarter and the second half, but this is and my first question.
Second question is about the vehicle the GP margin.
And it seems that the G III equipping them with the RFP is the creative to the GP margin. So so so how much of that sort of compare with the LCM battery.
Secondly, in the <unk> of announcements.
Mentioned that the first quarter of cost of goods show came down and Q on Q due.
Due to a lower material costs.
Could you quantify a bit in terms of the what kind of materials, leading to a lower cost.
And how you see the cost for all you do the second quarter.
Now, let's go with them and figure out how the years you know I don't want usually show of just your level of M. D. Do you guys. What are the right Jim the jugal and Tio just shy of what are you sure check of Roger and easy to shoes of them all of your dog eyes with the washout of show earlier, the actualize the U R. The on and you know the.
The way actualize the use of generic E G. The without the old way like the right, Jim the Jake well, well and you've got some of cadre of legal and.
And you go out of use you of a true of the knowledge of your phone and it's usually the challenge of Ge's and you're calling them on.
A piece of a whole ton of Malik with you and the C. M that you go on to other commodity Dara, we called the workshop.
She's soon as usual are what's the RJ.
Each of the announcement of your kind of unusual on the Jamba and Q on Q2, and you can shout. Your email you said, you're inside and out of the chunk of and the charge out of what would your charges on thought he should familiar and sell the other thing about it.
On the charge you, Ohio jewelry for tickets, the one chunk of it and the Shanghai and for Michelle Jones, you Archie do the plywood and somebody on a cup.
On Fisher.
Okay.
Ah Okay. Thank you Jeff good questions I would try to handle all of the questions and then brio charge of a sharper on kind of supplement.
Later a.
Number one is the are the software actually are in Q1, our total revenue from the X pilot of cheap on any of those software. It was about RMB 80 million.
Amount of that 50, some media and was from those contracts. We are we purchased the passing of patients last year and the out of the alcohol on a 30 minutes from those software. We saw this year. So in general of the software accounts for about two five.
The five percentage points up the the margin.
The amount of 2.5 points of 1.5 will be contributive on loss contract, we sold last year and yellow. The one percentage point is from those countries, we saw India first quarter.
Because we have a very good and G. P. A scheme family of Guangzhou to Beijing, and we get you guys seen the idea of software and also the hot well 40, Yeah ex pilot is increasing.
Actually in March and also in the airport. So we for the city of subway, our penetration and won't be a.
Even higher in the second quarter, but again in the first quarter. The total revenue on top of Odeon total margin inclusive of around 3000 units of lowest software. We are we are weak and the of customer purchase last year. So the second quarter were not as high as two point type of thing, but definitely the won't be hiring.
And one one percentage points for the first quarter and.
And that's number one the second question is for the <unk> three yes, and actually we have a mature.
The advantage compared with the a L P and L. P. A battery buses the and see them on battery, but I cannot tell you exactly number we see and for example of how we maintain the S and MA and Mis Hap. He Sam are available Maxine. However, we are happy I paid her she of course.
So a lot of web and improve our the tier.
Three of margin as well and we.
We started the delivery of the yard the.
The era of P. G suite and the App wholesale we kind of we will for C. D. A.
Margin improvement for Keytruda in the second quarter and number three is for the material cost reduction and yes. We are we happy a battery of the.
The newest compare with the of caught her for the good news is the primary from the battery costs the reduction.
We actually we negotiate with solid batteries the prior two.
The a battery of cost reduction that basically was the the negotiation was completed earlier. This year. So we have some material cost reduction the percentage of it would be from 5% to 10% in terms of the area of cost reduction and I, both as the table at the end of last year I Hope I answered your questions.
However, she wishes sit here, thank you and no more questions. Thank you.
The next question comes from the line of Edison you with the Deutsche Bank.
Alright, Thank you and congrats on the congrats on the quarter.
The first question is could you give us and an update on the on the Lidar testing and validation with Linux.
Is it meeting your performance requirement and are you confident that the P. Five with a lighter on it will be hitting the streets and the fourth quarter.
And then second question is on the the reservation number I know you disclosed it shortly after the release.
Could you maybe provide us and update.
And if it's not the exact number I know you don't give that but some sense of relative to your own expectations how much higher.
Is this number of tracking.
The trends like.
The bigger when he said because of your Sunshine and shop.
On the box.
<unk> laid out of your meal and the dollar just and the Linda says.
Because of the huge hole.
Right at the AGA when he said the needing to churn the gene pool of people, who tell what you want the dead.
They will then take the sewage the T J Schinder cinquemani tissue.
Okay sure.
And well maintenance and.
And for Shanghai the ladder.
And put on a ladder share as I told him and the childhood icon.
And the knee.
For me.
And certain but could be a higher usage of the primo.
Clemo auditing and washout, though you and you'll put on on the knee on the day. She was our mission and sort of the Eagle and she going under the Hood.
Hold on let me no losses.
Two of Dr. John Choi cash flow that you've got you've only done.
That's true and that you called out on a day.
And you see a woman on yard and.
Yes, and yes, well twitch without Patongo shovelnose phishing email on the Yahoo.
New York in order to any of the other critical of that.
And so you got it.
And John I get you on the ledger and much home route and that kind of pop.
The shovel and Dutch handguns and also on the knee.
Shelters and overlay and vivo genome and put on the concept that you're going on in order to put on the Cushing and.
Just on the Internet charter so that's all on the HIFU and.
She wants and it's hung in the country on it and then go the judge the tight way more of the 10 things of that Ajay and I shouldn't and the choices and without the European consists of what.
So and then you've got to identify them.
Some of them.
Yes.
Sorry.
And so we have tested multiple ideas of different brands and we compare it on by different parameters in terms of their human cost of the craftsmanship their costs and also the capability of being mass produced and so the lighter that reduce on P. Five he's actually T. G. I touch on and what are very open to other options and so by 2020.
Two to 2023, the new models that we are lunching may adopt different brands.
And that makes the purchase lightest. So basically were very confident that right now with all the capabilities of all round for <unk> sensing I'm not capable of.
And so on all vehicles and also on our production capabilities, we can actually be complementary to some of the light of technology sure catch more of like the technology of disadvantage of out there. However in the long run and hope that we can achieve a good balance between the cost of all of them get technology and their capability of the mask pictures at the same time.
And we can achieve the ball balance amongst the different performances across different parameters.
And well most of it on your change in the digital gel for the Salt So you'll know Jacob <unk> Sciences for later that you wanted.
Sorry go on.
On.
Great and in the tier one tier two of the wife, she would say Jake or some of it for them to the heart of Sugar Creek, putting on goes on in true Tito trade hold of Jewish shortly and I hope it doesn't hear your own share to IP and I Shlomi and stuff.
Sure so much of that travel for.
P cheap debt when she does sites for their travel.
And Peel the Fuji.
And then she P cheetahs for Treater Shaver.
The other the shopping journey to Shanghai and.
And Jay you could be at the against the unfortunate for us.
So it would be and very confident that by Q4. This year, we can launch piece of <unk> equipped with lighter and.
And regarding the second question up all of the reservation number and obviously, we can't disclose the exact number but.
Compared to <unk> seven for lunch on the Shanghai Auto show a lot here in the same period actually P. Five reservation number is a few times more than that of pizza oven.
And the materials, which of the Peachtree the fab with the hope of true.
The woman that didn't go on the shelf fatigue and enough of them quick thought out the peach tea the jazz the set.
And that other shuffled, the California has the or you know Tejada does appeal, Chiba and soil mixing and shovels getting done if I wait and see.
Okay and on the Jimmy Choo, and Dave Hughes to the whole of the show them the engine.
The total of Pizza you all know high single channel on occasion.
And also getting the feedback from off on like sales force and the same.
The periods last year when the first launch of P. Seven and they do feel some pressure for the market regarding the price of piece of it. However, this year with the launch of P. Five every single of feedback has been very positive regarding the launch of P. Five. So we're really confident that the actual performance in terms of orders and deliveries of P. Five b Sami.
Very encouraging.
Many thanks.
The next question comes from the line of Tim Chow with Morgan Stanley.
Hi, David and team congratulations on the solid result, and thanks for taking my questions. So on.
First question's about the component, Tom because compared to the other EV startup peers.
And of the PCA, apparently had a much much more new models and the phase III and especially in second half. So while we expect the chip shortage of my easy and second half.
But what else has ex pit and gone to ensure it hard and major component fly their face the need for new launches, where the have sufficient component supply later this year, especially I think there are a lot of Novartis will also be coming to it and like it in second half.
My second questions and just a quick follow up on the guidance for <unk>.
Kind of visibility do we have so far and shifts the buy and.
How much inventory do you have at the moment to support the production playing throughout the whole second quarter and meet the guidance of the sequential volume growth interest.
The sequential volume growth.
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These are the high shall change all of these hatches, which will the shame clinical and cheap and finish up on your line channel. So why now and you want me on until it is easier for Oklahoma, Okay and to the people with yourself of the <expletive> 10 day. She taught it Glenn Ginnie Poo chair shuffle until the end of the deal.
Tied to each of the light source.
So she she chip off of your question I think with you and say shop and yet the.
The country says 12 and <unk>.
And what kind of a dual channel church, he or she and cushy Joseph says the cheetah with all of it.
So any of the socal and country like Kuwait City now as per the wind piece of the shall Yao can change all of them to urge you to the balance sheet.
Buccino them to the sheen per se of corn seed the entry into the okay to sell now more share and thanks for the debt as you could say so there's really three and woman once you enter the RT two eco since had the Titan.
So the longer you can.
She said what he said.
Yeah.
So as you take a.
And she is so the ginger soil of the Swiss on though so anytime you will touch on the Tennessee of fit how quick and agile for data.
For the wouldn't teeth and.
Several of them you don't Gensler and she said ashamed of in the Trulia told for all of them at the trade classes. The G. Go towards you know a woman she doesn't noise of bioenergy I share that sensor and the fashion and a little about how the type of natural of course, she over since the start of it.
Channel age of Italian distributor.
Some of the Ginger chunk of them in and Jonathan and that kind of Jay the article Kilcullen and for.
And three hotels out of you go to the.
Of colon lesions on the edge out of the kind of on the San Diego and Golar LNG does the trade touch on South Korea of Dominion of teaching them the.
So and shop owners and does it have a chip on a cut change the of women for Yelp and quit.
So true the shimkus on the woman.
You should tell us that the women sort of sit on top of the Guangzhou and she and I quote and JJ to switching.
Sales of bone quota of woman, that's free and antisense.
For the junior and the sheep cannot tell the channel woman T J shutdown, but the woman and she and Kinder tabs and going through some tough. So we are the for the on enrollment towards the jet of Goldcorp.
G Women's Ajay Shymkent, though the Eagle.
J T.
Teach and Ya man and woman and.
On the.
Okay.
Tony Hawk and Schindler for Deutsche.
So I took a screenshot of which all of my age of the Shaw.
And on shelf and she is a talented and sit them clothing, and she and getting and parts of the Yogi pool for.
The theater two of them attach rate of couldn't talk on NIM for the Abd and the phones and that's that.
Shai.
Hold on hold true.
So anyway.
She met him and his team for your front door to tell the Intesa and setup.
Shovel and Ginger and a J.
She and Russia would only change of the quarters, you'll have the beta.
That's the level of the ones that kind of shows.
For the type of Tibet.
True true true okay.
Keep for your question regarding the shortage and chips that basically it is now a big challenge for all of the automakers all day.
And nobody out there I can't really promise that they can solve the problem and that go on time and for Smart E. The manufacturing is actually I think Q2 upcoming Q2 will be the most challenging timing and.
And we hope that by Q3 this year things will get better and however, if knocks than Q1 next year and maybe things will become the attention. They become more released so in order to prevent ourselves into and getting.
Getting into a difficult situation. We have done several measures. For example, we have made a lot of pre orders with our existing suppliers, we communicate directly with the supply of the head of different suppliers of chipsets to make sure of that we have enough inventory and order is kind of in place to some of that support all future development and production and also because we have lots of air force and come out.
And to meet it.
And the technology that allow us to be really flexible and adapting to different chipsets and manufacturing of vehicles, they're able to actually look out for new partners and new manufacturers of chipset. So that we can actually become a more adaptive to the market change and to this chipset shortage, so and the long run the belief that and you have confidence that these can be resolved.
But we can't promise anything like that.
Hey, Tim This is Brian and I just want to add in terms of the guidance. We gave for this quarter and we have considered the constraints of the chip shortage situation. The shelf on described so the reflected the constraint.
Our numbers are without constraints, obviously, the the delivery number will be higher than what we have given out but on the other hand, and I think the ship shortage visibility still and not very clear so it won't be subject to the changes. So we keep a very close eye on on the situation.
Yeah.
And I'm going to get shut out of and it puts you in the journey of you go to that is that you don't get it all shades of tennis shoes, and I couldn't do it for sure to of gel for the Soho, though you should tell Joe what do you the truth.
Toyota current values Jacob for finishing her attention.
And do you get the shymkent, the other potential doses and the Cushing no and no.
On the tour machines, and I kind of take on hinge on kidney the cash.
And the debt for the Joseph a.
Duncan on the shelf.
So no more cash.
And she and the possible use of shield you could see the well known way Craig.
Essentially the talented and part of what are you gonna be Joe true for the zone origin.
Argentina, and one of them that kind of tight and you shouldn't see any of the tuition free show the South Dakota, you want me going on.
And that she wanted to of Michelle She is essentially to see a woman and why you thought kitchen and when he couldn't hold on teacher does that actually the world no.
No one has the heel shown data and the child.
That's the kind of interest and potential for the so he's on the women's day.
And the J you got off to a good of freedom and yellow page and Colorado Chamberlain the sales leadership.
Now in terms of all the components as we deliver and more new models into two years from for the Sydney.
We are going to face some constraints in terms of the components other than chip shortage of for example, one thing is the battery supply right. Now we are using a L. P. S for some of them of vehicle models and the rest of the of the adoption of the L. P. Sorry will take about one quarter and so by Q3 this year we estimate.
And that's a wee bit of which a comfortable level of adopting E. L. F P and batteries and also the market and mindful of LSP. The battery is actually larger than expected and that is why in Q. <unk> Q3, two for this year, we are going to be able to average a more comfortable level of production adopting this new bed.
And as was mentioned by Bryan before our guidance for this year later on and actually included the calculation of all of those components that I mentioned.
Great. Thank you guys to go and buy it.
Thank you.
Yeah.
The next question comes from the line of Nick Lai with J P. Morgan.
Okay.
Yes.
Okay. So station and you saw.
And so my two simple question on the first question is launching and object shortage and the room to price hike and I guess of amusement upfront and most of them already into pocketbook for and should be putting chips of pine and so maybe just on the margin on the and my daughter and bunch of alumina to price can you give us on some of them.
On indication or guidance.
And in many cases, the touch kind of of Hum.
The material.
And the second question.
Is the small dogs.
And at this point it's free.
And on customer pay bumpy on 20, something and be together, it's part of as we put into service and.
And as we launch.
Go on this part of the people in front of it.
In the future.
Customer flow.
Most of the spooky to pay to on demand.
On the prescription model and what's it done just plain and simple.
This is 22.
Good luck in the outlook.
The margin outlook.
And.
Shouldn't you can see the either the zone.
<unk> and my true.
And Brian.
So the fleet on Gucci pin point shouldn't the the eshop trying to pay and each of them okay.
Some of them.
Some of them.
True.
With the demand.
No.
On the 18th of winter.
Couple of times from day one.
The two of which two children.
And for those students students.
And so with hunting and shooting.
And the simple copay.
The name something for you know she also tends to see.
Some of the more ctrip and they didn't want to see.
Yeah.
Hey, Nick This is Dennis let me handle the first question are actually in our first quarter margin, we do not have the.
The material impact on the margin due to the of cheap or yellow material.
So not nothing really in the first quarter, but the looking at the second quarter. We do have some impact due to the raw material. For example, do you see already I do mean, those kind of all of those raw materials.
<unk> costs the impact to our margin and also in terms of ship and we are also our associates some of alternative cheap and also a puppy too.
To help our supplier to get cheap. So they are some material from a cost increase but in total these two components scared of the impact will be less than a one percentage point in terms of margin are the.
The amount of is somewhere around 1002 of 1005 hundred <unk>.
But less than 1% of the margin impact to the of second quarter <unk> 40 of third quarter, we need to close the money to buy the situation and probably won't be the destock in the third quarter.
Of course, you shouldn't be a cartoon of whatever that the other one tier to the.
Towards the other day kind of us and all for life for paper and I will say the policies on and so I'm told me on that kind of the I'm sorry, the fishing my thought and so I'll say on kudos and go to them and kind of ex kind of suddenly all of a sudden.
And then she and wash out with no debt.
Duncan of food and wash out we'll know how Hudson city.
It's in the countries and geographies and she thought on it for the transfer for the concept.
The woman trading at the home of Quaker and sales of the change on the cobalt our attention.
Two cohorts of the city.
T J.
So let me take the second part of your question I'm actually in my opinion paying by on demand model of a subscription model will actually cost of a customer more the paying a one of fee for that software and service charge going forward. We are also considering all of the service charge of possibilities and we will communicate in the time.
And none of them, where we have the update to the market. Thank you.
Yeah.
The next question comes from the line of bin Wang with Credit Suisse.
And she said colonies, which of it.
Your line is amazing and I'm interested in the middle of Italy, Josh for the Sunday rule and the leak.
How long ago, you should keep beyond he made the chairman of Sunshine and yours.
On the pharma, that's a bunch of the Siemens Dominion.
And many of OTT, which you're going to national accounts.
For the name of the east would be the.
And I guess I'm much happier.
My question is about it on a tough start and.
And the ability of <unk>.
Nor to the three five as part of it. He was the comparison between the Baidu solution and published solution compared to expense as part of it.
And you put your pump and <unk>.
Thank you.
Okay.
And then expand on Sunday on where the true Chi the Goldman and.
And the Shanghai, and unless you're going to offshore and looking at the.
<unk> five for the tariffs of the trouble of critical of Macquarie inside.
And I can touch it for Michelle because that's what the cause.
So we surely shots for women of child or that kind of change the.
Tongue and.
And Jay just how some of the tone of the.
The T shirts at all from the Jefferson and even though you shipped and Corelogic and.
Well the top finish the whole milk and whey T D.
Joe you got to go for.
And so just for the most people calling on them for the motivation and the tools for does the woman high share of quantity, what she thought of Tivo one ecosystem for the engine.
And I'm going to watch and it's almost out of them, but yeah.
The address of course, the family who are challenging.
And it sounds.
Cool.
For you on the shoe true.
The thought quite shortly the Franco.
For you how the T yet.
No more so cheap at the end.
And that's for sure.
And I wish him and Hugo.
Nathan who told yoga for jobs of the European court of tissue free and women and that kind of Oh, you share shipping for the Alicia keys for any minute.
And I know, you've got Peter Huddle, and neither does the woman and with credit and stuff that you go and try and put up the job finish out the phone with it for that other opinions and say you can pick up quite a somewhat and the expire.
On a Sunday and Sydney and Bulgaria.
And so sure well and then close the chew on and good day.
Junior you'll share little bit stingy on one quarter of family dollar and.
The tranches of how they should get yet and it that you couldn't even thought of you can reach out of the knee share you will.
How do the CEO of Pink and the usual should ask for the capital for the jazz and shall Chan Chung Gulf of the Gulf of the RGB is our chance of true gunpowder to go on and GP, Dolce Vita and keep it out since the fourth quarter.
The country and show the Johnny you got sort of suggest the so called watch.
And the other between let's say U S G.
No actually in terms of ex pilot the viewpoint of landed functionality. We will have an official release when we launched the M. P. Five later on this year, how as of right now I can comment on different solutions and different criteria.
Criteria for evaluating different solutions basically we have to balance several things I was sort of aspects for the bar you have to look at the combination of different functionality second of all you have to combine the.
And look at their integration of the hardware and software and the overall cost of using debt solution does that aspect there as far as that you have to look at the scenario of.
The usage of our the scope of the usage of that particular solution last but not least you have also have to take into consideration the data feedback from the users whether or not the consider it a good experience to use that particular solution now in the market right now you might come across some videos of some solutions that claim that they're doing a very.
Good day in certain aspects of it that is only in certain functionality or out of very high costs right now what ASP and he's trying to do is that we're coming up with solutions on autonomous driving that can balance all of those aspects at a reasonable cost. So that we can deliver the most superior experience in terms of autonomous driving.
So our customers and we are.
Launching different versions and the once you go into the future, where we can actually use the <unk> technology to support not just the GP, but also to cover all of the other boats and China and then later on to ultra range of traffic growth scenarios, and China and even go south of the bad she goes to the global scenario and.
Scope and so that is and at the five Mays to balance all of these different aspects in order to the achieved the best solution on cost.
The mist.
Thank you for CIT.
The next question comes from the line of Min Li with Bank of America.
Shop on Brian and how good you know on the MAU shingles, and maybe it's you know it's been nickel and T D. The win T and E G.
And <unk> Zhang on now.
No just you think I should say on continuing the shutdown she clearly true.
And so once you go kind of quite simple.
And to the single kind of juice and others.
So you can and kind of click on a few of capital to kind.
The tornado so Debbie pinpoint how do you want a strong balance sheet and sensible and she's done.
And what you see are we worried that almost no group pool.
Lastly, the tungsten.
And in season.
And so it's on the Holocaust and you can imagine neutral how unusual with the amount of D. A.
And we should bank not just with the Lindsay, but the other one.
So by the Centurylink and see the older on the songs you don't want waiting and according to now if you go on so you for another ship.
The home.
The old machine getting done you mean, the guidance, you're saying what type of decision.
And he's on TD Bank now teaches the preference of especially on the OTT channel.
And so it sounds of the thing done of the cause.
Please go on the meal projection that the unwind of Shellman day yourself to flow coming true name on those free cash.
And Doug I know these on television and she says the frontier He took a convention and it's on top of it.
And some of kind of sounds simple.
The good thing done that he got to see okay on my question.
I have two questions. The first question is regarding the.
On the meat of periods our Q.
Q3 and upgrades.
So when will you start to do this and it will you use.
He was the contract manufacturing business model.
We'll use your own capacity to make the trade and the manufactured by yourself.
Will it be a margin neutral or slightly helpful.
To your margin and the second question is regarding the.
Battery odors.
Last time during your earning cope.
And at around 10% of older and some of Q3 is for Alex.
The battery version and the <unk> 90 per cent Oh does on P. Seven is for Alex.
And battery for Ocean.
And after two months do you see any structural change regarding on your older Company.
The combination I think.
Oh sure sure based on the uncertainty.
She and the cheese on women female it's absolutely true and shouldn't do it to the ingestion and shinohara needs change and to ensure that the Hugo boss and then she started the study.
And you got a guy, but the children of course are the couldn't go out and you don't take what's it all for Jeff to the woman director of the timing and the children.
At the time.
The only change and that she's on Oh Gee called Google.
The C or the onetime changes and kind of sort of woman and.
Sydney, and Shaanxi and woman and she call and say she's on the Mali.
The bulk of it all kind of on what sort of shorter shoot out of school.
And you'll hear us Jed J D.
So the as shown in the email multi regime with the goal no.
On the kind of went on at the other one keyboard and even <unk>.
And.
Sure the woman.
I'll cut to the itchy the you need to continue to dish and the shadow too.
The question lets you go to the Eaton Toyota comes on children, and Jamba to an average Fuji and Duncan of PD, Wilmington, and I believe.
And you do cause of San Diego to check all of the woman Angel and Henry.
On the other two bullets on the tension of attendance and then.
Good day, chew on and with Us and you're dealing with the other women you didn't go into the other woman types of immune to any of the G clip.
And so on the free tier.
With all of them and she'll conduct.
So I found a way of legislation.
Okay.
Sorry.
So one of them's hung and as well.
Well most of my or changing and.
Turning of the P D quite.
Quite of Gymboree, Hugo and actually Imodium, which of them together.
Yeah.
Okay about the newer version of what you think we actually you I wouldn't do any upgrade in terms of its autonomous driving capability, because we hope that by the next time on another new upgrade of G. P will April sales support a higher level of autonomous driving and regarding the second part of your first question. If we went to produce the.
It makes a version of our next model of Judy and her own battery definitely the margin will be and privileged and he will also impact the other models of gross margin as well and a very positive manner and the second question regarding the demand for L. P. S battery like basically we've seen more demand for that by the way that expectation so for.
G suite and P seven and that number that order for a L. P. S. L. S. P battery definitely have the Pos that we have the Pos that was disclosed in last conference call and so right. Now we are in the process of negotiating with a lot of the battery supply isn't hopefully that they can ramp up the capacity of protection of that day.
And so that we can support that or the demand for Q3 this year and the long run we are very confident that after the actually the month for L. S. B will continue to go up and we are very confident that it will help us to drive up the market and channel. Thank you.
So me and this is Brian let me just add on the L. P battery for.
What we see is that the increased demand is actually additive to our existing demand.
With that and see and battery powered models and factor, we have not seen the and the number of it and see EM models declined as a result of of the launching of the NFC batteries, we believe that L. P battery actually expanded our customer base and the reach because of the the wider pricing.
And also I think of.
Given the capacity of ramp up we think of the mix of well reach and probably a steady state.
Percentage, sometimes and third quarter, and that's where we think we got to see the the most significant contribution on volume side.
Thank you Brian.
Yeah.
Yeah.
And there are no further questions now I would like to turn the call back over to the company for closing remarks.
Thank you once again put on Earth day, if you have thought of questions. Please feel free to contact expand the matter of relation through the contact information provided on our website or the TPG Investor relations. Thank you.
Yeah.
This does conclude today's conference call you may now disconnect. Your line. Thank you.
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Yes.
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Yes.
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