Q4 2021 NIO Inc Earnings Call

Hello, Ladies and gentlemen, thank you for standing by for New Incorporated's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode.

This conference call is being recorded.

I'll now turn the call over to your host Ms. If Tom from capital markets and Investor Relations. Please go ahead.

Good morning, and good evening, everyone welcome to new <unk> fourth quarter and full year 2021 earnings conference call.

Companys financial and operating results were published in the press release earlier today and are posted at the company's IR website.

On today's call we have Mr. William Li founder Chairman of the Board and Chief Executive Officer, Mr. Steven <unk>, Chief Financial Officer, and Mr. Stanley Senior VP of finance.

Before we continue please be kindly.

I reminded 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 1095.

For looking statements involve inherent risks and uncertainties.

As such the company's actual results may be materially different from the views expressed today.

Further information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and Exchange Commission and the stock exchange of Hong Kong Limited.

Company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Please also note that news earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information.

Please refer to news press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

With that I will now turn the call over to oversee Oh, Mr. William Li William Please go ahead.

Please go.

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Hello, everyone. Thank you for joining the call.

Fourth quarter and full year 2021 earnings call.

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Toni it's Tom.

In the fourth quarter of 2021, we delivered the 25034, yes, yes, it's fixed and it is six representing an increase of 44% year over year.

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To go out and get them on sheets us attack.

2021 was a year full of challenges for Neil and the global auto industry by overcoming the pandemic semiconductor shortages supply chain volatility and many other difficulties. We have continued to lead the premium smart.

The vehicle market in China with a total delivery of 91429, new vehicles in 2021, representing a strong increase of 109, 1%.

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In January 2022, new delivered 9652 vehicles, increasing by 34% year over year in light of the Chinese new year holiday delivered 6000 to 131 vehicle.

In February 2022, representing a growth of 10% year over year during the holiday we adjusted the production lines to prepare for the delivery of <unk> 87 in late March 2022.

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Although the user demand and order momentum remained strong the production and delivery have been affected by the COVID-19 and the volatility of our supply chain production capacity, we expect that the total delivery in the first quarter of 2022 to be beaten.

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We will start the delivery up 87, the first product.

Two on March 28, 2022 in early March we kicked off of the test the drive up and <unk> seven nation wide users who test drove 87.

Oakland highly about the product.

First driver to order conversion rate exceeds our expectations, which gives us great confidence towards the competitiveness of NTT.

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In 2021, the battery electric vehicle market maintained a faster than expected uptrend.

According to China passenger car Association.

Retail penetration rate of the battery electric vehicles to grow from five 9% in January to 18, 6% in December last year.

Tier one and tier two cities in China, such as Shanghai, the penetration rate of a battery electric vehicle witnessed a more prominent growth.

Hi, among the sales of all ICD and electric SUV priced above RMB 35, 330 350000.

<unk>, New England, a market share of 23%, which is the shares.

The cells are ranked at the top in 2021.

We believe that this EV growth trends were also gradually expanded to tier three and tier four cities in the future.

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In terms of our gross margin benefited from the increase of our revenue per vehicle and the cost optimization brought forward by the 75 per kilowatt hour LP and DM hybrid batteries.

The vehicle gross margins reached 29% in Q4, 2021, and 21% for the full year of 2021, respectively.

Currently the whole industry is confronted with the pressure of the cost increase we are paying close attention to the dynamics in the supply chain and are working closely with other partners to enhance efficiency.

In order to reduce the impact of the vehicle gross margin.

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On a separate note Neil started disability by way of introduction.

Topics change of Hong Kong under the stock code.

866 from March 10, 2022.

Last thing your Hong Kong marks another milestone in the history of meal and enables us to serve more investors in the future.

Okay.

Jojo you shop, you haven't filed for bringing something that you said, Colombia console.

Next I would like to share some recent key highlights of our R&D and operations.

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In 2021, we started to step up our investments in R&D.

non-GAAP R&D expenses exceeding $4 1 billion RMB in 2021, we have set up for the development of new products and increased over investment in full stack autonomous driving and other core technology.

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Investment in R&D is also of critical importance for news our long term competitiveness.

From this year, we will be able to be part of the poor results from last year's R&D investment and efforts in.

In 2022, we plan to deliver three new products.

Two with 87 being different.

The mass production of 87 is well on track the product itself has led to the industry in various aspects, including computing power for autonomous driving.

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Hi, Julien Yeah catch itself.

And then the other day on December 18, 2021, we unveiled five and midsized smart electric sedan as a perfect combination of news the Supercars DNA and the concept of design for AC <unk> is equipped with.

And then D.

Driving and kind of cinema.

<unk> digital cockpit enabled by AUR and the V. Arent technologists. It comes standard with 100, a configuration for comfort safety and smart technologies.

Please the lungs <unk> five has attracted a wider and more diversified user base and received more orders than our expectations. The delivery of EG five expected to start in September this year.

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We also launched <unk>.

Seven of our first <unk>.

<unk> model NTT.

<unk>, which is positioned as a larger premium five seater SUV and expect it to start to delivery from the third quarter of this year.

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In the coming years, we will continue to elevate over R&D investment and effort in core technologies, especially in key capabilities, such as the food sack autonomous driving and battery technology.

Believe that the investments in core technologies will not only enhance our sustainable competitiveness in both of our technologies and products, but also improve our gross margin and profitability in the long run and ultimately create long term value for our shareholders.

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With regards to production capacity the production line upgrades after that JC advanced manufacturing center is in progress phase by phase.

Year, the production cadence across all workshop webpage 60 drops per hour.

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We have largely completed the building construction of our second manufacturing facility as two located in new parts.

Finished the equipment installation and are now working on the calibration up too is planned to be put in operation in third quarter. This year with a defined production cadence off of 60 drops per hour.

On March 16, the first validation viewed up 85, who wrote off the production line from the F. Two vehicle pallet production Center.

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On the side of our supply chain, we are still faced with the challenges of phone chip supply volatility raw material cost increase COVID-19 and the challenge the changing international arbitration and the past two years and more of our teams and partners have.

Accumulated a rich experience in securing supplies of pork production. We will continue to work closely under trial for faster to safeguard to the production and delivery going forward.

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2021 had been a year of $55 of investment in charging and swapping infrastructure as well as the sales and service network.

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In terms of it ourselves and our service network.

Now has a 46% of new houses and the 341 cases in 165 cities.

In China, we have 60.

Base of centers and a 117 nine authorized services centers and 146 facilities.

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That's the sales and service network expense quickly, we have been continuously optimizing the network deployment and the operational efficiency of each touch point, while delivering high quality services to users in 2022, we plan to open more than.

100, new sales outlets and over 50, New service centers and authorized service centers.

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In terms of the charging a swap in network.

The point.

866, the battery swap stations in 190 cities and completed over seven point.

6 million swaps in China, So far we have the 711 supercharging stations and 3786 at destination Chargers in China.

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In 2022, well at 30, new destination charging routes to the power plant with fact, Neil while accumulatively operate over 1300 battery swap stations sixth.

Thousands of power Chargers, and 10000 destination charterers in China.

Other expand overpowered networks to provide a better charging and swap experiences to users.

The changes will come from me it will then conduct <unk>.

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Yes.

Our <unk> team, we can dose fulltime attention.

And that global market.

Yes. He has from the appreciation of users in Norway. This year over months late deliveries have ranked top two among the six seater or <unk> cedar passenger cars.

The successful delivery and high quality user service in Norway also help us accumulate valuable experience in providing services in other countries in the region.

And gain confidence in entering new markets.

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In 2022.

Well bring its product and comprehensive services to Germany, the Netherlands, Sweden, and Denmark, the team building and market entry preparation I'm moving forward smoothly.

Well it means our patents to accomplish competitive console at tinder and shouldnt be pushing pundits pathogen, Washington Mutual fund yourself further GFR. So it keeps Hudson Aegean, Jim without question that you're on pace.

The mass market brand has been progressing according to plan, we have established that the protein specify that the strategic direction and the brand positioning and debate a critical research and development stage. After the first batch of product.

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The development of new won't be possible without the continued support of our users in 2021 3756 user volunteers, who contributed their time and efforts and events like auto shows and a new day more than <unk>.

More than 12000 users participated in over 260 charity event to make active contribution to society.

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And Neil Day, 2021, we announced that the user partner program.

New users can share benefits with each other and build even deeper connections among users in the community.

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In addition, <unk> launched the clean parks.

Ecosystem co construction initiated so far we have rolled out <unk> in six national parks and natural reserves in China, We aim to contribute to two ecosystem building support the adoption of a smart electric vehicles and the clean energy infrastructure in the <unk>.

<unk> reserves.

And establish a clean and a low carbon energy speculation you protected the authenticity and integrity of ecosystem.

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Switching, especially gym group, where you won't put highlight how you achieved that.

2021 what are your four new two it's about fundamental powers and make a comprehensive preparations for the next stage of development.

1022 is a year for Neil to print their hats at full speed, we will deliver three new product continue to invest in R&D and infrastructure to improve our long term competitiveness.

<unk> of our production capacity to meet their faster growing user demand and serve users in more countries and regions. We will always stay true to our original aspiration are precluding users' interest to first.

Continuous improvement and deliver products and services beyond the user expectations.

Sure.

So it didn't sound like that that's just all a union surgical that's how we get to Steven.

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

Thank you William.

I will now go over our key financial results for the fourth quarter and full year of two one.

And to be mindful of the length of this call.

<unk> does not refer to our press release, which is posted online for additional details.

Our total revenue in the fourth quarter.

Nine 9 billion.

One 6 billion just donuts.

Then he increase.

Fortunately, 1% year over year.

An increase of 1% quarter over quarter.

Our total revenue.

Two parts.

Veeco field and other fields.

Because sales in the fourth quarter was $9 2 billion RMB.

For opening remarks.

<unk>, 93% of total revenue in this quarter.

It represented an increase of 49, 3% year over year an increase of.

Six 7% quarter over quarter.

The increase in vehicle sales year over year.

As many of you built it too hard to divorce.

The increase in vehicle sales quarter over quarter was mainly attributed to a higher average selling price.

Chris.

Physician use of the co financing arrangements and the higher deliveries.

Other steel in the fourth quarter.

Zero 7 billion RMB.

100, and simple thought media owners.

An increase of 46, 8% year over year.

A decrease of 41, 3% quarter to quarter.

Great.

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What's unique attribute.

Waste revenue.

Right.

<unk> service and our major packages and accessories in line with the incremental cost sales.

The increased revenue from used car sales.

Auto finance is something in the fourth quarter of 22 to one.

Which was partially offset.

Sales of automotive laboratory credits.

Fourth quarter of 2020.

The decrease in other fields quarter over quarter.

Whats mainly attributed to the sales.

Multiyear regulatory credits.

Third quarter.

Cost of sales in the fourth quarter.

$8 2 billion RMB 842, 8 million dogs represent increase of 49, 1% year.

The increase.

All percent quarter over quarter.

Chris Carter.

Cost of sales year over year.

It was mainly driven by increased volume in the fourth quarter of 2021.

Gross profit in the <unk>.

Fourth quarter was $1.

Amit.

$266 7 billion stone.

Representing an increase of.

48, 8%.

And a decrease of 47% quarter over quarter.

The increase in gross profit.

Was mainly contributed by increased vehicle sales and increased vehicle margin.

The decrease of gross profit quarter over quarter.

It was mainly resulted from the sale of automotive luxury credits in the third quarter of 22 one.

Which contributes a high profit.

Gross margin in the fourth quarter of two to two one.

72%.

Compared with 17, 2% in the fourth quarter of 2020.

23% and historic culture.

I wanted to do one.

The decrease of gross margin cost of quarter, one minute with docket from sales of automotive luxury credits historic culture of two discrete one which comes at a higher gross margin.

More specifically vehicle margin in the fourth quarter was 9% compared with 17, 2% in the fourth quarter of 2020.

And 80%.

<unk>.

Third quarter of 2021.

Increase of vehicle margin.

What meaningfully been bought.

Our average selling price was higher.

100 kilowatt hour battery.

Increase of vehicle margin quarter over quarter was mainly attributed to decrease in substation use of the co financing arrangements.

R&D expenses in the fourth quarter for <unk>, eight 3 billion RMB.

286, non meaning the stone.

If there is an increase of 125% year over year, an increase of 53 three.

And 3% quarter over quarter.

The increase of R&D expenses quarter over quarter.

Yeah.

Whats mainly attributed to the increased personnel costs.

Search and other functions.

At.

The incremental pizza and development cost for new products and.

Dollar tree.

SG&A expenses in the fourth quarter.

236 billion RMB.

371 meeting of Thongs reprise.

An increase of 95, 4% year over year.

Increase.

Nine 2% quarter to quarter.

The increase in SG&A expenses year over year.

Culture.

Primarily due to the increase.

Personal cost.

Sales and service functions.

Costs related to the sales and service expansion.

How do we have as incremental marketing and promotional expenses, including for the host of new debt in December 31.

Hello.

In the fourth quarter was 245, Biamby AV 383 7 million tons.

The increase of 162, 5% year over year.

Increase of 146, 5% quarter over quarter.

Share based compensation expenses in the fourth quarter were $396 7 million RMB.

60.

62 3 million strong.

It's an increase of five.

559% year over year.

Increase of 49, 4% quarter over quarter.

The increase in share based compensation expenses.

And quarter to quarter.

Permanent attributes.

Oxy.

Restrict true that's granted.

Net loss in the fourth quarter.

214 billion RMB.

$336 4 million representing.

Okay.

Great.

<unk> 54, 4% year over year, an increase of 156, 6% quarter to quarter.

Net loss attributable to ordinary shareholders in the fourth quarter.

But the full on Biamby.

$207 million down.

The decrease.

48, 4% year over year.

Increase of three 6% quarter over quarter.

Basic and diluted net loss per ads in the fourth quarter.

Both.

<unk> six <unk> <unk>.

One cents per ADR.

Excluding share based compensation expenses.

Dimmable non controlling interests to redemption pattern.

Lung cancer.

Adjusted basic and diluted loss per ads.

One of them RMB.

16th Prady.

Our balance of cash and cash equivalents.

Cash and short term investment what.

55.

For the army.

$8 7 billion.

After some parts of the first anti PD one.

<unk> achieved positive cash flow.

Operating activities for the <unk>.

Full year two one.

Now for our beef Arctic.

William mentioned.

First quarter, all contributed to the cockpit expect deliveries to be between 5000 to 6000 vehicles, representing an increase of approximately 24, 6% to nine 6% from the same culture.

Two one.

The company also expects the total revenue of the first quarter of continued to do it.

Nine.

III and $9 99 billion RMB.

<unk> between one one.

117 being the strongest.

This would represent an increase of approximately 26% to 21% from the same culture.

One.

This outlook reflects the company's current and preliminary view on the visitation and market conditions, which is subject to change.

This concludes our prepared remarks, I will now turn the call over to the operator to facilitate our Q&A session.

Thank you.

Once again as a reminder, if you'd like to ask a question. Please press star one and wait for a name to be announced.

The benefit of all participants on today's call. Please limit yourself to two questions.

If you have additional questions you may reenter the queue.

First question comes from the line of Tim Hsiao of Morgan Stanley . Please go ahead.

Hi, Steve.

Stephen This daily congratulations on a solid result, and thanks for taking my questions.

Basically I have two questions. The first question is about costs and margin.

Because we know that Neil is better positioned to cope with the battery cost inflation, even without price hike.

But there is the rising mix of the high margin.

Our 75 kilowatt hour battery pack or other initiatives could have sufficiently offset the margin pressure this year.

Separately, if any or only as well.

We need to raise the prices one day.

Can you increase the price to consumers, who bought the batteries and also the battery asset management companies simultaneously.

Or it would take longer to renegotiate a tourist and contract with the battery management copy, Okay. It's more like a <unk> business.

So that's the first question and second question is about the model.

Currently.

<unk> ESP.

Comprehensively cover the SUV market was pricing range.

350 to 600000.

<unk> launch seven is really just mentioned.

How can we effectively differentiate es seven trillion comp in SUV motto as we put the ball in dilution.

How are we going to adjust the pricing strategy or reposition Curt asking for your models along with the launch of the seven so those are the two question from my side. Thank you.

Sure.

Tim.

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And it's something that it's a good point.

No.

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This is a big win.

Thanks <unk>.

Great.

Yeah.

Regarding the first two question actually starting from the fourth quarter of last year, we started to deliver 75 kilowatt hour LPN MCM hybrid battery pack to the users, which has contributed to the cost optimization and benefited over vehicle.

Gross margin growth in the fourth quarter.

But I believe everyone knows about the starting from the third quarter ended the fourth quarter of last year, we have been seeing some raw material cost increase in the industry in the industry and there has been lots of cost increasing the upstream offer the whole industry chain, which means that we won't need to share it.

The pressure across the whole industry gradually.

At this moment, we do not have any plan to increase our offer pricing yet.

That's because during the year, we're going to upgrade of our product competitiveness and capabilities and so at that time, probably based on the cost of the raw materials in the industry we will.

Evaluate of our pricing strategy as well.

But at this moment, we're not going to increase a fair price for that product.

And another point because of the sales growth and we believe that this has also contributed to the amortization of the cost and the benefit of a vehicle gross margin increase.

Regarding the raw material cost increase it's not just about the battery, but also other commodities like copper and aluminum and those raw material cost increase that have also affected other vehicle gross margin as well.

Yes.

Now, let me start with some.

Some of these mobile.

<unk>.

But inside.

Okay.

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California has a ceiling.

So Jim first of all of them, which can do.

Okay.

That sounds good.

Okay.

In light of the cost increase so those raw materials I have just mentioned and the other bom cost.

Over.

Full year vehicle gross margin for 2022, well, it's still a target to reach around 18% to 20%.

Dr. Glenn.

Seven.

Yes.

Sure.

Yes.

And get to the Tiger.

So I think the SUV.

And the problem. So SUV this at a time.

Among comes out 10-Q.

It took us some time that the shipments would have to shoot chosen.

Sure.

Sure.

Coming back to you.

Downtown.

Meaning that challenge.

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Trading timber suntan sensor tissue that sound out thats, causing them to go help our God no woman living wage passion and go see them take a <expletive> to attempt in the human cushions. So you also can go to families.

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With the social way or someone else you can tell the only industrial equate to say, but some of them yes.

The second question is about the day gas is seven and this is going to be the first SUV product based on the NTT and is positioned as a large.

Five seater SUV.

In this specific segment, we have witnessed some user demand increased recently for example, the BMW <unk> five we believe it's going to start at the local production very soon.

Yes, it's Kevin.

Going into <unk>.

Industry, leading battery electric powertrain and also the smart technologies as well and we believe is going to showcase at the high performance capabilities of the product and also satisfy users of demand in terms of the premium and luxury filling in.

We also believe that this is going to attract the users who will have a very high requirements regarding the product quality and a prime minutes. So.

All in all we believe that yes, the seven is going to contribute and they're going to be complementary to our current <unk> since that also affecting the sound was off with our current products.

No.

Jay Buth.

Yeah.

Coming out of them, which has a geological thoughtful step.

Brian .

So without the liquids with all a number.

So why you saw that as a good comparison.

So basically more churn does it goes to the lender.

So you won't get to the shipments with obviously all your attention.

We're going to launch at a yes, a seven in the second quarter apathy and well share the pricing information as well at that time.

At this moment that we can see that.

Regarding the market segment offer that large.

UV priced above seven.

Above a 400000 RMB.

It is actually has the addressable market size of over 200000 units and this market size. It's also growing that's why we're very confident that the performance of the yes, the seven updates of lunch.

Okay.

So is it really.

Thank you for the questions next question comes from the line of Ben Wong of Credit Suisse. Please go ahead.

Going now.

100, <unk> speaking you can basically bought an easy answer for women the antitumor Madonna, even once you losing them and they agree with us.

I'm going to be wanting to sneak up on us.

Yeah.

100, <unk> <unk> no matter what.

ESG I kind of want to make sure you're there so now moved off.

You can see it on the polymer film Atg it actually.

Oh sheet Shlomo contribution number in 'twenty.

Among behavioral unit.

Tusa proceeding honey litigation fatigue of MTR CLO Vince Com.

Well come back to profit increased substantially.

Essentially the commodity so I'm going to answer the money that you could choose to put me on it so but the R&D Anthony how question, saying from on the film content or the Ochsner Molly.

<unk>.

For the commodity has switched issuance with an <unk> hour.

I actually have a question on the 87, because recently there was a media code plus one evs.

If you haven't received very good order flow about 15000, <unk>, which indicate months youre going to be around <unk>. So what you come up on this and it's the kind of margin because we've seen a number of full quarter after yield is.

Actually a very big negative gross margin more than 30%.

What's the reason behind that and what's the outlook of refinish mantra going forward. Meanwhile, providing 80% to 20% margin kind of this is.

Just the vehicle gross margin will actually including the already thank you.

Yeah.

Obviously the email.

So some of that.

When you calculate something behind us to get into.

I'm, a little bit on your opportunity to get on the shelf.

Getting a couple of them.

But you can't just.

Uh huh.

Given that Congress is hot.

Well do you want.

But I wouldn't put a pin on put.

Put it would be good.

Uh huh.

So when they do go up and it's all of them.

Right.

Uh huh.

Okay.

Well my husband in Cambodia.

You get some kind of Queensland.

I shouldn't bolt on some sort of shock.

A woman.

Sometimes hundreds of them.

To meet those will phase out of China.

Well known financial shortly yes.

So I'm with you on that kind of a woman.

So I think there's certainly been too hot.

Ken Judah Frommer has some fish caught your attention.

<unk> you want could have found quite a delta.

Regarding the third.

Yeah.

<unk> seven <unk>.

Of course, we cannot disclose at that specific order number at this moment.

But what I can say is that it's actually much more than the media report and for the 87 market segment. We can see in some other benchmarks in for example, BMW five series Audi Ethics and C. D C class.

It just hasn't happened.

Similar pricing target per week, those are product that well, especially regarding the BMW five series.

So for BMW five series that we can see that on a monthly delivery number is around.

12000 to 15000.

Of course, it for the EV product you will need some time for the users to adopt and accept about if we look at the examples of the Shanghai market right now in the premium SUV segment in Shanghai or our market share is around 23% and so if a way.

Also mirror they sent you the sedan market and we believe that there is a lot of room for growth and also potential for E. T. Seven.

So at this moment, we cannot see how much we're going to do it for every month about according to the user feedback we receive right now we're very confident.

<unk> performance in the future.

Okay.

Uh huh.

Oh.

Okay.

Yes.

No.

But they all go into them.

We Didnt Eagle <unk>.

Yes, yes.

Koji.

It's the same thing when the chairman Sheila Jonathan Yes, Cheetah to tuck in with I would say it doesn't mean you could go.

So over the top.

<unk> to reallocate the Aloha in the house.

Again tablet with a chigger expired.

I'm just kind of on the I guess firewood.

Sorry somehow.

On the whole thought that they would have changed or has it been.

Uh huh.

So that's how the board chairman Thomas also when there are more.

What's true.

Has any of that assumed shouldn't go to Hulu.

What your thoughts are on the team.

So Michelle Jones oncology other legs out, but you can't count, particularly in research with having to shut down.

Mhm.

Regarding the yes. The seven previously I have also mentioned that yes, I think the positions in the larger premium SUV segment, and if we talk about a specific benchmark, we can refer to Tim template X five.

After the local production of it then BMW with X five.

You can see that the market actually has a very high expectations for BMW five the performance and the current market size of that business segment is over 200000 units. So if so when.

We look at the Comparables and we can use the BMW <unk> five as a reference and based on data, we're very comprehensive way.

Yes, it's seven because we believe they can actually our competed at BMW X five.

Okay for the second question.

Service law, we accelerated the construction of our service station in 2021.

And more power substation artery to provide service to end users.

<unk> lead to the cost increase of other revenue.

Business compared with Q3 and into <unk>, we will continue to deploy the battery charging and the smoking facilities the anticipated depreciation and operating expenses will keep rising.

But we believe the upfront deployment of battery swap stations kind of contributed to our branding user experience and also sales.

And are.

With the long long term value to the company so bearing a short term loss of power service station.

Constitutes a strict strategic decision for the company and in the long run.

The cumulative rico deliveries going up and the improvement of.

Service efficiency.

Spect there the next two margins, resulting from power maintain.

Maintain and repair service and all the other services, we will gradually improve.

Other revenues and margins contributed by innovative business models like Bob.

<unk> and also <unk>.

The service will keep growing.

Okay and.

The gross profit margin target, 18% to 20% for 2020 284 vehicle not the overall gross margin yeah.

Thank you.

Thank you for the questions next question comes from the lie Minsheng Li of Bank of America. Please go ahead.

Ashish can you turn out not all would have been <unk> Lindsey has requirement.

Some of it would come out with an <unk> number.

J P. H took a shaky in country or somehow Belgium Shang will continue this year.

So those are the Guangdong the whole how do you why do you sound LTE its element to go against the China, which is a hybrid to contamination at the ETA expansion progress.

As you have seen pure English within kind of our E file.

<unk> had some channel which are the car needs to be in.

Chris Shean, Pinecone halbach wish I could read the article recently Pinecone continued its good some downtime due.

Total Ciccarello woman took a page out food to go.

The district.

So my question is regarding capacity in Lidar hybrid battery.

The ozona cheap, especially ESPN yesterday, just also announce the chiefs show teach you will post the price hike. So I also want to know where the <unk> chip will comes trend of your vehicle delivery this year.

Anytime.

This is Jeremy.

Tom I'm going to you will then tell me are John Donahoe woman CEO comes home to suicide in Congress.

And there are a number of Tyler Lewis J P. H, we also Thiago control center or <unk>.

Tightening capacity in the courtroom.

Joseph saw record levels of J P H it upon the nucleus sometimes.

Take a took a switch.

So check yourself, so numbers are slowing down.

You gave you a long way to go.

Job on toys shed a lot more chillers are sort of on a number of times with central in that number.

So thats sort of choices.

Tony handle that.

I mean sort of how long that satellite zone.

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You sure multi Edison seen wish intend to talk about Samsung, the Virginia, and the Honourable woman sorry.

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Assumption that soccer that wouldn't see okay to rather than to U S.

To continue to grow.

Tradition that wouldn't ship.

Total relationship.

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Additional hotel coupons.

Tungsten that's under the Hood.

Women.

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Hum.

So I'll, let Jason Zhang with pace.

So you're going to pay us what may or may not true sometimes they go to.

Please turn to our balance sheet.

The finance that you saw focus some course of holiday.

To summarize here how.

You want to go to an equity partner.

So it <unk> just on that channel.

It's simply too.

Some of that will cause here.

<unk> two <unk>.

Yes.

Okay.

Thanks Russell.

What percent could be at least that's useful.

Most importantly.

Got it.

And what's your overall.

Okay.

Yeah.

So regarding the production capacity.

Previously you had also mentioned that the buyer.

Meet offered this year offer first of factory and that is the date in your manufacturing center is going to reach a production cadence across the different workshops.

That is around 60 drops per hour and designed production capacity of the factory Chi is also going to be around 60 times per hour, but of course. It further factory cheap because this is a new factory then we will need some time to ramp up production gradually.

So if we think about the 60 times per hour aiming that.

So we are work.

With 4000 hours every Gary then the annual production capacity is going to be 248000 units and for every mountains around 20000 units.

We work over Tyler debated T 5000 hours.

Our assets a year then you mean that that the annual production capacity is going to reach around that 300000 units.

Is it about the vehicle production capacity, we believe in the fourth quarter of this year well see some fundamental improvement regarding the vehicle production capacity, which is going to support offer an extra step of protection.

For the battery production capacity bottleneck.

Yes previously we have also mentioned about data and starting from last year and we have been working together with our partner <unk> County, and additional production lines for the battery cells and we believe according to the current plan in 2020 twos that battery production capacity.

Should be able to meet our demand of course, the cost increase off of that battery is another matter.

And actually I believe that the chip shortage is a bigger challenge for us.

Because a number of vehicle we have over a 1000 chips and amount of those 1000 chips that we have are probably around 10% of that chips in may.

The supply shortages or challenges that from time to time.

And so for us it starting from 2021.

Started to see some chip cost increase and this has affected other vehicle gross margin in 2021 based on this experience in 2021, we have already.

Taken into consideration offered that chip cost increase in.

In terms of setting offer targeted for the vehicle gross margin. We believe the main challenging regarding the chip is it more about the supply.

But regarding those high end chips or like either in beta or ring chips and popcorn H. One by five we have a long term that the director strategic cooperations with <unk> and Qualcomm. So we believe we should be able to have sufficient supplies.

All of our production, but for those of common chips or the cheaper ships.

Like from Ti and <unk>.

May face some challenges from time to tie and this is going to affect the production of course, we have some other ways to mitigate those challenges for example, we can find some other chips to achieve.

Place those chips or we can properly scan the market that she has built up all of our strategic inventory.

Avoided those risks we believe are speaking in the second half of this year or around the fourth quarter of this year, we should be able to see some fundamental improvement in terms of our vehicle production capacity at the end of the battery production capacity, but we may still faces some challenges in.

Hence the author of the supply chain volatility, especially semiconductors.

Thank you okay. Thank.

Thank you for the questions.

Our next question comes from Jeff <unk> of Citi. Please go ahead.

Well, we don't how was it partially that Jeff.

<unk>.

A quick recovery.

Good English farms Ah MSRP debenture.

<unk> initially awkwardly jobs, whether Samsung who will share some thoughts on the job through a portion of our vision local job watches Vigo and cheap.

This is a single digit growth probably a little time here.

No it <unk>.

Cleveland issue without you and how you can get them all.

However, due to shortages of each.

Cheetah carpool auditors or Saturday, you've heard Joseph <unk>.

You guys. Your question you guys have known that you could see yourself.

Also wholesale.

So there you go Lindsay yours.

Personally dongola spot price.

Do you guys see that without being given a house afterwards.

You can kind of value.

Siobhan.

As you go.

It was just a touch on Colombia, Shola <unk> not seen any musical Egypt.

I've got three questions. So number one is should we consider any MSRP hikes in the near term to offset potential battery and aluminium cost hike.

Yes, how are you.

If no why not.

The second question is about the existing 86, six products or sales volume visibility over the next few months.

Any covenants that we can maintain a 10000 unit amongst.

As well as the.

Could you give us more color on the <unk> server ramp up pace.

In the second quarter last but not least is the lithium spot pricing in China.

Do you think it has already peaked.

Due to the recent government intervention. Thank you.

Hi, This is Jeff.

<unk> and <unk>.

Women dialogue.

Michelle.

Yes, yes, yes.

<unk> hundred <unk>.

Japan yen Becca women that hit that in Q1.

Sure.

Yeah.

Sanchez, particularly.

Sure.

Right.

Sylvia.

Yes sure.

Paywall mentioned, Palo Duro changing shape Tim.

Yes.

Thompson SR.

They don't hold functionally full months ago, you can tell me if you have them.

From a woman.

Towards that goal.

Great.

Some of them the.

I must say, Colorado tell me ships from Guadalajara, our Ms Shang Yarra trams and Oh.

I'm a long way to go may be out there you've got lpl's. It seems to me that target accounts.

Our market share for women.

Ken This is Joseph senior.

Senior the Palo Alto types in the Eagle.

No we won't wait until you got closer to the telco to Tulsa.

Just two kind of parallel I also don't get it for Pembina.

Political closer to June <unk>.

<unk> got some cheater youll recall from our peers.

Does a day go into autonomy hartzell about sort of the key ways.

Good you want and that's how Nico should show tour, that's al mentioned that figure.

And that imbalance from high school of thought on that you'd see at a minimum wage.

<unk> based on more than two.

So let me show you the payload of the times.

<unk>.

Theater Youll 17.

Something called <unk>.

Because it seems like Youre sort of so it's a huge hole that's out of our minimum waste doesn't go no go about equal parts a day completed 10 acre.

And that took us from Merrill Lynch.

When do you think Samsung.

For the current yes, eight 6% of it is mix.

Of course, if we look at the digital cockpit that this is actually based on the new technology platform one no.

Developed in 2018, so for this chip.

Efficiency may be impaired if we run some.

Complicated software. So that's why starting from this year or we think this year, we're going to upgrade the smart hardware of offer existing product and we are also going to provided the after sales and upgrade services for their users and regarding the smart hardware upgrades.

And we're going to launch this program.

Appropriated time and for the existing yes, <unk> is the sector. We believe that we do not need to adjust the pricing at this moment.

But of course, it based on the smart hardware upgrades of existing products and also we are going to launch some model year product then at that time, we believe probably we can reevaluate over pricing strategy based on the cost increase in the supply.

King.

You have also asked about the performance of our current product and whether it should be able to still maintain that.

10000 units per months.

According to over order momentum in March week Lisa.

Can meet of expectation and we believe that the user demand is not appropriate for us.

Because diesel we compare over currently has 680 <unk> other EV products and I think <unk> seen in the market. We believe we still have a lot of our competitive advantages. So the overall demand momentum stays quite strong.

Good argument.

You can see the popcorn soda.

<unk> on the digital content patent Tuscola, yes.

You said it will be for concerns in time to finish.

Penetration of Kony.

No I'm I'm cheering and ship until finishing that program of change into the time, saying that the little guys and go long time ago. So you could see the downtime.

Downtime that will meet or beat our hometown, but you mentioned that EMEA solar migrations had.

Yes.

The most of it yes.

And if you don't have the time to go to helpful.

That's about it.

<unk> tonnage.

Sorry, you again, so that you get.

Hey, guys.

Finally, I will tell you that sourcing.

All of them had the panel Downhole me, Ohio, <unk> achieved that to go down.

And put to bed.

Okay.

Sure.

A woman.

You can see the pattern of the courtroom.

Pete.

The film itself.

And then I will.

She won't go to the.

Topical.

How big was signed into.

Quadruple.

All of US know, whether you got hungry so you touch into the pool as a reminder to those particular sometimes.

The contango.

Please go to the.

Top tier brands.

With that issue.

Well seven products ramp up.

Because it is going to be manufactured in the factory.

<unk> F. One and they are going to share the production line with the current product. Yes 606 at the same time, we'll also introducing some new manufacturing technology center techniques in the protection of 87.

So that's why starting from last year, we started at adjusting their production lines in the one to support the new product production in the meantime.

I've also mentioned about it that yes to seven which is going to start that the delivery in the third quarter of this year and Thats a product that is also going to be manufactured in the S. One so the situation in F. One is quite complicated as you can see it because we need to make sure we have.

Sufficient production capacities to support the current ATM 680, <unk>, but at the same time Wassa nature.

Produces AEP seven and also prepare for the production off of that he says seven and so that's why we believe the ramp up of progress off of Daiichi seven is probably going to be a little bit of slower comp.

<unk> with the data that <unk> does things <unk> is going to be manufactured in a separate new plant caught up too.

So we believe that probably around the third quarter of this year, we should be able to reach a normal production cadence is for the <unk>.

Seven.

He is on the <unk>.

Can you just.

Well, Linda it's a good time.

Suddenly the.

At the time of comfort.

So it took a junior annualize at that time summed it up Tom Jasper fifth on our compound.

Orman function sanyo to tie, though there's something you can quantify in case, the bulk of our Pinedale EMEA teams in our favour sheets good research.

<unk> took a company that.

<unk>.

Jason that they don't use silicone <unk> she said Tony.

<unk>, John Chisholm mainland number that it took a patchy.

Or may have to go to Asia.

One woman peers are going to go take share telephone <unk> got good people.

The minimum wage.

Who you suddenly order Tony Shea.

Home to the Congress some Ah Tony to go both ways to go.

Tons on either family share at Samsung among them got Samsung hung yeah, that's a good <unk>.

Has the shoe on time, and then go take a pre outdoor coalition that their tone.

Our children and wait for a doctor that's like a Samsung.

Can you push it to a house.

I'll, let John put it on waste so you could tons in the tandem locally in the wind chill, but then with training and coaching that you're supposed to come back.

Regarding the lithium carbonate cost increase we have done very in depth research regarding the of our industry chain and especially the upstream.

Upstream and we believe that the cost increase or the price hype phase in lending due to the opportunities stick.

Nice hikes and there is no specific big gaps in terms of the demand and the supply of lithium carbonate materials of course right now we can see some Chinese authorities like <unk> have already started to set up some mccann intensity and manage the situation at the.

Same time, we also like to urge the companies in the upstream of the industry change that they should think more from the long term benefit of all of our development of the whole industry instead of manipulate or take the opportunity of it.

The cost to increase their team increased their price.

Got it.

Thank you for the questions next question comes from the line of Nick <unk> of Jpmorgan. Please go ahead.

Yeah.

Yes. Thank you for taking my caution on two simple questions on first on margin.

Yes.

And then we can talk about the GP margin.

Let me switch focus to the op margin.

Last year, we understand.

On these things and SG&A increased a lot.

Lots of it.

Market due to the topline.

Topline increase.

In 2022, how should we assume about SG&A and R&D expense in terms of EBITA.

Understood.

Is it fair to say R&D because it has.

<unk> increased substitution.

Inventory.

<unk> issued.

With the top line and the second question is regarding asset quality.

Okay.

Not a big portion of our total Cocos.

Total sales.

Considering the latest dynamics in Europe , and the bank's been stronger.

You can follow.

Update us.

I suppose one thanks.

But it certainly is.

Igo Institute.

Operation as a commodity.

Okay.

Okay.

Women someone to sell it.

Yeah.

<unk> <unk> solution.

Of course with Toyota.

Sure.

The amount in several of the social thing.

It's a good communicator.

And the additional <unk> and you've got some keybank subsidiary clients wishing that Hudson.

Also in Crimson to ask on the puncture there yet.

Women Tchenguiz downright cheap again.

Yes.

Based on <unk>.

Yes.

Total debt in yen.

Jim.

So tell me you called out sort.

Or more.

Great.

Local with pneumonia nimble Cabo.

Okay.

Gentlemen.

Sure.

<unk>, yes.

<unk>.

Also send to the cohort.

Tony Hi, Duncan champion.

That's how old the.

I wish our discipline.

Jimmy I think you have that Hulu or more call it seemed to pick that up.

Maintaining in tenure.

Total confusion.

Talk where you play.

Any manually.

Thank you.

It's usually a.

Typically.

The pulp question Damian.

1000 <unk>.

Yes, <unk> seen a change was <unk> <unk>.

The total weight.

Got it.

Peter.

Well menthol Chilean E&P by what magnitude.

Yeah.

The agenda and the timing of the claim.

More churn that beautiful hilton's that pickup that you.

How are you won't want me to.

Okay place yet.

<unk> audits from Qualcomm, Google search a ton of sugar.

Well, then take a kind of a title sponsor.

I mentioned that I kind of our membership.

And kill suite.

And suddenly.

And of course, the level of Amiga Tito the breakeven that you can mobile.

Hello, Michelle on.

Australia on the Chilean negotiating and meet all.

Turning to the EBIT in Davao and.

Essentially.

Steve.

Yes.

Regarding the op margin.

Last year in terms of the company's strategy, we will do that.

I got to make sure that at the gross profit the tank covered at the SG&A cost and we believe that through the efficiency improvement and execution. We have a follow through this strategy in 2021 in the coming years, we will continue to make decisive investments.

In terms of the R&D and the infrastructure.

Of course of our strategy will stay the same that is that we would like it to make sure we can.

You said that gross profit to cover the SG&A costs.

If we look at the EU market.

Of course, the last year, because that was the first year faster to enter the global market and then I think that last year, we need to make some advanced investment and we believe that this theory that efficiency is much higher than last year.

But in terms of the R&D front, we are going to step up over R&D investment. This.

This year, we believe the R&D investment is going to be more than doubling in that off in 2021.

Because we're going to investing some long turn our core technologies and some fundamental technologies as well as the new product set for 2023 as well as some protective deprecation for the global markets by the year end of 2022 of their R&D.

It's going to reach around 9000, and we believe that this is going to be a big increase in compare with some of their current.

R&D team sites. So this is all a plan for the 2022.

In terms of the offer.

Strategic direction for the company.

Our target is is that we can achieve.

Breakeven for a single quarter in the fourth quarter of 2023, and we can achieve breakeven.

Rachel profitability in 2020 for the full year.

Yes.

Yes.

We are going to play out.

Okay.

Second question is about our global business right.

No equity right now every month, we deliver about 108 in Norway.

That boosts, our confidence lot improved our product competitiveness and.

And also out of this modem.

However, since we will kick off our.

In Europe .

Second half of this year, so the contribution of the European market.

The board would be pretty significant.

This year.

Now on the we're kind of used to develop and improve it for you and work.

Establish brookfield user communities and pursue a heart attack.

That could each market share on sale.

<unk>.

Real comp a lot laterally.

Okay.

Thank you for the questions.

Now take the next question.

Please continue.

Allow me to take the next question is from Fei Fang of Goldman Sachs. Please go ahead.

Okay. Thanks for your question.

100 <unk>.

The other ones you've done some quite sometimes that vehicle at seafood sure sure gotcha, but she coffee withdraw funds they had gone and talked to them John .

So you got whole Buda, changsha or easier because syngenta juncture, how the English call.

Let me just quickly translate for myself, Tom that you can talk a little bit about utilization metrics of your infrastructure battery swap stations and Supercharging stations call. Some people use it what's the unit economics of what's the difference between top cities versus lower tier cities. Thank you.

Oh.

Got it.

Yes.

Santa Clara.

If you wanted to ship out the one.

Cool.

Sure.

Hi, Paul.

<unk>.

John .

Igor <unk>.

Jim.

Sure.

Sure.

Sure.

It looks like <unk>.

Dan.

Sure go so.

Can you sort of a consortium.

At that time.

Yes.

Topped off with somebody because they came back.

These are sort of it looks like it's supposed to collect on a subscription.

Entry to boot.

Some of them.

That's right.

Hi, This is Todd.

Each territory.

Okay.

<unk>.

Okay.

Okay.

So with that.

The second quarter of 2000 and for Chile.

Of course without later this year.

Oh the package.

Yes.

So the most indicative of that.

Okay.

Previously have also mentioned that.

Accumulatively.

We have completed over $7 6 million swaps and it means that.

The current status of food desktop, stating is that every day, we can complete around.

<unk> thousand to swaps and for some areas with more users of course, we will be able to accommodate over 1000 swaps Stifel one power swap station.

In one day, but on highways it properly.

One day are the power swap stations are going to accommodate them.

Around 10 to 20 swaps at her power swap station.

Because we have the <unk>.

Point to the power swap station network in advance.

One or two years in advance and because of the design target. After the power swap station network is that.

The ratio between the.

User.

The ratio between the power swap to the user and should be around the one to 1000, but if we look at over current power network, especially for the power swap on network we have.

Over deployed some power swap stations at this moment to make sure we have a much better experience for the users.

Got it.

Thoughts on either in terms of course on EBIT.

Funeral homes in terms of that ETF tablet with them.

In fact with that okay.

Okay.

So as with all of them.

Yeah.

And I guess my question certainly next questions comes from the line of Edison <unk> of Deutsche Bank. Please go ahead.

Thank you for taking my questions first one can you give us some sense of the feature rollout cadence.

Economists driving what kind of features do you think the lidar will enable and when can we expect those to arrive on the car.

And then the second question is about the ecosystem more broadly speaking there are reports that that youre working on a smartphone how do we think about whats going on beyond the car I know theres VR to be a big part.

Any thoughts there would be appreciated thank you.

Yeah.

Although she is.

Women's and signed off on.

<unk> seven <unk> for the Soho women.

Sure.

And therefore, those out with a condom are much of a chance on the T shirts who've gotten through about some go to Tim, but it's useful social women's which is upon the product.

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Demos.

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There's some will tell them they got Ya.

Diego into April trends.

Thank you for your question.

Of course, and the timing of the delivery of a thing.

We are going to start to tier I provided the enhance the eight as it features the first to the users and that's on top of that so we have already queued up at the full stack autonomous driving capabilities from the perception to the controlling strategy. So are we.

<unk> to start provided.

As a service are probably in the fourth quarter of this year and we offer <unk> technology.

Thiago <unk>.

Uh huh.

Due to the peso.

But.

<unk> got combined Kingston.

Technical convention.

That agents who are.

Tony <unk> chief with its authorized Chung.

Some of them qualifying in them.

The bulk or bulk.

All core to the Portland, Tampa and she'll go three months ago.

You see the controllable.

Women.

The cadence of them.

So.

Okay.

It's powerful to show who own the shambles and figure out how to be better.

Sunday.

So at the moment.

Page two Thompson the Deepak.

Of wholesale we have always been actively.

Explore the possible connections and synergies between the vehicle and smartphones.

And other mobile terminal.

So we believe that there are lots of synergies between these two products in terms of the fundamental technologies that supply chain and the software at the launch of the Daiichi Five Avenue. We have also introduced.

Some a R and the VR technologies that smaller and we believe that there should be a lot of room for innovation and we can also thinking about some other innovative applications in their vehicles.

Sure.

Thank you for the questions next question will come from <unk> from CIBC. Please go ahead.

Oh gosh, if you will.

And it wasn't.

With that she does.

Probably one of the ones that you cannot manage it.

Okay.

Okay.

Going into that because of the size of them young.

So I think that just always told you that the.

Judy the jingles and Cuba.

So my next question.

What's the Capex budget in 2022 and would you. Please introduce the detail about the demand deductions and the expected.

The amount of money.

Yeah.

Oh.

Yeah.

Okay.

Please go ahead.

Okay. Thank.

Thank you.

Yes as mentioned.

Bye bye.

Our gross profit margin already kind of cover our SG&A expense and this is also offer targeted for 2022 and so our cash on hand will mainly be used too.

For our R&D activities and also capital expenditures for our new product development and production.

<unk> sales and service network.

And also recharging and networking infrastructure doctors and.

Overall.

Also as I mentioned that you have or.

Previous explanations.

We will increase.

Increase our Perth Substations to a 1000.

300 <unk>.

Patients by the end of 2022, and we will further open 100, new house and new space and 60.

Service centers.

The new service centers in 2022 so.

And we will.

Further too.

Strive to hover New park located in Hefei, introducing you to so the total expenditure I think is over.

Could it be a big increase compared with the.

Yes. Thank you.

Okay.

Oh yeah.

Thank you for the question. The next question comes from the line of Paul come from UBS. Please go ahead.

Yes, hi, thanks for taking my question.

And I still have a chance to ask at least one made some moments.

Yes.

Let me just limit my question to one.

I want to know more about the your thoughts on policy mass market brands are obvious today, you'll have to compromise some of the French are such an ideal house for more attractive pricing points on some cost competitiveness. So among all the franchise or are they new.

<unk> didn't say.

The exterior of the interior or the home shopping for insurance as a federation of library.

She's a bunch of small station.

Well, let's say.

<unk> experience and also the surface. So what do you think is the things that you are willing to compromise on.

Mass market brands that would be with some of the exclusive for the for new brands and <unk>.

<unk> for the mass market brands. Just this question. Thank you.

Sure.

This is Paul.

Just take a while.

Let me answer your part to keep them together.

So they got them.

No hot that Mega goes to the time, you put on that you've got scale there.

Oh, the telecom piece of Tesla.

Pingo model, what the C model y.

That's all the time here model as more the ex you'll sit on top of it you could chop hot political songs too cheeky at all it's a good.

Gordon Composites Alicia Chung.

Understood.

So if alitalia, so if I kind of took longer and so we are comfortable in the EMEA.

Uh huh.

And Furthermore.

Uh huh.

Sure Tim.

Sat down with them.

Okay.

Just a high school.

Uh huh.

Hey, guys.

Uh huh.

Hmm.

So she took longer.

Can you just if you could Brian go with Honda.

Okay.

Persons.

Do you think the range just nikolay satisfying you can blend the tongue.

And he thought that London can be.

Hi.

Attributes English type question. So as you go.

It was just common sense.

Okay.

Luke.

Yeah.

Enrollments that you can maintain that.

And it made us a top level.

Sure.

You come up with.

Sure.

Thanks.

No.

Yeah.

But I stand by what meat and potato chips and novel.

Hum.

Yes.

So I'll just hit on that.

Okay.

So equal amount.

No.

Tesla Telemotor stand with a y.

Okay.

Okay.

Kevin Good morning.

It's <unk>.

Okay.

Thiago.

I know that you don't.

Sure.

But we hope we can keep it.

Sorry.

The Parliament.

Shelby.

Well go to Paul talked.

About.

No no.

Well im.

Naturally it should come apart.

No.

If you go to Gen. Two youll see the problem that you came with a basket.

And the last one.

Oh by the way finished vehicle colleague Sylvia Cheung.

She is a pillar of our strategy of <unk> back in.

Uh huh.

Hum.

Again.

So it's just a little bit.

And Chen Chief clinical officer.

The Saudis are sound.

She's so cute about it and then can you talk about lead times good about 3%.

Sure.

Fusion molecule to be able to match the market.

Please.

Thank you.

Your question.

Of course, if we wanted to increase the offer of all them.

Volume and expand our user base and different companies will have a very different strategies.

For example, some peers are like a test that as they have adopted very different our strategy is to compare with ours and for test that they basically are differentiated.

The model three and model Y front, the model Accentor model as always a very big price gap.

So by doing this as they enter into the mass market with the model three and model Y. So far it has been quite successful at that.

At the same time, we have also seen some downside and for example, the cells offer them other acts and amount of why haven't decreased at six.

Inefficiently despite of that product cycle and so we believe there is some underlying fundamentals rules.

Auto industry.

<unk>.

There is a limited bandwidth after a specific brand is very difficult to imagine a.

Single brand can actually support the pricing range from a 100 from 100000 RMB two 1 million RMB is not feasible and I believe that this is against the common sense.

So for right now we target the market segment that is around <unk>.

50000 to 100000 to U S dollars and we.

We want to reach down to the mainstream market is that it is priced around 30000 that typically found in U S dollars and we believe this is a much weaker markets and there is a reasonable market size for us is to grow and we can also achieve.

<unk> gross margin.

We also.

Also need to take some lessons learned from the model three and model Y we understand of course, the four data in mass markets and we will also need to rethink the fundamental architecture of our products and also need to think about using different kinds of materials and also different manufacturing technologies.

Her product because they are in terms of that mass market brand of course that they still need to be efficiency, driven and therefore, there's a specific market segment. The price from 30000 to 50000 into U S. Dollars. We believe a more sensible approach for assays that you use a new.

<unk> brand to enter they sent new market segments, and we believe that they think that better strategy for us.

We can also see some successful examples in the market the way today's a strategy for example, Audi and Volkswagen and <unk> Centre Toyota.

Believe this can also be a strategy for us to disrupt that market as well, but of course for the mass market brands at that pre requisite enterprise basis to make sure. We can achieve high efficiency and also achieve a reasonable vehicle gross margin.

Thank you John for the questions now I would like to turn the call back over to the company for closing remarks.

Thank you once again for joining US today. If you have further questions. Please feel free to contact our new Investor relations team through the contact information provided on our website.

This concludes the conference call you May now disconnect your lines. Thank you.

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Hello, Ladies and gentlemen, thank you for standing by for New Incorporated's fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. Today's conference call is being recorded I will now turn the call over to your host Ms. If Tang from capital markets.

And Investor Relations. Please go ahead.

Good morning, and good evening, everyone welcome to news in fourth quarter and full year 2021 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted at the company's IR website.

On today's call we have Mr. William Li founder Chairman of the Board and Chief Executive Officer, Mr. Steven <unk>, Chief Financial Officer, and Mr. Stanley Senior VP of finance.

Before we continue please be kindly reminded 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 1095.

<unk> looking statements involve inherent risks and uncertainties.

As such the company's actual results may be materially different from the views expressed today.

Further information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and Exchange Commission and the stock exchange of Hong Kong Limited.

Company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Please also note that news earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information.

Please refer to news press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

With that I will now turn the call over to oversee all Mr. William Li William Please go ahead.

Based on current share go ahead Sanjay.

Our Union <unk>.

If you're trending year to go through them quickly.

Hello, everyone. Thank you for joining <unk> fourth quarter and full year 2021 earnings call.

Our union discouraging way lights on Jan one.

Sending census spot.

Bob.

You said your <unk> patents.

Sure.

In the fourth quarter of 2021, we delivered the 25034, yes, yes, it's fixed and it is fixed.

Presenting an increase off of 44% year over year.

They waited I Echo Tien Chau Cheng senior yen I think our union. So the trauma until it's on the Union will then cover each shymkent on chip going into important Gulf I'm Gonna Yodlee Chilean gel fishing.

So why are you chance about agile type Tobey its enzo biochem that you've been adding Jodie peak trading.

<unk> Standalone sheets also tough.

2021 once a year full of challenges for Neil and the global auto industry.

By overcoming the pandemic.

Conductor shortages supply chain Volatilities and many other difficulties we have continued to lead the premium smart electric vehicle market in China with a total delivery of our 91429, new vehicles in 2021, representing a strong increase.

So 109 point.

1%.

Yeah, Yeah. That's helpful. Joe Channel that we saw that at some point.

It turns out sometimes so.

So changing <unk> Shah.

Oh, Yeah. It's helpful. It sounds like you don't tell me, it's Sundar I'm just.

Post EMEA, Liam take onetime timeshare intelligent sanity, ETT that takes itself so how can take.

In January 2022, New delivered 9650, Tuesday, Kurt increasing by 34% year over year in light of the Chinese new year holiday.

Levered 6000 to 131 vehicles in February 2022, representing a growth of 10% year over year during the holiday we adjusted the production lines to prepare for the delivery of <unk> 87 in late March 2022.

Sure.

So with her changing but you're also going to swing around so about you changed going into a ton of important pathogen shop, well, maybe J D.

People get some gel 40, all the way down.

No change there.

Although the user demand and order momentum remained strong the production and delivery have been affected by the COVID-19 and the volatility of our supply chain production capacity, we expect that the total delivery in the first quarter off of 2022 to be between.

25000 to 2000 6000 vehicles.

So that's a positive way light, yeah that jacobson and get to the so-called assertion ETT John Kuch it's helpful.

<unk> Costa Jeff why don't you can cut sheet tying usage out of your own atg Gogo doesn't cook.

Slingshot in downtown Hyundai Togo, maybe cheap.

Dr. <unk> hydrogen can be to my attention.

We will start the delivery up 87, the first product and <unk>.

Two on March 28, 2022 in early March we kicked off of the test the drive up and <unk> seven nation wide.

Users, who test drove 87.

Coke and highly about the product.

First drive to order conversion rate exceeds our expectations, which gives us great confidence towards the competitiveness of NTT.

I think our Union <unk> chips also time that seems also to toggle it sometimes you cheap.

It is so cheap.

Our union.

Sure.

She had sort of thing. So similarly, some you guys end up having to Orient you, sometimes a site opened up on the Spartan deal.

Hi, Yes Samsung.

And then she said simply if something can wait many ship I think our union South Central one let me be some soil wrangles agenda SCO Pedro whaler, that's just pulling that up at all.

So sun communities shutdown time, indeed, well my assumption down to choose to put.

And our sensors and sensor.

In 2021, the battery electric vehicle market maintained a faster than expected uptrend.

According to China passenger car Association.

Retail penetration rate of the battery electric vehicles have grown from five 9% in January to 18, 6% in December last year.

Tier one and tier two cities in China, such as Shanghai, the penetration rate of a battery electric vehicle witnessed a more prominent growth.

Hi, among the sales of all ICD and electric SUV priced above RMB 35, 330 at 350000, RMB, New England, a market share of 23%, which is the shares.

<unk> cells are ranked at the top in 2021.

We believe that this EV growth trends were also gradually expanded to tier three and tier four cities in the future.

Multifamily and so your tanks ourselves ourselves or to Houston.

So staying on TNT dense about I'll, let somebody youll pop.

Our Union city to similarly adopt <unk>.

<unk>.

I think our union opinion.

Similarly tied up on us again.

Honea programming into attendance downtown Miami.

Mitch sequential cleaned in the P M.

But as a whole by Ichi Chico's Shelley <unk> salt timber Samsung pay multitude of yourself.

In terms of our gross margin benefited from the increase of our revenue per vehicle and the cost optimization brought forward by the 75 per kilowatt hour LP and DM hybrid battery the vehicle gross margin reached 29% in Q4.

2021, and 21% for the full year of 2021, respectively.

Currently the whole industry is confronted with the pressure off of cost increase we are paying close attention to the dynamics in the supply chain and are working closely with other partners.

Efficiency.

In order to reduce the impact to the vehicle gross margin.

Adding on yes time, you should wait.

Yes, Jeff that sounds like fun, Shanghai, and so you saw one also sounds so similar types of the coop, Hi, Joey could tell time I'll wait till <unk>.

Shanghai <unk> towards <unk>.

Yeah.

On a separate note Neil started dishabilitate by way of introduction on the stock exchange of Hong Kong under the stock Code 90, 866 from March 10, 2022, the listing in Hong Kong marks another milestone.

The history of meal and enables us to serve more investors in the future.

Okay.

Joe do you have in South Lake Union combination console.

Next I would like to share some recent key highlights of our R&D and operations.

I think our Union Mckesson chop out <unk> told you that lead to China, you have thoughts on total non-GAAP Taco sauce.

On the chocolate assumed <unk> Soto.

So don't Josh.

Each person she is holding tight.

The chart that total.

In 2021, we started to step up our investments in R&D with the.

non-GAAP R&D expenses exceeding $4 1 billion RMB in 2021, we have set up for the development of new products and increased over investment in full stack autonomous driving and other core technology.

<unk> had told rotate talent agenda.

So Antonio I think.

Well, I mean, Jordan conduct Ching and charter <unk> posted a pull from tango.

Finally on young women to have Joe for TV anti Tau that suncor unchanged session <unk> downtime, Jim that shouldn't be.

So don't just suddenly can toggle if amit joined in the Hungary further shifts.

Investment in R&D is also of critical importance for news our long term competitiveness.

Starting from this year, we will be able to see part of it the poor results from last year's R&D investment in Africa.

In 2022, we plan to deliver three new product based.

Two with 17 different.

The mass production of 87 is well on track.

Product itself has led to the industry in various aspects, including computing power for autonomous driving.

So I think our union side, yes, the positive near term, so well know Pablo tuition, so long tail on job how EQ U. Two one is long haul long haul about gene you wait certainly Josh suddenly the vignette thought that way.

So don't just with <unk>.

Yeah. They are tissue the way life changing sorts of thoughts cannot cinemark BLK it's helpful.

Also unchanged so no update so if you can go down that you won't go change the Guangzhou.

She had told them that you cheat.

IGN to catch itself.

And then the other day on December 18, 2021, we unveiled <unk> five and midsized smart electric sedan as a perfect combination of news that's Super car DNA and the concept of design for Egypt.

<unk> is equipped to ways of.

Driving and kind of cinema.

<unk> digital cockpit enabled by AR and VR technologies. It comes standard with 100, a configuration for comfort safety and smart technologies.

After its launch <unk> has attracted a wider and more diversified user base and received a more orders than our expectations.

Delivery of <unk> five we expected that to start in September this year.

Well that sounds like <unk>.

We entered toward that so as Sylvia pushing you guys to cheat.

Questions have been giving way to passion go down so as Sylvia So tuck <unk> to touch its helpful.

Soon we will also launch <unk>.

Seven of our first <unk>.

<unk> model, NTT, which is positioned as a larger premium five seater SUV and expect it to start to delivery from the third quarter of this year.

We had 19 in well mcquade associates at our content and chief with Genpact total pub Genzyme. So don't just with tissue <unk> Shanghai contending an assumption, okay switching to show the impact of Hulu, putting mango, Tim Chiang woman cheerful attempting that switched region to meet tungsten.

Yes.

Multi shaping.

Turns out punchy Johnson.

In the coming years, we will continue to elevate over R&D investment and effort in core technologies, especially in key capabilities, such as the full stack autonomous driving and battery technology.

We believe the investment in core technologies will not only enhance our sustainable competitiveness in both of our technologies and products, but also improve our gross margin and profitability in the long run and ultimately create long term value for our shareholders.

Hello.

<unk> life changing without GP at the time, Samsung T J times, so that taken don't.

I assume that sometime elite diamond tier.

J P H.

With regards to production capacity the production line upgrades after that JC.

On the manufacturing center is in progress phase by phase.

Year, the production cadence across all workshop webpage 60 drops per hour.

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Function.

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Sometimes TBA coupons from harmony J.

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So Todd <unk> here with us.

Super Junction Sasha.

We have largely completed the building construction of our second manufacturing facility as two located in new parts.

Finished the equipment installation and are now working on the calibration up too is planned to be put in operation in third quarter. This year with a defined production cadence off of 60 drops per hour on March 16, the first validation viewed up 85, who wrote off.

The production lines from the F. Two vehicle pilot production center.

So echoing India and done well, meaning szymczak growing important Jan set out some of the person you Ching could you choose certain thoughts from you and so Tyler to tell us that.

Sure Danielle.

Well I mean, the whole bank.

I'm sorry, Paul.

A lot of encouraging yet John tissue, meetcha painful kidney or thoughts on GSL Edison that's helpful. Wendell.

On the side of our supply chain, we are still face the ways of challenges from chip supply volatility raw material cost increase COVID-19 and the challenge the changing international arbitration and the past two years and more of our teams and partners have.

Accumulated a rich experience in securing supplies of pork production, we will continue to work closely and try up or faster to safeguard to the production and delivery going forward.

I mean, our union sort of way.

Gigi Polo Tang founder and Chief So Jim So.

So for our low point for the Union.

2021 have been a year of the designers of investment in charging and swapping infrastructure as well as the sales and service network.

So Soho full.

Nope I'm, yet well Michelle so they will go away like commission standby social equal weight I can Jim Okay, Tien Chau keep up so we've got some bonds that ebay is sort of the August one.

Lifeboat Division could you guys just a joke.

Unfortunately.

In terms of it ourselves and our service network. We now have 46, the new houses and the 341 new spaces in 155 cities.

Right.

China, we haven't 60.

Service centers, and a 179 authorized services centers and 146 facilities.

Okay. It sounds so hoof, who are not quite so of course I'm going home.

Joe Bob on local cheap teaser.

Banking getting Shao Lee to jump off the call option.

So you can I.

I think John tissue type Tongo, Quebec shuttle flew on La <unk>.

Kenya in Xinjiang Postop, you package also won't yet Tien tsin, Togo suggest we like consumer.

Wholesale junk food consumed.

That's the sales and service and network expense quickly we have been continuously optimizing the network deployment and the operational efficiency of each touch point, while delivering high quality services to users in 2022, we plan to open more than.

100, new sales outlets and over 50, New service centers and authorized service centers.

Hi, Ken.

Well no comment or may even gentlemen, Bob although still it's all funded in fact, so got it.

You bet, Joe So that's why I'm talking about.

Cobalt ship Loiseau and Tulsa.

Alright, Triangulated parcel toggled Shebat UC Ito powertrains.

Sudden change, possibly multi between them.

In terms of charging a swap in network.

Detroit.

866, the battery swap stations in 190, <unk> and completed over seven point.

Fixed swaps in China, So far we have 711, supercharging stations and 3786 at destination Chargers in China.

Well I think <unk> sense of how power plant would you be chartering those ships <unk>, Charlie do you gentlemen, I'll go each and sometimes they.

Bill Schenken touch on Guam, you won't go what do you need a twin pronged while it sounds like to get one lot switching poultry, but you're saying you won't have that Chuck empty yet.

In 2022, well at 30, new destination charging routes to the power plant with that Neil while accumulatively operate over 1300 battery swap stations six thousands of powered Chargers and <unk>.

10000 destination charges in China.

Further expand overpowered networks to provide a better charging and swapping experience to users.

The change also come from it will then conduct <unk>.

Where do you see I Didnt annualize it's helpful down.

Wouldn't you, Norway. So what's your thoughts here and so it's so talking about shutting down low.

That's helpful.

Ooh wait women chicken torrential Chile that just yet.

<unk>, we can dose those have they changed.

And that global market.

<unk> has from the appreciation of users in Norway. This year over months late deliveries have ranked top two amount the six seater or seven seater passenger cars.

The successful delivery and high quality user service in Norway also help us accumulate valuable experience in providing services in other countries and regions.

<unk> gained confidence in entering new markets.

Hi, Leon yen way, let attempting Richard Chantal CFO downside Turquoise Hill line right in terms of loyalty.

Planting so Jeff Kushan <unk> transaction.

In 2022, new well bring its product and comprehensive services to Germany, the Netherlands, Sweden, and Denmark, the team building and market entry preparation are moving forward smoothly.

Well the manager, but also the foundation competitive console at Tinder and shouldn't be pushing punty qiagen one too many.

Finally, I'll finish out so far that Gilles <unk> Hudson Aegean Ching without question that you're on pace.

The mass market brand has been progressing according to plan, we have established the protein specified that the strategic direction and the brand positioning and baked a critical research and development stage. After the first batch of product.

Yeah.

Wait, let the fact that leap <unk>.

You want to talk to <unk>.

Santana ship slower you won't go to Anthony Powell with Outback near Dayton corridor.

It's how good you wound down chimney tabular telco up at least the top corner you Horton situates totally contained.

The development of Neil won't be possible without the continued support of our users in 2021 3756 user volunteers, who contributed their time and efforts and events like auto shows and a new day more than.

<unk> more than 12000 users participated in over 260 charity event to make active contribution to society.

So you saw.

Well not far below totaled 40, hooker and so to your heart pump in Seo.

Long way ladder, so to mingle times I can tell you either.

That's not a 2021, we announced that the user partner program with <unk>.

Users can share benefits with each other and build even deeper connections among users in the community.

So I think our union, where lifestyle clean packs some type won't get into your box.

Well I mean look what are called one <unk>.

I'm, Paul could you model Xiaomi.

Some type one chip clips.

So now again on she took yes tien.

Tien tsin.

<unk> hundred 90, <unk> countries sheet, so sometimes you see it on the Janssen <unk> London.

In addition.

The clean parks.

And ecosystem co construction initiated so far we have rolled out <unk> in six national parks and natural reserves in China, we aim to contribute to ecosystem building support the adoption of a smart electric vehicles and the clean energy infrastructure in.

Natural reserves and establish a clean and a low carbon energy speculation you protected the authenticity and integrity of ecosystem.

I think yes, whaler Kessler Chongqing tissue on the Union side.

On a product change permanent.

So the way that our chairman Charles floating in womens junk telephone suncorp change in searching issue without Huntington's Tianjin <unk>.

So it's useful social total James <unk>, who should show.

You can watch out for <unk>.

John Chancellor.

Switching, especially gimbal, where you won't put I like how you achieved that attempting your pool.

2021 what are your four new two it's about fundamental powers and make a comprehensive preparations for the next stage of development.

'twenty two is a year for Neil to Presser had at full speed, we will deliver three new product continue to invest in R&D and infrastructure to improve our long term competitiveness.

<unk> of our production capacity to meet the faster growing end user demand and serve users in more countries and regions will always stay true to our original aspiration are precluding users' interest to first.

Make continuous improvement and deliver products and services beyond the user expectations.

Okay.

And tell me if that's all.

<unk>, that's how we get <unk>.

Steven.

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

Thank you William.

I will now go over our key financial results for the fourth quarter and full year after Q1.

And to be mindful of the length of this call.

<unk> does not refer to our press release, which is posted online for additional details.

Our total revenue in the fourth quarter were nine.

<unk> nine 9 billion RMB.

One 6 billion donuts, representing an increase of 49, 1% year over year, an increase of 1% quarter over quarter.

Our total revenues are made.

Made of two parts.

Veeco field and other fields.

Sales in the fourth quarter.

$1 2 billion RMB.

For opening a store on us.

Accounting for 93% of total revenues in this quarter.

It represented an increase of.

49, 3% year over year, an increase of six 7% quarter over quarter.

Increase in vehicle sales year over year like many of your ability to hard to divorce.

The increase in <unk>.

<unk> sales quarter over quarter was mainly attributed to higher average selling price.

Chris.

Subsidization is use of the co financing arrangements and higher deliveries.

Other sales in the fourth quarter.

Zero 7 billion RMB.

$105 million.

Representing an increase of 46, 8% year over year.

Decrease of 41, 3% quarter to quarter.

The increase in other sales.

Like many attributes.

<unk> revenue derived from sales of service.

Drew packages and accessories in line with the incremental cost sales.

The increased revenue.

Used car sales.

Auto finance is something in the fourth quarter of 'twenty.

Two one.

Rich.

Partially offset by <unk>.

Fills of automotive electronic credit.

Fourth quarter of 2020.

The decrease in other sales quarter over quarter.

Many of your ability to sales.

Regulatory credits in the third quarter.

Cost of sales in the fourth quarter.

$8 2 billion RMB 842, 8 million dogs.

Representing an increase of 49, 1%.

Sure.

Increase.

All percent quarter over quarter.

Cost of sales year over year.

Mainly driven by an increase of <unk> volume in the fourth quarter of 2021.

Gross profit in the.

Fourth quarter was one <unk>.

Be well.

$266 7 million tonne.

Representing an increase of 48, 8%.

And a decrease of 47% quarter over quarter.

The increase in gross profit.

<unk> contributed.

Vehicle sales.

Chris vehicle margin.

The decrease of gross profit quarter over quarter.

It was mainly resulted from the sale of automotive luxury credits historic culture of two to two one.

Which contributes a high profit.

Gross margin in the fourth quarter after the Q1.

72%.

PR was 17, 2% in the fourth quarter of 2020.

23% and historic culture.

I wanted to do one.

The decrease of gross margin cost of quarter. One minute resulted from sales of automotive luxury credits historic culture of two discrete one which comes at a higher gross margin.

More specifically vehicle margin in the fourth quarter was 39% compared with 17, 2% in the fourth quarter of 2020.

84.

Percent in third quarter of 2021.

Increase of vehicle margin.

What many Cleveland bought.

Our average selling price.

Hi, Archie Greek 100 kilowatt hour battery.

Increase of vehicle margin quarter over quarter.

Was mainly attributed to decrease in substation use of the co financing arrangements.

R&D expenses in the fourth quarter for <unk>, eight 3 billion RMB.

286 non meaningless.

Representing an increase of 125% year over year, an increase of 53 three.

3% quarter over quarter.

The increase of R&D expenses quarter over quarter and year over year.

Whats mainly attributed to the increased personnel costs.

Search and other functions.

At.

The incremental <unk> and development costs for new products.

And technologies.

SG&A expenses in the fourth quarter.

236 billion RMB.

$371 million dogs.

An increase of 95, 4% year over year, an increase of 29, 2% quarter to quarter.

The increase in <unk>.

G&A expenses year over year on a core of culture.

Primarily due to the increase in personnel costs in sales and established countries.

And costs related to the sales and services that broke expansion.

As well as incremental marketing and promotional expenses, including for the host of new debt in December 31.

No.

Pricing in the fourth quarter was 245, Biamby AV 383 7 million dogs.

The increase of 162, 5% year over year, an increase of 146, 5% quarter over quarter.

Sure.

Share based compensation expenses in the fourth quarter.

$396 7 million RMB.

60.

62 3 million strong.

Cause any increase.

859% year over year.

The increase of 49, 4% quarter over quarter.

The increase in share based compensation expenses year over year and quarter on quarter was primarily attributed to additional oxy.

Restrict sure that's granted.

Net loss in the <unk>.

Fourth quarter was <unk>, one 4 billion RMB.

$336 4 million songs, representing an increase of 54, 4% year over year, an increase of one.

156, 6% quarter to quarter.

Net loss.

But about two meals ordinary shareholders in the fourth quarter.

But the full on Biamby.

$208 7 million your stone.

Representing a decrease of 48, 4% year over year, an increase of three 6% quarter over quarter.

Basic and diluted net loss per ads in the fourth quarter were both three.

Three six RMB.

21 cents per ADR.

Excluding share based compensation expenses.

T mobile non controlling interests to redemption batty lung.

non-GAAP .

Basic and diluted loss per ads.

Both.

I'll say my hobby.

16th Prady.

Our balance of cash and cash equivalents restricted cash and short term investment.

What.

55.

Or beyond the <unk> eight.

<unk> eight 7 billion.

As of December 31st two anti PD one.

Additionally achieved.

Cash flow from.

Operating activities for the full year compared to two one.

And now for our bis Arctic.

As William mentioned.

First quarter of contributed to the comp we expect to be free to be between 5000 to 6000 vehicles representing increase.

You need 24, 6% to nine 6% from the same quarter.

2021.

The company also expects total revenues of the first quarter of 22 to be between nine three and 999 billion RMB.

Between one.

117, beating our songs.

This would represent an increase.

Approximately 26% to 25, 1% from same cultural of 2021 .

This outlook reflects the company's current and preliminary view on the visitation and market conditions, which is subject to change.

This concludes our prepared remarks, I will now turn the call over to the operator to facilitate our Q&A session.

Thank you.

Once again as a reminder, if you'd like to ask a question. Please press star one and wait for a name to be announced.

For the benefit of all participants on today's call. Please limit yourself to two questions and <unk>.

If you have additional questions you may reenter the queue.

First question comes from the line of Tim Hsiao of Morgan Stanley . Please go ahead.

Hi, Stephen this daily congratulations on this all be resolved and thanks for taking my questions basically I have two questions. The first question is about cost and margin.

Because we know that Neil is better positioned to cope with the battery cost inflation, even without price hike.

Magna is the rising mix of the high margin 100 kilowatt hour 75 kilowatt hour battery pack.

Or other initiatives could have sufficiently offset the margin pressure this year and separately.

If any or only as a lead to raise the prices one day.

Can you increase the price to their consumers, who bought the batteries and also the battery asset management companies simultaneously.

Or either with tech longer to renegotiate the terms being contract with a battery estimates copy okay. It's more like a <unk> business. So.

So that's the first question and second question is about our motto.

Currently.

I think <unk>.

Comprehensively cover the SUV market was pricing range.

350 to 600000.

<unk> launch seven is really and just mention.

How can we effectively differentiate yes, seven crore in comp and SUV motto as we put the call on dilution and how we're going to adjust the pricing strategy or reposition catastrophe models, along with the launch of <unk> seven. So those are the two question from my side. Thank you.

Sure Tim.

Diego and Tejas.

Switching gears slightly in total.

Let me take a Tesla so you want to go to shift so we'll do the same entity.

So unless unintended against for Donna just a P value of <unk>.

Choose to do that and they've assignment against somebody chose to sell T. Shirts. So you took a pill women searching for the moly UK SAR has a face value of bonds order.

So without <unk>.

Opinion, it's a good thing so suddenly all the events hideout.

Chad Woodson Thomas Amato.

Well take a somewhat higher than they are used.

Mutualized and time to take some time because of the Yodlee.

Tony will take more time.

Tom Bahama women.

John will tell them Hamiel element you ship it.

And towards that Tony's here bulk cohorts, having to suddenly hit tiwa almost way continue to the suture anchor client to go Q&A Michel women that's.

Thats the whole concentrated Tom that's a good Chuck of the entitled to calculate sort of hung out with maybe a good chunk of it something that could have put it a bunch at home at a time, which doesn't sound too good.

On Saturdays ago Shanghai.

So the woman that showed you on that to some of your whole amongst them.

Hundreds of good news.

His key shots on a per shop.

So it's a clear to hold in a multitude.

Todd it's something that you can shop.

Hello.

The confidence.

Bulk water.

Two months ago.

No.

So you'll see it bounce out two of them in the Maldives Genzyme continuously Alicia for me in the toilet.

So this is a big win.

Thank you.

Yeah regarding the first question actually starting from the fourth quarter of last year, we started to deliver 75 kilowatt hour LP in MCM hybrid battery pack to the users which has contributed to the cost optimization.

And benefited over vehicle gross margin growth in the fourth quarter.

But I believe everyone knows about the starting from the third quarter ended the fourth quarter of last year, we have been seeing some raw material cost increase in the industry in the industry and there has been a lot of cost to increase in the upstream offer the whole industry chain, which means that we won't need to share it.

The pressure across the whole industry gradually.

At this moment, we do not have any plan to increase the offer pricing yet.

That's because during the year, we're going to upgrade of our product competitiveness and capabilities and so at that time, probably based on the cost of the raw materials in the industry, we will reevaluate of our pricing strategy as well.

But at this moment, we're not going to increase a fair price for that product.

And another point because of the sales growth and we believe that this has also contributed to the amortization of the cost and benefit of our vehicle gross margin increase but regarding the raw material cost increase it's not just about the battery, but also other commodities.

Like the copper and aluminum and those raw material cost increase that have also affected other therefore gross margin as well.

Yes.

No.

Well, let me.

Some term, albeit a more bell.

But inside.

Okay.

Samsung element trend near the Multimode, California has a ceiling.

So Jim pistol and wish him to.

Hey, Tyler.

Sometimes it is modeled in a hotel.

In light of the cost increase so those raw materials I have just mentioned and the other bom cost.

Over a full year of vehicle gross margin for 2022, well, it's still a target to reach around 18% to 20%.

Yeah.

Yes.

How about yes, seven or.

Sure.

Yes Jacob.

Good to go.

The tablets orders Heineken SUV.

Touching the toggle so as stupid as sort of tongue among kind of continue to take us some time to get shipments would have the short term.

The bulk of people short BMW supplier.

Coming back to you.

Yeah.

Meaning that challenge.

Yes, seven peso lumen Jade.

<unk> timber.

<unk> central tissue that sound out thats, causing them to go whole hog on no woman living wage passion and go see them tick.

Sure.

Tom can assume encryption. So you also can go the soundness of your.

Well put it away partition Palo Duro seal with their social way or someone else you can tell we're the only park industrial quite a shape, it's a meal.

The second question is about the day gas is seven and this is going to be the first SUV product based on the NTT and is positioned as a large.

Five seater SUV.

This is specific segment, we have witnessed some user demand increases recently for example that BMW extra five we believe it's going to start at the local production very soon for that yes, a seven oh, it's going to have the industry leading battery.

<unk> electric powertrain and also the smart technologies as well and we believe is going to showcase at the high performance capabilities of the product and also satisfy users of demand in terms of the premium and luxury filling in.

I also believe that this is going to attract the users who will have a very high requirements regarding the product quality and a pre minutes. So.

All in all we believe the yes, it's seven is going to contribute and they're going to be complementary to other current yes, <unk> seen that also affecting the sound was off of the current products.

No.

Rajiv.

Yes.

How much is that.

Possible probable to go yes, seven things that also with other liquids with all.

So while you saw that as a good comparison services hub Mod churn does it go to the hospital.

I put on a system sale.

Due to the shipments lithography all your attention.

We're going to launch it yes, the seven in the second quarter after the secure and well share the pricing information as well at that time.

At this moment that we can see that.

Regarding the market segment to offer large SUV priced above seven priced above 400000 to RMB Ah is actually has a addressable market size of over 200000 units and.

This market size. It's also growing that's why we're very confident with the performance of the yes or seven update the lunch.

Yeah.

Okay.

Is it really.

Thank you for the questions next question comes from the line of bin Wang of Credit Suisse. Please go ahead.

Going now.

<unk> is an easy bolt on eating into for women the antitumor Madonna ivanka using them.

So to that I'm.

I'm wondering if you're wanting to Vietnam.

Yeah.

Yes.

No matter what.

On the ESG.

Let me give you the China Mughal.

You can see it on the ground.

Tom I presume atg, it actually Oh sheet Simon one.

Contribution number it will be it won't be used for unit two.

Proceeding an irritation.

<unk> <unk> com.

Well come back.

Chris will not substantially for Marty So Mohan ceremony that you could choose to ship.

Anthony how question Cheng from omni consume content the arsenic.

Multi chip all quarter to comp.

For the commodity has what shipments of the <unk> G E.

Asia.

A quick question on <unk> seven films consistently with the media code plus one evs.

If you haven't received very good order flow about 15000.

Which indicate months youre going to be around <unk>. So once you come up on this.

On a margin because we've seen a number of full quarter. After a year. So that is actually a very big negative gross margin more than 30%.

The reason behind that and what's the outlook.

The defense margin going forward. Meanwhile, you just provided 80% to 20% margin guidance.

Just the vehicle gross margin actually including us isn't much already thank you.

Sure.

Without the Evo and <unk>.

Okay.

Hum.

That's one.

Okay.

Got it.

Got it.

For the mid continent.

Uh huh.

Japan achieved types again.

Yes.

Pro forma.

But obviously the email.

What do you tell Blackstone behind us so to the agent.

<unk> got an opportunity to get paid.

So a couple of them.

But you can take that.

On the talent that Congress is hot.

Wow.

Hello.

That would put us put up.

Oh God.

Be careful when we do go forward with that.

Yes.

So talking about.

Well my husband cut about your EBIT.

And Oh.

Both until sort of shock.

A woman.

With consultants and hydro <unk>.

This will take on a challenge.

So we are well.

<unk> financial shortly yes.

So I'm with you on that kind of a woman.

I think we're still talking again to <unk>.

Sure Jordan.

So curious how you are thinking.

So you would've found credits out like that.

Regarding the first question.

The 87.

Of course, we cannot disclose at that specific order number at this moment.

But what I can say is that it's actually much more than the media report and for the at least seven market segment. We can see some other benchmark. So for example, the BMW five series, Audi Asics and C. D C class.

It just doesn't have the similar pricing.

<unk> per week, those are product that well, especially regarding the BMW five series.

So BMW five series that we can see that our monthly delivery number it is around 12.

12000 to 15000.

Of course, it for the EV product.

Some time for the users to adopt and accept.

If we look at the examples of the Shanghai market right now in the premium SUV segment in Shanghai or our market share is around 23% to so if a way.

Also mirrored that you the sedan market and we believe that there is a lot of room for growth and also potential for E. T. Seven.

So at this moment, we cannot see how much we're going to do it for every month about according to the user feedback.

<unk> right now, we're very confident with <unk> performance in the future.

Okay.

Managed to deal with that.

Uh huh.

Okay.

How you either yes or no.

With that I'll go into that.

Well, we Didnt Eagle <unk>.

Oh, yes, yes.

Accordingly.

So I just wanted to take those same thing well chairman Sheila Jonathan Yes, Peter touching with it so it doesn't mean cocoa pass over to <unk>.

Tom.

As for ticket similar to other Delta Honda has been.

Again tableau would have expired.

I'm in Chicago.

The address firewood.

Uh huh.

Quarterly home, the fact that they've had changed or has it begun.

No.

So that's how the board chairman John Massage OMD.

What's true then.

It's not that Ascension and then go to Hulu.

What your thoughts are going to change.

So Michelle Jones, Hong Kong lifestyle, but you're kind of done, particularly in Russia. How did you said there.

Mhm.

Regarding the seven previously I have also mentioned that you're studying the positions in the larger premium SUV segment, and if we talk about the specific a benchmark we can refer to tempt upload X five.

After the local production enough of them BMW with X five.

You can see that the market actually has a very high expectations for BMW five the performance and the current market size of that business segment is over 200000 units. So if so where.

We look at the comparable to we can use the BMW <unk> five as a reference and based on data, we're very comprehensive ways Oliver yes, as seven because we believe they can actually our competed at BMW X five.

Okay for the second question.

Service law.

Accelerating the power the construction of our service station in 2021, and more power substation artery to provide service to end users.

Which leads to the cost increase of other revenue.

Business compared with Q3 and in <unk>, we will continue to deploy the batteries charging.

These facilities the anticipated depreciation and operating expenses will keep rising.

But we believe the upfront deployment of battery swap stations kind of contributed to our branding user experience and also sales.

And with.

With the long long term value to the company.

<unk> bearing a short term loss of power service station.

Constitutes a strict strategic decision for the company and in the long run.

The cumulative rico deliveries going up and the improvement.

Service efficiency.

Expect that negative margins, resulting from power.

Maintain and repair service and all the other services, we will gradually improve and other revenues and margins contributed by innovative business models like Bob New life and also our eight.

The service will keep growing.

Okay.

B.

Most appropriate margin target.

18% to 20% for 2020 284 vehicle not the overall gross margin yeah.

Yes.

Thank you for the questions next question comes from the line I'll mention Li of Bank of America. Please go ahead.

She said going into China, not all would have been true a damaging <unk> high food quality.

At the time that you would come out with a younger.

J P. H took a shipping essentially or somehow Belgium, saying I'm, a teeny listen to those rules or the Guangdong the whole how do you why do you sound lgs elements that go against the China, which is a hybrid to good tenants in there that you can expansion that the progress now.

A couple things you have seen people engage with him.

Yeah.

Penalty or shimbun.

She had something downhole, which are the car needs to be.

And two it's because she pinecone hope I wish I could read the article recently politically.

Does it go to downtown Hollywood.

Those are triggered a woman took a page out food to the district.

So my question is regarding the capacity.

Lidar a hybrid battery.

Also on the cheap, especially ESPN yesterday, just also announced the Chiefs show teach you will close the price hike. So I also want to know where the <unk> chip will constrained your vehicle delivery this year strategically in itself.

This is Jeremy.

Tom I'm going to you will then tell me are John Hello Woman CEO comes home to suicide in Congress.

<unk> J P. H, we also Thiago control center or <unk>.

<unk> got parts in the courtroom.

Joseph.

J P I chewed up on the Newco is sometimes.

Took a took a switching yourself. So numbers are so I know you gave you a lot why now.

No.

Job on toys, yet about what she was also the on the number of times with central in that number.

So that's a good choices.

How long that totaling up to and sort of how long they satellites I'm.

Jimmy in the southern Yellow Unquote said senior in the capital kill Silver Nuomi, Nigel who you convince them that you could Uh huh.

You cited on the to go.

Sometimes the hormone Camille.

The more dense.

Cheers.

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Elements on Chilean peso caused CTO so can.

And do you also think that took a tight ship.

<unk> 10, so the total head count on the <unk>.

And then go match.

Some good that took a huge order. So you can go ahead.

And yet to.

It sounds that sounds Amsterdam, which that's the schedule and that has a number and sort it shouldnt care. So that they don't trade down about it helps on the human woman.

<unk> do you want to each handle cushion ship out you would see it.

On the patent.

Bush.

Going into <unk>.

Tigger chess.

So those are sort of who you are we seeing some of that.

To the assumption that's out there there are some chunky women tune yeah.

Sure of course, as Javier said, some ship or maturing until you Jamie. Thank you sure multi edison seeing wish intend to chocolate or sometimes the Virginia and the Honourable woman sorry.

Mulder took a call if I may you can patch and Ken that's a good chunk of it sometimes you can call reaching Sheila.

So your assumption that sounds good I wouldn't see it.

Rather than to your house.

<unk> continues to grow consideration that wouldn't ship.

Colby relationship.

When you made that the organization can't you won't Miss.

Chenzhou Diego downtime that the bulk of the total time of bio <unk>.

Additional hotel coupons.

Okay.

That's under the Hood.

A woman Tony Hawk.

The other one teahouses shifts which seem to be wishful thinking.

Sure.

Yeah.

Sure.

Sure.

So let's say, it's the same thing with pace.

So you're going to tell you what may or may not sure sometimes they go to.

Precision tend to bounce to that since you are so focused on of course is how old it was true.

Sure My issue.

How would you want to go clinically by Jamaica.

Yeah.

She's Omnichannel Bose simply too.

SAP IBM, having at La Jolla ship.

Guide to some further.

Yes.

So okay.

But we're also going to be a good operation put basically city, 14% in the tunnel portals.

The human shopping.

And then what's the overall.

Okay.

Yes.

So regarding the production capacity.

Previously you had also mentioned that by the mid of this year offer first a factory that is J J.

JC, New manufacturing center is going to reach a production cadence across the different workshops.

That is around 60 drops per hour and designed to production capacity of the factory. Two is also going to be around 60 times per hour, but of course for the factory cheap because this is a new factory then we will need some time to ramp up of the production gradually.

<unk>.

So if we think about the 60 drops per hour aiming that.

So we are working with the port.

4000 hours every year then the annual production capacity is going to be 248000 units and therefore every month is around 28000 units.

We work over Tyler debated.

5000 hours a year then it means that the annual production capacity is going to reach around that 300000 units. So this is about the vehicle production capacity, we believe in the fourth quarter of this year well see some fundamental improvement regarding the vehicle production capacity.

Which is going to support offer an extra step of protection.

For the battery production capacity bottleneck.

Yes previously we have also mentioned about this and starting from last year and we have been working together with our partner <unk> County, and additional production lines for the battery cells and we believe according to the current plan in 2022 battery production capacity should.

Be able to meet all of our demand.

Of course, the cost increase off of that battery is another matter.

And actually I believe that the chip shortage is a bigger challenge for us.

Because a number of vehicle we have over a 1000 chips and amount of those 1000 chips that we have are probably around 10% off does that chips in may.

This is a supply shortages or challenges that from time to time.

And so for us it starting from 2021.

Started to see some chip caused the increase and this has affected the other vehicle gross margin in 2021 based on this experience in 2021, we have already.

Taken into consideration offered that chip cost increase in.

In terms of assessing offer targeted for the vehicle gross margin I would believe that the main challenging regarding the chip is it more about the supply.

But regarding those high end chips or like into India, or ring chips, and popcorn H one by five and we have a long term that the director strategic cooperations with <unk> and Qualcomm. So we believe we should be able to have sufficient supplies.

All of our production, but for those of common chips or the cheaper ships.

From a ti and Infineon.

<unk> faces some challenges from time to tie and this is going to affect the production of course, we have some other ways to mitigate those challenges for example, we can find some other chipset cheap right.

Place those chips or we can properly scan the market achieve built up all of our strategic inventory.

Avoided those are risks, we believe the eye of our speaking in the second half of this year or around the fourth quarter of this year, we should be able to see some fundamental improvement in terms of all of our vehicle production capacity at the end of the battery production capacity, but we may still faces some challenges in.

Tens of office supply.

Supply chain volatility, especially semiconductors.

Thank you okay. Thank you for the questions.

Our next question comes from the line of Jeff Cheng of Citi. Please go ahead.

But if you don't have a policy that Jeff.

<unk> Oh.

When you go globally.

Billings was kind of an MSR participant Zhejiang Archie discharged digitally off where they're discharged from Louis Armstrong, who was sort of on the job through a portion of our vision level job watches Vigo and cheap.

Hello This is Shane.

At a time here.

Nowhere to live with it.

Cleavage without you and how you can get them all.

However, due to shortages of ETE cheetos popcorn, possibly shore side of that you've heard of Joseph <unk>.

You guys. Obviously, you got some young as you get yourself.

Also the whole shot.

So there you go Lindsay was unique.

Possibly stronger spot.

Spot price.

Do you guys see that without being what you may have.

You didn't kind of value creation.

Or can you give us.

Just to touch on so I'm sure that she had seen any musical Egypt.

I've got three questions. So number one is should we consider any MSRP hikes in the near term to offset potential battery and aluminium cost hike, if yes, how and if no why not.

The second question is about the existing 86, six products or sales volume visibility over the next few months.

Confidence that we can maintain a 10000 unit amongst.

As well as the.

Could you give us some more color on the <unk> server ramp up pace.

In the second quarter.

Last but not least is the lithium spot pricing in China.

Do you think you'd has already peaks.

Due to the recent government's intervention. Thank you.

Yeah.

The assistant.

Diego and <unk>.

A woman dialogue.

Michelle.

Yes bought yesterday.

That's a good combination and the audit physical persons.

Japan in particular women that hit that in.

Do you want to go it sounds like.

Cynthia.

But didn't have that Sanchez.

Into Asia.

Yeah and try to help you with that.

Sure.

I mentioned the powder chasing you should see in the appendices.

Yes.

Thompson.

Singer.

They don't hold function.

Ladies and gentlemen.

From a woman.

Towards that goal.

Uh huh.

Some of them.

I must say, Colorado tell me ships from gone up on a woman's sharing your attention, though I'm a long way to go may be out there you go.

It seems to me that that go to couch it.

Our market share for women gender 70 at Joseph a.

The senior the Palo Alto types in the Eagle.

No wait until you go close to the telco to Tulsa.

Yes, they tend to kind of tie the Ohio, They don't get so that's number one.

It's like a horse or they didn't shop.

Sure Monika computer you could recall from our peers.

This is just a D go into apparel houseful about sort of some of the key ways.

Good you wanted that's how Nico should show told that's out when they send that pick a tiny elephant that imbalance from high school to a battle that you'd see at a minimum wage.

Sure.

So let me show you the value of the pension closeout and salary to the theater.

I would say something called the <unk> ICL sales on top of that because it seems like youre sort of so it's a huge hole that's out of our minimum wage for the go no go about so there you go.

So they could either Tony or somebody would want to go into even the same thing.

The current yes, eight 6% that you can fix them of course, if we look at the digital cockpit chipset. This is actually based on the new technology platform one no.

<unk> was developed in 2018, so for this the chip.

The efficiency may be impaired if a way around some.

Complicated software. So that's why starting from this year or we think this year, we're going to upgrade the smart hardware off over existing products and we are also going to provided the after sales and upgrade services for their users and regarding best smart hardware upgrades.

We're going to launch this program and.

And eating a appropriate at the time.

For the existing yes, <unk> is a six week leaves, though we do not mean to suggest that the pricing at this moment.

But of course, it based on the smart hardware upgrades of existing products and also we are going to launch some model year product then at that time, we believe probably we can reevaluate over pricing strategy based on the cost increase and that's the point.

King.

You have also asked about the performance of our current production or whether it should be able to still maintain that.

10000 units per months according to over order momentum in March we believe that they can meet of expectation and we believe that the user demand is not a proper and for us because diesel we compare over currently is <unk> 686 of wages other EV products and IC.

<unk> seen in the market. We believe we still have a lot of our competitive advantages. So the overall demand maintain stay the quite strong.

Good argument.

You can see that the good popcorn soda.

It's true that.

Can you go going sometime tuscarora, yes by the way.

There was a concern for some time.

In addition, the company.

No women cheering and ship until finishing that fulltime attention to the time sitting at the good guys and go long time ago.

She does have downtime.

Isn't that big a hometown, but you mentioned that EMEA solo and <unk> had to go.

Yes.

Most of it yes.

And if you don't understand to go to helpful.

And that's about it.

<unk> tonnage in the sea.

Hello again.

Added to that.

Sandy I say youre assessing our Melbourne had a panel.

But you could.

Cheetah assumed citizens.

Yes sure.

To the downside.

Sales for the agency.

A woman say its something Thats all that that you can see that part of the question.

Pete.

Upon the settlement.

Intel at EQM.

Yes.

She wanted to on the go figure it is.

Top of the World.

Hum.

How the gross 90 to 92.

Uh huh.

And then whether you got hungry, so you touch and feel the probable shall remind to luxottica.

Good question.

The good part of it.

Uh huh.

Sure.

Well seven products ramp up.

Because it is going to be manufactured in the factory a record F. One and they are going to share the production line with the current product yes.

And that is the fix.

At the same time, we'll also introducing some new manufacturing technology center techniques in the protection of 87, and so that's why starting from last year, we started to adjust to the production lines in the one to support the new product production in the <unk>.

Meantime, I have also mentioned about it that yes to seven which is going to start that the delivery in the third quarter of this year and they sell product and it's also going to be manufactured in the S. One so the situation in F. One is quite complicated as you can see because we need to make.

Sure we have sufficient production capacities to support the current yes, 86, and 86, but at the same time <unk> produces AEP seven and also prepare for the production off of that <unk> seven and <unk>.

So that's why we believe in the ramp up of progress off of Daiichi Sberbank, they're probably going to be a little bit of slower compare with you that <unk> does things 85 is going to be manufactured in a separate new plant caught up too.

We believe that probably around the third quarter. After this year, we should be able to reach a normal production cadence is for the <unk>.

Seven.

He is on the <unk>.

<unk>.

Well, Linda it's a good time Sunday.

There's still time to come.

Yes.

Jimmy annualized personally that's on doubtful.

Women functions out of the way.

Sanyo to tide I'll tell you something about the compound has the bulk of our clientele EMEA team. Some of it is cheaper that's a good research a womans own two homes only took our tons on either pickup contactless repeat so.

<unk> that they're going to use silicone toilet she said Tony.

<unk> total edge on behind that she's a male diabetic Apache.

Or may or June quarter.

We are implementing ERP, you're still going to go take share tell tell me <unk> got good people.

Well minimum way what it means.

So who are you suddenly order Tony you ship to home to the Congress some tone to the bulk of what you should take a pause on either family share at Samsung among them got something got hung yeah. That's a good punctually, you're too far off.

The shoe on time, and then go to pre outdoor coalition that pendulum. They don't sound shot children wait till it sounds like that's got good that's a good problem.

Can you push it to a house.

So if somebody is I'll, let John put it away so you could.

The tongue locally in the windshield, and then with training and coaching that you're supposed to come back.

Regarding the lithium carbonate caused the increase.

Have done very in depth research regarding the industry change and especially the upstream and we believe that the cost the increase or the price hike phase in lending due to the opportunity to stick.

Price hikes and there is no specific big gaps in terms of the demand and the supply of lithium carbonate. The materials of course right now we can see some Chinese authorities like <unk> have already started to set up some mechanics answered to manage the situation at the.

Same time, we also like to urge the companies in the upstream.

Industry change that they should think more from the long term benefit of the department of it the whole industry instead of manipulate or take the opportunity of the cost.

Cost to increase their team increased their price.

Yeah.

Got it.

Thank you for the questions next question comes from the line of Mcknight of Jpmorgan. Please go ahead.

Yes. Thank you for taking my question on the two simple questions on first on margin and that's certainly an export business.

And then can you talk about the GP margin.

Let me switch focus to the op margin Yeah last year, we understand the on these things and assume a increased a lot from them.

Once a week.

Market due to the.

Topline increase.

Into 2022, how should we think about SG&A and R&D stance in terms of either dollars or percentage took off.

Is it fair to say, it's R&D programs.

Sure sure.

Since you took up meaningfully.

That's an issue.

With the top line.

And the second question is regarding as cool I understood. This correctly.

Not a big portion of our total Cocos.

Total sales.

Considering maybe dynamic Europe and advance the stronger euro.

Any update on that.

Thanks.

Certainly.

Please go ahead.

Our print operations as a commodity.

Okay.

So women some Keith I'll, let Phil Chin young women kept about solution the Costco Toyota tundra.

Sure.

The mounting them several of them are the social thing.

It's a good economy.

And Leticia women tune and you got <unk> Mellon clients fishing.

Yes.

But to us on the function.

Number of women.

<unk> done it either cheap again.

No no.

So the first one coming out of it you could say, yes, we've got some intelligence tool.

Indian thermal imaging.

So it sounded that you called out.

Sooner or later.

And then <unk>.

Hey, Doug.

Colorado.

Also that establish a year such as <unk>.

<unk> MP the hardness.

Youll also see us getting to that point.

I'm, Tony Hi, Duncan champion satellites, how old the.

It's obvious that all opinion.

That's what.

It seemed to step up.

Element <unk> tenure in Ohio, and Michigan.

Total confusion to.

How could you please how much any mainly in Brazil.

Hey, Joel.

It's usually flat hungry that's usually in.

Your poll question.

Listen surgically.

The bulk of the change versus how much kind of situations.

Okay.

Yeah, I'm sorry, the total weight.

Peter.

Well menthol Chilean yen Debottleneck ETE on part of Yahoo.

Joe Chen.

Are you more concerned that Elton John Peter.

Yes, I'm sorry, the total how're you won't want to push.

She had a somewhat teresa Jimmy and audits from Qualcomm, Google search or turned off on that.

Sure.

Well then.

I kind of thought are you the strong sell off on the women's center kind of our membership.

And kill suit Mimi.

Suddenly in the tools to do it.

<unk> achieved the breakeven that you could.

Hello, Michelle.

Australia, China and negotiating and meet.

It wasn't until the <unk>.

<unk> essentially.

Steve.

Regarding the op margin.

Last year in terms of the company's strategy, we would like us to make sure that that the gross profit of 10 covered.

<unk> cost and we believe that through the efficiency improvement and execution. We have a follow through this strategy in 2021 in the coming years, we will continue to make our decisive investments in terms of the R&D and the infrastructure of course of our strategy well.

They are the same that is that we would like it to make sure we can use.

You said that gross profit to cover the SG&A cost.

If we look at the EU market.

Of course, the last year, because that was the first year for us to enter the global market and then it means that the last year, we need to make some advanced investment and we believe that this year the efficiency is much higher than last year.

But in terms of the R&D front, we are going to step up over R&D investment. This.

This year, we believe the R&D investment is going to be more than doubling than that off of 2021.

Because we're going to investing some long turn our core technologies and some fundamental technologies as well as new products for 2023 as well as some protective deprecation for the global markets by the year end of 2022 of our R&D.

It's going to reach around 9000, and we believe that this is going to be a big increase of compare with some of their current.

R&D team sites. So this is all a plan for the 2022.

In terms of the.

Our strategic direction for the company.

Our target is is that we can achieve.

Break even for a single quarter in the fourth quarter of 2023, and we can achieve breakeven.

Rachel profitability in 2020 for the full year.

Yeah.

Yes.

Okay.

We are going to just give them a choice.

Okay Nick.

Question is about our global business right.

No equity right now every month, we deliver about 108 in Norway, so that boost our confidence lot improved our product competitiveness and.

And also all of this model.

However, since we will kick off our.

In Europe .

Second half of this year, so the contribution of the European market to Scott would be priced because it's Kent.

This year.

<unk>.

Continue to develop and improve its product portfolio and service work establish Brookfield user communities and pursue a heart attack.

With that belief.

Market share on <unk>.

Real comp a lot laterally.

Okay.

Thank you for the questions.

Now take the next question.

Please continue.

Allow me to take the next question is from <unk> Huang of Goldman Sachs. Please go ahead.

Okay. Thanks for your clients.

Other ones you've done some quite sometimes that vehicle at seafood sure sure that you've got to you, but you can call you felt they had gone and talked to them John .

Jacob Kolbert Changsha hoists here, because that's how the U S.

Let me just quickly translate for myself.

A little bit about utilization metrics of your infrastructure battery swap stations and Supercharging stations call. Some people use it what's the unit economics of what's the difference between top cities versus lower tier cities. Thank you.

Oh.

Got it.

Yes.

Oh, I'm sorry to go back to the.

You wanted to keep at the lunch and dinner.

Cool.

Sure.

Hi, Paul.

<unk> sorry.

Months.

John .

It does.

Yeah.

Uh huh.

Sure.

Sure absolutely.

Felicia.

Yeah.

Pardon.

Sure.

So how quickly can you sort of sorts out I mean, that's all either.

I got that right.

Yes.

So somebody negotiate it came back.

Yes.

But the second source of Alexandre Pato sheets and.

Entry tissue removal.

Some of them in a simple right.

Yes.

Therefore, each quarter.

Thanks.

Okay.

Sure.

Okay.

The capital of South Florida.

The second quarter.

Turning to Chile.

Of course without release yet.

Oh the package.

Yeah.

Uh huh.

So the motion.

Yeah.

Previously have also mentioned that.