Q4 2021 Xpeng Inc Earnings Call
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Hello, Ladies and gentlemen, thank you for standing by for the fourth quarter and fiscal year 2021 earnings Conference call for <unk>, Inc. At this time all participants are in a listen only mode. After management's remarks, there will be a question and answer session.
Today's conference call is being recorded.
I'll now turn the call over to your host Mr. Alex <unk> head of Investor Relations of the company. Please go ahead Alex.
Thank you Hello, everyone and welcome to <unk> fourth quarter and fiscal year 2021 earnings Conference call, our financial and operating results were issued our newswire services earlier today and available online you can also viewed earnings press release liability.
Section of our website at shelf.
<unk> Com participants on today's call from our management will include co founder Chairman and CEO . Mr. Fritz helpful. My Chairman and President Dr. Brian <unk>, Vice President of Finance with the 10-Q, Vice President of corporate finance and investments with the Charlestown and myself management will.
Beginning with the prepared remarks, and the call will conclude with a Q&A session webcast. A replay of this conference call will be available in the IR section.
Our website before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 995 forward looking statements involve material risks and uncertainties as such.
The company's results may be materially different from the views expressed today.
Information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U S.
Securities and Exchange Commission the company does not assume any obligation to update any forward looking statements except as required under applicable law. Please also note that <unk> earnings press release and conference call.
Including state exposure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures <unk> press release contains reconciliation after multiple non-GAAP measures to the unaudited GAAP measures I will now turn the call over.
To our co founder Chairman and CEO , Mr. Personal phone. Please go ahead.
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Hi, everyone. We closed 2021 with another record quarter of deliveries we do.
Deliver 41751 units in the fourth quarter alone growing 222% year over year and our total deliveries for the full year of 2021 increased by 263% compared with 2020 and reached 98155 units.
Making us the top ranked imagine EV maker in China, our 2021 full year revenue exceeded 20 billion RMB.
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We are seeing.
And as you all know quite tissue client events shifting.
Heading into 2022, we are experiencing even higher demand for all products, which continued to outpace all production.
Expedited delivery of large volume of order backlog carried over from 2021 and our newly acquired orders early this year, we completed technology upgrades of our gelatin plant during scheduled downtime over the Chinese new year holiday.
By adjusting our sales and delivery schedules new orders.
That came in late February and the first half of March picked up quickly and have returned to the same robust level as the peak season in last December starting from March 21, we raised prices across our product lineup by 10 to 20000 RMB.
In order to pass through the rising cost of batteries and raw materials.
Against the backdrop of higher oil prices driving electric vehicles, typically brings increasing cost advantages over IP E vehicles, allowing for greater growth opportunities in the mid to high end market, which is the target segment for our smart E D.
This market also feature a very vast array of consumers, who attach more importance to EV quality and technology. Therefore, 2022 will be a crucial year for each EV maker to validate their product's competitiveness looks.
Looking ahead as we pursue rapid technology and product innovation, we will continue to strengthen the overall competitiveness of our products comp.
Confident that our sales performance will continue to beat the industry.
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Even though we experienced some hiccups in terms of self delivery in certain areas of China, but because of our technology upgrade.
<unk> as well as our newly acquired large volume of orders, we expect to welcoming a new level of large orders in March which will be similar to our peak level last year and that will help us definitely to enhance our market share and maintain our leadership position.
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Our confidence about the sales volume potential of our core EDA products has extended into 2022, we delivered over 60000 page seven in 2021, placing it in the top three class BBB and above by sales volume, making it an indisputable blockbuster model and setting P. Seven SMU bench.
Mark Smart EV in China.
With the buildup of <unk> production capacity and reputation one of our goals in 2022 is to exceed 10000 P. Seven deliveries in a single month.
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We officially commenced the Max deliveries of Op Sy family sedan model in the fourth quarter of 2021, delivering close to 8000 units and its initial quarter debut.
With supply chain improvements and our city and GP launch, we can expect a more consistent ramp up in sales volume of the P side.
And supply chain constraints ease off in the coming months I am confident the P. Five monthly sales volume will begin to approach that of the <unk> in the second half of the year.
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Next EV model in line for US is our flagship SUV model. The Jeannine. It's P. J production vehicle has successfully rolled off the production line and we are on track to officially launch the <unk> nine in the third quarter.
So gena and represents the most advanced technology.
<unk> Bank has ever debacle of the building on years of in House developed software and core hardware. Consequently, the performance of our <unk> is head and shoulders above popular SUV models in the same category.
I firmly believe that <unk> will become a blockbuster model in the medium to large Fi smart electric SUV market.
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Furthermore, we plan to launch the first production model built on our Q newly established smart EV platforms, respectively. In 2023. These two new platforms, comprising a platform tailored for C class vehicles and the other four b class vehicles will inherit and sort of event ex <unk>.
<unk> capabilities in aesthetic design electrification and smart technology, strengthening our product portfolio with competitive advantages.
In addition, as we strive to make our platforms more scalable by employing more highly integrated design and state of the art manufacturing processes, such as ultra large integrated die casting technology.
New platforms will also with powerful cost control abilities as well as help us address a broader customer base in the mid to high end market segment, which has tremendous growth potential.
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Next I would like to share some update on R&D Havas Smart E beam technologies for our P. Seven MP five models deliver in the fourth quarter. The attach rate of the X pilot <unk> software with close to 20% currently the progress.
CD NTP the key function of X pilot, three which is mainly deployed on <unk> five as.
Well events. Its beta version is undergoing a SaaS iteration process, making continuous improvement in safety and user experience.
We also plan to complete the development of our CD NTP in second quarter of this year and plan to rollout in cities by batches. Once we receive the approval of the CD HD map.
The X pilot three five that is built on our next generation technology architecture has presented much higher than expected performance in our city driving scenarios. We are extremely proud of this notably among our mass produce <unk>. The number of driver interventions per 100 kilometers for CDN GP is.
Noting that of highway MVP and the level of its overall user experience can be benchmarked against domestic top robo taxi players and in some respect.
You already have caught up and even exceeded those companies performances.
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Given the underlying next generation technology architecture of our ex Paal at three five and I'll close loop of data we plan to officially launch the X pilot four point in 2023 to deliver advanced driving assistance experiences spanning food memorials of both highways and city road.
Simultaneously, we plan to progressively converge, our autonomous driving hardware and software platform that enables advanced driving assistance systems for our future vehicle models.
There will be at least four model, including both new models and faced with versions of existing models to support the X pilot for <unk> in 2023 with that our ex pilot fourth point out will boast a clear next generation leap against other mass produce advanced driver assistance systems simply put.
Under the premise of offering superior safety the X pilot for Dino will feature a more comprehensive set of use scenarios, even why don't you graphical coverage and a better human vehicle interface and in vehicle experience for both drivers and passengers. In addition to that we will control the cost of that production we believe.
That our ex pilot for Dino has the potential to spread high level advanced driver assistance system to an even broader customer base accelerating the transformation from human driving to the era of advanced driver assisted driving with this becomes when this becomes a reality in the future the attach rate of the.
<unk> pilot software will naturally be significantly higher than its current level.
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We will continue to advance and improve product performance.
Also we will continue to be committed to our in house full Tech software development and platform architecture approach to develop and upgrade our intelligence systems and powertrain systems for smart EV applying our platform architecture approach to our system management will propel innovations in oncology manufacturing techniques and processes.
As well as a bond cost structure I have confidence in our ability to achieve structural improvement of gross margin for our new models, including <unk> and ultimately improve overall gross margin on medium and long term goal is to increase the level of our overall gross margin above 25%.
At the same time will remain dedicated to our vision and execute on our founding strategy and operational literacy to continuously.
To continually boost operational efficiency.
Going forward as we achieve economies of scale, while improving operating leverage I believe our operating expense ratio will continue to trend downward.
Yes, Hello, gentlemen.
For 2015.
With that overview I would like now I would like to walk you through a few of our strategic initiatives and expectations moving forward.
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We've rapidly expanded our sales and services network as of the end of 2021 X pain physical sales network comprised 357 stores across 102009 cities of which 209 directly operated by US and 148 with franchise stores.
In particular during 2021, we strategically increased our investment in sales channels in lower tier areas in order to tap into pent up demand and captured the great growth potential we see in non tier one cities as.
As a result, we closed the year with our non tier one sell stores accounting for close to 80% of total ex Tang stores and most of those performance and sales were achieved during the second half of the year.
While we drove rapid network expansion throughout 2021, our monthly single store sales increased substantially.
On a sequential order basis, reflecting our sales model.
Bullet to make systemic enhancement as well as sustained efficiency improvement for.
By 2022 will continue to strengthen our sales network expansion and enhanced same store performance.
The tone of your loan book will grow from here.
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Regarding our Supercharging network X Tang branded Supercharging facilities, featuring wide coverage and a better user experience have already become a critical factor in X <unk> competitive edge as.
As of January 17, 2022, the number of ex Pang Brendan Supercharging stations increased to 813, covering 337 seas nationwide beginning in the second half of 2022, you will deploy next generation high capacity Supercharging to further shorten user.
As charging session significantly.
We also plan to accentuate efforts in deploying Supercharging stations alongside high speed express ways to bring users better more secure long distance traveling experiences with X <unk> vehicles.
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Along with these upgrades we are actively progressing our overseas expansion initiatives to this end we announced in February 2022, we had established partnerships with top tier European dealers by leveraging the well established market presence of respected overseas villas.
We strive to build our international business development capabilities and have established the first branded European retail experience stores for our smart Tvs in Stockholm, Sweden. We also plan to adopt a novel direct plus franchise retail model, which is what we are doing right now in China to expand ourselves.
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On February nine of this year ex pain was were included in the Shenzhen and Shanghai, Hong Kong stock connect programs.
We officially became the first emerging EV makers dock to be assessable for direct investment by qualified investors in mainland China.
We're delighted to share the growth opportunities in the smart EV industry with broader investor base from our home country.
Shortly thereafter on March seven X bandwidth added to the Hangsang Tech index, among 30 constituent stock as one of representative stocks for the autonomous texting.
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First of all one hopefully quick.
Could you tell that initiative going to call attention.
Looking back on 2021, we have faced challenges stemming from industry wide semiconductor and battery cell shortages, we would like to express our sincere gratitude to our excellent supply partners for the great effort of X pain for their great support for X spine and meet the challenges.
Redeveloped and qualified hundreds of alternative supply solutions to safeguard and stabilize our supply chain.
Entering 2022, the ongoing <unk> shortage and search in price for raw battery materials continues to present, a challenge for the whole industry.
Nevertheless, these near term obstacles cannot stop the long term journey. We are online we're smart Tvs are accelerating the disruption of ice's vehicles at an unprecedented speed.
Belief this is going to be a good experience for us to continue to enhance our capabilities I believe our ability to swiftly develop alternative supply solutions, coupled with concerted efforts with our suppliers will help us overcome these challenges.
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As we have been striving to navigate market dynamics made obstacles in the supply chain the impact of COVID-19, recurrence and the seasonality factors, we expect our smart EV deliveries to reach approximately 33500 34000 in the first quarter of 2022.
And our total revenue to be between approximately $7 2 billion to $7 3 billion RMB.
Just a few moments I will repeat that.
The way that any of those challenges at this particular TV.
Thank you everyone with that I will now turn the call over to our VP of finance, Mr. Dennis to discuss our financial performance for the fourth quarter of 2021.
Thank you Vishal Hello, everyone now I would like to provide a brief overview of our financial results for the fourth quarter of 2021.
I will reference RMB only in my discussion today, unless otherwise stated.
Our total revenues were $8 6 billion for the first quarter of 2021, an increase of 200% year over year, and an increase of 50% quarter over quarter.
Revenue from vehicle sales were $8 2 billion for the first quarter 2021, an increase of 199% year over year and an increase of 50% from last quarter, mainly attributable to higher vehicle deliveries, especially for the P 75.
Our gross margin was 12% for the first quarter of 2021, compared with 17% for the same period of 2020, and 14, 4% 40 last quarter.
Full year gross margin reached 45% an increase of seven nine percentage points year over year.
Vehicle margin reached 10, 9% for the first quarter of 2021, compared with six 8% for that same period of 2020.
And 13, 6% and 40 last quarter the.
Quarter over quarter margin reduction was primary attributable to product mix changes.
R&D expenses were $1 5 billion for the fourth quarter of 2021, an increase of 216% year over year increase of 14, 8% quarter over quarter, mainly due to one the increase in employee compensation as a Regal expanded research and development staff and to high expenses.
<unk> development of new vehicles to support future growth.
SG&A expenses were 2 billion for the first quarter of 'twenty to 'twenty, one an increase of 120% year over year, and an increase of 31% quarter over quarter. The.
The year over year increase was mainly due to one higher marketing and advertising expenses to support vehicle sales and to the expansion of our sales network and associated personnel costs and commission four franchise film sales.
The quarter over quarter increase was mainly driven by the expansion of our sales network and more sales commission in that with the higher vehicle sales.
Our suite of the foregoing loss from operation was $2 4 billion for the fourth quarter of 2021, compared with $1 $1 billion 40 up <unk>.
<unk> and $1.
For the last quarter.
A favorable gain on long term investments was <unk> 6 billion for the fourth quarter of 2021, reflecting the fair value assessment.
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Friday incorporation hopefully begin operating.
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At December 31.
We invest approximately <unk> 6 billion and approximately to the 18, 8% equity interest in <unk>.
Net loss was $1 3 billion for the first quarter compared with <unk> <unk>, a year ago, and $1 6 billion for the last quarter.
As of December 31st country plenty, one company had a cash and cash equivalents restricted cash and short term deposits short term investments long term deposits in total of $43 5 billion.
Achieved positive operating cash flow in the second half of 2021.
In the fourth quarter of <unk>, one our operating cash inflow was one two.
B, Michael Obligates, all earnings call I'll encourage indifferent.
To refer to our earnings press release for 2020, while full year financial results in further detail.
This concludes our prepared remarks, we will now open the call to questions. Operator. Please go ahead.
For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English for the sake of clarity and orders. Please ask one question at a time management was Bon and Dan feel free to follow up with your next question. Please press <unk>.
Star one to ask a question.
Your first question comes from the line of Tim Chiang.
According to the whole team.
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<unk> financial position is how you gauge although she got the attention this year.
<unk>, which includes health insurance.
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Thank you Qi just with you guys. So my first question is the price hike, that's finished volatility movers and that would seem to raise the prices.
Could we get a rough sense about how good a company lay the foundation of 10 to 20000 by 2% price hike.
Call. It a cost inflation in batteries were materially cheaper exactly what had been pricing.
So as the price increase just right at launch to cover the spot contracts or wholesale is that ex post adjustment upward price hikes.
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<unk>, let me respond to your questions.
Cutting the price.
Our realignment.
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We increased our price at about 10% to 20.
For the year.
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On March 21.
Much lesser effect.
Project peak component is basically on the FX cost increase we haven't finalized the.
Price negotiation with our suppliers.
<unk> and <unk> components, we anticipate.
We will have a cost increase in the low mature as well as the battery. So we typically price increase the price to cover the cost increase.
Lacks the.
Main driver of the price increase to basically to cover the potential cost increase.
The components costs.
Hello, This is Dennis <unk> X pilot issues already.
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And in total I think we should essentially fully.
So my second question is about ex policy take rate.
Because.
I think that during the presentation.
The trailer was mentioned just.
Transmission about 12%, particularly a fixed part of it is.
So I feel that sort of level.
Just due mainly to more low spec models, we saw it during the past quarter.
But when do we expect more beautiful increase in the adoption of <unk> pilot and what would be more of an IPO type rate in your view in next one to two years.
Is it likely you teed up 50%.
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This should help us to be a change.
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I was wondering if the jobs report as one of your Jonathan.
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Youll see us move it up just yet.
I'm sorry on my end of connection is not perfect, but I get the gist of your question. So here is my response.
Regards to the attach rate of X pilot three no actually it all depends on the chip supply so when the chip supply recovers to the normal level, we believe that the attach rate will increase as well I actually have more confidence in the attach rate improvement of X pilot or point out because according to our data our users' habits and Darren.
Satisfaction rate of using our ex pilots.
Is it can be very high.
As they get used to actually having the navigation assistance. According to alright, I mean with the help of RCT NTP function.
In their daily lives from one destination to another for example for their from their home to their offices or from their offices to a shopping mall et cetera.
Lee will give them that.
Trend of keeping the habit of using this sort of assistance from the X pilot. So about that time, the attach rate of X pilot will be even higher than the current level.
And in my.
And just understanding actually the ex pilot for diagnosed attach rate will exceed 50%, but again.
Yes.
Well it depends on the future market statistic and we'll see.
She was up also.
And your next question comes from the line of Jeff Chen with Citi.
Hey, everyone.
Got it.
Obviously, the tariff I think so.
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Thank you Sir.
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So I'll be honest with you what <unk> does or to sell now.
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Thank you so much.
My first question is.
It's about the worst case scenario this year.
DSO, so volume production capacity.
If we assume a further disruptions in the chip shortages.
Second question is about the <unk> margins.
It is necessary for us to also.
Monthly sales target for <unk> not going forward.
Yes.
Brian .
Yes, let me answer the question for you and Jimmy So first of all we obviously, we're all policy, we don't give guidance.
The sales number as well.
Dividual model numbers.
But I would say that.
Obviously this quarter represents.
A.
A quarter that's in the low season as well.
Disruption from Covid measures in China.
Probably.
<unk> considered.
Our appropriate base for extrapolating for the full year, we are.
Half of them with our new model launch as well as further market.
Momentum the sales number should be higher than the first quarter.
So that's the first answer to your question.
Second question is that.
<unk>, we do have high hopes that it.
It will be a blockbuster.
<unk>, which is the premium SUV class.
You could also find benchmarking bench.
Benchmark models in that class and we think there should be one of the top players in the category.
<unk>.
<unk> been I think it should.
Roche.
The <unk> seven level.
Third question is whether the <unk> mine is interchangeable from a supply chain perspective, I think we hope by the time the <unk> mine.
Volume delivery.
The second half or the fourth quarter.
Supply chain issue won't get.
VA did well.
But I think right now both models representing high gross margin product for us.
So I think.
I think for us.
<unk>.
Models that we will hold.
Obviously.
Make sure that it has adequate chip suppliers.
Sure.
See you, Brian we're highly <unk> to insurance.
Kishore magellan's value core because you won't see sort of the delta.
Sean that's a cyclical so cheap T shirt <unk> published reduction Neulasta for Ya <unk>.
So sooner or will you have that.
Order backlog due to your warehouse.
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Assuming some economy.
So it is about the order backlog.
After we raised.
<unk> price.
We saw a significant surge in new orders.
So roughly speaking right now the waiting time to get a car ranging from 16 months to 20 months.
In price of around 45 or <unk>.
First of all the backlog so I just wanted to clarify on these numbers. Thank you.
Well Justin.
So thank you for <unk>.
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Some of our soil <unk>.
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I think there is a mix of good and bad news with what's happening right. Now obviously the bad news is the resurgence of recurrence of the pandemic, which really affect our supply chain, especially in cities such as Shanghai. Because this is really the headquarter of all of the key suppliers.
Our company and the good side of the story is that we are actually improving our overall capability in and hunting hour battery cell supply and so obviously, there's a lot of disruption in the interruption in the market and also there is a lot of risks, but we will do our best and be fully committed to speed up the delivery times lead time.
But sitting here hopefully.
For the provision.
Thank you.
Overall, I believe that the actual outcome would be better than expected.
Next question please.
And your next question comes from the line of Min Li with Bank of America.
Okay.
So kwanza, Ohio, Brian .
Okay.
So the NGL <unk> <unk>.
So they're going into <unk>.
Mutually but you guys know what.
Thanks for calling some vessels that Duncan.
You kind of disaggregated.
That's helpful.
So now that you're sort of judicial proceedings.
Many of these entities Thats helpful. Tom.
On the tissue.
So Jonathan Hi, there, Jason seasonally advances, particularly beef in Brazil as usual.
To visit machine tool could be chunky don't do them to be and could you say chunky.
Not anymore as usual.
Is it in Hungary.
Hopefully you will be doing.
It's difficult to get things done.
So im not going to deal with diesel and so on.
First question.
Are the battery suppliers situation currently you have three suppliers.
Are you still.
Steelmaking coal.
Okay.
So you also maybe some vehicles to be written.
That's the current situation.
With the <unk>.
But you have to do both.
<unk> got some things on that.
The following questions.
It's a go no go proton machines in China.
Ladies users or I'm missing something.
<unk> <unk>.
With some clients.
David.
<unk> hundred one's always helps too.
Good.
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Key to future.
No the assemblies.
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Yeah. So my second question is regarding the new platform.
Positive breakdown for euro 3%.
In the future. Thank you that's my question.
Sure.
With other conditions of the 3% yes.
Volker Unicorn yourself.
Sure. This is Jeremy male and then you.
You have highlighted which will hit in Q2.
For example, as you come into it.
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Let's just go ahead Lee.
At the moment, China, Tim Watson.
Yes, sure disorders, who will conduct.
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High yield.
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What are the assortment content, that's on hold I don't mean, Gemini and <unk>.
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So what are you quantitate the port Honda.
Corporate owned phenotypes agenda for sure.
Thank you Johan.
Hello, gentlemen.
Hello, Ms. Sheila if that helps you to 100 million without sabre.
Total so Atlas is a tiny element.
Yeah.
Thank you.
So I want to say what the answer is zero value.
You will see.
<unk>.
In response to your first question first of all we have.
Very different from other <unk>.
Energy vehicle makers in a sense that we actually collaborated with multiple suppliers of batteries and so in the past what we experience is that there has been a lot of demand.
Batteries.
Okay.
Okay.
Alright.
Alright.
Sure.
Thank you.
Yeah.
Sure.
A lot of noise.
Okay.
Yes.
Okay.
Thank you John .
Lisa.
So in the past what we experienced at the market demand for LSP demand actually has surpassed our suppliers' capacity for batteries supply. So that's that's why we experienced a lot of challenges in the supply chain, but going forward, we actually have been able to gradually alleviate this problem.
And we are very confident that we can continue to improve the situation and for the second half of this year and for the coming year. We are very confident that the overall supply chain shortages pant can be.
Relief to a certain extent and then in response to your second question basically.
Differentiate the concept of plant capacity and the actual deliveries.
Or the actual carried out executed capacity.
So we do have planned capacity for its single plant of ours and through multiple shifts of working we can actually maximize those capacity and so what we're doing right. Now is that we are trying to coordinate different plans in producing different models on different platforms, because we haven't been able to.
And in a position to announce.
That number in terms of the capacity of each single plants, yes, I can just give you a rough idea that be single.
Single plant capacity will surpass half a million dollars.
Susan.
Next question please.
Next question comes from the line of decline with J P. Morgan.
We'll come to you.
Ladies and gentlemen.
Thanks, Anthony anything 22 million people by Dave and Bill.
Great.
Thank you Felicia the S&P keeping tight.
In terms of.
Yes.
Please keep in some kind of late.
My pleasure.
By the end of <unk>.
Last year, Recyclebank 33 billion in cash on balance sheet.
How should we think about use of cash.
In terms of.
R&D spending in the fifth month.
Thank you.
Sure.
Okay.
Nick Hi, Nick This is Ben.
Respond to you.
First question, Yes, you're right, we actually we have about 43 billion cash in.
In hand us up.
And our last year and our plan.
As I mentioned that we actually we achieved operating cash flow breakeven.
Cash inflow in the second half of the nausea.
So.
Plan is to continue to improve efficiency and also to improve.
Capital spending so we.
Jack team.
Trying very hard to continue the positive breakeven operating cash flow this year and other than that we also have some <unk>.
<unk> for example, we continue to have new products, we will have the facility and equipment for the new partner and we also had the investment in terms of the capacity.
<unk> capacity, so thats our plan for.
Usage of our cash in hand.
Operating NOI, but we will try to be breath, Eva positive and capital expenditure will continue to improve the efficiency of spending lots of protein year product development and also to support our capacity development for this year.
Okay.
Maybe two things.
The two components.
Thanks Ted.
But that takes time.
You can see that we've talked about.
So we can conclude.
Two points.
Would you be considering before.
Thanks again.
Thank you.
Yeah.
The commercial lines.
Ladies and gentlemen.
My second question really quick.
We don't think so.
As Scott mentioned in previous conference call. Thank you.
Okay.
Especially with the shelf once it does.
Does that union.
You too.
Okay.
In particular, some answered Python say global testing through the past here.
Female crescendo echelon.
<unk> got another four that you've got secular <unk>.
So that's how we're looking at other ways.
Julian Segal.
Particularly well, we'll adjust Fayetteville.
Global test tissue I mentioned that as they go forward.
Illinois, Chen Titusville allow hurts you kind of talk.
Or should it be one towards into the fourth quarter that kind of uncertainty that you continue to kind of.
Selling her lodging does this whole machine in Canada on a Sunday.
So if you just took the geopolitical.
How will this season.
So he joined US here wondering Jessica will then Jess.
<unk> is open shelf, but we will miss him, but he is also good.
Well it has nowhere you can tell us about that.
Now, we actually plan to test the robo taxi sort of capability and performance by Q4. This year on June nine we didn't actually announce or make any statement regarding achieving level four by 2024. Our estimate is that we can actually achieve.
Keith or work towards the goal of autonomous driving by 2026 now in terms of the exploration in the <unk> model.
Right now we are we need to do a lot more testing to be able to find out.
The business logic behind bubble taxi and to gather more data from the actual execution of the capability and also to understand better.
The regulatory environment in this regard, but currently with our observations in the ex pilot development as well as the generating of the data. We are very confident and very very excited about the future of robo taxi and we estimate that we can actually achieve a high level of autonomous driving sooner than expected.
On the tissue.
And your next question comes from the line of being Wang with Credit Suisse.
All of them to the clients you're pumping.
We will continue that policy.
Sure.
So you could see something.
Maybe some because we should have been and number two.
We continue to go deep on the.
So Colin Sanmina Shlomo.
Can you talk.
J P Mark notwithstanding Q <unk>.
PTT Joel.
Thank you today for you guys.
Since you said.
We can change it.
You guys you're comping.
Okay.
Pumping timing, yet obviously he can actually.
Okay. My question is about the new product.
Because we actually think that we have.
<unk> got some products from the new technology platform. So it does at least one product from each platform.
One perhaps two platform.
As I've mentioned in our forecast.
Available phone a CTO in GP.
But if you can comment <unk> syndrome and <unk>.
Thanks, Paul for the upcoming CPU and GPU with the Honeywell up great. Thank you.
The shutdown in India will not be on good.
Change in assumption, Cynthia Daniela put Honda.
Sure.
So the system itself.
<unk>, it's Dave.
Sure.
Hydrogen sharpen next year, we plan to launch two new products onto platforms and both of them will support.
The deployment of X pilot full point out thank you.
Great. Thank you.
And your next question comes from the line of Vinci Yang with Citic Securities.
So on the long haul when Youre talking about how all that will then be willing to do something to talk about in Q2 on a monthly component <unk> onshore told you that extra wash out.
We will go about where qdoba unusual changes become Belmont sumo controller, which is a true commercial.
Just wondering from a global non <unk> del Diablo and T cells.
But you've got some hydro.
Bondholder Ghansham, if you take a one time kind of on that molecule youll pillar within our control and <unk> commercial teams will do you guys are you guys essentially.
Got it.
Capex.
So I'm going to join the call or maybe I should wash out.
My two questions is about.
<unk> on the Capex. So the first question is could you. Please provide more details about <unk> and what's the well based off Gina and will there be.
It's a version or <unk> version.
My second question is about Capex, so, what's the Capex budget, Guangzhou and Wuhan factory, respectively.
Progress updates to factory. Thank you.
Yes, sure Dave will elaborate that Jake.
Geolocation administrator.
It was of interest to us.
So are we.
And then we're going to get it all changed your pension Glenn So the CAGR will now please.
Hello, Mr. Geoffrey just do it.
Thank you George Washington tissue damage.
Perfect.
Hi, This is Charles let me respond to your first question in terms of <unk>, what I can be.
What I can announce right now is going at Jean Marc is going to be a five seat medium to large sized SUV it won't be a six seater or seven seater and in terms of the details such as Neil base et cetera. We will we will actually launch we will give you more details in our official announcement when we have the information. Thank you.
Okay. The second question. This is Dennis let me handle this.
In our Guangzhou <unk> total capital expenditure is somewhere around $2 5 billion to $3 billion and among that the construction.
And then <unk> funded by the government.
And Kevin provide yet long forward to us for your interest so and in terms of facility.
Sure.
He is funding 50% of the interest cost. So we will pay 50% of the interest cost in terms of the <unk> plan.
<unk> is the in terms of construction has been completed and now we are doing.
Yes.
Equipment and for CFP.
For the new brand new production not so this is to support new vehicle production.
In terms of <unk>.
The then speaker in the quarter plan showed you a total capital expenditure of the OE channel.
Pace was about $4 billion.
About slightly higher than 4 billion, an amount that the government will fund.
The interest of the $3 billion that will be the interest will be funded by the covenant and the rest will be funded by by shall come itself.
<unk> is under construction, including the building in <unk>.
To support new product.
As we mentioned.
For next year, so that's the.
The status of the Korean construction and also to your capital spending of your print.
Thank you.
Next question please.
And your final question comes from the line of Jin Chang with CIC.
Okay.
And some of them are good enough.
Homework, you, Dan Hog Hogan from <unk>.
Yeah, Brian Thanks for one chunk.
Sure sure.
Sure.
So module market.
In the interim tier four interim.
People are taking to ensure that you can presume youll nausea from CBS .
No Matt. Thank you you may.
Now obviously, you can answer OEM pumps.
Good morning, Amit.
Siobhan will kind of always looked at.
Helpful.
Sure.
My first question is about.
That's really all the suppliers.
Yes.
Next year.
Born out of poverty.
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Our perfect comp.
Glen can you supply.
Can we go jointly between some of the.
So Houston is Oklahoma Sandwich combo mentioned, thank you.
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Management.
On the economy.
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As I said it on the high end or kind of policy.
Paul Cheng will contaminate the Mustang.
On my side compressor in box.
The Bancorp and monitoring them also.
Expense ratio.
Guidance this year and we are considering.
The current cost and our price product price increase how can you expect our cost of marketing this year.
Also about the expense ratio.
Our expectation of our R&D and Jim maybe just a quick question.
I guess, Michael Congress going back.
Howdy Ho to shuffle whatever that is.
Eagle wound care.
Sure.
So therefore, the whole value chain that I can say.
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Sure.
<unk> hundred <unk> sure.
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Full quad version.
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Got it and then judge it that's helpful color.
Thanks, everyone.
So China has been good or title. So you saw at Samsung.
That's always challenging quite so you can see demand sanctity, those oil which has in China or you didn't appear.
And then with agility.
Thank you.
Tom will go over the critical path.
General pace, which actually in women's it sounds as though youre cutting in the knee.
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Hi, This is <unk>, let me respond to your first question, having multiple suppliers for Alberta results definitely gives us a lot of values mainly in to inspect the first one is to definitely make sure that we have enough supply in the second is help us to optimize or enhance our cost control capability now for that.
First benefit because we have multiple models that definitely really popular in the market and we received a lot of orders last year, but due to the supply shortage in batteries, especially in LP batteries, we were not able to actually fulfill or deliver those orders last year.
The actual sales.
Our models are all products containing LLC batteries was actually a lot smaller than the actual orders that we received and this year with our concerted effort with our supplier partners. We hope that and we are very confident that we can alleviate the situation. This year and the second benefits, which I mentioned earlier is the cost control capability enhancement.
As the raw materials for batteries and for a lot of the core components continue to increase the whole industry experience lots of cost increase risk but.
Cause of our multiple supplier partner network and this model we are able to actually released this sort of stress.
I think one quarters, two three quarters time and this year, we will continue to.
The players to better control our costs that's all thank you.
For the second one the margin.
Firstly, we don't provide margin guidance.
For the future.
But according to the information we have on hand.
In the first quarter.
We used the majority of the batteries stock, which we acquired we purchase.
So.
Cost increase did not really.
On the full quarter basis so.
We anticipate some material cost good news on the battery.
And also we.
We have paid her panamax seven actually the mix is higher in quarter four.
Last year.
For the second half because we have increased the price and then.
After we.
TD that Lowe's.
Price protection, others, probably stopping starting in late May or June we will have.
Capability to cover the cost so all in all.
Anticipated at quarter, one and quarter two margin would be even though even slightly better in the quarter for the margin level.
Starting from June , we actually price, where the effective new price at which you will be able to cover their cost and more importantly, we have Chennai, which will be so in the second half. So we anticipate the second half margin will be better than the first half.
Kind of guidance, that's kind of your general assessment for the margin thus far thank you.
For DRAM et cetera.
Okay.
As there are no further questions I'd like to turn the call back over to the company for closing remarks.
Since there are no further questions I would like to turn the call back over to the company for closing remarks.
So thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> investor relations through contact information provided.
On our website or the Pearson group Investor Relations.
This concludes today's conference call you May now disconnect. Your lines. Thank you for your participation.
Okay.
Yes.