Q1 2022 Li Auto Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for the <unk> first quarter, two tell them 22 earnings conference call.
At this time all participants are in a listen only mode.
Today's conference call is being recorded I would now turn the call over to your host Ms. Jenny Zhang Investor Relations Director Oh, two please go ahead Janet.
Thank you and good evening.
And good morning, everyone. Welcome to lead out of first quarter 2022 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the Companys IR website.
On today's call, we have our president Mr. Kevin Yeah Nation, and a reserve for Mr. Johnny Kelly to begin with prepared remarks, our founder and CEO . Mr. Shao Lee will join for the Q&A discussion before we continue please be reminded that today's discussion will contain forward looking statement.
<unk> made under the Safe Harbor probation update you as private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the wheels expressed to date.
Information regarding risks and uncertainties eight included eight E search in salaries of the company with you add Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statements, except as required and applicable law.
Please also note that the outhouse earnings press release and this conference call include discussions of unaudited GAAP financial information as well as Oh today non-GAAP financial measures.
I used to refer to <unk> press release, which contains a reconciliation of the audited non-GAAP measures to comparable GAAP measures with that I will now turn the call over to our President. Please go ahead Kevin.
Thank you Janet Hello, everyone and thank you for joining our call today in.
In the first quarter of 2022, the UE boom continue.
According to the China, China passenger car Association, all CPUC, a retail sales of new energy passenger vehicles in China reached 1.07 million in the first quarter of 2022, representing a year over year increase of 146.
6%.
<unk> penetration rates climbed to a record high of 28, 2% in March 2022.
As the leader in the new energy vehicle market. We are excited to be one of the driving forces behind the industry continued innovation and evolution.
Thanks to our Lee was outstanding feature and the compelling appeal to family users.
We delivered.
<unk> 1716, Lee was during the quarter Amy.
Industry wide supply chain challenges.
152, 1% year over year and achieved a total revenue of Rs.
<unk> nine point 56 billion 100, and the 67, 5% higher than the first quarter.
2021.
The past several months was undoubtedly a difficulty difficult period for all of us given the headwinds caused by the COVID-19 pandemic.
We have being no exception to the supply chain disruptions and the rising material and logistics costs that challenge the entire auto industry. Our tango manufacturing base is located in the center of the youngsters Delta region, which is home to over 80% of our plan.
<unk> hires.
Especially in the cities of.
Shanghai and Shenzhen.
The COVID-19 resurgence in this area since late March has incapacitated some suppliers in Shanghai.
Some of them completely shut down their production and the delivery, making it impossible for us to maintain production after exhausting our parts inventory.
This materially affected our production in April .
<unk> in delayed deliveries to our customers as a result, we only completed 4167 deliveries in April .
In light of the encouraging signs of recovery from the pandemic in the Delta region.
We expect our total deliveries in the second quarter of this year to be between 21000 to 24000 vehicles.
We should note there are still uncertainties with respect to the pace of the recovery.
Well, we are doing everything in our power to increase our production and overcome supply chain constraints.
Aiming to shorten the delivery waiting time for the one users while meeting all pandemic prevention and containment requirements from the government.
To help offset the sharply rising raw material cost, particularly the battery cost.
We raised the price of Lee one by RMB 11800 effective April 1st.
This year.
Moving to the profitability.
In the first quarter, our gross margin remained robust at 22, 6%, our R&D expenses increased 100, and the 67% year over year to RMB one.
37 billion.
Accounting for over 14% of our total revenues.
As we continue to enhance our strategic investment in <unk>.
What's driving intelligence cockpit and electrification.
The increase in R&D together with our direct sales and servicing network expansion resulted in a 151, 5% increase in our operating expense year over year.
Despite the deliberate increase in expenses to drive growth.
Our net cash flow from operations was positive for the eight consecutive quarter at RMB 183 billion.
Thanks to our outstanding manufacturing and operational efficiency.
In addition to <unk>.
Propelling growth, our expanding direct sales and servicing network serves as an important and efficient interface for us to gain insight into our users' needs and desires. We think like user these perspective in Forbes and motivates us.
As we strive to continually piece users with updated features product design and services.
As of April 30 <unk>.
2022, we had 225 retail stores covering 106 cities and the 200 and the 92 servicing center and also authorized the body and paint workshop operating in 211 cities going forward we will.
To grow our sales network and the cadence that accommodates both.
<unk> to capture market demand and the risk related to the ongoing pandemic.
With respect to R&D since we released our Otas 3.0 to introduce our full stack in a way in December last year.
And to become the third automotive Oems globally to develop a full stack sales to do that.
There's no way more than 100000.
2021, Lee one users have enjoyed another way assisted driving as of the end of April we are pleased to see our self development process.
<unk> to the consistent improvement in our.
50 and functionalities.
<unk> penetration rate has reached to 61, 3%, which means that 61, 3% of our users utilize all.
On the highways what is available.
The data gathered from the N O way mileage in real life driving scenarios will play a crucial role in our future Adas development and facilitate our ultimate goal of full fully autonomous driving.
The Nvidia Marine ex chipset and the Lidar our next full sized SUV.
Al nine will further improve our vehicles autonomous driving capabilities.
Our R&D efforts to divert our rent extensive system surface and the domain controller inhouse also bearing fruit.
<unk> R&D trends among others will be unveiled in our second production model the ally.
That leads us to our update update on product.
Our first model <unk> has been a proven success catering to the needs of families in China.
D. One emerged as one of the industry's best SUV twice for family users. We built on our strengths and are getting ready to launch our second production model the <unk> disc.
A few pandemic related bumps in the road. We are forging ahead with our plan to commence the delivery of the <unk> in the third quarter.
<unk> is our flagships SUV for family users based on our new generation <unk> platform offering best in class combination of performance safety and intelligence.
As just mentioned it features our fully self developed Reg extension system chassis control system and the central vehicle domain controller, which empower is outstanding dynamics, Inc.
And to drive the ability.
In keeping with our fundamental belief that safety should always be standard not optional.
Every hour NIE is built to our strictest safety standards and come equipped with our update upgraded autonomous driving system L. I.
Max.
Capable of all scenario and the O N E.
Hence the driving safety and convenience.
And I also comes standard with first class premium features such as the sumptuous seat a high performance audio system and an all new three dimensional interactive experience.
Above all the ally aims to meet the needs of more family users and the delight users by proactively search find desire that they may never knew existed.
Since we released the TCR T cell information for the vehicle. We have received a great deal of positive customer feedback and we can't wait to deliver our Eni and amaze our users with all its features and benefits.
In parallel with our <unk> development. We are also investing in R&D for next generation electric vehicle technology, including high fee rates battery high voltage platform and ultra fast charging technology with the goal of building an end to end BV and charging ecosystem.
That can support a driving range of more than 400 kilometers with only 10 minutes charging.
As the leader in the new <unk>.
Energy vehicle industry.
We are dedicated to leading the future of mobility.
Well also making a positive impact on the environment of our society.
On April 19, we released our first ESG report.
Which marks yet another step forward in our sustainability journey and underscore our resolve to operate responsibly. In addition, we are pleased to report that our class a ordinary shares were included in the Shenzhen and Shanghai, Hong Kong stock connect programs.
On March 14th and the April 25th this year respectively.
This allows us to access a broader investor base and the share of our growth trajectory and the further success with users partners and the investors in mainland China.
The financial market.
Looking forward, we will continue to create the right product for family users.
Per suffering through challenges.
With a laser focus on operational and financial efficiency.
How they progressed and they inspire happiness along the way.
With that I would like to turn it over to our CFO Jonny for a closer look at our financial performance. Please go ahead.
Hello, everyone.
I'll go over some of our financial results for the first quarter of 2022.
To be mindful of the length of this call I will address financial highlights here and in card as you refer to our earnings press release.
Which is posted.
Phone lines for additional details.
Total revenues in the first quarter of 2022 or RMB nine point.
Five 6 billion.
015, 1 billion U S dollar.
Representing an increase of 167.5%.
From RMB 35698 bidding in the first quarter of 2020, while these included RMB.
9.31 billion or one point.
The four 7 billion U S dollar of vehicle sales in the first quarter of 2022.
The increase of 468, 7% from the first quarter of last year.
The increase in vehicle sales over the first quarter of 2021 well smoothly.
Attributable to the increase in vehicle deliveries in the first quarter of 2022.
Or cultural will cause our base.
Oh of course, our base basis total revenues in the vehicles vehicle sales decreased 10% and 10.
3% respectively.
Primarily due to the decrease in vehicle deliveries in the first quarter of 2022.
Revenues from other sales on the services were RMB $253 4 million.
A $40 million.
In the first quarter of 2022.
Representing an increase of 100.
27, 2% from RMB 100.
11, five meeting in the first quarter of 2021.
And the increase of three 6% from RMB $244 7 million in the fourth quarter of 2021.
The increase in revenue from auto sales and services over the first quarter of 2021 was mainly attributable to the increase increase the sales of charging stop.
<unk> accessories on the theory is it in line with the higher accumulated vehicles sales.
Cost of sales in the first quarter.
2022 was RMB.
Seven.
For billing.
1.1 dollars 7 billion U S dollars.
Representing an increase of one.
150.
1% year over year.
<unk>, 10.2% cultural quarter crossed.
Gross profit in the first quarter of 2022, well it's RMB.
One six beating all 341, three meeting U S dollars, representing an increase of 259% year over year, and a decrease of nine 1% quarter over quarter.
Vehicle margin in the first quarter of 2022.
22.4% comparatively of 16, 9% in the same quarter of 2021.
'twenty two.
<unk>, 3% in the fourth quarter of 2021, the increased used vehicle margin over the first quarter of <unk>.
2021 was driven by higher average selling price.
Attributable to the increase in vehicle deliveries of 2021 U S. CFO relief in May 2021 crore.
Gross margin in the first quarter of 2022 was 22, 6% compared to 17, 3% in the first quarter of last year.
And.
22, 4% in the fourth quarter of 2021.
Operating expenses in the first quarter of 2022 were RMB <unk>, five 8 billion or $406 5 million U S dollars.
Representing an increase of 151, 5% year over year.
The increase of nine 4% cultural work harder.
Research and development expenses in the first quarter of 2022 were RMB.
137 billion.
All 216.
$7 million representing.
Representing an increase of 167.
Year over year, and the increase of <unk>.
11.
7% quarter over quarter.
The increase in research and development expenses over the first quarter of last year.
It was primarily driven by the increase.
Employee compensation as a result of our growing number of <unk>.
Research and development staff as well as increased cost associated with new product developments.
The increase.
Research and development expenses over the fourth quarter of last year was mainly driven by <unk>.
Increased employee compensation.
Selling general and administrative expenses in the first quarter of 2022 RMB one.
$2 billion.
189, 8 million U S dollars.
<unk> increased by 100.
35, <unk>, 9% year over year, and the increase of six point.
8% cultural culture.
The increase in selling general and administrative expenses over the first quarter of 2021 was primarily driven by increased employee compensation.
Result of our growing number of staff as well as increased marketing and promotion.
And rental expenses associated with the.
The expansion of the company's sales network.
Loss from operations in the first quarter of 2000.
22 was RMB 400.
13, 1 million or 65 2 million U S dollars.
<unk> is RMB 407.7 million loss from operations in the first quarter of 2021.
On the RMB.
Plentiful part 1 million income from operations in the fourth quarter of 2021.
Net loss was RMB, 10, 9 million or $1.7 million.
In the first quarter of 2022.
Compared with RMB.
<unk> 350 meeting net loss in the first quarter of 2021.
On the RMB 200.
<unk> 5 million net income in the fourth quarter of 2021.
Turning to our balance sheet and cash flow.
Cash and cash equivalents.
Restricted cash and time deposits and short term investments totaled RMB 51.19 billion or eight pardon zero $7 billion as of March 31st 2022.
Cash flow in the FERC first quarter of 2022 was RMB 183 billion or 289.3 million U S dollars free.
Free cash flow was RMB.
502 2 million.
<unk> seven <unk>.
<unk> 9.2 million U S dollars in the first quarter of 2022.
Yeah.
And now for our business outlook.
For the first for the second quarter of 2022, the company expects the deliveries to be between.
'twenty, one solve that and 24000 vehicles.
Representing an increase of.
19, 5% to 36, 6%.
From the second quarter of 2021.
The company also expects second cause of our total revenues to be between RMB 6.16 billion and RMB 7.0 for bidding.
U S dollar $972 3 million.
The U S dollar one point.
$11 billion.
<unk> increase of 22, 3%.
Cool.
39, 8% from the second quarter of last year.
This business outlook reflects the company's current and preliminary review.
On the business.
Situation in the market condition in particular.
The encouraging.
And sulfur recovery from the.
<unk> painted pandemic in the young start her read it which are all subject to change due to uncertainties related.
Two factors such as the pay for fall.
Did I make recovery a modest I will now.
Turning to call over to the operator to start the Q&A session. Thank you.
Thank you.
We will now begin the question and answer session. If you wish you ask a question. Please press star one on your telephone them wait for your name to be announced if you wish to withdraw your request. Please press the pound key.
For the benefit of all participants on today's call. Please limit yourself to two questions and if you have additional questions you can re enter the queue.
If you are going to ask the question in Chinese please follow with English translation, once again, ladies and gentlemen.
One for questions.
Our first question comes from the line of Fei Fang from Goldman Sachs. Please ask your question.
Because you guys are calling some of the financial consequences to usual <unk>, which had been on <unk>. So it's going.
When you take a chat to recon side you.
Could you show me out there you go to Chunghwa, sometimes shelf it on the chin quality. Good Joshua sequence readout of <unk> is the outage in Q2, two cts horror almost somewhat to routinely and ctrip volume, which had that Sheldon <unk>.
Tina easy to deliver new fish on the Hall Butler cabin gone I'd have to go through all the challenge our CFO .
Andrew <unk> lets them closer.
And you alluded to you how does translate for myself great quarter I have two questions first of all the business outlook was a broader market level assumptions that management are working with in terms of in terms of both the supply and demand with a specific launch timing for our <unk> hardware production ramp up and any comment on the broader market environment would be.
Very helpful. Second it's about margin the first quarter margin was upbeat Kevin discuss a retail price increase in April . So can you refresh us on the margin guidance from here. Thank you.
Thank you.
This is Kevin. Thank you for your question, Okay. Our first question.
In fact, they are the outlook are we.
We gave just now is based on our our.
Patient out.
The recovery of.
The production.
All of our suppliers.
Answer the Delta region.
Basically you can see from end of.
April Qunar, although still a lot of suppliers are still struggling to recover but we already see some of the positive signs that at least.
Half of our suppliers already already.
Their production.
So therefore the are there still are uncertainties for the next step.
And in terms of they are they are.
The other we have enough order too.
Uh huh.
Yeah, So right now the sink.
Single biggest risks still they are the production of our suppliers.
And then in terms of the March.
March.
Market large plan for <unk> as.
As we just mentioned.
In the third quarter of this year and I will be will be delivered to our customers.
And the overall I think for the overall business.
Behind us we already see that in the past two quarters, we have already seen very strong growth both the production and consumption.
And so on.
Looking to the future.
<unk>.
There are uncertainties first of all as they are.
Recovery of the supply chain.
On the other hand, if the pandemic persists for a longer time, our fear is that does that.
The the.
The consumers are spending desire we.
Reduce yeah. So that's a.
Another thing we are monitoring closely.
On your second person.
Actually we are.
Right now, it's not time for us to provide another.
<unk> guidance for our gross margin.
Thank you.
Great. Thank you. Our next question comes from team shelf.
Stanley. Please ask your question.
Uh huh.
Aloha.
So with that you would know what you mean.
<unk> horrible nature to this.
Yes.
He was too so she held a shipyard, which outlet center central acquisition, which was a painful.
So the two vaccine that phone churn it sounds.
I was hoping you guys could go football and seeking out Tony Guzzi can call.
As you can see changes huh.
You can see that simplicity HLA.
But once you get it seems very stable cohorts in China, So do yourself.
So how.
How do you think.
<unk> Colo.
Here you can contact either.
But that is one of <unk> to the table that you can call it against that without the portal.
Thank you Michelle.
Sure.
I'll, let choices on television.
In July Quanta.
So okay, so talented senior youll come in Haynesville.
Chocolate telecom <unk> clinical what you'll hopefully to the couch it.
<unk> put that to shake out yet.
The challenge to be honest.
So I've got two questions. The first question is about they're switching strategy because.
We think the production will be called me up here, it's a matter of time.
But has taken any extra precautions.
Temporary viewing or changing your current sourcing strategy has been to wake up the rest and disruption.
<unk> Riva Galata region.
As Kevin mentioned, 80% of our suppliers are currently located there so any thoughts on further diversification in China offshore.
Second question is about the potential price hike or margin pressure I guess on top of that.
<unk> 8000 <unk>.
Since April .
If there is any pressure off the Friday plasma Jasmine or this back.
There's likely further price hike of key components for example, like batteries into second half.
Especially production costs has substantially increased.
That's in place.
Got it.
Alright. Thank you Tim this is Kevin again.
So first of all for the supply chain.
Management.
In fact, we.
In the past we already have the have the measurement to try to.
Qualify more suppliers.
Suppliers to two supply.
To supply us so that will not change and right now of course with the pandemic we are.
We will definitely.
Consider some short term.
<unk> to two <unk>.
To counter the counter.
Hunter the the impact because we will.
There are still uncertainties off the recovery after the pandemic.
Front of us.
For the long term.
Don't think it will take a any dramatic measurement to two.
To change our supply chain management strategy.
Because.
The pandemic is.
We think it still is a one time issue for us and the supply chain.
Hi, Chad.
Strategy is a long term thing.
And for the.
For the for the price.
Adjustments in fact with the.
2021.
The one actually when we increase the price.
On April <unk>, we already took the took into consideration of all the <unk>.
Foreseeable.
Material costs the increase yes.
But we are but we will continue to closely monitor the the.
Vitality ALS.
The cost.
So right now we don't we we don't see.
Is there a need to further.
Change our price, yeah, but thats based on the current <unk>.
The information we have yes.
Alright. Thank you. Our next question comes from <unk> Zhang from HSBC. Please go ahead.
Right.
I believe you get something done on that one.
So it sounds like that would come down to a whole woman seeing something damaged tissue.
And I think then it sounds like you are calling it out.
Oh man.
Hey, Don.
So it doesn't have a gondola and salary chicken and Turkey.
Oh, okay.
Arnie hunting is hovnanian Duncan can play for your home.
Thank.
Daniela. Thank you she tells us someday.
Now how about Helen gives you plenty of both the dollar kind of thing.
John Smith on Georgia, Damn I thought you'll allocate it sounds to me I'm going to general until attending Danya now cobalt team, but anytime soon so I'm going to do and I should probably call me do publishing hunting.
Henin go Ken.
No.
But I think I'm trying to think about it.
Why are you attempting to Jennifer.
It was a complete game controller thins out.
So when I didn't know what that means.
Thank you and Hello to bump jumping to us yet.
My two questions. Firstly is on the order book and the demand outlook whats the new order book momentum post the price hike and how would the new auto book in April compared to January and looking ahead, how would management what do you expect higher high end biking category E demanding second half it looks like <unk> gross quota backend loaded.
And the second question is on the product cycle and product strategy, what might be coming through in next year would be a big product cycle launching yet.
We have your insight.
We plan the five models new models value proposition in the coming 18 months and the conviction or the product.
Philosophy to enable them all potentially the second one.
Yeah. Thank.
Thank you sure. This is Kevin I'll take the first question and leave the second question to.
Alicia yes.
As we are.
We all know that the the.
In April 1st we increased our price.
Actually the.
A lot of sales please.
What were consumed in.
The end of March so therefore.
In the very beginning of the April because we have to re restarted.
Sales Lisa <unk>.
Pipeline. So therefore, the first half of April was a little bit slow, but the things that.
Last week of April and also the.
Also the first week of May we already see a.
Very strong comeback after other intake.
The only exception is so high because the Panera two <unk>.
That makes a stopped us from taking all of this yeah. So overall, we are we are still very confident that that.
They are.
The only one we will continue to be.
Demand will continue to see very strong overall for the high end.
Hi.
PV market.
Unless the pandemic persist.
Very long time and hurt the economy very badly otherwise so we we think that the.
The demand will continue to be stable and but from our side.
Our.
And also our incoming Eni.
The product competitiveness is very very strong so therefore, despite the the.
The demand side.
Fluctuation, we still have a very strong confidence that these two products will do a very good this year in the market.
Yes.
Well, what I can hit on the champion in Wuhan.
Tell me, who have are pushing as hard in June yet.
Oh, okay.
The Chinese.
So in conclusion the downturn many of you in hospital.
And coming to see what else.
Machine at it sounds familiar I thought I heard about that before they happen.
Yes.
Sure Josh.
Hawkins, Tim Lugo Pinhead, Keith will come here.
So you don't really get a good attending our shows you though.
Okay.
Oh, okay.
Sure.
She now you know essentially.
Essentially what it says about the agenda to the cavalry that ensure the I mean, essentially you're trying to shop.
So that element of it.
Sure.
How about on the phone who are choosing to go hard either.
Oh, yeah, good that's happening.
So when they turn down.
Diego Harsha download puts on not only quite tight.
So the total amount of interim CFO .
Sure I think that you were asking right.
Or do you want me to answer that.
Sure.
Cash audio household MTV, but shouldn't be guys how are you.
So you got a fade how hard they're using.
I'm here to help them and hence you should also note that should.
Cause I feel it curious how long you think it will go.
So I know that many of them actually you don't change anything.
All right.
As you can probably tell me if I could add one was really a trend yet.
When you finish it sounds like you don't think that.
Champion.
Some of it around.
On the Holdco through the entire strategy.
One of the only on Taiwan.
As I mentioned, they are downloading hydrogen GGP movie titles.
How do you how should I do.
The Hartford Albert.
We had the.
All her time and put on the Jaguar.
What was that make sure that you talked about earlier.
Sure.
Bulky in there at all.
Sure.
And then beyond that you would have thought that that part of it.
Essentially it also drives it yet.
Thank you Shashank, you bought Chita, Sichuan upfront, but you get value.
When you shop, you bought your kind of with or without adjuvant the downward change yet.
So I'm gonna chalk keybanc.
Keeping up with them.
Got you.
Rolling out either time here you can see.
In particular, the caveat you generate value for the future.
But do you have any partial bill cimino hook JV.
Fernando but don't have enough time here I didn't mention happened yet.
Bill Congrats on.
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Tom Chime in.
The whole bar to go from here.
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They should know towards how they behind them against the Haynesville shale plays.
Charlotte.
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IPhone sharper Omadacycline sharper all iPhone sharp eye for sure Armenia that puts let you have it.
How can they put on the shelf as usual Tianjin and Chengdu.
So just curious how did you hear that question.
So let me have him.
Maybe you could talk about your Jennie O. So could you go into 10 Mindy nominal Capex you generally how you're glad you did.
We're getting tangible so it just became very catchy.
I've been with you.
This is michelle on translating for the founder of the company.
When we launched our first product by the end of 2019.
One single product, which became a big success.
At that time on we started to look at our product portfolio as a combination of different products.
And therefore since then we started to develop some five different platforms to support our product portfolio, including the range extended platform 800 volt high voltage electric vehicle platform.
Thomas driving platform Smart space platform, and our electric E architecture platform. So all of these <unk> platforms combined together support our wide range of products across different price ranges. So by 2021, if you look at the one.
Is it product.
300 to 400.
In RMB.
The market you have already had a 30% market share and there is still increasing and thats. Our standard for successful hip products and we think that some of their comparable market share in the target market.
And with that in mind, we move on to continue to deliver hip products in every price range within our target markets and we look at our product portfolio with two perspectives.
The first one is that we.
Pair different body types with different energy sources and by that I mean.
Electric electric pure electric vehicles, we don't have one body type and extended range vehicles with different body time. So when we built started building range extended vehicles.
We felt we realize that the best spotty tightened with Suvs because neither sedans are mtvs were good fit for from a packaging standpoint or range extended vehicles.
And by the same logic when it comes to electric vehicles, we realize that big Suvs are no longer could fit because for energy efficiency reasons.
And therefore, when we deliver our first electric vehicles, you will see a completely new body types that we believe is best optimized for electric pure electric vehicles.
And with this combination we believe there will be no cannibalization between our own electric vehicle and range extended vehicle product portfolios.
Those will completely covered the 200 to 500000 RMB.
Target market.
So that was our first strategy. The second strategy is with respect to price range.
So with the goal of covering the entire 200 to 500000 price range and every <unk>.
10000 100000.
Segment, we will have one hip products one in range extended I'm wondering like pure electric.
We had a good start because our first product was in the 300000 RMB price range. So from there. We can go up to four to 500000 and we can also go down to two and 300 between 300000. So in every segment as I said earlier there'll be one <unk> and one <unk> and they will all be built based on those.
Five platforms that I mentioned earlier.
Range extended vehicle platform the high voltage electric vehicle platform autonomous driving platform Smart based platform and E architecture platform.
So by analogy you can see our product portfolio is very similar to iPhone, where.
You have one key concepts and platform.
From there on the covers all different price ranges with the Python 12 item 12 Pro I can talk pro Max and even the iPhone many ever.
Every price range, you can see the product insert.
Absolute leader in that market segment, and that has been our role and our goal and philosophy.
And three years ago.
Thank you. Our next question comes from Sean Lee from Bank of America. Please ask your question.
This is Jason.
Thank you.
So Quentin just.
We continue to grow.
Both of whom are conducted.
She needed until the.
Cost of it themselves.
Joe.
Samsung does it tells you kind of something that you can't see it.
Uh huh.
Yeah.
Oh, just the Huntington.
Interesting.
Youll come into the quarter as well.
Turning to the homes.
Zooming into the UK.
So it sounds the liard quarters. This one.
Chocolate itself.
When it pans out.
Okay.
Right.
Good.
Yeah.
This is unusual.
As usual.
We said just call it 90 wise assortment through the.
So does it sounds like.
Yes.
We're not going to go ahead.
Thanks Johan.
So to.
That's absolutely true.
That is one thing.
Okay.
But they'll see it if that's okay.
Sure.
One of them.
You guys have.
That does it.
As you said there was some people don't.
Some clients you say you will kind of took a tight institutional suddenly it sounds like you did not do you want to you could you assume at newco.
Yes.
Sure. So this is Sharon.
So would you tend to have children.
Okay.
And she was just searches and took the total wage no.
Question on Yosemite youngsters.
Quite soon in Chicago.
For example.
Tony in Zohydro woman as smooth as Tony said.
It always seemed to kind of talk about somewhat seasonal but what are you saying.
Still it sounds you're on to showcase them at all go to the charging station Opex is way down, but when do you know what I'm, saying.
So my first question so for the battery price.
And then also the D C new supply in the future where you think the.
The lithium supply constraint.
Constrained.
Gross but China and also currently.
Battery prices still high.
Do you think of this is because of some speculative.
Trading or is.
Mainly because of the real demand.
Simple questions regarding that Youre point of sales expansion.
Previously you had targeted 400 stores by the end of the year, but the under the pandemic.
You slow down the progress and also in terms of the charging and power.
As you can Oh, let's go charging station based Super charging infrastructure. Thank you.
Yes.
Ali This is Kevin Thank you for the question.
Three questions first of all we well we think right now the.
The battery cost, especially the.
The raw material cost.
Is already a deviated from the reasonable price of course.
With a with a supply increase will attest.
AC gradually.
<unk>.
The raw material cost.
Go down but the overall for this year, we still expect that.
The probably the the price will we will still stay in a relatively high position yeah. That's our.
I'll look yeah. So of course these are these.
These are high price of the raw material will will we.
We will translate.
Translate into the increase of the end consumer price therefore.
We were kind of hurts us.
The market demand, but as I mentioned, just now with our <unk> and our ally.
Because our product competitiveness is very high.
We still have strong confidence that.
Even with a slightly higher price.
We can do.
Get a lot of order.
For example for the one even though we increased the price starting from a preferred.
But the.
As I just mentioned starting from end of April Qunar, we see the other steel coming in strong.
And then in terms of Covid.
The.
Sure.
The retail stores.
We did have a.
Quite.
Aggressive plan by end of this year wanted to have more than 400 retail stores right now of course because of this pandemic.
Pandemic issue.
We are revisiting our plan.
We.
We should all agree that the number of retail stores.
It's a fundamental requirement for us to achieve a higher sales volume next year. So therefore, it doesn't matter.
It doesn't matter, how big the impact of the pandemic.
This year, we still we still.
I want to open.
Many retail stores as possible despite the impact of the pandemic.
In terms of charging post starting from this year, we already have a team.
Talking to build the charging posts.
Right now the initial our initial initial focus of this team is to two primarily build had imposed along the highway, especially those highways connecting the.
The connecting the.
The.
Big cities, Yeah. So right now the primary focus today is still the the highway too.
To connect the cities and within the city.
It depends on the customer needs, yes, we will.
Very well.
We'll choose carefully whether we want to build the trading posts within CCT.
That's the strategy right now we have yeah.
Alright. Thank you. Your next question comes from James Jang from CIC. Please ask your question.
Okay.
Okay.
Okay.
Alright.
The other income.
Yeah.
Right.
Uh huh.
Yeah.
That's helpful.
Thank you.
Okay.
Yeah.
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Yeah.
Yeah.
That's helpful.
That's really helpful.
Uh huh.
Oh Wow.
Okay.
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Okay.
Yeah.
Oh my goodness.
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Great.
Hello.
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Right.
Okay.
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Sure.
Yeah Paul.
That's something that wasn't something we wouldnt want them.
Okay.
Uh huh.
Sure thing.
I'm, sorry, I wasn't quite sure.
Alright.
This is fun.
So.
Oh yeah.
Yeah.
Yeah.
Welcome.
No way.
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Oh sure.
Sure.
So I think.
Okay.
No.
So my first question.
And there's no question about the other income.
200.
So that's.
Does it come from.
My first question.
Absolutely.
Oh, Okay I heard that.
Uh huh.
Particularly.
Uh huh.
Yeah.
So how about that.
That's correct.
Okay.
That's where you are comfortable increase pardon me at all.
Uh huh.
And Uh huh.
Okay.
There's some quite cool.
It's not the cost.
And that last question about the product.
Product pipeline.
Right.
At lunch.
Hum.
Thanks, a lot.
Got that.
Okay acquisition off around <unk>.
I'm good.
Yes.
On the market.
Oh pardon me.
How did we do it all paid off.
Uh huh.
Mark.
According to our client.
Yeah, we're going to launch.
And you.
Uh huh.
Or do you think.
I think that.
Thank you.
No.
But not before then.
So how do you worry about.
The market today.
That's helpful.
Thank you Tony.
Our lithia.
I will take the first.
First question is on again.
Increased.
Of other good compared with last quarter was <unk> 83 fall upon collection.
As well if our company was qualified as a software company.
This is Kevin for the battery cost.
We agreed with our suppliers with a framework to kind of a related.
<unk>.
The battery price with.
With the fluctuation of the.
Upstream raw materials. So therefore.
For the coming quarters, we do need to renegotiate everything, but those costs will always come back to our suppliers asking for cost savings that's for sure.
And also is as I just mentioned.
The price increase already reflected our expectation after.
For the raw material price in the coming quarters yeah.
But I'm trying to get anything over the year.
When she was at TNT, the R&R and that triggered a champion.
We're going through the downturn.
I'm not sure if you're judging the.
So youre hydro the Jennie O.
The change in Cleveland.
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20th when you're interested in the down the time here.
Neil Hi.
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How do you do impart to how to go to China.
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You'll have a tendency that you tell you are sure to align the direction yet.
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Great.
Tissue, how can you Hasan that young.
<unk>.
Thats it also sort of that.
Yes.
Samsung talking about Central Sunday time here.
Kind of without Droning, Tom champion.
Now we did tissue are women.
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The 13 year Bahar deal, how media Homeaway faithful sounds like MTN.
Brian .
TJ can get thereby creating the.
Okay.
Okay.
Dominion that I hope, you'll keep kind of on the deeper horizontal central under hotels drove him till the time here.
You just you want me to come in the future.
Paul.
It's fair Cleveland step by 2025 of our core customers will still be families with kids and with that three things become very clear first is.
You're always going to build vehicles with an acceptable level of return dimensions for family users and the second one is that all of our vehicles all wheel drive.
Third is that we want we wanted to make sure that every vehicle includes our latest autonomous driving and smart <unk> solutions. So that every family member or able to enjoy them.
And with these three things in mind, it's very natural that we will continue to focus on the 200 to 500000 RMB price range.
With.
Within this range, we will continue to mind, the 300 400000, which is our starting point.
And from there on we'll expand upward to the full sized market and downwards to mid sized market.
This year as you know our focus won't be the alpine release and next year. It will be launching three new vehicles, including a new completely new range extended vehicle and also our first battery electric vehicle and you will also see our first product in the first in the 200 to 300000 midsize market.
Okay.
Alright. Thank you. Our next question comes from being Wang from Credit Suisse. Please ask your question.
And you don't always hit Joey Goldman's clients into somebody you could see some months ago. It seems that Tom talked about then essentially youll military.
So as you saw.
And then just I'll.
I will give you <unk>.
Well, maybe somebody useful gotcha.
<unk> will have been seller.
Got it.
And with the hydrocodone.
Thanks for taking my call.
Capital.
I would tell you when you think about why the margin implication.
Good morning.
Everyone comes to continue to talk about that some some crashes.
Uh huh.
I would have a one question.
So cam no one coming forward I think quick battery.
You guys mentioned that price increase by 30%.
Jennifer Costar from second quarter.
For the first quarter already considering the pricing Crystal battery you also actually Christophe smartphone April for US is that that means the second quarter market. Following Chris. So can you guide us on this thank you.
Yes.
Thank you first question is.
Rather complicated question Huh.
So basically the.
The first quarters.
Our financial performance already to consideration of the of course already to consideration Alf.
Part of the battery cost increase and the impact was not that dramatic primarily due to as you know that we have the inventories. So therefore, the the cost.
Fact is.
It's a rolling mix yeah.
That's for the first quarter.
From the second quarter, we will have.
The the best III costs increase as you mentioned and at the same time from the beginning of this quarter, we will have.
Selling price increase so yeah.
So therefore the.
So not that we can expect that.
Some of very high.
Gross margin.
<unk> two last quarter.
Okay.
Alright. Thank you as we are reaching the end of our conference call I would like to turn the call back to the company for closing remarks, Ms. Janet Jackson. Please go ahead.
Sure. Thank you once again for joining with US today. If you have further questions. Please feel free to contact me autos Investor relations team and desktop for today. Thank you and have a good one.
Ladies and gentlemen, this concludes our conference for today. Thank you for participating you may all disconnect.
Sure.
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