Q1 2022 NIO Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for Neo Incorporated's first quarter. Two tells in 'twenty two 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 E Tang from capital market.
Please go ahead.
Good morning, and good evening, everyone welcome to <unk> 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 company's IR website on today's call we have them.
Mr. William Li founder Chairman of the Board and Chief Executive Officer, Mr. Steven phone, Chief Financial Officer, Mr. Stanley Qi, Senior Vice President of finance and it made straight away.
Vice President of capital markets 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 119 95.
Looking statements involve inherent risks and uncertainties.
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.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Please also note that the news earnings press release and this conference call include discussions of an auto just GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to news press release, which contains a reconciliation of the unaudited non-GAAP measures to the.
Comparable GAAP metrics.
With that I will now turn the call over to oversee OOO. Mr. Windley William Please go ahead.
Please go.
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Hello, everyone. Thank you for joining Neil was the first quarter of 2022 earnings Conference call.
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In the first quarter of 2022, we de Levered to 25768 premium smart electric vehicle another record quarter with a throat.
37, 6% year over year.
So that would be I assume you guys can see.
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Things that they didnt have up in March.
Wave of the Corona virus outbreaks in certain regions in China has impacted other vehicle production and the believers in April and May we de Levered 5074, and 7000 to 24 vehicles, respectively, starting from June well the supply chain.
The faithful production have basically returned to normal over vehicle deliveries have also gotten back on track in Shanghai and several other important in the market.
We will continue to work closely with all of our supply chain partners to further improve the overall supply chain production capacity and accelerates the vehicle deliveries, we expect that the total delivery in the second quarter of 2020 two to be between 23000 to 25000 units.
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Despite of the outbreak.
The product has continued to.
To witness the robot 15 months order intake they are strong, especially for <unk> seven and <unk>.
It's to a new high in May we believe the launch of new products or won't drive continuous order growth in the meantime governments at all levels in China have also introduced a positive policies to encourage vehicle consumption and purchase of electric vehicles.
This will further promoted the up trading and the new purchase of a premium smart electric vehicles going forward. We will further increase of the overall supply chain production capacity and we're comping off of ramping up our deliveries at a much faster pace in the second half of this year.
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In terms of the vehicle goes Martin the whole industry is faced with the rising cost of a battery raw materials and the chips, which has also affected over vehicle margin in the first quarter of a vehicle margin stood at 18, 1%.
The battery cost are continuing to search and to pick in April the vehicle margin in the second quarter will be under even higher pressure to mitigate the impact of the rising material costs, we haven't taken a serious of a counter measures such as adjusting product prices.
We have raised the all the new product higher revenue per vehicle and increasing production output. We expected the vehicle margin to start bouncing back from the third quarter.
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May 'twenty 2022.
It was listed on the main board, they think that plagues change, which marks another important milestone off Neil.
That we have further enhance of our footing in the global capital markets, which lets us better connect with the the.
The investors and certainly investors from around the World. It is also off of quite a significant pool of our global business development.
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In addition, according to the announcement made by the Hudson Indexes Company limited.
All will be included in the 100 and Tech index and the Hudson Composite index starting from June 13th.
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I told you we shot <unk>, possibly even some in Asia.
Sure.
I would like to share with you some updates on all of our weekend operations and R&D.
Sure.
Ocean Chief William Fox, It's almost the way lights Hunter your father, and son going into India, Bhutan gunshot wounds, often die until how youll should attention.
Research and development of new products and core technologies has been one off and you know it's a long term strategic focuses.
We have been making positive progress, it's I'm embarrassed related fronts.
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On March 28, we started to deliver seven whose extraordinary handily in the riding experience has been well recognized by the users and the media thinks that delivery of the 87, we have made the phosphate durations and released the most smart features via a photo.
Great.
On a continuous basis, we have introduced over 200, new features on the N teacher 0.0 platform with the next generation voice into action and emotion engine technologies No amazing active experience is comprehensively upgraded the driver assistance system powered by now.
So meals at full staff in house algorithm has achieved outstanding performance in external reviews and the field test.
Third quarter, well really MLP plus based on the HD map co developed with our partner enabled by the powerful software and hardware platform full stack in house algorithm and end to end approach to data collection and the operations of capabilities and a 2.0.
<unk> is capable of a phosphate tuition and upgrades laying a solid foundation for releasing and they do it services in more scenarios and providing the autonomous driving experience beyond expectations.
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On April 29, the first itchy five tooling trials you wrote off the production line in F. Two at New Park. The team is working towards the final stage of mass production of 85 and the delivery is expected to start this in September .
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This month, we will unveil yeah, seven eight brand new large five seater SUV based on the N teach you pointed out and well start but believe right in late August .
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We will continue to step up our investments in battery related fields.
Now we have over 400 employees are working battery related to technologies, including battery material, So and pack design battery management system and manufacturing processes, we aim to build any hung over a comprehensive battery R&D and industrialization capability.
To improve the competitiveness and the profitability of all the products in the long run.
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With regards to production as one has been fully Jim gave the capacity to the level before the recent outbreak. In addition, we will further ramp up of the production output on a gradual basis to support the mass production of the new product Neil F. Two are new.
Parts has completed the production line installation and a truly and has entered into the production validation phase.
We'll be putting to accretion from the third quarter. This year. It only took US 12 months from kicking off a construction to rolling off with the first truly child Pugh in F T, which is a record construction speeding the industry.
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So chi jobs to machine itself was when we shouldn't forget at triangle Biosystems Yogurts.
In terms of it themselves under service network. We now have a 381, new houses and new spaces in 152 cities as well as a 247, new service centers and delivery centers in 149 St. Louis.
Worldwide.
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With regards to charging and a swapping networks, where we installed over 960 battery swapping stations in 197 cities. So far we have 829 supercharging stations and 1140.
Destination Chargers.
So so for those people to jump way way lineup compared some into some format you do show thousands of downloads Hunter you couldn't ship.
The continued deployment of ourselves service and the power network, well bring long term benefits to our brand awareness user satisfaction rate and the south growth.
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With respect to the global market well, so they funding over a thousand of citizen network and improving the user satisfaction and Norway. Our team has been accelerating preparation for launch of our products and services in Germany, The Netherlands, Sweden and Denmark.
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<unk> way like Tesla, you walk Hudson Bay, Sympson pads, Huntington a ton in Jim's opening as well.
He turns off over mass market brands.
The product development and the production preparation are in steady progress.
May 10th.
Find a strategic corporation agreement with what I'll say on the second phase of our vehicle production plants and the facilities with both key components and Neill Park. The agreement marks the start of the planning and preparation of the production capacity of the new brand.
Well Chinlone Tien tsin, well then so do you use that funding because the way for me if I'm in Tianjin Suzhou, the total where it could push your father coming to India.
Yeah originates from envision suite wades of Blue Sky.
We're fully committed to making continuous investments in environmental protection, and the social welfare and contributing to global sustainable development.
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Tableau has with us and Sunday, So that's all Pablo.
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So from vantage.
Thanks Myles.
So clean parks.
Global ecosystem co construction initiated last December Nu has been actively cooperating with several organizations to go out as far as the projects to support National Parks and natural reserves on April 22, New reached a strategic Corporation.
In face of worldwide font for nature, who had to join hands with us in establishing a swing in the low carbon energy situation system in national parks, and the natural reserves in China and beyond.
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Yeah.
Although we went through many challenges in the first half of 2022 2022 is still a critical year for Neil to make committed to investments and efforts in new product core technologies global market entry and to the mass market rent in there.
Second half of this year, we will accelerate new product delivery and the capacity expansion. We are confident of and look forward to realizing that's fine you have results in 2022.
Got you.
Shouldn't that Stephen's done without doubt yourself, adding onion D G to the Taiwan Neogen Steven.
As always thank you for your support with that I will now turn the call over to Stephen to provide you the financial details for the quarter. Steven. Please go ahead.
I'm here with them.
Now I'll go over our key financial results for the first quarter ought to be.
And to be mindful of the length of this call I will refer to RMB only in my discussion today.
Encourage listeners to refer to our earnings press release, which is posted online for additional details.
Our total revenues in the first quarter were nine 9 billion RMB, which was an increase of 24, 2% year over year and remained stable quarter over quarter.
Our total revenues are made up of two parts.
Phil.
Other films.
The hotels in the first quarter were $9 2 billion RMB. Because then the increase of 24, 8% year over year and remained relatively stable quarter over quarter.
Increase in Bakersfield year over year.
Muni attributed to higher delivery.
Other sales in the first quarter.
0.7 billion RMB.
The increase please.
15, 6% year over year and remained relatively stable quarter over quarter.
The increase in other fields year over year was mainly attributed to the increased sales.
It is an image of packages and others in line with the incremental vehicles Phil.
The first quarter optimistic too.
Well, partially offset by a decrease in revenue from battery upgrade services.
Roth, marking the first quarter was 14, 6%.
With 95% in the first quarter.
And.
17, 2% in the fourth quarter.
Two one.
The decrease of gross margin year over year.
Attributed to the decrease on FICO, Martin and reduction or the sales margin, resulting from expanded investment in <unk>.
Our service network.
The decrease of gross margin.
The courtroom, what many attribute it could.
Decrease of vehicle margin.
More specifically.
The commodity in the first quarter.
With eight 1%.
And it was 21, 2% in the first quarter of two to three one.
9% in the fourth.
Fourth quarter.
Absolutely.
The decrease in <unk> was mainly driven by the lower average selling price to the <unk>.
<unk> is our product.
Please.
Decrease of zero margin quarter over quarter.
But mainly attributed to the increased battery cost per unit.
On expenses in the first quarter.
176 billion RMB, because an increase of 156, 6% year over year.
It remains stable quarter over quarter.
The increase of R&D expenses year over year.
As many of her beauty cause increased personnel costs.
Search and development functions as well as incremental design and development costs for new production.
Technology.
G&A expenses in the first quarter.
To put a 1 billion RMB.
That's an increase.
68, 3% year over year.
Decrease.
46% quarter over quarter.
The increase in SG&A expenses yoga.
Primarily due to the increase.
Personal cost.
Sales and service functions.
It cost really the OS and network.
Rockies Patrick.
The decrease in SG&A expenses quarter to quarter.
Many attributed to decreased marketing and promotion expenses.
Okay, and marketing and promotional expenses incurred from the hosting of new data in December from two to one.
The decrease in professional services expenses.
Loss from operations in the first quarter to one 9 billion RMB.
It was an increase of 639, 7% year over year.
The decrease.
5% quarter over quarter.
Net loss in first quarter.
One point some paid been RMB, representing increase of 295, 3% year over year, a decrease of 68% quarter over quarter.
Net loss attributable to news aten with shareholders in the first quarter.
Eight three biamby represent a decrease.
62, 6% year over year.
The decrease.
$16, 3% quarter over quarter.
Our bass cash and cash equivalents.
Cash and short term investment.
$53 3 billion RMB.
As of March 31.
Now this concludes our prepared remarks.
Now I'll turn the call over to the operator to facilitate our country's session.
Thank you ladies and gentlemen, we will now begin the question and answer session.
You wish you answer question. Please press star one on your telephone that might fill named to be now.
If you wish you withdraw your request please press the pound or hash key.
Limit to two questions at a time if you have follow up questions. Please request to rejoin so once again the star one for questions.
First question comes from the line of Jeff Chung from Citi. Please ask your question.
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So I have a two question one is the second.
Second quarter GP margin outlook, so look like the high margin.
As a percentage of sales in second quarter, Google grew each of about 37%.
Versus 17% in the first quarter.
This is one of the positives that may potentially leave up the GP margin trend.
Secondly is that.
There has been some MSRP hike recently and we would like to know how much of the sales volume from the second quarter.
So it has been a price.
Price hike versus the first quarter. So this is the first question and the second question is that the new motorcycles suggests that all occur in the aging on our products three products is going to turn into six new products into the mix of six or 12 months.
So.
My question is whether the third quarter production capacity, which are both 48000 units.
Since by referring to cash flow, we saw a strong we call weekend Muslim and recovery from the past weeks and my understanding is that.
Lots of our supply other parts suppliers overlap was attached to that so if past Louis recover fast.
Would that mean that we are going to enjoy the similar pace into June in the third quarter.
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Yes.
Thank you for the question Jeff.
And from April we actually updated.
Raymond ways of our battery suppliers HL and right now of a battery cost is a connected with the raw material indexes. So basically.
It means that if so.
The second quarter, we can see the battery cost is going to disconnect when the increase compared with that of the first quarter and this is going to affect the other vehicle gross margin performance.
But there's going to be some latencies.
The battery prices are increasing in the prior month is going to be reflected in the battery cost. After the later months and this is going to incorporate it into offer vehicle gross margin performance. According to the current forecast and the market trend. We can see the battery cost is there.
Going down a little bit to starting from May and we have also taken some measures to for example, increasing offer paradox of prices and they said, it's going to help us improve our performance in the third quarter right now we are still delivering vehicles.
Now that the price adjustments and we expect it to started to deliver the vehicles waste the prices adjustment.
Starting from the third quarter because of our business model is a make to order order to delivery.
So just now you have also mentioned that our offer our products with a higher gross margin is also for you to picking a intends to offer their performance after the vehicle gross margin.
Our S E T. Seven that is a lounge to in the second quarter, and we expect that production Norfolk Southern's going to gradually ramp up starting from Jim and then starting from the third quarter is going to maintain at a normal level of all speaking we believe.
Although the vehicle gross margin is going to say higher pressure in the second quarter. So this is mainly due to the battery cost the impact.
The vehicle costs marching up with the second quarter is going to be lower compared with the data off of the first quarter, but a ways at the price of assessment of we expect that we're going to start to deliver those vehicles have ways of higher prices and starting from the third quarter, which is going to contribute to two other vehicles with margin.
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So tigger thoughts inside of the day, you could choose to the hub.
The production capacity expansion in the F. One of we expected that this is going to start to improve as the overall production output starting from June of course, it won't meet some time to gradually ramp up of the production.
But we believe that the vehicle production is not going to be a bottleneck and the demand is not the issue for us. The main challenges that we're facing right now is that the supply chain, especially in terms of the chipsets and also the production capacity off of our suppliers.
We are very confident of.
Of our delivery performance starting from the third quarter.
So does it dip thank you.
Thank you. Our next question comes from Tim Shelf from Morgan Stanley . Please ask your question.
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No.
Let me translate my questions.
Questions. The first question is just about holders. So could you. Please provide further details.
Yes.
Two older seven dominate.
To current order intake.
While the demand for it in Calvin SUV.
Hi, falling buoyed by the phone and how are we going to have a safe our current U S reminding Tyson.
And you mentioned a record order book.
That includes the holders of E T five by <unk>.
Second question is about the countries because student presentation I didn't really mention now has more than 400 really good battery related technology covering sell Pac DNS anymore.
Well he considered involving more in battery production over time or is it all for it for fashion or battery Oems vendors help to produce the battery based on news hold patents and the technology. So those are my two questions. Thank you.
Oh Citron team D.
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Do you go into any shim <expletive> findings.
Thank you team for your question regarding your first question food order basically are in May over order growth is quite significant and did this actually includes at the order intake for the existing is eight to get six and he says.
The overall order intake performance offer the existing yes, eight yes, it's six and that he says six is quite steady and we have witnessed a certain growth and you have also mentioned that whether we are planning for some upgrades of existing models.
We are planning for a incorporating some smart hardware and some new software features of food the upgraded version of the existing models.
I mean, <unk> would say junior near the Fabre your whole woman turmoil and lifetime.
So she is I think that to me since I last saw they'll find out you waited till she or he has hurt them. So you I mean, you kind of Youtube and the Pennsylvania, Utica would've been damaged lungs.
Hap.
Yeah.
After we launched the U T. Five in last year's a day, we have a witness steady growth off of the order intake.
Mainly because of the auto shows and exhibitions. So we have witnessed a very positive order performance of 95.
They are going to teach us a women's sort of Seo Togo swap Islander, Yeah. In fact, one day take a tour.
And then finally the size so of course should the figure you don't Sudan Womans I didn't see in final form in a total solution to the Angola agenda.
Oh, well Michelle had somebody they'll finish on this side.
Soon and a woman I saw your data to somebody on with Macquarie or change in the pattern, we would take a <unk> option tied a quiet Honda Toyota so putting in a downturn you get tense about or mcquay long she's only begins about a massage nobody else in the commission to tell me to go to food, but you know what that took.
You'll find me in Ohio.
The unified pack, because it sounds like a cyclical assumption.
I mean shouldn't you go against dengue <unk> pulpwood Pembina Youll. So assuming that you also I'm sure I'm going to use Oh, Ms Harrington doses in powder form.
Enough on the yoga at Tinder, and you sort of a woman a chip autonomous to tie us to take.
Sure Danielle well Miaow Cotai women Schinder soundly against about tangential to adulthood, Yeah, one woman, who can shoot of Amazon's, sorry, Jana woman convinced that you could pull to Jonathan why its high that's only the tundra thats either in some elements of the phase <unk> do you think that going forward.
And the lead time here in the Mea culpa Molly the even though you need them to meet those listen to me out GSO them insight towards <unk>.
<unk> and <unk>.
Hum.
That's now for the full hundred this is actually about the R&D teams are focusing on the battery technology. So we have little over 400 employees.
Four days, so we plan to leverage our R&D capabilities and the intent of the battery to.
Lunch, a 800 volt high voltage battery pack, which will also support the battery swapping technologies in 2024.
Understand that this is going to bring many innovation, our innovative technologies and revolutionary solutions.
<unk> believes that there's a unified Packer concept is going to redefine the battery technologies intends to offer the battery cost and the battery safety.
Our plan right now is that she started the production not that they send new next generation battery pack in the second half off of 'twenty 'twenty four over long term battery strategy is going to be a combination of our in house production and also outsourcing.
Believe it is a long term strategy is going to benefit the overall competitiveness and a bigger gross margin as well as at the profitability of our new products.
This is also going to be all right.
Okay.
Quint.
Central team.
Thank you. Our next question comes from bin Wang from Credit Suisse. Please ask your question.
I think you've got an hour to younger clients look at LNG.
And then just on the Arctic.
Could you give them a really technically Cutler Shah you may want to.
If I'm quite months, even quaint and controversial that T cells with the <unk>.
Future some sunshine that number on the Shaw <unk>.
So it sounds like you've been quite logical GP.
So.
It may turn out to those tangible quickly sometimes it now because it's sometimes with easyjet.
If I've understood part of the digital magazines.
Archie.
So just as a point moderation womans I wanted to cut solution consultants to kind of a cheap and ghansham.
So, let's see commodity equity tranche anywhere you want.
Unless you've been sort of your club.
Yeah.
Oh, Thanks, I actually want to quantify the margin because you've actually seen a second quarter wont be low margin, Tennessee, what's the.
<unk> offered at the current margin because you're actually relate to the private school columns grows by around 10000, I mean do you kind of assume that is the decline in gross profit margin of course bought that.
And you also mentioned that in the quarter went back to normal once the back a little more you're deferring two referred to 18.
18% gross margin in the first quarter, all up and off the peak level of around 21%. Meanwhile, I suppose if you will.
And of course, the price for the upcoming.
Semiconductor.
And touch on cockpit Boucher.
Kind of product is that going to be.
Increasing the gross margin. Thank you.
Okay.
Oh sure Joe I'm being a woman so you've got some talented people from the Cheapens I'm sure Sanjay two tenants or T Shea, chairman, which I mean, it sounds like.
Oh man stands out as a proof enough on a figure champions Sundance Channel exerting downward Michelle had a telephone knitted and done.
It sounds out has assured us Angelo tenant retention number 10, so it's had been chiselled syngenta, Peter toys <expletive> ton should see that'll take a soda and Nissan and Honda.
It took over much into how are you sure check are you sure to go figure out how do we separate trading Shimmer no woman yoga attention that I kind of.
Take slippy, you want <unk> sure the article womens, which unlike kind of the untreated so those auto home and kind of how she all come in ticketing sheet as highlighted it's a good chunk of the P. M.
You won't be you can see gold town Eagle funds.
So it is hard to do that you got two o'clock Sunday playful yet chiseled in EMEA, Chelsea you read them, but she didn't send you to what I'm, saying is on the job. That's all Michele candidate so that somehow tied out of town that you could choose to download and suddenly you take yeah types and had a third tenant and guys I'm Ali So it's only the Midtown tunnel woman.
Suddenly the newer fan-tan, there's a sudden panned out odeon negotiating woman tinder inches high.
Yeah, Egypt, which had anything with your temp we found that the amount that you mentioned I think again sort of timber in kindergarten silo. So bluntly. We don't want me to answer you go fix that a geography, you too because it's to help which hadn't seen lights you could take a default.
Yeah.
Thank you Ben for your question.
Regarding the price increase of four of our products. Previously have also explained that this is going to be reflected in off road vehicles gross margin in the third quarter because right now we're still delivering vehicles are without the adjusted the price.
For the second quarter, the battery cost is higher than that of the first quarter, but the impact of this is there's still uncertain specifically.
Specifically, we believe it's going to be higher than the 10000 to RMB you have just mentioned them but.
But we believe that there's still many uncertainties about the we need to wait out a little bit because just like I mentioned right now the battery cost of products is actually based on the raw material trends and other index. So it means that for the.
Third quarter.
You will probably see some trend of the raw material cost is going down a little bit and with the other type of gross margin improvement based on the new technology platform to find out at the pick up gross margin in the third quarter and we believe it's going to bounce back.
But.
There are still many uncertainties.
And because the battery Costa is a very difficult to forecast that it's timing at this moment.
Okay.
Oh excuse me I mean.
Thank you. Our next question comes from the line of Ming said Li from Bank of America. Please go ahead.
Waiting, Ohio Authority no no it was a bit into cylindrical windshield T go into in a second.
Just to let you know in the heart of San Fran She took on some partners.
What's happening to the.
Volume growth in high demand.
So when you say setting them up the millions because it does seem to us how buckle and audio services.
In the home and you see girlfriend attitude. So okay. So you chose to go product cycle, Okay to get them initiated on a T shirt.
To deal with T O Tioga, one thing Oh Suk why you took oh does at the other revenue that way.
She's of course, you she's got to the heart.
The other revenue.
Now with Goldman <unk>.
It sounds like you got your question I'm not sure. If you do the other revenue. So we don't see idea because it has been through a phone call you always get questions all the way to the other revenue.
So just curious as you do your youngsters at <unk> foods, our essential personnel as Sean noted it has to be seen when it took us a battery swap stations as you kind of be outdoor.
He said at the time that they only had the last nine to 10 times of commodity product.
Got any sensitivity you want you choose one to the other revenue that's a commodity.
So beyond that you guys took.
Took a chance I'll I, just didn't know where things are.
My first question could you also give us some guidance regarding Europe .
Your potential product pipeline for 2023.
Especially for the 86 six.
Will you consider to launch a new generation next year.
My question is regarding your.
Services, the autos business first our revenue started to decline Q O Q is it because of a COVID-19 impact.
Huntley.
Gross margin of this business Oh.
Not a very good for the quarter.
Is also is this because of the lower.
Utilization.
Do you feel that the new battery swap station.
What do we expect the margin improvement for this business.
So does that mean Diego win T at woman.
<unk> sorry to take outside of time, that's a good cushion minions two way Chevron Dow to indeed to the P&I sounds you would take the time so on the Chi.
No.
So the convener.
Ill go into you don't want a woman she and standing with ICR.
Yeah.
Thank you for the question of course is for the existing models, including the yes, 86 and that you said six upper plan is there to upgrade all of those models are to the N T. Two platform.
In the next year.
The timing of the study.
The other operating loss are mainly because of the increase in depreciation and also operating expenses related to our power swap stations and are in this year, we will continue to build that.
Battery charging either swiping network, which can bring the unique experience to our users.
The benefits are the further improvement.
Our user satisfaction and also brand image. So from the short term I think the other loss.
It will.
Will increase along with the expansion of the network and from the long run that's the numbers of the delivery and also users grow we will make our charging a service charge added swati services more efficient the losses arising from the charging and swapping service.
Gradually narrow it down.
Our innovative business models, including our new life and also Adas.
Can also bring extra gross profit and booked in the satcom.
Thanks Neil.
Thank you and next question comes from Nick Lai from Jpmorgan. Please ask your question.
Hum.
Acquaintance with yoga, because it took them and keep them in shape to teach them quick.
Thank you Peter for your second question getting again.
Sure.
Thank you Christopher J C Penney.
Do you think that's a good.
This show them, sometimes you don't.
Since you didn't say that.
Thank you very much intact.
Turning to the timken at CBS .
Maybe a quick comment on.
Sometimes it can be.
Hum.
Cooking.
Since the beginning.
Okay.
Sure.
Goodbye.
No.
So we couldnt get them to come to them.
In terms of.
When she.
It sounds like you went through quite a few things you could see something you need to cancel it.
Thank you.
For the past few months.
Okay.
A good chunk of it.
So there's certainly a good time for the pricing to chunk of the strategy.
Thanks.
She.
It didn't seem to protect sometimes it's going to come to market.
Brian .
Great.
Sounds good.
With this market just switching gears.
Hi, Joe.
Okay.
<expletive> Sydney.
And pretty quickly my two questions.
And can.
Can you give us an answer on chips upon completion.
In the second.
Second half.
Princeton.
Thank you rich.
Uh huh.
The increase in the first time.
Could you do it twice.
Are we going to.
Okay.
No.
A quick update.
Keeping strategy.
Oh sure.
Diego and tiers.
Queen Jim Shanahan notice it has.
You ship, but shouldn't you shouldn't tell me <expletive> ton church, which hit a woman.
You may not tell you each endo pushing chip.
So the number that guy that up you saw it cannot make me made us intuition that Glen Chick.
So you got one chance to get into a digger.
<unk> had a sudden yoda to good chip do you think that those initiatives with English and Kim Beazley.
T I, though it was a nice quarter, so take a step down.
Now you say invading down that you said, how many are you sure you don't have.
Simulation and door.
So you're in a pretty rich opportunities in the financials to them or what are you doing.
Hello, Winston Saddam where you took the high frequency in the hope Alejandro purchases tradings in South Asia.
Yes, the pool, you're keeping a lid on several of them. There is tons of demand you finalize what do you and I'm like yes. It could have some churn, yes to minimus him here in Connecticut. It sounds maybe there's a pause.
Young adult would mislead you opportunity to TGI, putting the two tier two you know.
Somebody is sort of on a woman itself down as your funds are not.
On the phone goodwill pharma to tier two as they go into.
One woman.
It Didnt dunnage outlet channel and then I'll, let a J.
Finally, my yes, we shop and you're in touch with patents have now so you wouldn't teach and that Shin young woman to that book down to you here.
So you had some sort of assumption.
Assumption took a you always go down as one could you quantify.
Do you even have said somebody gets you more.
Louis for Nevada, turn now and talk in Shymkent meal tie that sequential drop.
Some time apart for the quarter.
Hey.
Yep. Thank.
Thank you for your question.
There are many uncertainties in turns off the chip supply because they are in all of our vehicles, we probably have over 1000, the chips and the chip shortage situation for those 1000 chips and may vary from time to time and this is totally depends on the app.
Strength applies offered the tier one suppliers off a meal.
Many of the chip shortage is actually caused by the basic chipsets used by those tier one suppliers or the upstream suppliers also does the tier one suppliers. For example that are like a T. I end the opinion they provide various kind of the chipset to the Oh, yes.
And he's a very difficult or too.
Actually identifying specific risky chips are that we're going to face a shortage and that is why we do have a risky chip.
And normally it includes the probably around the one to 20 different kind of chips and lease them may change.
Two months.
Of course, we will try to mitigate all of those who have ways.
With a different kind of measures are previously.
Previously our plan is to expand our production capacity starting from the second half of this year. So that's why starting from last year. We have already started to work closely with our suppliers there to make sure we can secure sufficient supplies at full of our products.
We have some risks in terms of what the chip supply, but we believe that this is actually manageable and it's under control for the production capacity also the AR in the Mount Arthur Chin Oh. This is actually not specifically related to the chip shortage or other supply chain rates because.
They say, it's just a part of the normal ramp up of our processes for the production capacity expansion.
Yes, Thiago in tears.
A woman to massive massive or does it go to market to get Brian that you said you did you have <unk> okay.
So if I'm challenges.
Well, David as you kind of hit it again, so that wouldn't be as well.
So don't want no woman seven inches this the only woman.
Uncertainty and could be a little niche out good.
I'll, let John Hopkins, a good 10 to the Tyler that hasn't been the quantity there'll be down that.
And like Nevada, where Mccann dollar took a tongue slip in the guardian types without one shot so numb.
You got to send them in one country at a time.
Lee Siang Gardner to go talk to a number of them kind of <unk> to.
The accounting behind that.
That's what our Cotai you think I think we just had cooler no was Susan way to go 10 seats on to sound too good titled attendance, one shots over that 10 times without its total post Oh, it's a good choice.
How do we ship, which had a useful onward and locum yearly me your Butler Parkway tissue sunlight in guys fulfill long shot. So just think about a function and so they'll both salt Lake.
Sure.
Hi, Andrew the way IPO times on the tablet all conclude say Tucson, Tusa Tusa and adult sons, who I made when a patient that'd be the heartaches and conoco shut it down.
I'll show you some time last though sensor so you'll see you'll tell me. If you saw good yeah, that's a good way.
<unk> shut down their families. You took so it's only John I wanted to take a chance to take up take us through how you how you ship with <unk>.
Sure.
Choosing that walks out tilda.
Regarding the second question of the battery.
Hunting from April of a battery cost is linked to together ways that the raw materials off of their batteries in the market. We can see that raw material costs to actually picked in April and we started to see some trained.
Kind of going down specifically for the lithium carbonate.
In China, we have already started to see there are more resources in for the week M. And there are some companies that are trying to mine the lithium and to make sure. They can supply to the market and to meet the demand is so I believe there's general consensus also the industry is.
It is already picked in April so it's going to gradually go down but of course people have a different the forecast in terms of what is going to be the final cost to offer those raw materials as some people may think that they're the leading cabinets.
Going to go down to around probably 30000 per ton.
It means that we're going to reduce the cost of Adobe think cabinets by 20% to 30% and then we also have a similar forecast for the me cold material as well. So we believe that the general trend is that the cost of those battery materials is going down but.
And it's not going to go up again.
I'm, a tiago and THL, so I'm a massive market it is good.
And and all of them with <unk>.
I assume you know Siobhan young with Macquarie Tofu, no more of a thought that women the Sunday the N T.
Until Sunday in the tissue.
No men will tend to take a michelle jump on to John King with habitat thought leaders Thomson so that our pseudoscience O&M and Pete.
Number one getting the jobs go.
The popular yoga meal, but young it in so Paulo.
We thought that a woman she does sometime it into.
The telephone Samsung life.
Take a massage sometimes.
Tend to need anytime soon.
The next question is about did that mass market brand.
Their plan is to started the delivery offer that product for the mass market brands is starting from the second half for 'twenty 'twenty four.
It's a product it's going to be based on the new technology platform three point, though and we believe that the mainstream products out to the mass market brand is going to be at the price range from 200000 to two 300000 of course is the mass market brand products are well also.
Our support to battery swapping and we aren't going to use our in house developed down to manufacture the batteries, the food and mass market brand product.
Oh, Yeah, Oh, yeah.
Oh, Yeah, yeah yeah.
Before I turn the T for Uh Huh.
Oh.
So our company is also planning to support the high voltage technologies and we believe the way so all of those advanced technologies and the competitive pricing are those the product the owned or the mass market brands are going to be very competitive.
Thank you.
Thank you. Our next question comes from Paul Gong from UBS. Please ask your question.
Oh sure sure sure.
You know what your windshield, Joe we don't go into your typical win finish let's say according to U S.
Yeah.
And we've shown you changed you teach you how you feel with the watchman softball, Joe Forza and cause us to be at home with somewhat so your first one yes. It should I saw Oh, that's awful hard time air Cool Youtube without fishing, all gung Ho are showing industrial suggest chi.
It sounds like your Baidu and I saw one liquidity accretive to us on a go at times too.
Yeah, so skeptical when T. Thiago until I saw the horses to Churchill title Yuko convenient to them.
And we've shown shouldn't sorry to assure you teach it ourself with dolcetto Hashana IPO classes I don't feel shoulder so not the one Mr. Joe fall out so no. So some of them go into tuition price will show that you could put your thoughts on China, what I'm trying to do with just the amount of choice on a potent Chaco com Chee.
When you sum so photo you said, Tom how long or something there you go.
You call it run pump well, let me translate my questions. The first question is related to your seven a wife, one unveiling our lungs and COPD. If we it seems to go a lot faster than the previous year to 7125, and so how do you think about the kind of Ization of voices, yes, right yes.
Yes, six months you see six given there are all kinds of Suvs of similar size.
Second question is regarding the supply chain preparation for the <unk> platform.
Today, It seems that the U T. Stephane production remains to be relatively slow in terms of when pipelines always felt pretty alone. We can periods. You view, we're going to offer you two five for a with a much lower volume and seven are in the pipeline.
Halfway done enough work to secure the key component suppliers to enable the ramp up of the <unk>.
Overall <unk> platform models. Thank you.
Oh sure Yeah, Paul Diego and T. So it's a long lead time on a woman yes. The Cheetah you haven't found them for each of those.
That case on a woman to go follow suit, yet, but in singles and doubles and the signing of fibre channel. So too does it sometimes you go public at a time, yeah I do I will Miss you achieved could be seen that's all he didn't mean, we each name by Yamana Hotel Asia.
Cancel actual kantar retail foods, a little bit.
But one thing thats the MP <unk> top issue that somebody is almost all of them and the tier one tenths of that.
Yes, Julian when you thought that assortment detour to tissue.
The pilot the pilot would do behind the condenser, so and I'm glad that it's a good tea routine type of what's happened the way it always here, so you're tired of chocolate candy crush and die so that shouldn't that yes, baas are yet to deal with so Jim no women.
Wait before you hit that one as you know it sounds like you said.
<unk> to the time in a way that's hard to childhood, San Diego's How'd, you use with half a year. It's a bio team Wade is high and we get past that.
There was a there was a cheese or town nicotine way number yes. If you don't mind, how does he got thousands or not but yes little behind it sounded I saw it had a childless unconvinced they'll call you shared.
The other thing definitely here, we said it's hard to.
Well I don't know, how so youll tend to lead someone to sell that John mentioned, a tick up to that question in a point to be a top before you put it out of Cheetah, Tony could show to show them the data doesn't eagle and <unk>.
Thank you Paul for your question regarding the first question we.
We have always been working on the development also of our new products and we have been working on the development of it that you have to step in for some time and the lunch time. After the yes. It's seven is actually already planned when we work developing the product.
It may things are right now it is a very closer to the delivery of the yes, it's seven but previously over playing into to launch it I guess its seven earlier due to the impact of the COVID-19, we delayed a little bit that is why it seems that that's the it's much closer to the.
The actual delivery of the yes, the seven but everything is actually going forward. According to our plan E. S. Seven is going to be based on the new technology platform to do which is going to be offering higher and a smarter technologies compare with at the current.
And teach U N P. One technology platform.
And the current yes, 80 676 are actually based on the N T. One technology platforms. There will also be some price differences the price positioning of it that yes, the seven he's going to be between that after that yes, eight and yes. It's six we believe is there.
Going to be a cannibalization between the yes, seven under the existing models, because we have a different positioning and our pricing strategies for those products.
Ample thickness eight is it mainly focusing on the six theatre and a seven seater markets and yes, seven is positioned as a large five seater SUV, which has the higher pricing compare wafer that off at the yes. The six.
Yeah I'll go into your woman Tigger funds are Joe Tsai away and detour their times and.
Pop who took the time now.
That took a telephone young that's what can be so youll talk that there is a woman that going down from here.
So that is what how much was paid.
Well the second question of course, we have already and actually started at a very early stage to plan for the production ramp up of offered a.
Our products are based on the N T. Two platforms and we have already done. They said for some time of course that there are going to going to be some risks that better because we have a plan to had we believe it's still manageable.
Thank you Paul.
Thank you. Our next question comes from you cant Ding from HSBC. Please go ahead.
So you have many of them are now going to your Danish account can things.
I'll go with anybody else he'd I'll, just say that jumped out.
As long as they go from here.
She has equal when it comes.
So don't take those things out.
Sean could you the.
A guy a woman kind of woman did you go to ensure all above what shouldn't eat Russia Aqua.
Ken I think you.
If you're going to Jacob bout golf Okay.
Why not do it some but not a dog that dot taught us that she had just had changed so much I can do well and kind of what size the possible. Okay. So I'll take that this is exactly what he meant yukiko aging, but anytime Johnny's Jacek.
Oh gosh, what does your phone tangshan logical I spoke about.
Yeah.
Yeah.
Trucking.
Thank you.
You can do it I got.
So I'm trying to figure out sheets.
Yeah. He is Oh Gee.
And so I think that will help that just have an initial kind of way I mean, you've got just an enrollment.
And get a whole lot to hustle really show you do go just made that decision.
Oh, no no kind of woman in Shanghai.
And I think once you get there I think in digital yet what.
The initial tranche.
Donlin diagnosis, so do you think or I should say.
Without doing it yourself.
Just once again, well know sampled hotshot geological hearing.
So I think Joel just to nail it down to one something like that.
No nothing Dunkin' Tien tsin.
And I think it sounds like smoke that jump with the Shahar Jingle club, which will change here just didn't even show which have been against as Doug already I don't take any I'll call. It the whole way doing well it.
It should be dealt with what they should do that you got I imagine 10, JD and Ctrip. So I've got two questions. The first one is to ask you about whether our price hiking may isn't enough to cover the cost headwind from the battery side aluminum body and also the chips alignment in the channel and what's the management thoughts about.
Our actual costs and also the pricing strategy coming forward and second question is to ask about E. T. Five volume and margin conviction, we know there's a bit of Oh those who've been on the splash on the entry luxury which is currently 87 has been located within those segments and also previously we have.
Designed 20% above margin, but bagging of time, but we havent considered might we might not consider the cogs headwind coming from the commodity side my persist longer.
Yeah.
Oh, So you have your chance, sending you without ego and Kim.
Hi.
Hi, James this is stunning.
Of course increase the better I think William has a give us a lot of guidance and the regarding the price increase of other material and also cheap cost.
I think we have absorbed through close cooperation with our partners and also internal efficiency improvements and also we have introduced the whole market for the key raw materials a pipe.
Dynamic at this moment, we cannot give the precise.
Like estimation of the following months or quarters.
The trend so.
For second question William.
Yeah, you're dealing with Ohio, Chester woman Jinyan songs, Yeah, Yeah, how to marry up all your main Tinian Canyon to go you Didnt angina and can use a jumbo pool itself, which will either sleep well moving in fact kind of gotten she can combat that kind of take a title that you can call my take a Saturday.
And to that kind of attacked what I say.
But why would somebody Josh Julien don't Miss Me Michele.
For the two five.
Because we have already accumulated to a significant amount of our reservation orders. So if we consider the production. After the 80 fives. We believe for this year the protection offering to five oh, well only be sufficient to needed backlog, our food E T five orders.
And so there's a price increase of 85 is not going to have any impact at all from their core gross margin performance. This year.
Great. Thank you. Our next question comes from Vijay Rakesh from Mizuho. Please ask your question.
Yeah, Hi, a quick two questions on the on it in house capacity with Hefei, you talked about 240000 annual capacity do you think you'd get to that 20000, a month run rate by end of Q3 of this year could be 'twenty two.
And the second question is on the New York that obviously has an incremental additional 200000.
Do you have capacity you talked about a ramp starting that in Q3 can you walk through how that ramp should look we'd be like 10000, a month exiting this year and then gradually increase next year.
That's it thank you very much.
Yeah.
Oh this is a way to trigger.
Steven you are in no way does have to go into.
Okay. So I'll be just unfair question for the pride and capacity of our first plant with JC meal. As we have mentioned, we will continue to ramp up.
Capacity in Q3.
I think probably it.
At least in the second half of the year.
Our oil plant capacity to reach 20000 unit per month it can be.
Now probably two Arctic baas to see when and.
For the <unk> ramp up.
Equity first.
Kick off the delivery of 85 from this plant.
In Q3, so it will not.
In Q3, and then we try to reach consulting unit.
Within.
A quite short period, probably three four months.
I think that's our plan.
Of course next year as we introduce more models into this factory that they all production volume of ft.
With me it's rice.
Alright, thank you.
Question comes from Jean Chang from the ICC. Please ask your question.
And how that you see are coming.
Uh huh.
And I'm not sure we can see now going T D.
And she should buy a woman she turns out with them.
Okay.
Sure.
Kind of a geothermal oil kind of wanted to kick off he can keep on the dash program. Louis.
She got crazy.
T shirts are they had actually trumps quantity and alike, but not much.
Tell me that on Deutsche Bank.
They already I don't know what you said.
Oh of course, social are often kind of on that you Shouldnt get up can you talk to what you end up with you.
The history on that.
Sure. It's I haven't put out tell me and I'll finish my mandate.
And what are you going to come out there.
Yeah, Dan I wouldn't you know pharma credential sheet consumption.
Time will tell 90, especially if you think that ship shoal.
Great to see.
Yeah.
Right.
We have been trying to tell you when.
First my first question is about.
And of course their politics.
In light of that we have government recruitment information the United States.
So can you share more details about it but how do you see the breakthroughs in overseas market reach potential market.
We think Ah ha.
Had small potential lost to deployment and what what are the difficulties and my second question is about Oh sure no details about its current past and progress.
Thank you.
Oh, so you Sanjay.
Stephen you without Evo and CBS .
Okay Tony.
Thank you for your question. So first with regard to the U S market. The short answer is we are definitely in terms of the U S market.
Actually we are.
Starting with comprehensive study of the U S market and have a dedicated team in charge of different they plan for the market, we're tapping into the U S market with the mantra.
Amanda manner.
But now during the startup phase so we'll share more information when it's appropriate.
And also then for the <unk>.
Difficulties or difference in the northern European market.
First equity with a lot of.
Commodities between China, and the European market.
Monday this model to the aspiration for Green Smart EV products.
While reaching users also enjoy.
The concept of smart TV and he was on the price, but we do need to lane some difference.
Of course first.
Culture and also the cost structure. So in Europe shortly that they proposed would be higher and also we need to be it accumulate enough.
Understanding of the local culture and get integrated into the local community.
With empathy.
Yeah.
Thiago in Tejas.
D Neil pilots.
Take Oh about well I mentioned that to somebody had to go near pilot to them enough to do just.
The soil the condom pneumonia in guys sought to achieve your women's really the churn scientists, which you'd sort of ours who've gone through Oh, and then some good that's a good sign for I thought some good.
To go to go quake hung our soldiers in total womens Logility, who led sort of panned out.
Take a tongue take a Saturday, it's about how you teach itself, we hope well macondo lots sold at some what they don't churn sudden tissue that led them to you just saw GP upon quite so Dr. Dave Johnson or me the tango two data usage.
Of course, she doesn't know what they'll get a Sydney again, well macondo in the photo chats with cool if I'm an assumed and so do you feel you're talking about it because we have some you know them. If we can just slow to equate to issue that you did I forget it into training to Shin young.
I can take it to a minute ago.
So of course, I mean assume them no Google can do a woman 30, that's a subtle.
On the home and decided to go for 2017.
Oh Man you guys source Liotier pay that's I mean, you guys seem them at Houston.
It sounds alone sagittal Mcquay Fob will take a little P plus Joseph photo chats with it then it gets into them, but not all of them.
So much and that's also the total write down of home as a few hundred machines in that number to go cogent at what you saw him or her condition. So that's all.
<expletive> tongue, because it's really an adult or chicken hot you'll tell me go. So that's all no Missouri. She is from governments and goodness that Saddam charts photo chats with its own Nico von <unk> and Comdata.
No that's it.
That's useful.
Well that's a good.
So, Switzerland Joseph C. G. You got your full time should torte no woman.
Tito Jameson enrollments within Honeywell, Syngenta or mechanical Merchandised Chi almost certainly will Miss Otp, one quite switching Wyman Lee from Chi town town that you could see she does tell me you're going to need all women condo Gorman that D that in tier one and some piece of young children.
Hum and for the second question regarding M D and the current Adas the functions and features based on the new technology platform to point Don is actually derived from the full stack of technologies are developed in house.
My other one a D teams Oh, we have a comprehensive full stack of capabilities, starting in France, sensing outweighed them and control strategy starting from the delivery of the 87 on March 28, we have a witness to the date of close to two.
Management, and the collection, which has helped us to achieve a very fast deterioration and upgrades for that vehicle autonomous driving or Adas experiences based on the anti too so for US we have witnessed.
Many improvements in the last two months.
Because a we can collect over its data and we can actually see all of those that data as we can see that the performance offers a N T. She is actually several times better than that off at the end of Q1, because after we collect all the data. So we can use that data to <unk>.
Hang up or outweighs them, and Oh for Adas and a D technologies. So I have also just mentioned that they were going to release at the end I'll keep plus we're very confident with the performance of alphabet and I'll keep plus.
I Hope your policy is going to be based on the high definition map developed it together.
By yourself that together with the 10 cents and this is going to be a in house high definition map and we are going to integrate all of those different technologies, including the high definition map or ways to offer a D. N. A does it close loop of data management. So we are going to use the same kind.
So the technology stack to improve offer autonomous driving and Adas features that is why we are very comprehensive ways. There's a performance in the long run based on all of our sensing capabilities that close loop of data management and also the fast iterations and nomad.
Capabilities.
Thank you.
Right. Thank you very much for all your questions. We have reached the end of the question and answer session. I'll now turn the call back to the management team for closing remarks.
Thank you once again for joining US today. If you have further questions. Please feel free to contact our investor relations team through the contact information provided on our website. This concludes the conference call you may now.
Now disconnect your line. Thank you.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.
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