Q3 2022 NIO Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for New incorporated third quarter 2022 earnings Conference call.
This time, all participants are in a listen only mode.
Today's conference call is being recorded.
I will now turn the call, but what do you eat time from capital market. Please go ahead.
Good morning, and good evening, everyone welcome to the third quarter 2022 earnings conference call.
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 Mr. Within Li founder Chairman of the Board and the Chief Executive Officer, Mr. Steven phone, Chief Financial Officer, Mr. Stanley too thin.
Senior Vice President of finance.
Before we continue please be kindly reminded that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward 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 the stock exchange of Hong Kong Limited and the Singapore Exchange Securities trading limited.
The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
Please also note that the news earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to our news press release, which contains a reconciliation of the unaudited non-GAAP measures too.
Parable GAAP measures.
With that I will now turn the call over to oversee OOO. Mr. Windley William Please go ahead.
First on guidance, you're going to send out way like San Diego, Yes, you called them quickly.
Hello, everyone. Thank you for joining.
Third quarter 2022 earnings conference call.
Thank you to wait I can do Joe Pooler strong about each enviable balance sheet on Golden Fulham tenants you cool <unk>.
Julian from seed to shelf, we can go.
In the third quarter 2022 delivered a total of 31607 smart electric vehicles up 29, 3% year over year setting a new quarterly high.
You will see that Keith who can patented two well known problem Joe Pooler. Some question Cushing Trinian piece in the hundreds.
You bought a golden shipping so top paid loss ratio, that's supposed to get them done.
Based on our latest technology platform and key to point out we have a long and delivered three new products, which has improved the competitiveness of our product lineup in all aspects and enabled us to enter more premium segments.
It's Elisa continues with demand growth.
Well I'm Coppola, sometimes you can really important.
Can you tell us on John you want to leave with Sergio downstream Cook 20, Sundar patterns that you buy it cheaper for them.
Amazon media on the hook without me check what's cool when deemed important question's, a good chunk of them as well.
Well maybe Ali.
Could you do that some don't go down and wait.
So I'm passing them.
In October our work.
Coming to production and supply chain volatility we delivered the 10000 to 15 nine vehicles, representing a 174 point, a 3% increase year over here well continue to collaborate closely with all of our supply chain partners to stabilize components supply and further acts.
Salary to the vehicle production and the delivery, we expect that the total number of deliveries in the fourth quarter of 2022 to be between 43000 to 48000.
Sure.
Our total each are going to be impossible.
You shared some younger people.
I would like to share some recent highlights of our R&D and operations.
So we have been.
Paul <unk> will advance lucido again, Cynthia and Cordero turns out leases you can go and Dunson Cheng.
So less alcohol <unk> hydrogel, who thought he won't put up money to Pogo and maybe Keith.
In September at the show cars off 85, a smart electric bikes, but then they're going to be on display and all of our stores store traffic reached a record high and order intake witnessed strong growth momentum.
September 30, we officially kicked off with the delivery of <unk>, five and the preliminary user satisfaction rate exceeded our expectations.
Of course, we don't and Youtube.
So let me go to the other items you don't go to yet.
Well the <unk> Cushing syndrome.
Over the past to cover off a month basis.
<unk> the digital system of NTT has accelerated and the upgrades it multiple times with continuous user experience. The improvement we have strong confidence in the market competitiveness of the new models based on the antitumor platform Shelton, who I'm looking at here, Let me show you some edge assiduous attention.
I.
Forgot you guys soon you'll get some clue.
Yeah.
Passage of food to machine itself with omission forgot you bought it it was longer than we thought.
With respect to themselves and to service the network.
Now have a 319 nine new houses and the new spaces in 149 cities and 280, <unk> service centers and delivery centers in 163 cities. So I'm wondering along welcome yet, but maybe you can lay jetblue to each of.
How about Houston for funding.
Thank you Adrian could you talk about your chance to that one for the funding pool, EMEA <unk> and children with <unk> 2 million.
But.
We tend to see Baidu can potent guangzhou attending to the chicken would you be 'twenty one.
Well said.
<unk> also had some good scheduled last December 20th Pogo and the city of London.
So general Togo, Santa Barbara and then in terms of what they're charging a swap in network now has the installed a total of a 1000 to 210 power swap stations and provided 14 million battery swap. So for users new housing starts 2000 to 55 charging stay.
So in some ways a 5000 to 765 for power Chargers and the 6000 to 77, that's the nation charters in place in the meantime, overpower map has connected to over 590003rd party charters in China and more than 380000.
Charters in Europe too.
And you.
So I'm assuming no wasted time didn't go forward. So dollar funding being put to achieve put on comes on we will.
<unk> also good job cumulative Huntington.
Since we entered that the Norwegian market a lot of September all of our products and services have been well received by local users and the user community has been growing rapidly which has laid a solid foundation for and posted all of our competencies entering more markets in Europe .
Yes, sure well Matthias <unk> Butler Neopallium Ali Al <unk>, Chairman and she has a long way led our country in Corfu Tee sheet Templeton fits in with the Coca Cola anti microbial system.
On October seven this year, we held new billing to our 2022 worldwide comprehensively introduced other products and services to users in Europe .
<unk> overall official market entry in Germany, the Netherlands, Denmark and Sweden.
Neopallium Portola, although you could see that go to 125 times zodiac.
And that also carbon pathway must adopt and culture. So that's helpful.
Youre willing to a lot of attention in the recognition from users and the auto industry in Europe .
We are now organizing larger scale test drive and kicked off a user delivery in Europe .
Yes uhm.
<unk> orthopedic Alejandro towards impairments on patents on peak and tool <unk> die compassion Cook well ahead of time <unk> Sotelo.
Hum.
<unk>, yes.
Yesterday, you 87, one <unk>.
22, Golden steering well award granted by the price tickets German Maxine auto built as E. T. Seven was voted the best car in the median and upper class category, both of our products and innovative technology have been highly recognized by the users industry experts and professionals.
Media in Europe , we're going how the food <unk> momentum very poorly flanker, Hulu Copenhagen, So they'll go on with them, although slow throughout two foot.
That's when we shouldn't go away like when Jim.
<unk>, you're adding on E&P that although Jensen hospital found in fact <unk> Jensen.
But we're it's Andy Yeung, who keep them could Hong Kong, one cushion that.
Yes.
<unk> serve user communities in Europe , we plan to open houses and the new spaces in 10 major European cities, such as Berlin, Frankfurt broker, then Copenhagen and Stockholm.
Also plan to install 20 power swap stations in Europe by the end of by the year end and another 100 by the end of 2023, so that more users can experience at no charge, both probable and affordable power system in Europe .
For me is in the pudding tuition.
<unk> again Fox the Lodi.
And do you include or exclude them yet.
In addition, we have established an R&D center in Berlin for localized the development and deployment of digital cockpit and Adas to continuously improve for the intelligent digital experience of local users.
Awesome.
Well are you somehow to amp up with sharepoint cause damage to antigen with Hudson could impact TJ.
This is a move down to you so to come down further than where it could push your partner will envy.
On September 27, <unk> announced a collaboration with the Danish Society for natural Conservation entered the Danesh nature Foundation on the clean parks initiate it.
You hoped to actively engage with the local communities share their responsibilities and jointly make a contribution to a more sustainable future.
In some blue Sky come in nutrition realized a couple of thoughts and yet keep all go well.
Calcium silicate sequencer to the Bogo based on Laguna.
Any insight quality service, you're going to put if I'm in a quantity so jamie.
On September 30, upholding news orange in our aspiration of a blue Sky humming.
At least at the first the new environment, social and governance report 2021.
Sure Neil shared is ESG management practices and the performance in 2021.
Putting on yen.
Luncheon hurting tissue.
Total fool unwelcome Permian G, but totally hook Bluetooth with how you change also Congress Huntington <unk> sensitive.
So don't worry a whole bunch of European payment opinion parallel to the hotels that we sanctioned hopefully on the media side trying to time, some TV Pune meat chicken.
Senior but youll have some and Jacob you can reuse Audi.
Antonio you won't see that attempting hofuf.
In 2022.
Further at a month in product core technologies, charging and swapping network as well as a sales and service network, which has laid a solid foundation for us to compete in the global market for the long run in spite of the operation challenges brought forward by the change in micro environment, we delete that Neal.
Is fully capable of staying focused on product and technology innovations as well as service capability improvement, while further optimizing the cost structure and improving operational efficiency to do more beyond experience products and the services to users worldwide.
Yes.
Stephen's done with either <unk> or <unk>.
Stephen as always thank you for your support.
That I will now turn the call over to Steven to provide the financial details for the third quarter 2022 over to you Steven Thank you Vivian.
I will now go over our key.
Oh.
For the third quarter after that you need to have to be mindful of the length of the school.
To RMB only in my discussion today.
I encourage listeners to refer to our earnings press release, which is posted online for additional details.
Our total revenues in the third quarter.
Oh Biamby.
It didn't increase.
Two 6% year over year, and 263% quarter over quarter.
Our total revenues are made up to par.
Legal and other skills.
You can see all historic culture work, because I'm not getting the RMB or even increase.
Eight 2% year over year, and 24, 7% quarter over quarter.
The increase in vehicle sales year over year and quarter over quarter, but mainly attributed to higher deliveries.
The result of more diversified product mix offer to our users.
On a scale of the third quarter were one.
1 billion RMB.
Great.
Box count year over year.
Kris.
82% quarter over quarter.
The crazy.
Year over year.
Due to the decreased revenues declined from sales of automotive Godfrey credits.
And Barton Creek.
The revenue in line with the incremental buccal film.
The increase the other skills courtroom must.
Must be good at.
The increased revenue derived from sales of automotive markets with credits.
Great.
Other revenues nine with incremental vehicles sales.
Gross margin.
Third quarter of <unk>.
So can put 3% comparable to the 3% in the third quarter of two to one.
All percentage in the second quarter of <unk>.
The decrease of gross margin year over year.
That's a good to first.
Chris correctly right conceals a locomotive at Oxford credits with high margin.
They can the craze of vehicle margin.
And third the reduction on the sales margin, resulting from expanded investment.
Power service type work.
The increase of gross margin quarter to quarter.
Maybe that's the beauty of automotive work towards credits with higher sales margin.
More specifically <unk>.
Margin in the third quarter.
Two 4% comp.
Compared with 18% third caught up to date with one and.
And 16 seven.
A percent in the second quarter.
Good too.
The craze of vehicle market with year over year.
As we look to increase battery cost per unit.
Which was partially offset.
Chris in subsidy issue.
He was a critical financing agreements.
Rico module remained stable quarter over quarter.
Our R&D expenses in third quarter or two.
Two 9 billion RMB.
There is an increase of 146, 8% year over year.
And a two 7% crude and coker.
Crazy arent expenses year over year and quarter to quarter.
But mainly attributed to the increased personnel costs.
Search and different functions.
As well as incremental design and development cost for new products and technologies.
SG&A expenses in third quarter.
Two 7 billion RMB.
Which is an increase of.
Eight 6% year over year.
And 18, 8% quarter on quarter.
Chris will disappear expenses year over year.
Quarter over quarter.
Primarily due to first.
Kris will personal cost related to sales and the general corporate functions.
Second through Crazy expensive.
Related to the concrete sales and bookings kind of food.
Mark.
Crazy marketing and promotional activities to promote our vehicle in China and Europe .
Locks.
Operationally the third quarter three.
Three 9 billion RMB.
It represented increase of 299.
292% year over year.
And 36% quarter over quarter.
The lawsuits massaro caught up the liquidity one two.
$295 6 million RMB represent an increase of.
$508 2 million RMB.
Other income of.
Two 6 million RMB Ms. Sarah Clark tentative, one an increase of three.
$305 6 million RMB, one taking the courtroom.
Conducive to.
The increase of other losses.
Third constant at one.
Particularly caught up too much.
<unk> is loss from the issues.
Our overseas <unk> related assets.
As a result of the depreciation of RMB against U S donors third Qualcomm.
Yeah.
Net loss in the third.
Third quarter.
Putting 1 billion RMB.
It is an increase of.
392, 1% our year over year.
And 49, 1% quarter over quarter.
Net loss attributable.
Attributable to meals Andre shareholders in the third quarter.
<unk> put in warm biamby represent increase.
44, 9% year over year.
And 59% quarter over quarter.
Our balance of cash and cash equivalents.
Cash short couple of investment.
Long term deposits.
One 4 billion RMB.
As of September 30th two.
Me too.
Now this concludes our prepared remarks.
I will now turn the call over to the operator to prosecute our Q&A session.
Thank you we will now begin the question and answer session to ask a question.
The Star then one on your Touchtone phone.
We are using a speakerphone please pick up your handset before pressing the key.
It doesn't have any Dan. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
For the benefit of all.
All participants on today's call. Please limit yourself to two questions and if you have additional questions you can reenter the queue.
This time, we will pause momentarily to assemble our roster.
Our first question comes from Ming Li with Bank of America. Please go ahead.
Well, Steve Ohio.
Now would have been interested in <unk>. So Glenn you took a coming into <unk> now.
As Sean noted Nuomi Eni East you said.
Opinion, you guys moved us as through one.
Did you say you don't see the deal <unk> Bosch and Diana.
Oh lets see Hawker who called aegis ashore.
<unk> going into 2013.
Telling you should assume that acquisition soon at one two times.
No you shouldn't you be willing to take on pension charges Boku Foods Hotel collection kit Ascension chunky internally.
On the call.
EG too just to hopefully to the middle East.
The Isa.
Sometimes it does.
<unk> attorneys that kind of looking to sell it to.
No.
Good stuff.
<unk> your capacity is <unk>.
Component suppliers, especially.
The welding part Australian institutes. So could you also update on your latest capacity component capacity.
There is no Colby control impair.
Impact thank you.
So I mean chips will say.
So do you have enough I know women take a good that's a good carefully colby so some top box home, including the usage because of the solvency Sendai.
No.
How's it going in sort of in summer.
Hey, good to go.
So in some of the puts adopt.
<unk>.
And so goes out of <unk>. So you are in the high you know given the country's inkjet yellow <unk>, John I know of interest for you.
Yeah, Amit you choose.
As Simba said the ETR for the Green Park, Okay. Good just that one Linda.
It <unk> change Netherlands silicone <unk>.
On the call.
But there are signs of accumulative announces for so.
Total political impasse sensitivity in a pot.
Chip.
<unk>.
The pension.
Pension.
Cool.
Hi, Joseph.
It shouldn't.
Yeah.
The other one in Chengdu.
So bored of talking about so that they can use with John to let up on the <unk>.
Oh on the Silicon chips is crucial.
So I would say.
The U S.
So that will be utilizing fuller Linda.
Jesse.
I shall go in that way.
<unk> is probably an impossible personally.
When he didn't get a lot more women do you see the service in Nevada.
So each one of them goes battle and then popping in sheet.
And yet the team with two of them.
Oh excuse me.
Yes.
I mean, so tomorrow.
Sure.
Thank you for your question.
Yes regarding the production in October and there has been some impact due to several reasons to enter the impact around the room solvent.
One the factories because of a.
Our sub frame just like you mentioned about the we expect that this will be resolved in November and then the second reason is that the new eds before it is price and we actually have a new EDA as a plant next to offer factory choose and the automation level off at the new <unk> pumps is very high.
We only need to have around 30000 people to support the overall operation not basically a new <unk> pumps due.
Due to the ramp up of Volatilities off as the Etfs over production is affected by around two to 3000 and the reason is that the COVID-19 situation I believe that this has impacted the production run for one week. So about speaking all those factors have affected.
The production in October , but we have resumed normal production and now and we expect to have a new production line for the new eds, an extra week and probably by the end of this month. So it takes a new E. That's in line will be ready and we can ramp up the production.
We will we have already softer the suffering issue and I believe that probably in December <unk> production will not be an issue and as of now I don't believe there's any production in Asia for the T 700, yes seven.
Oh.
So whether or not there's a windy Meg Whitman notice you can get a sense as to consider.
<unk>.
Synthetically.
Hey, Bob as you get those phone calls Steve.
The banks have been the hot bitumen.
This.
As John Kimble to do that show to summit in Shanghai.
U S semi Ben.
How will this impact the <unk>.
<unk> for the industry you know so Neil.
Besides <unk> currently you can see 800 chips to China.
Compared to a 100.
Good to see the impact.
Tuna progress of our autonomous driving.
Tony.
In a way that is it some share in the ticketing in pad two wells two thirds of our Michigan.
And as she mentioned I'm sure Omnichannel. So some yields will go towards the <unk>.
But I think assumption.
100, <unk> Mangum and I'm, telling you done within the.
The dosing in the future.
EMEA disruption.
Someone that they got on bulk whole cliche it didn't sound strategic koto.
The GDP, we just havent hit upon the throughput of the 80% that's for sure.
How much lead time in the late <unk> and some of them.
A natural avoidance elements of those types of them going into the future.
Thank you for your question regarding the Chip Act I believe that they send many affected the chip you Stifel cloud to training right now I believe that we have sufficient chips to like the eight well 100 to satisfy the need for that.
Training in the long run them, but at the same time, we're also exploring different opportunities for example, where.
Considering working together with some cloud service providers and we're also evaluating some long term solutions to support the integration of <unk> solutions as of now I don't actually see any impact on overall patient centrally.
Situated.
Yeah.
Our next question comes from Paul Gong with UBS. Please go ahead.
Sure sure.
Sean.
I'm going to go back to <unk>.
The income tax.
So the UK awards hopefully total mining of course is how what are your chip.
But your thoughts on where you are collecting non telco you schedule was shown tangential flow niche industrial conductor.
As usual weather you can bundle.
Conclusion that shouldn't be something we're talking to them, but that's unknown chunk on consumption high switching towards <unk>.
<unk> costs are so high.
Oh.
Utilization for our new products, one charge so it sounds Alex I hope so too.
<unk> so.
So my first question is regarding the use of five auto just now you mentioned Todd.
Such as function level as.
Expectation.
As I mentioned, how the order intake has been.
How do you see the orders in <unk> since our launch until your special day after day.
Late October after lunch on other wafer or Scott did you see any impact from there.
This is my first question.
Yeah.
Paul Cheng.
<unk> evaluated the Gwen.
<unk>.
Chip.
If you would like in that.
Nice job on the.
Still a vessel which has a placebo.
Uh huh.
And then Moshe has done too badly.
Because sometimes.
Paul.
<unk>.
I can't tell folks who treat upon element of it and <unk> highlighted that one part quarter over quarter.
And so it was may I put it down.
How do you feel with I'm going to show how you went through a phase on challenging.
The finances.
So on the <unk> because you got <unk>.
And so new anchor Douglas.
Cingal and <unk>.
Mr. Jim <unk>.
Florida and southern Cal <unk> currently tend to come down.
Personally syngenta.
Well <unk>, they will miss utility or something could be at a bottom there yourself.
So you must have fashion that I think a cartoon that model that model.
Aloha.
But that happens.
Our model lineup on the car.
You laid on US has gone the bulk of <unk> fast.
<unk> uses the PLO balance.
See women choose <unk> got it done will come and go more than say you could cause us to have attrition.
Yeah.
Goodbye this auto lifestyle, so far at home with him nature to what Nielsen Mccook.
Yeah.
Thank you Paul for your question of course, I understand regarding the into five order is the more important thing for US right now to find ways to deliver five to users and shorten the waiting time for the users. So generally speaking order is not an issue.
Regarding two five.
The ramp up of 85, because this is still at a relatively early stage yourself would like to pay more attention to the quality improvement and to make sure. We can stabilize the quality of the two five.
The amount of 45 days of very strong as we expected of course it is.
The strong King you put the order can be even stronger with the stronger the better.
But it's a but at the same time, we don't want their users to wait for a really long time.
If we come back to tech stuff test the often cut if prices just so we don't actually think they surfactant that uses the mountains of regarding new products. If we look at the specific a product like the model three there is a big press gap compared with all of our product and we compare them.
Model Y ways, all right, yes, six we don't actually believes that we're competing in the same segment. So if we look at the pricing of our product and the positioning of our products that strictly speaking, we're not competing with Tesla in the same segment.
Our third clinical winches sequentially in <unk> or <unk>.
It sounds like three or four questions from you on behalf of them.
Oh gosh.
So hopefully you won't go.
It sounds like similar to your thoughts in general.
Charge offs, obviously, you've got your attention.
All assumptions Osama <unk>.
Sure.
The autos Hunter you call them.
Sure.
No actually it's also shall I talk with you you've got to your question is since these are sorts juices shouldn't go.
John .
EMEA was also.
Answer your call.
Sure.
Nicolas amount Australia. So my second question is regarding about your expenses are included in both R&D and SG&A.
To be timing of a large Q on Q this quarter.
Just time period, because you have new products on time.
To explore the new markets in Europe or is it smaller structural and if so what is your expectation for its trends going forward.
Sandy.
Hi, Paul this is spending the increase of SG&A in Q3 compared to Q2.
Of course.
Our sales and service network in China and also in Europe since we are in.
Enter the more.
Country market in Europe with this third.
Quarter, and also some marketing and promotional activities.
More marketing and promotion activities in Q3 compared with Q2.
The long term.
I think also you can check with is that checks a base resolve the form twos Q3, SG&A SG&A as a percentage of sales revenue.
We'll continue to be optimized along with the improvement of.
Our operation efficiency.
Thank you.
In 2023 and also the coming years, you will see in our.
A stable trend to for further improvement for this ratio.
Paul <unk> home in Ohio, <unk> therefore.
We all have the <unk> machine that Shanghai turmoil as it <unk> take a.
Bulk of those relationships and then later you said, yes, but total.
Good Jim.
So the bulk of <unk> is here.
Yeah.
<unk> come in and he said so true.
Total AUM in CFR equals embarked in pushing some of that.
Yeah.
Mhm.
Regarding the R&D expenses, yes, we do see some increase in the third quarter compared with the second quarter and this is mainly because the off Oliver our new products.
Development cadence as well as our other initiatives there like it that battery chipsets and the attachment of validation to when we enter new markets as well as is the employee cost than do the ETD caught this is actually part of our plan and we don't think is there any.
Other additional arent expenses at that is that out of the planning of the company closer yes.
They've opened the holiday season's done since I will look to get some good again further pucci Goldman <unk> attributed all of a sudden Kevin.
<unk>.
Finish at Nova.
Many of you who travelled all make good to do the <unk> Chengdu.
I'm sorry, Anthony so familiar MFA on tablet offered today, you got to essentially even in Pittsburgh.
It's somebody that is absolutely critical.
<unk> from Polo Tang from.
And we achieved a number of parts. So you can see to essentially eliminate EBITDA carbohydrate food with integrity.
So you guys had infinite.
Hum.
Regarding the R&D operations I believe right now we have entered into a relatively stable phase of regarding the R&D development work as well as adult patients.
So.
For us quickly.
When it comes to the R&D expenses, including human resources costs.
It will stay in a relatively stable.
Oh for example, probably every quarter it should be around a 3 billion RMB of course at the same time, we'll continue to improve the efficiency of our R&D efforts and.
But for some time now I believe it will stay at this level.
To make sure we can Uh huh.
Small products and technology innovations to provide a better experience for the users.
Hey, Jeff.
While we will continue to Shaw S. Joe So the tier two ultra and <unk>. So what is so roughly a ratio of Europe .
For this quarter session.
Oh, yes.
Yes, Hi, Paul and Europe is now.
Quiet initial stage. So currently the over our expenses.
A big percentage of the overall SG&A.
Now the mark for the <unk>.
Our marketing team.
Our Europe business is about 500 head count.
So yes, that's basically the information for our Europe business.
Okay. Thank you very much.
Okay.
<unk>.
Our next question comes from Tim <unk> with Morgan Stanley . Please go ahead.
2020 Baja.
So with one tier konishi, because each of which you touched on this just helps out quite well.
They are going to do you go and T cell <unk> 22 per center jobs with the full kind of anyway.
Got it.
Utility guidance should you saw him talk I imply that you should see sure you could do whatever you want she thought you went through with you, which I. Appreciate you all know we didnt check double check did you guys look at home depot.
Suitcase any signs that this is a woman called them.
Okay, Tom that's a good touch with our phone she thought I was going to say team now many of the homes that Sheila excuse me the time to go to the shipyard.
The shaping so anyone who quit dancing to the sense that changing probably talk to you because when you get your question. The windshield, you mean satcom, Chile, Czech good turnkey kind of coordinate it goes around call. It high food quality that yet so how do you weigh a hospital you can do to one jobs to attrition no going yourself, what kind of milestones you go tighten evercore tackled earlier T cell <unk> bye.
So you took a whole basis again, she told me against this etonian, because you're pushing the which.
So with the vehicle engine.
So my first question is about the production and delivery.
So I think based on our fourth quarter guidance. So basically the average daily rate in November December critical around 17 to 19000.
So what would be the peak monthly outputs Neil can reach by the end of each year and how is the trajectory looks like into first half next year.
With the supply chain bottleneck economy, a structure issue.
The unchanged Kobe policy and bold new motto, the players and their likelihood longer time for supply to expand their capacity. They include the production yield.
Just with you guys.
So yes.
So we won't see that lets you know.
We did a two minute take a kind of a battle with them.
Franco.
<unk> here so in Chile.
Got it bottoms and single women should the financial community.
And that would be you can't take a while.
It's very good news is that.
So when you take a look.
Queen then <unk> Goldman <unk> take a person that has a lead time on the.
<unk> mentioned that.
Figured something good is going to be and how in government.
The median so good or you could do for them.
And so sometimes you can bushel wouldn't hilla.
No.
<unk> showed up on the.
Diesel and serve in Asia, the mill itself with element so though.
<unk> designation Chili's, yes, yes.
When the power later.
The bigger priority.
Yes, it does come down within <unk> several of them.
<unk>.
Oh, sorry.
So I'm going there because some tonnage on lifestyle.
<unk> got some Cheetah Metro Manila.
While each admittedly you sell off or.
<unk> pay is.
That was a mix in general.
Yeah.
Of all speaking.
Quite difficult to Fox Hitchin Mega estimation, the garden and the impact of the corporate control and prevention measures and the operation of the company.
But if we talk about is the supply chain and the vehicle production I believe at the vehicle production.
Typically since you'd be able to meet that delivery targets. We set for next year and if we speak of the supply chain.
Do you see some.
Challenges for example in December we will.
Faces some constraints regarding the supply of silicon carbide.
But if we look at the 2023, I believe that the supply chain and production capacity.
Specifically to meet the demand and the targets, we set out for ourselves.
Too many alerts in person at this or the lead time on the well.
So let's stay on this ecosystem.
Throughput at <unk>.
Total <unk> and <unk>, but you do have.
A medicine package, so hope shutdown co formulate something like <unk> those would be the Hollywood chip.
For 2023 I believe.
For the vehicle protection goodwill of the.
Have we will have a relatively sufficient production capacity to meet the demand and we can achieve a 150000.
On capacity on one ship to I believe you said the production after vehicle wealthy.
I went out with a very smooth manner.
Got it.
Theyre going T cells, essentially jellies Hot Country-dance sure Jan Quench Hotshot law Okay.
I would tell them to go to coordinate you've answered them and give them I'm sure that you guys have been certainly enjoyed Xi'an Shanghai E. G. I always feel like I was just sort of underpins a lot so called.
You thought churn shield and project that out.
High school, who are going to get yourself to somebody to T cells.
Sean can you kind of income because two.
It was once Archie obviously, they're trying to get them. So that you go what time I'll leave you off what he can do you want to do so.
Oh sure I was just hoping you can achieve condensate when had them. All you do is just that Hershey Hershey with Gen <unk> took us through.
Well look one always wants but you cut to the housekeeping can you read that the so my second question is about the profitability because.
Based on our observation, we noticed a lifecycle with smart EV in China is actually getting shorter.
Rather than longer and traditional cars, so considering the very sizable R&D and manufacturing investment.
What would be the board reasonable terminal gross or operating margins and Ah shall.
Should we.
We should look for.
I think the competition is getting more intense thank you.
Sure.
So, let's take some goods to 90 nm chips.
Cloud private data sort of the acquire women sugar conduct some good timing.
Timing of data boutiques and musical acquire no immediate how long way topical Scania bus.
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Each quantum leap.
With other us with us.
And kind of mortgages.
Physical intimacy that you could quantify.
Okay.
Thank you for your question.
Regarding the smart electric vehicles I believe we have a much faster iteration FICO compare with it the traditional telcos and we believe they tuition cycle should be around three years and this is a highway iterating offer smart technology thing Neal.
Different companies have different strategies and different titration cycles about Neil.
We look at our technology platforms and with the Liza Liza one technology platforms have we actually have the same kind of a hardware and software for all the vehicles based on data technology platform. So for example.
We have explained that we haven't been new technology, one point out Anthony with technology to point out for other products based on new technology at one point I want to have the same kind of a software and.
However, when it comes to the smart technologies and Thats the thing for new technology to point out at the same time. We also have the unified battery pack and then we also share a lot of.
Commonality and said when it comes to the vehicle platforms.
So previously we mentioned a waver package you offer different kind of a top hat to meet their diversified demand and take those different users.
I think when we think about it.
Technology platform kind of a vehicle a platform strategy I think that 20% to 25% nickel of course marketing is not a very big challenge for us.
But if we look at the 2022 specifically.
Cost of the battery at Sky Rocketed.
Of course at the same time, we have increased the price of our products and even against this backdrop we have.
I believe the achieved a relatively reasonable vehicle gross margin.
Previously we have also achieved a 20% gross margin in the pot.
Like in the past that we didn't have the battery cost increases. So this is a relatively reasonable vehicle gross margin for all of our products are.
In the future if the battery cost can come down to reasonable level I think it's possible facet to linking the 20% to 25% the vehicle gross margin with other product in addition to that.
With our vertical technology vertical integration.
Including the battery the chipset I believe we will have more room to improve for the vehicle gross margin and it's possible for us to achieve a 25% to 30% the vehicle gross margin.
Look at the mass market heavily for the challenges that much Baker because if we.
Combining all of the companies in the mass market right now I think the overall gross margin is actually negative.
Got.
It is an exception because they have got a vertical integration of the batteries and other technologies.
If we do not have the vertical integration capabilities in the mass market will be quite challenging to survive in the mass market, but if we have those capabilities in place I think it's possible for us to also achieve 20% to 25% with other mass market products.
Thank you.
Is there a way that is Asia.
Yeah.
Our next question comes from the wrong with Credit Suisse. Please go ahead.
I should say coming in what do you think you'll answer some thunder.
Sure.
James <unk> sons.
Yeah, So I'm going to ask you about <unk>, which is the class C. Gail Goodman to shipments in the quarter. If you will that's showing up on my son's sheet, she industrial which shouldnt see Cassandra in just several months ago.
Woman to say, it's a change so called minimally.
<unk>, which is the Mega Cima, so think of institutional clients, who could cheat.
My question first of all on the guidance actually housekeeping kind of three things number one.
<unk> got the higher volume of MTN popular three Suez and then to guidance as Scott Brinker.
And the number of full quarter next year and number three guidance you have for 80% to 20% gross margin. Upon a vehicle you can maintain this guidance.
Thank you.
Yeah.
Ambient figure.
Let me, let Donald mental health.
About two of them and there you go take a function just.
Ministers to take even though many on the Merchandised Carnival.
Neil.
So that needs to be to breakeven with the militia tailwind from.
While millennium bulk was down that you could see.
But I would say the remainder of $2 <unk> the ambition that some pathogen.
From a <unk> 10 to <unk>, Ohio.
So.
Well as all of them together to go to.
Finally, as familiar with NPS.
<unk> familiar with who have got a sense without <unk> the genpact political anymore.
Consider the Dominion stupid like kind of on the Google Public you can see Australia for bulk water you hit upon the women's judo.
So I think a unique way to breakeven with no way it hasn't changed that Eagle.
Okay. Thank you. Thank you for being a question of US speaking and that's still the direction we're aiming for.
For the core business, often you know I, we are still aiming to achieve breakeven in the third quarter off by 2023 and this is still off our plan at the same time, we're also working on different strategic new business.
Example, we have two new brands and the battery chipset and the smartphone business at the same time. So if we look at the 2023 and the investment to four doses strategic new business is going to be around $3 4 billion RMB I mean, probably around.
1 billion RMB every quarter.
If we take all of those as strategic new business. Aside we are still very confident to achieve a breakeven for <unk> core business in the fourth quarter of 2023, but there are going to you tube Togo BMW three.
Take a took a therapy at.
At the end of the story of <unk>.
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Lululemon.
The input onto the <unk>.
As Michel Accordingly.
Marketing Oh did a tour.
<unk>.
Mhm.
So for the second question regarding is it five.
You mentioned.
Previously.
One of our co founder and mentioned that identified the volume going to exceed the Devonian after that BMW three series.
Event.
And of.
Of course that this is not a guidance, but because I believe in two five is much much better than BMW. Three series is however confident to achieve this target.
<unk> multi Google <unk> and Novartis.
Yotel pad.
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It deals with our suite of <unk> does.
Does that do to answer that.
Youre looking at the end of 2000 and secondary ODM donuts to the chest.
Hello.
Hello are inclusive today because get pneumonia.
Good choices for them.
So I would say no change at.
<unk> controller EMEA mid band pads.
Yeah.
So you said it well.
It is about promoting leader with deep below nothing untoward about standardized or excuse me. The amount. It is a tangible example, Steve it sounded it was deemed that was significantly thats a good brushy Eagle Sugarland.
But you kind of thought.
But you had a <unk> 10 launches that are going through a combo sunlight, but that you may have Rio tinto.
But again for Intel adulthood.
Number two.
They were completed on time, but with clinical community.
Uh huh.
And how about what sort of EBITDA.
Would you invest.
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EMEA EMEA commensurate.
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Remember that.
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The one that you got chocolate.
Millimole ideally a tableau through that that'd be helpful.
Uh huh.
You may have.
Molly publicly with aggregate.
So what kind of stores a lot no material figure in a multi dose for that.
As you can understand about a possibility to flip you undertaking.
Ladies and gentlemen.
Targeted marketing.
Okay.
Reality is bigger.
C&I on the mainland.
Nobody will continue.
Mhm.
Mm for the vehicle gross margin in 2022, I believe you said, they're still many talented privacy, especially when it comes to the methane cabinets.
Hot right now than we see in <unk> Costa still stays at a very high level.
Previously it has dropped to around 400000, RMB and now is going back or actually reached a new high that is around the 600000 RMB. This has significantly affected the battery cot and so for US This is actually out of Oh.
Of our control and it's very difficult to predict.
But I believe we can still remain a relatively stable there for gross margin in the fourth quarter compared with the third quarter.
For the lithium carbonate cotter I like Itchy property sure some impact for I don't think is that price or the cost of the lithium component is due to the supply situation because right now if you look at the car companies in China I don't think there's any car comes.
They cannot deliver their products because of the battery shortage.
Of course in the future, we believe that the lithium carbonate caught well go down, but we cannot predict a win and this has a relatively big impact on us because for all of our products, we have a relatively high battery capacity.
Speaking for each of our vehicles.
The batteries are around 80 to 90.
Kilowatt hours, so if adobe lithium carbonate caught that stays as at a very high level. This is going to have a big impact on the vehicle gross margin.
Maybe I can give you some numbers.
Which will probably help you to understand the situation and if we think about 100000, RMB cotton food everything happening today, it's actually affecting of our vehicle margin by around two point to point at 2% and we.
You can see the lithium carbonate cost dropped from 600000 to 400000, then this is going to improve our vehicle gross margin by around 4%. So if it is a leading carbonite cockpit can drop two events lowered it probably around 300000 to RMB, which is that reasonable.
For Bank Covenant, then it means that all of our vehicle gross margin can improve by probably around 8%.
They face the reality we're facing.
No I think so.
Sure.
<unk>.
Sorry about that I'm not sure it is.
But Tony you Paul clients is real women.
As a matter of time.
It was a similar.
Murdo why something like a switching.
The major part of our formal tweak.
With the.
Quarter associated.
So I'm wondering if we conclude that maybe idea show.
So you put all that essence, Michelle Ma.
Thank you Sam.
Sure.
Until a check on that.
I feel plus all the things you actually.
That much is obvious.
Our subsidiary products to expand modestly. So my question is about what's the model what we do for media.
<unk> launch.
<unk>.
We feel it's going to be showcased in the upcoming <unk>.
In December this year. Thank you.
Yeah.
So no ambient media, Nova minions, semiannual Romeo Wuhan person quite painful so you're familiar with your clients. So when you model out.
But you can go through but we'll have to come from their own boxes of women's usually got some the prototypes.
Let me tell you that <unk> will make it to balance their household income.
So Neil the Toyota that is oncology.
Women take opinion has certainly been women Samson.
Those are the things that you might put a cushing by future Assortments, some cheetah <unk> philosophy.
I see.
But as you guys kind of think that me understand Danielle so do with Minnesota power consumption.
And as I mentioned, Todd Mcmahon too.
Central and so on that they could choose any member who that you could chip in someone to take a full MTB.
MTV.
Thank you Amanda.
Good I'm going to switch over to the agenda.
Some there could figure.
We're showing better configured thousands you can pick up.
Yeah.
South, Florida Liang will result in high school.
Battle.
Well it may have been put Q1 more if I'm, putting in about one hour and you can get it fixed.
With him about <unk> you can see it was all methode.
Tell me if.
You will note hydropower get a dividend payable at Tidewater team for you Paul.
The magnitude of my salary.
Sequentially.
Okay.
Hum.
For the product lineup in the first quarter for next year.
First half of next year, we're going to have the five new product and I believe we're probably one of them is going to be.
The model Y to Tesla I can you mentioned, but as far.
So we focus more on the Australian offer all the product lineup.
We are in the premium market is fragmented so offer philosophy is to satisfy the diversifying to user demand.
High efficiency in the price range from 300000 to 500000 to waiver provided different product to satisfy the diversifying to user demand and the taste. So I believe with all of our product lineup and we should be able to achieve a foot.
Our delivery volume that can meet all of our expectations.
I don't actually expected that one product can sell around over or probably surround what can sell over 100000.
Units in China.
For example for <unk> five if it can sell properly over three.
30002 units per month.
It's going to be a very common street card and I don't think this is good for the 85 year old for Neil.
It's massive.
Multiple market deepen the story massive market.
Hello America being like a competitive way.
With each other.
<unk>.
Hey, guys take us apart from the put who listen and sometimes you have to put in the <unk>.
Mhm.
For them massive for the mass market. This is a different story.
We just had a meeting today with their mass marketing and for US we believe that the mass market product can sell probably over 50000 units per month I think of our model.
My model because the base is different market segments and the different target user group.
You'll see people. Thank you owned it.
Thank you.
Our next question comes from Jeff Chang with Citi. Please go ahead.
Yeah.
William you or what's your philosophy to channel to show what is your strategy.
So on the one team she's going to substitute a while Nick arguably three Charlotte satellite kind of partner are urging the popular assessing the hazardous or mega issues, such as sugar together, you've got funding things wrong.
With that I'll show you the financials already.
Sure Bob.
No.
<unk> seen the javelin PARP home of hydrocodone is going towards a single weight with phones.
Are you because I'm, sorry, I should have to pour a little ones here Joe.
Yeah, just a shot wasn't that nucor will ensure you shouldn't even bother to sit down and work with them.
Got you.
Well clearly ratio you've achieved Shanghai, so that you can.
XOMA targa tissue or those that you can win.
So my first question is about the.
The sales volume growth into November and December so in order to meet our meet mediums quarter, you talked about 43000 units.
And if the month on month improvement to be linear.
Around 37%, we should be reached 19000 units a.
Monthly run rate by December so from from.
<unk>.
Could you break down the volume of the U T five.
And the second question is if there's a ramp up pace is going to be long.
Linear.
Most of the way it's happening concentrated in December so could you tell us what kind of elements.
<unk> will be determined to our run rate to overshoot.
But but not in November thank you.
Okay.
So you have to know how much of a hassle.
So part of the call at some point you to the satellites at La <unk>.
Bulk of it is corporate.
Yes.
The quarter Seneca.
Of course.
Following up on the Halo of minimum wage has to go to the toilet power weighted.
<unk> gives me something right.
Investor sentiment, though in the public interest.
So if somebody has already done.
To get started on <unk>. So you have some time they have.
Please proceed.
Well my husband Shuang Mango Copa you gave you that one either.
We'll sell boxes or someone who's on.
At this time.
Yeah.
Thank you Jeff for your question.
In November we will still need some time to ramp up into production, including EG five considering the factors I just mentioned their 90 day, yes in December except that the Silicon carbine I just mentioned I believe we will have.
More production compare with the production off in November and of course in December .
We hope that we can still achieve our over 20000 a quarter.
On a run rate.
Yeah.
Although it's just Oh no.
No more questions. Thank you. Thank you.
The next question comes from Nick <unk> with J P. Morgan. Please go ahead.
I'd like to see a really good.
Hum.
M C.
So consider punctual semi annually by good execution.
Hum.
<unk> was 100 new feature.
Okay.
No.
Josh I'm going to do something.
Continues as we continue to incrementally move increasingly jumping to see.
Thank you.
Hum.
Let's see.
Chairman.
Well continue to do.
For example, it seems to come up with.
Sure.
So in Q2.
So for some time.
In terms of 30% and continue to do with absolute CPU Qualcomm. She wont include possible.
No.
So you are going to cause <unk> come even more to come soon.
Good.
Please proceed.
When we buy the cheaper.
You can.
E Commerce.
Our solution coupons.
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<unk> seen.
Some potential consumers.
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You can shop with us.
And as you can see.
She put into this new strategy.
Now let me conclude my two simple controlled really well.
First question.
Hum.
Accretion as we look into 'twenty, three and cool and also to come off it could lead to.
Uh huh.
Q2 on CPE.
Second question again, just on the <unk>.
Shifting strategy.
We can just talk about OTT.
<unk> solutions.
Solutions.
I'll start.
<unk>.
Chip.
Food conference solution not related.
Good evening.
Got you.
You can call.
<unk>.
Yeah.
Hi, Nick this is stunning.
Produced by William or myself.
We will further improve our S J.
Operating efficiency and Furthermore, our R&D expense will keep stable.
Stable compared with.
A relatively stable comparatively 2022.
No.
Operating cash flow wise, I think we are quite optimistic to achieving a positive.
Working.
Like our operating cash flow in future years, so our cash burn cash burn mainly it depends on the capital investment.
Now we are planning our next years budget.
Budget and.
From the generally I think the.
Total skus of Capex next year will not increase so significantly compared with this year.
We are planning more.
Life sales and service network and also we are planning.
Morris.
Duction and also supply chain.
ICT so.
At this moment.
<unk> give you a clear guidance and we are also covered under that our cash on hand.
Apply our ongoing.
Operation to breakeven its final achieved yes.
Yes. Thank you.
So you don't utilize Alan Dunton tuition silicon Youre homebuilder portrayed.
<unk> and <unk>.
Allison you mentioned say the take a.
Tien Tsin, it's a good tool Bay Samsung is yet to go her leader each year cohort income come in Asia.
Switching the tusa from England. So Kris will go the so called attrition women Korea telecoms today, you're good to go on <unk>.
I will come in the television is it doesn't they don't even go there.
So I wouldn't see it off on the.
Some other countries.
Mhm.
Overall speaking we understand there are still many uncertainties in the market, but I believe it weighs over current cash reserve and also the bank facilities and we should be able to support the companys operation until we break even.
So we don't think that this is going to be a huge challenge for the company.
Syngenta one teed off.
You bet, especially in refinish and Jen <unk>.
I'm going to assume is jacqueline.
One the big assumption of.
<unk> challenge to the team.
But that women Chenzhou Diego biotech, even with out of the Orange and Tim.
Do you I mean <unk>.
Solid year over year.
Well nothing with other hotel brands, you don't take on SMB, El Nino Hanmi, Aloha and women between Trina in pet food.
Yes.
Single women designated as <unk>.
Let me say or me.
What about in the Prime days I think it's Shlomo.
It's inbound hesitated on assembly. She was about INR continues with vigor.
So you did a symbion tougher satisfy your pop comes within them to come into service and powder, because <unk> had a shoulder constant thought Danielle <unk>.
Okay.
Hum.
<unk>.
So Tony utilizes it also Neil.
Yeah.
Regarding the chipset previously we have already addressed the AI training chipset that is and then you'd be down a 100 and now after I tend to probably elaborate more on the onboard a chipset.
We are there for the company in the World to launch of a product that is equipped to lay down all right, which is actually six months earlier than other companies and we also have a very close collaborations with Nvidia.
At the same time last year, we have already kicked off the R&D also over a D. Chipsets right now we have around 500 people working on the <unk> chipset.
It.
It is a commonly acknowledged that a chip that is closely coupled with it.
Algorithm if are we can use it the algorithm to define the design of the <unk> chipset.
The efficiency can be significantly improved which account also contributed to the other day.
Core gross margin now.
Our progress after the <unk> chipset to R&D is on track and Oh, we have seen some positive huh.
A cheaper in the front of the team.
So we'll keep shooting strategically come.
Dominion with potential.
Possibly.
Okay.
Turning to Mr. Qi.
Yes.
Yes.
Thank you participants.
Yeah.
Yeah.
Our next question comes Cheng Cheng Cheng with TICC. Please go ahead.
Hum.
Something else sounds you know, let's say yourself.
The South Louisiana.
Oh sure.
On top of all of them yet.
Okay.
Can't tell for that.
It was impossible for me I know you don't like little quick on shallow or long, sometimes you can get them to taper talk show some tangible signs of it little shortfall with holiday I was wondering about is what type of I'm not sure why it sounds like Jim talked about.
I hope all of you for Kimco.
What they're looking for short term such as home yet.
I'll wait for Google myself, she's sort of halfway up from a non GMO the whole diesel, which I almost forgot gas sure if all these things.
Hi, Paul.
But she was at home, but Oh.
Sure Stephen Lynch Auto tariff I shall go on he said, but yes, Aqua Capex that you guys are totally hook into Italy.
But I.
Can't give us the best shot column a temperature for the Hollywood film patent on I'll call. It that way I can in Egypt, what NATO C D. A davidson.
Topics of interest with a total of 40 Encana Linky women's actually makes you want to talk with high chicken volatile hits out of it if you want to shop with chocolate for me in the fourth quarter system, telling me he could tell them.
It sounds like you could sell to when she goes there.
So oh tens.
People today, it's all quiet on T V choices are kind of all of them, which I have met with John looks like a whole well not so much you can pick what kind of M. T V.
Careful until it seems looking like sorry, please go down the choices.
But what I'll tell you what tricks about social they absolutely get hung in there can you talk with them.
That's ongoing.
So my first question is about our in our current external environment, but everyone I encountered a lot of difficulties in production. So you know longer term or will be considered switching from oh, yeah, well to self build production.
Are there any difficulties in obtaining clarification kind of a way to optimize our new products the ramp up speed on manufacturing cost.
My second question is regarding to R&D and that's been that's a capex of about the boundary of our in house R&D and as.
So you can see that in the sort of cultural andi, except for the expense to two eight.
The RMB, so our cost at or the current capital market environment and to a much more intense competition Chinese EV market in a few years, but will we adopt a more conservative strategy of R&D and capex. So under what circumstances, we'd be able to trust our current strategy and the weather I'll work with that organization.
Secondly, flexible enough toward the trust.
And the last question is about to.
Just mentioned and T V models, so what do we see CAFTA MTBE market.
We will launch the new product pipeline in this segment in the future.
All my questions.
C J D.
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Two of the compound <unk>.
And some of the sort of thing.
The woman.
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Central and <unk>.
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So you can see me.
We had a setback in Chile.
In the <unk>.
Both of information.
I'll go through Q1, but then instead of at the same time I'm sure.
Yes.
Queen Anne.
Sure.
Sure.
Let's say if <unk> total tonnage of Yodlee proportionately similar.
About women save elements I'm going to come down at all.
So if I'm in the EMEA.
So youll see a conclusion Amit.
There was one key development, where your liquidity European here with some good I think a change in the shaping performance was on the size of the Tianjin <unk> total <unk> down even a hotel so negligible sensory utility the Peru, Sabawi Trimble again, Puerto Rico Sunday made it sounds like the Capex per megawatt.
<unk> got to consider strategic altogether Toyoda GSO facility.
It's Alan.
<unk> has several years ago.
Does anyone here because given the history.
Okay.
The factory to we are still working together with <unk>.
JC I believe over joined from manufacturing Corporation has been quite positive.
Regarding the vehicle production I believe.
Gold production capacity can support as a company is that delivery target in the short term.
Honestly I have already mentioned that for one front, we should be able to achieve a 150000 units under one chip and they said we combined the two plants together the factory one manufacturing to meet that under one ship to we should be able to achieve their production capacity of 300000 to you.
Got it.
If a week double they said to two shifts and the production capacity can also be doubled when it comes to the supply chain of course. So there are some volatilities for the whole industry not just for Neil.
As we ramp up our production capacity and the delivery of I believe we have the capability to mitigate the risk of their supply chain for the second question regarding the boundaries of our investments.
They have already mentioned that we do have a sufficient to catch a reserve to support the companys operations and when it comes to the overall investment in R&D every quarter, we expect that you have.
Jim back to around 300000 arm.
So a 300000.
Actually four three.
Thanks, Charlie.
3 billion sorry.
Every quarter, we expected to invest around 3 billion RMB four R&D efforts and so this includes all the R&D in <unk>. So we have explained previously.
The capex.
<unk> improved the efficiency of the Capex investment and we do have a very strict management regarding the finance and investment of the company.
Okay.
Two the MPV market.
Our strategy is very simple in the short term no plan, Colombia NPV model.
Of course long term booking more through this niche market.
So what is it that would lead this market the barnhart.
The supply side several Chinese brands have launched their high end computing model.
From the demand side at least right now MTV segment still remains a niche market.
Why.
He became more green and then decide what to do.
Several years.
Sure.
I think currently.
Our next question comes from you can Deng with HSBC. Please go ahead.
I'll tell you why do you think that comes out of this out we're down gosh I'm thinking that beyond just it sounds like how long ago.
Gotcha.
Guys have gone through them, India Bollywood Houston at Columbia.
Good luck. Thank you Keisha Hum yawn, what kind of a mixed bag outdoor shop, even makes the job doing what you do with Madison deal it'll have colon cancer Shanteau Esher mini anchor so that you got a break even though generally met a woman plenty of them that Josh.
The job I think Oh.
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Shang women do you take attention challenging J Goff, neither tasteful digestion, Russia, Danville, so much of which are noncash and then Tony Eagle Ford to Obama made sure that time will be on China, I'm going to support.
So on the logical evenly.
I've got two questions. Firstly, just to follow up on the margin side. So next year's gross profit margin improvement, yeah, well that'd be mainly coming from the increasing economic scale could we have some quantification over there because with the off on the mix side. It was more 85 in the mix that could be coming down a little bit and also we talked about our Q.
For breakeven.
But that based on the current lithium price assumption or in our Q4 breakeven assumption that basically baking normalizing of the lithium price and the second part is to ask what's the city pilot on the autonomous driving side, what's our timeline to push for it city pie.
And when do we expect that our autonomous driving capability to triple from Hum selling vehicle item to support materially on the margin side.
Yes.
So as you said.
Sure.
So the women Don Marchand like kind of chestnut.
Thats a good thats a good shape.
Sure.
In the past you.
<unk> Junior until you guys shared with us that demo.
Sure.
Yes.
<unk> done to it so how much I mean disorder or put you to assess eco community.
Cigarette she mentioned that chassis of Miller <unk>.
But don't know kind of spoken for.
When I kind of go through the state, Pennsylvania, where you should figure shouldn't have done this year.
The quantum of damage of Cotai.
You said you had a knee in the pandemic.
Now importantly, does it go down and down the hall.
Hello about banks without silver linings that you did.
<unk> mentioned that Columbia, So you're Cytosorb module horsepower. So we got one.
Understood I wasn't sure what sort of timing because you took two two so we're going to get that one.
Just on the parts of the funding side that you could stay quite shocked with their tickets to go Supercombinator Panda.
Thank you Tim for your question as of now of.
Of course, the leading cabinet comp isn't not going down as we expected.
In the fourth quarter.
But like I explained previously I don't believe that this is a supply issue because if we look at the market right now all the car companies that can actually get sufficient to supply batteries.
For us regarding the lithium resources. So we have seen some lithium resources that entered the market in the past year in the past.
And we expect our property and next year, the cough talk about lithium.
And is there going to be around 300000 to 400000 RMB.
When it comes to the budget planning of the company of course, we would like it to be more conservative. So offer assumption is around 400000 to RMB.
Basically basically all of our judgment regarding there'll be P. M covenant cost to probably for the next year.
Absolutely.
Oh sure Tito Moldavia Chip has Joseph this is Jim <unk>.
Hi father settlement hypothesis in daily Surf wave I mean, it sounded to sharpen our parkway team, but at the time, so I'm kind of thinking Kimball question Paul.
<unk> gone Untasteful HFC.
<unk> call.
A woman she died or minimum with Sunshine.
So actually under a parallel metabolite Donald <unk> young initiatives Jim.
I mean, you said parkway somewhere in Asia.
You said <unk>, 3%.
But she may have put viacom content type orders of Mali.
Yeah.
For the autonomous driving I believe there were still.
I need some time to see the contributions also autonomous driving to the vehicle costs marching entered the off our gross margin.
There are several factors of parts is that because of the feature and function development and the parties because of that the legislation recently, we do see some positive progress on the legislation in France for example.
M. I T has launched some pilot programs for the autonomous driving and a faster we believe it will still need to probably one to two years to get mature.
When it comes to autonomous driving technologies and also the legislations. So in the short term we expect the property they will not see.
And then significant contributions from the autonomous driving to the vehicle gross margin yet.
Margin.
Okay.
City type product.
Too many.
Yeah.
Our next question comes from changing in let's see AT&T Securities. Please go ahead.
Okay.
What do they hold them or sell them to you, but do you go to the deal with Hudson Valley, South what do you think you could of course will come out when you do look good for them, but so don't forget about Honeywell.
It was with the issue of course you take.
All of those sounds very articulate.
300, <unk>, you always got to be sure, but sure you bet.
Woman.
I do not want to do all of that Guy you got in high school.
So in total equivalent to hit that.
The eagles onto you.
Thiago Lindsay nursery something I always like when you. If you do go to church I should say gives you face on the cobalt and you want me they can conduct each year.
Bundled who actually got maybe you're telling me you said why don't you take that shortly.
And she knows how.
Jay Leno Halden future detailed though a young doctors are calling them beat our goal that's how many times does require U.
It sounds like you've got some quick well many option down there you go whole judiciary.
So my third question is about inventory so the inventory is around.
$6 7 billion at quarter.
Quarter three it is nearly doubled compared with quarter two.
This number imply around 10000 more inventory cars on your balance sheet.
Second question is about 85.
It was really hard on but September but reasonably with see some negative comments our news on the social media.
First off its poor performance on energy efficiency. So I was wondering what's your next move to deal with the consumers' concerns.
For taking my question.
Hi.
His study further.
<unk> Ah <unk>.
Increase in Q3, I think mainly two reasons why that is.
Other increases.
Inventory cars in Q3.
Other production with victory impacted by our rigorous upstream.
In Q3, so we increase the production of <unk>.
Yes, yes, yes fixed at 86 in Q3.
Secondly, it's because of the increase.
The.
Components inventory.
<unk>.
To secure the production in the coming months, we our stores more.
Key materials like <unk> and also other raw materials interest rate so all of those factors.
Led to the increase.
Inventory stock.
Yes.
One woman.
Uhm harnesses long, let down our Portland tight.
To get their housing mccollister income without Bob <unk>.
<unk> here with us.
And put another pilot.
Tyler.
Now Youre Yahoo, Colombia, mainly put together since I E, you're going to ship Netherlands Shimon.
Is it possible maybe go deeper into the type of part of hazard, Bob Yeoman, keeping with the burden on the medicine.
I Wonder if that's what you do with <unk>.
Good quarter, because he wasn't sure people wouldn't sort of impact.
On the business and title transfer.
Excuse me 1 million pool.
<unk> seen them, Doug <unk> here with the vigor. So now you've made a doubtful losses from the amendment today that figure is a little bigger chunks, because it got bigger and bigger.
So that's like a total not each hesitation or balance sheet impact.
Yeah.
<unk> face open doors per home.
<unk> should be able to shift those ago I'm sure.
Canadian <unk> two months ago.
That's obviously one of them.
Mhm.
Yeah.
Uh huh.
Yes.
Fine.
Different tires, it may have a different impact on the different performance when it comes to the power consumption.
They use us choose a performing prior than the purple the power consumption will be higher but if the user chooses a long range higher or low resistance tire than the power consumption performance is going to be much better and.
So we would also like to remind of the users you really enjoy driving and handling and deals that I get to experience it.
Acceleration of.
If you buy something for a second then.
And you can go into the performance tire, but you say you care more about their drive brands then it's better for us to go with a long range tire, which will have a much better performance when it comes to the wrench.
Data center.
Our balance sheet.
Taylor.
Okay.
I think there are no further questions.
There are no further questions now I'd like to turn the call back over to the company for closing remarks.
Thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> Investor relations team through the contact information provided on our website.
This concludes the conference call you May now disconnect. Your line. Thank you.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.
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Hello, Ladies and gentlemen, thank you for standing by for New incorporated third quarter 2022 earnings Conference call.
At this time all participants are in a listen only mode today.
Today's conference call is being recorded.
I will now turn the call over to your host Mr. Tang from capital market. Please go ahead.
Good morning, and good evening, everyone. Welcome to news in third quarter 2022 earnings Conference call. The company's financial and operating results were published in the press release earlier today and are posted at the company's IR website.
Today's call we have Mr. Within Li founder Chairman of the Board and Chief Executive Officer, Mr. Steven phone, Chief Financial Officer, Mr Standing too.
Senior Vice President of finance.
Before we continue please be kindly reminded that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties.
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 the stock exchange of Hong Kong Limited and the Singapore Exchange Securities trading 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 unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to our news press release, which contains a reconciliation of the unaudited non-GAAP measures too.
Parable GAAP measures.
With that I will now turn the call over to our CEO Mr. William Li William Please go ahead.
Our current guidance, you're going to tend to outweigh the onion defenses to ultimately.
Hello, everyone. Thank you for joining <unk>.
Third quarter 2022 earnings conference call.
<unk> two whaler items itself, what I was talking about in <unk> Golden Fulham tendency Cook <unk>.
Julia Chung <unk> itself, which in golf.
In the third quarter 2022, new delivered a total of 31607 smart electric vehicles up 29, 3% year over year setting a new quarterly high.
Well I see it I see who can patented two well known Bob will hook, Joe Pooler Sunquest interesting champion piece in the Huntington.
<unk> bought a golden shipping silicon paid loss ratio, that's supposed to get them done.
Based on our latest technology platform and key to point out we have a launch and delivered three new product, which has improved the competitiveness of our product lineup and I'll add.
Aspect and enabled a new to enter more premium segments capitalizing continues that demand growth.
Coppola, sometimes you cant really important.
Can you tell us that you are leading with Sergio downstream.
And the payments that you buy it cheaper for them.
Amazon tissue, you can media the hookup of about <unk>.
When deemed important going to calculate.
Since a good chunk of them as well.
Maybe adding to.
So we don't put on weight.
So I'm back now.
In October overcoming the production and supply chain volatility.
River to 10000 to 15 nine vehicles, representing a 174, 3% increase year over here. So welcome.
<unk> to collaborate closely with all of our supply chain partners to stabilize components supply and further accelerated the vehicle production and the delivery. We expect that the total number of deliveries in the fourth quarter of 2022 to be between 43000 to 48000.
Well, then that Antonio you saw come through yet powerful being family nature to it.
Next I would like to share some recent highlights of our R&D and operations.
So we have been on telecom <unk> would have done without it.
<unk> turns out leases in golf and Dunson Cheng.
So that sounds easy with some catch itself.
<unk> put a magnitude Togo.
In September after show cars off 85, a smart electric sedan.
But then they're going to be on display in all of our stores.
Our traffic reached a record high and order intake witnessed strong growth momentum.
September 30, we officially kicked off with the delivery of 85 under the preliminary user satisfaction rate exceeded our expectations.
What we see.
<unk> bought two theater SMT don't go to yet.
Well with AT&T took in patients with <unk> syndrome phase, how you were thinking.
Over the past to cover off a month.
Bang the digital assistant of NTT has accelerated and the upgrades it multiple times with continuous user experience. The improvement we have strong confidence in the market competitiveness of the new models based on the empty to platform sales over for one minute, let me see here with some major studio.
Well I.
Forgot your vessels Yogurts.
Let me go down by a passage outflow to meeting hotels don't forget you bought it it was longer than.
With respect to their sales and service network.
Now have a 319 nine new houses and the new spaces in 149 cities and 280, <unk> service centers and delivery centers in 163.
One thing I want to welcome yet or maybe you can lay deepwater.
Oh about Houston for a client that <unk> could you talk about your tends to that went to the funding pool EMEA each in late April the antimony.
But <unk>, we can see by those who can total cardio attempting to achieve them would you be 'twenty one.
On the 20 <unk> schedule it depends on the 20th puzzled with city of London.
So David with Togo, Santa Barbara and then in terms of what they're targeting are swapping network.
How has the installed a total of a 1000 to 210 power swap stations and provided 14 million battery swap. So for users new housing start 2000 to 55 charging stations the ways of 5000 to 765 for power Chargers and 6000.
77 destination targets in place in the meantime, overpower map has connected to over 590003rd party charters in China and more than 380000 charters in Europe too.
<unk> been continuing to always the timing and go forward. So dollar Thunder you can put it.
We've put on comes up we will maintain we will convert the OTO courtyard cumulative Huntington.
Since we entered that the Norwegian market a lot of September all of our products and services have been well received by local users and the user community has been growing rapidly which has laid a solid foundation for and the postpaid offer comprehensive entering more markets in Europe .
Adding on yes.
Well Matthias <unk> Butler, Neopallium Ali Al <unk>, Chairman and test our way later hunting and golf OTC Templeton fits in with the Coca Cola anti microbial against.
On October seven this year, we held new billing to 2022, well, we comprehensively introduced other products and services to users in Europe , marking of our efficient market entry in Germany, The Netherlands, Denmark and Sweden.
But in quarter. The older cohorts you go to two five times Zodiac Wilmington that also Keybank Parkway, most adoptees and countries so without you.
But going to a lot of attention and recognition from users and the auto industry in Europe .
We are now organizing larger scale test drive and kicked off a user delivery in Europe .
Yes, the U S.
<unk> orthopedic, adding on to Tim Pennington patents around pecan tool DTC pay patient wait and to see that come back into play.
At a time <unk> total of Alto <unk>, yes.
Yesterday.
Seven one <unk>.
22, Gordon steering well award granted by the prestigious German Maxine auto field at <unk> seven was voted the best car in the median and upper class category, both of our products and innovative technology have been highly recognized by the users industry experts and professionals.
Media in Europe , we're going how the full although momentum by porting flanker polo Tang Copenhagen, So they'll go more than autos to go throughout two foot.
<unk> been adding an E&P, but also Jensen hospital found in fact.
Sandy Chen from you about hospital funding, but when it's Andy Yeung with <unk> Cushing dug into yet.
To better serve user communities in Europe , we plan to open houses and the new spaces in major European cities, such as Berlin, Frankfurt broker, then Copenhagen and Stockholm. We also plan to install 20 power swap stations in Europe by the end.
Our end and another 100 by the end of 2023, so that more users can experience the newest charge, both probable and affordable power system in Europe .
For me is in the pudding <unk> patent case.
Super Bowl <unk>, Jim Fox, the Lodi supposed to achieve.
And do you include a full month yet.
Station, we have established an R&D center in Berlin for localized the development and deployment of digital cockpit and Adas to continuously improve for the intelligent digital experience of local users throughout the children well are you.
And bulk okay cause damage to antigen with Hudson could impact TJ.
This is going to come to you so to come down.
They could push you further on the whaler annually.
On September 27, <unk> announced a collaboration with the Danish Society for natural Conservation entered the Danish Nature Foundation, and the clean parks initiated new hoped to actively engage with the local communities shared their responsibilities and constantly make contributions to them.
More sustainable future.
In some blue Sky come in attrition way life popular Susan yes, the bulk of IGT.
Nigeria balancing slope, it's equal to the bulk up based on a going through a union quality and service you're going to put if I'm in a quantity so Daniel.
On September 30, upholding news orange in our aspiration of a blue Sky humming.
We said the first the new environment, social and governance report 2021.
Neil shared is ESG management practices and the performance in 2021.
Adding on yet.
Putting tissue.
So that's also a full on northern Permian keep with total hopefully.
How do you change also comes the tongue teaching them Pascal intensities.
<unk> came with a median parallel to that hotels that consumption closely on the media side.
One two times GDP for TV, Pune mid season.
Johan <unk> Jacob <unk>, Saudi win Centurion, who you won't probably see that tankage.
In 2022, New has further advanced in product core technologies charging is walking network as well as a sales and service network, which has laid a solid foundation for us to compete in the global market for the long run in spite of the operation talented brought forward by the change in micro <unk>.
Nick we delete that Neil is fully capable of staying focused on product and technology innovations as well as service capability improvement, while further optimizing the cost structure and improving operational efficiency changes do more beyond experience products and the services to users quote.
Right.
Yes.
And that's stephen's done with that yourselves, adding onion defensible of highway.
Stephen as always thank you for your support with that I will now turn the call over to Steven to provide the financial details for the third quarter of 2022 over to you Steven Thank you Binnie.
I will now go over our key.
Okay.
For the third quarter of competitive too and be mindful of the length of school.
Referenced RMB only in my discussion today.
I encourage listeners to refer to our earnings press release.
It is posted online for additional details.
Our total revenues in the third quarter.
Pretty old Biamby perfect then increase.
32, 6% year over year.
And to the six 3% quarter over quarter.
Our total revenues are made up to par.
Sales and other sales.
Sales in the third quarter were $11.
Non getting RMB for butane increase.
The eight 2% year over year, and 24, 7% quarter over quarter.
The increase in vehicle sales year over year and quarter over quarter, but mainly attributed to higher deliveries.
The result, a more diversified product mix.
Offer to our users.
On a scale of the third quarter were one point.
1 billion RMB.
A decrease of eight.
5%.
For the year, an increase of 48, 2%.
Uh huh.
Decrease in sales year over year.
Due to the decreased revenues derived from sales of automotive got weak credits.
Barton Creek.
Other revenues in line with the incremental vehicles sales.
The increase in other sales quarter over quarter.
The increased revenue derived from sales of automotive markets with credits.
Great.
Other revenues in line with incremental vehicles sales.
Gross margin.
Third quarter continued to.
So can put 3% comparable to the books.
3% in the third quarter due to the one.
All percentage in the second quarter of two distributors.
The decrease of gross margin year over year.
If you get to first.
Chris correctly.
Sales of automotive trucks with credits with high margin.
The decrease of vehicle margin.
Third the reduction of the sales margin, resulting from expanded investment.
Hum don't work in.
Create a gross margin quarter to quarter.
We have the ability to scale.
Automotive broke towards credits with higher sales margin.
More specifically <unk>.
Zero margin in the third quarter.
Two 4%.
Compared with 18% with third caught up to date with one and.
And 15, 7% in the second quarter of continued good too.
But the craze of vehicle margin year over year.
Attributed to increase battery cost per unit.
Which was partially offset.
Chris in transportation.
Was there a critical financing arrangements.
Rico margin remained stable quarter over quarter.
Our R&D expenses in third quarter.
Two non getting RMB.
Because of an increase.
146, 8% year over year.
And at least 7% crude and coker.
The increase arent expenses year over year and quarter over quarter.
I mean, it could be okay to the increased personnel costs.
Research and different functions.
As well as incremental design and development costs.
New products and technologies.
SG&A expenses in third quarter.
Two 7 billion RMB.
This increase of 48, 6% year over year.
Eight 8% quarter on quarter.
That can create with SG&A expenses year over year.
Quarter over quarter.
Primary go to first.
Kris will personal costs related to sales and the general corporate functions.
Second to create extensive.
Related to the concrete sales and service network expansion.
Mark.
Marketing and promotional activities to promote our people in China and Europe .
Laura.
Operationally the third quarter.
Three 9 billion RMB.
An increase of 290.
292% year over year.
Got it.
6% quarter over quarter.
On the losses in the third quarter contributed to one two.
$295 6 million RMB, where if there is an increase of.
$528 2 million RMB.
Income of.
Two six.
In the third quarter. They did one an increase of three.
$305 6 million RMB.
Taking the courtroom.
Could you speak to.
The increase of other losses.
For the third constant at this one.
Second quarter continues to move.
<unk> is loss.
The issues are.
Our overseas RMB related assets.
The result of the two.
Depreciation of RMB against U S donors and the third call accountability.
Net loss.
Third quarter.
1 billion RMB.
Which is an increase.
392, 1% our year over year.
49, 1% quarter over quarter.
Net loss.
Attributable to lose Andre shareholders with third quarter.
Couldn't warm biamby represent increase.
44, 9% year over year.
And.
Two 9% quarter over quarter.
Our balance of cash and cash equivalents restricted cash and short couple of investment.
Long term deposits.
One four pretty lumpy.
As of September 30th two.
Me too.
Now this concludes our prepared remarks.
I will now turn the call over to the operator capacities our Q&A session.
Thank you we will now begin the question and answer session to ask a question.
Thats Star then one on your Touchtone phone.
Do you think a speakerphone please pick up your handset before pressing the key.
It didn't have any Dan. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
For the benefit of all participants in today's call. Please limit yourself to two questions and if you have additional questions you can reenter the queue.
At this time, we will pause momentarily to pass them along.
Gotcha.
Our first question comes from Ming Li with Bank of America. Please go ahead.
Steven.
No.
<unk>.
If you took a coming in at <unk> <unk>.
The opinion you guys move to US is two one times.
You don't see the deal <unk> Bosch and Diana.
<unk> seen the Hawker lucrative Egypt, England.
But with <unk> going into two because I keep telling you can assume that acquisition sooner onto that.
No you shouldn't you waiting to be clear Campos and Santos as Boku foods whole Japanese you Kim <unk>.
And Churchill suddenly going to cheat by chance.
So easy to just two.
Our hope is within each of the Isa.
Some of it.
You can see to the hunton drilling to include.
Could you in attendance.
So no we will face ethical Woodstock previously your capacity is capable by.
Component suppliers, especially.
Welding part Australian Institutes. So could you also update on your latest capacity component capacity.
If there is no Colby control.
Impact thank you.
Yeah.
So I mean just to.
So do you have enough I know women take a good that's a good shelf with young.
So its impact back home and pretty limited because of the solvency II.
How do you think you can sort of use alba.
Would they go I'm going to sound flip adopt they will.
Okay.
And so that you have in Ohio.
So you can judge from OTR Gladstone and level of interest to you.
<unk> two <unk> machine the ETR for the group.
Just I want to ask.
Again.
The change in Netherlands, you Derisk the compound, but most of it on coal.
Doug I felt of accumulative, so an answer to.
So an unprofitable comstock sensitivity than apart.
Chip.
Sure.
The expansion out of that pool.
Hey, good talent.
Each of them.
It's because of any size here.
And then <unk>.
<unk> board of top not so easy to use with John to let up on the Lois with interesting outcomes.
Awesome.
So I would say the.
The U S.
So sometimes and plentiful.
Yes.
Yes.
So in that way.
Since <unk> is probably an impossible task.
So that it wouldn't be you can catch a lot more women.
Uh huh.
So if you went to battle them popular Youtube you can ship it yet the team which hit us on the status.
Yeah.
Hum.
Yes.
Yeah.
I mean, so tomorrow.
Sure.
Thank you for your question regarding the production in October and there has been some impact due to several reasons to enter the impacted around the room solvent.
The factories because of.
Our sub frame just like you mentioned about the we expect that this will be resolved in November and then the second reason is that the new eds before it is price and we actually have a new eds upon connect to offer factory Chi and the automation level off at the new <unk> is very high.
We only need to have around 30000 people to support to the overall operation not basically a new E gas pumps due.
Due to the ramp up of volatility is off of the Etfs.
Our production is affected by around two to 3000 and the reason is that the COVID-19 situation I believe that this has impacted the production run for one week.
Oh about speaking all those factors have affected the production in October , but we have resumed normal production and now and we expect to have a new production line for the new eds, an extra week and probably by the end of this month, the new Etfs in line will be ready and we can ramp.
But the production.
We will we have already softer the suffering issue and I believe that probably in December <unk> production will not be an issue and as of now I don't believe if there is any production issues for the <unk> 707.
So whether or not theres a windy.
<unk> completed the issue.
Synthetically Hey.
Hey, Bob as you can get those phone calls.
Steve and could be in the Hawk sizzle.
And it took the Kimball.
Kimball International to summit.
Michelle.
The U S semi Ben.
How will this impact the <unk>.
<unk> for the industry I know so Neil.
Besides <unk> and Veeco currently you can see.
800 chips to China.
Compared to a 100.
How do you see the impact of tuna progress of our autonomous driving.
Tony.
In a way that I think are Simpson, the tinman pad two wells two thirds of it or mitigate the unbundling.
And as she mentioned Omnichannel.
No I mean, so some yields will go towards or you buy that that assumption.
London, <unk> mango them in time, you're done within the <unk>.
There shouldn't be in the future.
EMEA.
Okay.
Someone that they determine packed bulk core please here.
<unk> thousand two decent koto.
The GDP, we just hung with us on that.
Throughput in the $80 if it's for sure that there that not so much an edge on women.
<unk> income.
With natural bleeding settlements of those types of amyloid beta.
Sure.
Thank you for your question regarding the chips Act I believe that there is some many affected the chip you Stifel cloud to training right now I believe that we have a sufficient chips like the eight well 100 to satisfy the need for that.
Training in the long run them, but at the same time, we're also exploring different opportunities for example, where.
Considering working together with some cloud service providers and we're also evaluating some long term solutions to support the deterioration of our ACI solution as of now I don't actually see any impact on what the operations temporarily.
Particularly with it.
Our next question comes from Paul Gong with UBS. Please go ahead.
Sure sure.
I'm going to go back to <unk>.
In contact with all of you to award.
Hopefully towards amaya towards the top corner you chip.
But your thoughts on where you are collecting non telco you schedule was Sean can you just saw in industrial kind of the so called usual, whether you're collecting bundle.
Concession that you shouldnt be familiar with we talked about some better color on consumption and total <unk> costs.
So.
<unk> showed an important chunk of charge so it sounds Alex I hope so too.
On your mill condition called <unk> so.
So my first question is regarding the <unk> auto just now you've mentioned.
Such as function level has some future expectation.
As I mentioned, how the order intake has been.
How do you see the orders in <unk> since our launch until your special day after day.
In late October after lunch on other waveforms are Scott did you see any impact from there.
This is my first question.
Yeah Paul.
<unk> evaluated the one towards the muscle.
Chip.
If you would assume that.
No.
It's still a vessel which has a placebo.
One woman.
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EMEA Pcr.
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The debate is authorized to say so far the home with him nature to what Nielsen Mccook it on it.
Thank you Paul for your question of course, I understand regarding the into five order. It said the more important thing for US is right now to find ways to deliver five to users.
And shorten the waiting time for the users. So generally speaking order is not at issue five regarding two five.
Regarding the ramp up of 85, because this is still at a relatively early stage yourself would like to pay more attention to the quality improvement and to make sure. We can stabilize the colleague here for the two five.
The demand for 85 days of very strong as we expected of course it. If it is strong can you put the order can be even stronger the stronger the better.
But at the same time, we don't want the user to wait for a really long time.
So I come back to tech stuff test the often cut if price is just so we don't actually think they surfactant that uses the mountains of regarding new products.
If we look at the specific a product like the model three there is a big press gap compared with all of our product and so we compare the model Y ways operate yes, six we don't actually believes that we're competing in the same segment. So if we look at the pricing of our product and our positioning.
Of a product that strictly speaking, we're not competing with Tesla in the same segment.
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What the clinical winches sequentially in <unk> or <unk>.
It took us three or four quick ones, just one year and half of them are high.
Sure. So so hopefully you won't go.
Sounds like a similar to your total internal peso so what's wrong with your charge offs. Obviously, you've got your attention goes through if that's what you call your assumptions on some of those are.
Sure.
<unk> Hunter Yugo.
Sure.
No actually it's also shall I talk with you you've got to your question is since these are sorts juices shouldn't go.
John .
EMEA was also your core parts of the vehicle.
Sure.
So my second question is regarding about your expenses are incurred.
Both R&D and SG&A.
Seems to be timing of launch our Q on Q or this quarter or is that just temporary because you have a new products.
Going to explode.
New markets in Europe .
What is structural and if so what is your expectation for its trends going forward.
Okay.
Yes Sandy.
Paul This is spending now the increase of SG&A in Q3 compared to Q2.
Because.
Our sales and service network in China and also in Europe since we are in.
The more.
Country market in Europe with this third.
Quarter, and also some marketing and promotional activities.
More marketing and promotion activities in Q3 compared with Q2.
The long term.
I think also you can check with you is that checks a base resolve the form twos Q3, SG&A SG&A as a percentage of sales revenue.
We'll continue to be optimized along with the improvement of.
Our operation efficiency.
Thank you.
In 2023 and also the coming years, you will see in our.
A stable trend to for further improvement for this ratio.
Thank you Paul <unk> home in Ohio.
<unk> therefore.
We all have to come more in the mid <unk> high <unk>.
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Both of those relationships and then later you said you're in Peru.
Jim.
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So a material part of important pin pusher.
Absolutely.
Regarding the R&D expenses, yes, we do see some increase in the third quarter compared with the second quarter and this is mainly because of all of our new product development.
Development cadence as well as our other initiatives are like at that battery chipsets and the attachment of validation. So when we enter new markets as well as is our employee cost than do the ETD caught this is actually part of our plan and we don't think that there isn't any.
Any other additional arent expenses at that is that our doctors are planning out for the company cost savings.
They've opened the Halloween season <unk>.
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Kevin.
<unk> basic Nova <unk>.
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So it's a 1 billion roughly on top it off is also key to essentially even in Pittsburgh.
How quickly.
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And we achieved a number of both so you can see to essentially eliminate cabos titles with innovative thinking that you're going to the ultimate.
Hum.
Regarding the R&D operations I believe right now we have entered a relatively stable phase regarding the R&D development work as well as adult patients.
So.
For us quickly.
When it comes to the R&D expenses, including human resources Cogs.
It will stay in a relatively stable.
Oh for example, probably every quarter it should be around a 3 billion RMB of course at the same time, we'll continue to improve the efficiency of our R&D efforts and.
But for some time right now I believe it will stay at this level.
To make sure we can Uh huh.
Small products and technology innovations to provide a better experience for the users.
Figure Paul what.
Continuing Shaw S. John so the tier two ultra <unk> until you got pizzano. So whats so roughly a ratio of Europe .
For this quarter session.
Oh, yes.
Yes, Hi, Paul and Europe is now quite initial stage. So currently the overall experience is not enough.
A big percentage of the overall SG&A.
Now the Mark.
Sales and marketing team.
Our Europe business is about.
<unk> head count.
So yes, that's basically the information for our Europe business.
Okay. Thank you very much for some ghansham.
Okay.
Our next question comes from Tim <unk> with Morgan Stanley . Please go ahead.
So you can see just over there.
<unk>.
Okay sounds like it's just helpful quick, which means theyre going to go and T cell <unk> <unk>, 2% at Joseph with a full kind of how we got here because utility guidance should you saw in Targa imply though that you should see sure you could do whatever you want she thought eventually which helps create T Mo.
She double check with that did you guys go to pay down debt.
Okay.
The woman called them.
Okay damn good chunk that took a touch with our phone. She thought I was going to say team now many of the whole geography Cima excuse me the time to take a tour.
Okay.
The shipping so anyone who quit dancing to the sense that changing probably it's housekeeping thing because you're pushing the windshield.
Any contrary.
Good talking to you kind of coordinate it goes wrong Paul Hudson.
Quite a few out yet.
I was just how you can go to one jobs to attrition going yourself, what kind of milestones you go tighten evercore tackle they'll either T cell Toby you initiate EG bicycle. So you took a whole basis again, she told me against this etonian, because you're pushing the which.
So what the vehicle. So my first question is about the production and delivery.
So I think based on our fourth quarter guidance. So basically the average delivery in November December could it get around 17 to 19000.
So what would be the peak monthly output Neil can reach by end of this year.
How is the trajectory looks like into first half next year.
With the supply chain bottleneck economy, a structure issue.
The unchanged Kobe policy at both new model your players and it likely won't quit calling for supply to expand their capacity to increase the production deal.
Just what are you going.
Thank you Tim.
So let's jump to the two midnight to go kind of down with them.
Yes.
I'm, calling from Intel at ECS Cheetah, you got it got it.
Importantly, some single women should the financial community.
You can't take a while.
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Because sometimes it does let down on the.
<unk> got some Cheetah Metro Manila.
Each of our children.
You can probably do a mix in general.
Of all speaking.
Quite typical Fox hatching egg estimation regarding the impact of the corporate control and prevention measures and the operation of the company.
But if we talk about is the supply chain and the vehicle production I believe at the vehicle production.
Typically these things should be able to meet that delivery target. We set for next year and if we speak of the supply chain.
We do see some chat.
Challenges for example in December we will.
Faces some constraints regarding the supply of silicon carbide.
But if we look at the 2023, I believe that the supply chain and production capacity.
Specifically to meet the demand and the target we set for ourselves.
Too many alerts in person at this or the lead time.
Let's do a marquis ecosystem.
Throughput at your tier 2 million tons.
Total <unk> type <unk>, <unk> and Millicent punches, a little help shutdown co formulate something like when you sell it those would be the Hollywood chip.
But for 2023 I believe.
For the vehicle protection goodwill.
We will have a relatively sufficient production capacity to meet the demand and we can achieve a 150000 production capacity one shipped I believe you said the production of the vehicle will be carried out a very smooth.
Manner.
Got it.
Theyre going T cells, essentially jellies, how you treat us.
Sure Jim Quench, how shall I got.
Got you a hotel in particular coordinate you've answered them and giving them choice because that can certainly enjoyed xian Xian gel you I always feel like the house I was just sort of underpins a lot down the road.
Dr Chin Shield and project that out.
<unk> High school, who are going to get yourselves company a T cell.
Sean can you kind of income because it's onetime.
Obviously, they're trying to get them. So that you go what time I'll leave you off what he can do and do.
So again she is just something that as you can see condensate when had them all leadership that Hershey Hershey with Gen. Two the sort of tech will look like.
If you cut too.
So my second question is about the profitability because base.
Based on our own observation, we noticed the lifecycle of a smart EV in China is actually getting shorter.
Rather than longer and traditional cars, so considering the very sizable R&D and manufacturing investment.
It would be the board reasonable terminal gross or operating margins.
Should we.
We should look for.
I think the competition is getting more intense.
Sure.
Sure.
So, let's take the 290 nm chips.
Quite a big part of that is sort of the acquire women sugar conduct some good I think the timing of data digital music inquire Melanie Gee, how long way topical Scania bus.
You got that data.
Guidance for me that that is probably.
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Neal, Yes under patent litigator that data elements and then quality issue.
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And then both Canada, possibly the comfort out of them coming out of a switch.
But most of the market and took a charge that will advise you at all.
I'll, let down.
Thank you Bob its become massive market it a lot tougher comps through Saturday quite a lot.
Molly Molly economy those are affordable.
The Maldives was.
Sure.
Okay.
The other even with hydro <unk> and.
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Hasbro has sort of hit on all three.
The domestic market, it's a broken up on the <unk> Mayo trades each.
It's quite a leap.
The other asset after the game kind of multi vehicle.
First of all I mean, obviously you could one hub.
Thank you for your question.
Regarding the smart electric vehicles I believe we have a much faster iteration FICO compare with at their traditional telcos and we believe that the tuition cycle should be around three years and this is a highway iterating offer smart technology thing Neal of course different companies.
Have different strategies and a different penetration cycles about Neil.
We look at other technology platforms and we.
We believe at least one technology platforms that we actually have the same kind of a hardware and software for all the vehicles based on data technology platform. So for example.
Previously we have explained that we haven't been new technology, one point out Anthony Oh technology to point out for other products based on new technology at some point they have the same kind of a software and hardware.
When it comes to the smart technologies and Thats the thing for new technology to point out at the same time. We also have the unified battery pack and then we also share a lot of commonality.
Commonality and so when it comes to the vehicle platforms.
Previously we mentioned the way, we'd like to offer a different kind of a top hat to meet their diversified demand.
So a different users.
When we think about it.
Technology platforms and off a vehicle platform strategy I think of 20% to 25% nickel of course marketing is not a very big challenge for us.
But if we look at the 2022, specifically the cost of the battery at Sky Rocketed. So of course at the same time, we have increased the price of our products and even against this backdrop, we have I believe the achieved a relatively reasonable vehicle gross margin.
Previously we have also achieved 20% the vehicle gross margin in the pot.
Uh huh.
Like in the past we didn't have the battery cost increases. So this is a relatively reasonable vehicle gross margin for all of our products.
In the future if the battery cost can come down to reasonable level I think it's possible for us to regain the 20% to 25% of the vehicle gross margin with other product in addition to that.
With all the vehicle technology vertical integration.
Including the battery the chipset I believe we will have more room to improve for the vehicle gross margin and it's possible for us to achieve a 25% to 30% that therefore gross margin if at all.
Look at the mass market heavily for the challenges that much Baker because if we.
We combine all of the companies in the mass market right now I think the overall gross margin is actually negative.
BYD is an exception because they have the vertical integration of the batteries and other technologies.
Got it.
We do not have the vertical integration capabilities in the mass market and it will be quite challenging to survive in the mass market, but yeah. So we have those capabilities in place I think it's possible for us to also achieve 20% to 25% without that mass market products.
Thank you.
Is there a way that the facial tissue.
Okay.
Our next question comes from being long with Credit Suisse. Please go ahead.
I should say covenant.
Thank you Alicia Chung Ching.
Sure.
Yes.
Core noninterest Cedar Creek punch.
So I'm going to ask you about which is the currency yogurt to shipment to China.
I'm essentially shouldn't that shortfall, which.
Shouldn't see Cassandra in just several months ago.
Well my two cents.
Any so called minimally.
Sebastian, but youll hush about which of the Mega Cima, So think of institutional clients, who could cheat.
My question first one is the.
Your guidance actually Husky Picasso things number one.
<unk> got the higher volume of MTN popular three Suez.
Now to guidance as Scott you were breakeven number full quarter next year and then the three guidance assumptions you have for 80% to 20% gross margin for a vehicle you can maintain this guidance.
Thank you.
So you're on being on figure.
Can you lay down mental health.
Paul two of them and there you go take a function just that.
<unk> to take even though many merchandised carnival.
Neil.
So <unk>.
That needs to be to breakeven with the militia may Olympia.
The millennium bulk was down that you could see.
Scientifically mentally at $2 <unk>, the English induction pathogen.
From Ohio did.
Hey, guys.
<unk>, Ohio.
So we're.
So we're quite good at the.
And you assume that you were trying to get home.
Omi enthusiasts familiar with who have got a sense without <unk>.
Consider the Dominion so people like kind of on the Google tablet you could do to sort of your basketball court tissue on the women's judo.
So the bigger you can create a breakeven with no weyerhaeuser yoshimi symbol that eagle.
Okay. Thank you.
Thank you for being part of question.
Speaking, that's still the direction, we're aiming for.
For the core business, often you know I, we are still aiming to achieve breakeven in the third quarter off by 2023, and this is still off our plan.
<unk>, we're also working on different strategic new business for.
For example, we have two new brands and the battery chipset and the smartphone business at the same time. So if we look at 2023 and the investment to four doses strategic new business today is going to be around.
Three to 4 billion RMB.
Probably around 1 billion RMB every quarter.
If we take all of those as strategic new business site.
We are still very confident to achieve a breakeven for <unk> core business in the fourth quarter of 2023.
You are going to Youtube Togo BMW three.
Take a took a therapy.
At the end of the three are all tied to the.
Hypothetically of a season.
<unk>.
The premium figure for women.
I'm going to go do my quick answer that impact I guess sometime.
Michelle quota in South America.
You can imagine so was.
Did a tour that you guys are like how is it <unk>.
Mhm.
Hum.
For the second question regarding is it five.
You mentioned previously.
Previously.
One of our co founder and mentioned that identified a buoyant going to exceed the Devonian after that BMW three series.
And of course that this is not a guidance, but because I believe your two 5% is much much better than BMW three series. It's however confident to achieve this target.
<unk> multi do so to me at Novartis.
Yotel pad.
Well, we all have.
And then for Doug.
Total you can see that sounds good.
The landfill sort of go away.
Take all of the Sha.
Our service robots.
As I do so until the leadership team.
At the end of 2000 and secondary organ donor to the chess alone units are lower than Q2 because.
Good day and the Maldives.
Chip.
Okay.
Out of all of the control EMEA maybe.
So it's actually pans out.
Well I mean, that's about promoted leader with deep Paloma two months or about <unk> <unk> is a standard dose example, so you sounded a theme.
Secondly, there's a good especially the <unk> <unk> CFO .
But you kind of thought.
What puts you at assembly on that good demand shifts that are going through you may begin to convert sunlight, but that you may be able to go out with him.
But again Williams adulthood, essentially complete.
But what's been your conclusion.
C C.
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Would you invest.
Figure.
Probably somewhat similar chips with vigor.
Yeah, Yeah yeah.
That will be.
In terms of thinking about it.
Let me.
You get into volume against Saddam Tau.
Pinnacle National hub.
Possible fit into it yet.
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We won that battle eager Chaco paywall minimally a tableau through that that'd be helpful.
Uh huh.
It's a recruitment of Mali publicly we found aggregate.
If all goes well.
There's a lot no material figure of the molecule.
I'm talking about.
Really the flip you're undertaking.
Lincoln.
<unk> in the market.
Okay.
Reality is bigger.
C&I on them.
Nobody will continue.
Hum.
For the vehicle gross margin in 2022, I believe you said, there's still many talented fast, especially when it comes to the methane cabinets court right now than we can cover that cost is still stays at a very high level.
Previously it has dropped to around 400000, RMB and now it is.
Going back Oh actually reached a new high that is around 600000 RMB. This has significantly affected the battery cost and so for US. This is actually out of our control and it's very difficult to predict.
But I believe we can still remain a relatively stable there for gross margin in the fourth quarter compared with the third quarter for.
For the lithium carbonate Carter I'll like it she property sure some impact for I D.
Don't think that the price or the cost of the lithium component is due to the supply situation because right now if you look at the car companies in China I don't think there's any car companies they cannot deliver their products because of it the battery shortage. So of course in the future. We believe it is.
Lithium carbonate cost will go down, but we cannot predict when and this has a relatively big impact on us because for all of our products that we have a relatively high battery capacity I'm virtually speaking for each of our vehicles.
What are the.
The batteries are around the 80 to 90.
Kilowatt hours, so if adobe UPN cabinets caught that stays and at a very high level. This is going to have a big impact on the vehicle gross margin.
Maybe I can give you some numbers.
Which will probably help you to understand that the situation and if so when you think about the 100000 RMB cockpit for the leasing company that they say, it's actually affecting of our vehicle margin by around 2.2, 0.12% and we.
You can see the lithium carbonate cost dropped from 600000 to 400000, then this is going to improve our vehicle gross margin by around 4%. So if it does lead to a carbonate cost that can drop to even lower probably around 200000 to RMB, which is that reasonable.
For the lead bank covenants, then it means that all of our vehicles gross margin can improve by probably around 8%.
They face the reality we're facing.
No I think that's all.
Other than Asia.
<unk>.
Sorry, your question I'm not sure.
Tony you Paul Clark is a real woman.
As a matter of time.
It was a similar model why something like a switch.
The major part of our formal tweak.
If you would bump around quarter Associate Lincoln Thunder, So I wonder if we conclude that.
So you put all that isn't too shima.
Actually we were just checking.
Check it out it's a five year plus all the other day you actually.
In February or March.
Robert It's Scott.
Is it products.
Modestly. So my question is about what's the <unk>.
What we do for media like on the <unk>.
Hum.
PT Fi awaken.
It's going to be showcased in the upcoming <unk>.
But if here thank you.
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C C.
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On the assumption ton of months or so.
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And about <unk> <unk>.
Yeah.
So that'll tell.
Tell me if you when you gave you went with hydropower data, yes, bronchi boiler Tidewater tier player.
So maybe if you want my cell and highway pay sequences.
Yeah.
So for the product lineup in the first quarter product here in the first half of next year, we're going to have the five new product and I believe are probably one of them is going to be.
Like the model Y to Tesla I can you mentioned, but as.
So we focus more on the overall volume after all the product lineup.
We are in the premium market is fragmented so our philosophy is to satisfy the diversifying to user demand.
High efficiency in the price range from 300000 to 500000 to waiver provided different product to satisfy the diversified end user demand to undertake.
I believe with all of our product lineup and we should be able to achieve a foot of all delivery volume that can meet all of our expectations and I don't actually expect that one product can sell around over probably surround.
Can sell over 100000.
Units in China.
For example for <unk> five.
Can sell properly over 330.
30002 units per month.
It's going to be a very common street card and I don't think this is good for the 85 for all for Neil.
Yes.
Yeah.
It's massive.
The massive market deepen the story most of the market.
Hello America being like a competitive way.
So Mr <unk>.
Hey, guys, so put put who listen to you guys to put in the <unk>.
Mhm.
For them matches for the mass market. This is a different story.
We just had a meeting today with mass marketing and for US we believe that the mass market product can sell probably over 50000 units per months.
Our model for <unk>.
The model because the base is different market segments and the different target user group.
Youll see in Chile.
Thank you owned it.
Thank you.
Our next question comes from Jeff Chang with Citi. Please go ahead.
Or what's your philosophy to channel to show what is your strategy.
So on the one <unk> sequentially Q2, there will make a mood arguably.
Today, Charlotte satellite kind of partner.
Or is it a popular assessing novartis or maybe your issues such as sugar together, you've got funding things are.
As usual with our surety of the furniture.
But yes, Bob as you know.
I wish I was particularly encouraging to.
Ashish I assume that you have like a pothole my hydrocodone is going towards a single weight it sounds.
Sure.
Sorry, if I should have to park that was higher Jeff.
It's usually the ETR Charlotte Nucor.
Are you sure you want.
Well, just sit down and work with them.
You are welcome.
You wish you could see Shanghai, so that depends on the target tissue or those that you can win.
Or if any sharp so my first question is about the <unk>.
Sales volume growth into November and December so in order to meet our meet mediums quarter, you talked about 43000 units.
And if the month on month improvement to be linear.
Around 37%, we should be reached 19000 units.
Monthly run rate by December so from from.
<unk>.
Could you break down the volume of <unk> five.
And the second question is if there's a ramp up pace is going to be linear.
Most of the wage happening concentrated in December so could you tell us what.
Elements.
Will be determined.
Run rate to overshoot in December but not in November . Thank you.
So Jack women.
So you have the knowhow to children.
Part of the cotton <unk> bulk of it is <unk>.
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The pop quota semi could you go you go.
Of course.
A follow up on the Halo of minimum wage Todd Gibbons.
Who took a toll on the power weight of the <unk> litigation.
What sort of interest to them at all in the public but I'm sure. There's a good day.
So if somebody has already done.
But aside of them converted so you have some time they have more choice.
Well my husband, Shuang startup and Mango Copa you gave you that one either.
We'll sell boxes on somebody's on either side.
Yeah.
Thank you Jeff for your question.
In November we will still need some time to ramp up in production, including <unk> five considering the factors I just mentioned I'd like to say, yes.
In December accepted the Silicon carbine. So I just mentioned I believe we will have.
More production compare with the protection of November and of course in December .
We hope that we can still achieve over 28000 a.
Production run rate.
Although it's just your ownership.
No more questions. Thank you.
The next question comes from Nick <unk> with Jpmorgan. Please go ahead.
I would like to see a willingness to.
We were too long.
Pete.
Yeah.
So contingent onshore sandy hangover.
Clearly if we can prove to be true.
Cool.
Please keep in touch.
Gosh.
To do so.
We continue to see.
So incrementally quickly jumping to see.
Thank you.
You too.
Mr Chairman.
Such group.
Dupont.
B E.
Putting competency in subsequent months.
Gotcha.
Sure.
Some of the symptoms.
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For some time.
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No.
So you're going to.
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It is.
Simply.
And these are the cheaper.
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E Commerce.
Solutions to pump.
If you could put yourself to do some with some feature typically.
Some at some point just because of the future.
<unk> seen.
Some of which are chomping assortments.
It's not a secret.
When you shop with us.
And as you can see.
<unk> strategy.
Thanks, John .
Truthfully My two simple questions really the first question.
Apache group.
Accretion as we move into 'twenty and cool and also some of it could be too.
The Q2 CPE.
Just a quick question.
In the summer.
Chip's points.
Thank you.
We can just talk about.
Okay.
Solution.
I'll start.
On the cheap.
The people compound solution.
Got it.
Good evening.
Uh huh.
<unk> com.
Yeah.
Hi, Nick this is Danny.
Produced by Williams and myself.
We will further improve our SGA operating efficiency and Furthermore, our R&D expense will keep.
Stable compared with.
A relatively stable compared with 2022.
Operating cash flow wise, I think we are quite optimistic to achieving the positive.
Working.
Like our operating cash flow in future years, so our cash burn cash burn mainly it depends on the capital investment.
Now we are planning our next years budget.
Budget and.
From that generally I think the.
Total skus of Capex in next year.
We will not increase so significantly compared with this year.
We are planning more.
Life sales and service network and also we are planning.
More production and also supply chain.
Capacity so.
At this moment I only give you a clear guidance.
And we are also confident that that our cash on hand can supply our ongoing.
Operations to breakeven its final achieved.
Yes. Thank you.
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So those shouldn't hinder wouldn't teed off on the other.
Hmm.
Overall speaking we understand that there are still many uncertainties in the market, but I believe it weighs over current cash reserve and also the bank facility and said, we should be able to support the company's operation until we break even.
So we don't think that this is going to be a huge challenge for the company.
I wouldn't see it off.
You bet.
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On the assumption of an AR.
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Solid year over year.
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Coming to them as a good quality into sufficient powder, Liberals, whom 80 that there are some pockets or otherwise and continue this engine had a shoulder constant.
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So Tony you said that it doesn't matter.
Yeah.
Regarding the chipset previously we have already addressed the AI training chipset that is so then you would be down a 100 and now after I got to properly elaborate more on the onboard a chipset.
We are the first.
Company in the world to launch of a product that is equipped to lay down all right, which is actually six months earlier than other companies and we also have a very close collaborations with Nvidia.
But at the same time last year, we have already kicked off the R&D also over a D. Chipsets right now we have around 500 people working on the <unk> chipset.
I believed.
It is a commonly acknowledged that chipset is closely coupled with it.
Algorithm if are we can use it the algorithm to define the design of the <unk> chipset.
Our efficiency can be significantly improved which account also contributed to gross.
Gross margin now.
All of our progress after the <unk> chipset to R&D is on track and Oh, we have so I think some positive.
Cheaper in the front of the team.
We'll keep shooting to get you to come to terms to.
And with potential to policy.
Okay.
The change in the future.
Yes.
Yes.
Thank you.
Hum.
Our next question Cheng Cheng Cheng with TICC. Please go ahead.
Hum.
You're buying something else out.
With all the ones you know the initial.
On top of them yet.
Okay.
Tell us without a viable financing.
It's impossible for me I know you don't want a little quick on shallow water long food Hall in Chicago.
It will take which I'm sure some tangible signs here almost triple with holiday. That's one thing that is worth.
Well once you're trying to sell into the same channel or the whole quite you for all the teams will be how hard they're working for some time such as home yet are pushed out of it I wont myself hit Florida Hospital from a demo or a hole in Q4, which I almost forgot to ask you if all the central hub pool, if you take.
But she was at home, but tragically it anyway you want.
Sure Stephen Lynch auto tariff of Hydro Guang says, Oh, yes, Aqua capex equals a totally hook into Italy.
But I can't.
Can't give us the best shot.
Temperatures for the Hollywood film patent on a car T in Egypt and E Tailers.
No I can't tell.
Topics of interest with a total protein cattle winkie women's fashion that she wants how clean up as high as you can possibly kick out of it if you want me to.
Ralph without before me and the whole Italian quota system, telling you could tell a joke.
At this time because it was felt that when she goes you can go on for a couple of people today. It's all quiet on T V choices cut all of them, which I have met with John looks like a home that's something like Yukon, Okay. We're kind of M. T V.
Careful until I think something like sorry, Please go down the choices.
But what I'll tell you what triggered that social they likely will get hung and he told me about.
Josh is ongoing.
So my first question is about our in our current external environment.
I encountered a lot of difficulties in production.
You know longer term, we'll reconsider switching from Oh, yeah, well to self build production.
Any difficulties in obtaining clarification kind of a way to optimize our new product for the ramp up speed all manufacturing cost.
My second question is regarding to R&D investment that's capex.
About the boundary of our in House R&D.
So you can see that you know so called her album on the ex Tac for the expense to two eight.
Any of the other RMB, so a coffee that or the current capital market environment and to a much more intense competition in Chinese EV market in a few years, but we'll be adopting a more conservative strategy of R&D and capex. So under what circumstances, we'd be able to trust our current strategy and the weather Oh, well if at all.
<unk> is a flexible flexible.
The flexible enough to let the trust and the last question is about to just.
Just mentioned and T V models, so what do we see CAFTA MTBE market wheel, Oh they'll eat.
The new product pipeline.
You know future that's all my questions.
Yeah.
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Liquidity that you've got PMT to some good I think I said agenda shaping performance was on the size of its engine again part of the total <unk> down even a hotel so negligible sensory utility the Peru Sabawi assembled again, but also send that made us so I'll take.
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Does anyone here because given the historic.
Okay.
The factory to we are still working together with JC I believe over joined from manufacturing Corporation has been quite positive.
Regarding the vehicle production I believe it does.
Take our production capacity can support as a company said delivery target in the short term. Our previously I have already mentioned that the full one plant we should be able to achieve a 150000 units under one chip and they said we combined the two plants together the factory one manufacturing to meet that.
One shipped to we should be able to achieve their production capacity of 300000 units. If a week double they said to two shifts and the production capacity can also be doubled when it comes to discipline thing of course. So there are some volatilities for the whole industry not just us.
Neil.
But as we ramp up our production capacity and the delivery I believe we have the ability to mitigate the risks of the supply chain for the second question regarding the boundaries of our investment.
Previously I have already mentioned that we do have a sufficient to catch a reserve to support the companys operations and when it comes to the overall investment in R&D.
Great quarter, we expected to have to.
<unk> back to around 300000 arm.
For a 300000.
Actually four three.
Right.
You touched.
3 billion, sorry every quarter, we expected to invest around 3 billion RMB.
<unk> R&D efforts.
So this includes all the R&D initiative. So we have explained previously.
For the Capex.
Well improve the efficiency of the Capex investment and we do have a very strict management regarding the finance and investment of the company.
Okay.
With regard to the MPV market.
Our strategy is very simple in the short term no plan, Colombia NPV model.
Long term booking more through this niche market.
I have also noticed that with me at this market is very hot.
My site Civil Chinese brands have launched their high end model.
But from the demand side at least right now as the MTV segment still remains a niche market.
That's why we like to give them more green and then decide what to do in the next several years.
Sure.
Currently.
Our next question comes from you can Deng with HSBC. Please go ahead.
I'll take that one time, I think I got that I've been saying gosh I'm thinking that beyond just a thought that how long ago.
Gotcha, something guys I've gone swimmingly about limitation of Colombia.
Goodbye. Thank you, Sir Hum yawn, what kind of a mixed bag outdoor shop you. It makes the job doing what you do with medical total hopkinton country Szabo Esher Mignon coastal that you got a break even though definitely met a woman budget are plenty of them that Josh.
The jobs I think.
Gotcha Gotcha door shop, Jim, Louisiana, Oklahoma Hydro mini element kills the breakeven Charlotte John I'm, Sorry, you said normalization dockyard in countries, Belgium, Josh Chan.
Can you.
If you take attention chunky, Jake Oh, no need of tasteful, Doug I was just unless you Danville so much of a whole genome Cashman, Tom Eagle Ford to Obama made sure that some will be in China I'm going to support just show on the Magic leap.
Oh I got two questions. Firstly, just to follow up on the margin side. So next year's gross profit margin improvement, yeah, well that'd be mainly coming from the increasing economic scale could we have some quantification over there because we see off on the mix side. It was more on the 85 and that makes that could be coming down a little bit and also we talked about in Q4.
Like even does that based on the current lithium price assumptions are in our Q4 breakeven assumption that basically baking normalizing of the lithium price and the second part is to ask what's the city pilot.
On the autonomous driving besides what's our timeline to push for it city pilot and when do we expect that our autonomous driving capability to improve from a.
Hub selling vehicle item to support materially on the margin side.
Okay.
So as you said.
So well done.
Like kind of Chester.
Pardon me that's a good that's a good figure.
Sure.
And those pads that you achieved on their own side senior until suit you guys shared with us that demo so that will make sure that the dominion. So much is already done to it so how much I mean sort of what put you at the C Corp conversion.
Cigarette cigarettes and that should be a <unk> <unk>.
I don't know.
So no.
And I kind of go through the Pennsylvania, where you ship sooner than this year.
One of them is a tall task.
To do such a dominion.
Pardon me.
Nathan that Domino and personnel needed to go down and down the hole.
A quick word about tons without physical damage that you did.
Our merchandize Columbia until you sign as a medical policy.
Understood I wasn't shoots autonomy, because you took to choose so it kind of gets that wow.
Just on the biopsy funding side that you could take place chocolate in particular.
<unk>.
Thank you Tim for your question.
As of now of.
Of course, they're leading cabinets caught isn't not going down as we expected.
In the fourth quarter.
But like I explained previously I don't believe that this is a supply issue because if we look at the market right now all the car companies that can actually get sufficient to supply batteries.
Hum.
Regarding the lithium resources. So we have seen some lithium resources to enter the market in the past year in the past and we factor property next year. The cough talk about lithium carbonate is there going to be around 300000 to 400000 RMB.
When it comes to the budget planning of the company of course, we would like it to be more conservative. So offer assumption is around 400000 to RMB.
This is basically basically all of our judgment regarding there'll be P. M covenant caught probably for the next year.
Absolutely.
Food <unk> chip has Joseph Kim Thank you Lisa.
Let me take a cut of father said Kona hypothesis in daily chef pathways, I mean that sounds like a shutdown of a great team, but this home so I'm kind of thinking Kimball Quintin pool Guangxu can untasteful already said, but also the <unk> call.
A woman, she diebold or minimum wage.
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Initiatives in several immuno Michel Parkway out somewhat and are you sure.
You said <unk>, 3%.
But she may have put higher concomitant headwaters Molly.
Yeah.
As for the autonomous driving I believe there was still need some time to see the contributions also autonomous driving to the vehicle costs marching enter the overall gross margin.
There are several factors of parts is it because of the feature and function development and the parties because I'll get the legislation recently, we do see some positive progress on the legislation in France for example.
M. I T has launched some pilot programs for autonomous driving and a faucet, we believe it.
Well still need to probably one to two years to get mature when it comes to autonomous driving technologies and also the legislations. So in the short term, we expect our property there will not be.
And the significant contributions from the autonomous driving to the vehicle gross margin yet gross margin.
Okay.
City type product.
Oh sure Guinea.
Yeah.
Our next question comes from changing in let's see.
Securities. Please go ahead.
Goodbye.
Okay.
What did they only sell them to you.
You go to the deal without too Chuck what do you think you can look.
Switzerland than you do.
Low coupon.
Forgot about Honeywell.
It was with the issue of course, just because you do check all of those sound like.
Do they tell.
Sunbelt.
You always got to be sure, but shouldn't you Bette Jo mill chance that a woman.
Jacob.
So you put all of that guide you got in high school.
So in total equivalent to hit the Eagles onto you.
But as you know sure something because it always helps when you if you.
Diego Church I should say gives you face on the cobalt actually want me they can conduct easier.
Oh, Gosh, I got maybe you're trying to Egypt.
Yeah sure.
Or how does it go to haul them future detailed though oh.
I'm not too sure hold on beta golf like how many titles require U E channel. It sounds like you've got some quick well many options out there you got a whole suite of him.
So my third question is about inventory. So the inventory is around $6 7 billion on the on quarter.
Quarter, three is nearly doubled compared with quarter two.
This number imply around 10000 more inventory of cars on your balance sheet.
Second question is about 85.
It was really hard on that.
Remember, but recently, we see some market come in our news on the social media.
Most of its poor performance on energy efficiency. So I was wondering what's your next move to deal with the consumers' concerns.
Thank you for taking my question.
Hi, Thanks for the history.
Right.
Increase in Q3, I think mainly two reasons why that is.
Other increases.
Inventory cars in Q3.
Other production with victory impacted by our Ria sub frame.
In Q3, so we increase the production of.
Yes, yes, yes, six at ACC in Q3.
Secondly, it's the <unk>.
Most of the increase.
The component inventory.
<unk>.
To secure the production in the coming months, we stores more key materials like chips and also other raw materials interest rate. So all of those factors.
Two the increase.
<unk> stock.
Yes.
One woman.
Uhm will behind us as long as our Portland tight do you think Oh, so any capital Bob.
Dean <unk> here with us. So you can put on the pilot and then kind of as a good thing.
Got it.
No Youre Yahoo, Colombia, mainly put together since I E you're going to submit them to me.
As possible and they go deeper into the type of part of hazard, Bob Yeoman people in comparison with the medicine. So I wonder if that's what you do with the government of Coco issuance.
Because we're going to ship bigger deeper into the impact of how much of your hardware business and.
Hi.
So let me teasing a million, Google and you should be dosing them.
<unk> here with a bigger somehow you've made a thoughtful answer.
England today that figure is a little bigger chunks, because it could take a bigger job. So that I think I was hoping that.
They say it upon the hesitation.
Thank you Bonnie.
Coupons com interface opened out of Chicago.
Could it be easier to call. It a lot because they are two shifts so that they go hungry.
It will come in better for you two months ago.
Let's see.
Yeah.
Yeah.
Uh huh.
Yes. It is.
I see.
Different tires, it may have a different impact than the different performance when it comes to the power consumption.
They use us choose a performing prior than the power consumption, while the higher but if the user chooses a long range tier or low resistance tire than the power consumption performance is going to be much better.
We would also like to remind all of our users.
You really enjoy driving and handling and do that I get to experience. It the acceleration of at least five so we think for a second then of course you can go with it the performance tire, but you say you care more about the drive range then it's better for us to go with a long range tire, which.
I'll have a much better performance when it comes to the range.
There seem to.
Hi, Peter.
Okay.
I think there are no further questions.
There are no further questions now I'd like to turn the call back or what is it.
Thank you Mark.
Thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> Investor relations team to the contact information provided on our website.
This concludes the conference call you May now disconnect. Your line. Thank you.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.