Q3 2022 Li Auto Inc Earnings Call
Speaker 1: Hello, ladies and gentlemen. Thank you for standing by for Lee Otto's third quarter 2022 Greetings conference call. At this time, all participants are in listen-only mode.
Speaker 2: non-GAAP financial measures. Please refer to Liado's disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our president. Please go ahead, Kevin.
Speaker 3: Thank you Janet. Hello everyone and thank you for joining our call today. I will review our third quarter key highlights.
Speaker 4: In the third quarter, we navigated our model succession and launch cycle, as well as the challenging micro-environment and supply chain constraints. Against this backdrop, we delivered 26,524 vehicles.
Speaker 5: up 5.6% year over year.
Speaker 6: Despite a supply chain bottleneck, we delivered over 10,000 Li-L9s in September , the model's first full month of production.
Speaker 7: This marked the first time that a Chinese-branded premium model priced over RMB400,000 achieved monthly sales of more than 10,000 vehicles.
Speaker 8: demonstrating LEA L9 as the topic among full-size SUVs for family users.
Speaker 9: This success was due to the exceptional strength of our team, their outstanding management of the lead L9 ramp-up process, and their skillful collaboration with our supply chain partners.
Speaker 10: As the L9 continues to surpass user expectations with class-leading features in drivability, safety, interior space, passenger experience, and smartness, demand remains robust, providing constantly strong order inflow for the model.
Speaker 11: Li L9 has been the sales champion among full-size SUVs in China since its delivery started.
Speaker 12: Benefiting from LE-L9 strength, our total delivery in October reached 10,052, representing a 31.4% year-over-year increase.
Speaker 13: this followed by a record breaking.
Speaker 14: 15,034 vehicle deliveries in November .
Speaker 15: As always, we would like to extend the sincere thanks to our patrons.
Speaker 16: gratitude to our over 200,000 Liwan users.
Speaker 17: we will continue to adhere to higher industry service standards and continue to improve the performance of LEE-1 through OTAs.
Speaker 18: On September 30th, we launched Li L8, a 6-seat premium family SUV that succeeded LiWAN. We also unveiled Li L7, a 7-seat flagship family SUV, on the same day.
Speaker 19: We commenced the deliveries of the L8 in November . Let me provide more details of this vehicle.
Speaker 20: LE-L9-8 employs our new generation AWD range extension system.
Speaker 21: and boasts over 100 features in their standard configurations.
Speaker 22: It's available in two trims, Pro and Max.
Speaker 23: providing users with flexible choices of smartness.
Speaker 24: The two trims are harnessed respectively with the AD Pro and the AD Max autonomous driving systems.
Speaker 25: Pro is powered by the Horizon Robotics Journey 5 chip with 128 tufts of computing power, while Max is powered by the dual-ring X chips with 508 tufts of computing power.
Speaker 26: In addition, the two trims are equipped with the innovative smart space system, SSPro and SSMax, featuring a first row full-screen interactive system and a five-screen three-dimensional interactive system respectively.
Speaker 27: These packages bring a new level of driving and entertainment experience to smart electric vehicles.
Speaker 28: We are pleased that the L8's numerous class-leading features have delighted its first batch of users, and we believe that their satisfaction for the vehicle has broadly exceeded their expectations.
Speaker 29: We are confident that the Li L8 will stand among the finest options for six-seaters priced over RMB 3300,000 RMB and together with Li L9.
Speaker 30: The sales champions of full-size SUVs in China and the Li L7, which we believe will be a top choice among 5-seat SUVs priced over RMB 300,000.
Speaker 31: We expect to captivate a broader range of family users with differentiated needs and gain a larger market share in the RMB 300,000 to RMB 500,000 price segment.
Speaker 32: We are encouraged by DL9's continued strong sales performance and the solid demand for
LE-L8
But considering the ongoing supply chain uncertainty, we expected fourth quarter deliveries to be in the range of
45,000 to 48,000 vehicles.
We will continue to collaborate closely with our supply chain partners to react quickly to changes and to mitigate potential risks.
During the third quarter, we continued to demonstrate our strong commitment to vehicle safety.
According to the vehicle safety evaluation results released on November 4 by the China Insurance Automotive Safety Index, or CIASI, Lee L. Nai obtained the G greeting.
The highest safety rating.
in three out of four evaluation categories.
occupant safety, pedestrian safety, and assistance safety.
In the category of crashworthiness and repair economy, LEE L9 received an M rating, one of the top results received by premium vehicles, tested by CIASI since 2017. In addition, LEE L9 received a M rating, one of the top results received by premium vehicles, tested by CIASI since 2017.
It was the first domestic full-size SUV tested for 25% frontal offset impact on both the driver and passenger sides, and achieved the G rating for both tests.
Thanks to its ultra-high strength body structure, the L9 also demonstrated class-leading performance with the ability to withstand a peak force of 116.
in the roof strength test.
Its roof can withstand a weight of 11.8 tons on the side, effectively preventing cabin deformation and safeguard a relatively large headspace for drivers and passengers to survive in case of accidents.
We continue to...
We continually improved our vehicles' performance and features through OTA after their
Delivery.
In early November , we released our OTA 4.1 upgrade for L9, further enhancing user experience with our
upgraded the AD autonomous driving system and smart in-car voice assistant Li Xiaotongxue, as well as improved smart-space interactions and entertainment experiences.
in particular.
The vehicle's three 15.7-inch 3K automotive-grade OLED screens can now project the same events and all game from the three different camera angles.
transforming the L9 into a great sports lounge for families and friends to watch
such as the ongoing FIFA World Cup.
To create successful products, we have two core goals. Firstly, for consumers, we choose to exceed their needs rather than merely meeting them.
Secondly, as a company, we aim to achieve healthy growth margin and self-sustaining cash flow, which will allow us to continually invest in our dual-growth engine of R&D and business capabilities.
Specially, our R&D efforts will be directed more comprehensively across products, platforms, and systems with the long-term goal of growing into a world-class technology company.
Our business capabilities include commercial, supply, and organization capabilities.
With continued investment in R&D and business capability, supported by our healthy growth margin, we will continue to pursue product and commercial success.
and foster a healthy long-term development model.
This flywheel has been the strategic focus since our founding, and we believe will remain our strategy going forward. By understanding this business model, you will understand the ultimately optimal.
Our supply chain remains one of the most significant variables with respect to our deliveries.
We are accelerating supply chain deployment and optimization to build our resilience for fluctuations and support our rapid growth sales.
Importantly, we are committed to extending our in-house development and manufacturing capability vertically along our supply chain. Through our forthcoming self-owned manufacturing base and majority-owned JVs, we expect to be able to self-produce our manufacturing base.
both range extenders and the 5-in-1 electric drive unit that can support our EREV delivery targets.
On the BEV side, we have commenced construction of a semiconductor manufacturing base in the high-tech zone of Suzhou Jiangsu Province in the third quarter. It will focus on R&D and production of automotive-grade power module based on the third-generation semiconductor material, silicon carbide.
The power module is a core component of our self-developed 8-volt electric drive system.
Alongside our dedicated investment in supply chain, we continue to expand our direct sales and servicing network and increase our brand awareness with up to $1 billion.
gritted brand image to fuel our business expansion. As of November 30, 2022, we had 276 retail stores covering 119 cities, as well as 317 servicing centers and the auto authorized body and paint shops.
operating in 226 cities.
During the third quarter, we also started to open retail stores in places other than shopping malls.
such as automotive theme parks to diversify our locations and reach more varied target users. The retail stores we opened at Hangzhou Tikka Auto theme park in September is a good example, featuring our new design language and warm colors.
it creates a welcoming interactive space for visitors.
It also enjoys strong foot traffic due to its excellent location and word-of-mouth publicity.
In addition, this store also offers customers a comprehensive and convenient experience with combined showroom and delivery center functions.
The expansion and upgrade of our direct sales and servicing network have boosted both our brand recognition and our ability to fulfill user demand for our compelling products.
which we are confident will drive meaningful sales growth going forward. We will continue to innovate new retail formats.
finding new ways to attract more users while providing them with better services and experiences.
Moving to R&D, we believe R&D capability lies in the
at the core of product competitiveness as we scale our company from 1 to 10. Therefore, we insist on full-stack self-development of core technologies such as electric drive, intelligent space and the autonomous driving system.
We have spared no effort in solidifying our leadership in the EREB space with continued investment in our new generation range extension system.
In addition, we are actively self-developing the key building blocks of our 8-V HPC-B EV platform, including the power chip, power module,
electronic control unit, electric motor, and transmission system.
aiming to be one of the first automakers to roll out HPC BEV decals.
We are also proud to lead the industry in smart space R&D. For example, we self-developed our smart space.
the AI system powered by MIMO-Net, a six-room human voice enhanced network, and the MVS-Net.
a multi-view vision confusion.
Network, the AI can help create accurate sound perception in a complex acoustic environment and identify complicated gestures, enabling an unparalleled in-car entertainment and interactive sound perception.
experience
With respect to autonomous driving, as of November 30, more than 170,000 family users have enjoyed our Highway OA feature. We have further enhanced our vehicle's ability to perceive dynamic obstacles.
and static road structures in a complex environment, as well as their
ability to forecast traffic participants' actions.
We were the first in the industry to extend the concept of 3D hypothesis, 2D verification, to multimode sensor. And Li L9 was the first to realize Highway NOA based on an NVIDIA O-ring SoC chipset.
Meanwhile, we have partnered with Tsinghua University and MIT to complete the world's first public project to construct high precision maps in real time.
Intelligent manufacturing is another core competence for any successful automaker and another area in which we excel. First, we have industry leading manufacturing equipment.
Our fully self-developed manufacturing management software, LiMOS, can greatly improve production efficiency and quality with precision control. During the entire automotive manufacturing process, this system will be implemented in all...
our future factories, shortening new factories deployment cycle by more than 3 months.
Our R&D efforts are not limited to building a grid car, but also how to make it.
We use vision.
sensors, and algorithms to precisely control the workflow of hardware equipment in order to realize flexible production and intelligent inspection.
As we strive to enhance our R&D and manufacturing capabilities, we also aspire to make a positive environmental and social impact through our sound government structure and dedication to sustainable development.
In September 2022, we received an MSCI ESG rating of AA for the second year in a row, maintaining our leadership position in the automotive industry in terms of ESG performance. Moreover, following the earthquake in Ludin County, we received a MSCI ESG rating of AA for the second year in a row,
Sichuan province on September 5th, we made a donation to help the affected people and to support disaster relief efforts.
We hope to play our part as a corporate citizen and a member of the community by helping people in need.
We look forward to sharing more of our ESG endeavors in our next ESG report, which we expect in the first half of next year.
In addition, we are pleased to be included as a constituent stock in the Hengsheng China Enterprise Index effective December 5, 2018.
This is a strong recognition of our underlying strengths and investment value.
Lastly, as you may have seen from today's press release, from January 1st,
2023, I will no longer serve as the company's president.
I will spend more time to support the company's new round-off organizational upgrade to prepare for its future.
In the future, our CEO Li Yang will take over the responsibility of sales and services.
our newly appointed president.
Mr. Ma Dong Hui will be responsible for the overall closed-loop management from product R&D to procurement and supply, production, manufacturing and quality.
Here, our new CTO will lead the company's R&D team to explore the most advanced underlying technologies in the smart electric vehicle industry.
I would like to thank our investors for the support and trust they have placed in the auto and myself.
I firmly believe that Li Auto will continue to achieve great results under the leadership of the new management team.
and continue to lead.
the smart new energy vehicle industry in China.
With that, I will turn the call over to our CFO Zhang for a closer look at our financial performance. Please go ahead. Thank you, Cam. Hello everyone. I will now go over some of our financial results for the third quarter of 2022.
To be mindful of the length of this call, I will address financial highlights here and encourage you to refer to our earnings price release, which is posted online for additional details. If you have any questions, please post them in the comments below.
Total revenue.
revenues in the third quarter of 2022 were RMB 9.34 billion or 1.31 billion USD.
representing an increase of 20.2%.
from RMB 7.78 bidding in the third quarter of 2021.
This included RMB 9.05 billion or 1.9 billion.
to $7 billion of vehicle sales in the third quarter of 2022.
22.5% year-over-year and 6.6% quarter-over-quarter.
This increase was mainly due to
our delivery of the L9 starting in late August .
which raised our average selling price in the third quarter of 2022.
Revenues from other sales and services were RMB 296.4 million or US$41.7 million in the third quarter of 2022.
representing a decrease of 23.9% from the same period last year and the increase of 19%.
from the second quarter of this year.
The year-over-year decrease was attributable to the sales of automotive regulatory credits in the third quarter of 2021, which didn't recur in the third quarter of 2022. The quarter-over-quarter increase in revenue from other sales and services.
was mainly due to the increased sales of accessories and services in line with higher accumulated vehicle sales.
Cost of sales in the third quarter of 2022 was RMB 8.16 billion USD or 1.15 billion USD, representing an increase of $6.3 billion USD.
The total of 2022 was RMB 8.16 billion USD or 1.15 billion USD, representing an increase of 36.
0.8% year-over-year and the increase of 19.1% quarter-over-quarter.
The increase in cost of sales was mainly driven by higher average cost of sales due to our delivery of LE-L9 starting in late August .
and a provision related to LiWANs.
as we lower its order forecast considering the stronger-than-expected market demands for the IL-9 and our accelerated launch of IL-8.
the provision in the amount of RMB800 2.8 million.
US$ 112.9 million.
was made based on our
updated order forecast.
for Li-1 after the launch of Li-L9 and Li-L8.
Gross profit in the third quarter of 2022 was RMB 1.7 billion.
1.8 billion or 166.2 million US dollars.
decreasing 34.8% year-over-year and 37.1% quarter-over-quarter.
Vehicle margin in the third quarter of 2022 was 12%.
compared with
21.1% in the third quarter of 2021, and 21.2% in the second quarter of this year.
mostly due to the provision related to Liyuan.
I just mentioned, excluding this impact.
the vehicle margin was 20.8% in the third quarter of 2022.
Going forward with our production ramp-up.
and responsible cost management we expect to realize greater economics of scale and drive costs down further, putting us back on track to hit our profitability inflection point.
Cross margin in the third quarter of 2022 was 12.7% compared to 23.3% in the third quarter of last year and 21.5% in the second quarter of this year.
Operating expenses in the third quarter of 2022 were RMB3.31 billion or US$465.6 million.
increasing 73.4% year-over-year.
15.9% cultural culture.
R&D expenses in the third quarter of 2022 were RMB1.8 billion.
Off to 153 point
6 million US dollars.
up 103.1% year-over-year and 17.8% quarter-over-quarter. The year-over-year increase was primarily driven by increased expenses.
associated with future models, as well as increased employee compensation as a result of our growing number of R&D staff.
Its quarter-over-quarter increase was primarily driven by increased expenses associated with future models.
signing general and administrative expenses in the third quarter of 2022.
RMB 1.51 billion or $211.9 million.
47.6% year-over-year and 13.8% quarter-over-quarter.
The year-over-year increase was primarily driven by increased
employee compensation as a result of the growth in our staff's high comp, as well as increased rental expenses associated with the expansion of the company's sales network.
its quarter over quarter increase.
was primarily driven by increased marketing and promotion activities.
and increased employee compensation as a result.
of the growth in our staff icon.
Loss from operations in the third quarter of 2022 was RMB 2.13 billion or $299.4 million.
compared.
a loss of R&B.
97.8, meaning in the same period last year, and the loss of rb.
976.5 million in the second quarter of this year.
Net loss was RMB 1.65 billion or 200 billion.
31.3 million US dollars in the third quarter of 2022.
Compare with RMB 21.5 million in the third quarter of last year.
and RMB 641.
meeting in the second quarter of 2022.
And now turning to our balance sheet and cash flow. Our cash and cash equivalents, restricted cash, time deposits, short-term investments, long-term time deposits.
long-term financial instruments that were included in long-term investments total.
R&B.
55.83 beating.
or $7.85 billion as of September 30, 2022.
Netcache used in operating activities.
in the third quarter of 2022 was RMB...
$508.3 million or $71.5 million.
The change in net cash used in operating activities over both the third quarter of 2020 and 2020
last year and the second quarter of this year was mainly due to the increase in payment related to inventory
purchase.
partially off-site by the increase in cash received from the customer.
Pre-cache flow was negative, RMB 1.0
96, or negative $275.3 million in the third quarter of 2022.
And now for our PCOS outlook.
For the fourth quarter of 2022, the company expects the deliveries to be between
45,000 and 48,000 vehicles.
representing an increase of
27.8% to 36.3%
from the fourth quarter of last year.
The company also expects fourth-quarter total revenues to be between RMB and RMB.
16.51B and RMB 17.61B or USD 2.32B.
and the US dollar two point.
representing an increase of 55.4% to 65.6% from the fourth quarter of last year.
This business outlook reflects the company's current
and preliminary review on the business situation and market conditions which is subject to change.
Going forward, we believe...
our naval and collaborative corporate culture, execution discipline and strong balance sheet.
will allow us to face challenging markets head-on and continue to deploy capital and resources efficiently.
to focus on our products and innovation initiatives and drive our long-term growth.
I will now turn the call over to the operator to start the Q&A session.
Thank you.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. For the benefit of all participants on today's call, please limit yourself to two questions.
And if you have additional questions, you can re-enter the queue.
Please ask your question in Chinese first, then follow with the English translation.
And our first question will come from Tim Hasow with Morgan Stanley . Please go ahead.
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So my first question is about vehicle sales. So how should we think about the stable monthly run rate of the sales of L789 in aggregates next year? Could the sales of the whole L family models stay at around 25-30,000 level?
on a monthly basis as previously expected. And in the meantime, considering the declining store traffic in October and November due to the COVID, does Lioto's older backlog so far remain strong and adequate enough to bolster the delivery momentum into first quarter 2023.
Tim, you want me to answer your first question first, right? About the outlook of L9, L8, and L7, so we can only make judgment based on the competitiveness of this product and also based on the outcome.
outlook based on the market size of each of these products segments. So our outlook is that for L9, the stabilized monthly sales should be around 8,000 to 11,000.
That's our estimation. And for L8, will be 10,000 to 15,000. 14,000 and L7, now it's quite early to do estimation.
So basically for the Q1 outlook, we believe the beginning of the Q1, our backlog will continue to drive strong delivery performance. And of course, after Chinese New Year, we need to bring more order in.
we have strong confidence that the NQA will continue to beat the overall PV market performance.
But Tim, as you mentioned, there are some factors that are beyond our control, like COVID. But we believe we will beat the overall PV market for this.
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So my second question is about the battery EV, the Pure EV. With the current updates on LiO's BEV pipeline, will the company follow its original plan to launch two BEV models next year, operating in 2023? Yes, sir.
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So, this is the end of the session. If you have any questions, please feel free to contact me. If you have any questions, please feel free to contact me. I'll see you in the next session.
So we're pretty certain that next year we'll be releasing our first electric vehicle. And so the two big events for next year, one is the release of the first electric vehicle and the other one is the delivery of L7.
Thank you very much for the update.
Our next question will come from Olivia Jue with Goldman Sachs. Please go ahead.
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Now let me translate my two questions. The first question is about the pricing and competition. Recently, Tesla has announced a meaningful pricing cut in Chinese markets. What is the other response to that? And how should we examine such pricing competition next year?
is expected to be more severe. The second question is on the supply chain management. As Kevin mentioned in the braving, there exists supply chain uncertainties. Could you please clarify what's the key bottleneck for now? And as the COVID-related policies change a lot recently.
What is the expected impact on the auto's production in the next several months? Thank you. Thank you, Alivia. Let me take your question. Your first question about the price cut from Tesla size. Actually, we see a little impact on our auto flow.
Because our product right now, L9 and L8, the price segment is higher than Tesla's main selling model.
And we would expect the same kind of situation in next year. So, we still have a strong confidence that in this industry turmoil will continue to lead.
For your second question about the supply chain, of course we are glad to see the new COVID policy that ultimately with the pandemic will resolve.
actually the supply chain will go back to normal. But as we should all know that for the next two, three months, based on the trend we see in other foreign countries, once the policy change, we may see here and there the manpower shortages.
Right now we already see some of these kind of manpower shortages impact our production, especially in our suppliers' side.
So we are working closely with our supply chain partners, trying to mitigate all these risks, and we even start to prepare some of the workforce by ourselves. Whenever there is a shortage, we will send the workforce to help our supply partners.
Thank you.
Thank you.
Our next question will come from Ming Hassan Lee with Bank of America. Please go ahead.ves.
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My first question is regarding your decision to make a decision by yourself.
And compared to your peers, some choose to build internal capacity for battery, some decide to design chips by themselves. What is the decision? Why is the decision made for these capacity builds? Thank you.
Thank you Ming. This is Kevin. Let me take this question. Actually, just to clarify, we are not in SUGO, not manufacturing the silicon cut by chipset. Actually, we are making the power drive module with the chipset.
So why we choose to design our own power module is because the power module is closely integrated into our five-in-one electric motors and our three-in-one electric motors. So therefore the thermal solution and the size...
of this module are very important for our competitiveness and energy efficiency. That's why we choose to build this module by our design and build these modules by ourselves. Yeah, just to clarify.
Yeah, thank you Kevin. My second question, the new energy vehicle policy will change in Shanghai in the 2017 so could you remind us what is the current contribution from Shanghai area and how do you see the impact?
after the policy change. Besides that, we will use the data that you actually need to launch in order to make the potential of the loss after the policy change. Thank you for listening.
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Thank you. So Shanghai comes for 6 to 5% of our sales volume. So of course the policy change will have some impact on our sales in Shanghai.
But actually, as we should all know, most of the auto customers are not buying a new car. They are kind of upgrading their car. So in theory, they already have the car plate. So therefore, we are actively working with our Shanghai team to build a new sales strategy.
for next year to mitigate the impact of this policy change. But again, overall Shanghai is only like 6% of our sales total volume.
And about the BEV, actually just now, Li Xiong already discussed that next year we're going to have a launch of our first BEV.
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As a reminder, please first ask your question in Chinese and then translate into English. Our next question will come from Zhu Yingbo with CITCS. Please go ahead. Kareem.
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is the principle for this cost and how can we expect for the future potential cost of produced one. And my second question is about metric organization. Could you please talk about more about that. Thank you.
I will take your provision question. This is Johnny. And for this provision, it's always hit to the raw materials, which means the parts already in our inventory, all the purchase commitment we made to our suppliers.
For those inventory and parts commitment, we don't plan to make it into vehicles in the future. So the provision was...
was based on the lower of cost and tonight's realizable value based on our estimate and negotiation with the vendors.
So it's an estimate. So when I finally realized in the next two quarters, there will be some minor adjustment to the final amount. Comparing with quarterly growth margin is not very significant.
Yeah. Second question, I think. Ali Xiang. We'll take one more. Okay.
Okay, I think we have a lot of time for questions. If you have any questions, please let us know. We will be back in a few minutes.
Jin, comment on this Opportunity
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Actually, since we founded V-Auto, we've always dreamed of becoming a trillion RMB company.
Actually since we founded the auto, we've always dreamed of becoming a trillion dollar or trillion R&D company.
And as you can see, next year we're expecting to become a 100 billion R&B company already. So personally, I have never built a company from zero to one, a $100 billion company from scratch. And most of my colleagues have not had that experience either. Most of my colleagues either –
They come from companies that are smaller than that, or they come from companies that became that large years ago, or they work off of a remote office that is not headquartered in China. So we have seen this issue a long time ago. So since 2019, we've been starting to study software and hardware companies.
that have reached the size of 1 trillion RMB very, very deeply to see how they manage their business at different stages and what we can learn from them.
And one thing in common that we've seen is that they've all transformed to a matrix organization when they reach the level of about 10 billion RMB.
And so for Lee Auto, when we started from zero to one, speed was efficiency. Speed meant everything. But as time went on, we saw that in a very long value chain where quality and efficiency is very important. In our one to ten stage, quality is efficiency.
So a successful enterprise will need to be able to, for their internal purposes, we need to have a very robust planning, perception, execution process. And for their customers, they need very strong R&D from products, sales, and services.
So the matrix organization was the only way to manage this entire process end to end. To make an analogy, the horizontal teams make sure that they built the roads, they maintain the roads, and the roads are good to run for vehicles. And the vertical teams are the ones that build cars, maintain the fleet, and make sure the cars run smoothly on the roads.
And these cars on the well-built and maintained roads are responsible for delivering good services and products to our consumers, which forms a very...
healthy cycle.
So we first started piloting this thought in what we call IPD integrated product development. And the process has actually been validated by the success of L9, L8 and L7 where...
So, you might have seen the success of B1, which in a certain view could be a coincidence, but through the application of IPD, we've made that a certainty so that we can replicate the success with our current and ongoing future product development.
So we are now in the process of applying our pilot process on a much larger scale to make sure that our company can continue to turn out successful products and services to our customers.
And our last question will come from Jing Chang with CICC. Please go ahead.
How does C cumance with gooding? Other things cannot go e. So think people and you sure going to like, when you find people who I tell you you ful care, lot you about our scholarshpping, not so much about money of feel food guidance, call it all, want to Y your people attention.
and selling that increase to 1.8, 1.5 billion in the history of the site. So can you give us more guidance on next year's expense ratio? And considering that next year we will have a brand new BV platform model on the market and a more complicated platform.
and the more channeled networks layout. So in addition, in terms of which parts will we do mainly to our in-house research.
This year's R&D expenses will just as we guided will be around 1 billion US dollars. This year's R&D expenses will just as we guided will be around 1 billion US dollars.
which is 7 billion RMB for the whole year. It's as expected. And for next year, currently we see over 10 billion to 12 billion RMB, depending on our final decision on summer investment.
I will start next year all.
in 2024.
So it will be 10 to 12 beating RMB for next year.
Thank you. Thank you very much. We hope that you will be able to see the results of the presentation. Thank you very much.
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If we look back to 2020 until now, R&D spending mostly fell into three areas. The first area is product development, which you see similar exercises in traditional car OEMs. The second one is technological platforms, including our REV platform, our high voltage REV platform, our smart space platform.
The third one is new and fast growing is our system development, which includes super computing, the super cleaning platform, cloud computing platform, and our IT infrastructure. These are very long-term but crucial investments for our company. And in terms of organization, product and technological platforms are run by Mr. Madonhui.
And system development is run by our CTO, CIN. And in terms of spending level, we spend the most today in technical platforms, followed by product and then thirdly system infrastructure. And going forward, we expect to see more spending in system and infrastructure, which might even.
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My question is about product design and planning. In the family car market, how can you achieve research product differentiation?
different models such as SUV or MPD and also different number of seats. What can be looking forward to get a greater differentiation.
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UKai STUDENT Fake teaching is a modular student compared to a resistive. If the committee here can give framework support andared Rumor, we can help reach those needs including VINs,?'s Thank you for watching. Please subscribe to my channel.
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and exactly what the day of the meeting series looks like nothing has changed cause the95 30m updates are already posted The 11th meeting N
Our philosophy is the same as before. We still believe that price and seat configuration is the best way to segment the market. And this has been partially tested by the success of L9 and 7, which is soon to start delivery. In that these three cars actually have achieved a track record of about 1,000 miles per hour.
and has shares of a very similar customer base as V1. And L7 has been attracting a lot of young family users aged between 25 and 35. So as you can see, pricing and seat arrangements have allowed us to very efficiently cover the market in different user groups.
And there have even been some surprises in the case of L7 where we've been able to tap into new age groups that we weren't expecting before.
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As we're reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Ms. Janet Zhang, please go ahead.
Thank you once again for joining us today. If you have further questions, please feel free to contact Leota's Investor Relations team. Then that's all for today. Thank you and have a good weekend.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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