Q4 2022 Xpeng Inc Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by for the fourth quarter and fiscal year 2022 earnings conference call for XPONG, Inc. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question and answer session.
Speaker 1: Today's conference call is being recorded. I will now turn the conference over to your host, Mr. Alex Xia, head of investor relations of the company. Please go ahead, Alex.
Speaker 1: I will now turn the conference over to your host, Mr. Alex Hsieh, Head of Investor Relations of the company. Please go ahead, Alex.
Speaker 2: Thank you. Hello everyone and welcome to XPeng's fourth quarter and fiscal year 2022 Earnings Conference call. Our financial and operating results were issued by Newswire Services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaoeng.com.
Speaker 2: Participants on today's call from our management will include co-founder, chairman and CEO Mr He Xiaopeng, Vice-Chairman and President Dr Brian Gu, Vice-President of Finance Mr Dennis Liu, Vice-President of Corporate Finance and Investments Mr Charles Zhang and myself.
Speaker 2: Management will begin with the prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain four looking statements made under the Safe Harbor provisions.
Speaker 2: of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties may be
Speaker 2: is included in the relevant public filings of the company as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under Epic the Law. Please also note that XPeng's earnings press release and this conference call...
Speaker 2: includes the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Ex-loons press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to our co-founder, chairman, and CEO , Mr. He Shao.
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Speaker 1: Hello everyone. In 2022, XPeng delivered more than 120,000 electric vehicles, a year-over-year increase of 23%, and ranking number 10 among emerging EV makers in China, as measured by vehicle insurance registration volume.
Speaker 1: Throughout the year, a challenging macro environment and increasingly intense competition in the EV market placed pressure on our performance.
Speaker 1: Amidst this pressure, we saw an opportunity to become a first mover in tackling the challenges faced by industry and examining inhibitors to our business growth at the same time. At the end of last year, I rapidly and decisively conducted a review of our strategies.
Speaker 1: and implemented a series of significant adjustments to our organizational structure with a focus on improving areas of weakness.
Speaker 1: We have decided to start the change with ourselves and revamp XPeng's business with a startup mindset on an elevated platform with new angles.
Speaker 1: I believe XPeng is approaching an inflection point as we have clearly identified what our goals are and what our strengths and weaknesses are. We are now building recovery momentum in our sales and market share expansion.
Speaker 1: As we do this, we are placing a high premium on improving our organization and cost efficiency to fortify our strong foundation and better position our company for sustainable growth over the long term. Our overarching goal is to make XPeng a leader in the Chinese EV market and ultimately win the global EV race.
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Speaker 1: What excites me is that our strategic adjustment has induced meaningful results in the first quarter of this year, which gives me confidence that we will achieve sustainable and greater breakthroughs in the next few quarters.
Speaker 1: My first step to the organizational restructure started with changes and upgrades in our top leadership.
Speaker 1: Ms. Sungmin Wang has joined our team as president of the company, bringing us more than 30 years of experience in the automotive industry.
Speaker 1: Feng Ying is taking full responsibility for our product planning and sales operations.
Speaker 1: and is also in charge of our product platform management scheme. Her extensive industry experience, in-depth market insight, and strong execution capabilities will help our product capture customer demand more accurately, while greatly improving efficiency in our Silicon Services Division.
Speaker 1: At the same time, the adaptations to our management organization are geared toward a flatter and more concentrated structure.
Speaker 1: Since February , all design, R&D, production, supply chain, and organizational management functions directly report to me.
Speaker 1: I believe that these shifts will significantly improve our planning capabilities and lift the efficiency of our decision making and execution in the coming months.
Speaker 1: More importantly, these adjustments have effectively refreshed our execution and competitiveness.
Speaker 1: For the foreseeable future, I will remain focused on lifting the labor efficiency across our organization by multiple times so as to generate increased customer value with the same headcounts and greatly reduce costs across a full range of processes through technology and management innovation.
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Speaker 1: With regard to our product planning and design, we concentrate on customer perceived value and product differentiation in our innovation.
Speaker 1: will make substantial changes to future product model configuration mix, whole vehicle modulize design, and consistency in smart features. In terms of interior and exterior styling and design, to meet XPeng customers' high standards for aesthetics, I am directly running the Styling Design Division.
Speaker 1: and building three teams that compete with each other to generate creative ideas. These initiatives will continuously improve our interior and exterior styling and space design capabilities.
Speaker 1: At the same time, I incorporated the NACRA Motor Score or NPS into the core performance indicators for a variety of business functions and required feedback collection on a monthly basis. The NPS performance evaluation will anchor the transformation of the NPS performance.
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Speaker 1: With in terms of branding and marketing. 'will harness our core differentiation in autonomous driving to the full extent and enhance customer perception.
Speaker 1: We are broadening our addressable market, expanding our penetration from Tier 1 and Tier 2 cities to Tier 3, Tier 4 cities.
Speaker 1: So far, we have completed a preliminary merge between our branding and marketing teams and refreshed our overall strategy.
Speaker 1: This will help us improve the quality, effectiveness, and flexibility of marketing activities in an effective way going forward, while significantly reducing marketing expenses. We have already flattened out the management hierarchy in our sales network.
Speaker 1: Furthermore, we are enhancing our network coverage, increasing competitive capabilities in our frontline sales staff and developing XPeng's powerful data-driven sales touchpoints in order to achieve significant strides in sales growth.
Speaker 1: are enhancing our network coverage, increasing competitive capabilities in our front line sales staff, and developing XPeng's powerful data-driven sales touch points in order to achieve significant strides in sales growth.
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Speaker 1: On March 10, we officially launched the new P7i sports sedan, which is an upgraded version of our highly successful P7 model. Deliveries to customers also commenced in this month.
Speaker 1: I'm pleased to see our in-store traffic and test driving volume both hit new heights in recent months following the P7 ice launch.
Speaker 1: This new product's smart features, styling design, and performance, among other clear advantages in Vibra with similar products were well received among customers.
Speaker 1: Amid the market's prevailing weakness in new order intake, our results outperform the market.
Speaker 1: Our new order intake in February increased 100% over the previous month. With the strong momentum of P7I orders following its official launch, we expect to see a considerable month-on-month growth of total new order intake in March.
Speaker 1: This marks an initial success following our comprehensive transformation, which has also boosted our company morale.
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Speaker 1: Our second new product model coming up this year, the G6, will make its debut at the Shanghai Auto Show. Its official launch and vehicle deliveries will occur around the end of the second quarter.
Speaker 1: The G6 will bring the most advanced electrification and smart mobility technologies to the 200,000 to 300,000 yuan price NEV SUV market. With unrivaled interior space, range, styling and interior decoration, we believe the G6 is the world's most advanced electrification and smart mobility technology.
Speaker 1: in the second half of 2023 will launch a brand new BEV 7-seat MPV. This new MPV model is designed to cater to customer cohorts that demand larger interior room while serving the needs of our family customers for a human machine copilot.
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Speaker 1: Recently, ChatGPT 4.0 and other AI-based applications have created a buzz among hundreds of millions of users on the massive potential of generative AI models. I am also very excited about this.
Speaker 1: It represents a brand new phase of artificial general intelligence with on-premise deployment that does not rely on cloud end, which not only redefines the pathway to realize autonomous driving but also increases its efficiency.
Speaker 1: Given this development, there is an even higher possibility that autonomous technology further advances from L4 to L5. We expect to incorporate GPT technology deeply into XPeng's business across the board to create groundbreaking user experiences and exceptional improvements to our eyes.
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Speaker 1: In late March, we began accelerating the OCA rollout of CityNGP compatible with multiple models in several cities including Guangzhou, Shenzhen, and Shanghai.
Speaker 1: Through CDNGP's OTA, we took the lead in mass-producing the Transformer-based BEV Time Series Network, or XNET, in China, which achieved a milestone in deep learning algorithm development and application. In the second half of this year, XNGP, powered by XNET's deep learning algorithm development,
Speaker 1: XNGP outperformed peers actual on-road performance in the United States. This leads us to believe XPeng's autonomous technology and its customer adoption is approaching a pivotal turning point.
Speaker 1: foreign peers' actual on-road performance in the United States. This leads us to believe XPeng's autonomous technology and its customer adoption is approaching a pivotal turning point.
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Speaker 1: We have built notable leadership in smart technologies as well as customer adoption of smart technologies compared with peers. We're driving our technology roadmap and commercialization pathway to cross over the inflection point and reach an accelerated growth curve. While keeping high safety standards remains a top priority of our technology advancements, we are also working to ensure that our customers are safe and healthy.
Speaker 1: We'll also be focused on rapid development to improve scenario coverage, user experience, and software and hardware cost optimization.
Speaker 1: In terms of scenario coverage, we have expanded the usage of the advanced technology from highway scenarios into city scenarios, where ADAS are used at high frequency and even become an essential driving tool.
Speaker 1: Going forward, we'll strive to further broaden ADAF's usage to more end-to-end driving scenarios such as internal compound waves and non-public roads, and expand our geographical coverage from three cities to more major cities nationwide beginning in the third quarter.
Speaker 1: In terms of user experience, we have achieved an important psychological barrier for customers to use autonomous driving to relieve drivers. That is, drivers can let the machine safely take the wheel, resting assured that they are acting only as a supervisor.
Speaker 1: Looking ahead, we expect that through continuous OTA upgrades, XNGP's driving skills will escalate every year and in 2-3 years reach a level that is equivalent to a human driver with 3 years of driving experience.
Speaker 1: We also expect that the number of manual takeovers per 100 kilometers will be reduced to one or fewer. Regarding cost efficiency, we plan to cut XNGP's BOM cost significantly next year and adjust our sales model from one that bundles sales of software and hardware to one that splits the sales of software and hardware.
Speaker 1: which is going to enable autonomous driving on all of our new vehicles and allow more customers to use the latest autonomous driving capabilities.
Speaker 1: In pursuit of breakthroughs in the aforementioned three realms, we'll bring great value to our customers and build our competitive edge in technologies, delivering long-term sustainable revenue growth at scale and with improved margin contribution.
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Speaker 1: It has been said that the past five year period was the golden age for our new energy vehiclesi believe the next five year period will be the golden age for autonomous drivingduring the five years to come expan highly events autonomous driving technology and our efforts in optimizing our organization and making up for our witnesses will help ex.
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Speaker 1: and the face of fierce competition in addition to our leadership in autonomous driving and aesthetic design while greatly improving our product planning abilities marketing efficiency and organizational capabilities
Speaker 1: I believe more powerful cost control will be the core competitive edge that will enable XPeng to secure its leadership in the EV market. We'll advance the platform-based approach and technology innovation to propel our cost reduction strategy. Entering 2023, we're applying a full platform-based approach to the EV market.
Speaker 1: were able to develop products with superior product quality and customer experience at a faster pace and at a lower cost.
Speaker 1: In the past, our R&D strengths were primarily manifested by our leading product performance. In the future, our R&D strengths will be underlined by maintaining the leading performance while achieving remarkable cost reductions.
Speaker 1: We have mapped out our strategic execution roadmap with associated cost reduction, including an over 50% decrease for autonomous driving costs and about 25 decrease for vehicle hardware costs, including power chain over the 2023 to 2024 period by means such as
Speaker 1: technology innovation, and optimized configurations.
Speaker 1: I'm pleased to see that the design technology R&D, supply chain, and manufacturing teams are now working in a synergistic way to make our efforts and products more competitive through innovation.
Speaker 1: design technology R&D, supply chain, and manufacturing teams are now working in a synergistic way to make our efforts and products more competitive through innovation.
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Speaker 1: vehicle platforms that can support a series of new model launches over the next three years. Our R&D will further concentrate on initiatives that best correspond to a long-term trend and further differentiate our products in terms of customer experience and cost.
Speaker 1: We'll also pursue improvements in operating efficiency throughout the entire process.
Speaker 1: For example, within our sales operations, we strive to improve same-store efficiency by optimizing our store network. We believe these cost optimization efforts will start to deliver material results beginning in the coming several months, including in the second half of this year.
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Speaker 1: It has always been my intention to build a successful company that can grow in scale instead of a small company in a niche market or just any generic company out there. Expanding our scale and market share to achieve economy of scale in both software and hardware is the primary goal in our long-term strategy.
Speaker 1: Although the product and management adjustment cycle in the automotive industry is more difficult than other industries and takes a longer period of time, we're still willing to sacrifice short-term sales and more patiently pursue greater victories in the medium and long term.
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Speaker 1: host of upgrades and iterations in our product portfolio and marketing capabilities, we have seen encouraging changes and positive results.
Speaker 1: I'm firmly convinced that beginning in the third quarter of this year, XPeng's monthly sales number will achieve significant growth both sequentially and year-over-year, as well as be much higher than the industry's average growth rate.
Speaker 1: convinced that beginning in the third quarter of this year, XPeng's monthly sales number will achieve significant growth both sequentially and year-over-year, as well as be much higher than the industry's average growth rate.
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Speaker 3: If you have any questions, please leave them in the comments section.
Speaker 1: I would reiterate that our current focus is on building and improving our capabilities in organization, product design, marketing, and cost control. Continuous efforts in refining, management, and accelerated new product launches in an era of autonomous driving will lead us to the next level of exponential growth.
Speaker 1: We'll continue to strive for this goal. Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between $4 billion and $4.2 billion RMB.
Speaker 1: Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between 4 billion and 4.2 billion RMB.
Speaker 3: Thank you everyone. I will now hand over to our Finance VP, Dennis Liu.
Speaker 2: Thank you, Mr. He and hello everyone. Now I would like to provide a brief overview of our financial results for the first quarter of 2022. I will reference RMB only in my discussion today unless otherwise stated. Our total revenues were RMB 5.1 billion for the first quarter of 2021.
Speaker 2: a 43.1% year-over-year and a decrease of 25.3% from the last quarter. The year-over-year decrease was mainly attributable to lower vehicle deliveries for the G3 and P7, while the quarter-over-quarter decrease was mainly due to lower vehicle deliveries for the P5 and P7.
Speaker 2: with partial offset by the newly launched G9. Girls' margin was 8.7% for the first quarter of 2022 compared with 12% for the same period of 2021 and 13.5% for the last quarter. Beautiful margin was 5.7% for the fourth quarter of 2022 compared with 10.9% for the same period of 2021.
Speaker 2: and 11.6% for the last quarter. The year-over-year and quarter-over-quarter decreases were mainly explained by the increased sales promotion. Under expenses were RMB 1.2 billion for the fourth quarter of 2022, a decrease of 15.3% year-over-year and a decrease of 17.9% quarter-over-quarter.
Speaker 2: The year-over-year and quarter-over-quarter decreases mainly in-line with timing and progress on new vehicle programs. SG&A expenses were RMB$1.8 billion for the first quarter of 2022, a decrease of 12.9% year-over-year, and an increase of 8% quarter-over-quarter. The year-over-year decrease was 1.8% in-line with timing and progress on new vehicle programs.
Speaker 2: was mainly due to the decrease of the commission pay to the franchise stores associated with lower vehicle deliveries. The quarter over quarter increase mainly attributed to higher marketing, promotional and advertising expense to support vehicle sales.
Speaker 2: As result of the foregoing loss from operations with RMB 2.5 billion for the first quarter 2022, compared with RMB 2.4 billion for the same period 2021 and RMB 2.2 billion for the last quarter. Name loss was RMB 2.4 billion for the first quarter, compared with RMB 1.3 billion for the same period a year ago and RMB 2.4 billion for the last quarter.
Speaker 2: earnings press release for further details of our financial results for the fourth quarter and full year 2022. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.
Speaker 2: the details of our financial results for the fourth quarter and full year 2022. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.
Speaker 1: Thank you. If you wish to ask a question, please press star, then 1 on your telephone keypad and wait for your name to be announced.
Speaker 4: If you wish to cancel your request, please press star then 2. If you are on a speaker phone, you will need to pick up the handset to ask your question.
Speaker 4: For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please press star 1 to receive your answer.
Speaker 4: For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English.
Speaker 4: For the sake of clarity of order, please ask one question at a time. The participant will respond and then feel free to follow up with your next question.
Speaker 4: For the sake of clarity of order, please ask one question at a time. The participant will respond and then feel free to follow up with your next question.
Speaker 3: Our first question will come from Tim Hisile of Morgan Stanley . Please go ahead.
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Speaker 3: Because the market with pricing segment of 200 to 350,000 RMB or 30 to 50,000 US dollar is actually a strong hope and a key volume driver. However, if you look at what happened over the past few quarters, in Tesla, EVstar, BYD, and traditional car makers, EV brands and business providers like Ford and so forth.
Speaker 3: are getting more aggressive in this pricing segment. And I think yesterday, B.Y.D. just upgraded its HAN, EV, and TAN DMI to focus on the 200,000 plus market and Tesla might consider having another round of price quads. So...
Speaker 3: How do we think about the competitive landscape in this pricing segment? And how could accident make sure that his upcoming models, including G6 and the model next year, could stand out in a crowd of competitors? Will we be more pricing aggressive with more meaningful cost balance in the following quarters?
Speaker 3: So that's my first question. Thank you. Thank you, Professor. Good afternoon. I would like to thank all of you for your time. I hope you will be able to see the results of the presentation. I hope you will be able to see the results of the presentation. I hope you will be able to see the results of the presentation.
Speaker 3: Therefore, in order to temporify uncovered sightings, their advertised living outcomes are still increased. Therefore, in
Speaker 3: I hope you will enjoy this video. Please subscribe to my channel. Thank you for watching. Please subscribe to my channel. Thank you for watching. Please subscribe to my channel.
Speaker 3: We are very happy to be able to meet you. We hope to meet you in the future. We hope that you will be able to meet us in the future. We hope that you will be able to meet us in the future. We hope that you will be able to meet us in the future.
Speaker 3: see that detail of the information and answer about the questions i gave as i was watching aSC´s Sherman video of the nominated Strip
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Speaker 1: Thank you for your question. It's a very good one. Basically, we expect the market to experience a series of price cuts by different OEMs in the coming couple of years because of the very intensified competition or competitive landscape in the current market, especially for traditional OCE cars.
Speaker 1: card makers because we expect to see a lot of oversupply of a capacity and the market as well as some Reduction in a raw material pricing which will lay a good foundation for a different price cut to be expected in the near future And as a result different brands and different players in the market will launch a series of price cuts
Speaker 1: as well as optimizing our design language. Now next to it, we also will prioritize the cost optimization. In the past, we mainly focused on the development of the functionalities and the overall performance of our products. Now when we expand our price, our targeted price range to cover more than $250,000 and $300,000 to actually a little bit lower.
Speaker 1: first of all, prioritize the scale development as well as improving our autonomous technology and overall product quality and performance while improving our cost structure in many new areas, especially to be reflected in our newly launched products to be expected. And also, we will expect some strategic price reduction in the near future.
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Speaker 3: based on Er Hunnan Ob incentives and that of the headaches of OFF the
Speaker 3: We're representing this country in the 10th birthday a day. Please help us to make our grade mayor profitable. If you want to see more videos like this, please subscribe to my channel. If you want to see more videos like this, please subscribe to my channel.
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Speaker 1: Looking back in 2017, there were about 300 car making startups and 70 passenger vehicle makers in the market. By now, there's only 50 players left and in five years time, maybe there will be less than 25 and in 10 years time, less than 10. Which means that by that time, the annual deliveries of each single car maker will not be 100,000, 50,000, half a million or so.
Speaker 1: why in the coming 5 to 10 years our priority will be to solidify our leadership in our technological R&D capability as well as our cost control. Thank you.
Speaker 3: Supporting three now what they're going to the she you're going, youtu should. That is a aching think. In $3 pro body, supposing going a dollars go, although the people they want con your ens. Well ens, I'm going to UD every et.
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Speaker 5: So my second question is about the sales network. Could you please help to update us the expense to channel strategy this year? Tier 1 to CDs that will see that is strategically critical. They grow their virtual CDs in China was an outpaced the higher two cities and become a key growth driver.
Speaker 5: So quite a few EV makers are targeting to pantry into the lower geo cities. So how is Xpeng going to grow its presence in the lower geo cities? And in the meantime, where the company change is hybrid business model consisting of the direct sales and the dealership, will be there any mature changes in the upcoming quarters? That's my second question. Thank you.
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Speaker 3: This video is only and I'll see you in the next video. See you soon.
Speaker 3: Meredith from China is excellency of treasurer power. He was produced in 2009 by China, combination of Sensei and molecules of Golang, and hissuccessful team. Called
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Speaker 3: I hope you will enjoy it. Please subscribe to my channel. I hope you will enjoy this video. Thank you for watching. Thank you for watching.
Speaker 3: and to strike out the Thank you. Thank you.
Speaker 1: Thank you. Our newly recruited senior management member, Ms. Wang Fengying, actually is way more experienced than me in terms of channel distribution. And since one month after her enrollment, she already had numerous discussions regarding our distribution channels in our network development. So for this year, we have several strategies in place already. First of all, we will maintain our current model of...
Speaker 1: of our distribution channels. And the third point is that we will actually expand the functionality of those kind of channels to include not only sales purposes or functionality, but also to increase forest function as well, so as to provide a more comprehensive set of services to our customers.
Speaker 1: Now, one of our upcoming next steps, which I can review right now, is that we don't believe that it would be very effective to have a large number of small distributors or small channels. Rather, we prefer to prioritize the development of quality channels to improve our overall service and distribution efficiency. Thank you.
Speaker 3: passes. Good morning Og mine Lifting homes. Good morningog I am here today I of a chance to W ach look at mult LWIA this morningWall Street.
Speaker 1: Regarding the second part of your question, which is the channel network in Tier 3, Tier 4 cities, first of all, we will work with our partners to expand the channel network. In addition to that, we will also design and curate appropriate products suitable for Tier 3, Tier 4 cities, and we do have awesome face-
Speaker 4: This next question comes from Paul Gong of UBS. Please go ahead.
Speaker 4: Paul Gong of UBS. Please go ahead.
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Speaker 6: say on the arrival of Ms. Wang Fengyin's new role as a president, what has been her biggest criticism on the expo motor for the current situation and what is her plan to change it?
Speaker 6: On the arrival of Ms. Wang Fengyin's new role as President, what has been her biggest criticism on the expo motor for the current situation and what is her plan to change it?
Speaker 6: of Ms. Wang Fengyin's new role as a president, what has been her biggest criticism on the Xbox motor for the current situation and what is her plan to change it?
Speaker 3: Thank you sometimes. We will hopefully spread the news aboutozy handles after the official pronunciation of Chinese advertising Well if I join the Ôcounting then I guess that will be much easier Security
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Speaker 1: Now, this is a very interesting question. Ms. Wang has been with us, has arrived for more than one and a half months. Her biggest criticism for the company is twofold. The first one is on the planning side and the other is on sales and marketing. I mean, this is definitely a very positive sign because it is better to see the problems and have solutions rather than being fully complacent without seeing the root cause of the problem.
Speaker 6: uh no, what you going in show the horydro conact the do also to G P T that you got time your on cent that you can die to, to son and cheif or somewhere you go during your. uh no, chchange of get is also: or you go you, you and the. You got some the tun in.
Speaker 6: So my second question is regarding your interesting comment on the GPT's application into the smart vehicles. Can you give us a little bit more detail on the GPT application? Can you give us a little bit more detail on the GPT application?
Speaker 3: To spread the message, you must also suggest Tuesday 6-7 Off country episodes with84 privateeen
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Speaker 3: For more information on these new cases, photo- usb devices should be up on my channel by the end of the official news Just one more question.
Speaker 3: And I have very money else to make that GA, so he has fact sheet at Home grain. He is a cheap producer and you can't sell anything in Pumpkin, And the other one completely better. He is not a F To Call it to curtain at that time.
Speaker 1: and the AI technology will provide a lot of values for our mid-term and long-term development.
Speaker 1: Now when we look at autonomous driving technology or capabilities, the lower level or medium level kind of autonomous driving technology always face the conundrum of being not smart enough as human drivers because cars definitely can be very capable as a driving vehicle. But in terms of decision making, a lot of it comes down to the intelligence level.
Speaker 1: of adopting the technology, first of all, we will look at the near-term application in the software side, which will be much sooner than its application on the hardware side because its application in the hardware, we're talking about integrating the software together with the hardware, which is quite a different story from just applying it on the software side. And we mainly will look at some of the key areas in, for example, which can be used to integrate the software together with the hardware,
Speaker 1: a lot of potential partners and in regards to the potential cause, we believe it's quite minimal. We alllass to
Speaker 1: partners and in regards to the potential cause, we believe it's quite minimal. Thank you. Thank you very much.
Speaker 1: in regards to the potential cause, we believe it's quite minimal. Thank you. Thank you very much.
Speaker 7: The next question comes from the long of credit. Please, Please go aheadclein a H. what you on 11 T do you, even you just calling from 10 e know comes. So I think continual militanian back bunch our show ase I seen from which one kind of const motion treat a fancial share our short. I made F on G ofor subic show Al EI Y are.
Speaker 7: Actually, we should have an issue to make sure that I'm not going to see it. How does it feel? You know, the other day I was in a country called Chichu. I was in Chichu when I was in China. I was in a country called Pimucao. I was in a country called Chichu. I was in a country called Bichau. I was in a country called Tengen. I was in a country called Pichu. I was in China. Now, I have two questions. Number one is about your cost reduction. You mentioned about 25% cost in the...
Speaker 7: vehicle components cost, which is very amazing. Can you give me more detail about how you can achieve that? For example, do you use the integrated die casting to do the caster cutting? That is very important. The second question is about G9. G9 actually has been doing not good recently, but previously you are seeing G9 volume be even higher than P7. How you can maintain the G9 sales from momentum and what's your maintenance patterns for G9? Thank you. What should we say to them?
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Speaker 1: not amazing per se, but it definitely indicates that in the past, you know, we definitely still were not doing good enough. There's a lot of room improvement in terms of cost reduction. And right now, we are seeing multiple ways to actually reduce our cost of manufacturing and overall production. For example...
Speaker 1: to reduce the cost by about 50 to 60 percent. In addition to that, in terms of the overall chip and battery, we are now employing or adopting the whole vehicle platform engineering technique that can also help us to drive down cost. So as a result, there is a mix of methods and a rate of ways for us to reduce cost in terms of our power chain.
Speaker 1: in terms of our cost reduction and the effect can be expected. Thank you.
Speaker 8: can be expected. Thank you.
Speaker 3: Sorry guys, what I reasonably forgot about mytag I have not yet answered your questions Your comments are no lessolas I will repeat this thought In the Cortezhand EU Let's lot again... Apparently the
Speaker 3: and the new XNG-P and the PGI is the most important tool in the world. The PGI is the most important tool in the world. The PGI is the most important tool in the world.
Speaker 1: and RMB, you know, among all the GBV rifles, there's been a lot of challenges in pushing itself. However, you know, in the near future, we do have several moves in place to boost sales deliveries. The first one is that we're ramping up several configurations, and the second one is by implementing the XNGP function or user update verification capabilities, and that's whereomet's get to see faster delivery. And then the second one is about ext customization technologies, the XNGP functions are obviously referred to by different regions, and that.
Speaker 1: we believe that the launches of P7i as well as G6 will boost food traffic in our stores as well as encourage or encourage interest in G9 as well as part of the you know product line. In addition to that, we are now already seeing you know reinvigorated sales or deliveries in March compared to the month of March.
Speaker 4: The next question comes from Nick Lye of JP Morgan. Please go ahead.
Speaker 7: Which Bitcoin being the pre-IP key inange of the Bitcoin market, do you think mine? science otherwiseApp crucially be able to teach the strawberry-goaahara, to start with.
Speaker 3: If you have any questions or other questions for us, please feel free to
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Speaker 1: I think what you mentioned in your questions might be viable 15 years ago, which was that you can basically sell anything as long as you know.
Speaker 1: as for the upcoming several quarters of the year. So we definitely expect a lot of reinvigorated deliveries or sales outcome for the rest of the year.
Speaker 7: A little bit of background. Governor Thank you so much to you. Thank you. Well, the driest weather in the world. Thank you.
Speaker 3: So there is no such details as the Momo's breakdown but the power is told.
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Speaker 3: I think that's it. I hope you enjoyed this video. If you did, please like and subscribe to the channel. I hope you enjoyed it. If you have any questions, please leave them in the comments. If you want to see more videos, please leave them in the comments. Please leave them in the comments.
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Now, in regards to battery supply, first of all, in January last year, we saw this pricing inflation happened in the industry, which really encouraged the development of hybrid vehicles in the market, but hurt a lot of development in the BED sector. However, this year, we are happy to see that the pricing of batteries have come down.
And this newly launched price war in the industry led by a lot of very makers, especially the leaders. It's definitely a very good sign or very beneficial for development of BEV and can help us to improve our pricing competitiveness as well. Now, so far, based on our conversation with our various suppliers, we are confident that the price reduction, the degree of the price reduction...
batteries as well as are packed by for example integration as well integrating some of the parts as well as replacing traditional NCM or NCA batteries with LFP batteries also by extending the usage or the driving range that it can support per battery by about 10 to 20 percent
The next question comes from Ming Li of Bank of America. Please go ahead.
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So my first question is regarding product competitiveness of G6 because as Mitch mentioned, they expect G6 in the future, the stabilized monthly sales could be two to three times of P7. But because G6 is in a similar price segment of P7, they expect G6 to be a little bit more successful.
What is the product competitiveness to give you the confidence?
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I really cannot review too many details regarding our yet to launch models, but you can expect to learn more about G6 in mid to low April this year in Shanghai Auto Show.
at the second road of the car, the seating area is pretty spacious. And another characteristic to G6 or highlight is this aesthetic. The design language follows the X-PAN style, which is going to be very appealing to our customers. Thank you.
car, the seating area is pretty spacious. And another characteristic to G6 or highlight is this aesthetic. The design language follows the X-PAN style which is going to be very appealing to our customers. Thank you.
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G9 you already provided the high voltage charging battery. What is the ratio high enough or if it is not high enough is this because the charging infrastructure is still not enough or consumer feel comfortable based on the current, the normalized battery pack size? Thank you.
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I hope you enjoyed this video. Please subscribe to my channel. Thank you for watching. Please subscribe to my channel. Please subscribe to my channel. Please subscribe to my channel.
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by using the technology on both charging piles. In addition to that, we also have to put in place our modularized optimization technology to optimize the batteries as well as the chips in the design of those new vehicles. So we are open to the possibility of adopting cylindrical batteries in the future.
Thank you once again for joining us today. If you have further questions, please feel free to contact me.
please feel free to contact the expungs investor relations through the contact information provided on our website or the Pearson Financial Communications.
This concludes today's conference call. You may now disconnect your lines. Thank you.
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Music
fiscal year 2022 earnings conference call for XPong Inc. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded.
I will now turn the conference over to your host, Mr. Alex Xia, head of investor relations of the company. Please go ahead, Alex. Thank you. Hello everyone and welcome to Expung's fourth quarter and fiscal year 2022 earnings conference call. Our financial and operating results were issued by our Newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at IR.
and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain four looking statements made under the Safe Harbor provisions of the US Private Security Slatecation Reform Act of 1995.
Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Certain information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that XPON's earnings press release and this conference call are not being recorded.
includes the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Ex-loons press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.
I will now turn the call over to our co-founder, chairman and CEO , Mr. He Xiaopeng. Please go ahead.
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Hello everyone. In 2022, XPeng delivered more than 120,000 electric vehicles, a year-over-year increase of 23 percent and ranking No. 10 among emerging EV makers in China, as measured by vehicle insurance registration volume. Throughout the year, a challenging macro environment and increasingly intense competition has been
significant adjustments to our organizational structure with a focus on improving areas of weakness. We have decided to start the change with ourselves and revamp XPeng's business with a startup mindset on an elevated platform with new angles. I believe XPeng is approaching an inflection point.
as we have clearly identified what our goals are and what our strengths and weaknesses are. We are now building recovery momentum in our sales and market share expansion.
As we do this, we are placing a high premium on improving our organization and cost efficiency to fortify our strong foundation and better position our company for sustainable growth over the long term. Our overarching goal is to make XPeng a leader in the Chinese EV market.
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What excites me is that our strategic adjustment has induced meaningful results in the first quarter of this year, which gives me confidence that we will achieve sustainable and greater breakthroughs in the next few quarters. My first step to the organizational restructure started with changes and upgrades in our top leadership.
Ms. Fengyin Wang has joined our team as president of the company, bringing us more than 30 years of experience in the automotive industry. Fengyin is taking full responsibility for our product planning and sales operations, and is also in charge of our product platform management scheme. Her extensive industry experience, in-depth market insight, and strong execution capabilities will help our product capture customer demand more accurately, while greatly improving efficiency in our Silicon Services Division.
At the same time, the adaptations to our management's organization are geared toward a flatter and more concentrated structure. In February , all design, R&D, production, supply chain, and organizational management functions directly report to me.
I believe that these shifts will significantly improve our planning capabilities and lift the efficiency of our decision-making and execution in the coming months. More importantly, these adjustments have effectively refreshed our execution and competitiveness. Perhaps there will also be some changes for future development such as MCOU affinity check, commercialct go, COVID change, and affect.
I will remain focused on lifting the labor efficiency across our organization by multiple times so as to generate increased customer value with the same headcounts and greatly reduce costs across a full range of processes through technology and management innovation.
labor efficiency across our organization by multiple times so as to generate increased customer value with the same headcounts and greatly reduce costs across a full range of processes through technology and management innovation.
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With regard to our product planning and design, we concentrate on customer perceived value and product differentiation in our innovation. We'll make substantial changes to future product model configuration mix to vehicle moduli designed and consistency in smart features. In terms of interior and exterior styling and design,
To meet XPeng customers' high standards for aesthetics, I am directly running the styling design division and building three teams that compete with each other to generate creative ideas. These initiatives will continuously improve our interior and exterior styling and space design capabilities. At the same time, I incorporated
the Necromotor Score or NPS into the core performance indicators for a variety of business functions and required feedback collection on a monthly basis. The NPS performance evaluation will anchor the transformation of our product planning, design and development toward a customer-centric pathway. I believe our new products, our OTAs and new services to come will demonstrate substantial progress.
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So, as we continue to why this property is events, I hope you enjoyed it. If you have any questions, please leave them in the comments. Please subscribe to my channel.
In terms of branding and marketing, we'll harness our core differentiation in autonomous driving to the full extent and enhance customer perception. We are broadening our addressable market, expanding our penetration from Tier 1 and Tier 2 cities to Tier 3, Tier 4 cities. So far, we have completed a preliminary merge between our branding and marketing teams and refreshed our overall strategy.
This will help us improve the quality, effectiveness, and flexibility of marketing activities in an effective way going forward, while significantly reducing marketing expenses. We have already flattened out the management hierarchy in our sales network.
Furthermore, we are enhancing our network coverage, increasing competitive capabilities in our frontline sales staff and developing XPeng's powerful data-driven sales touchpoints in order to achieve significant strides in sales growth.
Furthermore, we are enhancing our network coverage, increasing competitive capabilities in our frontline sales staff and developing XPeng's powerful data-driven sales touchpoints in order to achieve significant strides in sales growth.
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On March 10, we officially launched the new P7i sports sedan, which is an upgraded version of our highly successful P7 model. Deliveries to customers also commenced in this month. I'm pleased to see our in-store traffic and test driving volume both hit new heights in recent months following the P7i's launch.
This new product's smart features, styling design, and performance, among other clear advantages in Vypery with similar products, were well received among customers. Amid the market's prevailing weakness in new order intake, our results outperformed the market. Our new order intake in February increased 100% over the previous month. With the strong momentum of P7i orders following its official launch, we expect to see a considerable month-on-month growth.
of total new order intake in March. This marks an initial success following our comprehensive transformation, which has also boosted our company morale. Thank you.
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We will continue to provide a more efficient and efficient and efficient and efficient MTP. We will continue to provide a more efficient and efficient and efficient and efficient MTP. Our second new product model coming up this year, the G6, will make its debut at the Shanghai Auto Show. Its official launch and vehicle deliveries will occur around the end of the second quarter.OTHER
The G6 will bring the most advanced electrification and smart mobility technologies to the 200,000 to 300,000 yuan price NEV SUV market.
With unrivaled interior space, range, styling, and interior decoration, we believe the G6 will become the top-selling model in its market segment. Following the ramp-up of G6 mass production, we expect G6's monthly sales target to be 2 to 3 times that of its P7 predecessor's sales. In addition, in the second half of 2023, we'll launch G6's massive,
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Recently, ChatGPT 4.0 and other AI-based applications have created a buzz among hundreds of millions of users on the massive potential of generative AI models. I am also very excited about this. They represent a brand new phase of artificial general intelligence.
with on-premise deployment that does not rely on cloud end, which not only redefines the pathway to realize autonomous driving, but also increases its efficiency. Given this development, there is an even higher possibility that autonomous technology further advances from L4 to L5. We expect to incorporate GPT technology deeply into XPeng's business across the board to create groundbreaking user experiences and exceptional improvements to our operational efficiency.
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In late March, we began accelerating the OTA rollout of CDNGP, compatible with multiple models in several cities including Guangzhou, Shenzhen, and Shanghai. Through CDNGP's OTA, we took the lead in mass producing the transformer-based BEV Time Series Network, or XNET, in China, which achieved a milestone in deep learning algorithm development and application. In the second half of this year, XNGP, powered by XNET's deep learning algorithms,
will no longer depend on a high-definition map. That said, XNGP will be supporting drivers on more urban roads across over 10 cities in China. Results from our testing showed the new version of XNGP outperformed peers' actual on-road performance in the United States. This leads us to believe Xpeng's autonomous technology and its customer adoption is approaching a pivotal turning point.
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We have built notable leadership in smart technologies as well as customer adoption of smart technologies compared with peers. We're driving our technology roadmap and commercialization pathway to cross over the inflection point and reach an accelerated growth curve. While keeping high safety standards remains a top priority of our technology advancement,
will also be focused on rapid development to improve scenario coverage, user experience, and software and hardware cost optimization. In terms of scenario coverage, we have expanded the usage of the advanced technology from highway scenarios into city scenarios, where ADAS are used at high frequency and even become an essential driving tool.
Going forward, we'll strive to further broaden ADAP's usage to more end-to-end driving scenarios, such as internal compound waves and nonpublic roads, and expand our geographical coverage from three cities to more major cities nationwide, beginning in the third quarter. In terms of user experience, we have achieved an important psychological barrier for customers to use autonomous driving.
We also expect that the number of manual takeovers per 100 km will be reduced to one or fewer. Regarding cost efficiency, we plan to cut XNGP's BOM cost significantly next year and adjust our sales model from one that bundles sales of software and hardware to one that splits the size of our products
to our customers and build our competitive edge in technologies, delivering long-term, sustainable revenue growth at scale and with improved margin contribution.
in technologies, delivering long-term sustainable revenue growth at scale and with improved margin contribution.
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It has been said that the past five-year period was the golden age for new energy vehicles. I believe the next five-year period will be the golden age for autonomous driving. During the five years to come, XPeng's highly advanced autonomous driving technology and our efforts in optimizing our organization and making up for our weaknesses will help XPeng accelerate our ability to gain top market share.
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In the face of fierce competition, in addition to our leadership in autonomous driving and aesthetic design, one major step towards annuls K dunks are education and education.
innovation to propel our cost reduction strategy. Entering 2023, we're applying a full platform engineering approach for our BEV vehicle platform, electrical and electronic architecture, powertrain system, and ADAS software and hardware development. This signals that we are entering a new phase of car making in a unified...
Our R&D strengths will be underlined by maintaining the leading performance while achieving remarkable cost reductions. We have mapped out our strategic execution roadmap with associated cost reduction, including an over 50% decrease for autonomous driving costs.
and about 25 degrees for vehicle hardware costs including power chain over the 2023 to 2024 period by means such as technology innovation and optimized configurations.
I'm pleased to see that the design technology R&D, supply chain, and manufacturing teams are now working in a synergistic way to make our efforts and products more competitive through innovation.
to see that the design technology R&D, supply chain, and manufacturing teams are now working in a synergistic way to make our efforts and products more competitive through innovation.
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will also pursue improvement in our operating efficiency throughout the entire process. For example, within our sales operations, we strive to improve the same store efficiency by optimizing our store network. We believe these cost optimization efforts will start to deliver material results beginning in the coming several months, including
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It has always been my intention to build a successful company that can grow in scale instead of a small company in a niche market or just any generic company out there. Expanding our scale and market share to achieve economy of scale in both software and hardware is the primary goal in our long-term strategy. Although the product and management adjustment cycle in the automotive industry is more difficult than other industries and takes a longer period of time.
We're still willing to sacrifice short-term selves and more patiently pursue greater victories Excitingly as we rapidly implement adjustment
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I would reiterate that our current focus is on building and improving our capabilities in organization, product design, marketing, and cost control. Continuous efforts in refining, management, and accelerated new product launches in an era of autonomous driving will lead us to the next level of exponential growth.
We'll continue to strive for this goal. Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between 4 billion and 4.2 billion RMB.
Thank you everyone. I will now hand over to our finance VP, Dennis Liu. Thank you, Mr. He and hello everyone. Now I would like to provide a brief overview of our financial results for the first quarter of 2022.
billion for the first quarter of 2022, a decrease of 43.1% year-over-year and a decrease of 25.3% from the last quarter. The year-over-year decrease was mainly attributable to lower vehicle deliveries for the G3 and P7, while the quarter-over-quarter decrease was mainly due to lower vehicle deliveries for the P5.
quarter of 2022, compared with 10.9% for the same period of 2021 and 11.6% for the last quarter. The year-over-year and quarter-over-quarter decreases were mainly explained by the increased sales promotion. On-day expenses were RMB 1.2 billion for the fourth quarter of 2022, a decrease of 15.3% year-over-year and a decrease of 17.9% quarter.
The year-over-year decrease was mainly due to the decrease of the commission pay to the franchise stores associated with lower vehicle deliveries. The quarter-over-quarter increase mainly attributed to higher marketing, promotional, and advertising expense to support vehicle sales. As result of the foregoing, loss from operations was RMB 2.5 billion for the first quarter of 2022 compared with RMB 2.4 billion for the same period of 2021.
and time deposit in total RMB 38.3 billion.
To be mindful for the length of our earnings call, I will encourage listeners to refer to our earnings press release for further details of our financial results for the fourth quarter and full year 2022. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.
earnings call, I will encourage listeners to refer to our earnings press release for further details of our financial results for the fourth quarter and full year 2022. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.
Thank you. If you wish to ask a question, please press star, then 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star, then 2. If you are on a speakerphone, you will need to pick up the handset to ask your question. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English.
For the sake of clarity of order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. Our first question will come from Tim Hisile of Morgan Stanley . Please go ahead. highly Environmental To me, that doesn't mean a lot for a student, but I also think, will land until we get onto a system.
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So my first question is about the competition because the market with pricing price segment of 200 to 350,000 RMB or 30 to 50,000 US dollar is X-Men The Stronghold and The Key Violent Driver.
However, if you look at what happened over the past few quarters, I think Tesla, EVStor. BYD and even traditional car makers, EV brands are getting more aggressive in this pricing segment. And I think yesterday, BYD just upgraded its Hahn, EV and Tahn DMI to focus on the 200,000 plus market and Tesla might consider having another round of price quads. So how do you think about the competitive landscape in this pricing segment and how could accident make sure that its upcoming models including G6 and the model next year?
could stand out in a crowd of competitors? Will we be more pricing aggressive with more meaningful cost down in the following quarters? So that's my first question. Thank you. We will ask questions upcoming soon.
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So, if you want to learn more about the world of Chinese technology, you can visit our website at www.xiaotang.com and you can find our website at www.xiaotang.com and you can find our website at www.xiaotang.com Thank you for watching.
Thank you for your question. It's a very good one. Basically, we expect the market to experience a series of price cuts by different OEMs in the coming couple of years because of the very intensified competition or competitive landscape in the current market, especially our traditional OCE card.
card makers because we expect to see a lot of oversupply of capacity in the market as well as some reduction in a raw material pricing which will lay a good foundation for a different price cut to be expected in the near future. And as a result different brands and different players in the market will launch a series of price cuts in order to expand their market share. Now as I mentioned in the prepared remarks that the current first priority for XPeng is to optimize our organization as well as to expand our scale and in addition to that
of room for improvement in terms of cost reduction, for example, just to reduce our overall bond costs in the R&D sector and also to integrate our software, I mean, an aspect of our software and hardware design as well. That is why in the coming future we will first of all prioritize the
scale development as well as improving our autonomous technology and overall product quality and performance while improving our cost structure in many new areas especially to be reflected in our newly launched products to be expected and also we will expect some strategic price reduction in the near future as well so as to expand our market share and promote deliveries. Thank you.
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Looking back in 2017, there were about 300 carmaking startups and 70 passenger vehicle makers in the market. By now, there's only 50 players left and in five years time, maybe there will be less than 25 and in 10 years time, less than 10, which means that by that time, the annual deliveries of each single car makers will not be 100,000, 50,000, half a million or 700,000, it needs to be at least 7 million in order to survive, which means that we need to have a solid foundation in terms of our hardware and software capabilities, as well as our cost control capabilities.
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The growth in the lower two cities in China will soon outpace the higher two cities and decline a key growth driver. Quite a few EV makers are talking to pantry into the lower two cities.
So how is X-Men going to grow its presence in the lower geo cities? And in the meantime, where the company change is hybrid business model consisting of the direct sales and the dealership, will there be any material changes in the upcoming quarters? That's my second question. Thank you.
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Thank you. Our newly recruited senior management member, Ms. Wang Fengying, actually is way more experienced than me in terms of channel distribution. And since one month after her enrollment, she already had numerous discussions regarding our distribution channels and all network development. So for this year, we have several strategies in place already.
also to increase forest function as well, so as to provide a more comprehensive set of services to our customers. Now one of our upcoming next steps which I can review right now is that we don't believe that it would be very effective to have a large number of small distributors or small channels.
Rather, we prefer to prioritize the development of quality channels to improve our overall service and distribution efficiency. Thank you. Thank you.
we prefer to prioritize the development of quality channels to improve our overall service and distribution efficiency. Thank you. In the next session, we will discuss the development of quality channels to improve our service and distribution efficiency. Thank you.
Regarding the second part of your question, which is the channel network in Tier 3, Tier 4 cities, first of all, we will work with our partners to expand the channel network. In addition to that, we will also design and curate appropriate products suitable for Tier 3, Tier 4 cities, and we do have some facelift products upcoming to be expected. Thank you. Thank you very much for all the inside updates. The next question comes from Paul Gong of UBS. Please go ahead. Please go ahead.
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Now, this is a very interesting question. Ms. Wang has been with us, has arrived for more than one and a half months. Her biggest criticism for the company is twofold. First one is on the planning side and the other is on sales and marketing. I mean, this is definitely a very positive sign because it is better to see the problems and have solutions rather than being fully complacent without seeing the root cause of the problems.
And so right now we are in full force to correct some of the mistakes that we previously had. And personally, I feel a lot of pressure from Ms. Wang because she is working seven days a week. And right now we are all following this trend of being very, very diligent at work. So that is a lot of pressure on me.
adding your interesting comments on the GPT's application into the smart vehicles. Can you give us some kind of some example how do you imagine such kind of technologies to be used in the long term in the smart vehicles and if so, shall we pay for some kind of technology or kind of technology servicing fee on that?
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Thank you for your question. Definitely, touchy-pity and related AI technologies will provide a lot of values for our mid-term and long-term development. When we look at autonomous driving technology or capabilities, the lower level or medium level autonomous driving technology always face the conundrum of being not smart enough as human drivers because cars...
We mainly will look at some of the key areas in, for example, education and also document processing, language processing, etc. And definitely we expect to see a lot of variations of related touch TTP technology in China. And we will select the right partners for expanding the future according to our developmental pathway. Now we are in competition.
This question comes from Ben Wong of Credit Suisse. Please go ahead.
Please go ahead.
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and the cost of cutting is very high. So, we have to be careful about the cost reduction. We have to be careful about the cost reduction. We have to be careful about the cost reduction. We have to be careful about the cost reduction. Now, I actually got two questions. Number one is about your cost reduction. You mentioned about 25% cut in the vehicle component cost, which is very amazing. Can you give me more detail about how you can achieve that? I think it's very important to do the cost of cutting. It's very important. The second question is about G9. It has been doing a lot good recently.
But previously, you have seen a G9 volume of even higher than P7. How you can maintain the G9 sales from momentum and what's your maintenance patterns for G9? Thank you.
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Specifically speaking, the cost reduction target of 25% is not amazing per se, but it definitely indicates that in the past, we definitely still were not doing good enough. There's a lot of room improvement in terms of cost reduction. And right now, we are seeing multiple ways to actually reduce our cost of manufacturing and overall production. For example, as you mentioned, we have some new technologies in our hardware, the integrated stamping techniques that can help us to reduce the cost of manufacturing the whole car. And also in terms of...
pack of the whole vehicle as well. We have some viable methodology that can help us to reduce the cost by about 50 to 60 percent. In addition to that, in terms of the overall chip and battery, we are now employing or adopting the whole vehicle platform engineering technique that can also help us to drive down cost. So as a result, there is a mix of methods and a range of ways for us to reduce cost in terms of our power chain, overall whole vehicle platform engineering architecture scale and also different configuration as well. So overall in the coming period, in the second half of the year, first half of next year and also the second half of next year, we have set of different devices.
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the price range of RMB among the GBEV rivals. There have been a lot of challenges in pushing itself. However, in the near future, we do have several moves in place to boost its cell deliveries. The first one is that we're ramping up several configurations and the second one is by implementing the XNGP function on GNI as well as on P7i which we believe will...
we are on the right trajectory to meet our delivery target for G9 for the year. Thank you.
The next question comes from Nick Lye of JP Morgan. Please go ahead. Did you still get to know, to see, your boyfriend's face?
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I think what you mentioned in your questions might be viable 15 years ago, which was that you can basically sell anything as long as they are cheap enough. However, it might not work today. We still believe that product quality speaks volume. So for this year, in terms of our overall marketing and pricing strategy, we have set up different aggressive goals.
for example, the second half of the first quarter, as well as for the upcoming several quarters of the year. So we definitely expect a lot of reinvigorated deliveries or sales outcome for the rest of the year. So we expect a lot of reinvigorated deliveries or sales outcome for the rest of the year. So we expect a lot of reinvigorated deliveries
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In regards to battery supply, first of all, in January last year, we saw this pricing inflation happen in the industry, which really encouraged the development of hybrid vehicles in the market, but hurt a lot of development in the BED sector. However, this year, we are happy to see that the pricing of batteries have come down. And this newly launched price was in the industry led by a lot of very makers, especially the leaders.
It's definitely a very good sign or very beneficial for development of BEV and can help us to improve our pricing competitiveness as well. Now, so far, based on our conversation with our various suppliers, we are confident that the price reduction, the degree of the price reduction, you know, by Xiaopeng supplied by our supplier partners will be more aggressive than the industry average. And that's just from the outside. Looking internally, we also have discovered different ways to optimize our cost structure to reduce our costs in terms of the power chain, batteries, as well as our PECs by, for example, integration as well as integrating some of the parts as well.
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So my first question is regarding product competitiveness of G6, because Mitch mentioned, they expect G6 in the future, the stabilized monthly sales could be two to three times of P7. But because G6 is in a similar price segment, G6 is not a market-based product.
of P7, so what is the product competitiveness to give you the confidence? Xi Zhi, this is the D-E-O-N-D. The D-E-O-N-D is a product that is dedicated to the development of the D-E-O-N-D. The D-E-O-N-D is a product that is dedicated to the development of the D-E-O-N-D.
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Okay, Xièxi. Apologies, I really cannot review too many details regarding our yet to launch models. You can expect to learn more about G6 in mid to low April this year in Shanghai Auto Show. But something that I can mention about some highlights of G6 is, first of all, it has a longer driving range supported by our optimized weight of the whole vehicle, driven by our integrated stamping technology as well as better heat management and wind resistance management technology as well. In addition to that, the interior space of G6 is amazing, especially if you are looking at the second road of the car, the seating area.
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So my second question is related to the battery technology. So in the future, will you consider to use different types of batteries, for example, like a cylindrical type of battery? And besides that, regarding your current older battery, what is the current battery technology? So in the future, you will consider to use different types of batteries, for example, like a cylindrical type of battery. And besides that, regarding your current older back load, you will consider to use different types of batteries, like a cylindrical type battery,
Is the ratio high enough or if it is not high enough, is this because the charging infrastructure is still not enough or consumers feel comfortable based on the current normalized battery pack size? Xi Xi. Yes. But we cannot lament that this is an important project, we are based out of the grid <expletive> over the STORMV community of many. I hope to see you again soon.
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Regarding G9 and all of our upcoming new models and facelift versions, all of them will be equipped with
modularized optimization technology to optimize the batteries as well as the chip in the design of those new vehicles. So we are open to the possibility of adopting cylindrical batteries in the future.
Thank you once again for joining us today. If you have further questions, please feel free to contact Expense Investor Relations through the contact information provided on our website or the Pearson Financial Communications.
This concludes today's conference call. You may now disconnect your lines. Thank you.