Q1 2023 Li Auto Inc Earnings Call
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Hello, ladies and gentlemen.
Thank you for standing by for the Auto's first quarter 2023 earnings conference call.
At this time all participants are in a listen only mode.
This conference call is being recorded.
I will now turn the call over to your host Janet Zhang.
Mr Relations director of <unk>. Please go ahead Jonathan.
Thank you operator, good evening and good morning, everyone. Welcome to Reorder first quarter 2023 earnings conference call the company's financial and operating results were published in the press release earlier today.
We stayed on the company's IR website.
It is called we have our chairman and CEO , Mr. Shao, Lee and our CFO , Mr. Johnny Kelly to begin with prepared remarks, our president Mr don't relax and outdoors senior exactly management, we're joined by the Q&A discussion.
Before we continue please be reminded that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially.
Your friends from the views expressed today further information regarding risks and uncertainties is included in circuit in company's filings with the U S Securities and Exchange Commission and the Hong Kong stock exchange.
The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
Also note that the auto its earnings press release and this conference call include discussions of Oh did it get furniture inflammation as well as unaudited non-GAAP financial matters. Please refer to the Liard always disclosure documents on the IR section of our website, which contains a reconciliation of the annual.
non-GAAP measures to comparable GAAP measures.
Our CEO will start with his remarks in Chinese there will be translation. After he's finished all his remarks with that I would now turn the call over to our CEO . Mr. Shao Lee. Please go ahead.
Oh, Oh, Oh go ahead.
How are you.
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Hi, everyone and welcome to today's earnings call in the first quarter of 2020 three China's nev market continue to grow our market competition intensified triggering a wait and see sentiment among consumers.
Nevertheless, we firmly believe that true winners will emerge from conversation.
In the first quarter, we achieved our best quarterly delivery results today with.
With continued reuse a recognition of the L. Eight in L. Nine.
We as well as strong order intake for al Saturn and has rapid production ramp up we delivered 52584 vehicles with this quarter, representing a year over year on year on year increase of 65, 8%.
This achievement places us among the top three any of the branded price over RMB 200000 in China with a market share of approximately 11% far surpassing any other emerging automakers and once again showcasing our ability to design and build blockbuster model.
It also demonstrates the strength and collaborative if efficacy of our supply chain manufacturing and sales and servicing network will continue to do our best to grow rapidly and strengthen our market leadership.
In April our.
Our monthly deliveries hit a new high reaching 25681 units with cumulative deliveries exceeding 3300 35000.
Lee L seven al H and L. Nine all performed outstandingly and their respective market segments. According to the insurance registration data of C. I R. I Auto Technology Institute.
Seven became the sales champion in the large SUV market in China. After I started delivery in early March and April its first four months of delivery now seven hit the 10000 vehicle market, becoming our first fourth model to reach this milestone.
Meantime, the L. H has maintained its sales leadership and six theaters sub segment and in the full size SUV market yeah.
<unk> has consistently taught the sales charts ever since its delivery started at the end of August last year.
Driven by our strong deliveries and relentless pursuit of operating efficiency, our financial metrics improved across the board.
In the first quarter.
Our total revenues reached RMB 18, seven 9 billion, representing a year over year increase.
Increase of 96, 5%.
At the same time, we delivered positive operating profit and positive net profit and our free cash flow reached a record high of RMB six 7 billion.
A healthy profitability and cash flow will fund, our R&D and product platforms and systems, creating a solid foundation for long term development.
With the launch of our seventh or eighth Air models in April we further expanded our price range and user coverage, we expect our user market share and the LTV market at over RMB 200000, and above to expand further in the next quarter with expected deliveries to be between 76080.
1000 units.
Physical product delivery is just the beginning.
In order to continuously improve the experience of family users, we will enhance our products through otas.
Since the beginning of this year, we have delivered two O T. A updates for al Al theory, Okay for three and four for updating more than 100 features in total new features include past mess Master, which allows users to create customized combinations of function of seats drive setting navigation applications and more.
We also rolled out okay, plus the first feature of its kind in China, which Ken Autonomous Lee overtake on highway and urban expressway when not in navigation mode.
Recently, we will officially launch OTT three three for at least one in the middle of this year.
For family users safety is always the top priority every model of Lee Auto has evolved to meet the most stringent safety standards and has undergone comprehensive safety and.
In April 2023, the China insurance at all.
Automotive safety Index CIC released its latest batch of evaluation results.
Oh eight received a G rating the highest rating in Aachen occupant protection pedestrian protection and driver assistance systems.
It also received a <unk> rating in the 25% offset Toronto impact pass on both the driver and passenger side.
And I also received a five star rating with a way to score of 91, 3% and the C. Uncap assassin task.
In the first quarter of 2023, we continue to enhance our commercial capabilities upgrading and expanding our integrated online and offline direct sales and servicing networks to support the expanding product offerings and provide better services to our users while spreading our brand vision and creating increasing brand awareness.
With respect to our retail sales network, we continue to add physical stores, while accelerating the upgrade and expansion of our existing stores to support multiple vehicles.
Since <unk> launch in late June last year.
We have relocated and expanded close to 50 existing stores and opened over 50 new stores.
As of April 32023, we have 300 and to retail stores and 103 cities as well as 318 service centers and authorized body shops in 222 cities.
As our business accelerated sustained its sustainability has always been deeply ingrained in our products services and corporate governance on.
On April 20, <unk>, we released our 202022 ESG report detailing our continuing exploration progress and ESG.
We received an MSCI ESG double a rating for two consecutive years in the future. We will continue to improve our ESG governance promote a harmonious development of our brand the environment and society and create value for our users partners employees and other stakeholders.
As we enter the next phase of the development.
We'll execute our autonomous driving and B V roadmap and they held on April 18th.
Shanghai Auto show.
City and L. A will mark the beginning of autonomous driving three point out for our company.
Meanwhile, we will also enter a new chapter in terms of powertrain platforms and products with your <unk> and H P. C. D V being developed in parallel.
In terms of autonomous driving our highway MLA feature has served over 280000 families accumulating over 140 million kilometers of highway anyway mileage and this quarter, we will bring the <unk> featured urban driving scenarios, well expand where we released city NOI for beta testing Ali <unk>.
Autumn Max three courthouse.
And targeted rollout the FIFA and the hunger cities across the country by the end of 2020.
Moving forward with the application of transformer models and autonomous driving we believe we will be the biggest beneficiary since we have the largest data set in China.
With respect to E. R E V H B C D b.
Adhere to our parallel development strategy for <unk>.
<unk> will focus on enhancing the efficiency of the range extenders, allowing users to drive on battery powered on urban commute and on radio centered here in a long distance travel a much better experience than driving I C E vehicles.
H BCP vs will continue to improve our technology to offer a rapid charging experience.
To columba gasoline vehicles, so that users can make inter city of trips without ranges right.
By 2025, our portfolio will consist of.
Hum models with what consists of one supermodel flagship model five E. R. E D. Five H P. C. D V 11 models in total which will allow us to further expand our user base and expand to new markets.
This year it won't re double our efforts in fast charging network deployments.
Our foresee fast Chargers can reach peak power output of 480 kilowatts, adding 400 kilometers of driving range with a 10 minute charge.
We plan to build a 300 charging stations and highway service areas by the end of 2023, covering four major economic zones, including the Beijing, Tianjin Hebei region, the Yangtze River Delta region, and a great Bay area and they're trying to transform the region we.
We expect to further expand to 3000 charging stations by the end of 2025, covering 90% of highway mileage nationally and all major tier one two or three things.
In the future, we will continue to refine our operations build organizational capabilities to support the scaling of our business and maintain healthy sales growth as.
As we continue to strengthen our autonomous driving and smart cockpit capabilities and simultaneously improve implement our E. R E and H P. C. VEB dual product strategy. We're confident we will also continue to strengthen our market leadership and the nev market.
Creating more and better choices for my family users to create mobile homes and create happiness.
With that I'll turn it over to our CFO jonny for a closer look at our financial performance.
Thank you Lisa Hello, everyone.
Some of our Oh.
Uh huh.
Absolutely.
21st quarter financials.
Our total Tam constrained.
Often that's all highlights here and even harder for you to refer to our earnings press release.
For further detail.
Total revenue in the first quarter of Hawthorne.
1023 were RMB.
Aegean pardon 19 in all coupon, albeit in U S dollar.
Increasing 96, 5% year over year and <unk>.
Pardon all per se cultural culture.
This included a RMB.
Anything partner III, three beating all tool pardon.
Six 7 billion U S dollar problem vehicle sale.
Which was up.
How did he say.
One 9% year over year, and six 1% cultural culture.
The year over year increase was mainly due to the increase of vehicle deliveries.
Our average starting price contributed by the leader out there.
The polls are what caused the increase.
Well, it's mainly due to the increase in vehicle deliveries.
Partially offset by the lower average selling price.
Two different product mix between the two quarters.
Revenues from other sales on the services were RMB.
The 15 nine pardon seven minutes.
Our fixed pay based upon 9 million U S dollar in the first quarter of 2023.
Growing 81, 4% year over year.
They quantify cause our we'll call it here.
The increase was.
Mainly attributable to increase it to increase the sale of accessories and services.
In line with higher accumulated vehicle sale.
Cost of sales in the first call her was RMB 14 pardon.
A nice states bidding all pool points.
Well, it's been in U S dollar.
Representing an increase of 500 tool part of the 2% year over year.
Increased off base part of the toolkit that cultural will falter.
Our gross profit in the first quarter of 2023 was RMB 3.8 to repeat it.
Paul.
557, 7 million U S dollar.
Growing 17 seven.
Cause that.
Comparable with the first quarter of last year and.
1.4%, whereas the.
Fourth is the false cause are all 2022.
Vehicle margin in the first quarter of this year.
19.8% comparatively pontypool pardon, 12% in the first quarter of 2022.
And 20% in the fourth quarter al.
In the fourth call at all.
2022, but you are where you see Chris well, it's mainly due to the different product mix between two cultures.
Gross margin in the first quarter of 2023 was positive one 4% compared with 22 pilot states in the first quarter of last year.
Plenty.
2% in the fourth quarter of last year.
Operating expenses in the first call. It are all 2023, or RMB 342 billion or 498 pardon 7 million U S. Dollar.
Increasing.
30th Toolbars night.
Percent year over year.
Decreasing.
7.4% cultural culture.
Research and development expenses in the first call for all of 2023, well RMB one point.
Eight five beating all 269.
Simon meeting U S border.
Up 34 point.
8% year over year, and down 10, 5% cultural powder.
Oh year over year increase was primarily driven by increased expenses.
We will support our expanding.
Our product portfolio as well as increased employee compensation.
Results of our growing number of staff.
Our call Center will call. The decrease was mainly in line with the.
Jaime on the progress of new vehicle programs.
Styling genre.
<unk> expenses in the first quarter of 2023, well RMB 165, beating.
200 <unk>.
39.6 meeting U S dollar.
Representing a increase of 38.
<unk>, 8% year over year.
And the increase off.
Zero point.
9% cultural recall here.
Oh year increase was primarily driven by increased employee.
Asia as a result of our growing number of staff.
As well as increase the rental expenses associated with the expansion of our.
Sales and servicing nice work.
Income from operations in the first quarter.
Well, it's the RMB 400 watt firepower to all.
Oh 59.0, meaning you asked Dora.
Our comparable.
RMB.
431 meeting loss from operations.
In the first quarter of 2022.
And RMB 133.6, meaning loss from operations in the fourth quarter all 2022.
Net income in the first quarter are all 2000. Upon this rate was RMB 930 <unk>.
Three.
Eight meetings.
101.
Hey.
Many of you at dollar comparable is RMB time point.
9 million net loss in the first quarter of 2022.
More than tripled.
The RMB.
260.
Five three meeting 19 hot in the fourth quarter of 2008.
Turning to our balance sheet and cash flow.
Our balance of cash on cash or equivalents.
As Chris stated tax time, they pulled it.
And short term investments.
It's RMB 65.
Beating.
<unk> nine point.
False eight speed in the U S dollar has off.
Mark Survey for 2000.
Tons history.
Net cash provided by operating activities in the first quarter of 2023, well it's RMB.
Pardon.
Eight beating all one point.
Why does the rabies in the U S dollar.
Free cash flow.
Was RMB six 7 billion or 975.9, meaning U S dollar in the first quarter of 2023.
Now for our business outlook for.
While the second called or off the 2023.
The company expects that they do rate to be between.
76000 and.
A T y.
<unk> thousand vehicles, representing an increase off.
100, or a fixed pay 4.9% to 100.
H a pool, 0.4% from the second quarter of 2022.
The company also Asia Pac the second quarter, our total revenue.
To be between RMB.
Plentiful pine pool to billing and the RMB.
Quantify upon.
Eight 6 billion all U S dollar.
Three five.
<unk> repeat it in the U S dollar three pardon seven 7 billion.
And here you can solve.
117, 7.4% to 196, 1% from the second cause or off last year.
This outlook assumes the positive macro economic conditions.
With no significant disruption in the supply chain.
And it reflects the Companys current and preliminary view only saw business situation and market condition I.
Which is subject to change I will now.
Turning to call over to the operator, who will stop.
Today's session.
Thank you.
If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
If you wish to cancel your request please press star two.
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Please pick up the handset to ask your question.
For the benefit of all participants on today's call. Please limit yourself to two questions and if you have additional questions you can reenter the queue.
If you are amendments speaker.
Please ask your questions in Chinese first then followed by the English translation.
Yes.
The first question comes from Tim Hsiao.
From Morgan Stanley .
Please go ahead.
Uh huh.
So with the Q and you won't see C. G E E G E.
Gotcha, well, Japan is now going to young <unk> Li She said multi Tuc club kind of itchy dogs, you answered them all each without you guys turning to <unk>.
You tell them you don't even need a change out of yourself.
Well actually that you're too she said well you guys with a patent on Humana or did you do the homework help greenlaw.
Good morning, Shannon Hollywood you ended your attempt advantage that's something you wish that you all Santos I know that you guys don't take him all D to C U.
But then he told me Richard Thompson Siegel call.
How do you feel that's already ensure no well, let you go she told me somebody with two big kind of multi on.
Why do you do you wait to indulge N T. The shingle connecting to go, especially with your S&P shop.
So my first question is about our gross profit margin. So Chris first quarter close parking watching was adversely affected by talking instead of a product mix and lower utilization rates.
So how should we thinking about the margin trajectory in the following quarters given the interplay of the logical factors. So on its eisai Todd is scale, whereas I've seen a couple of other costs, including the battery prices would fall on.
On the flip side.
We expect our device makes us al seven anti air mottos might cost greater margin dilution, so any chance in Hong quarter, we could see the gross profit margin dollars back to our like our previous peak level.
22%. So that's my first question.
Sounds good.
Johnny.
Oh basically.
We are confident in our fall improving.
The cross marketing a stocking problem to us our first.
In the first quarter.
Levi's, they all thought impacts wildfire they expressed that on the gross margin collective.
Excluding that so.
Uh huh.
We will both out all the Levi's.
In the first call it in the first half and yeah, there will be some room on this.
When do you what's the negative impact.
And we saw the ramp up of Oh.
Or Oh, Oh, thousands area and also with the Arab terrorists.
There will be some room on that yeah.
Bill.
There will be some other.
Uh huh.
Oh.
Uh huh.
Right, well, we still keep our subsurface and our full year guidance.
Yeah.
Got it. Thank you very much Johnny Huynh with it youre going to U C U E.
Okay.
Once it was really to kind of tease out you'll have fanion knee jerk Hassan assesses the Honda with you Josh.
Go Chiefs cities, Yeah, Tony Hawk with Endesa gasification, what he says anytime you tell them to the Triple Asensio, who clean more oh tres owing to the cenci. So too does the chicken chicken Bill Steve like each I'll, just squeeze two UGC Yahoo defense, yes.
So the mogul Jackie you work with a <unk> session.
Ooh chassis this you'll see quite a bit you can't.
Well I can just ask you. This if it's only Alex you know you can see that.
Typically I spoke with told nothing just tell me to cool nights, you thought you'd be talking what were the key yeah Ninja turtles without even shot. So my second question is how does <unk>. So Lee Oh total class two acoustics seating on a to smoke group of users who are already testing.
So what's the size of the user group at the initial stage and when are you going to activate all the function to all eight macs users separately with companies think about illegal towards their targeted customers Aida family users a western value proposition of a CTO and a way or a high level it sounds <unk>.
Function, a widebody does that mean to them and how important is that the way the family users like.
Make that decision to buy the cars Henchy enhanced music spirits. So that's my second question. Thank you.
Yeah sure I'll do it now, which I know all of them and so I'm gonna truthfully, Trisha Dill Hakeemullah. So high it would be helpful. Either what is you really don't you Tricia has your floor.
Sure Oh, there was too much for sure.
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No glitches ones I.
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Of course, you know when we receive on the audio you don't go to work Oh, yes.
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The La go go through you'll get hopefully you know what people will come and go.
How are you going to generally.
I know what my kitchen empties when I moved to other harsh attacking and indeed, we have jumbo pack, which will show that you can please.
Switzerland, Austria, who come to let's see the law and downhill Oh.
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Looking forward I see.
Those who are traveling.
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I'm going to I'll call. It like the Asia PE funds, Michigan wanted to wish you only the one.
Overall, we're making good progress in terms of a city in L. A both on our system testing level and as long as real world testing.
Our plan is still to release early bird testing in June .
And the policy specific policy as to who do we released it who are still being created.
Generally our rule of thumb is we will.
Try to cover more frequent users of highway in alloys, which are users who have more willingness and ability to use anyways. They also have higher tolerance and level of understanding of the Illinois feature.
And we still plan to launch a city, Illinois in 100 cities.
And as to which specific cities, we will cover first.
It is mostly dependent on a number of our existing vehicles in those cities because as you know our city and OE solution doesn't rely on high definition map, which means as long as we have navigation data for the city as long as there's enough drivers driving our Max models.
We will be able to accumulate enough data to allow users to use city in a way.
Especially.
When it comes to complex intersections.
As long as we achieved good coverage on those scenarios, we will be able to accumulate more data and open those open up those cities and.
Locations for our users.
Speaking of family users.
We've always believed they care a lot about safety and also comfort.
Especially when it comes to.
Mimicking human drivers to be able to drive mis smoothly and give the entire family of good experience. So to make that happen we are running shadow testing.
In our existing vehicles already too to try to improve the behavior of our innovative features so that when they are launched they can provide the best experience for our family users.
Oh excuse me when you say the playful. Thank you very much for a detail sure. Thank you.
Thank you.
Yeah.
The next question comes from bin Wang with Credit Suisse. Please.
Please go ahead.
Clearly not Gucci, if we thought we would have been okay. So now I see you're going to just kind of going on <unk>.
So Ms Orlando.
Without a Manhattan west.
Several weeks ago and without Union.
Michelle.
Somehow impact after you go empty.
You don't want to go and make it pop album attack.
So I need to.
Oh pardon me.
James.
The haynesville not too much.
<unk> okay.
Thank you Sir.
I actually got two questions on O Olive garden. If he was the last conference call information you actually maybe try to monthly.
Housing units.
What's your take.
They shouldn't we smashed Atlanta D var.
Oh in the future.
Because I'm thinking about it.
QED Meteor.
How do you see that now.
Alexia can you confirm that UBS, what's the reason behind that.
Yeah. Thank you.
Oh, well reach out went up without a home and chemo Oh Eagle.
Oh did you say that you are.
<unk> argued a little hot or.
Uh huh.
No I don't see it at all of that.
Yeah.
So all the time and haven't done.
And you said, you're going to you Oh, Yeah, Oh, yeah in Tokyo, Okay. That's it.
Yeah.
Now how do you call it.
Yeah P J.
Oh, sorry, I know you touched on that you also include voucher, arguing how about what she does not properly with the hotel to Angela I thought you also did you go.
So first question in Q2, we will gradually ramp up our delivery numbers and our current goal is to reach the 340000 monthly Mark by June of this quarter.
And talking about the BV flagship.
Our plan is still to release it in Q4, and after which we will be delivering the vehicles to retail stores birds for synthetics aesthetic viewing.
And test drives which will follow a similar pace as you've observed withheld.
All right.
Thank you.
Okay.
Yeah.
Thank you.
The next question comes from Paul Gong with UBS. Please go ahead.
Sure sure.
Well you don't go into clinical and financial at some point, you'll see on the industrial kind of sounds like Q2 was also a coffee.
So not all so I don't know if that's what I thought so.
Pushing be selling because you can actually make a woman Ananda you catch your question on P. C O D E Shaw.
Cool social Glenda for you on the hall.
All of them dominate Guardian system, Jonathan concerns like you do some get a hospital to me over to Michele.
No I'm just.
Just two questions.
Oh woman.
<unk>.
Yeah My father.
So I'm not so sure halfway down somewhat what you can call me, though.
So you've got to use something else just wanted to go see them do it there you go.
Social Glenn if you want on a feeling to you thought you can add.
Oh no.
So my first question is regarding the expense.
It seems that top off on D S.
It seems to be having either flattish quarter over quarter or even slight decline.
Budget, especially in terms of question, even with the <unk> network.
Still seems to be well within control. So can you. Please give an update on the full year R&D spending.
Spending guidance as well.
Our expense ratio. Thank you.
Hi, Paul This is Tony I would take off.
For the R&D, we will still keep our full year.
Okay. That's it.
It shows over.
Omar.
212, beating RMB for the full year.
And.
For the Gen I forget and they are.
Turning to talk from a revenue.
We will bill improve targeting from a default called her off our loss ratio.
This is our plan.
Thank you.
Oh.
No, it's not going to disappoint you on a coach and some fun Schindler industrial size, how much she's telling me a kindle.
Shopping you found out towards Sean Yes, we sure I'll come help has helped Autoshop go Oh Tuitions, all 13, Johnson I'm into what might be all behind <unk> all of them.
Hi.
Dunite collecting bundle onetime social.
Oh total towards Q2 issue.
Also on tuition to machine goes all auto Shanghai, Shanghai Chongqing. So my second question is regarding the competition.
I think some other common equal you saw similar size of the vehicle with also planking hybrid system, and so with even a lower price than the I O H O. We absorbed any impact in terms of New York or in peak and so how shall we think how policy.
Competition in the same segment.
Yes.
Oh, She goes home and this would give you that kind of on our bodies that just doesn't scale.
Okay.
It's Linda.
In heads hung at all John This is how much you know me that I would tell you John .
Sandy can you help me with.
With that I'm doing.
So you need kind of like Oh.
Some dialogue about that.
If you're just doing my interests they talked about neither.
Anyway, so it's easy to trigger any of them that kind of gone up almost <unk>.
Oh Gee, that's eating out to my team to Palo Verde charging deal.
Well, then the box food allergy and additional hygiene, either 10 minutes with you.
I know you took it all the way.
Looking at our actual order intake.
The order is for L. A is actually increasing very steadily and fat.
We believe as more players enter the market is actually good for our I O eight which is the market leader because many users read about these competitors and they start looking into this market segment.
They come over to elevate and order our products. So we don't generally don't think this to be a big threat and.
Even when we look at the feed data for our Allied orders. This product you were talking about this specific product isn't even among the top competitors are tough competitors are still the Tesla model y.
Oh, thank you so much.
Thank you.
The next question comes from Meng soon Li from Bank of America. Please go ahead.
Okay. Thank you Oh go ahead, Glen you said Oh no no.
Now the winter that's Eagle wouldn't you know yes.
Going into the Ginger Jones Vinci colonial claims NAW, Jason She does it does sound as though just to <unk>.
Due to the claim on the Ohio Siddhartha <unk>.
Nishu that just quickly what are you going to change.
So we shouldn't be done Jo mill ice.
I see that Oh, Susanna just showing how we do that sometimes if you can touch on that.
Uh huh.
D G D zone.
So the two Kimberly oleson, so unless you said it.
Milton coaches, who would use it to each of the pin pad it sounds your wisdom.
No need you had oh, just as the size of the team to the <unk> because you got some unusual conditions into each other's oh.
It sounds like zoom and teams and a doomsday machine come deepens the teach out at sika.
Hopefully you'll come into convenient cone home should have been done at your ego since Andy's disorder.
Do you know, what you're saying Oh. So my first question is regarding your business priority.
For a moment is a property of appeals and a free cash flow.
More important for you or our market share is more important for you.
So and also how do you see the price competition in the second half this year.
Given the battery price already a lot.
So whether you told sito to fly to the Q, a little bit the discounts in order to maintain that you got high market share.
Yeah.
Well, if he or she doesn't even have to do so even all of them arent.
Arent you the human will be honest with you the doctor might even if I'm misreading she's on mute.
He didn't have that in there is just that.
You are not one of them was that they would call me.
Got it.
Women's at.
Yeah, that's all.
All of them. He was looking at deals and I suppose that the D. B. It of course it was that are you.
You're doing all the time, but you're getting your Kingdom Stewart do you believe that maybe you have yourself.
When you talk about where you went to you.
Oh man I didn't have on me at Egypt Huntington.
So he called me and welcome again.
Yes.
First of all.
Our top priority is going to be market share in Q2, our goal is to increase our market share in any of the market about RMB 200000, MSRP from 11% to 13% and we don't have any plans to offer discounts because as we made our long term sales and product plans.
We're already considered to price our product as the most competitive considering the size of the segment and the price segment. So this is all taken into consideration and we have confidence not to offer discounts.
Okay.
Oh, yes.
But once you know so glad you took the attention so that not just us.
It's a genetic a CSA 2010 Ninja Josiah does show.
He dealt with the audio when you're at home so hopefully what you're quite she didn't know how do you much good question.
Oh I see.
So demand not just teachers or Uh huh.
And then so that something that you can.
So Jim Adina isolation since a young.
Or does it only be Tencent did indeed.
Okay.
Those results did.
Davinci I'm glad that you could see different types of submission I just want to go.
Tony and John .
Now when I said that you consider pets, a DUC I don't know who's doing so.
So my second question is regarding your Betsy E V plan in Aero you already discuss your long time go by Antonio tied to your site you will have the size of the EV and that'd be eating those endo also Syfy EV models in Atlanta.
Thanks for your models so how.
How do you think about the long term gross margin, obviously, you battery EV and <unk>.
So.
Oh capex related to the VEB Pcs.
Okay.
I will take that question.
Tony and Paul.
Paul this year, so our capex.
And so.
In the last three years, a real capex they've thought about our.
10 billion RMB.
The rolling three year starting from this year.
Based on our current estimate including the Hps the Capex.
About.
18 billion RMB.
But it may expand if our.
Early task owned H P C.
Well start with Steve we will adapt.
Our pension.
Okay.
Okay.
Thank you.
Yes.
Yeah.
Thank you.
Okay.
The next question comes from U P M D.
With HSBC. Please go ahead.
Okay.
Data for countries outside yes without attempting.
And then on PBS are all that's all I'd say that sometimes I'm sure everyone's.
Almost all of them kind of on that Dan if you'd even with the idea that should be the amount that.
That's about two slides in Italian <unk>.
Well, there's not much at all it's Angela and Suzanne attending shallow, but I Gotta should then bill that's even didn't deliver them called Dunkin' Donuts just talking about.
Uh huh.
Hi.
Jonathan I'm jumping college in closing checking I'd say that's.
Two questions on the product map firstly on the pure battery electric vehicle product strategy on profits I'll I'll look at BV might have a quite different bond structure question. It's a bunch of the standup of the coming EV models fixed size M. D V will that'd be a range extender vision Christmas pure battery electric version and so far we noticed that are doing the competition.
Ladies and <unk> has been selling well, but 90% 70% is a range that is a ph D. S that going around the RMB Tonga K just stay on UK pricing range large attained by more competition, how would be auto differentiate itself in winning <unk> compact size segment, which already have crowded modest supply. Thank you.
Yeah.
But I don't want to you must know did the eagle.
So you know women's with your hands up to that yes.
Hello to a comedian its vision fund me a whole lot of time doing housekeeping Beth yeah.
Yeah. So you know women will be I'll say and I'll go Bob Good afternoon in Israel.
So I'm just gonna Jaguar P. J I didn't go forward.
And Oh, John the Giga Molly do you make sure that you guys can come to you guys.
Is it to you on that.
Because it's equally yet considered yet.
Well anyway.
I hope, we can see the twitching luck.
Thanks, you too.
I was hoping you know what I'm sort of asking yes, judo drilling Eagle Ford maybe off due to mobile tablet when EQT that angel.
Mclaughlin younger.
Behind that what do you do on the ownership English ningaloo.
Oh, she was going to live in a little town home.
And so you know what I can do that are going to lose up to half the taboo in the ETF hub.
Oh, Gee I told him dwell.
Would that change that yet.
As you can get easier.
Oh sure sure Julien.
Oh no.
What about hedging.
Please.
And then they come back from that can you tell me doing zoom highway.
Yeah, Bob how can you kind of put you on I don't know you can go closer to Joshua Gale.
Jonathan do you have any vessels you need the time.
Uh huh.
From two angles first of all.
Even though we have.
We launched our H P. CBD products in fact, we have invested in R&D and supply chain, especially in the house parts. There early on to prepare so that we can offer the best products at a price point very close to our our EV products.
To deliver very similar gross margin as well all of this is relying on our R&D efforts as well as in house parts.
Deployments in our supply chain.
Without talking about specific models.
S. B E vs. R. B R. Argue these are our goal has always been to replace massively replace IC vehicles and in order to do that the top priority is to tackle arrangement variety. So that our users can drive freely.
Between cities.
Away from their homes.
So our strategy for for that product is to deploy them.
Carving stations, which have been charged or very rapidly.
Service areas in highways, so that it can provide a very similar experience even comparable to cards are powered by our traditional chemical fields.
So and at the same time as I mentioned earlier with our.
Strategy in R&D and in House development, we're able to offer all of this without incurring additional costs for the users. So that they can buy these products at prices very similar to ours.
Thank you.
The next question comes from young Bulls you.
With Citic Securities. Please go ahead.
Thank you Glenn you, Tom Whelan, who when she answers your questions when he or she asks you Gandhi.
E T God can go into Turkey with telephone.
I'm, a woman social khufu, nor shall excuse me how many you got it right.
It was just your factories in China.
I'm sure you can't make a call.
My question is how we plan our sales and service network makes it two or three years to prepare for the launch to follow in the future. Thank you.
So that.
That was the manager.
Come in I'm sure you do too young woman, who through the channels. How close you got to know how you thought about until the EMEA charters from D. A.
To deal with them yet.
Yeah. So again, the why she's element yeah, I'll mention because it's not only if at all did.
So I'm sure most of attention here is not an anti smoking do you.
I mean, it's also again the Hopkins.
Uh-huh two pumps were down at the Oh go ahead Mark.
It sounds like when I was wondering I forgot if you will.
Oh sure Yeah.
Okay. That's okay, I know, Germany younger telephone shirt, Oh should that.
Does that give you the qdoba anemia.
Thank you to Tony <unk>.
Yeah. So you know I don't get it we'll get a function I think we've done friendship I might argue that the agreement will hopefully get it to be honest with you mean in terms of looking back you know.
I'll answer this on three levels first of all as we build multiple vehicles and are part of the portfolio will be upgrading stores, which only house, a one or two cars today.
They can have.
Pick a part of our product offering and secondly.
We we will change the format in the cities, where we have a very high market share will change the format of our some of our stores to be a sales complex, which will offer better test driving experience as well as drive higher conversion rates and thoroughly and tier four cities will pretty much cover all we plan to pretty much cover all of them here in forest City.
And the format will be very similar to what you see in.
Auto complex.
Frank.
A comprehensive store offering services as well as sales.
In the same complex. So overall, if you look at our sales network that will look very similar to what you see with Mercedes BMW Audi both in terms of scale and formats.
Yeah.
Thank you.
The next question comes from Jim Cheng.
Let's see ICC. Please go ahead.
Hum.
Well here to me and she told me. He said he would it ends I think Lindsay Trokendi go.
Sure.
Can you say that you're also treat you.
I argue.
Hopefully that can give us on the youngest between Oh sounds you're always hasn't really changed.
I know your question was already embedded in kind of Shelby you shouldn't EBIT keystone's, Patricia who really isn't much L. L. Johnson County, what Tricia T shirt, Okay. How do you I can't wait Adam with setting up on.
Eric.
Uh huh.
Yeah, how useful it may not even see.
It's cool.
Yeah. So I'm sure that I'm attending you call that kind of I'm trying to I'm not sure if I got it the safety Oh 70, you're putting on nutrition, a chipotle is central in contact with them now.
So kind of a long shot on yet but people essentially you towards your pet's wellness I'm quite sure whether you felt that all of a sudden announce oh.
Yeah, well no quibble question at all that you picked up the off peak.
Sure.
Well I think you said.
You can see that our every week a second culture.
And it is around a seven to eight point flight centre eight suddenly something plus sites housing units, which means that by the end of second quarter, the north face House all is well.
70000 units and that's why I want to ask about whether that's kind of new owner I see my first and we have already seen a significant improvement and the path of continuous improvement.
You may actually you know what.
I want to ask whether the current propulsion north Arab working and also the propulsion, though it sounds funny yeah.
Lower tier cities has already made a greater and greater incremental contribution than before and what did you see a photo.
Our estimate is I think model.
After they're so small.
All three of yourselves call. It has already reached 3000 units are actually even if certain pulse culture. This year can you expect a higher level.
Okay.
So let's go with you.
What do you do with Eagle Oh, Gee, She's list out all the time.
Okay.
How did you all put out an album.
You can do the whole usually if a movie.
Oh.
Oh jeez.
Tokyo and I'll say it.
Yeah.
Okay sure.
Good food handling you give me kind of build off okay.
Alex you are about two hours.
No it doesn't.
Okay.
Oh sure.
Yeah.
I don't know if that's enough then we can't be sure that.
The tiers you need in Georgia.
Thank you and have you found the hull.
Oh Gee, you can't tell I'm sure Virginia consolidated.
Okay.
They're not talking about kind of how you are thinking I don't think I'm sure you shouldn't one hope you're all doing guidance you put out for the <unk>.
One of them.
Yes.
Answering these questions in order first of all May has typically been a low season in terms of the vehicle sales but.
So for US we have seen a strong.
Compared with April both in terms of delivery numbers in order numbers and as the air models hit our stores and we began to offer test drives we have also seen a greater share of air models in both al and IL seven.
Together <unk> eight and now seven air contributes about 20% of incremental sales.
Yeah.
Secondly, we divide the city by what we call new tier ones and tier twos and we asked.
Past performance in the so called new tier one cities because these are strong drivers in terms of fine.
<unk> set a price over 300000 RMB.
<unk>.
And they will continue to be strong drivers and our next steps, we will expand into tier three and towards tier four cities and we believe it will be a growth engine for our next stage of Philadelphia.
Yeah.
Okay.
Thank you.
Okay.
Please go ahead.
Oh I don't know what have you been contacted.
Oh, the knee good shape, he wasn't willing to really shop to fill them and all the national without actually should okay. Yeah, hopefully you'll come along and again as I shop in shops.
Oh My God.
So I'm sure it's no newfield nice things out here it.
It seems like Union, though you could do that.
Yeah, Oh I'm sure the Condor.
All right agenda.
Uh huh.
I'll show you know you don't see a whole.
And she doesn't soybeans, our calculus Cashable crazy cancers.
And my second question.
Well, we can see a number of our staff has extended a lot and most of them say, okay. You know what what's your cities and so this is a major one off in nature.
Oh, I'm, sorry, I thought where I thought there that's helpful. I think well and Oh, we also can see that'd be all constantly adjusting out.
You have two different channels and open at it okay.
Asian Naphtha. So can you share some detailed cases actually fall what's it what difficulties do we seen although it's the <expletive> hits and that's how we adjust to a makes it to Nick.
It makes the the improvement.
Tyson you then move on hydro.
All women shoes and.
That isn't that easy to do or not you don't let them go society. She lives with new solutions.
I can't do that.
Cone cost.
Oh sure.
No actually I'm glad you I'll be Nielsen to do coming from India.
Uh huh.
Well of course the elephant.
Of course, you don't know Jim Wilson.
Julien it's.
Got you. Okay. So Joe gave me yourself, Amit good EMEA, how long ago, she still applicable laws, including <unk>.
Listen to those who say that T shirt, Oh somebody who used to deal with them and again it will not be immune tend to let them know there's enough problem and a Sunday and that's true.
I'll tell Ya man he grew up in Ohio.
That's helpful. So there you go.
Yeah, those are not all women do Oh.
Oh, Gee, though Tony.
Oh, yes.
Can you talk to your ability to get to you. So yes, it's very little.
Oh, Thank you can't tell I'm sure all of them, which is north of Monaco, who suddenly sascha will do that when the heidrick way fashion not Hollywood somebody Okay, Tony Hawk, and mostly chunky I'd tell you.
Okay on the hang up on me.
And how your comment and also you know how do you deal with all the time.
Sure Yeah, yeah, but the only thing that you get you know I'll comment.
Students have begun puncture decent money.
I can't disclose too many details but.
What I can share is that this quarter, we have started a.
Comprehensive organizational and upgrade on the commercial side, we have changed from a regional organizational structure to our province based organizational structure. So in terms of both customer acquisition and conversion resources.
We've changed from essentially allocated model to a more regional more frontline.
This allocation model.
So that'd be resources can be allocated more efficiently compared to Q4 of last year actually our number of stores hasnt changed much but the sales per store in sales for person have both increased very dramatically.
Also the conversion rate from leaves the order has also increased as to our strategy in tier three and four cities are what I can share right. Now is that we will trust this new process and organizational structure and give the power to the frontline workers. So that they can use their judgment and experience to decide.
What is the best strategy that best suits their city and region to achieve the best results.
Hum.
Hum.
Okay.
Thank you.
The next question comes from Jiang Shell with Barclays. Please go ahead.
Oh, Glenn anything you look how she she is to sit with it you want a can do once you can be one of the or what do you usually see.
Guang human 10, and no I'm a woman she won't listening to you my sound Lantana nobody in my opinion, so we sell them in <unk>.
Yeah.
For the medium to the 10, well that's all for me and pack and hold the junior you you can do.
So Jim you issue Oh agenda to go blank two has a machine yeah.
You'll need to put them into a P&G sushi.
Oh sure I can tell you.
But I believe I said they'll have things you're trying to Michigan.
I understand the whole women's I kind of went out in Hollywood Ontologize, yet your total high for some time.
How about for some time that kind of a man who got on vacation time.
No no no I totally understand novo's shoes, so you shouldn't have.
Finish I hope on the hot side I'll touch on the home page for Pilgrim, and which I know how God I wish I can know how shoes that makes him a man who got the highest vacation time.
Uh huh.
How can you take the California English will then cause you to put a hard tissue in Doha in China.
Okay, Yeah, no it sounds interesting.
I know how you could tell for sure.
I don't know how she when I asked from time to penetration.
In each of those actually you cannot know how shoes Shanghai now you don't have no clip here so congratulations publicly to Yahoo.
Yeah.
Uh huh.
First of all in the Changzhou factory. We currently operate two production lines. The first line.
Manufacturers L eight and nine and we're currently offered to shift which gives us the capacity about 20 to 25000 per month.
Second line can make our seven and <unk> eight and currently operates on one shift delivering 10% to 12000 per month and eight is actually used to balance that.
Load up the two lines so that they can operate at optimal efficiency.
Going forward based on demand we can.
Usually improve our production output with the current factory in Changzhou. So this year.
This factor should be enough to support our sales targets.
The phasing factory is dedicated to our best product line.
And it's designed to initially offer 100000 units production capacity in anyway, and as we deliver more vehicles in the future. We will strategically increased the output of these actions.
Action capacities to meet our demand.
Thank you.
As we are reaching the end of our conference now.
I'd like to turn the call back over to the company for closing remarks, Ms. Janet Zhang.
Please go ahead.
Thank you all once again for joining US today. If you have any further questions. Please feel free to contact the IR Investor Investor Relations team then that's all for today. Thank you and have a good day.
Yeah.
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Okay.
Okay.
Yeah.
Okay.
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