Q2 2023 Li Auto Inc Earnings Call

August 8, 2023

Operator: Hello, ladies and gentlemen. Thank you for standing by for Li Auto's Q2 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Janet Zhang, Investor Relations Director of Li Auto. Please go ahead, Janet.

Hello, Ladies and gentlemen, thank you for standing by for Lee Auto's second quarter 2020 Free earnings Conference call.

At this time all participants are in listen only mode today's.

Today's conference call is being recorded.

I will turn the call over to your host Janet Yang Investor Relations Director Hopefully auto. Please go ahead Bennett.

Janet Zhang: Thank you, Sarah. Good evening, and good morning, everyone. Welcome to Li Auto's Q2 2023 Earnings Conference Call. The company's financial and operating results were published in a press release earlier today and are posted on the company's IR website. On today's call, we have our chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Lu, begin with prepared remarks. Our president, Mr. Donghui Ma, and other senior managements will join for 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 US 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 different from the views expressed today.

Janet Zhang: Thank you, Sarah. Good evening, and good morning, everyone. Welcome to Li Auto's Q2 2023 Earnings Conference Call. The company's financial and operating results were published in a press release earlier today and are posted on the company's IR website. On today's call, we have our chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tie Li, begin with prepared remarks. Our president, Mr. Donghui Ma, and other senior managements will join for 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 US 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 different from the views expressed today.

Thank you Sara good evening and good morning, everyone. Welcome truly out of second quarter 2023 earnings Conference call. The Companys financial and operating results were published in the press release earlier today.

Allstate and accomplish IR website on today's call, we have our chairman and CEO , Mr. Shao Lee and our CFO , Mr. Johnny Kelly begin with prepared remarks, our president Mr. Don cleanup and other senior management will join for the Q&A discussion before we continue please be reminded that today's discussion.

Contain forward looking statements made under the Safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995, Florida <unk> statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the views expressed today further information.

Janet Zhang: Further information regarding risks and uncertainties is included in certain filings with the US Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial matters. Please refer to Li Auto's disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Our CEO will start his remarks in Chinese. There will be English translation after he finished all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead.

Regarding risk and then scent and taste is included in Circumstantially Wednesday 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.

Please also note that the autos earnings press release and this conference call include discussions of Alginate, GAAP financial information as well as unaudited non-GAAP financial matters. Please refer to Alere those disclosure documents on the IR section of our website, which contains a reconciliation of the all day long.

GAAP measures to comparable GAAP measures.

Our CEO will start his remarks in Chinese still be English translation. After I finish all his remarks with that I will now turn the call over to our CEO . Mr. Shan Li. Please go ahead.

[noise] dug a hole with Lisa.

Xiang Li: 大家好，我是李想，欢迎各位参加今天的业绩电话会议。关于交付量和近期的近况，在2023年二季度，理想汽车实现了多个交付里程碑，六月完成了三万辆的月交付，第二季度总共交付了超过八万六千辆，是去年同期的三倍。今年上半年的交付量也超过了2022年的全年总和。七月初，我们交付了第四十万辆理想汽车，自2019年12月正式交付以来，历经二十四个月，成为了国内最快达到四十万辆交付的造车新势力。其中第三十万辆交付到第四十万辆交付用了不到四个月。我们七月的交付量也再创新高，超过了三点四万辆，累计交付突破了四十三万辆。得益于我们强大的产品力以及组织流程和经营能力的全面提升，理想L系列的三款车型均在各自细分市场保持销量领先。自去年六月相继发布以来，累计交付已经超过了二十万辆。根据中汽数据显示，二季度理想L7蝉联三十万以上中大型SUV销量冠军，理想L8仍然是三十万以上六座SUV的首选，理想L9继续领跑全尺寸SUV销量榜首。理想汽车成为中国市场销量最高的中国豪华品牌。我们在中国二十万以上新能源汽车品牌销量保持前三，市占率从一季度的约11%提升到二季度的14%。在交付增长和更好的运营能力的推动下，我们的财务表现也持续进步。二季度公司的收入、净利润和自由现金流等多项财务数据均创下历史记录，总收入达到了286.5亿元人民币，同比增长228.1%。净利润达到了23.1亿人民币，自由现金流更是达到了96.2亿元人民币。相信理想汽车出色的自我造血能力和充裕在手的现金，可以坚定地支持我们不遗余力地投入研发、招揽人才、加速业务扩张，建立长期的竞争壁垒。今年三季度预计理想汽车的交付量可以超过十万辆。今年全年我们有信心超出年初内部制定的全年交付目标10%到20%，突破千亿人民币的全年营收，并在今年年底冲击四万辆月交付的里程碑。为支持交付，我们将持续增强产供销协同能力，持续提升生产能力，通过优化供应链管理策略、升级管理流程，提升供应能力。在智能驾驶方面，今年我们取得了飞速进展。我们于2023年6月在北京最复杂的路况，望京路段开启了中国首个不依赖于高精地图的城市NOA和通勤NOA的试驾，面向北京和上海的早鸟用户推送了城市NOA功能。在感知方面，通过创新的NPN特征和TIN网络增强BEV模型，实时感知复杂道路结构，理解交通规则，通过专用网络识别各种障碍物。同时在规控算法方面使用模仿学习做出更像人类驾驶员的判断。试驾用户和媒体对理想AD Max展现的驾驶安全感、驾驶效率和舒适性等方面给予高度评价。下半年我们会开放城市NOA和通勤NOA给更多早鸟用户，将城市智能驾驶普及给更多家庭。与此同时，用户也愈发习惯于享受高速NOA带来的旅程中的轻松与便捷。截至目前，我们为超过三十八万家庭用户提供高速NOA功能，高速NOA里程超过了2.3亿公里。纯电车型方面，我们在2023年6月的理想汽车首个家庭科技日揭晓了800伏高压快充解决方案，对高压纯电车型的电池和宽温域的电池热管理系统进行了优化，更加充分地利用电池的5C充电倍率，实现峰值500千瓦以上的充电功率，充电十二分钟即可以续航500公里。配合理想汽车自建的5C超级充电网络，让理想汽车纯电车主的补能体验也非常接近燃油车。我们的首款5C纯电超级旗舰车型理想MEGA将于今年年底发布。我们有信心理想MEGA将成为五十万以上销量第一的新爆品。同时我们也在积极地布局5C超级充电网络。截止目前，理想汽车已经在全国建立运营三十七座理想5C超级充电站，我们将加快基础网络的建设，目标于今年年底建成超过三百座，2025年底建成超过三千座理想5C超级充电站，为理想汽车纯电车主提供快速可靠的充电体验。我们坚信以大电池和高效率增程为核心的增程技术，以及真正解决充电速度慢和长途充电难的高压纯电技术，两条路线并行，是大规模替代燃油车的最佳解决方案。在销售和服务方面，为支持销量的快速提升，我们加速拓展升级线上线下一体的直营销售和服务网络。在购物中心开设商场店的同时，我们增加了汽车销售园区的中心店占比，以及满足不同用户的购车习惯和需求，进一步提高获客流量和订单转化率。二季度我们新增零售中心三十二家，通过换址或扩大面积升级十八家现有门店。截止2023年7月31日，理想汽车全国已有三百三十七家零售中心，覆盖一百二十八个城市。售后维修中心及授权维修中心三百二十三家，覆盖了二百二十二个城市。面向将来，我们将持续以不断成长为核心的动力，持续学习，持续训练，打磨我们最重要的两大产品，服务于家庭用户的智能电动车和服务于内部员工的流程组织，更好地支持理想汽车从一到十的发展。下面有请我们的CFO李铁为大家详细介绍我们的财务表现。

Xiang Li: [Non-English content]

Hi, guys.

If you don't have.

Glen, California, Virginia to determine essentially taking the call.

Sam you argue to you to ask you again.

Hopefully someday.

Jonathan Thank you Adolfo.

Good morning, Joe Cola Cola value channel switching a complete assembly.

I was hoping you could talk about the Ollie's Army under 10 years old.

Sure.

Will it be especially right now.

So are you doing yeah, surely a country, California that you harvest window here coming up.

I'd also remind myself with a public entity.

Essentially Gulf without exclusive telco, you end up with us.

Well then she had a gel for now is that kind of Cingal covered I think so neal.

Ladies helpful Kubala Citrus Antonio.

On the China economy.

<unk> you Sir.

Yes.

It sounds like you do that she visited on vouchers that haven't yet.

Luciano.

Ladies Yahoo travel a lot.

Thank you. Thank you. So do you guys argue.

Alright.

Archie Charlie and thanks a lot.

Jonathan.

Yes.

Okay. Thanks, a lot for yourself.

Hey, Gerard.

I'll just add Marshall.

Thank you Tony.

Sure Tom.

I'll take all the goodwill goodbye.

Thank you Michelle.

Yes, Patrick.

When you do that.

It isn't that hard you with if I missed this.

That dealt with Iraq book Goodbye.

Well I mean, that's how we got here.

Yes, Richard Nimble Alright, you go into the showroom.

So as we look at.

So unfortunately I wish it would you can you talk to Alicia.

Total room.

Absolutely.

Hum.

Hi, Matt.

Julie.

Obviously I E.

Bill can you go to that I'll, let Johan Joseph Yes.

And then maybe Chuck.

So anytime you do a quarter or two.

Yes, absolutely.

So you can be in literature women.

Hello Anna.

Hi, Thiago your quota anytime soon.

Yes.

Thank you.

Thats helpful.

Sure.

Senior tenure.

Total <unk> enabled redeeming that Shanghai Jopling five initiatives.

Sure.

<unk>.

China unusual.

Sure Andy <unk> dealt.

Hopefully that you can make.

Hey, Joe.

On the downstream.

Cheng.

Excuse me.

Total youll have clear Julian Thank you Bonnie.

Keith I'm going to leave.

Thank you Linda Eddy senior elements, you della face leukemia.

Alright, thank you.

Yes.

Thanks for that.

Kathy that don't look so good.

Regarding keytruda joy.

Yes.

Please go ahead.

Based on our chemistry and our economy.

Secondly, we'll try agenda MTN kudo.

Even with you.

Sure Andrew for the adult with U K government.

Oh sure vehicles.

So our clinical sites.

Sure you'll move outs.

Hey, Josh.

Yes.

Hey, guys <unk> got agenda, Joshua NGL guidance Josh.

Hopefully in the Permian.

You go to conduct.

Hello and welcome.

Sure.

Okay.

Jonathan It's Josh.

Sure.

Got you.

This is Ross here.

You are asking.

Casual delco.

Internal net gain year JJ.

<unk> and related travel.

Thank you Jonathan.

Go to Angola.

Also our return targets.

Thank you Bonnie.

[noise] financial insomnia.

Neil you that detail in future so but that include either she is all about.

Thank you goodbye.

Hey, Guy out when you're introducing.

Sure.

Johan.

Our children, the gantry that with 8000 daily.

Yes, Andrew.

Okay. It sounds like you're kind of at William Blair.

Sure ethanol, particularly.

Let me detail together with <unk>.

So at least on future financial to the point yet.

In our ultra.

Well I mean the silicon.

And how do you forget visa Mega <unk>, let me go to <unk>.

D C market.

Closure.

Would you say, how do you think that envelope JD Retail's chunghwa.

Thank you Tito.

How do you think.

While major Jack you too on the litigation.

Eddie Central cover them as well.

Any change on our San Angelo <unk>, how do you think.

Yes.

<unk> zero Kolkata premiums yeah.

Jason you got Im sure <unk> Rio Tinto, we are collecting.

Thank you.

You didn't know just yet.

<unk> <unk> <unk>.

So you should.

We'll see that now to the <unk>.

That's helpful.

I don't know Carlos will then Jack will put out soon.

Each of the three.

And we talked about before.

<unk> roofing <unk>, Samsung Gaucher, Latanya law, Cheetos total yen Sheila dosing the Mb.

When we open the call to a similar position.

People see Gulfport currently we are looking at.

<unk> Thanks Roger.

200, <unk> <unk> salmon.

This is hardly are as <unk> as I said, either Chunghwa E optimized LTE guiding to flat.

I forgot you barackobama to ensure.

Our radio Division distortion, manoogian seminars and yeah for Golar.

Sure.

Okay.

Yeah.

Okay.

If we go and tundra vehicles in that only.

This is traditionally a more commentary to add.

Okay.

Full year jacking up with the genome.

So off.

Naval Yamuna due to integer kahala distributions.

Hi.

Jimmy Iot homeless, therefore, lithia a diverse I'd suggest our home and that's how we got here.

[Company Representative] (Li Auto): In Q2 2023, we reached multiple milestones in deliveries. We delivered over 30,000 vehicles in June, taking our Q2 deliveries to 86,553 vehicles, tripling the volume from the same period last year. We delivered more vehicles in H1 of this year than all of 2022. Furthermore, in early July, we delivered our 400,000th Li Auto vehicle, taking just 42 months to reach this important milestone since we commenced deliveries in December 2019, setting a record for Chinese emerging NEV OEMs. Going from 300,000 cumulative deliveries to 400,000 took less than 4 months. Finally, our July deliveries hit a new high of 34,134 units, bringing our total cumulative vehicle deliveries over 430,000.

[Translator]: In Q2 2023, we reached multiple milestones in deliveries. We delivered over 30,000 vehicles in June, taking our Q2 deliveries to 86,553 vehicles, tripling the volume from the same period last year. We delivered more vehicles in H1 of this year than all of 2022. Furthermore, in early July, we delivered our 400,000th Li Auto vehicle, taking just 42 months to reach this important milestone since we commenced deliveries in December 2019, setting a record for Chinese emerging NEV OEMs. Going from 300,000 cumulative deliveries to 400,000 took less than 4 months. Finally, our July deliveries hit a new high of 34,134 units, bringing our total cumulative vehicle deliveries over 430,000.

In the second quarter of 2012.

It reached multiple milestones and deliveries.

We delivered over 30000 vehicles in June .

Second quarter deliveries to 86533 vehicles.

Currently the volume from the same period last year.

We delivered more vehicles in the first half of this year and then all of 2022.

Furthermore, in early July we delivered our 40 to 400000 auto vehicle I can just 42 months to reach this important milestone since we commenced deliveries in December 2019, setting a record for Chinese emerging any Oems.

Going from 300000 cumulative deliveries to 400000 took less than four months.

Finally, our July deliveries set a new high of 34134 34 units, bringing our total cumulative vehicle deliveries over 430.

[Company Representative] (Li Auto): With our strong product lineup and comprehensive improvements to organizational processes and operating capabilities, our three models continue to lead in their respective market segments, with cumulative deliveries exceeding 200,000 units since their successive launches starting in June last year. According to the insurance registration data of China Automotive Technology and Research Center, in this past quarter, Li L7 consistently topped China's large SUV monthly sales charts. The L8 also remained customers' favorite six-seater SUV priced over CNY 300,000. The L9 continued to dominate the full-size SUV sales chart in China. Li Auto has the highest sales among domestic premium automotive brands in China, and we remain one of the top three NEV brands priced over CNY 200,000 in China, with market share increasing from approximately 11% in Q1 to about 14% in Q2.

[Translator]: With our strong product lineup and comprehensive improvements to organizational processes and operating capabilities, our three models continue to lead in their respective market segments, with cumulative deliveries exceeding 200,000 units since their successive launches starting in June last year. According to the insurance registration data of China Automotive Technology and Research Center, in this past quarter, Li L7 consistently topped China's large SUV monthly sales charts. The L8 also remained customers' favorite six-seater SUV priced over CNY 300,000. The L9 continued to dominate the full-size SUV sales chart in China. Li Auto has the highest sales among domestic premium automotive brands in China, and we remain one of the top three NEV brands priced over CNY 200,000 in China, with market share increasing from approximately 11% in Q1 to about 14% in Q2.

With a strong product lineup and comprehensive improvements organizational processes and operating capabilities. Our three models continue to lead in their respective markets.

With cumulative deliveries exceeding 200000 units since the <unk>.

Set of launches starting in June last year.

According to the insurance registration data of China, Automotive technology and research center in this past quarter <unk> consistently topped China's large SUV monthly sales chart.

<unk> also remained customer favorites six seater SUV price over RMB 300000.

Online continued to dominate the full size SUV sales charter in China.

Auto has the higher sales among domestic premium automotive brands in China and remain we remain one of the top three <unk> brands priced over 200000 to RMB in China.

When market share increasing from approximately 11% in the first quarter to about 14% in the second quarter.

[Company Representative] (Li Auto): Driven by our delivery growth and stronger operational capabilities, our financial performance continued to improve. In Q2, the company achieved record-breaking results across revenue, net income, and free cash flow. During the quarter, our revenue reached CNY 28.65 billion, up 28.1% year over year, while net income and free cash flow increased to CNY 2.31 billion and CNY 9.62 billion, respectively. We're confident that our outstanding cash generation capability and ample cash reserve will support our unwavering commitment to invest in R&D, business expansion, and building long-term competitive barriers. We expect our Q3 deliveries to be between 100,000 and 103,000 units.

[Translator]: Driven by our delivery growth and stronger operational capabilities, our financial performance continued to improve. In Q2, the company achieved record-breaking results across revenue, net income, and free cash flow. During the quarter, our revenue reached CNY 28.65 billion, up 28.1% year over year, while net income and free cash flow increased to CNY 2.31 billion and CNY 9.62 billion, respectively. We're confident that our outstanding cash generation capability and ample cash reserve will support our unwavering commitment to invest in R&D, business expansion, and building long-term competitive barriers. We expect our Q3 deliveries to be between 100,000 and 103,000 units.

Driven by our delivery growth and stronger operational capabilities, our financial performance continued to improve in the second quarter. The company achieved record breaking results across revenue net income and free cash flow.

During the quarter, our revenue reached RMB $228 65 billion up 228, 1% year over year, while net income and free cash flow increased from RMB 231 billion and RMB 962 billion respectively.

Evident that our outstanding cash generation capability and ample cash reserves will support our unwavering commitment to invest in R&D.

Business expansion and building long term competitive barriers.

We expect our third quarter deliveries to be between 100 to 103000 units for the full year 2023, we're confident that the internal delivery target. We set at the beginning of this year by 10% to 20%, but annual revenue exceeding RMB 100 billion, we aim to hit the $4 40.

[Company Representative] (Li Auto): For the full year 2023, we're confident to beat the internal delivery target we set at the beginning of this year by 10% to 20%, with annual revenue exceeding CNY 100 billion. We aim to hit the 440,000 monthly delivery milestone by the end of this year. To achieve our delivery target, we will continue to foster coordination across production, supply chain, and sales while continuing to expand production capacity, enhance supply chain management processes and capabilities. We made rapid progress in autonomous driving this year. In June 2023, we started test drives for China's first NOA and Commute NOA, which do not rely on high-definition maps in Wangjing, known as one of the most complicated traffic zones in Beijing. We also rolled out our City NOA to early-bird users in Beijing and Shanghai.

[Translator]: For the full year 2023, we're confident to beat the internal delivery target we set at the beginning of this year by 10% to 20%, with annual revenue exceeding CNY 100 billion. We aim to hit the 440,000 monthly delivery milestone by the end of this year. To achieve our delivery target, we will continue to foster coordination across production, supply chain, and sales while continuing to expand production capacity, enhance supply chain management processes and capabilities. We made rapid progress in autonomous driving this year. In June 2023, we started test drives for China's first NOA and Commute NOA, which do not rely on high-definition maps in Wangjing, known as one of the most complicated traffic zones in Beijing. We also rolled out our City NOA to early-bird users in Beijing and Shanghai.

Monthly delivery milestone by the end of this year to achieve our delivery targets. We will continue to foster coordination across production supply chain and sales, while continuing to expand production capacity enhanced supply chain management processes and capabilities.

Made rapid progress in autonomous driving this year.

In June 2023, we started test drives for China's first MLA and commute NOI, which do not rely on high definition maps launching known as one of the most complicated traffic is always envision.

We also rolled out our city NOI to early bird users in Beijing and Shanghai.

[Company Representative] (Li Auto): On the perception front, we use BEV models enhanced by innovative NPN features and TIN network to perceive complex road structures in real time and comprehend traffic rules. While utilizing occupancy networks to identify common obstacles, we also utilize imitation learning in control algorithms to make judgments more akin to human drivers. Test drivers and media have spoken highly of driving safety, efficiency, and comfort demonstrated by Li Auto AD Max. In H2 2023, we will continue to re-release city NOA and Commute NOA to more early-bird users, bringing city-level autonomous driving to more families. Meanwhile, users are increasingly accustomed to the convenience and ease of highway NOA during their journey. As of today, we have provided highway NOA to over 380,000 families, covering more than 230 million km.

[Translator]: On the perception front, we use BEV models enhanced by innovative NPN features and TIN network to perceive complex road structures in real time and comprehend traffic rules. While utilizing occupancy networks to identify common obstacles, we also utilize imitation learning in control algorithms to make judgments more akin to human drivers. Test drivers and media have spoken highly of driving safety, efficiency, and comfort demonstrated by Li Auto AD Max. In H2 2023, we will continue to re-release city NOA and Commute NOA to more early-bird users, bringing city-level autonomous driving to more families. Meanwhile, users are increasingly accustomed to the convenience and ease of highway NOA during their journey. As of today, we have provided highway NOA to over 380,000 families, covering more than 230 million km.

The perception front, we USB remodels enhanced by innovative MTN features NTR and network to perceive complex road structures in real time, and comprehend traffic rules traffic growth.

Utilizing occupancy network to identify common obstacles will also utilize a imitation learning.

Control algorithms to make judgments more akin to human drivers.

Test drivers and media have spoken highly of driving safety efficiency and comfort demonstrated by Lee Auto 80, Max in the second half of 2023, we will continue to release city on OE and compute commute anyway to more early bird users, bringing city level of autonomous driving to more families. Meanwhile.

Users are increasingly customer to convenience and ease the convenience and ease of highway MLA during their journey.

As of today, we have provided highway to over 380000 families covering more than 230 million kilometers.

[Company Representative] (Li Auto): With respect to BEV models, we introduced our 800-volt high-power charging solution at our first-ever family tech day in June 2023. With optimized battery and thermal management systems, our BEVs can fully leverage the battery's 5C charging rates with peak charging power of over 500kW and 500km of driving range from a 12-minute charge. In conjunction with our own 5C charging network, our BEV can offer a very comparable energy replenishment experience to ICE vehicles. We will unveil our super flagship 5C BEV, Li MEGA, by the end of this year, and we're confident that it will emerge as the new top seller among all vehicles priced over CNY 500,000. Meanwhile, we're actively deploying our 5C supercharging network. As of now, we have built and commenced operation of 37 Li Auto 5C supercharging stations.

[Translator]: With respect to BEV models, we introduced our 800-volt high-power charging solution at our first-ever family tech day in June 2023. With optimized battery and thermal management systems, our BEVs can fully leverage the battery's 5C charging rates with peak charging power of over 500kW and 500km of driving range from a 12-minute charge. In conjunction with our own 5C charging network, our BEV can offer a very comparable energy replenishment experience to ICE vehicles. We will unveil our super flagship 5C BEV, Li MEGA, by the end of this year, and we're confident that it will emerge as the new top seller among all vehicles priced over CNY 500,000. Meanwhile, we're actively deploying our 5C supercharging network. As of now, we have built and commenced operation of 37 Li Auto 5C supercharging stations.

With respect to BV models, we introduced our fruitful 800 volt high powered charging solution at our first ever family Tech day in June 2020, with optimized battery and thermal management systems or <unk> can fully leverage the batteries <unk> charging rates with peak charging power of over.

500, kilowatts, and 500 kilometers of driving range from a 12 minute charge.

In conjunction with our own <unk> charging network, our BV can offer a very comparable energy replace replenishment experience to IC vehicles.

We will unveil our super flagship <unk> lean Mega by the end of this year and we're confident that we will emerge as the new top seller amount of vehicles prior to over RMB 500000.

Meanwhile, we are actively deploying our <unk> Supercharging network as of now we have built and commence operation of 37 Liard of Ice's Supercharging stations going forward, we will accelerate the rollout aiming to establish over 350 supercharging stations by the end of this year and over three.

[Company Representative] (Li Auto): Going forward, we'll accelerate the rollout, aiming to establish over 300 5C supercharging stations by the end of this year and over 3,000 by the end of 2025 to offer our BEV users a fast and reliable charging experience. We firmly believe our dual energy strategy is the best solution to replacing ICE vehicles at scale. The dual energy strategy consists of EREV technologies that center on high-capacity batteries and highly efficient range extenders, as well as a high-voltage BEV technology that can truly address pain points in charging speed and charging on long trips. To support the rapid sales growth, we accelerated the expansion and upgrade of our integrated online and offline direct sales and servicing network.

[Translator]: Going forward, we'll accelerate the rollout, aiming to establish over 300 5C supercharging stations by the end of this year and over 3,000 by the end of 2025 to offer our BEV users a fast and reliable charging experience. We firmly believe our dual energy strategy is the best solution to replacing ICE vehicles at scale. The dual energy strategy consists of EREV technologies that center on high-capacity batteries and highly efficient range extenders, as well as a high-voltage BEV technology that can truly address pain points in charging speed and charging on long trips. To support the rapid sales growth, we accelerated the expansion and upgrade of our integrated online and offline direct sales and servicing network.

By the end of 2025 to offer our BV users at <unk>.

And real reliable charging experience with.

We firmly believe our dual energy strategy is the best solution to replacing Ice's vehicles at scale, the dual energy strategy composes of <unk>.

Technologies that center on high capacity batteries, and highly efficient range extenders as well as a high voltage BV technology.

I can truly address pain points, and charging speed and charging on long trips.

To support the rapid sales growth, we accelerated the expansion and upgrade of our internal integrated online and offline direct sales and service network.

[Company Representative] (Li Auto): While we continue to open retail stores in shopping malls, we have increased the proportion of our retail stores located in automotive retail parks to cater to different users' purchasing habits and needs, further improving user acquisition and sales conversion. In Q2, we opened 32 new retail stores and upgraded 18 existing stores through relocation and expansion. As of 31 July 2023, we operated 337 retail stores in 128 cities, as well as 323 service centers and Li Auto authorized body and paint shops operating in 222 cities.

[Translator]: While we continue to open retail stores in shopping malls, we have increased the proportion of our retail stores located in automotive retail parks to cater to different users' purchasing habits and needs, further improving user acquisition and sales conversion. In Q2, we opened 32 new retail stores and upgraded 18 existing stores through relocation and expansion. As of 31 July 2023, we operated 337 retail stores in 128 cities, as well as 323 service centers and Li Auto authorized body and paint shops operating in 222 cities.

We continue to open retail stores in shopping malls, we have increased the proportion of our retail stores located in automotive retail parks to cater to different users purchasing habits and me.

Further improving user acquisition and sales conversion.

In the second quarter, we opened 32, new retail stores and upgraded 18 existing stores through relocation and expansion as.

As of July 31, 2023, we operated 3300 37 retail stores and 128 cities as well as 323 service centers.

And Lee auto audit authorized body and paint shops operating in 222 cities.

[Company Representative] (Li Auto): Looking ahead, driven by our pursuit of continuous growth, we will relentlessly explore, train, and learn to refine our two most critical products, namely our smart electric vehicles for family users and organizational processes to serve our internal talents and teams, better supporting our trip, journey from 1 to 10. With that, I will turn it over to our CFO, Johnny, for a closer look at our financial performance.

[Translator]: Looking ahead, driven by our pursuit of continuous growth, we will relentlessly explore, train, and learn to refine our two most critical products, namely our smart electric vehicles for family users and organizational processes to serve our internal talents and teams, better supporting our trip, journey from 1 to 10. With that, I will turn it over to our CFO, Johnny, for a closer look at our financial performance.

Looking ahead, driven by our pursuit of continuous growth and we will relentlessly explore train and learn to refine our two most critical products, namely our smart electric vehicles for family users and organizational processes to serve our internal talent and teams better support.

Our trip journey from one to 10.

With that I will turn it over to our CFO jonny.

Looking at our financial performance.

Johnny Tie Li: Thank you, Xiang Li. Hello, everyone. I will now walk you through some of our 2023 Q2 financials. Due to time constraints, I will address financial highlights here and encourage you to refer to our earnings press release for further details. Total revenues in the Q2 of 2023 were RMB 28.65 billion, or $3.95 billion, increasing 228.1% year over year and 52.5% quarter over quarter. This included RMB 27.97 billion, or $3.86 billion from vehicle sales, which was at 229.7% year over year and 22.6% quarter over quarter.

Thank you Vishal Hello, everyone I will now walk you through some of our 2023 second quarter financials.

Due to time.

Time constraints I will address.

Financial highlights here and encourage you to refer to our earnings press release for further details.

Total revenues in the second quarter of 2023 were RMB 28, pardon six 5 billion or $3 95 billion U S dollars.

Increasing to 128, 1% year over year.

52 points.

5% quarter over quarter. This included RMB.

<unk> thousand 797 billion or three point.

At $6 billion.

Vehicle sales.

Which was up 229, 7% year over year and funded two 6% cultural culture.

Johnny Tie Li: The year-over-year increase was mainly due to the increased vehicle deliveries. The quarter-over-quarter increase was mainly due to the increase in vehicle deliveries, partially offset by the lower average selling price as a result of different product mix between the two quarters. Revenues from other sales and services were RMB 688.8 million, or $93.9 million in Q2 2023, growing 173.4% year over year and 48.1% quarter over quarter. The increase was mainly due to the increase of sales of accessories and provision of services in line with higher accumulated vehicle sales, as well as increased sales of charging stores in line with higher vehicle deliveries.

The year over year increase was mainly due to the increase.

Increased vehicle deliveries.

Quarter over quarter increase was mainly due to the increase in vehicle deliveries, partially offset by the lower <unk>.

Selling price as a result of different product mix between the two quarters.

Revenues from other sales and services were RMB 688 meeting on $93 $9 million.

In the second quarter of 2023.

Growing by 107 phase III.

4% year over year.

<unk>.

48, 1% quarter over quarter.

The increase was mainly due to the increase.

Sales of accessories and provision of services in line with higher accumulated vehicle sales.

As well as increased sales of charging stores in line with higher vehicle deliveries.

Johnny Tie Li: Cost of sales in Q2 of this year was RMB 22.42 billion, or $3.09 billion, up 227.1% year-over-year and 49.9% quarter-over-quarter. Gross profit in Q2 of this year was RMB 6.24 billion, or $859.9 million, growing 232% and 62.8% compared with Q2 of 2022 and Q1 of this year. Vehicle margin in Q2 of 2023 was 21% compared with 21.2% in Q2 of last year, and 19.8% in Q1 of 2023.

Cost of sales in the second quarter of this year was RMB 22.

<unk> 2 billion or 3.0.

9 billion U S dollar.

Up to 127, 1% year over year.

The 49, 9% quarter over quarter.

Gross profit in the second quarter of this year was RMB.

<unk> two.

Two 4 billion.

850.

<unk> $9 9 million U S dollars growing to 132%.

And 62, 8% comparable with the second quarter of 2022, and the first quarter of this year.

Vehicle margin in the second quarter of 2023 was 21% compared with 21, 2% in the second quarter of last year.

And 19, 8% in the first quarter of 2023.

Johnny Tie Li: Excluding the impact of Li ONE, the vehicle margin of the Li L series remained stable over Q1 2023. Gross margin in Q2 2023 was 21.8% compared with 21.5% in Q2 2022, and 20.4% in Q1 2023. Operating expenses in Q2 2023 were CNY 4.61 billion or $635.7 million, growing 61.4% year over year, and 34.6% quarter over quarter.

Excluding the impact of the U S.

The vehicle margin of the lease areas.

<unk> series.

In stable over there for us.

Quarter of 2023.

Gross margin in the second quarter of 2023.

Was 21, 8% compared with 21, 5% in the second quarter of 2022 and.

<unk>.

4% in the first quarter of 2023.

Operating expenses in the second quarter of 2023 were RMB <unk> six 1 billion.

All 675 points 7 million U S dollars.

Growing <unk>.

61, 4% year over year, and 34, 6% cultural culture.

Johnny Tie Li: Research and development expenses in Q2 2023 were RMB 2.43 billion or $334.5 million, up 58.4% year over year and 31% quarter over quarter. The increase was primarily driven by increased employee compensation as a result of our growing number of staff, as well as increased expenses to support our product portfolio expansion and technology advancements. Selling, general and administrative expenses in Q2 2023 were RMB 2.31 billion or $318.5 million, up 74.3% year over year, and 40.4% quarter over quarter.

Research and development expenses in the second quarter of 2023.

RMB 243 billion.

$334 5 million U S dollars.

Up 58, 4% year over year, and 31% cultural culture the.

The increase was primarily driven by increased employee compensation.

As a result of our growing number of.

Our staff as well as increased expenses.

To support our product portfolio expansion and technology advancement.

Selling general and administrative expenses in the second quarter of 2023.

While RMB <unk> three 1 billion.

Our 300.

$18 5 million U S dollars.

$74 three year over year and 40 points.

4% quarter over quarter.

Johnny Tie Li: The increase was mainly driven by increased employee compensation as a result of our growing number of staff, as well as increased rental expenses associated with our sales and service network expansion. Income from operations in Q2 2023 was CNY 1.63 billion or $224.2 million, compared with CNY 978.5 million loss from operations in Q2 last year. Growing 301.3% from CNY 405.2 million income from operations in Q1 this year. Net income in Q2 2023 was CNY 2.31 billion or $318.6 million, compared with 641 million net loss in Q2 last year.

The increase was mainly.

Driven by increased employee compensation.

As a result of our growing number of staff as well as increased rental expenses.

Associated with our sales and service network his friendship.

Income from operations in the second quarter of 2023 was RMB 163 billion or $224 two.

$2 million.

Comparable is RMB.

$978 5 million loss from operations in the second quarter of last year and growing.

301, 3% from RMB.

400 <unk>.

<unk> 2 million income from operations in the first quarter of this year.

Net income in the second quarter of 2023.

Was RMB two.

Three 1 billion or 300.

$18 six.

In U S dollars.

Comparable.

641 million.

<unk> net loss in the second quarter of last year.

Johnny Tie Li: More than doubled the RMB 933.8 million net income in Q1 2023. Turning to our balance sheet and cash flow. Our balance of cash and cash equivalents, restricted cash, time deposits, and short-term investments totaled RMB 73.77 billion or $10.17 billion as of 30 June 2023. Net cash provided by operating activities in Q2 2023 was RMB 11.11 billion or $1.53 billion. Free cash flow was RMB 9.62 billion or $1.33 billion in Q2 2023. Now for our business outlook.

And more than doubled the RMB.

933 eight.

<unk> net income in the first quarter of 2023.

Turning to our balance sheet and cash flow.

Our balance of cash and cash equivalents.

Strictly cash time deposits.

And short term investments totaled RMB.

<unk> seven 7 billion.

<unk> $10.17 billion.

Sure.

<unk> 2023.

Net cash provided by operating activities in the second quarter of 2023 was RMB 11 1 billion.

At one point.

$3 billion for.

Free cash flow was RMB.

906, 2 billion or $133 billion in the second quarter of 2023.

And now for our business outlook for the third quarter of 2023.

Johnny Tie Li: For the Q3 2023, the company expects the deliveries to be between 100,000 and 103,000 vehicles, representing an increase of 277% to 288.3% from the Q3 2022. The company also expects the Q3 total revenues to be between RMB 32.33 billion and 33.3 billion, or $4.46 billion and $4.59 billion, representing an increase of 246% to 200-

The company expects deliveries to be between.

100000.

103.

1000 vehicles.

<unk> an increase of 200.

77% to 288.

<unk>, 3% from the third quarter of 2022.

The company also expects third quarter total revenues to be between RMB, 30, 233 billion and RMB $33 3 billion.

All four point.

$6 billion.

<unk>.

<unk> hundred 19 in U S dollar.

The increase of 200.

46% to 200.

Donghui Ma: 56.4% from Q3 last year. This business outlook reflects the company's current and preliminary view on its business, situation and market condition, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you.

Johnny Tie Li: 56.4% from Q3 last year. This business outlook reflects the company's current and preliminary view on its business, situation and market condition, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you.

56, 4% from the third quarter of last year.

This is this business outlook reflects the company's current.

And the preliminary view on this situation on the market condition, which is subject to change.

That concludes our prepared remarks, I will now turn the call over to the operator to start our Q&A session. Thank you.

Operator: 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. If you are on a speakerphone, please pick up your handset to ask your question. For the benefit of our 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 a Mandarin speaker, please ask your question in Chinese first, then follow with English translation. Our first question comes from Tim from Morgan Stanley. Please go ahead.

Thank you.

If you wish to ask a question please press <unk>.

One on your telephone.

Wait for your name to BMO.

Thank you wish to cancel your request please press star two.

If you're on a speakerphone please pick up your handset ask your question.

For the benefit of.

On today's call please limit yourself to two questions.

And if you have additional questions you can re enter the queue.

If you are a Mandarin speaker.

Please ask your question in Chinese.

Finally, with English translation.

Okay.

Our first question comes.

It comes from Tim.

Uh-huh Morgan Stanley . Please go ahead.

Tim Hsiao: 各位管理层好，感谢接受我的提问，也恭喜理想的这个二季度业绩表现。我这边两个问题啊，第一个问题是关于这个汽车的销售跟交付，因为刚才其实也提到了，这三季度可能十万出头的一个交付量，这样的一个指引呢，其实表示这个产能瓶颈，如同这个李想总之前分享的讯息啊，基本上短期可能是无解。那能否了解一下，就是造成目前啊，这个生产瓶颈的主要原因为何？是整个生产啊，零部件还是什么样的一个特别的原因。那我们对于四季度刚才也提到了，就是说还是有一定的期待，那四季度去产能去瓶颈，或者平均月交付上升到四万，现在究竟有多少这个能见度？那这样的问题呢，我们怎么去看待后续基于新平台、新工厂生产的这个纯电车型，那到时候交付的时候是否也会有相同的问题我们需要去克服。 My first question is about the vehicle delivery. Because the order's third quarter volume guidance of around a hundred thousand implies the vehicle supply constraints will persist throughout the whole quarter. Could you please elaborate a bit more about the key bottleneck to your production, is that due to supply constraint of any specific component or anything else?

Tim Hsiao: My first question is about the vehicle delivery. Because the order's third quarter volume guidance of around a hundred thousand implies the vehicle supply constraints will persist throughout the whole quarter. Could you please elaborate a bit more about the key bottleneck to your production, is that due to supply constraint of any specific component or anything else?

Oh, Okay. So lets see how you can see that.

Q2 will get you back here.

<unk> central congenital <unk> send you to finish line's facility, which also without Johnny with gene and she said yes.

<unk> owns it.

Thanks unchanged.

And she finishes.

And therefore, the LNG charges it sounds from Lin Chen I can say that changing nature of it anyway.

Assistant just in China, we can essentially on either to be the number one thing.

So you do kind of technology.

Now you can achieve tennant's shooting team will continue to come up with something else.

Choosing to Johnny.

<unk> elements emerge who kind of who she is thinking high single assumptions, particularly starting in 2000.

<unk> <unk> and Michelle Qi.

So my first question is about equal delivery because.

Third quarter volume guidance at around 100000 implies the vehicle supply constraints.

Our persistent throughout the whole quarter.

So could you please elaborate a bit more about the key bottleneck shale production is that <unk>.

<unk> supply constraint of any specific component or anything else.

Tim Hsiao: How confident are you in the company's ability to remove the bottleneck and deliver like around 40,000 units a month in Q4? In the meantime, should we be concerned about the similar challenge might relapse when launching the BEV models on the new platform and at the new plant? That's my first question. Thank you.

How confident are you in the company's ability to remove that bottleneck and deliver like around 40000 units from mines in fourth quarter in the meantime should we be concerned about a similar challenge.

<unk> launching the PV modules on the new platform and that the new planes.

That's my first question. Thank you.

Donghui Ma: 谢谢提问。我是理想汽车马东辉，我来回答关于产能的问题。现在，我们在常州制造基地有两条生产线用来生产L7、L8、L9。单纯，从整车这个产能来说，如果是双班，我们最大的每个月可以达到5万台。现在，主要瓶颈还是在零部件的供应。那一方面的原因是今年公司的销量比较好，那相比年初制定的目标，需求还是有提升的。那虽然是说我们在Q2已经制定了提升的策略和规划，但是需要一段时间的。现在，零部件的生产线和工装还在调试和验证当中，还需要一点准备时间，但是很快就可以释放出新的产能。我们还是有很强的信心，今年全年是可以达到制定的一个销量目标。然后另外，针对于2024年和2025年，我们也提前做好了产能的一个规划和准备。谢谢。 First I'll take the question on production capacity. We currently operate two production lines in Changzhou, for L8, L9 and L7. The total capacity if we're running at two shifts is around 50,000 units per month. The current bottleneck is still with component supply, mostly because of a very strong demand for this year, which led us to increase our target compared to what we set at the beginning of the year. To cope with the additional demand, we actually have a production expansion plan made in Q2, but it's taking some time for us to test the production lines and verify those. The new capacity will be released in due time. We are still confident that on an annual basis, we will be able to reach our delivery targets. In addition, to prepare for our growth in 2024 and 2025, we have started early to make production and capacity plans to satisfy the needs for those two years.

Yeah.

Hey, guys.

Sure the Sanchez from Apple with Olive Garden.

I don't have any kind of <unk>.

And as soon as the hall of <unk> Yeah.

The donation.

Our biological function.

<unk> Hot food control CECO, China, Russia.

<unk> commentary.

At all.

Not much I know lots of options you know, how I should say agenda.

If I'm gonna have any reaching at least the hotshot on behalf the junkie intrusion future infusion.

Now she actually enrollment.

Sure <unk>.

Thank you Sheila at Ashington Omnichannel Hot agenda.

Has that Toshiba.

I shall get introduce yet.

<unk> Chiffon Shuda channel.

I'm actually off internationally entering anticipate at.

Certainly you can shut them down.

<unk>, our CFO Arlene only a chicken drama China will have a debate.

[Translator]: First I'll take the question on production capacity. We currently operate two production lines in Changzhou, for L8, L9 and L7. The total capacity if we're running at two shifts is around 50,000 units per month. The current bottleneck is still with component supply, mostly because of a very strong demand for this year, which led us to increase our target compared to what we set at the beginning of the year.

Yes.

First of all I'll take the question on production capacity. We currently operate two production lines in Changzhou.

$8 nine and outside.

The total capacity of running two shifts.

Around 30000 units per month.

The bottleneck is still with component supply.

Mostly because.

Strong demand for this year.

Which led us to increase our target compared to what we said at the beginning of the year to cope with the additional demand we actually have a production expansion plan made in Q2, but it's taken some time for us to test the production lines and verify those so.

[Translator]: To cope with the additional demand, we actually have a production expansion plan made in Q2, but it's taking some time for us to test the production lines and verify those. The new capacity will be released in due time. We are still confident that on an annual basis, we will be able to reach our delivery targets. In addition, to prepare for our growth in 2024 and 2025, we have started early to make production and capacity plans to satisfy the needs for those two years.

The new capacity will be released in due time.

So confident that on an annual basis, we will be able to reach our delivery targets.

And in addition to prepare for our growth in 'twenty four 'twenty five we have.

It started early to make a production and capacity plans.

To satisfy the needs for two years.

Tim Hsiao: 明白。那我第二个问题是有关于这个组织的变革，因为过去十二个月我们看到产业里面有许多新能源车的这个同业进行组织的调整，然后期间也遭遇了很多这个人员的变动。那我们印象中就是理想汽车去年底也提出了公司矩阵型组织的一个变革，那是不是能够请管理层分享一下，就是组织这个变革改的进展的一个最新的情况，那以及在未来六到十二个月，随着公司组织的调整呢，是否也会有相应的一些管理团队的异动或优化？那另外我们怎么从接下来几个季度，比较量化运营跟财务指标，去判断这个变革一个实际的贡献，好比如说成本增效，比如说毛利提升或者新产品的这个迭代加速。 My second question is about optimization restructure, because we noticed that over the past twelve months, quite a lot of EV industry peers have gone through organization restructure or had management reshuffle.

Yeah.

Tim Hsiao: My second question is about optimization restructure, because we noticed that over the past twelve months, quite a lot of EV industry peers have gone through organization restructure or had management reshuffle.

Okay.

Yes, the win T C U E.

<unk> could you share your view on China.

And so there is a 10 year changes, which are intelligent LNG Daniel how are you trying to achieve.

Okay.

No.

Additional efficiency in the tissue concentrations, which again, yes.

And have we seen Clayton charges to pimco, Okay Tina.

<unk>. Thank you Sir.

We would also have used vehicles, which is intelligent.

We're selling this year 2020.

No the whole missile and symmetrical <unk> Peter.

E <unk> Japan.

Kingrey Statistical machine health insurer, Jonathan finish out some other T cell processing centers, because you can see that's awesome.

So my second question is about optimization and restructure it.

Because we noticed that over the past 12 months quite a lot of PV industry peers have come to the organization restructure where had management reshuffle.

Tim Hsiao: We recall that Li Auto also announced organizational upgrade last December to prepare for its future growth. Could you share with us the latest progress of the restructuring efforts? Should we expect any changes to the management team in the next 6 to 12 months amid such upgrade? In the meantime, any operational and financial metrics could we monitor more closely to quantify the improvement, for example, the lower cost, higher margin, or faster model upgrade in upcoming quarters? That's my second question. Thank you.

We record the <unk> also announced organisation upgrade last December to prepare for future growth.

So could you share with us the latest progress of the restructuring efforts into shall we.

<unk> any changes to the management team in the next six to 12 months.

Upgrades in it.

Meantime, operational and financial metrics, we monitor closely to quantify the improvement for example at a lower cost higher margin for the <unk>.

After market upgrades in upcoming quarters. So that's my second question. Thank you.

Donghui Ma: [Non-English content]

Although we don't have $100 million.

Agents, who traditionally women in senior total numbers 100 need yield.

Finally, operating entity and essentially 100 jumping up.

The tenant and Andrew Mccarthy with all to continuously make sure.

You heard of anything sort of anti.

I'll call it our <unk>.

From a telco later last year.

Julianne go digital hub.

We're not doing anything different.

So we'll look at all.

All of them.

Essentially anecdotal.

Paresh ammonia.

In Asia Tommy.

And with that I'll tell you two recently co modalities audio.

Yes.

Operator: Our next question comes from Ben Wang with please.

Our next question comes from bin Wang with Credit Suisse.

Ben Wang: Sorry, operator. Operator, can you hear us? We have some technical problems.

[Company Representative] (Li Auto): Sorry, operator. Operator, can you hear us? We have some technical problems.

Sure.

Operator came here.

So I have some technical problem.

Operator: Hi. Yes, you're coming through.

Hi, yes, you're coming through.

Ben Wang: Oh, yeah. Clear.

[Company Representative] (Li Auto): Oh, yeah. Clear.

Are you.

[Company Representative] (Li Auto): To translate the previous question, answer the previous question. On the matrix organization upgrade is something we have invested a significant amount of resources and manpower. Our business team at the beginning of the year had set an annual delivery target of 360,000 units. Considering two factors, we had, in fact, earlier this year downgraded the target to 300,000 units. One is the overall economic environment, and the other is considering many of the enterprises while they are carrying out organization upgrades, their growth impact had stagnated for two to three years. However, in hindsight, the actual result from H1 of this year, our operating efficiency has not only not declined, but actually, we actually saw a very significant increase.

[Translator]: To translate the previous question, answer the previous question. On the matrix organization upgrade is something we have invested a significant amount of resources and manpower. Our business team at the beginning of the year had set an annual delivery target of 360,000 units. Considering two factors, we had, in fact, earlier this year downgraded the target to 300,000 units. One is the overall economic environment, and the other is considering many of the enterprises while they are carrying out organization upgrades, their growth impact had stagnated for two to three years. However, in hindsight, the actual result from H1 of this year, our operating efficiency has not only not declined, but actually, we actually saw a very significant increase.

To translate the previous question answer to the previous question.

The matrix organization operate is something we have invested a significant amount of resources and manpower our business team at the beginning of the year has set the annual delivery target of 360000.

But considering two factors we had in fact earlier this year downgraded target to 300000 units.

One is the overall economic environment and the other is considering many of the enterprises, while they are carrying out organization upgrades.

Their growth in fact had stagnated for two to three years.

However in hindsight.

Actual results from the first half of this year.

Our operating efficiency has not only not decline, but actually we actually saw a very significant increase we have beaten our target average every single month and the overall coordination and cooperation efficiency is very high the.

[Company Representative] (Li Auto): We have beaten our target every single month, and the overall coordination and cooperation efficiency is very high. The benefits from an organizational upgrade has significantly exceeded our expectations. The organizational upgrade has really allowed us to fight trench warfare as an army group in the smart electric vehicle industry, which is known for having very long product cycles and long value chains. Once we have achieved certain milestones in terms of market share, we are able to defend it very steadily and continue to build on top of it. We can see as a result, we have displayed a very steady growth curve over this year. H1, but also H2 of this year. That is the real benefit of our organizational upgrade.

[Translator]: We have beaten our target every single month, and the overall coordination and cooperation efficiency is very high. The benefits from an organizational upgrade has significantly exceeded our expectations. The organizational upgrade has really allowed us to fight trench warfare as an army group in the smart electric vehicle industry, which is known for having very long product cycles and long value chains. Once we have achieved certain milestones in terms of market share, we are able to defend it very steadily and continue to build on top of it. We can see as a result, we have displayed a very steady growth curve over this year. H1, but also H2 of this year. That is the real benefit of our organizational upgrade.

Benefits from a organizational upgraded have significantly exceeded our expectations.

The organization on the upgrade has really allowed us to.

Fight a trench wars.

As Abe Army group.

In the smart.

Electric vehicle industry, which is known for having very long product cycles and long value chain.

Once we have achieved certain milestones in terms of market share.

We are able to defend it very steadily and continue to build on top of it. So we can see as a result, we have to do.

The slate of very steady growth curve.

Yes.

First half, but also the second half of this year.

That is the real benefit.

Our organizational upgrade.

[Company Representative] (Li Auto): In terms of the matrix organization, there are really three types of specific benefits. First of all, when we describe ourselves as a guerrilla in our early days to being an actual, a formal armed forces, the company is really building highways for its core businesses so that every person can, on the value chain, run very efficiently. Even though there are more traffic rules on the highways, overall, the efficiency of highway is much higher and there are much fewer accidents. Secondly, the organizational upgrade has allowed us to build a very robust training structure for our employees and business practices.

[Translator]: In terms of the matrix organization, there are really three types of specific benefits. First of all, when we describe ourselves as a guerrilla in our early days to being an actual, a formal armed forces, the company is really building highways for its core businesses so that every person can, on the value chain, run very efficiently. Even though there are more traffic rules on the highways, overall, the efficiency of highway is much higher and there are much fewer accidents. Secondly, the organizational upgrade has allowed us to build a very robust training structure for our employees and business practices.

In terms of the matrix organization, there are really three types of specific benefits.

First of all from our when we.

Describe ourselves as a gorilla in our early days too.

<unk> actuals a formal armed forces the company. It was really building highways for its core businesses. So that every person on the value chain can run very efficiently.

Even though there are more traffic rules on highways.

Overall efficiency of highway is much higher and there are much fewer accidents and.

And secondly, the organizational operator has allowed us to build a very robust training structure for our.

Employees and business practices.

[Company Representative] (Li Auto): The working mechanism is very similar to artificial intelligence, from perception and observations to setting goals and planning its activities, and finally to execution and collaboration, and after action reviews to really build in as the company's capability. Even for a fresh graduate, he or she doesn't need to start as a business assistant, but rather can really get into real battles and grow quickly. Thirdly is what we call interlocking, and it's really a contractual relationship between our different teams and talents. Compared to the OKR mechanism, our matrix organization changed what we used to call alignment to interlocking, which is essentially a contract between teams and our different individuals.

[Translator]: The working mechanism is very similar to artificial intelligence, from perception and observations to setting goals and planning its activities, and finally to execution and collaboration, and after action reviews to really build in as the company's capability. Even for a fresh graduate, he or she doesn't need to start as a business assistant, but rather can really get into real battles and grow quickly. Thirdly is what we call interlocking, and it's really a contractual relationship between our different teams and talents. Compared to the OKR mechanism, our matrix organization changed what we used to call alignment to interlocking, which is essentially a contract between teams and our different individuals.

Working.

The working mechanism is very similar to.

Artificial intelligence from perception and observations to setting goals and planning.

<unk> and finally through execution and collaboration.

And after action reviews to really.

Build built in as the company's capabilities, so even for a fresh graduate here she doesn't need to start asset business assistant, but rather can really get into real battles and.

Grown quickly.

And thirdly is what we call interlocking and it's really a contractual.

Relationship between our different teams and.

Talents comparatively the OTR mechanism.

Our matrix organization.

Changed where we used to call it alignment two interlocking.

Which is essentially a contracted between teams.

And our different individuals so when people set their goals they can challenge each other and when they execute they can work very closely and collaborate.

[Company Representative] (Li Auto): When people set their goals, they can challenge each other, and when they execute, they can work very closely and collaborate to deliver the best results. By going from alignment to interlocking, we're really setting a contract between the different teams, and the targets become more and more challenging, but we're able to achieve these targets with higher and higher confidence. Overall, we believe that the most critical ingredient to a successful organizational upgrade is great culture, which includes putting customers' value first, taking the right path and not the easy path, and building everything on collaboration, which is our core value. The organization and process is really the best product that we can build for our employees.

[Translator]: When people set their goals, they can challenge each other, and when they execute, they can work very closely and collaborate to deliver the best results. By going from alignment to interlocking, we're really setting a contract between the different teams, and the targets become more and more challenging, but we're able to achieve these targets with higher and higher confidence. Overall, we believe that the most critical ingredient to a successful organizational upgrade is great culture, which includes putting customers' value first, taking the right path and not the easy path, and building everything on collaboration, which is our core value. The organization and process is really the best product that we can build for our employees.

Remember the best results and so that.

By going from alignment two interlocking were really exciting.

Contract between the different teams.

Target has become more and more challenged challenging, but we were able to achieve these targets at a higher with higher and higher confidence.

So overall, we believe that.

The most critical ingredient to a successful organization upgrade is great culture, which includes putting customers value first.

Picking the right path to not easy path and building everything on collaboration which is our core value.

<unk>.

Organization and process is really the best product that we can build for our employees is simple yet sophisticated and it brings the best practices from each business area and build them into products. So that the organization can grow along one along the way so without great culture great.

[Company Representative] (Li Auto): It's simple, yet sophisticated, and it brings the best practices from each business area and build them into products, so that the organization can grow along the line, along the way. Without great culture, the business processes are going to be rigid and complicated. This is the biggest learnings from upgrading our matrix organization and processes. Basically, product upgrades bring more margins or value to the company, and organizational upgrades bring more efficiency for the company.

[Translator]: It's simple, yet sophisticated, and it brings the best practices from each business area and build them into products, so that the organization can grow along the line, along the way. Without great culture, the business processes are going to be rigid and complicated. This is the biggest learnings from upgrading our matrix organization and processes. Basically, product upgrades bring more margins or value to the company, and organizational upgrades bring more efficiency for the company.

Business processes are going to be rigid and complicated. So this is the biggest learnings from upgrading our matrix organization and processes.

So basically product upgrades bring more margins are.

Values as a company and organization upgrade bring more efficiency for the company.

Tim Hsiao: [Non-English content]

Sheldon will go towards the future.

Operator: Our next question comes from Bin Wang with Credit Suisse. Please go ahead.

Our next question comes from Ben Yang with Credit Suisse. Please go ahead.

Honest to their company.

Yes.

Steve has quite a needle mover timberland Congress <unk>.

Now I know that conduct kimono Shlomo.

And you don't want to see the automotive equivalent and negotiate.

So kudos to the Taiwan Sandy Martin.

Okay, Josh I understand you don't see that we're going to be low nuclear power auctions that you may need without lithium attention.

Do you have a general question, Joshua which I won't kind of comes back to Michelle.

Chip I should answer that Josh.

So I'd like to thank you guys. So much for two cases.

Bin Wang: I got two questions. Number one is about the margin. What's your outlook in Q3 and Q4 this year? Because previously you've highlighted the Li ONE has been dragged down about 2% gross margin. Now you have a better volume in H2 this year. Can I assume H2 margin will be above 23%, increased by 2%? That's number one question about the margin. Second thing about self-driving technology. Right now you're doing the early bird program for some customers. Can I know when the self-driving can roll out to every single car buyer when they purchase the car, they can enjoy? Do you have a timetable to share for 2024? Thank you.

So Jim you guys announced the nimble Chico number Jon Cohen.

Thank you Sir.

I've got two questions number one is about the margin.

What's the hospital.

Our quarter number four.

Fourth quarter this year, because previously <unk> had been.

About 2% gross margin.

Following the second half because the year kind of do you want to take a half margin will be above 23% increased by two percentage. That's the number one question about the margin.

You can see a pilot self driving technology.

I know youre doing the <unk>.

Our program forward.

Some customers right.

No one.

Self driving can know at every single compound.

Purchased the Konica enjoying so do you have that type of a share for 2024. Thank you.

[Company Representative] (Li Auto): Hi, this is Johnny from the company. Our Q2 gross margin has reflect our sales and marketing team's effort. You can see the improved SG&A percentage relative to total revenue. Also some positive improvement on the BOM from our supply chain team. We will continue to improve on that. For the whole year, because we still got six months or five months to the end, we still want to keep the whole year's gross margin guidance just above 20%. Yeah. Thank you.

Johnny Tie Li: Hi, this is Johnny from the company. Our Q2 gross margin has reflect our sales and marketing team's effort. You can see the improved SG&A percentage relative to total revenue. Also some positive improvement on the BOM from our supply chain team. We will continue to improve on that. For the whole year, because we still got six months or five months to the end, we still want to keep the whole year's gross margin guidance just above 20%. Yeah. Thank you.

Hi.

It is.

<unk> got a problem with the company.

Our second quarter.

Gross margin has reflect our.

Sales and marketing and sales and marketing teams Ivor.

The the <unk>.

Improved SG&A.

Our advantage as total.

Total revenue and also.

A positive improvement on the bulk buy from our suppliers.

Churn here.

And we will continue to improve on that pad for the whole year.

Because we feel it's six.

Six months five months from yen, while we still want to keep the full year call.

Our marketing guidance.

Desktop tens of percent.

Thank you.

Xiang Li: 我来回答一下关于自动驾驶的这个问题。我是马东辉。理想汽车的城市和通勤NOA的话，我们还会按照之前制定的计划分批进行开放。那开放的话，这个逻辑跟顺序的话，很大程度上还是决定于当地理想汽车的保有量。如果说这个量越多，那行驶里程数越多，和自动驾驶相关的测试数据就会多，那这个城市就有可能更早地开放出来。那另外的话还会取决于说在这个城市当中复杂路口的这个NPN特征的一个完成情况。那我们现在已经开放了一些早鸟用户，那随着这些早鸟用户的加入，那我们开放的城市会逐渐增加。那目前总体来说的话，开发和测试的进展还是比较顺利的。那在六月份的话，是在北京望京开启了中国首个不依赖高精度地图的城市NOA试驾，并且也大规模开展了媒体试驾。在七月份，刚刚过去的七月份，在北京、上海两个城市我们也开放了早鸟用户，然后用户对于我们整个这个智能驾驶NOA的舒适性和安全性还是给予了非常高的反馈。那基于大模型全面落地智能驾驶，那我们是有信心在明年能够把城市和高速全部打通，进行全面开放。那目前的话，这个研发和测试还是在加速当中。

Donghui Ma: 我来回答一下关于自动驾驶的这个问题。我是马东辉。理想汽车的城市和通勤NOA的话，我们还会按照之前制定的计划分批进行开放。那开放的话，这个逻辑跟顺序的话，很大程度上还是决定于当地理想汽车的保有量。如果说这个量越多，那行驶里程数越多，和自动驾驶相关的测试数据就会多，那这个城市就有可能更早地开放出来。那另外的话还会取决于说在这个城市当中复杂路口的这个NPN特征的一个完成情况。那我们现在已经开放了一些早鸟用户，那随着这些早鸟用户的加入，那我们开放的城市会逐渐增加。那目前总体来说的话，开发和测试的进展还是比较顺利的。那在六月份的话，是在北京望京开启了中国首个不依赖高精度地图的城市NOA试驾，并且也大规模开展了媒体试驾。在七月份，刚刚过去的七月份，在北京、上海两个城市我们也开放了早鸟用户，然后用户对于我们整个这个智能驾驶NOA的舒适性和安全性还是给予了非常高的反馈。那基于大模型全面落地智能驾驶，那我们是有信心在明年能够把城市和高速全部打通，进行全面开放。那目前的话，这个研发和测试还是在加速当中。

Well.

But any reason cash.

Right.

Thank God you can't you try the Changsha Tianjin.

And our teacher and she can achieve box <unk> in Doha, Qatar.

What do you guys think.

I'm not sure how should drinking dunkin' each and each other.

Yes.

And each of them.

So some of that is somewhat neutral shouldn't conjecture with one particular solution jewelry, Oklahoma conductor Kevin for that now.

And then I wanted to highlight two Julia Shaw Danone for down quarter.

Ken could only hope entrenching pump no well merchandised and coupon that you hit on it.

Hi.

No one wants everyone onto the shelf agenda of us even some job nonetheless.

I just wanted to walk half off electrical should Ciena Azure industrial leader.

How does that begin.

Thank you Nick Heisler congressional pillar.

We'll keep on to ensure that only shop dumping that youre talking about <unk>.

Maybe you should go.

So she doesn't contemplate that but you know shall I had on which I'm sure we'll need capital.

The two new momentum.

I was gonna industrial early that day.

Okay.

Great.

Now keeping the argument how much in champion in the Hollywood Ethan Thanks Asher.

Well I'm not sure you'll see him.

Number of batch Lucia cultural deluxe as a company.

The Hudson Okay.

How much I know you have hopper Tricia I should say.

Sure.

[Company Representative] (Li Auto): On city NOA and commute NOA, we will continue our original plan to roll them out in batches in different cities. The rollout plan is going to be largely based on the number of vehicles or owners in the specific cities. The more owners, the more mileage accumulated, more test data, the more likely the cities will get city NOA and commute NOA early. In addition to that, we're also taking into consideration the NPN features of complex intersections in those cities and the amount of data coverage that we have. As more and more early bird users join into our pilot program, we'll be opening up our NOA features in more cities. Overall, the development and testing for NOA features are going on track.

[Translator]: On city NOA and commute NOA, we will continue our original plan to roll them out in batches in different cities. The rollout plan is going to be largely based on the number of vehicles or owners in the specific cities. The more owners, the more mileage accumulated, more test data, the more likely the cities will get city NOA and commute NOA early. In addition to that, we're also taking into consideration the NPN features of complex intersections in those cities and the amount of data coverage that we have. As more and more early bird users join into our pilot program, we'll be opening up our NOA features in more cities. Overall, the development and testing for NOA features are going on track.

Yeah.

The city MLA in community, we will continue our original plan to roll them out in batches in different cities.

The rollout plan is going to be largely based on the number of vehicles or owners in the specific cities more owners more mileage it's related more test data number likely the cities will get Citi annoying.

Early.

In addition to that we're also taking into consideration the.

MTN features of complex intersections in the city.

Dana coverage that we have so as more and more early bird users joined into our program will be opening up our NOI features and Mercedes.

Overall, the development and testing for all I know a features are.

[Company Representative] (Li Auto): In June 2023, we've offered test drives of our city NOA in Wangjing, which is known as one of the most complicated traffic zones in Beijing, using China's first city NOA solution that doesn't rely on high definition maps. Media gave very nice reviews about the features. In July in Beijing and Shanghai, we've opened up city NOA to early bird users, and users spoke very highly of the comfort and safety of our solution. This year we will be releasing our city NOA and commute NOA for large-scale testing, and the plan to release it in 100 cities remains unchanged. Internally, we're continuing to accelerate the R&D and testing of our city NOA solution.

What is going on track.

[Translator]: In June 2023, we've offered test drives of our city NOA in Wangjing, which is known as one of the most complicated traffic zones in Beijing, using China's first city NOA solution that doesn't rely on high definition maps. Media gave very nice reviews about the features. In July in Beijing and Shanghai, we've opened up city NOA to early bird users, and users spoke very highly of the comfort and safety of our solution. This year we will be releasing our city NOA and commute NOA for large-scale testing, and the plan to release it in 100 cities remains unchanged. Internally, we're continuing to accelerate the R&D and testing of our city NOA solution.

And in June 2023.

Offer a test drive of our city <unk> and <unk>, which is known as one of the most complicated traffic facility in Beijing.

Using the first China's first anyway city, Illinois solution that doesn't rely on a high definition maps and.

In media gave very.

Nice reviews about the features.

In July in Beijing, and Shanghai, We've opened up say annoying too early bird users and users who are very highly of the comfort and safety of our solution.

And this year, we will be.

Releasing our city of annoying commuter anyway.

For large scale testing and plan to release 100 cities remains unchanged.

Internally.

Continuing to accelerate.

R&D testing of our CDN solutions.

Xiang Li: Thank you. Thank you so much.

Bin Wang: Thank you. Thank you so much.

Thank you thanks, so much.

Okay.

Operator: The next question comes from Yingbo Xu with CITIC, please go ahead.

Our next question comes from Ian <unk> with.

Please go ahead.

Yingbo Xu: 感谢管理层，我有两个问题。那第一个呢，是跟三季度的这个销量展望相关。我们看到七月份的这个实际销量是在三万四，那么三季度的展望是在十万到十万三千。这样看的话，后面可能八九月份都在三万量左右，而我们另外一个预期呢，是在四季度达到月销四万。所以我的第一个问题是想问一下关于三季度的销量弹性，以及后面我们的这个月销的一个进展是指在四季度初还是四季度末会达到一个四万量的一个水平。那这是第一个关于销量展望的问题。那第二个呢，就是我们看到在这个家庭科技日的时候，我们就是推出了这个计划，推出这个MindGPT，市场也关注度很高。我想问一下目前这个MindGPT的一个进展，以及可能作为消费者大概什么时候有机会能够体验到MindGPT的这样一个应用。

Thank you Glenn.

Thank you Suzanne.

Thank you Sean.

Is that longer term Glenn.

Sure.

I'll now ask Sheila.

Thank you the general answer that Sean.

John .

And does that sound.

Thanks, you mentioned that since you brought that up.

So you want to BMO Lindsay this is Tom Morningstar claim center.

Sean Thompson.

Thank you Charlotte.

That's true how do you think you're doing more with that.

Now that you are anticipating nickel mine shutdowns that long ago.

As I noted, we Shouldnt macondo.

Jackson could lead to additional woman kitchen couture like Q2, we continue to mine the GPT.

Andrew Wilson.

Chairman Shinji remind you PTT button.

Congratulations Richard donation Michelle Julien.

Miami GPT accounting.

I have two questions. The first one is about the quarters and the third quarters sales.

Yingbo Xu: The first one is about the quarter's, the Q3 sales. How do we see the sales elasticity for the Q3 expectation? My second question is about MindGPT. Could you give us more color about how MindGPT going? Thank you.

Sales.

How do we see the sales you have to take time for the third quarter expectation.

My second question is about mine chips, and Keith could you give us more color about how many GPC Kelly. Thank.

Thank you.

Xiang Li: 我先说吧。我理想，对。然后目前给出来的销量指引确实是三季度产能的极限。对，然后四季度产能提升后实现四万辆的一个交付目标，我觉得没有任何问题。对，我觉得还有一个很重要的一点，其实我们是有信心在2024年提前挑战奔驰、宝马、奥迪在中国区的销量。对，我们在2024年将努力成为销量第一的豪华品牌。

With central.

Oh.

Sure sure sure.

I need to technology.

That also need autonomy, you don't know that I have.

Jonathan maybe I'll go in here.

But how are you.

One idea.

Jonathan Yes, TJ I'll talk a bunch about how the second look through this ordeal.

Yes, John Dooley.

How do you buy.

[Company Representative] (Li Auto): First of all, on guidance. The guidance we've given earlier today is really built around our production capacity, the maximum of our production boundaries for Q3. For Q4, with increased production capacity, we'll be able to reach or surpass the 40,000 per month mark. Another important point to note is we're very confident that we will be able to challenge the leadership position of Mercedes-Benz, BMW, and Audi in China, meaning we will exceed their sales in China and become the top selling luxury brand in China.

[Translator]: First of all, on guidance. The guidance we've given earlier today is really built around our production capacity, the maximum of our production boundaries for Q3. For Q4, with increased production capacity, we'll be able to reach or surpass the 40,000 per month mark. Another important point to note is we're very confident that we will be able to challenge the leadership position of Mercedes-Benz, BMW, and Audi in China, meaning we will exceed their sales in China and become the top selling luxury brand in China.

First of all on guidance.

Guidance, we've given earlier today.

Really built around our production capacity the maximum.

Production boundaries for Q3.

For Q4, we have increased production capacity will be able to reach our surpassed 40000 per.

Per month Mark.

Another important point to note is we're very confident that we will.

We will be able to challenge the leadership position of Mercedes BMW and Audi in China, what we see.

Seat exceed their sales in China and become the top selling luxury brand in China.

Xiang Li: 我是马东辉，我来回答一下MindGPT的话题的问题。我们在六月份家庭科技日，发布了自研的认知大模型MindGPT。从研发上来说，我们具备了全栈自研能力。从研发整个结构上来说，是分四部分：数据，还有大模型的话，训练算法，评估和安全，还有应用交付。在大模型训练算法流程方面，跟行业主流是一致的，包含基座模型训练。发布会上我们也提到了，我们是使用了1.3万亿的token，进行基座模型训练。我们在此基础之上，为了确保MindGPT的知识的准确性和个性化的能力，我们还增加了搜索和推荐的自研能力。目前第一个版本，我们是采用了160亿个参数，基于自研基座模型，可以更好地贴合我们的用户，提升理想同学对话式交互的效果。最终会形成一系列产品，它可以让理想同学成为家庭当中的一个成员，也可以成为车辆的专家或者是您才需要的老师。目前进展方面，我们在未来九月会分享更加详细的整个MindGPT智能空间的进展。目前已经启动了公司内部的测试，测试通过之后，会通过OTA释放给少量的早期用户。

Donghui Ma: 我是马东辉，我来回答一下MindGPT的话题的问题。我们在六月份家庭科技日，发布了自研的认知大模型MindGPT。从研发上来说，我们具备了全栈自研能力。从研发整个结构上来说，是分四部分：数据，还有大模型的话，训练算法，评估和安全，还有应用交付。在大模型训练算法流程方面，跟行业主流是一致的，包含基座模型训练。发布会上我们也提到了，我们是使用了1.3万亿的token，进行基座模型训练。我们在此基础之上，为了确保MindGPT的知识的准确性和个性化的能力，我们还增加了搜索和推荐的自研能力。目前第一个版本，我们是采用了160亿个参数，基于自研基座模型，可以更好地贴合我们的用户，提升理想同学对话式交互的效果。最终会形成一系列产品，它可以让理想同学成为家庭当中的一个成员，也可以成为车辆的专家或者是您才需要的老师。目前进展方面，我们在未来九月会分享更加详细的整个MindGPT智能空间的进展。目前已经启动了公司内部的测试，测试通过之后，会通过OTA释放给少量的早期用户。

What's your model.

Our message and if you don't have visibility.

It was the first and second quarter.

Fabulous.

And by the GDP.

Yes, I'm back on that as well.

Harlem insurer to better guidance in.

Lee natural and Jennifer congratulation on anecdotal harsher than simple thing.

Sure Tom.

Switching to our financials on top.

<unk> I don't know if I take your phone.

Yeah.

I'm glad you listened in Shanghai and Hong Kong.

<unk> three trillion.

Aloha <unk>, yet they'll probably with augment your thought when Michigan semi token, Jason <unk>, chief almost machine yet no womens substitutional just shot <unk>.

<unk>.

The GDP the attrition of the transmission.

So a question on.

While our Hudson chose us to agenda underneath them, which I know how data bundle.

Mr tightened our evaluation of potential achieved adulthood CN Keith one wishing you all click on hot holding.

David you talked conclusion fuselage itself with Jonathan.

Sure.

<unk>.

Now to some of the operational.

You should be at the heart.

Talk to you on the comprehension weight.

Thank you tuned in connection with the audio we're trying to understand what usher in Hershey adoption normal attention.

Well most of it actually has a long way.

Obviously, the genco matter GDP.

Ginger and which I know I didn't see you don't want to see the homes enabled Ohio ego.

Ill now touch upon what you hold the way from what would be the harsh upon day shutdown of icon.

[Company Representative] (Li Auto): Second question on MindGPT. In terms of technology, we release our internal big model MindGPT. We have built a full stack in-house development capability of large language models. The R&D really falls into four areas. First is data, and second is big model training algorithms, and third is assessment and security. Lastly, application deliveries. On the training algorithm front, we've stayed in line with mainstream algorithms in the industry, including the foundational model training, which utilizes 1.3 billion tokens, and instruction fine-tuning and reinforcement learning. In order to make sure that the MindGPT model can have accurate knowledge and be able to personalize based on users, we've also introduced search and recommendation algorithms, which are also built in-house. MindGPT is out now in version 1, which uses 16 billion parameters, and based on the foundational model, we can better suit the user scenarios of our users, and make Li Xiang Tongxue more interactive with our users. On the product front, the big model-based MindGPT is going to power our first generation multi-modal human machine interface operating system, and it can allow every single person of our user's family to use AI with ease and make Li Xiang Tongxue a new member of the family, and can be an expert on the car, and can be a teacher, it can be a tour guide, it can be everything. In terms of progress, we'll be sharing more details about the progress of R&D. So far, we have already opened up MindGPT for internal beta testing, and after these tests, we will be releasing the models to a small number of early bird users through OTAs.

[Translator]: Second question on MindGPT. In terms of technology, we release our internal big model MindGPT. We have built a full stack in-house development capability of large language models. The R&D really falls into four areas. First is data, and second is big model training algorithms, and third is assessment and security. Lastly, application deliveries. On the training algorithm front, we've stayed in line with mainstream algorithms in the industry, including the foundational model training, which utilizes 1.3 billion tokens, and instruction fine-tuning and reinforcement learning. In order to make sure that the MindGPT model can have accurate knowledge and be able to personalize based on users, we've also introduced search and recommendation algorithms, which are also built in-house.

Second question on my GBT in terms of technology, we have.

<unk> R.

Turnover Big model mine GPT, and we have built since built a full stack in house development capability.

<unk> models and the R&D really falls into four years versus data and second is big model the training, our womens and third is assessment and security.

Lastly application deliveries.

On the training algorithm.

We've stayed in line with mainstream.

Mainstream algorithms.

Industry, including the foundational modeling training, which.

It utilizes $1 3 billion tokens and too.

Command.

To me.

Reinforces reinforced learning and in order to.

Make sure that the <unk> model can have accurate knowledge and be able to personalize all based on the users.

Also introduced search and recommendation algorithms, which are also built in house.

[Translator]: MindGPT is out now in version 1, which uses 16 billion parameters, and based on the foundational model, we can better suit the user scenarios of our users, and make Li Xiang Tongxue more interactive with our users. On the product front, the big model-based MindGPT is going to power our first generation multi-modal human machine interface operating system, and it can allow every single person of our user's family to use AI with ease and make Li Xiang Tongxue a new member of the family, and can be an expert on the car, and can be a teacher, it can be a tour guide, it can be everything.

<unk> is now in version one we should use a 16 billion parameters.

And based on the foundation model, we can better suit user scenarios of our users.

And to <unk>.

Make visa share more.

And are active with our users on the product front.

Big model based mine GPT.

Is really going to is going to empower our first generation multimodal.

Human machine interface operating system and it can allow every single person.

User's family to use AI with ease and make lease our total share in new member of the family and can be an expert on the car and it can be.

A teacher and can be a tour guide that can be everything.

[Translator]: In terms of progress, we'll be sharing more details about the progress of R&D. So far, we have already opened up MindGPT for internal beta testing, and after these tests, we will be releasing the models to a small number of early bird users through OTAs.

In terms of progress, we'll be sharing more details about the progress on R&D.

So far we have already opened up <unk> for internal Barcoding and after these tests, we will be releasing.

Models too.

A small number.

Users through Otas.

Operator: 好的，非常感谢。 The next question comes from Paul Gong with UBS. Please go ahead.

Yingbo Xu: 好的，非常感谢。

Okay.

Operator: The next question comes from Paul Gong with UBS. Please go ahead.

Our next question comes from Paul Gong with UBS. Please go ahead.

Paul Gong: 好的，谢谢接受我的提问。我的第一个问题来说的话是，我们现在对于这个MEGA的产能的准备以及销量的预期是一个什么样子？目前为止，市场上面的纯电MPV的话，就是只看ZEEKR 009，大约是每个月两千台。我们认为这是否给我们提供了一个销量的参照。然后再来MEGA之后的话，我们的纯电产品的最新规划是一个什么样子的？ So my first question is regarding the MEGA, regarding its capacity preparation as well as sales expectation. As the ZEEKR 009, the only pure electric MPV currently in the market, provides a benchmark. And after MEGA, what is our latest thought on the product pipeline for the BEV?

How does <unk>.

Q1 <unk>.

And I just wanted to ask.

I'm trying not to get telecom Mcarthur.

So I don't think we should see you call somebody else.

So that's helpful.

Mandelson Gaiam TV.

Yes.

Hi.

And when we chose to go on the coupon that you're cautious on that.

Tom.

Santa Monica.

Thank you Dan.

Our assumptions are you call it recently.

From a young fleet.

So my first question is regarding the Mecca.

Regarding capella.

Capacity perforation Aswell.

Asian coal.

Carl line, the only metric MPV currently in the market for Viator benchmark and ophthalmic on what is our latest thoughts on the pipeline.

Pipeline for the VEB.

Xiang Li: 好，我来回答你的问题。有关于MEGA的销量目标，我们有信心MEGA是成为五十万以上销量第一的产品，不分能源形式，不分车身形式。对，就跟其实我们今天可以看到L7、L8也会大量从轿车领域获得巨大的市场份额。对，这就是非常有效的增量。那……

We're not going out of India.

Great.

My guys are terminable general needed MTN.

Arranging for triple going towards making sure that you're going to issue and how can you kind of Archie or Bob but that also looks all excluding <unk>.

Okay. Thank you.

Yeah.

[Company Representative] (Li Auto): First on MEGA's sales target, we're confident that MEGA will become the top seller in the market above RMB 500,000 across all different energy forms and body types. Just like we've seen from L7 and L8, which are respective market leaders in their segments. They've also won over market share from sedans and other segments.

[Translator]: First on MEGA's sales target, we're confident that MEGA will become the top seller in the market above RMB 500,000 across all different energy forms and body types. Just like we've seen from L7 and L8, which are respective market leaders in their segments. They've also won over market share from sedans and other segments.

First of all on the Mega sales target, we are confident that mega will become the top seller.

And the market at about 500000, RMB across all different energy forms and body types. Just like we've seen from <unk> 78, which are respected market leaders in their segments. They've also won over market share from sedans and other segments.

Paul Gong: 那MEGA之后的那个纯电那一部分能回答一下吗？

Okay.

Makeup so hold on Nicholson joined April production.

Xiang Li: 今年的话，我们会发布四款车，会有一款增程的SUV，还会有三款纯电车型，不包含这个MEGA。所以具体的产品信息，我觉得我们还是借助我们的这个发布会能够跟大家沟通。

Okay.

Yes.

Absolutely Fabulous.

Hello.

I view it.

Hopefully with some quite and congratulate you for about 100 megawatt.

You see that having a hit.

Gentlemen, two if I'm.

I'm going to let that go to <unk>.

Johnny Tie Li: Next year we're planning to release four vehicles, one range extender vehicle and three pure electric vehicles, not including MEGA, which we just talked about. For specific product details, we'll be sharing on our product release next year when the time is appropriate.

[Translator]: Next year we're planning to release four vehicles, one range extender vehicle and three pure electric vehicles, not including MEGA, which we just talked about. For specific product details, we'll be sharing on our product release next year when the time is appropriate.

Next year, we're planning to release.

One range extender vehicle and three are pure electric vehicles, not including Mega, which we just talked about for specific product details, we'll be sharing on our product release next year when the time is appropriate.

Paul Gong: 我第二个问题来说的话，就是现在理想是新势力当中唯一一个不做出口的，但是却有一些那个平行的出口，以一些非正规的一个方式吧，就流入到中亚以及俄罗斯这些地方。我们能否知道就说这有多大的一个量，然后我们是否会考虑，就是把这种游击队也变成正规军，然后给予一定的支持，以进一步扩大我们的一个销量，以及就是说全球的一个品牌的一个认知度。Uh so the second question is regarding the parallel exports.

Paul Gong: Uh so the second question is regarding the parallel exports.

So I just wanted hi, Joseph since right.

Awesome.

Sure.

<unk>.

Sure.

So I'm glad that you call. Thanks, so much.

Such a default.

So I'll tell you, we'll do so for a quick call with resource.

It wasn't on Gucci to you again soon.

<unk> I'm, hoping you didn't.

I'll answer this.

For <unk>. This is also to ensure that <unk> got a component or equal to total.

Second question is regarding the parallel exports.

Paul Gong: We realize that there are some informal trading of the auto products into other countries. How big is this in terms of scale? Do you have any plan to formalize it from guerrilla into formal army and expand our sales volume as well as our global influence of the branding?

Realize that there are some informal trading of the <unk>, we sell products into other countries.

Uh huh.

How big is this in terms of scale and size do you have a new plan to formalize Banca.

Korea liking too.

A formal Ami and expand our sales volume as well.

<unk> global influenced soften up Brian .

Johnny Tie Li: Hi, apologies John. I think we want to state again we want to. I mean, globalization after we become dominant in China, because China is a very big market as you just mentioned. The answer is no, we want to. Also our product is well-defined and was available for sale only for China mainland. That's basically. Thank you.

I apologize.

I think we want to.

Yes.

<unk>.

Say again.

Two.

Globalization altra.

Become dominant in China, because China is a very big market.

As we just mentioned so.

Yes, the answer is no.

No we won't.

Also our product once they buy in.

All of our available for sale in April .

China mainland that's all.

Yes perfectly.

Thank you.

Paul Gong: OK, thank you very much. Thank you.

Okay. Thank you very much thank you.

Operator: Our next question comes from Jing Chang with CICC. Please go ahead.

Our next question comes from James Jang with Ti.

Please go ahead.

Jing Chang: 好的，感谢。这是我的提问。我这边想问两个问题，首先第一个还是关于毛利率，刚刚也集结了，就是下半年有一些正面的能够帮助毛利率进一步向上的一些因素，那全年的话，我们仍然还是保持20%的一个毛利率的指引，我们有否看到说可能潜在的一些负面的影响，可能会是哪些？那进一步往2024年展望的话，我们整体纯电动车型以及全新工厂可能会开始投产，因为考虑到目前就是普遍的纯电车型的margin是比较低的，我们的这些可能纯电车型是否可以期待说刚开始上市上量就能够获得一个较高的毛利率，有什么比较好的一个方式实现？这是第一个问题。好，然后第二个问题的话，我先翻译一下第一个问题吧。A follow-up question about gross margin. As Mr.

Jingjing Chang: 好的，感谢。这是我的提问。我这边想问两个问题，首先第一个还是关于毛利率，刚刚也集结了，就是下半年有一些正面的能够帮助毛利率进一步向上的一些因素，那全年的话，我们仍然还是保持20%的一个毛利率的指引，我们有否看到说可能潜在的一些负面的影响，可能会是哪些？那进一步往2024年展望的话，我们整体纯电动车型以及全新工厂可能会开始投产，因为考虑到目前就是普遍的纯电车型的margin是比较低的，我们的这些可能纯电车型是否可以期待说刚开始上市上量就能够获得一个较高的毛利率，有什么比较好的一个方式实现？这是第一个问题。好，然后第二个问题的话，我先翻译一下第一个问题吧。A follow-up question about gross margin. As Mr.

Okay.

Thank you.

Thank you Sandeep.

Thank you Vanessa.

Yes.

He can answer this or that I mean, you said you mean.

Thanks, Sean.

Thanks Shannon.

Sure.

Okay.

So a question.

Thank you Jonathan.

As I mentioned is from Raymond James.

Franklin Electric propulsion.

Ms Angela <unk>.

Any interest in Denmark.

Thank you gentlemen.

Colon cancer Association of announcements.

Good morning.

Hi, Glenn.

Sure.

Thank you Jackie.

Uh huh.

So let me ask a question about gross margin.

Jing Chang: Li Jie just mentioned, from total factors on our gross profit margin in H2 of this year. We still maintain the guidance of 20% for the full year guidance. Is there any potential negative impacts we can see? And what might that be? Looking into 2024, our BEV models and the manufacturer will start to put into operation. Because we can see the current BEV models are aggressively have a very low gross profit margin. How can we achieve our BEV model to drive an higher gross profit margin compared to the industry?

Jingjing Chang: Li Jie just mentioned, from total factors on our gross profit margin in H2 of this year. We still maintain the guidance of 20% for the full year guidance. Is there any potential negative impacts we can see? And what might that be? Looking into 2024, our BEV models and the manufacturer will start to put into operation. Because we can see the current BEV models are aggressively have a very low gross profit margin. How can we achieve our BEV model to drive an higher gross profit margin compared to the industry?

As Terry mentioned.

Some consumer sectors.

Our work with broker market.

Yes.

You maintain the guidance.

20%.

Got it.

So is there any potential impact.

Hi, Matt.

<unk> to 'twenty.

We're BBB model.

Sure.

Great.

They will start to put into operation.

Okay.

Can you be models.

That's a great little gross.

Gross profit margin.

Okay.

Sure.

Right.

Higher gross profit margin I'm sorry, Tony.

Okay.

Johnny Tie Li: I will yeah take this question. This is Johnny.

Yeah I'll take this question as John and Jeff mentioned in the early question.

Johnny Tie Li: As I just mentioned in the early question, the current gross margin has reflect our the effort of from our supply chain team. We keep improving on the BOM side and help us to improve our gross margin to the 25% designed gross margin continuously. For the BEV, I think every time we launch a new product, we will welcome some question about the margin. Because there are some pure product offering in the market. We still want to reinforce our statement is that the product gross margin was from the first day you define your customer and you define your product. We what we want to say that overall we want to keep 25% for the whole company with different product offerings. Yeah. Thank you.

Gross margin as a risk factor.

Our.

I've heard from our supply chain team.

We.

Keep improving on the bond side.

<unk> helped us to improve our.

Gross margin towards the 75% occupied and cross market continuously.

And for the BV I think every time, we launched a new product.

We will now come from question about the market.

And because there are some product offering in the market.

We still want to all.

Sure.

What are your thoughts there Mike.

The product.

Gross margin was from the first day, you will get final customer you will be fine.

<unk>.

Goal of B B.

What you want to say about the overall.

Overall, we want to keep 35% for the whole company with a different product offering.

Thank you.

Sure.

Jing Chang: 好的，我的第二个问题也是关于智能驾驶，那公司也是规划到年底会释放城市NOA到一百座城市，整个目标跟竞品相比还是比较激进的，我们目前看是否还是有比较大的一个挑战，以及说可能这个到一百座城市，它的整个的铺设是说可能内测还是说更大范围的一个商业化落地，然后能否再介绍一下我们在智能驾驶方面可能比较突出的一些能力，以支持我们实现这个稍有挑战的目标。My second question is about autonomous driving. We plan to release city NOA to 100 cities by the end of this year, which is a very aggressive target compared to competitors. Is there any great challenge as you can see at present?

Jingjing Chang: 好的，我的第二个问题也是关于智能驾驶，那公司也是规划到年底会释放城市NOA到一百座城市，整个目标跟竞品相比还是比较激进的，我们目前看是否还是有比较大的一个挑战，以及说可能这个到一百座城市，它的整个的铺设是说可能内测还是说更大范围的一个商业化落地，然后能否再介绍一下我们在智能驾驶方面可能比较突出的一些能力，以支持我们实现这个稍有挑战的目标。My second question is about autonomous driving. We plan to release city NOA to 100 cities by the end of this year, which is a very aggressive target compared to competitors. Is there any great challenge as you can see at present?

Thank you Kevin.

Good morning, guys.

Thanks, Dan shipments and mix.

Mix shifting tuition later, thanks, so much.

Hi, gentlemen, and thank you sandy.

Okay.

<unk>.

Thanks, Jason.

Good evening.

Can you kind of assuming that even showing.

Thank you so much gentlemen, thank you Joseph.

Thank you Jim.

Sure Sanjay.

Yes.

My second question.

Thomas Chinese.

No.

James too many.

<unk>.

Tom.

Ali assumption to 180.

This year.

Thanks Barry.

Thank you.

Thank you Annie.

As you can see in fragrance.

Jing Chang: Can you share more about our outstanding capabilities in different aspects of our autonomous driving to support us?

Jingjing Chang: Can you share more about our outstanding capabilities in different aspects of our autonomous driving to support us?

Thanks, you Shannon.

And outstanding capabilities in.

Hey, guys. Thanks.

Please try to some partners.

Xiang Li: 我是马东辉，我来回答这个问题。首先的话，我们还是会分批来进行开放，并不会在今年年底全量进行开放。但是我们的目标并没有改变，还是要做到一百座城市，来实现城市NOA。那相比这个竞争对手，我们在感知，包含规划算法方面，我们认为我们是有优势的。一方面我们是通过创新的NPN，包含就是说这个TIN网络，那我们可以实时去感知复杂的道路结构，然后通过occupancy网络识别通用的障碍物。那相比这个竞争对手而言，我们认为最大的优势就在于说我们拥有最大的智能驾驶的车队，包含国内最多的训练里程数据，而这样的话我们可以实现数据算法，然后到整个这样的不断的迭代，这是我们的一个绝对优势。

I'm sorry.

Okay.

Oh sure.

Okay.

Lindsay.

Sure No problem I assure you from Pete I think in simple.

Thank you again.

Obviously, you can pepper.

So one of them will go up okay.

Hi shelf to ensure.

As you kind of attrition openly.

I think the Kingdom vishal.

Got it.

No our business ramp up on that when we really will know.

Sure sure.

Sure.

Hello, Michelle.

MTN, Paul hydrogen authority, ITM or more normal cleaning the heartache should ship in Q4.

But with the juggle.

Yes.

<unk> <unk> <unk>.

It would be though hard to say.

Yes.

You actually can tell you for a while now.

Got it.

One is to Florida.

Shinhan mahady tumor shrinking our tier.

Sure, yes truly save.

In Guadalajara, Tijuana and Guadalajara additional M&A.

[Company Representative] (Li Auto): As we mentioned earlier, we're still planning to release city NOA and commute NOA in batches, as opposed to releasing all the cities in one go. We're on track to delivering city NOA to 100 cities by the end of this year. In terms of technical capabilities, we think we have advantages in both perception and planning. On the perception side, we have this innovative neural prior network and also traffic intention network to predict traffic lights intentions using this end-to-end model. All of this going to enhance our BEV model, which can perceive or sense the complex road structure information in real time and understand traffic rules. Also using occupancy network, we're able to recognize general obstacles on the driver's route.

Sure the ocean.

[Translator]: As we mentioned earlier, we're still planning to release city NOA and commute NOA in batches, as opposed to releasing all the cities in one go. We're on track to delivering city NOA to 100 cities by the end of this year. In terms of technical capabilities, we think we have advantages in both perception and planning. On the perception side, we have this innovative neural prior network and also traffic intention network to predict traffic lights intentions using this end-to-end model. All of this going to enhance our BEV model, which can perceive or sense the complex road structure information in real time and understand traffic rules. Also using occupancy network, we're able to recognize general obstacles on the driver's route.

As I mentioned earlier, we are still planning to release city, I know and commute in OE in batches as opposed to releasing all the series in one go and we're on track to delivering city on the way to 100 cities by the end of this year in terms of technical capabilities. We think our we have advantages in both perception and planning.

On the perception side, we have this innovative newer prior network and also traffic and network to predict traffic lights intentions.

And to <unk>.

And model all of this is going to enhance our BV model.

Which can.

Perceive or sensors.

Complex road structure information in real time and understand track.

And also using occupancy network.

We're able to.

Recognize.

General obstacles.

[Company Representative] (Li Auto): On the planning side, we're utilizing imitation learning algorithms, which learns from a lot of human driver behavior and decisions to make sure our city NOA can stay safe on track and also follow traffic rules and at the same time drive very similar to human behavior. We have the biggest autopilot or NOA training testing fleet in China and also have the most training mileage as well as a significant reserve of cloud-side computing power, which we believe will be our absolute competitive advantage.

[Translator]: On the planning side, we're utilizing imitation learning algorithms, which learns from a lot of human driver behavior and decisions to make sure our city NOA can stay safe on track and also follow traffic rules and at the same time drive very similar to human behavior. We have the biggest autopilot or NOA training testing fleet in China and also have the most training mileage as well as a significant reserve of cloud-side computing power, which we believe will be our absolute competitive advantage.

The drivers for that.

On the planning side of the river.

Using utilizing inpatient and learning.

Items, which.

Learn from a lot of human driver behavior and decisions to make sure in a city or in a way can stay safe.

Track and also.

Follow traffic rules.

Same time very similar to human behavior, we have.

Biggest.

Autopilot or.

I know a training testing fleet in China, and also have the most trading mileage as well as <unk>.

Significant reserve cloud.

Cloud aside.

<unk> power, which we believe will be our.

Absolute competitive advantage.

Xiang Li: 好的，好的，谢谢您。没有其他问题。谢谢您。

Jingjing Chang: 好的，好的，谢谢您。没有其他问题。谢谢您。

Okay.

Merrill Lynch.

Yes.

Operator: The next question comes from Ming-Hsun Lee with Bank of America. Please go ahead.

The next question comes from Ming Lee.

And Lee with Bank of America. Please go ahead.

Ming-Hsun Lee: 郭毅晨您好，我是Ming-Hsun Lee的Ming，这边就两个问题。第一个问题是关于咱们的店。因为到七月份的话，我们现在已经有超过大概三百三十家店，然后也覆盖超过一百二十座城市了。我注意到就是说，其实如果以我们销量来讲，其实我们同店的销售其实一直不断在进步。想了解一下，就是说李想总您觉得，我们跟其他的品牌来比的话，您觉得我们哪一些地方是我们这个店的运营效率更好？因为其实当然从IPO开始就很好，但是已经开了三百多家店，这效率还是非常好，所以想了解一下。那您另外觉得就是说，我们如果说到2024年或2025年的话，我们目标希望能够到多少家店，然后可以覆盖多少个城市。那以我们品牌比较高端的话，您觉得大概最低的话，会下沉到哪一类城市？那最后就是想了解一下，您觉得我们这个店的运营方面来讲，还有什么地方您觉得是您之后觉得可以有空间可以去继续改善的地方。那我翻译一下问题。So my first question is regarding your sales channels.

Ming Hsun Lee: 郭毅晨您好，我是Ming-Hsun Lee的Ming，这边就两个问题。第一个问题是关于咱们的店。因为到七月份的话，我们现在已经有超过大概三百三十家店，然后也覆盖超过一百二十座城市了。我注意到就是说，其实如果以我们销量来讲，其实我们同店的销售其实一直不断在进步。想了解一下，就是说李想总您觉得，我们跟其他的品牌来比的话，您觉得我们哪一些地方是我们这个店的运营效率更好？因为其实当然从IPO开始就很好，但是已经开了三百多家店，这效率还是非常好，所以想了解一下。那您另外觉得就是说，我们如果说到2024年或2025年的话，我们目标希望能够到多少家店，然后可以覆盖多少个城市。那以我们品牌比较高端的话，您觉得大概最低的话，会下沉到哪一类城市？那最后就是想了解一下，您觉得我们这个店的运营方面来讲，还有什么地方您觉得是您之后觉得可以有空间可以去继续改善的地方。那我翻译一下问题。So my first question is regarding your sales channels.

Kony is anyhow.

I mean does it mean in <unk>, but there you go.

When you said Glen Musica.

I'm not.

Hello, Michelle.

Amazon is out there.

So how will you balance.

No <unk>, so which is it will shut down right now she assortment on shelf so chooses.

Please go ahead Jim.

Vishal <unk> solution on a.

A woman <unk>.

And Joe measure defenses.

Tim.

Tony.

John So I view that you want to is how does the <unk> <unk> was the idea.

To the.

Charlie has it fits on Hollister, we shall now Jason do you want to you to do so.

So the earnings.

Well, maybe I'll show you on a go down too soft out there okay.

Tusa tungsten <unk>.

Peter I'll call during the Han each of the target.

C J D.

Now an idea Thompson and Thats, what <unk> announces any judah.

So the piano.

<unk> from.

<unk>.

Okay.

Just as you guys said default no financial warranty. So my first question is regarding your sales channel. So right now you have a morning <unk> retail stores.

Ming-Hsun Lee: Right now you have more than 330 retail stores that cover more than 120 cities. In terms of your long-term goal, how many stores and how many cities do you want to cover? Besides that, could you also share what is the successful part of your sales channel management? And also in what area do you want to improve if there is any?

Ming Hsun Lee: Right now you have more than 330 retail stores that cover more than 120 cities. In terms of your long-term goal, how many stores and how many cities do you want to cover? Besides that, could you also share what is the successful part of your sales channel management? And also in what area do you want to improve if there is any?

More than 120 cities. So in terms of your long term goal.

How many stores and how many seats do you want to cover besides that could you also share.

While the east a successful part of your sales channel management and also in Quad area do we want to improve.

Yeah.

Xiang Li: 我来回答。我觉得好的产品和好的销售渠道、好的运营销售渠道，这两个是相辅相成的，缺一不可。那我们内部的话，也要有一个对自己要求比较高的指标，就是营业六个月以上的店面，要实现每个店每个月完成平均一百辆以上的订单量。所以我们既看好本年的效率，也不会过于短期，来忽视了其实长期的整个店面的建设和投资。那我觉得再往后看2024年、2025年，我们最重要的是会有多款车型推向市场。所以再基于这样的一个跟之前显著不同的前提下，我们还是会去开更多的店。其实目前开店的这些方式、逻辑，还有用户群，其实没有什么特别的奥秘。因为像奔驰、宝马、奥迪这样的豪华品牌，已经把应该下沉到什么样的级别的城市、应该开多少家店，其实已经验证得非常清楚了。

Okay.

What else can you go.

The 10-Q, that's filed with you at all how does Intel if you talk to that but just help us out.

Okay.

The neighborhood.

Sure.

Julia you sound on the EMEA yesterday, yes.

Hello, Michael.

Can you give me telling you about that in Canada.

Okay.

Okay great.

A huge balance sheet getting into.

Schedule a little.

No.

Hello, Good afternoon, Arnaud when your Apple because this year.

We will talk to you pre concert hall.

Okay great.

Sure.

Any help on that.

<unk>.

Sure Okay.

Sure.

How are you pushing out to the notion that could be the army anyway.

<unk> do you have a hardened by Zimbabwe.

How did you get that whole share.

Alright got it.

Xiang Li: 所以呢，在这方面我们不需要重新造轮子，重新发明。其实我们基本上就是遵循奔驰、宝马、奥迪的开店数量和开店逻辑，来实现我们销量的支撑。

Let me touch controller arena.

Helpful.

When you talk to your digital than anybody Hunter, Thank you and.

Thank you Pablo.

Okay.

Yeah.

Thanks, Sean.

[Company Representative] (Li Auto): On stores, we have a firm belief that good products and good channel, we can't live without either of them. The metric we use internally is, for a retail store which has been operating for six months, getting over 100 orders per month is a pretty healthy level of operating efficiency. With that said, we'll still focus on not only short-term sales per store, but also long-term.

[Translator]: On stores, we have a firm belief that good products and good channel, we can't live without either of them. The metric we use internally is, for a retail store which has been operating for six months, getting over 100 orders per month is a pretty healthy level of operating efficiency. With that said, we'll still focus on not only short-term sales per store, but also long-term.

Stores, we have a firm belief that good products and good channel where container.

We can't live without either of them.

The metric we use internally is for a mature store, which has been operating for six months, we think getting over 100 orders per month is a pretty healthy level of operation operating efficiency.

But with that said, we will still focus on not only short term sales per assortment store, but also long term, we'll be looking into investing in more stores and expanding our sales network.

[Company Representative] (Li Auto): We'll be looking into investing in more stores and expanding our sales network. By 2025, we will by then have many models and much greater sales than today. We are still committed to opening more stores and covering more cities, covering more users. We really think there's not much secret sauce in terms of where to open stores and how the stores will look like, because Mercedes-Benz, BMW, and Audi, all of them, have verified a very successful model in terms of user coverage and city coverage. We don't really need to reinvent the wheel here. Our plan is really in the next few years to continue to expand to lower tier cities and cover more users just following their footsteps, so that we can support our sales healthily by 2025.

[Translator]: We'll be looking into investing in more stores and expanding our sales network. By 2025, we will by then have many models and much greater sales than today. We are still committed to opening more stores and covering more cities, covering more users. We really think there's not much secret sauce in terms of where to open stores and how the stores will look like, because Mercedes-Benz, BMW, and Audi, all of them, have verified a very successful model in terms of user coverage and city coverage. We don't really need to reinvent the wheel here. Our plan is really in the next few years to continue to expand to lower tier cities and cover more users just following their footsteps, so that we can support our sales healthily by 2025.

By 2025, it will be by then have many models and much greater sales in today. So we are still committed to opening more stores and covering more series covering more users and we really think there is some secret sauce in terms of where to open stores and how the stores look like because Mercedes BMW and Audi.

<unk>.

All of them have verified a very successful model in terms of user coverage in city coverage. So.

We don't really need to reinvent the wheel here. Our plan is really in the next few years to continue to expand to lower tier cities can cover more.

Users just following their footsteps, so that we can support our sales healthy.

Healthy by 2025.

Ming-Hsun Lee: 谢谢李想总。那我的第二个问题是关于这个充电补能的问题，那就是想了解一下，因为刚才有提到我们现在5C的充电站已经有超过三十个，那有没有一个，比如说到2024年或2025年的年底的这个目标，那另外的话这个相关的资本开支大概是多少？那我们目前都会是以这个第三方运营商来帮我们建呢，还是说有一部分也是我们自己自建，然后运营。那最后就是也想了解一下，我们建这个充电站的逻辑，会是这个贵精不贵多，还是说因为预计我们将来的这个销量会是比较高的，所以说还是会尽力铺开，所以我们这个充电站不会仅限于这个5C的这种超快充充电站，谢谢。 My second question is regarding your charging network. Do you have any plan regarding your expansion target? What's your potential CapEx? Will you build the charging station by yourself or you mainly let the third party to build and operate? Will all of those charging stations be 5C grade or some will be a lower grade? 谢谢。

Ming Hsun Lee: 谢谢李想总。那我的第二个问题是关于这个充电补能的问题，那就是想了解一下，因为刚才有提到我们现在5C的充电站已经有超过三十个，那有没有一个，比如说到2024年或2025年的年底的这个目标，那另外的话这个相关的资本开支大概是多少？那我们目前都会是以这个第三方运营商来帮我们建呢，还是说有一部分也是我们自己自建，然后运营。那最后就是也想了解一下，我们建这个充电站的逻辑，会是这个贵精不贵多，还是说因为预计我们将来的这个销量会是比较高的，所以说还是会尽力铺开，所以我们这个充电站不会仅限于这个5C的这种超快充充电站，谢谢。 My second question is regarding your charging network. Do you have any plan regarding your expansion target? What's your potential CapEx? Will you build the charging station by yourself or you mainly let the third party to build and operate? Will all of those charging stations be 5C grade or some will be a lower grade? 谢谢。

<unk>.

And then just as a note with Iot told Michelle with Cedar Tony into any channels wholesale now.

Yes.

Oh, sorry.

Sunil Oneonta took a mandate.

Indeed took a more beyond that being one of the hot summer Glenda.

<unk> devices now women margin toys that you took out the Samsung.

Yes.

<unk> I was just wondering.

These women.

Jin Ho.

So really just the issue on the Otas.

And then guys just agenda the Sony intended.

What we see to the equation Parkway to Haynesville.

Jonathan Ho, Michelle Neal who is that.

Peter I'll call it seasonal isolating the Hasbro womens Tony in terms of which is.

So that's how I'd answer. So my second question is regarding your <unk> network. So do you have any plan regarding your.

Expansion target, what's your potential capex.

Built a charging station by yourself or are you mainly led to this third party to build and to operate.

All of those are charging station <unk>, great or some will be a lower grade.

Okay.

Xiang Li: 我是李想。2023年我们将完成超过300个高速的超充站的建设，主要覆盖长三角、大湾区、京津冀和成渝四大经济带。在2025年，我们的超充站将建设超过3,000座，覆盖超过90%的高速路旅程和主要的城市。我们会在保证健康的运营和自由现金流的前提下，完成充电桩的布局，这个对我们的财务压力还是完全可以承受的。我们的整个经营策略，就是在高速上，我们的超充站都是自建自营的，城市里我们会选择代理商的模式来加速整个城市的布局。

All the detail.

Danielle.

Banco Marco.

Also the telecom guys sure Dr. Russell Guy Diamond changing or Tony I think you bet.

No one yet.

And then Jonathan will talk about that yet.

Thank you Angela I'll forget it talk about the hull because it.

Also in retail.

Sure.

Yes.

Danielle.

I'll then turn the 20th.

Could you.

And that's how we got the hydro crazy.

Okay.

Yeah.

Good afternoon Roger.

With the Gulf was up although the total debt.

Great.

Hi.

My question I grew up.

You said that you're telling them.

Sure, Jeff will have Joe virtually sort of would you.

[Company Representative] (Li Auto): We're so on track to rolling out 300 supercharging stations by the end of this year. In 2023, our charging stations by the end of this year will cover mainly the four economic zones, which includes the Beijing-Tianjin-Hebei area, the Yangtze River Delta area, and the Guangdong Bay Area, as well as the Chengdu-Chongqing area. By 2025, we will have built 3,000 HPC charging stations, which will cover over 90% of all the highway mileage as well as the major cities in China. We will make sure to achieve that goal, of course, with operating efficiency as well as a healthy free cash flow in mind. So far, we believe the financial burden is totally manageable. All of our highway HPC stations will be built and operated in house, and all the city stations will be working with the franchise models so that to accelerate the expansion of our charging stations.

[Translator]: We're so on track to rolling out 300 supercharging stations by the end of this year. In 2023, our charging stations by the end of this year will cover mainly the four economic zones, which includes the Beijing-Tianjin-Hebei area, the Yangtze River Delta area, and the Guangdong Bay Area, as well as the Chengdu-Chongqing area.

We're still on track to rolling out 300, a supercharging stations by the end of this year and in 2023.

Charging stations by the end of this year and well cover mainly for economic zones, which includes to the attending meetings Hubei area.

The River Delta area and Guangdong.

Area as well as the Chengdu Chongqing area.

[Translator]: By 2025, we will have built 3,000 HPC charging stations, which will cover over 90% of all the highway mileage as well as the major cities in China. We will make sure to achieve that goal, of course, with operating efficiency as well as a healthy free cash flow in mind. So far, we believe the financial burden is totally manageable. All of our highway HPC stations will be built and operated in house, and all the city stations will be working with the franchise models so that to accelerate the expansion of our charging stations.

And by 2025, we will have built 3000, HCC Chinese patients, which will cover over 90% of all of the highway knowledge as well as the major cities in China.

We will make sure to fill.

<unk> finished achieved that goal of course when opt.

Operating efficiency as well as a healthy free cash flow in mind.

So far we believe the financial burden is totally manageable.

All of our highway stations will be built and operated in house.

All of the city's stations will be working with the franchise model so that salary.

Salary.

Pension I.

I'm trying to say here.

Ming-Hsun Lee: 谢谢李想总。

Ming Hsun Lee: 谢谢李想总。

J D zone.

Okay.

Operator: Next question will come from Yuqian Ding with HSBC. Please go ahead.

The next question will come from.

Kim Dang with HSBC. Please go ahead.

Yuqian Ding: 好的，感谢管理层。我有两个问题，第一个是费用管控。公司的OPEX的管理水平非常优秀，堪比19年特斯拉同量级的水平。那上半年研发的run rate也就是花了全年的30%，guidance 30%到40%。那么现在我们可以结构性地调低研发和费用指引吗？还是说我们自动驾驶下半年扩展摆传其实需要更大力度的研发和费用投入？然后第二个问题是关于走出舒适区，我们目前在这个大型家用30万以上的区间还是相当领先的。我们如果明年潜在的这个产品要投放在20到30万这个价格区间，目前看起来这个竞争非常激烈，也有很多现有的车型，那我们怎么去差异化，以及最大限度地保持我们相当于等同于现有的这个产品品类的竞争力。

Hello, and thank you Glenn.

<unk>.

Also about <unk> of anything on your own. So it can be used on the antenna side till now I think the same thing.

Yes, so on a run rate.

I apologize antibody and essentially that is about there. Thanks.

Now listen element, Hey, Jimbo lithium at Saudi Yes, let's say on Jean Marc has just now since.

How many of them quite on Biogen's, Michelle get diluted uncle Sam.

Yeah, Glenn disappointed, though tussauds chose issue well normal.

So I think the passing of <unk>, chairman and CEO Zander.

Now our meru.

And then I think on <unk> I was hoping to ask thanks a lot.

So again with Shanghai Java Gerry.

Thank you Danielle channels touching elements have been huge high <unk> did I say below a bunch of Shandong <unk>.

That can be instantly.

Speaker 17: I got two questions. The first is on the OPEX management. The company's OPEX management has been quite good, especially in H1, the R&D run rate is roughly 30 to 40% of the full year guidance. Can we structurally revise down the guidance on R&D and SG&A? Or that would suggest in H2 when we roll out NOA in 100 cities, that would require more intensity in terms of R&D and SG&A. The second question is about breaking out into our current dominance, dominating zone. We're currently quite dominant in the big size, the family utility SUV at the pricing category above CNY 300K. In the future, we'll probably have model launch in a pricing category between CNY 200K to 300K.

Yuqian Ding: I got two questions. The first is on the OPEX management. The company's OPEX management has been quite good, especially in H1, the R&D run rate is roughly 30 to 40% of the full year guidance. Can we structurally revise down the guidance on R&D and SG&A? Or that would suggest in H2 when we roll out NOA in 100 cities, that would require more intensity in terms of R&D and SG&A. The second question is about breaking out into our current dominance, dominating zone. We're currently quite dominant in the big size, the family utility SUV at the pricing category above CNY 300K. In the future, we'll probably have model launch in a pricing category between CNY 200K to 300K.

I've got two questions. The first one is on the OPEC management of the company as OPEC management has been quite good, especially in the first half. The R&D run rate is roughly you are saying 40% of the full year guidance. So can we structurally revising down the guidance on the R&D and SG&A or debit, suggesting the second half.

When we rollout.

100 cities that would require more intensity in terms of R&D and SG&A and the second question is about breaking out into our current dominated dominating zone.

Glad to dominate in the big side of the family utility SUV at the pricing category about stood out in the K, but in the future, we'll probably have model launch.

Pricing category between just around.

Speaker 17: Currently, we're seeing a very intense competition and many new model supply over there. How do we potentially differentiate over there and maximize the volume impact that we currently see in our dominating zone?

Yuqian Ding: Currently, we're seeing a very intense competition and many new model supply over there. How do we potentially differentiate over there and maximize the volume impact that we currently see in our dominating zone?

Currently we're seeing a very intense competition and many new module supply over there. So how do we potentially differentiate over there and maximize the volume impacts that we're currently seeing a dominating zone.

Johnny Tie Li: I will take the R&D question first. We will continue to invest in the R&D for either autonomous driving or other areas that we believe is necessary. We still want to keep our full year R&D expenses above CNY 10 billion. Thank you. We're very confident on the overall product leadership of the L6. We believe that L6 will become the best-selling product across the L lineup. We will continue to invest in its competitiveness, and we believe it will be the product of choice in the price range for family users.

Hi.

Okay.

R&D question first.

We will continue to invest in the R&D vault item described either for autonomous driving.

All other areas.

IRA there'll be PV.

The three of you.

We will work to keep our full year R&D expenses.

Bob.

10 billion RMB.

Yes.

Sure.

Two.

Yes.

I don't know how many.

Michel do you already have which already to RTW Bert Thank you Jonathan.

Just two questions here.

Sure just from the generally because you deal sure.

Yes.

But we're very confident on the overall product leadership.

We believe that <unk> will become the best selling product across the <unk> lineup.

We will continue to invest in its competitiveness and we believe it will be the product of choice.

In this price range for family users.

Okay.

Hi.

Operator: As we are reaching the end of our conference call, now I'd like to turn the call back over to the company for closing remarks. Ms. Janet Chang, please go ahead.

Okay.

We're reaching the end of our conference call now I'd like to turn the call back over to the company for closing remarks.

Please go ahead.

Janet Zhang: Thank you once again for joining us today. If you have any further questions, please feel free to contact Li Auto's investor relations team. You may disconnect your line. Thank you.

Thank you once again for joining us today, if you have any further questions. Please feel free to contact <unk> Investor Relations you.

You may disconnect your lines. Thank you.

[music].

Okay.

[music].

Okay.

[music].

<unk>.

[music].

Yeah.

Okay.

[music].

Yes.

Sure.

[music].

Okay.

[music].

Okay.

[music].

Okay.

Yes.

[music].

Yes.

Okay.

[music].

Yeah.

[music].

Okay.

Yeah.

[music].

Q2 2023 Li Auto Inc Earnings Call

Request a DemoDemo

Li Auto

Earnings