Q3 2023 XPeng Inc Earnings Call

November 15, 2023

Hello, Ladies and gentlemen, thank you for standing by for the third quarter 2023 earnings conference call for <unk>, Inc.

At this time, all participants are in listen only mode.

After management's remarks, there will be a question and answer session.

Today's conference call is being recorded.

I will now turn the call over to your host Mr. Alex sure.

Head of Investor Relations of the company.

Please go ahead Alex.

Thank you Hello, everyone and welcome to excellent third quarter 2023 conference call, our financial and operating results were issued MAU Newswire services earlier today and are available online you can also view the earnings press release by visiting.

<unk> section of our website.

Does Sheldon Dot com.

Participants on today's call from our management team will include co founder Chairman and CEO, Mr. Zhao Peng.

My Chairman and patent Dr. Brian <unk>, Vice President of corporate Finance and vessel Mr. Chow.

Chang Vice President of Finance and accounting, Mr. James Hu and myself.

<unk> will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available in the IR section of our website.

Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions.

The U S Private Securities Litigation Reform Act of 90 95.

Forward looking statements involve inherent risks and uncertainties.

Such the company's results may be materially different from views expressed today.

Information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with U S Securities Exchange Commission.

The company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Please also note that excellent earnings press release and this conference call include a discussion on audited.

GAAP financial measures as well as non-GAAP financial measures external news press release contains a reconciliation of the unaudited non-GAAP measures.

GAAP measures I will now turn the call over to our co founder Chairman and CEO. Mr. Hersh I'll phone. Please go ahead.

Our discussion is alcoholic who don't want to call it plays out.

The Chico's Fas Inc.

Yes. Thank you for what has the shelf on the shoulder pain crisis.

And you know those change without chalkboard that changeover.

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Yeah, you bet.

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Linda could you guys share that.

Leslie.

I will now.

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Sure.

And yes, and Yeah go ahead Colby.

Oh, Yeah, Oh, yeah.

Children's Hospital.

Gotcha Gotcha.

Hello, everyone today I'm pleased to report to our shareholders and customers that after three quarters of transformation and effort. We have entered into the initial phase of a virtuous cycle driving improvements in cells, Brent and niche team morale and free cash flow it is extremely difficult.

To deliver such a turnaround in the smart car manufacturing.

Therefore, I would like to express my gratitude for your support and patience throughout the journey.

Going forward, we're confident in achieving rapid sales growth and notable improvement of gross margin in the fourth quarter and we're ready to gain considerable market share in 2024, achieving a high growth target that is significantly above the industry average.

Sure.

Anna Gene O'neal.

Sonya.

It doesn't say that.

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Those are the two that Sheila <unk>.

To achieve that.

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That's it I.

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That team so that they don't see it as a jacket that you think that's such a fabulous.

The way, it's set up to sell.

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China's new energy vehicle industry has witnessed resilience and growth must increasingly intensified competition throughout 2023, creating great opportunities to reshape the industry landscape.

Competition on electrification and modification is speeding up the replacement of IC E cars with Mtv's.

And AI is revolutionizing the technical structure of smart Tvs and transforming automakers' business models.

There are no shortcuts to Adas technology, the only way to determine whether mass production Andy inflection point of Adas technology have been reached is the achievement of nationwide coverage with low cost a high level of safety and great customer experience across different models.

During our Tech day on October 24th we launched a public testing of ex <unk> and the first batch of 20 cities, where high definition maps are unavailable.

Our plan is to expand our coverage to 50 cities by the end of this year.

Oh technology, and AI will empower our customers to use adas wherever they drive throughout the country.

X spine has been a pioneer and leader in Adas technology, and as customer adoption I strongly believe that the demand for Adas will surge in the next five years and <unk> will be the preferred smart EV Brent for customers.

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He said, yes, she's shopping centre of options.

This won't ship has actually moved it up which is encouraging.

So I think all of them.

Our portal.

Unfortunately, or Fortunately, thank you don't tango foothold today with a delivery of a charge element that haven't adopted I mean, Peter.

Yeah.

Next year, we will consolidate and integrate all full stack in house R&D capabilities, and a wide range of systems, including the Nextgen E architecture to unify a D. H S domain smart cockpit and voice assistant brand, New large language models, the nextgen chassis and <unk>.

Powertrain as a result, we'll be able to deploy multiple models for the global market rapidly and realize the integration of cars between different platforms as well as between cars and other vehicles.

I believe this will significantly enhance our engineering capabilities to support various products in the global market strengthening our edge and smart technologies by integrating different systems.

Uh huh.

Well, if that's what your synergy.

There's also a a saturday that tools are well I mean, I know you just healthy tissue.

So Jason.

Corporate hotels, essentially shouldn't tell ourselves also for the peer group.

That also by itself when you think about a whole bunch.

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Looking at hedging the English telephone and of course, Inc tend to lead to a shipyard.

Well I mean Apache as you follow their phone call them and she got a total open to that.

That's helpful.

Apart from our commitment to Adas and smart technologies, we have made crucial changes to our corporate strategies organizational structure senior management team and product and technology roadmap over the past three quarters, making.

Making various changes as such a magnitude simultaneously could've brought risks and impacted near term results.

Thanks to the mutual trust and endeavors of the whole excellent team. These changes did not affect our short term performance instead, they allowed us to deliver better than expected results.

Well I'm going to tell them what else hope what I saw in F&B and Jonathan.

So kind of thing that shows the sales change.

So you got it handy.

For the third quarter of 2023, our vehicle deliveries exceeded 40000, representing a 72% increase quarter over quarter.

Ali we achieved positive free cash flow was over 1 billion RMB and cash inflow.

Yes.

Maybe just tell us what else I suppose that at least the shingle woman that will get us a toehold if you know what.

We're confident of setting a new record for vehicle deliveries at the fourth quarter, our target is over 6 million units.

Oh, I'm, sorry, 60000 units.

<unk> do.

That's also the D S.

<unk> TV.

With the shutdown, but that's yes, Joe for that total package that she deal does have a golf Galaxy 12 months, I mean that shovel or you can get as high a lot of times, it's usual video showing how Toshiba D. As she mentioned I'm a believer in switching and goodbye.

<unk> culture.

Regarding product sells the G. Six electric SUV has become the top selling vehicle in the 250000 RMB price range during its first quarter on the market.

In October over 8700, <unk> six vehicles were delivered this early success of the G. Six is a strong validation of <unk> ability to create and introduce a new benchmark model and the relevant market segment, thanks to our highly differentiated technologies and effective marketing.

By doing so we're bringing smart EV technologies to a much broader customer base.

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Did you put in place.

Sure Joe.

So as you think about each hold what are your nitrogen shouldn't change all of that CHF 1 billion.

What's the chance and we're satisfied.

We know engines.

In September we launched the 'twenty 'twenty four edition of Exxon Jeannine <unk> with a higher gross margin than that of the original version.

This cost reduction was made possible through events Smith in technology and engineering.

In October we delivered over 4000 units of Chi nine making it one of the top selling electric Suvs in the 300000 RMB price segment.

This is.

Okay.

But unfortunately the jingle.

All right that telco shamefully admit shouldn't didn't show that feeling that pain.

In October we achieved a record breaking sales month with over 20000 vehicle deliveries and secure the top spot among EV startups for BV sales volume again.

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<unk> 10 did Susan Docherty Tau impute that should have a clean gentlemen.

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Your bill pay to hold and so on but just since the hook chichi shoulder jogger.

<unk> training channel what were excellent.

So instead of a fashion show at a geography change bullshit.

And they don't know about you that I'm sure you bet.

Thanks Joseph.

Thanks, Joe.

I'll take that actually you get full crisis careful what should I ask Joe Choi.

Rajiv Tonya empiricism showdown.

Yeah.

We're excited to announce that we will showcase our flagship M. P V. The excellent X nine at the Guangzhou Auto show and start presale on November 17th.

The X the X nine is a seven seater pure electric smart M. P. D built on the separate 2.0 architecture. It stands out from traditional MPV models with a superior space design and maneuvering that Chris perfectly combine the advantages of an MPV and SUV.

Moreover, the X Knight it comes equipped with real wheel steering as the standard configuration.

Turning radius similar to that of the <unk> seven.

With <unk>, our industry, leading technology that does not rely on high definition maps maneuvering in MPV has never been easier and more agile.

These technical capabilities are not found in any other MPV models on a market.

X nine will be delivered from the beginning of January 2024.

We're confident that X Knight will become the top seller in the large electric MPV market.

So they are soon at Oracle Java Chi for Air travel a tasteful gingerly Torchwood the question session.

Okay cool.

You saw what she made a change.

Hello.

We thought that's what can be the D D.

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Changing that should favor understand Yamaguchi Mora with Nielsen is the strategy to sell it so it kind of India and so as you know Maura just egress to achieve with his function is to Jesus.

It's kind of cultural in Ohio.

Toyota So why are you just want me to.

Sure.

<unk> 24 door punches.

So culture, the ingestion of social.

Well on the shelf until <unk> got away.

Turning to our Thunder tuition now.

Thank you Patrick what are you guys changing well put a lot of hedges.

In 2024, we plan to launch highly competitive new models based on behalf of 2.0 architecture.

Additionally, we intend to introduce a new EV brand in the 150000 RMB price segment.

Leveraging our partnership with Didi, China's leading mobility technology platform. We believe that this new brand will greatly accelerate our sales growth and expand our market share in the a class easy market.

Our team is currently on track to develop Mona the first model under this brand with an expected launch date in the third quarter of 2024.

We believe that Mona is just the beginning of an exciting journey and we're committed to pushing the boundaries of technology and keeping costs under control.

This will enable us to launch smart EV models that both autonomous driving technology in the mass market segment at a price point of 150000, RMB or 20000 U S dollars.

This move will give our product a significant edge over other models in the segment, allowing us to reach a wider audience in a blue Ocean market segment.

Sure.

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Put up a little bit.

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It wasn't the Baidu channel changing shelf. So again, that's something we're looking to obviously you'll show the whole lot Smokey hills hurting ourselves.

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So the only thing.

Yeah.

President Ms. Wang from <unk> has been meeting a significant overhaul of our sales network, making it more efficient flexible and extending faster to cover more tier three and tier four cities.

We closed almost 100 low performing stores during the first three quarters. This year and launched the Jupiter project a program to recruit more competent franchisee partners.

We secured investments for over 100, new stores within two months and established cooperation with top tier dealer groups specializing in luxury vehicles.

As we head into the fourth quarter were accelerating new store openings and expanding our sales network to reach our goal of 500 stores by the end of the year or early next year.

These upgrades and rapid expansions, coupled with innovations and marketing will become one of the most important drivers for all of the sales growth in 2024 and beyond.

Julia will pay.

1000 <unk>.

Both of them.

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That's useful.

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Congratulations jixi pantonal quarter horses.

And with us that as much as you like.

I don't have a lot of Chi Chi Chow opinion titles, Washington that goes out to your question. Please.

First of all yes, all of that's anecdotal.

Toyota and children treated.

G familiar on the call I'm going to tell Magellan petco shared with us.

Well, so the way to judge our full but a similar corporate any one real quick.

You also to yourself.

Fishy.

Yes.

So each open channels and the gentlemen.

Number two the transaction as a faithful question I know you are finishing.

Joshua sensors.

Oh, yeah yeah.

Are there any us in England, the jumbo birds eye toward a mobile assuming an antibody.

And he said that he said.

During late September I had the opportunity to visit the Volkswagen group's headquarters in ones that those but we had a detailed discussion with Mr. Bloom and both Robinson senior management regarding all comprehensive strategic partnership which helps clarify the blueprint for our long term.

Teekay Corporation in technology.

We also explored deeper strategic cooperation opportunities in the international market.

Currently we're jointly developing models based on the G. Nine platform, which is in full swing the strategic cooperation in the supply chain is also progressing effectively and we expect cost reduction in the supply chain to generate meaningful results in the next year.

To enhance our cost control, we learn from the best practice of Oems in the industry.

The progress of cost reduction in the entire process of design R&D and manufacturing and marketing has given me confidence in accelerating the progress to reach the goal of 25% cost reduction by the end of 2024 or even exceed it which will significantly increase the gross margin next year.

Year.

So changing the OTA Joe Okay.

Thank you to walk that cycle changing really.

So but yes.

Send you to a woman associated that's how it works for you and then maybe the things have changed.

Schindler Sanjay what you can tell that she's going to war <expletive>.

Sure.

Richard surgical Genworth has conducted without change.

So it is sort of a woman's tongue in cheek when will you need a cheap.

Let's look at the cash flow, we had approximately $36 5 billion RMB in cash at the end of the third quarter of 2023, and we generated over 1 billion RMB in positive free cash flow during the same quarter.

With our new product and technology, driven cost reduction, we expect to see a significant improvement in our gross margin, resulting in even stronger positive free cash flow in the fourth quarter.

This is an important milestone for us to achieve profitability at scale in the long term.

Okay.

Alrighty Sundance is such a woman that's only Joseph O'dea Gateway, what Joe Channel.

Gil West Central Alberta, why do you think this is balance sheet.

Satish.

So luxury cheeseburger with Chi.

You bet Seth.

Chevy April Shelburne, whichever without that full suite.

Huggies, Joe easy adoption that approach is a key issue.

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Hope he should have congestion.

Yes.

We will go a little further.

Gotcha, Okay, you wait boardwalk Sunoco Joshua.

Synergy question, Jim with regard to the linear and shouting too good a job and Genesis.

Are you sending me until its over threatening agenda. So let's say there was a lot of it.

Looking ahead, we're projecting our total vehicle deliveries to be between 59000 563500 units in the fourth quarter of 2023 with a quarter over quarter growth rate of 48, 7% to 58, 7%.

We expect our revenue to be between 12.7.

And 13.6 billion RMB during this period.

We are committed to implementing transformation, primarily in our organization and marketing strategy, which we believe will produce more favorable results in 2024 and beyond.

This in turn will enable us to accelerate our growth and expand our scale from the fourth quarter of 'twenty 'twenty four.

Aim is to capitalize on global opportunities arising from our leadership in smart E beam technologies improve our organizational efficiency and gain a dominant market share. Our ultimate goal is to establish <unk> as the top smart EV company by 2020 by 2030.

Xiaomi all of them, that's how we'd be gentle with ITG, though it wasn't that different you do that's helpful.

Thank you, everyone and with that I'll now turn the call over to our VP of finance, Mr. James Ward to discuss our financial performance for the third quarter of 2023.

Thank you yourself home.

Now I'd like to provide a brief overview of our financial results for the third quarter of 2023.

Reference RMB only in my discussion today, unless otherwise stated.

Our total revenues were.

853 billion for the third quarter of 2023, an increase of 25% year over year, and an increase of 68, 5% quarter over quarter.

Revenues from vehicle sales were 7.84 billion for the third quarter of 2023, representing an increase of 25, 7% year over year, and an increase of 77, 3% quarter over quarter.

The year over year and quarter over quarter increases were mainly attributable to the accelerating sales growth of the G. Six in the third quarter of 2023.

Gross margin was negative two 7% for the third quarter of 2023, compared with 13, 5% for the same period of 2022 and negative three 9% for the second quarter of 2023.

Excluding the negative impact attributable to the G III and the production as we described in the prior quarter. The gross margin would have been breakeven for this quarter.

Vehicle margin was negative six 1% for the third quarter of 2023, compared with 11, 6% for the same period of 2022 and negative <unk>, 6% for the second quarter of 2023.

The year over year decrease was explained by first the inventory write downs amounting to 0.2 3 billion related to the Moto G. III as we finish the rest of the production in its lifecycle with a negative impact of two nine percentage points on vehicle margin.

And secondly increased sales promotions and the expiry of new energy vehicle subsidies.

The quarter over quarter increase was primarily attributable to the improvement in our product mix and battery cost reduction.

R&D expenses were $1 31 billion for the third quarter of 2023, representing a decrease of 12, 9% year over year and a decrease of four 5% quarter over quarter.

The year over year and quarter over quarter decreases were mainly in line with the development timing and progress of new vehicle programs.

SG&A expenses were $1 69 billion for the third quarter of 2023, representing an increase of 4% year over year, and an increase of nine 6% quarter over quarter.

The year over year and quarter over quarter increases were primarily attributable to the higher commissions paid to our franchise stores.

As a result of the foregoing loss from operations was $3. One 6 billion for the third quarter of 2023, compared with 2.18 billion for the same period of 2022 and three.

<unk> 3.09 billion for the second quarter of 2023.

Fair value loss on derivative liability. It was zero point 97 billion for the third quarter of 2023.

On July 26, 2023, our company entered into a agreement with Volkswagen group to issue up to 499% of our company's ordinary shares for a fixed purchase price of $15 per eds.

Until the transaction closes fluctuations in the fair value of the forward share purchase agreement were measured through profit or loss, resulting in a noncash loss of zero point 97 billion for this quarter.

Net loss was $3 eight 9 billion for the third quarter of 2023, compared with $2. Three 8 billion for the same period of 2022 and $2 8 billion for the second quarter of 2023.

non-GAAP net loss, which excludes share based compensation expenses and fair value loss on derivative liability was 2.79 billion for the third quarter of 2023, compared with 2.22 billion for the same period of 2022 and $2 67 billion for the second quarter of 2023.

As of September 30th 2023, our company had cash and cash equivalents restricted cash and short term investments and time deposits in total of $36 48 billion.

The positive free cash flow in Q3 as shelf home mentioned earlier was the main driver for our higher quarter over quarter cash balance.

To be mindful of the less of our earnings call I would encourage listeners to refer to our earnings press release for more details on our third quarter financial results.

This concludes our prepared remarks, we'll now open the line to questions. Operator. Please go ahead.

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 then two if you are on speakerphone, please pick up the handset.

Ask your question.

With the benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English for the sake of clarity and order. Please ask one question at a time.

Management will respond and then feel free to follow up with your next question.

Your first question comes from Tim Zhao with Morgan Stanley.

Please go ahead.

Okay.

Without going T E C U E.

The change in kind.

The other question Suzie too you couldn't do it or could you cheated.

I'll always tell me shown G. G. Yahoo that you guys can.

The change in G.

Gee I think yourself all the shelves with that whenever you use your cello C tuning to kind of again sort of getting into it I did took a change in the thought that he sees how Houston titrated. The journal, telling me cut out could you talk to yourself against that.

But she got her yoga, who shouldn't hydrogel watch hunting shall show that's a figure women against that she had a Y O y.

He sends a bunch of pools, which he quite Hitachi ultra deep links. So my first question is about.

About to the competition.

So we noticed that there are more tech companies like Vale and Xiaomi.

Challenging gaming company it'd be makers.

We noticed that tech companies have all the advantages across position ecosystem, our asbestos chatter with that does remain quite difficult for carmakers to replicate them how are they expanding backup for such a short call base versus tech players in the following quarters. That's my first question. Thank you.

Okay.

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Oh Tesla today is I'll put it out for you.

Hello.

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Hello, Jason.

Diesel so citizens or you wouldn't be Oh, yeah go.

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They are trying to cope with that.

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Comment a little from them.

Because that's what their children.

Females.

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Show, So so 40 San Francisco.

I would tell you so synthetic food Oh does that bias it what did he say.

<unk> is fortunate to have a local coffee shop.

So you've got those Sheila Campbell told them and meet changing that's a cool that's all.

Sure.

Hey, Dmitry that's for sure.

So you sold through a challenge.

Total T cell count while cutting costs.

Okay.

Thank you so much for your question. This is Sean Paul now this is a very good question, but not an easy question I like to start by reviewing my past entrepreneur Spirit Chip I experienced I first started with an international Internet Company and also and then I went on to investing ex Pat I mean youre.

Question has always been a question of thinking you know for many years in the pass of my experience. Let me give you. An example, when I was in the Internet mobile Internet business. We saw a lot of competition and there are different ways to compete in that landscape. For example people turn to us acquiring traffic and that is a good way.

<unk> actually make up for different shortcomings in the ecosystem or the lack of different capabilities our abilities in different aspect and you saw a lot of a cross over from different players in different sectors, and you realize that the problem with using or relying purely on a topic is that there are a lot of media that has.

The traffic that is not transferable and let me give you. An example, you know audience on our you know from traditional Washington, No T. V. You know it may not be the same audience, who rely so heavily on mobile phones et cetera, and so that's actually lead to a lot of failures, but right. Now you also are seeing a lot of competition from players are across different sectors, you know could try.

To actually enter a new domain using different the ecosystem or capabilities from daragh.

No one sector. For example, you see players from the real estate the mobile smartphone industry and also from the Internet and that a lot of tech companies as well.

So when we compare ourselves against these players from other sectors, we have to really come down to our internal capability. We have to look at what we have as Australia. For example, we are very strong with all technology, where you know a very strong with all AI capability and also manufacturing capability as long as the supply chain as well so really what help.

To differentiate ourselves and sent out from the crowd is that we can actually focus on what we already have and expand using different partnerships. For example, we've been started we have been very committed to actually expand our ecosystem by for example, investing in our other format of mobility different vehicles.

We have invested in our robotics technology and flying cars et cetera. We also have announced a partnership with Volkswagen in different aspect, including you know supply chain technology, our global sales and marketing and also after sell services as well and in August We also announced our partnership with D D a leading mobile.

<unk> platform to expand our market share in a class of.

Vehicles segment also to build the foundation for all future expansion in Robo taxi, except China beef are just some of the examples of how we try to make up for a shortcoming in the ecosystem and we believe that by combining different capabilities of food as a partnership we can actually strengthen our overall comp.

Pertinent.

Building on the strong foundation that we already have which is our technology and our core manufacturing capability as a carmaker. Thank you.

Cause yourself on this one.

No telling when tissue is going to be a temporary but didn't gotcha.

Okay, I'd say of course, I'll finish up on sort of $2 200 yesterday, Sanjay jumping to the mobile no you won't be showing some cities without media and culture.

Lingo you either be judge coaches coach shooting them already but since I'm sure what sort of jumping July time things like coupons or something gotcha, okay opinions of controlling it yourself, what kind of dog when they pause until she says she said it was.

So I apologize if I can squeeze it so it's all going to be awesome.

Just based on sort of Chicago culture, He shall change out Glenn He said Oh Gee to shop. When she chose that word I grew up with that she finishes tells me that.

She does getting challenging things Adrienne.

Sure.

So my second question is about the pricing power because.

Mentioned earlier in the call I think the car.

Can you talk you should cut the 'twenty 'twenty four production costs by 25% as the company optimized design and efficiency et cetera.

However, without enhancing their pricing power.

Very likely the battlefield cost saving my COPD placements by the constant on the coffee.

Especially quite a lot of carmakers to all sorts of good pricing strategies. These days to test on the BYD and dressed respond tactically.

Tactically so how this extra and planning to strengthen pricing power on top of the cost reduction into 2024. That's my second question. Thank you.

So shall we say Tom Tony the Gwen.

So until she wo, that's hungry that cause that change a little bit of a child Pinnacle associates.

So all of those are the people that travel to what.

What it tells me that she's only union there so can you.

Doing more.

So for those at the time of close of the deal So Greenwood and Jonathan.

The more you use on the show there.

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The need for option at whole foods or a corporate target.

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Highlights of your pin pad E F E. G do you cool cool month.

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Well then well.

Hello, Keith.

He also possibly a teenage function.

So you want to.

And of course, I'll chime in and they're totally called Evo dual clutch.

Hi.

Called official.

Is that the new trend.

As shown in shape.

Oh, Yeah, sanyo available without the kind of woman pet.

Great question Jacob.

Greenwood 10, but pin pad Thai baht, Josh Siegel from your shovel a toll road.

Total control.

Okay.

Thank you for your question first of all I agree with you our opinion that our pricing power is very important and in the long term, we definitely want to become a the apple in our Automaking, which has very very strong bargaining power and pricing power.

The carmaker and Oh, Yeah, we believe that there are several aspects that's an important that's affecting our pricing power. One is scale in the router is cost control capability as well as our branding and differentiation definitely the scale itself affect all costs and it's also the same the other way around as well and right now we are in the process of reshaping our overall capability as well as <unk>.

Our brand is.

It's very important that we can actually first of all built our brand image as well as contributing to that customer value by really strengthening our differentiation. Our president Mr. <unk> is a big advocate an eternal and also systematic innovation. So going forward you are going into 'twenty 'twenty, four and 'twenty 'twenty four.

Five we will continue our effort and commitment in the second scaling up of our cells in volume controlling our costs building our brand as well as our differentiation in order to gain a bigger pricing power. Thank you.

So thank you very much appreciate it guys. Thank.

Thank you.

Your next question comes from Min Li with Bank of America.

Please go ahead.

Thank you someone's I'll go ahead and.

No.

Okay.

Following that.

Oh, it's all Windows to go ahead.

2000, okay.

So long ago, I don't see that you actually have that interesting.

We did see Houston.

Does it go you guys or is it.

I'll touch on this whole notion of homes are guilty.

Oh, okay.

And again, that's something that was it.

So Johnny.

John just mentioned by John.

Got it got it.

Jim do.

No we don't.

Thank you.

Oh sure.

On the P&L on a go Colorado, John I'll do occasional Michelle Jonathan.

You can see in terms of the 2010 that you're doing.

So on the whole, you're telling me Oh Geez Goldman.

Goldman's, Louisiana.

So it seems that it has to be all that kind of number of.

Tonnage Rajiv.

Oh shoot.

So I didn't show you the Xiaomi, who doesn't know what she does.

Hudson, Okay, Hello Chu.

<unk> I'm sorry.

You said some shell.

Uh huh.

Missmahl Julien it's Tom.

China.

Channels. So stores are reforming is is continuing so do you have any metrics regarding to evaluate your progress.

Channel our reform and besides that we have.

Any targets.

To amounted a longtime direct sales and also dealership.

Vintage.

Yeah.

Okay.

Sure let me know.

So there's a quite.

Sure.

Cool.

Yeah Yeah.

He says I'll touch on it.

At that time, but she thought.

And they're talking to.

Faith in the holiday.

Hi, Chad.

Jim mentioned that.

Sure.

The other tissue.

For two shovels as function he taught us.

J J.

Oh I see.

So the good things about that.

Cool.

Jakob you got that challenge.

Unless leases at the moment.

Suddenly it means to them and say the tolerant of the Clos are anyway.

How good is that a woman does.

Well Oh.

So I can assure you.

Thanks, John.

I fully appreciate that David but she got Tulsa, you're talking about John that it should have a feel of Jameson in Chicago.

Oh sure Yeah Jonathan.

Yeah sure Joseph censorship sensitive.

So you will have that strategy to change the people culture.

Sure.

Thank you for your question now I would like to address this by giving you a little bit of background information about our president Ms. Wang <unk>, she come from Chau Cheng quite well.

Traditional OEM and he has been excellent and controlling costs developing channels and also leading our innovative systematic overhaul of the company. So in the first few months that she joined our company. She spent a little time observing what we currently have we used to have this hybrid channel Oh.

Having our cellphone source together with some some franchisee so much but we had a total control of the pricing for all of the stores I mean, all of the channels and going into Q3, I mean for the past quarter. In Q3, we have already set our future strategy of channel innovation or before them, which will actually cater to.

Two different kinds of dynamics of changes coming to going into 'twenty 'twenty five to 'twenty 'twenty sake. We are talking about for example, significant Li more models that we're going to launch in 2025 and also we take into consideration the future of market competition and market environment and also.

Our future expansion to cover not just tier one tier two cities, but also tier three tier four cities as well.

Yeah.

Unless villa hasn't.

And we'll go with that.

Yeah. So.

G show so you're foregoing your cheetos also teaching change out Tianjin provision gets it just shows all Florida Gotcha.

The Tulsa without that.

Union of Citigroup. Please casual told what you've had to either changing the CFO.

I see what would then be empty the.

Total video.

You're talking to us and we've done that.

You can see in Towson shortly assuredness should yes.

Dominion that E G. The logical public deal without a true data shows us.

But that shouldn't change through the quarter.

Yeah, but I still wasn't that 60.

T shirts, instead of showing up at the table.

Hello, Paul.

It's true that when we get on T shot midnight, so called inkjet, yet so you shuffle, Nick over to you to show them for little quite Tulsa with clean with what he should have showed up.

Okay.

Got it for Finjan with body total that country Nyota cemetery that Joshua.

So have you gone into over 20 different ways. It does show what did you do a chink in that high shovelnose ketchup, Xiaomi and engender, Ohio.

Well then shouldn't that's what hit her daughter says a woman can sheet.

We'll wait for them to go.

Okay.

Yeah.

So in the mid to long term, we aim to have at least five franchise stores that are capable of not only doing south but services as well and in the mid to long term. We also plan to have a total of at least 1000 service centers across the country that can help us to provide better services to our customers and going into Q4.

We plan to open 100, new stores that can allow us to expand our sales network more extensively and so by the end of 2023, and we're gonna have a total of 500 stores of different modes and over time, because it takes time for those new stores to build up their capability and experience. So we believe that the the time off.

The Q1 and Q2 next year will be the time, when we can actually see a lot of growth in our deliveries themselves and that can also allow us to see grubs and deliveries themselves in lower tier cities in China as well because we are going to build more stores in those areas and regions in terms of the pricing control, we would remain at very strong.

In terms of the extent of price control and we are going to evaluate the performance of different source from a different aspects, including their M. P. S and weekend equipped them and empower them with a wide range of tools and we can control the procedures and we can do a lot more things to maintain.

Our strong control after service qualities of those stores as well now in terms of the especially and seize up at the format of the stores I agree with you and we believe that.

Important that we keep improving the overall efficiencies of all stores because currently we see still a lot of room for growth there for improvement there.

And by 2020 for it we expect to see a huge uptake in terms of the efficiencies about store. Thank you.

I was curious I wonder if that was the best deals when she was so by each one.

I suppose just a woman.

Chelsea Chin.

Truecar.

Chargers.

Uh huh.

You kind of guided to that.

She did not.

Oh really.

Okay.

It just took a drink.

To each other be Jumna places that the T cells can do high usual Martina.

Once you're in that kind of density in high school, we actually can be done doing so we went into the <unk>.

Many of you have adequate water through.

Do I know, New Jersey, which was not initiated the traditional shoveling assertion simply just like it was all doses on wireless as a hurdle to do that.

Now do you want to go.

Okay. Thank you.

I'm going to ask Tom You said, you know what if I <unk> Jonathan.

My second question is related to our export business.

October you also have a.

Thousands of cars.

To oversea market.

Future will you consider to build more direct operated stores Oh, you were relying more on the distributors locally there we go.

Your current product portfolio.

Do you think that you will export O&M models oversee or you have selected a few models from oversea market.

Do we have any plan for South East Asia market.

Okay.

I mean, it's Brian let me address your question regarding the international expansion.

You're correct that we currently employee you know sort of a hybrid model in the Nordic countries, we have to record stores as well as our partnership and agents.

Going forward, we probably kind of opt to use them more of a collaborative partnership model using either agents or distributors for specific markets. So that's probably going to be likely the mix will shift towards a more partnership oriented model and in terms of product that for international markets.

You saw that we currently have G nine and <unk> seven are currently studying in Europe already we will be launching <unk> six is a global product next year. So I would say, it's only the subset of products that we will design and proof for international use not all our products. So the product I mentioned.

Are the ones that we're currently decided for global markets and also we have plans for Ryan driving models next year as well for example by the end of next year, we plan to rollout our first Ryan driving model.

Likely to be based on the G six model.

With that we'd be able to tackle southeast Asia market, so that would definitely be in our site.

And there will be also looking at other Ryan driving model markets as well.

Yep. Thank you.

Ryan I don't have any questions. Thank you.

Okay.

Your next question comes from Tina <unk> with Goldman Sachs. Please go ahead.

I see.

T D.

Sure.

Pete.

Uh huh.

Sure.

I'll, let you go.

Uh huh.

Thank you.

Sharia.

Oh, Yeah Foundation, she sounds a judge.

Yeah.

Oh sure.

You saw I shall conduct.

Oh.

Does it.

No.

She's just outweighs that Donlin, Gold's, hi, gentlemen, rukwa apology <unk> nikko.

Yeah.

Matt boss.

Yes.

The Paw patrol J required a hot that guy.

Until the Churchill Downs I'm Alisha.

Your breakeven now.

Now what column is showing its oh.

Got it out in the wash.

Our Union city too.

Oh Nathan.

Children with them all you should add passenger sedans, you're old about though.

Hey, a J.

So why don't you show them that you guys called out.

Don't judge.

Cool.

In some ways that cheap.

Yeah Yeah.

And then Shang Guang Dong.

Oh <expletive> minion, Zelman Zelman do quite well.

You see that you're gonna looting Shinjuku, Tokyo lunch, all that <expletive>, just you call it.

It will be tough with Shandong womens J D.

Yeah, Sheila to wash out.

Josh its roll out Saturday, they sat down you kind of seeing it by chance.

J P. G E S Pizza, guys say I don't like to go back.

But what you'll do that.

No what I think.

Thank you very much for your time management. So my first question is regarding our sales volume. So according to our fourth quarter, our sales volume guidance. It seems that November and December will be flat versus the October volume. So just wondering a what is a what is the reason here are we just being.

Conservative or is there any specific trends.

Observed in the industry and then the second question is regarding gross margin So management mentioned.

Excluding the impairment loss of G. Three D vehicle gross margin was breakeven in the third quarter of 23.

The last time, we delivered over 40000 units of vehicles was in the fourth quarter of 2021, and then back then the vehicle gross margin was actually 10, 9%. So I'm just wondering what is leading to the differential in gross margin and also related to that management mentioned that next year.

We're expecting to see a great gross margin enhancement, obviously, we know the cost.

Cost reduction is pretty on track even ahead of our progress, but then how much price decline all we factor into our the Ah. This gross margin expectation because we see that this year.

Three quarters this year and average a S. P actually declined by 6% year over year. So how much of the competition I'll be factoring in into next year in terms of gross margin guidance. Thank you.

So Peter.

This is Brian let me first answer your first question the guidance of 60000.

This quarter I think are reflective of our confidence of the progress we've made in the.

In recent months.

We think it's actually a very important milestone for us to reach you.

Average 20000 per month. So this is I think is a very I would say important milestone for us and also by giving this guidance. We also are considering the the competition as well as the macroeconomic backdrop that we're facing in the fourth quarter.

We're confident with.

The the guidance because obviously the backlog we have already as well as the momentum we're seeing in our order intake, but I think this is also reflective of the market at the moment and we hope that this is a realistic card for us.

And I'll hand over to James for the gross profit comments, yes.

From a gross margin perspective.

First of all as we talked about earlier, even if we compare to on a year over year basis. The reduction in margin came from as you mentioned the Q3 O P impact that we have booked in this quarter and this is this will be the final impact from the <unk> perspective.

Secondly.

You know into going into 2023 the new energy vehicle subsidy has been removed from the market and that obviously has an impact on our margin as well you.

You didn't mention our E. S. P is reduced overtime.

That's our overall market dynamic as well because we are we've been trying to improve the product competitiveness.

For our product as well throughout this journey.

In the meantime.

Supplements and we do expect our gross margin to improve in Q4 meaningfully, particularly our vehicle margin will become positive we believe in the fourth quarter and one one proving factor as we improve our product mix is is that as we launched a new G. Nine.

24, we see that the gross profit margin is actually higher than our older version of <unk>. This is a great proving point for us to continue to drive profitability of our products I hope hopefully that answers your question.

Oh gosh.

Uh huh.

Follow up then.

And then.

But nature shows.

Got that.

I just have one very quick follow up so in terms of the cost reduction technology improvement cost reduction, which are the models that can benefit from the cost reduction.

When the soil the Cushing thoughtfully. So that you do tend to go and sell them on the household debt as a woman.

Essentially all of the.

So the shutting down of personnel related cost.

If we can do it or don't get sort of pillar two.

All of the models that we have will benefit from the cost reduction driven by technology advancement, but among our top selling models, we are going to put more effort into driving up I'm driving up the cost reduction.

Jim.

Your next question comes from Paul Gong with UBS.

Please go ahead.

Oh sure sure just the ones that you want with it.

You go into some quite a bit of manado subscription part of the team with only two where do you see that was a chunk of b when they go through with you too. Thanks to the Chesapeake Bay, a bushel tied to a woman somebody on a true friend social knowledge, which in part are you cool pinpoint.

Pinpoint a team with a home run off we probably shouldn't go with or without any man pumps. So Shlomo. So my first question is regarding the position of the Moon up around islands find the pricing point is generally in the wintertime.

But it's not really too much lower and so how shall we differentiate the brand positioning of the two brands.

Well not also going to be available at all coverage those are to be sold to simultaneously.

Yeah.

Well not quite I mean, yeah.

Are there things show up on the deal.

Hi, there.

Shanghai Tang Wei.

So it didn't change too much.

All ages into the show hold as shown by the Shanxi the mobile channel.

So let's see.

Sure.

Mm Hmm, Okay, Ive always sunshine.

You can view shutdown Portland, three dose of Hudson Cai shovel into the technology.

Okay.

Thank you we are going to disclose more information regarding Mona next year, I mean, 'twenty 'twenty four will talk about this new brand in terms of the spending positioning. It's you know channels and after sales services and right. Now we are actively preparing for the launch of mono for next year, one thing that I can address or.

I can share is that there is definitely going to separate channels.

Going to have separate channels to sell them on a with you know apart from you know our current Exane lineups.

Now what that you aren't going to soak when you go to shop, which I'm, sorry Chi Tung does the whole Shaw confounds don't get how Nicaragua Toolboxes homes.

Yeah.

Now puts it out yourself from Chongqing joint venture.

Can I shown Jim Hawkins time on this as it comes from Vietnam.

What's your thoughts on JV or shutdowns.

Thank you Tom.

You didn't call it out to a good time to impact from time to time sheet shrunk from countries with home somebody who's on function.

Yes, Oh, yes, Joe Creed quite short quote unquote, you have two companies function. So my question. My second question is regarding your earlier comments you have discussed with Volkswagen regarding the global market.

Do you think.

The business model be Tuesday online Tucson, Mutare, that's how Greenville Chinese quota.

With our global Oems global footprints and bring into the global market with Rockville centre rates Youre globalization in terms of the market reach.

Okay.

Hey, Paul This is Charles Yeah, I'll address the question.

I think first of all of our joint development on a for the model based on the genome platform has been.

Going on really efficiently and I think we're going to achieve a milestone very soon and.

I think the international international market collaboration.

One of the strategic initiatives we are.

We're exploring we saw partner Volkswagen and I think that the we are.

VAALCO has global manufacturing footprint and also the.

The supply chain capabilities, I think there's a lot of St.

The areas, we can learn from.

Our partner and also leverage each.

Each other's strength in the international market.

We wouldn't comment on all the other companies our collaboration model. Thank you.

Thank you.

Your next question comes from Ping, who with Citic Securities. Please go ahead.

Okay. So go ahead I'll, let you go to do quite a number of ways that I want to you know go back towards the guidance. He says a 15 dollar guanines yourself at home that's $2 a gigabit if you know what sounds good to me.

As you know when he took a woman's okay.

Saturday in Chicago, San Diego should show you see women Sumitomo attention. This afternoon should have shelf I hear what you said.

So so my first question is about.

Two two to sell cars in the lower tier market and how do we think of the demand for the lower tier cities and how do we use.

We utilize our strengths are in those markets.

What are the other ones you sure Gwen.

So we're going to take our R&D meander R&D that you could see what our number one and then see just kind of all my question Yeah, Let's Shunyata does the R&D there Jacob I don't know if they don't you don't Josh you still cannot Armenia woman go sell Dal places you Tito Hudson Com with that I will now be glad to hear you on.

The channel part that you get.

I saw a number of them kind of woman, yes, I D systems out of both entry all should hold that up yet my second question is about the research and development for it doesn't do anything before as well.

The R&D total amount like a increase of it next year and where where all this money you spent on thank you.

Okay.

Great.

Uh huh.

Oh, you know what will.

T O.

Great time, you know what he sees on the shut in and this is how this ratio.

And more agile team.

Anyway, you call out.

Uh huh.

Congratulations on the real economy.

So channel that Ginnie Mae were being pushed out and you went to two.

That means the champion for Shanxi single time in treatment. So children do you go to the shoulder.

Oh sure.

Yes, yes.

Oh, sorry.

Sure well the attention to ensure that should show you want them and then go through that whole harder tissue cause elimination fleet Jonestown nuclear field pay P. J that tissue differentiated over time in a single.

Pivotal Michelle Schroeder.

Yeah.

You're doing what you say.

Go to treat all itchy tragic that treat other phone yeah, Yeah, Hi, Joseph.

Sure.

And then why shouldn't it be a champion yesterday.

Now let me address your first question regarding our product lineup, we're going to meet the lower tiered city demand by offering Mona and other new products right now.

We're not in a position to disclose too much specific information, where I can see what I can say right. Now is that we aim to offer topnotch, Adas technology and capabilities to the lower tier market as well, including tier two all the way to tier four cities audience, I mean customers and we are going to those autonomous driving capability.

Standard configurations in our future lineups, where those cities as well and we are also going to reform our distribution channels for the lower tier market. Thank you.

Okay great.

When to take them, if they don't call you to watch and she.

He says that Chicago, Paciello, what's kind of photos.

Shove hometown trade shouldn't it sounds that you told me that she knew this issue now.

So the R&D to fail Shelby.

The Genesis downward Cheng Cheng Kelsen.

Sure Jim.

Blue Shield.

Yeah. This is Bobby.

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It sounds though.

Well I shouldn't say, the daughter and father to going to school.

So they'll go to one of them again.

As Joe Cornea sounds Andy gave I failed.

Cheating double woman Banca.

Bones in golf.

Jody J.

October she decision.

That's a good trend tissue.

<unk> gone to tissues, a thoughtful answer.

That's what I should is it no more dominion has shown that you didnt quite that.

All good trailer woman or they're new to go all the way.

But what do you want for T J D.

Sure.

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They will either poultry the talent Chi the essential.

Okay.

Oh wait I changed Joshua tree Dominion for me to argue to field shrunk to a woman.

Ginger and a judicious with convenience.

He didn't have to ensure that eagle tissue.

Regarding your second question on the R&D.

<unk> expenses actually what's been put in we've been putting in a lot of thought in the past three quarters and we've actually done a lot Eaton starting from the beginning of this year to reduce our R&D fee. Let me give you said for example, when we started the overhaul in our restructuring of the organization. The first thing we did is to cut R&D.

Expenses and we also have been advocating this module based assign a rationale that can allow us to put everything on the same architecture. This up a 2.0. We also have actually encourage and asked our suppliers to put their R&D expenses into the bomb you know to reduce the overall R&D expenses on a fund the last thing we are another thing.

That we did it was to two actually equipped our R&D team with a more systematic tools and ways that could allow a better integration and you know mutual compatibility of different parts. So that overall R&D expenses can be it can be cut even further so going into 2020 for it we are going to actually strengthened several.

Capabilities. The first one is our overall you know design capability of our model is the products. We also will strengthen our craftsmanship, which is also critical in manufacturing we will continue to improve our modification I mean intelligence of our products will also do R&D improvement.

For the international markets, you strengthen all globalization capability and we will also put in some R&D efforts to prepare for our long term development and also for our long term strategy as well so in terms of the absolute value of our R&D expenses in 2024, it definitely is going to be higher than this year.

Although they didn't know where that that's it.

Okay.

The next question comes from <unk> Chang with TICC.

Please go ahead.

So this is just one of a few minutes.

Okay.

Even when he.

And to your question.

Well so much cash.

Cash.

Uh huh.

Alright. Thank you don't you should Jim can you kind of an actual quote unquote.

The Michigan, not say Oh Gee go from Deutsche Bank.

Switching to teach them from cash economy.

So Vince you've hired the people.

Okay.

Okay, So children and dogs and cats units you Christian Glennie solution.

Right. Okay. That's just my only one question regards to autonomous driving a mix, we believe will become the key sector.

Sector in the U.

Next year, so how do we extract the seat of autonomous.

And the Chinese machine.

Okay contacted landscape of the industry, but we.

We won't be very quickly.

Quickly can be seen in the maybe next one to two years, so it would be too much longer time.

I also see that money traditional Oems have chosen to comprehend my other companies.

Often this Friday, so E on contract.

Can you share some details I'll cover that one.

Teaching somehow in housing research.

Hi, gene to the shuffle no more coincidental, Josh So no way that Teva would an email database.

I mean, you bought in.

Sure.

Gopher.

We'll talk a long way.

Oh Shandong Henan.

I mean, you can answer that question.

He kind of under what's kind of on nonunion cushioning and she's a.

She too that'd be center leases.

Sure Chad.

The machines that were little and has that changed.

Is that how you would have pulled it.

Sure.

Did I hear your daughter.

Your tongue change anything in the entire shore.

I encourage you though.

<unk> hired a couple of those types of accounts.

Sure.

So hopefully I couldn't do that thoughtfully.

Oh, two quite unions, if you listen to.

Personal solutions.

Good how are you doing some call him was that he chi Chi.

So that's just how the gene pool did Joe.

Full policy this policy.

Chin.

Shimbun.

Sure.

Thank you for your question. This is shopping I think the upcoming five years, well actually usher in an era of rapid development for Adas adoption and technology development, it's going to be very similar to the stage, where we see the rapid development of a N V penetration from back in 2018.

Into 2022, and I remember back in 2020, we saw a huge uptick in the penetration rate of new energy vehicles in the market and I think right now in terms of Adas technology adoption, we're still in a woman upstage you know in terms of the technology readiness and also for the whole industry as well, we definitely are seeing more and more younger customers who are in <unk>.

Raising this new technology, who are willing to try this new experience in the future. We are very optimistic optimistic about the adoption rate our improvement because we know first of all we're very excited to see that there are more and more participants in the industry. You know that are helping us to educate a wider and wider audience that are cultivating the market.

Get it ready for this upcoming exciting era of Adas adoption.

Right right.

Yeah.

So you also tie at all hours have been switching visa fees.

But Jason but Dupont.

That's one we'll see.

<unk>.

So we'll handle the pathologists will die.

Sure sure that's a good point, even through the holidays, but do you see it what do you need to repeat the idea.

Healthy children.

Oh sure.

Trends in Winchester, Virginia.

Oh, that's right Todd she wants to that closer to 10 Dental school sure Adrienne.

Ginger.

So good attendance English without Google Seo tendency at minimum a needle.

That's useful.

The candle the portrait of it in a minute.

The emotional appeal.

What I'll tell you emotion tone.

E shelf on jet support for that so how does that change.

They've done a door entry a nice schedule it's Josh.

That's the intention.

I'm kind of you can frame, how you should've Columbia just for sure.

<unk>.

She said Shlomo.

Got you.

G suite.

So you look at book or any unusual at that full time, that's an adjusted let's say ehi, okay to demolition.

All good even on the tenancy and Tottenham Goldbach foothold in Jan Jan.

The knee.

So green tea sheet, Oh, sorry, excuse me Oh, no way, Hey, John attitude to the truth and you met Sharon orphaned.

Often you need to train them, so faithful quintanilla individuals' homes either.

Sure.

Okay.

Now regarding our advantages I was trying to in having this full stack our in house R&D capability, you know Theres a long list of examples of spreads that I can give you I mean just to name a few are look like they shouldn't be a self development of the technology is one of them and the second thing is to control the cost of production because you know even though we.

We are seeing a wider customer base that are tied to embrace the technology. They still want to have both safety in terms of experience and also affordability as well so having full stack development capability definitely allow us to control the cost better and another good you know advantage of having that capability is that it can allow.

Embrace our upcoming and Theyre cutting edge technology very timely as well for example in the past year. We saw this impact itself are the application of lost language models and having full stack them argue capability allow us to do a full domain and to an application of that new technology.

Which you know I would not be possible without that capability and that is actually happening without a lot of our peers, who are struggling to adopt a new technology as well and another good point that I would like to make is that we are seeing more and more you know are tighter and tighter coupling them with AI technology with a car.

Manufacturing capability, our R&D capability and we need to have for example, the Nextgen E architecture. The Unifi Adas domain, you know start carpet and voice assistant are two.

To actually embrace this tighter coupling with AI technology and that actually requires a lot of integration on it not just the hardware level, but also hardware together with software and AI as well and Ah. We're very proud that currently we are very capable of doing that thanks to our full stack R&D capability.

[laughter], Okay, then they're established.

And.

And the last question is coming from Nick Lai with J P. Morgan. Please go ahead.

Uh huh.

What do you think the content what are you seeing the Lindsay.

With you guys going to do what we.

So when we see total Huntington.

Davidson Somalis C U E.

Great.

Okay sounds good.

Yeah.

Thank you Jim.

And particularly within our profit margin to Chiesi.

Maybe it would be good too.

<unk> and PV chocolate without golf CTG com.

Hum.

Uh huh.

Because he came on board.

In.

One of them to the time can you should want to Jonathan ill come to about $2. Two things one is it sounds like.

Good job.

Thank you.

So it sounds like she wanted to give Hershey Babu from <unk>.

You go to.

Titan beauty.

She wanted to talk a pleasant place.

So good job.

Talk to the content.

It seems to me.

Hum.

Can you give me interestingly my question briefly.

I recall in the second quarter was a cool indicate that a full two eco margin would likely turn to party posture.

There's no guidance.

Hmm.

And at the same time, we are launching.

U S segment see Dan good morning off Brian with pricing.

Destocking.

And.

The new product will be equipped with a high.

How do we kind of saw that.

Oh competition.

And also.

Got.

The problem that we saw.

Thank you.

Hey.

Thanks, Nick This is James So I'll ask your questions one by one.

First of all two we confirm we do believe our fourth quarter vehicle margin will turn positive to confirm your question.

This is bolstered by a bit.

Better mix of products in Q4 compared to Q3 and.

As I mentioned earlier, we did see some level a bedroom cost reduction that came through towards the end of Q3. So for Q4, we'll see.

A full quarter of our bedroom cost reduction coming through Empire.

Empowering the lithium prices stable over time.

Going into 2024.

We do we do expect our gross margin to be meaningfully improved versus 2023 on a full year basis and this is also bolstered by our continued cost reduction to achieve our 25% or even more cost reduction targets and cell phone mentioned earlier.

We will have better product mix next year as we launch for example, <unk> which will be.

Amongst the highest X nine I'm, sorry, ex NIE the highest gross margin product at this point in our portfolio and obviously the new products coming.

Coming from our <unk> 2.0 platform next year will be we will have better margin as well.

And lastly to your question on Mona you're correct. It is targeting.

Each segment, but.

But we do see the Mona is a very good.

Cost control and planning process I'm very competitive from a cost perspective.

First of all and second of all.

<unk> will help us achieve great scale, which will benefit to the entire company from a scale perspective, as we've seen our cost allocation and therefore improve our margin.

Lastly, we do expect you know.

More controlled associated sales expense.

Related to the mono mono sales because of the scale. So it should not be a drag from a bottom line perspective.

In terms of profitability.

Thank you.

Okay.

[noise] was there a follow up question.

No.

Thankfully it's clean.

Thank you as there are no further questions now I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> Investor relations through the contact information provided on our website, but appears and financial communications.

Okay.

This concludes today's conference call you May now disconnect. Your line. Thank you.

Okay.

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Hello, Ladies and gentlemen, thank you for standing by for the third quarter 2023 earnings Conference call for <unk>, Inc.

At this time, all participants are in listen only mode.

After management's remarks, there will be a question and answer session.

Today's conference call is being recorded.

I will now turn the call over to your host Mr. Alex <unk> head.

Head of Investor Relations of the company. Please.

Please go ahead Alex.

Thank you Hello, everyone and welcome to excellent third quarter 2023 earnings Conference call, our financial and operating results were issued via Newswire services earlier today and are available online you can also view the earnings press release by visiting the IR section of our website.

Sheldon Dot com.

Participants on today's call from our management team will include our co founder Chairman and CEO, Mr. Hersh I'll phone.

Bitumen and patent Dr. Brian <unk>, Vice President of corporate Finance and investment Mr. Charles Chang Vice President of finance accounting with the Chengdu and myself.

<unk> will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website.

Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 90 95.

Forward looking statements involve inherent risks and uncertainties.

Such the company's results may be materially different from views expressed today.

Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with U S Securities Exchange Commission.

The company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Please also note that excellent earnings press release and this conference call include the disclosure.

GAAP financial measures as well.

The non-GAAP financial measures <unk> earnings press release contains a reconciliation of the unaudited non-GAAP measures to the other.

GAAP measures.

I'll now turn the call over to our co founder Chairman and CEO, Mr. Hersh I'll phone. Please go ahead.

Well the caution is I'll call, if we don't get paid and look with our technical of Central Pennsylvania.

And then switching gears. Thank you don't have the shelf on the shoulder pain price sushi.

Changing the dosing with our tool for the J P. Morgan.

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Susan.

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Yeah.

Sure.

Oh, Yeah go you, probably get essentials and top of the courthouse.

Good day.

Hello, everyone today I'm pleased to report to our shareholders and customers that after three quarters of transformation and effort. We have enter into the initial phase of a virtuous cycle driving improvements in cells, Brent and niche T morale and free cash flow is extremely.

Difficult to deliver such a turnaround in the smart car manufacturing industry. Therefore, I would like to express my gratitude for your support and patients throughout the journey going forward, we're confident in achieving rapid sales growth and notable improvement of gross margin in the fourth quarter and we're ready to gain.

Sito mobile market share in 2024, achieving a high growth target that is significantly above the industry average.

Sure Nathan.

Jason.

Yes.

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Sure.

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In Virginia.

So could you do it yourself from country to <unk>. So Peter as you go into just the control.

Do you have a shot at it.

Okay.

Okay, Chambal and citizens.

Kochi.

Sheldon said shingle total waterworks, something Jeff and.

Sure Shannon club was set up with just a question Tom.

<unk> has chosen to Orient it pushes it up was adjusted up both us Chavez.

Yes.

So again I don't want to associate team.

Yeah.

China's new energy vehicle industry has witnessed resilience and growth must increasingly intensified competition throughout 2023, creating great opportunities to reshape the industry landscape the competition on electrification and smarter vacation is speeding up the replacement of IC <unk>.

With M <unk>.

And AI is revolutionizing the technical structure of smart Tvs and transforming automakers' business models.

There are no shortcuts to Adas technology, the only way to determine whether mass production and the inflection point of Adas technology have been reached is the achievement of nationwide coverage with low cost a high level of safety and great customer experience across different models.

During our Tech day on October 24th we launched a public testing us X and G. P and the first batch of 20 cities, where high definition maps are unavailable.

Our plan is to expand our coverage to 50 cities by the end of this year.

Oh technology, and AI will empower our customers to use adas wherever they drive throughout the country.

Hi, Ashley.

Talk a little tissue.

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Let me check on charter.

She is today and so that's what Helen.

Change in Italian Washington, shy that sit in that you probably don't even faster as a total change in total.

Yeah quite a full portal portal that social channel.

Yeah, Chris Shean.

<unk> shopping centre of option.

So this won't ship about should I get along with them.

So which is encouraging.

Thought out of Chicago that.

That change our portal.

Unfortunately, or fortunately, thank you adult cohort.

Today with a summary of our cash element that some good positive feeling.

The nexgen chassis and powertrain as a result, we'll be able to deploy multiple models for the global market rapidly and realize the integration of cars between different platforms as well as between cars and other vehicles I.

I believe this will significantly enhance our engineering capabilities to support various products in the global market strengthening our edge and smart technologies by integrating different systems.

The agenda.

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And then of course, you sound like you do.

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Corporate intelligently. Thank you shouldn't tell ourselves also thought up here.

That's also about hopefully you'll figure that inhibit tau and she's Hudson completing doesn't.

Looking pacing the English cellphone end of Cushing in the week.

So she feels good.

Michelle will negotiations as part of their bundle of and she got a total of interest that we see.

That's helpful.

Apart from our commitment to Adas and smart EV technologies, we have made crucial changes to our corporate strategies organizational structure senior management team and product and technology roadmap over the past three quarters.

Making various changes as such a magnitude simultaneously could've bought risks and impacted near term results.

Ever thanks to the mutual trust and endeavors of the whole excellent team. These changes did not affect our short term performance instead, they allowed us to deliver better than expected results.

Well I'm going to tell what else hope water sewer and F&B turns out balance sheet.

So kind of thing that shows the sales engine.

<unk> tablets.

Yeah.

For the third quarter of 2023, our vehicle deliveries exceeded 40000, representing a 72% increase quarter over quarter.

Additionally, we achieved positive free cash flow was over 1 billion RMB and cash inflow.

Yes.

Maybe just tell us what else is needed.

The shingle woman that will get us a toehold gigawatt.

We're confident of setting a new record for vehicle deliveries at the fourth quarter, our target is over 6 million units.

Oh, I'm, sorry, 60000 units.

Total net.

That's also the EBIT to hit that what I saw one TV et cetera.

Yes.

Joe for that towards the backend of Cuba, Gd orders have on balance sheet, Torrance, I mean shovel or you can get high order timing change of where youre showing <unk> as she mentioned I'm up here.

But as with any good at all.

Coach.

Regarding product sells the G. Six electric SUV has become the top selling vehicle in the 250000 RMB price range during its first quarter on the market.

In October over 8700, <unk> six vehicles were delivered this early success of the <unk> six is a strong validation of <unk> ability to create and introduce a new benchmark model and a relevant market segment. Thanks to our highly differentiated technologies and effective marketing.

By doing so we're bringing smart EV technologies to a much broader customer base.

Hey, Joe.

I'm going to wait for that to.

The new chairman.

T J P tuition tuition agenda. So as you think about it's hovering at agile shouldn't that you told us CHF 1 billion.

What's the chance and with Cytosorb.

Engines have.

In September we launched the 'twenty 'twenty four edition of Exxon Jeannine <unk> with a higher gross margin than that of the original version.

This cost reduction was made possible through events Smith in technology and engineering.

In October we delivered over 4000 units of G nine, making it one of the top selling electric Suvs in the 300000 RMB price segment.

Yes.

Yeah.

Cingal towards here with what might that telcos Yesterdays Didnt show that.

In October we achieved a record breaking sales month with over 20000 vehicle deliveries and secure the top spot among EV startups for BV sales volume again.

So yeah. So cheated you don't have to kind of put us on a woman.

Shouldn't that she had especially in ex Java, Tennessee, Michelle with Jimmy Choo Casey So.

<unk> Joshi from 10 gig, Susan she's going to purchase other clean Jensen.

Yeah. This is just.

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So you called lunch importantly triangle.

<unk>.

Your bill pay to hold interest yeah, so on budget.

Her pitches eldar.

Yeah training channel what we're exiting.

Okay.

Passion towards digital channels.

And they don't know about you that NPV Cushing.

Thanks, Joe.

With that I actually use cases careful what should I steal Choi.

You mentioned the MTA visa.

Do you mean.

We're excited to announce that we will showcase our flagship MTV the excellent X nine at the Guangzhou Auto show and start presale on November 17th.

The X nine days, a seven seater pure electric smart M. P. D built on the separate 2.0 architecture. It stands out from traditional MPV models with superior space design and maneuvering that Chris perfectly combine the advantages of an MPV and SUV.

Moreover, the X Knight it comes equipped with real wheel steering as the standard configuration.

Billing, a turning radius similar to that of the PS seven.

With <unk>, our industry, leading technology that does not rely on high definition maps maneuvering and MTV has never been easier and more agile.

These technical capabilities are not found in any other MPV models on a market.

X nine will be delivered from the beginning of January 2024.

We're confident that <unk> will become the top seller in the large electric MPV market.

So they are soon at one of them.

Switching over to you for air travel a total change the need for the question, Chris you want to choose.

You saw what he made a change in mix in total.

Hello, you thought was we thought that's what can be the Tds telecoms shouldn't.

Shouldn't that impact casual women's at EG choices on the shoulder.

Unless you mean better silver.

Sure Joe So Laura maybe that you haven't thought about changing that.

Oh, My God, <unk> Mora with a <unk> 72.

So what kind of inventories with Nomura Securities.

To achieve this function.

So that's a little closer on the highway side.

So why are you just want me to answer the choice to April two tranches.

Okay. So go Jason congestion, especially when it hasn't totally at home.

Turning to our Thunder tuition now.

Thank you Patrick what are you guys changing well put a lot of issues.

Yeah.

In 2024, we plan to launch highly competitive new models based on the SAP a 2.0 architecture. Additionally.

Additionally, we intend to introduce a new EV brand in the 150000 RMB price segment.

Our team is currently on track to develop Mona the first model under this brand with an expected launch date in the third quarter of 2024.

We believe that Mona is just the beginning of an exciting journey and we're committed to pushing the boundaries of technology and keeping costs under control.

This will enable us to launch smart EV models that both autonomous driving technology in the mass market segment at a price point of 150000, RMB or 20000 U S dollars.

This move will give our product a significant edge over at a model in this segment, allowing us to reach a wider audience in the blue Ocean market segment.

We're going to show her title.

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Put up a bit chunky.

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I'm going to tell you need a chance I'll change our California.

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The auction you'll show the whole lot switching yard counted ourselves.

Women, Joan Tong surgical has Joshua casual she doesn't have any IP.

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Anything.

Our president Mr. Wang from <unk> has been meeting a significant overhaul of our sales network, making it more efficient flexible and expanding faster to cover more tier three and tier four cities. We closed almost 100 low performing stores during the first three quarters this year and launched Jupiter.

Project, a program to recruit more competent franchisee partners.

We secured investment for over 100, new stores within two months and established cooperation with top tier dealer good specializing in luxury vehicles.

As we head into the fourth quarter were accelerating new store openings and expanding our sales network to reach our goal of 500 stores by the end of the year or early next year.

These upgrades and rapid expansions, coupled with innovation and marketing will become one of the most important drivers for all of the sales growth in 2024 and beyond.

Julia.

Okay.

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For the 10 minutes on acquisition.

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Toyota until the ticket.

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Well, it's a way to judge our phone call and central corporate any well known Pushout, Hi, Andy Matt you also to yourself.

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Number two the transaction as a faithful question I know you're always chasing Josh in terms of.

Oh, yeah yeah.

While the us and in each of the things that I thought that mobile assuming an antibody.

Michelle let's use it.

During late September I had the opportunity to visit the Volkswagen group's headquarters in what was that those like we had a detailed discussion with Mr. Bloom and both volume senior management regarding our comprehensive strategic partnership which helps clarify the blueprint for our long term store.

Teekay Corporation in technology, we also explored deeper strategic cooperation opportunities in the international market.

Currently we're jointly developing models based on the June nine platform, which is in full swing.

A strategic cooperation in the supply chain is also progressing effectively.

And we expect cost reduction in the supply chain to generate meaningful results in the next year.

To enhance our cost control, we learn from the best practice of Oems and industry.

Sure.

So changing the order to okay. Well then thank you towards that type of changing the way setback because of what I mean.

The subject of woman associated less homework for you and then maybe the things have changed.

Tien tsin.

She loves him here, but you can tell that she's going to war <expletive> reaches.

So Jeff we're testing conducted without change.

Sure Yeah, so the woman.

Tonnage equally will you need a cheap.

Let's look at the cash flow, we had approximately $36 5 billion RMB in cash at the end of the third quarter of 2023, and we generated over 1 billion RMB and positive free cash flow during the same quarter.

With our new products and technology, driven cost reduction, we expect to see a significant improvement in our gross margin, resulting in even stronger positive free cash flow in the fourth quarter.

This is an important milestone for us to achieve profitability at scale in the long term.

Okay.

And just switching to woman, that's only Joseph O'dea Gateway, what Joe Channel.

Gil West Central Alberta, why do you think this is balance sheet true <unk> studies.

Got it.

So do you view it as a cheap.

You bet Seth.

And as Shelly evil shoveling, whichever without that full suite.

Hi, Michelle easy adoption nice proceeds of tissue.

Well, Sean King Junior champion for the shovel chunk of it.

<unk> hope he's condemning.

Oh, yes.

We won't go so far that you know whether the judges or me.

You're right Pavel Sudhakar Joshua.

<unk> quite sure Jim with regard to the linear shouting too good a job and Genesis.

Are you sending their influence over threatening agenda.

So a lot of it.

Looking ahead, we're projecting our total vehicle deliveries to be between 59000 563500 units in the fourth quarter of 2023 with a quarter over quarter growth rate of 48, 7% to 58, 7%.

We expect our revenue to be between 12.7.

And <unk> 13, 6 billion RMB during this period.

We are committed to implementing transformation, primarily in our organization and marketing strategy, which we believe will produce more favorable results in 2024 and beyond.

This in turn will enable us to accelerate our growth and expand our scale from the fourth quarter of 'twenty 'twenty four.

Okay that xiaomi all of them, that's how we'd be gentle with ITG, though it wasn't a differentiator that's helpful.

Thank you everyone with that I'll now turn the call over to our VP of finance, Mr. James Ward to discuss our financial performance for the third quarter of 2023.

Thank you it's helpful.

Now I'd like to provide a brief overview of our financial results for the third quarter of 2023, I will reference RMB only in my discussion today, unless otherwise stated.

Our total revenues were.

853 billion for the third quarter of 2023, an increase of 25% year over year, and an increase of 68, 5% quarter over quarter.

Revenues from vehicle sales were 7.84 billion for the third quarter of 2023, representing an increase of 25, 7% year over year, and an increase of 77, 3% quarter over quarter.

The year over year and quarter over quarter increases were mainly attributable to the accelerating sales growth of the G. Six in the third quarter of 2023.

Gross margin was negative two 7% for the third quarter of 2023, compared with 13, 5% for the same period of 2022 and negative three 9% for the second quarter of 2023.

Excluding the negative impact attributable to the G III and the production as we described in the prior quarter. The gross margin would have been breakeven for this quarter.

Veeco margin was negative six 1% for the third quarter of 2023, compared with 11, 6% for the same period of 2022 and negative eight 6% for the second quarter of 2023.

Secondly, increased sales promotions and the expiry of new energy vehicle subsidies.

The quarter over quarter increase was primarily attributable to the improvement in our product mix and battery cost reduction.

R&D expenses were $1 31 billion for the third quarter of 2023, representing a decrease of 12, 9% year over year and a decrease of four 5% quarter over quarter.

The year over year and quarter over quarter decreases were mainly in line with the development timing and progress of new vehicle programs.

SG&A expenses were $1 69 billion for the third quarter of 2023, representing an increase of 4% year over year, and an increase of nine 6% quarter over quarter.

The year over year and quarter over quarter increases were primarily attributed beautiful to the higher commissions paid to our franchise stores.

As a result of the foregoing loss from operations was $3 $1 6 billion for the third quarter of 2023, compared with $2. One 8 billion for the same period of 2022.

<unk> 3.09 billion for the second quarter of 2023.

Fair value loss on derivative liability. It was zero point 97 billion for the third quarter of 2023.

On July 26, 2023, Oh company entered into a agreement with Volkswagen group to issue up to 499% of our company's ordinary shares for fixed purchase price of $15 per eds.

Net loss was $3 eight 9 billion for the third quarter of 2023, compared with $2 38 billion for the same period of 2022 and $2 8 billion for the second quarter of 2023.

As of September 30th 2023, our company had cash and cash equivalents restricted cash and short term investments and time deposits in total of $36 48 billion.

The positive free cash flow in Q3 as <unk> mentioned earlier was the main driver for our higher quarter over quarter cash balance.

To be mindful of the length of our earnings call I would encourage listeners to refer to our earnings press release for more details on our third quarter financial results.

This concludes our prepared remarks, we'll now open the line to questions. Operator. Please go ahead.

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 then two.

If you are on speakerphone, please pick up the handset to ask a question.

Management will respond and then feel free to follow up with your next question.

Your first question comes.

<unk> from.

Tim Zhao with Morgan Stanley.

Please go ahead.

Sometimes you just what was that you weren't aware that Gwen Chi.

When do you see that you are going to change.

The other question do you see do you couldn't do it or could you get a bunch I'm always telling me showing G. G Yahoo.

The change in.

I think it yourself all the shelves with you.

Your child, well see tuning the kind of thought it was going to get them to where that it took a change in.

Thank God. He said he was entitled the change I know that when you cut out could you talk to yourself against that year, we had changed the Chico Hussein's Hydrogel watch hunting shall show Desert figure will then against the law. So what do you sense, a bunch of pools, which is quite Hitachi.

So my first question is about.

About to the competition.

As we noticed that there are more companies like Huawei and Xiaomi.

Challenge in Dayton company it'd be makers, how we noticed that tech companies have advantages across position ecosystem, a sprouts to China, what that does remain quite difficult for carmakers to replicate them how are they expanding backup for such a short comments versus tech players in the following quarters. That's my first question.

Thank you.

Okay.

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Sure Joe.

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Hey, Dmitry that's for sure.

No.

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The total health care.

Marketing costs.

Well this is Gary.

Okay.

Thank you so much for your question. This is shop now this is a very good question, but not an easy question I'd like to start by reviewing my past entrepreneurial spirit and ship I experienced I first started with an international Internet Company and also and then I went on to investing X pegged I mean.

Your question has always been a question of thinking you know for many years in the past of my experience. Let me give you. An example, when I was in the Internet mobile Internet business. We saw a lot of competition and there are different ways to compete in that landscape. For example people turn to acquiring traffic and that is a.

Good way to actually make up for different shortcomings in the ecosystem or the lack of different capabilities our abilities in different aspect and you saw a lot of them you know a cross over from different players in different sectors, and you realize that the problem with using or relying purely on a topic is that there are a lot of media that.

Has the traffic that is not transferable and let me give you. An example, you know audience from a you know from traditional Washington, No T. V. You know it may not be the same audience, who rely so heavily on mobile phones et cetera, and so that's actually lead to a lot of failures, but right. Now you also are seeing a lot of competition from players across different sectors.

Try to actually enter a new domain are using different ecosystem our capabilities from there are you know.

One factor for example, you see players from the real estate the mobile smartphone industry and also from the Internet and that a lot of tech companies as well.

So when we compare ourselves against these players from other sectors, we have to really come down to our internal capability. We have to look at what we have as a strength. For example, we are very strong with all technology, where you know a very strong with all AI capability and also manufacturing capability as well as our supply chain as well so really what help.

We have invested in our robotics technology and flying cars et cetera. We also have announced our partnership with Volkswagen in different aspect, including you know supply chain technology, our global sales and marketing and also after sell services as well and in August We also announced our partnership with Didi, a leading automobile.

<unk> platform to expand our market share in a class of.

Vehicles segment also to build the foundation for our future expansion and Robo taxi, except that now. These are just some of the examples of how we try to make up for a shortcoming.

In the ecosystem and we believe that by combining different capabilities of food is partnership we can actually strengthen our overall competency building on the strong foundation that we already have which is our technology and our core manufacturing capability as a carmaker. Thank you.

Cause yourself on this one so.

When tissue is going to be tempting to think gotcha.

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Lingo you either be judge cookies could shoot a commodity with syngenta, what sort of jumping July time things like coupons or something Gotcha, Oh, what do you think is the controlling it yourself here, what kind of dog when they portend to Ashish.

So it was a white box because that's what makes it so it's all going to be IP than she does.

Based on sort of Chicago culture.

I shall change out Glenn He said Oh Gee to shop, when she chose that word I grew up with that she finishes her TV, yes, she does getting challenging things Austrian post will have to go down materially.

So my second question is about the pricing power because.

Hum mentioned earlier in the call.

I'll be talking Chicago, 'twenty 'twenty four production costs by 25% as the company optimized design and efficiency et cetera.

However, without enhancing their pricing power.

Very likely the battlefield cost saving my COPD placements by the constant coffee.

Especially quite a lot of car makers that are supposed to get pricing strategies. These days are two like Tesla and BYD amtrust respond tactically.

Tactically, so how does xtra and planning to strengthen pricing power on top of the cost reduction into 2024. That's my second question. Thank you.

So shall we say Tom Tony the Gwen.

So I'm sure that hunt you that kind of that change a little girl Xiao Kimco associates.

So all of those are the things I tried to say what was that.

And does she told me anymore. So Sanjay.

If we move.

So for those of us from a quota deal so Greenwood and Jonathan.

Graeme or you use on the show now know Tobey this is the agenda.

Uh huh.

<unk> 12 for household.

That whole sort of different corporate towards yet, but she's switching actually I want to highlight the pin pad E. F. E. G do you Cook who might.

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Called essential.

The two year trend.

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No woman site.

Great question Jacob.

10, but pin pad Thai baht, Josh Siegel from Chipotle.

Right.

Okay.

Thank you for your question first of all I agree with you our opinion that pricing power is very important that in the long term, we definitely want to become a the apple in auto, making well, which has very very strong bargaining power and pricing power.

A carmaker and Oh, yeah, we believe that there are several aspects as a important that's affecting our pricing power. One is scale in the outer is cost control capability as well as our branding and differentiation definitely the scale itself affect all costs and it's also the same the other way around as well and right now we are in the process of reshaping our overall capability as well as all.

Brent.

And it's very important that we can actually first of all built our brand image as well as contributing to that customer value by a really strengthening our differentiation our president Mr. <unk> is a big advocate an eternal and also systematic innovations. So going forward you are going into 2024 and 2020.

So thank you very much for sharing their crazy so thank.

Thank you.

Your next question comes from Ming, Sean Lee with Bank of America. Please go ahead.

Thank you someone's I'll go ahead and.

Uh huh.

It had been.

Following the Eagle Ford as you know.

One two questions.

2000, if you go back and this whole loans over Joe.

See that you actually all that interesting.

You can see Houston.

Does it go.

Hi, Thomas.

Sometimes a guilty about to go public.

No kind of existing again most analogy.

Okay Jonathan.

Well, Jason as you go into.

No we don't.

Thank you.

Oh sure.

To the P&L on a go Colorado, John and I'll be glad to do so please sure Jonathan.

During the day in terms of the 2010 that you've done.

The holidays on rheology judge's order goldman's homes yet.

The golar tundra haul tonnage luxury resorts.

Does it go.

I wanted to cookies I didn't show you the xiaomi.

Tayo this is bill.

Hello, gentlemen.

Sure.

I'm sorry.

When he gets on the shelf.

Uh huh.

So F Ter.

MS Cheng, it's Paul Cheng.

Channels. So stores are reforming is is continuing so do you have any metrics regarding to evaluate your progress.

Channel a reform and besides that do we have any target.

Two about the long term direct sales and also dealership.

Sure.

Okay.

Sure let me know.

So there's a little quieter.

Cool.

Yeah.

He says I'll touch on it and at that time, but she thought.

Networking.

Faith on the holiday.

Uh huh.

Chip mentioned.

Quite a top shovel order she doesn't show unless other tissue.

Shovels as functioning sort of.

J J.

Sure.

You'll see in Chicago.

Those are closer to the Jackup.

Okay.

Unless we either that quite in southern Colorado.

So did you mean to them and say the tolerant of the Clos are anyway Hopkinsville woman.

Well, Oh, yeah, I mean, I knew an illness.

I can assure you.

You say you're going to have finished.

So this will help ensure that we have you thought about wholesale.

This should have a pill Jameson since you called me at all.

Oh sure yes.

Jonathan Johnson.

Censorship essentially.

So you have a data center personnel changes.

Thank you Dr fish.

Thank you for your question now I would like to address this by giving you a little bit of background information about our president Ms. Wang <unk>, she come from Chau Cheng quite well on the traditional OEM and he has been excellent and controlling costs of developing channels and also leading.

Our innovative systematic overhaul of the company. So in the first few months that she joined our company. She spent a little time observing what we currently have we used to have this hybrid channel Oh.

Our cellphone source together with some some franchisees so much but we had a total control of the pricing for all of the stores I mean all of the channels.

And going into Q3, I mean for the past quarter in Q3, we have already set our future strategy of channel innovation or reform, which will actually cater to different kinds of dynamics of changes coming to going into 'twenty 'twenty five to 'twenty 'twenty sake. We're talking about for example are significant.

Lee more models that we're going to launch in 2025 and also we take into consideration the future of market competition and market environment and also our future expansion to cover not just tier one tier two cities, but also tier three tier four cities as well.

Yeah.

Unless villa.

Has it moved out that changed.

Daniel.

So will that job.

The show so you see that's all forget a teaching change out Tianjin wishing good. So just shows all Florida Gotcha.

The Tulsa.

With that Union, a cyclical play casual Togo, if I've got that changing the geothermal.

I assume that would be entitled to a full truckload.

Hi, Joe.

You're talking telephone wasteful.

So you can see in Towson shortly assuredness suggests.

The change from Dominion at GWG going public deal without a true data shows us.

You will note that these ships instead of quota.

Yeah, well, that's sort of at that.

Do you sense any sort of showed up at the table.

Hello, Paul.

It's true that when we get on T shirts, midnight, so called inkjet, yet so you shuffle Nikola truth I shudder for horror Tulsa quickly when he left he should have showed up.

Okay.

Got it.

It was part of your total that country Nyota, some intranet Joshua for them.

So you've gone into over 20 different ways that yes sure.

Ken that high Shovelnose ketchup Xiaomi engender, Ohio.

Yes.

And then she had that's what federal diversity, a woman can sheet on yesterday, and we're always thoughtful and careful.

Okay.

Yeah.

So in the mid to long term, we aim to have at least five franchise stores that are capable of not only doing but services as well and in the mid to long term. We also plan to have a total of at least 1000 service centers across the country that can help us to provide better services to our customers and going into Q4.

We plan to open 100, new stores that can allow us to expand our sales network more extensively and so by the end of 2023, and we're going to have a total of 500 stores of different modes and over time, because it takes time for those new stores to build up their capability and experience. So we believe that the.

The time of the Q1 and Q2 next year will be the time, when we can actually see a lot of growth in our deliveries themselves and that can also allow us to see grubs and deliveries themselves in lower tier cities in China as well because we are going to build more stores in those areas and regions in terms of the pricing control, we will remain at <unk>.

Very strong in terms of the.

The extent of price control and we are going to evaluate the performance of different source from different aspects, including their M. P. S and we can equip them and empower them with a wide range of tools and we can control the procedures.

And we can do a lot more things to maintain our strong control after service qualities of those stores as well now in terms of the especially sees all but the format of the stores I agree with you and we believe that it's very important that we keep improving the overall efficiencies of all stores because currently we see still a lot.

The room for growth there for improvement there.

And by 2024, we expect to see a huge uptake in terms of the efficiencies about store. Thank you.

I was curious I won't say that it was a bit there when she was quite easy to achieve.

Just a woman to be chassis chin.

Truecar.

Oh Jeez Chargers.

Uh huh.

Kind of.

You did.

Oh really.

Okay.

Just to go to England to each other be jumbo.

He says that the T cells can do hydrogen.

Once you're in that kind of huh.

Yeah, Hi, so we actually can be.

So we waited to the Ginnie paddock water to the Duane <unk> chosen not initiated the traditional shovlin assertion simply just he was all doses out well how do I see the hurdle to do that so we see that way.

Now do you wait until you.

So you should see if I <unk> Jonathan.

Hello.

My second question is related to export business. So in October you also have a few.

<unk> of cars to oversea market.

In the future, where you would consider to build more direct operated stores.

Where do you rely more on the distributors locally.

Regarding your current product portfolio.

Do you think that you will export O&M models oversee or you will select a few models from oversea market Lastly, do we have any plan for South East Asia market.

I mean, it's Brian let me address your question regarding the international expansion.

You're correct that we currently employee.

So the hybrid model in the Nordic countries, we have to record stores as well as our partnership and agents, but going forward, we probably kind of opt to use them more of a collaborative partnership model using either agents or distributors for specific markets. So thats, probably going to be likely the mixed <unk>.

Our shift towards a more partnership oriented model.

It's a product that for international markets.

You saw that we currently have <unk> nine and <unk> seven are currently studying Europe already we will be launching <unk> six is a global product next year. So.

I would say, it's only the subset of product that we will design and prove for international use not all our products. So the products I mentioned are the ones that we're currently decided for global markets and also we have plans for Ryan driving models next year as well for example up by the end of next year.

We plan to rollout our first Ryan driving model are likely to be based on the T. Six model. So was that we'd be able to tackle southeast Asia market. So that will definitely be in our site and there will be also looking at other Ryan driving model markets as well.

Yes. Thank you Brian I don't have any questions. Thank you.

Yeah.

Your next question comes from Ciena.

With Goldman Sachs. Please go ahead.

I see.

Oh.

Sure.

T G.

Gene.

Sure.

So no one out there.

Thank you.

Sharia sounder, she I think she sounds a judge.

Oh yeah.

Hi, Jacob.

Thank.

You saw I shall conduct the.

Yeah.

Now she's.

She's just outweighs that donlin Gold's hydrogel, Google apology <unk> Nikko.

The impairment loss.

The the Paw patrol J required a lot that guide or surgical until the Churchill downs demolish it should be.

That should break even though.

Now what column is showing its oh.

It all down and talk with the wash.

Our Union city too.

Oh sure.

Children with them all you should add passenger sedans, you're old about though.

Hey, a J.

Yeah sure.

It sounds like you guys held out.

Don't judge.

So eagle shaping soundwaves at G.

Yeah.

Then gigamon literally Shang Guang dong.

Oh <expletive> minion Zelman Zelman <unk> quite what you can see that you are losing Shinjuku, Tokyo and watch all that <expletive>.

I just have one at home.

Really tough Shandong womens J D.

Yeah, Sheila wash out dog.

She told us exactly they sat down you'll kind of see that chance.

J P. G E S pizza guys shutdown that you go back in June.

But what you would do that.

No one else I.

Or is there any specific trends.

We've observed in the industry.

Then the second question is regarding gross margin So management mentioned.

Excluding the impairment loss of G. Three D vehicle gross margin was breakeven in the third quarter of 'twenty three.

So the last time, we delivered over 40000 units of vehicles was in the fourth quarter of 2021, and then back then the vehicle gross margin was actually 10, 9%. So I'm just wondering what is leading to the differential in gross margin and also related to that management mentioned that next year.

We're expecting to see a great gross margin enhancement, obviously, we know the cost.

Cost reduction is pretty on track even ahead of our progress, but then how much price decline all refractor into Ah. The Ah This gross margin expectation because we see that this year.

Three quarters, this year and average ASP actually declined by 6% year over year. So how much of the competition I'll be factoring in into next year in terms of gross margin guidance. Thank you.

So Peter.

This is Brian let me first answer your first question the guidance of 60000.

This quarter I think are reflective of our confidence of the progress we've made.

The recent months, we think it's actually a very important milestone for us to reach.

On average 20000 per month. So this is I think is a very I would say important milestone for us and also like I've been giving this guidance. We also are considering the competition as well as the macroeconomic backdrop that we're facing in the fourth quarter, we're very confident with.

And I'll hand off to James for the gross profit comments, yes.

From a gross margin perspective.

Secondly.

Going into 2023, the new energy vehicle subsidy has been removed from the market and that obviously has an impact on our margin as well you.

You Didnt mentioned, our ASP reduced overtime.

Believe that overall market dynamic as well because we are we've been trying to improve the product competitiveness.

For our product as well throughout this journey.

In the meantime.

Supplements and we do expect our gross margin to improve in Q4 meaningfully, particularly our vehicle margin will become positive we believe in the fourth quarter.

And one one.

Proving factor as we improve our product mix is is that as we launched a new G. Nine 2024, we see that the gross profit margin is actually higher than our older version of <unk>. This is a great proving point for us to continue to drive profitability of our products.

Hopefully that answers your question.

Oh God.

Uh huh.

Follow up Josh a woman.

Seafood sounds that nature to us.

Oh gosh, we're dumping that I think it's a hot for I just have one very quick follow up so in terms of the cost reduction technology improvement cost reduction, which are the models that can benefit from the cost reduction. Thank you.

When the soil switching thoughtfully, so that usual jumbo good and solid.

As a woman.

To ensure we owe that to the shut in conductor personal related cost will come toward a target.

Okay.

All of the models that we have will benefit from the cost reduction driven by technology advancement.

But among our top selling models, we're going to put more effort into driving up driving up the cost reduction. Thank you.

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

Oh sure sure just the ones that you want to go into some kind of among those who could pinpoint one thing when you talk to where do you see that was a chunk will be when we go through auction parcel deal with you. Thanks. So.

Chesapeake a bushel tie to a woman somebody on a true friend, social Monaco Trojan, partly you cool.

Participating with me.

It shouldn't go without any nantong sit though shlomo. So my first question is regarding the position of the Moon up runs all islands find the pricing point is generally in the wintertime.

Sports is not really too much lower and so how shall we differentiate the <unk>.

The positioning of the two brands.

Mona also going to be available at all carbon suppose to be sold to simultaneously.

Well no for Dominion.

Jeff any shale play anymore, so which helps on the Trs <unk> Shanghai Tang Wei.

J J E T.

Shoot all ages into the so called in Shanghai.

The mobile.

We'll channel all these kinds of centralization.

Sure, Michael Jordan, and the mobile Crane always Sunshine.

I can.

<unk> shutdown pool for industry those sorts of things.

To the technology.

Okay.

Thank you we are going to disclose more information regarding Mona next year I mean 2024, we'll talk about this new Brian in terms of the spending positioning its channels and after sales services and right. Now we are actively preparing for the launch of Mone. After next year, one thing that I can address.

I can share is that there is definitely going to separate channels.

Going to have separate channels to sell Mona with.

Apart from current ex banking lineups.

Now what that you aren't going to disappoint, you go to shop, which I'm, sorry Chi Tung does the whole Shaw, who confronts won't get hot and cold water washes home total vehicle car T.

Now puts it out yourself from shopping sometimes you have to kind of my shown Jim Hawkins time on these symptoms can be it on its own accord in Polk, what's your thoughts on the JV.

Shanghai Tang.

You didn't call it out to a consumption pattern from the time it didn't.

In other words, you said, Sean from countries with home somebody is one function Oh, yes.

Is from Joe Creed, quite so quote unquote you have two companies one function. So my question. My second question is regarding your earlier comments you have discussed with Volkswagen regarding broke in April market, how do you think.

The business model be Tuesday, Atlantis on trying to move towards that sounds Greenville Chinese quota.

With our global Oems Global footprints and so we're into the global market with Rockville centre rates Youre globalization in terms of the market reach.

Hey, Paul This is Charles Yeah, I'll address the question.

First of all our joint development on a for the model based on the genome platform that's been.

Going on really efficiently and then we're going to achieve a milestone very soon and.

I think the international international market collaboration.

One of the strategic initiatives we are.

We're exploring we saw partner Volkswagen and I think that the we are.

Volkswagen has global manufacturing footprint and also the.

The supply chain capabilities, I think theres a lot of zinc.

The areas, we can learn from.

Our partner and also leverage.

Each other's strength in the international market.

We wouldn't comment on all the other companies collaboration model. Thank you.

Thank you.

Your next question comes from Ping.

With Citic Securities. Please go ahead.

Hey, good to go ahead and see what else do you get a normal way or the other ones you're not gonna have told me that he showed a 15 dollar Glenn who self interest home that's $2 a gigabit it sounds good to me.

He did a woman's okay.

Saturday in Chicago, San Diego Shuttle, if your woman Sumitomo attention that doesn't just you talked John Cahill.

So my first question is about.

Two two to sell cars in the lower tier market and how do we think of the demand for the lower tier cities and how do we.

Our sense are in those markets I don't know what the dog once you sure Gwen.

So we're going to take our R&D and the R&D that you could see quite a number of elements as you called out my question, Yeah Hudson yards and the R&D that Jacob.

So you don't see that Josh you're talking not a mommy element.

Does that would help with the G T shirts and call it that all women who wanted to hear you.

The channel for that either.

A number of them kind of woman, yes, I D systems out of both entry ASO told that up yet my second question is about the research and development for it doesn't do anything before what's well well the R&D total amount like Oh.

Increase of it next year and where we all these money you spent on thank you.

Yeah.

Great.

Uh huh.

What was that you absolutely need in China.

Great.

He is on the shelf and this is on the screen shows that.

More agile team.

Yeah.

There you go.

So you're telling.

I mean so.

And so as you know in that journey.

We now are being pushed out.

I mean, it's a chip being discharged single time in treatment.

Hilton do you go to the shoulder <unk>.

<unk> showed a sort of gesture.

Oh, sorry.

Sure well the attention to ensure the Frito you don't want them and then go to the whole harder tissue cause elimination quite jonestown nuclear field pay P. J that tissue tranches over 10 minutes shield pistols.

Pivotal Michelle Schroeder.

Yeah.

And then you're doing what you say.

Go to treat all itchy pledging to treat other phone yeah.

I thought it would be a walk in Shenzhen.

And then we shouldn't be ashamed.

Now let me address your first question regarding our product lineup, we're going to meet the lower tiered city demand by offering a mona and other new products and right now.

Not in a position to disclose too much specific information, where I can see what I can say right. Now is that we aim to offer topnotch, Adas technology and capabilities to the lower tier market as well, including tier two all the way to tier four cities audience, I mean customers and we're going to those.

Those hum autonomous driving capability as the standard configuration, and our future lineups, where those cities as well and we are also going to work for them all the distribution channels for the lower tier market. Thank you.

Okay great.

When to take them, if they don't call you to watch and she.

That should probably go potty I wish I was sort of the shelf homecare trenching the sounds of it all but that's what she knew this issue.

So the R&D to sales Shelby.

And it'll be.

The Genesis downward Cheng Cheng telephone.

Sure Jim.

For shield.

This is bobby tweet or Oklahoma.

No total tuition foothold pink I shouldn't even think Eagle Ford general tissue.

It sounds though.

Well, then shouldn't say Hum daughter father to.

So they'll go to a woman again well managed.

This is Joe calling some of the R&D that you have I feel.

So just you talked about a woman.

All of them can golf doesn't want me Jody J. So you have a fever.

October she decision.

So that's a good trend tissue on the country tissues, a thoughtful oh, that's what she loves it.

India has shown that you didn't quite get the all good tradeoff another need to go with it but what do you want for T. J D.

Toshi.

Now Jesus instead of Oh cool.

Oh, no we're going to choose to go to cogent.

What do you want to answer.

The phone yet easy that you share woman.

They will either poultry the talent Chi the essential.

J D.

The only change from Joshua tree Dominion or the R&D to field shrunk to a woman.

Ginger and a judicious were convinced.

He didn't have to mention that he got tissue.

Regarding your second question on the R&D.

<unk> expenses actually what's been put in we've been putting in a lot of thought in the past three quarters and we've actually done a lot.

Starting from the beginning of this year to reduce our R&D see let me give you said for example, when we started the overhaul in our restructuring of the organization. The first thing. We did is to cut R&D expenses and we also have been advocating this module based assign a rationale that can allow us to put everything on the same architecture. This up a 2.0.

We also have actually encourage and asked our suppliers to put their R&D expenses into the bomb you know to reduce the overall R&D expenses on a fund the last day of week. Another thing that we did it was to two actually equipped our R&D team with a more systematic tools and ways that could allow a better integration and you know.

Actual compatibility of different parts. So that all overall R&D expenses can be it can be cut even further so going into 2024, we are going to actually strengthened several capabilities. The first one is our overall design capability of our model is the products. We also will strengthen our craftsmanship, which is also critical in <unk>.

Manufacturing, we will continue to improve our smart education I mean, the intelligence of our products will also do R&D improvement in India for the international market to strengthen our globalization capability and we will also put in some R&D efforts to prepare for all.

Our long term development and also for our long term strategy as well so in terms of the absolute value of our R&D expenses in 2024, it definitely is going to be higher than this year.

Although it says it doesn't even know where that that's it.

Okay.

The next question comes from <unk> Chang with CIC.

Please go ahead.

However, this is just one of a few minutes no Jason do you want.

Oh, great Okay shape in Oh sure.

And to your question that you.

Sure.

Oh gosh.

Oh excuse me.

Uh huh.

Alright. Thank you don't you should GMP kind of unusual.

Michigan now.

Hey, Oh from Deutsche Bank.

Switching to tissue from cash economy.

So I think she'd have the people.

Joe Shan Shan Shan.

It's really twofold.

Children and dogs and Kashi much if we can go in the future.

Okay. This is my only one question regards to autonomous driving.

I mean should we believe will become the key.

Sector in the.

Yes, so how do we extract the seat of autonomous.

Often the Chinese machine.

Okay contacted landscape.

The Street we.

We won't be very quickly.

Quickly can be seen in the maybe next one to two years old we will be T.

Okay.

You also see that money traditional Oems have chosen to comprehend my other companies.

Often this Friday, so E on contract.

Can you share some details I'll cover.

He changed somehow in housing research.

Hi gene to the shuffle.

So don't just sell them in a way that table would an email database.

You brought in.

Sure.

Gopher will talk.

Got it don't wait and see.

Oh, Yeah, Shandong Henan, arguing you shouldn't answer.

A question about that Oh, he kind of it was kind of on nonunion cushioning and she's a.

She could that'd be central east.

Sure Chad.

And why shouldn't that no one has that changed with that.

Uh Huh, yeah, the pool did.

So your front door to door.

Your tongue Tien tsin, so again entire shore.

Could you either in terms of inflation tied to cope with those types of those houses.

Sure.

So hopefully I couldn't do it all.

Oh, two quite geophysical should hold till they are catching up with him.

Good how are you doing at your uncle was that he Chi Chi that's good for the adjustments.

And pulled yet Joe.

So apologize for the CSR policy.

Chin.

Shambaugh, Thank you Don.

Yeah.

Thank you for your question. This is shopping I think the upcoming five years will actually usher in an era of rapid development for Adas adoption and technology development, it's going to be very similar to the stage, where we see the rapid development of Av and EV penetration from back in 2018.

2022, and I remember back in 2020, we saw a huge uptick in the penetration rate of new energy vehicles in the market and I think right now in terms of Adas technology adoption, we're still in a woman upstage you know in terms of the technology readiness and also for the whole industry as well, we definitely are seeing more and more younger customers who are embracing.

Using this new technology, who are willing to try this new experience in the future. We are very optimistic optimistic about the adoption rate a improvement a bit.

We know first of all we're very excited to see that there are more and more participants in the industry. You know that are helping us to educate a wider and wider audience that are cultivating the market to get it ready for this upcoming exciting era of Adas adoption.

Well it turns out at sea.

Yes.

So you also tie at all hours have been switching visa fees.

But Jason but do you have that phone call you'll handle UGC.

I'll handle the pathologists will die pneumonia shot towards articulate that Jay just won't even through the holidays, but do you see it or do you need to be the idea.

With a healthy children.

Oh sure.

Well, Josh as you know to get any color that <expletive> Todd She wants that's closer to 10 vessels closer to the origin.

Ginger will soon.

So a good chunk of English without Google Seo tendency at Newmont needle.

Oh gosh, that's usual overlook handle that portrait of it then you bet.

The motion to be helpful.

What I'll tell you in motion tone.

E Chevron's, yet support for an adult.

They've done a door entry a nice schedule it's Josh.

That's the intention.

I'm kind of you can say in how you're treated Glenn just for sure.

Shouldn't that incident.

She said Shlomo.

The AI to channels.

That book or any unusual at that full time, that's what I just said.

Oh, Okay, yeah abortion done all good even on the China Entertainment Golf ball.

In June one.

Yeah.

The knee.

So I mean tissue she actually she was Oh no way, okay, Jonah energy to the truth and event shall fulfill.

Often you need to train them, so faithful quinella interject with balance sheet.

Sure.

Okay.

Now regarding our advantages I was trying to having this full stack our in house R&D capability, you know Theres a long list of examples of spreads that I can give you I mean just to name a few are look like they shouldn't be a self development of the technology is one of them and the second thing is to control the cost of production because you know even though we.

Embrace upcoming and Theyre cutting edge technology, very timely as well for example in the past year. We saw this emergence of the application of lost language models and having full stack them argue capability allow us to do a full domain and to an application of that new technology.

Which you know I would not be possible without that capability and that is actually happening without a lot of our peers, who are struggling to adopt new technology as well and another good point that I would like to make is that we are seeing more and more of a you know a tighter and tighter coupling with AI technology with a car.

Manufacturing capability, our R&D capability.

And we need to have for example, the Nextgen E architecture do unify Adas domain, you know start carpet and voice assistant are two.

Okay, and then there was how much.

And.

And the last question is coming from Nick Lai with J P. Morgan.

Please go ahead.

Uh huh.

What do you think the content.

You see the Lindsay.

With you guys going to do what we do so well.

Total Huntington.

<unk> you can see what you read.

Okay sounds good to.

Thank you.

In particular to the profit margin to Chiesi.

So Q2, and Q2 of MPD chocolate liqueur golf CTG com.

Do you guys have.

Uh huh.

Because he came on who owns it.

Michael.

One of them to the time can you should want to Chongqing Guangzhou.

I'll come to about 2000, she wanted to cancel the policy.

We're pleased with the job.

Okay.

Well thank.

Sometimes she wanted to switching.

What do you mean.

Paul.

Two times higher than beauty.

With that she wanted to pause at times.

To the content.

It seems to me.

Good morning.

Hum.

Can you give me interestingly my question briefly.

I recall in the second quarter was a cool.

We cannot afford to eco margin would likely turn capacity posture.

There's no guidance.

Yes.

And at the same time, we have.

<unk> you.

Any segment see Dan good morning off Brian with pricing point.

Could you still going to be D. Anderson.

The new product will be equipped with a high.

At this time.

How do we become sounder.

Competition.

And also.

Got it.

The product we sell much more.

Thank you.

Yeah.

Hey, thanks.

Thanks, Nick This is James So I'll answer your questions one by one.

First of all to reconfirm, we do believe our fourth quarter vehicle margin will turn positive to confirm your question and this is bolstered by.

A better mix of products in Q4 compared to Q3 and as.

As I mentioned earlier, we did see some level bedroom cost reduction that came through towards the end of Q3. So for Q4, we'll see a full quarter of our bedroom cost reduction coming through.

Empowering the lithium prices stable over time.

Going into 2024.

We will have better product mix next year as we launch for example, <unk> which will be.

Amongst the highest <unk> im sorry, <unk> the highest gross margin product at this point in our portfolio and obviously the new products coming from our <unk> 2.0 platform next year will be we will have better margin as well.

And lastly to your question on Mona.

You're correct it is targeting.

<unk> segment.

But we do see the Mona is a very good.

Cost control and planning process I'm very competitive from a cost perspective.

First of all and second of all.

Mona will help us achieve great scale, which will benefit to the entire company from a scale perspective, as we've seen our cost allocation and therefore improve our margin.

Lastly, we do expect you know.

More controlled associated sales expense.

Related to the mono mono sales because of the scale. So it should not be a drag from a bottom line perspective.

In terms of profitability.

Thank you.

Okay.

[noise] was there a follow up question.

No.

Thankfully it's clean.

Thank you as there are no further questions now I'd like to turn the call back over to the company for closing remarks.

Okay.

This concludes today's conference call you May now disconnect. Your line. Thank you.

Q3 2023 XPeng Inc Earnings Call

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