Q3 2023 NIO Inc Earnings Call

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[music].

Hello, Ladies and gentlemen, thank you for standing by for you know incorporated third quarter 2023 earnings Conference call.

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

This conference calls being recorded I will now turn the call over to your host Mr. H Hun head of Investor Relations of the company. Please go ahead Ray.

Good morning, and good evening, everyone welcome to Neil's third quarter 2023 earnings Conference call.

Company's financial and operating results were published in the press release earlier today and are posted on the company's IR website.

Today's call we have Mr. William Li founder Chairman and CEO, Mr. David Stone, our CFO and Danny Chu.

Senior VP of finance.

Before we continue please be kindly remind you 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 995.

Forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the views expressed today.

Further information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and Exchange Commission.

Exchange of Hong Kong Limited and the Singapore Exchange Securities Trading limited the company does not assume any obligation to update any forward looking statements, except as required under applicable law.

Please also note that Neil's earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

Please refer to <unk> press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

With that I will now turn the call over to our CEO Mr. William Li.

Please go ahead.

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Hello, everyone. Thank you for joining news 2023 Q3 earnings call.

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In the third quarter of 2023, I'm, making the most of a complete product lineup on the NTT platform the improvement of overall sales capacity and capability as well as the continuous expansion of self service and the power networks.

<unk> delivered a total of 55432 premium smart electric vehicles 77 to.

254% year over year. The retail starts from car Park showed that in Q3, new ranked first in kind of baby segment with an average transaction price of over RMB for Hunter solvent with market share above 45% in the segment.

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In September new launched under delivered on your East Essex, Amy decides coupe SUV upgrade that to the second generation. It also marked the completion of newest product lineup on the empty 2.0 platform.

In Q4 as twice where it depends on the competition gets tighter for smart Ev's nil delivered a total of 32033 vehicles in October and November 32, 2% from last year, while maintaining our prices stable in.

In Q4, the total deliveries are expected to be between 47214 myself.

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Going forward, we will stay focused on exactly or T cell strategies and improving operational efficiency. We believe the competitiveness of Nielsen's second generation products well before that unleashed next ear tayo.

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In terms of new financial performance attributed to the increase the south mix for higher priced models decreased the parts costs and improve the economies of scale enabled by more deliveries combined with a refined management of south policies. The vehicle margin in the third quarter reached 11%.

I will tell you is that coincident timing yet.

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Next I'd like to share with you the raising of the highlights of our product R&D and operations.

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On September 21st Neil held near in Nielsen Innovation and Technology day.

The events news talk full stack technology capabilities, covering the holistic business scenarios with smart Ete's Brooks on multiple brands and platforms were introduced to the public for the first time.

In the meantime, also unveiled China's first vehicle operating system Sky Alas under the in house developed Lidar S. O C named Yount, yet demonstrating Neil sufficient magic R&D capabilities, beating the industry. So don't ask me if I'm yet so as you can see it on them quite sold yet.

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Regarding our assistant and intelligence driving Neil has been quickly integrating the system capabilities on November 15th power swap pilot for highway Beta was released in China. So far 29 power swap stations I'm highways already support this feature P. S. P seamlessly combines.

And no P plus and the power swap, bringing new users a hassle free highway driving and battery swapping experience that is automated and intelligent from and to and also selling home food, So Nokia plus some galasso too well.

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In the meantime, you'll have thrown out the N O P plus four urban traffic, providing users with uninterrupted driving experience from point a to point b, both on highways and on city streets.

Enabled by Neils generalization capability in house and are taking into consideration the high demand the votes on your wish list. When it started to go out and look at plus four cities route by route from November and will gradually real life wider coverage.

At present that then I'll keep glass has been released too early bird users in several major cities and is quickly becoming available for more routes and in more cities, which has far surpassed the target announced at new in an.

And our upcoming communications event, we will be sharing more information about that.

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In terms of the sales and service network. So far we have 406 to eight new house, new space and the pop up stores and 152 cities as well as Hunter and a 14 service centers and 62 delivery centers into Hunter and 17 cities.

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As for the charging and the swapping network to date, we have installed 2226 power swap stations over 9004 hundred power Chargers and over 11000 destination Carter's worldwide more than 1.46 million public charters have been connected with neil's charging that.

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Neil Sloane tested and well proven battery swapping system has offered over 32 million convenient efficient and safe battery swaps to new users, making power swap the most trusted charging solution for them.

<unk> powered cloud and newest power swap that work has been opened to the entire industry in November no partner with China automobile and the Geely holding respectively on battery swapping in the future Neil will join hands with more industry partners in such areas as formulation is swappable battery standards.

Battery swap network R&D of battery swapping vehicles, and the management of battery assets. So as to provide the holistic chargeable swappable and upgradable solution to more smart EV users and jointly contribute to the development and the wider adoption of battery swap when a young who you do some quick near term.

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Chief Financial Officer.

No day newest Grand annual government gatherings with users will be held on December 23rd NCR Shanxi Province.

Year, we will unveil a brand new flagship model a real EPA domain of news innovative technologies. This product will become a technology benchmark for smart Tvs and a trendsetter after smart technologies worldwide to ask a little well options yet Tim on sheets funded unfunded and tissue go 10 did hung.

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On September 26, with contributions to shaping a low carbon industry, whereas innovative EV battery swapping Neil received the innovation Award after 2023 person price for sustainability. This award is a vaccination of the novelty and expand abilities as well as the economic and.

Environmental benefits of news by battery swapping technology and business model.

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The 2023, New Cup Formula in China, a racing car design competition for college students was held from November eight to November 12th in close say Neil has been sponsoring and supporting the competition since 2015, so far from the listed in China has cultivated more than 40000 gamba.

Fashion for China's automotive industry, becoming one of the most important cradles of young automotive talent in China.

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Jim.

The next two years, we will see the most intense competition during the transformation of the automotive industry faced whereas massive uncertainty in the external environment recently, we have sorted through and adjusted our key objectives.

Alrighty and action plans to become more focused on efficient execution and improvement of system capabilities, while ensuring long term investment in core technologies strong sales and service capabilities to navigate the intense market competition and on time release of the nine core products from the fed.

Our brands, we will continuously optimize internal working processes and the division of roles and responsibilities stay focused on projects that can contribute to the company's financial performance and comprehensively improve organizational efficiency and resource utilization. We are very confident of neil's long term competitiveness.

And the smart EV industry. Thank you.

Send that Stephen <unk> Uhm Steven.

As always thank you for your support with that I will now turn the call over to Steven to provide the financial details for the third quarter over to you Steven.

William I will now go over our key financial results for the third quarter, often to Missouri and to be mindful of the length of this call I will reference to RMB only in MA is cashing today.

Encourage listeners to refer to our earnings press release, which is posted online for additional details.

Our total revenues in the third quarter were $19 1 billion RMB represent an increase of 46.6% year over year, an increase of 117, 4% quarter over quarter.

Our total revenues are made of two parts.

<unk> and other sales.

Vehicle sales in the third quarter were $7 4 billion RMB represent an increase of 45, 9% of yoga, a year and a 142, 3% quarter over quarter.

The increase in vehicle sales.

A year and quarter over quarter was muni attributable to higher vehicle deliveries.

Other sales in the third quarter were one 7 billion RMB, representing an increase of 55% year over year, an increase of four 5% quarter over quarter.

Gross margin in the third quarter of two introduce III was 80% comparator ways.

3% in the third quarter of two and a 1% second quarter of 'twenty to mystery there.

10 years of gross margin year over year and quarter over quarter was many attributable to the changes of vehicle margin.

More specifically weak market in the third quarter was 11%.

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16, 4% in the star caught often stability.

At six 2% in the second quarter of <unk> industry.

The decrease in vehicle margin year over year was muni attributable to changes in product mix, partially offset by the decreased battery cost per unit.

The increase in vehicle margin quarter to quarter.

Whilst many due to changes in product mix as well as decreased promotion.

Our R&D expenses in third quarter were <unk>.

<unk>, which is an increase of three 2% year over year, and a decrease of nine 1% quarter to quarter.

Slight increase in <unk>.

Search and development expenses year over year was mainly attributable to increased personnel costs in research and development functions.

Offset by the decree design and development costs.

Taxing of expenses due to support for technology advancement provided by local government authorities during the third quarter often mystery.

The decrease in research and development expenses quarter over quarter was mainly due to the support for technology advancement provided by local government authorities.

Third quarter of <unk> industry.

SG&A expenses in third quarter were three.

<unk> three 6 billion RMB.

There is an increase of.

That is three 1% a year.

An increase of two six.

Six 3% quarter over quarter.

Loss from operations in the third quarter loss.

ADP the RMB will represent an increase of 25, 2% year over year, and a decrease of 23% quarter over quarter.

Net loss.

<unk> Fourth award.

16, RMB, representing an increase of 8% year over year, and a decrease of 24, 8% quarter over quarter.

Our balance of cash and cash equivalents restricted cash.

So I'll talk to the investment and long term time deposits was.

$45 2 billion RMB.

After September 30 is continuous III.

Now this concludes our prepared remarks.

I will now turn the call over to the operator to our Q&A session.

Yeah.

Thank you.

If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.

If you wish to cancel your request please press star two if.

You're on a speakerphone please pick up your handset to ask your question.

The benefit of our participants on today's call. Please limit yourself to two questions and if you have additional questions you can re enter the queue.

Yeah.

Our first question comes from Tim Zhong with Morgan Stanley. Please go ahead.

Thank you very much for taking my questions.

I actually have two parts of the question the first one.

As part of the battery swampy.

Because the new <unk>.

Mentioned for an extended strategic alliance.

Batteries pumping from previous partner like Sinopec to Shanghai and Judy could.

Could you share of left them more about your plans of how to structure, the new alliance of battery swapping and the potential financial impact like your Capex and operating loss.

In the long term will you consider to spin off the battery swap in business and I appreciate it.

It independently or even go public as a stand alone third party battery swapping or utility operator. So that's my first question.

Oh.

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Turning to the near total edge on kind of the World station network or meet Susan with hospital, that's our cloud service infrastructure sometime this summer.

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Thank you team for your question, Yes, recently, we have announced that the cooperation agreements with both China and the television on the battery swapping and in terms of the battery swap network. The way we look at it it's a bit similar to the cloud service, where the cloud infrastructure, both power swap stations and cloud infrastructure.

Required and rely on the network effect, both can have a pretty long investment cycles and both are actually started with the internal services first and off transformation sufficient validation and verifying the demands and the fulfillment for our users needs. We will then open up the service to the public so after five years.

Yourself, a validation and internal services, we believe that we are ready to provide such network and our service to the industry and its about time to open up the network to the industry.

Thanks.

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The Florida user.

And as we all know that there are quite a lot benefit whereas power swap it is faster than charging and also it has better user experience. It also brings values and the benefits to users and also the society, especially in China, many users living in urban environments, where a compound.

On apartments do not have a home chargers installed and in fact actually more than 50% of our users cannot install a charge offs at home in this case battery swap it becomes even more important in a convenient for those users do not have an home Chargers.

This is also very important for the mass market brands, because new is after all a premium brand and many of our users cost you have a charter at home, but for the mass market brands the percentage us not being able to having the home Chargers will be higher that's why when we started to share our battery design standards and also specifications for the <unk>.

Mass market brands to the industry peers. Many of them are very interested in this alliance we have already announced the two agreements and there are several more that are still in negotiation as they also believe that with newest current battery swap technologies service standards and also service network. This is what they need for their product.

As far as whether users tell them it sounds in.

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Total capex as opposed to come in.

The nucor team in Tulsa.

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Thank you Sir.

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Jim Bianco CEO, Neil why that figure going forward.

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Yeah.

And also in terms of the business model for the power swap we believe that it is sustainable both from the business perspective, as well as from a finance perspective, especially after five years of operations and validation we have confidence in the sustainability of outerwear swap in terms of our bachelors.

Swapped network as we will continue to expand our power swaps network. It won't be a capex also relevant to such network development, but you know I mean.

We are also looking for approaches where we may introduce partners into our Powersoft network.

Basically they will buy the battery swap station as a product from US and then they will install the stations and hand it over to us for the operations. In this case they will be holding this battery assets for US there are a thousand of such stations already running based on this business model. So for the longer term, we will also be looking for.

<unk> holding the battery swap station assets.

In terms of the neuro powered charging service itself is already almost breaking even as you may know that 80% of our power was charged for the now new users. So for the longer term, our new power charging will also be a profitable business actually in certain areas and web search and charging stations are the operational stage.

With certain swap stations are the operations is already profitable.

This is also in terms of spinning off the power swap stations. There are some investors showing their interest into having power swap or power swap the business as a independent business. We are also in conversation with them yes.

Okay. Thanks team.

Next question.

Yeah.

Sure. Thank you. Thank you Elena for sharing with you details. So my next question is about.

The card manufacturing because.

And so you just mentioned new announced you acquired a production facility from JC.

First does that mean, new has been granted the manufacturing license.

In the meantime that.

I think that means new officially shifting around the asset light business model, which you have a happy.

Neutral how should we think about the unit cost.

He co manufacturing from fourth quarter onwards. So I think previously you would provide a vehicle margin guidance by 50% for December quarter and in the long term.

You still think that the full stack in house development production and direct vehicle sales readout would rely on dealers.

It would be the most ideal model for both new and Alpha.

Mass market brand or if there will be any major difference. That's my second question. Thank you.

Stephen will answer this question.

Yes.

Okay.

Manufacturing commented factory.

They are in this acquisition.

Manufacturer agreements between <unk> and J C.

<unk>.

<unk>.

And the production activities of the models in the Corporation.

Going along normally.

Going forward. If there is any changes to the manufacturing corporation with regards to risk models.

Between EU and Jay Seo, our destination that constitute significant information after this acquisition or in the future.

Neil will communicate ways and disclose the capital market in Etame main manner comply with direct Knowles and regulations and the rules for listed companies.

Yeah.

This is Chris.

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Yeah.

And also to add onto our students comment if wave a brain the entire manufacturing fully in house overall speaking our manufacturing cost will be reduced by around 10%.

Yes.

Great. Thanks, Steven.

Steven four cohorts.

Oh, Thank you thanks a lot.

Our next question comes from Nick <unk> with Jpmorgan. Please go ahead.

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My first simple question.

Interesting.

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Aren't you.

Can you give me some examples.

More on this initiative.

Thank you Nick.

Thank you Nick.

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And Danny here to go tell them.

Yes.

In this round of organizational optimizations, we have identified several our principles.

Because over the years of development, we have some low efficiency positions and jobs and also some duplicated the roles and responsibilities in this case, we have identified this no efficiencies or redundancies in the organization, we've improved the processes of lower efficiencies and we've also eliminated jobs and positions that our duplex.

Weighted or are off low efficiencies and also in terms of the projects deferred or timing related basically we'll look at the projects and their financial contributions if they cannot screen any financial contribution in the coming straight years, we will be thinking about deferring them. We're terminating them I'm for example, if they cannot contribute to the <unk>.

Gross margin, where the P&L, they may need to be deferred or reconsidered.

A quick example is regarding the our in house manufacturing of our batteries, we've identified that in the coming three years, bringing battery production in house will not help us with the gross margin improvement in this case, we have decided to defer the plant we will still continue to do the in house R&D of anchor yourself battery materials.

In the battery packs, but we will outsource the manufacturing of the battery packs for better overall efficiency and performance. So far. This one is optimization, we've found a detailed and thorough review and adjustments and also made the necessary adjustments based on the needs of the business and the resources of the entire company, yes downward.

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Yeah.

Yeah.

But in the meantime, we will still make sure that we don't Miss our thought because we're dilute our investment of resources for the high priority items for the coming two years. The first is the long term investment for the core technologies. So that we can still keep bleeding in terms of the products and the technologies as.

As mentioned earlier today at the New day 2023, we're going to unveil a brand new flagship model and this car will be equipped with a lot of state of the art technologies that are leading the entire automotive industry and our second priority is the continuous development of our sales and service networks recently, we have entered.

Large sales teams. We have also increased the number of the point of itself. So that we can get ready for the more intense competition in the coming two years, because if we don't make such preparation we will not be navigating. The intense competition example is ads in October in Shanghai, Our south volume has outnumbered.

BMW and Mercedes running all running on or power sources, including ICU cost as well as evs and in cities from Jiangsu Zhejiang provinces. We are also establishing a pretty solid foothold with a pretty significant market share, but when it comes to large here.

Cities like fourth gear or fifth tier cities, we still have a long way to go we're in cities, where the EV infrastructure is not yet ready. We're also not performing that well established brands. In this case, we need to continue to develop ourselves and service networks.

In terms of our soft performance in Georgetown, Jiangsu and Shanghai actually 50% of our sales volume is contributed by the south in this three areas on the one hand it shows that our products are well recognized in the highly competitive markets and there are places.

Other hand, it also means that we needed to further enhance our brand awareness in the lower tier cities and the third priority in the coming two years is to secure the on time release of our nine core products from the third bench, we have already made investments and the products of this or brands that will be coming into the market very quickly in the coming too.

Yes, Thank you Nick.

Hum Huntington Huntington.

Hunter you presented.

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Duncan Cooper.

We can consume in Shanghai.

To do so much.

Welcome.

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NTT Christine <unk> from Q2.

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Sure.

You said at that moment.

Our strategy for the third quarter is pretty clear.

That is to keep our prices stable earlier this year in June we have adjusted our user benefits actually both our existing users and new users were accepting this adjustment pretty well. So we may be the only company able to satisfy both existing users and new users with a benefit and adjust.

And since then we have been keeping a pretty stable price strategy as we believe that it is beneficial to our brand image and also product competitiveness of Europe.

And also users are experiencing benefits.

Going into Q4, the press, whereas deepens. The competition also gets more fierce for many well established brands like our competitors BMW and Mercedes there also slashing prices pretty aggressively.

On their EV models, the price reduction can be as high as 31%, but we still keep a pretty stable price Amit. There's fears. The competition. This is also reflected the stable prices also are reflected in our improved <unk> margin. So our longer term strategy will be keeping our price staple.

While continuously improving our vehicle margin in the meantime.

We will also include our south capacity capability and efficiency. So that we can bolster our sales volume, but this can take time and we will be staying patient we will not we will not realize where boost our south ballroom at the cost of our product margin. As this is not healthy for the longer route maybe Stanley can also.

More information regarding our specific financial numbers.

Our record gross appropriate margin 11 for Q3, and we are confident in achieving a higher margin in Q4 considering more.

Production efficiency lower price of lithium carbonate and also decrease our part cost.

Our target is also a still kept at 15% for Q4 at a firm long run.

They are important.

Projected internally, we have started to further improve our cost structure for NTT product by optimizing design improving cause.

And production efficiency and also present is the negotiation with our partners.

As mentioned by William our newer brands keeps focus on premium market segment, and we will keep our product prices relatively stable.

Combined all of those factors together, we believe our vehicle margin can be further increased to 15% to 18%.

In 2024.

That's the general guidance for a vehicle margin. Thank you yeah.

Yeah.

Yes.

Okay.

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Yeah.

Our next question comes from you can deal with HSBC. Please go ahead.

And they say we can't here I've got two question, maybe we wrote it one by one the first one is on the cash position, we noticed that the cash balance increasing quarter on quarter other than the strategic investment and the convertible bonds that there is also still a 1 billion increase is that coming from the improving.

Can you shed a little bit more light on that.

Okay.

Hi, rich understanding.

In fact, the new product delivery ramp up in Q3, we achieved we achieved positive operating cash flow.

Yeah going forward.

So if our sales.

<unk> continued to grow we are confident to reach.

Realized and a healthy operating cash flow. So that's for your first question yes.

Okay got it thank you.

My second question is on the OPEC a reduction for a Williams the sharing optimizing the battery business. We also read there is also the head count cuts could you share more on whether there will be asset write offs. During the process of the cost optimization and when we would expect us to rich at link yes.

Sustainable shape.

Yeah, Hi, it's about the cost of my vision, yes, we reduced 10% of what compositions and complete the adjustment in November.

But for Q4, there will be almost no financial impact since we need to pay additional compensation for employees, who left the company offset with less payroll costs.

But a four for next year together with the headcount reductions.

We also delayed.

Okay. So the certain project as mentioned by William So the total impact to 'twenty 'twenty four will be receiving a for a total cost of around $2 billion.

Our RMB.

Yeah.

Yes.

Tony.

Obviously, you'll have all that net net the things you'd see similar to the Thailand. So you don't have to.

And so you'll see it I mean, Peter you go to.

I'm wondering.

Yeah to around to 200.

Yeah.

Yes. This one dose optimization has helped us to improve the financial performance slightly over our previous budget. However, we do need to have some one time expenses due to the severance package for the terminated employees.

Okay.

Oh got it done.

Thanks, William and Stanley.

Yeah.

Your next question comes from Meng suddenly when it's bank of America. Please go ahead.

Hello management.

Management. Thank you for taking my question. My first question is regarding your second brand L.

Help us in 2024 in the future.

You all consider to share the charging station and the Patriots substation along with them.

Brent and ozone.

You also constitution and sales channel.

Brent Thank you.

Okay.

Susan.

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Sure.

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Neil young horses in the Midland.

The opposite of Yahoo, Yes, and no.

Currently it is Samsung.

Time charter in Nevada.

To allow them to us.

I found the synergies coming from social if I may a quick caito voyage you.

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Okay.

Yes, when it comes to our mass market brands that Nick code named Alps actually originally we have just had the very first validation period of this this brand I wrote off the production line actually at the condition of this verification bill there's a pretty good it can be.

One of the best of VB cars, we have in the history of Neil. So we are very confident in the competitiveness of this project and before the official launch and delivery. We're still have time to continue to optimize and improve the project in terms of our power swap and the charging network strategy for Neal our back.

We swapped network will be coming in two parts. The first is the exclusive network for new and the new users and then the second will be a shared network not only for new users, but also for our producers and other brands with Swappable vehicles in terms of the charging network with being sharing our Chargers already Germany.

New brands in terms of the South network. This won't be separated so they will have their own self stores, but we will be sharing the service capacities and facilities. So service centers will be shared between you and els.

Yeah.

Thank you William.

Thank you.

My second question's regarding your utility for our product because of this.

This year you are maybe oh.

Update of your new models and also about some new modules.

2024, well you'll have some recent version of our existing model and they start to use it.

Voltage charging.

<unk> system.

Your car so.

In this case do you have any guidance about.

The actually substation.

We'll expect I think.

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Yeah.

Don.

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As a woman.

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Sure.

No problem at all to see.

Collateral from one has a clear path so that would be good for them.

And they go with teams.

Ah boy was out of that.

And then peninsula as shorthand Orbitz agents, who would you need to go a lot lower Geo satellite.

Well then its envelope, but it can take a go.

To go public.

Patient in network.

What would cause it tends to be a lot more leeway if I may on the Hormel EMEA engineered if they don't you don't put a spiritual surgical Tony fell off a little on the high liquids issue that you just answered it a slowdown.

Hi, guys seem to hold it.

Each of you to see.

So the download.

Okay.

Yes, it's a common standards and practices for the automotive industry to have model years, where physically but for our anti <unk> product. We will not have any major modifications were upgrades as many of them were just newly launched were delivered to the market. She was stabilized our quality and the supply chain.

We will only make minor improvements and upgrades on our part.

Or antitumor projects in terms of our plan for the power swap stations in 2024 as I've mentioned, we will be not only building our exclusive battery swap network, but also a battery swap network for Xiaomi are on the one hand, we will appeal. This bill.

This power swap network for other brands, where that can be shared with other brands in the meantime, we will also continuously looking at the demand of our new users. So that if there are any requirements, where a high demand station store locations. We will also install stations there, but we are still working on the specific plants in the numbers.

Thanks.

Consistent with it.

Yeah.

Okay.

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

Hi, Thanks, Thanks for taking my question. My first question is regarding your sales force sales team.

Last quarter, you mentioned that youre going to secretive increase yourselves peoples com.

Double check how you say soft in our policy at this moment.

Have you achieved.

Achieved your original target of expanding sales team.

Have you adjusted your original plan.

Yeah.

Thank you Paul.

Then.

How much of that down.

Your the salary I just saw the social Goku in San.

Soon as he's in Togo Chamberlain more chance.

We can ship items or you don't.

And I'm in the Barber from Mohan that those are.

So it may come down routes.

That's helpful.

Both of my top of Ascension Turbos turbo fans and audiences in chicken Nuggets for the timing.

<unk> from.

Social and in need of high shows this is Jim.

Woman Cubans element and maybe you could parse that out.

I mean, you can find me Oh my goodness, that's what occasion.

But I'm going to choose to go to.

Social true number Ah patient Eaglebank Tysons.

So to Australia.

And though you guys talk a little bit so that saying to ourselves.

I'm Gonna put us showing them how does it shows within EMEA hazards Hot. So you said if I may on that Sheridan mentioned without 100 homes.

So what happens.

Uh huh.

No.

I don't want our mcquay kidneys.

Don't call Eagle, Colorado.

Hopefully the patient that users.

We're going to get that Havent been go show resiliency of social selling.

Some of which will be partly true.

It's going to be.

Yeah.

At present for our frontline panels silos, we have a team of around five southern and Hunter persons, but many of them were just newly onboard around the threshold and then if there are hundreds of them or a newly onboard into the company and they it still takes some time for them to really get to know the brands and also.

I familiar with the entire ourselves processes.

Because for the newly hired silos, we will spend around one month and a half on the trainees and after what they can start to sell vehicles to our users. According to our history of data and then the follow on average well need to spend around six months to get familiar with the brands ended the processes and will keep coming a will sell for.

For the company, so we need to be stay patient with this newly hired fallows as many of them just joined the company in September and October but in the meantime, we will also completing an improving our assessment and evaluation systems. Our training systems. We will also bring this follows more efficient tools. So that they can really make for you.

Our make full use of their self capacity and capability.

Thanks. My second question is regarding the R&D spending I think for this quarter.

Our 300 million quarter over quarter decline on the on until your explanation use some incentives from the local governments more quantified that non par and more importantly.

Going forward what would be your.

Projected quarterly R&D spending.

Yeah.

Sandy.

Yeah, Hi, there.

There are some slight.

Like a decree considering.

Some support we received from the.

Local authorities so.

But on the long run as we mentioned during the past also earnings core <unk>, our non-GAAP R&D investments per quarter.

We will also be kept at a RMB three two to $3 5 billion.

We.

Also mentioned by without prejudice.

The statements. We will also we will use.

<unk> investment in core technologies and also the let's say.

Yeah. The one T. J's is the technology of the product at the guarantee the timely launch of.

The new product so.

The.

Investments R&D.

There are no secrets there.

There will be a slight like fluctuation across different quarters. Thank.

Thank you Paul.

Thank you Doug for helpful. Thank you.

Yeah.

The next question comes from changing with C. R. I C. C. Please go ahead.

[noise] additional listen essentially Lindsay.

Oh gosh.

Hum.

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She truly Pasha authority attrition rate.

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At this time.

Hi.

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Okay.

Sure.

Okay.

Yeah Yeah.

So my first question is regarding to autonomous shiny or we have already opened.

Now for a wish list in September so.

All groups intelligence, we are.

You're trying to extend the function function.

Our mission, so that's a bit different from other Oems.

They open up and you can see.

So you can see that.

On the <unk>.

Our implementation ultimately function.

And also.

Uh huh.

It is our target.

The accumulated knowledge for Uh huh.

Thompson Chairman by the end of last.

And this year so how is our current program.

Okay.

Okay.

Serious hunting.

So Neil I sort of on the woman the tickets and.

Sure the forgotten Little P.

Since you don't know if deposit limits.

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If you were to come in and some of them, we announced entitlements America.

So would you be Honda nipple Chin Masa now someone with a lifetime.

You guys saw that gets inside Togo.

The more convinced now.

Both Hogan side, so sort of the go live I'm going either soda.

What's their wits about well then you guys you can chew base that you're back.

The shootings and said to them they simply on Hawkeye phone to carve out because of that so you wouldn't have done it in the deal Didnt kill them away.

Hum.

That's all border to yachts and coaching sometime soon.

Uh huh.

Tung country, the harmful to the telco edge on the EMEA, Canada, and daughter salaries women tongue holidays are marking the trough.

A woman with a country that has a phase seriously.

And you go through it.

Step by step the true that chip out to go.

Yes, I'm gonna to harness that equates your annuity.

Well no photos, what's in the <unk> and as it gets into that.

And that won't change.

In fact for a total of women.

Uh huh.

You mentioned that you continue to grow.

Citywide down per se.

Sorry to see you soon.

It should be one of them is to sit on top of it.

Uh huh.

Oh boy and in digital.

In terms of news no P plus four cities actually we leverage our generalization capabilities as well as the faulting AI capabilities. So that we can rollout. This MLP route by route for our users based on their demand.

Of course, we have in the meantime, we have also formulated the data close to the capabilities, where we can really leverage all this data coming from the generalization and also our cloud AI at the new and we have enough that by end of this year, we're going to open up the rules covering around the 60000 kilometers of mileage and so far our.

Progress is pretty good and we already have established the capabilities of where leasing L. P. Plus four early bird users in one in 100 cities and that we will be rolling out such a service and invite our users into the program step by step and so that it can be covering more cities with a with more <unk>.

Users title.

I'm sorry.

In terms of facility based where relative based on autonomous driving we're unlocking.

Some of our peers they have from a marketing slogan regarding their services, but we believe that MLP, plus especially L. Plus four cities is a pretty serious service and we would have liked to make sure that our users have a safe and also good experience.

And then we will roll out the service and its coverage step by step, but overall speaking our progress has far surpassed our expectations and we as after all we already have more than 100000 vehicles on the road. This will also help us to further formulate and improve our data closer yes. It wasn't too long ago that go through.

We're missing.

So any other term downturn.

The old payloads.

We'll then take a CCAR in the cigarette some chance that that sounds it sounds good.

So that's where those of you on the pizza.

We'll then send up Atlas will give you a hunting season as a whole no motion it yet either knee.

I'm quite I would say that she is a yes, a woman totally that youll ship.

Sunday, sometimes on the 17th.

Especially for every new engine to vehicle. It is standard work for a range ships and also 33 high performance sensors. This will further help us to formulate that data close loop and improve the data capabilities and in return we will also accelerate the capabilities for integration. This is.

Also a very unique advantage of new which is quite different from any other competitors offering the same alerts service.

Yeah.

Sure.

Alright.

Hey, how does gambro into your question you should go how they shop.

No sugar athletes.

Sure Jacob.

Oh no no.

Cheaper natural breaking in.

Oh I'm sure something that's either in Chiba, and popcorn, which Andy Michel Mcqueen.

She went to the Q2 shortly.

No no I just want to go quickly.

My second question is regarding to overseas markets.

Will it still be one of our strategic focus.

Please introduce the current operation.

Operation situation knock our overseas market this year.

Regarding to the our our audience our lay out program El Abra collision.

Also about dealerships and entrust truckers.

Also our next year's target in place.

Yeah.

Uh huh.

Well Mattel women also will go even higher.

It's near houses.

But without question, Yeah got to Brooklyn, and therefore don't assume so it was.

Unfortunately not.

Not all of them, Ohio central towards where the tools are.

Okay.

It says it's also the honeymoons that I'm a.

Women, but also for another year will add on a woman would send the vessel.

So Dow has let's say you could.

Yeah, with a solid silver or more quickly than they are.

All of us in good it's a good year with a more sure no trouble.

Ooh, Yeah, you'll hear the fruits yet.

<unk>, particularly on a Sunday.

C O M a hypothetical.

Well no it yourself.

Union Toyota sedan with me.

Well chip our meals to go quote that Dr. Quay, good South Heldman was what again.

So, yes, some glass listen at celadon and sell them the PD data.

At the moment in five European countries. We have opened six new houses, it's Neil spaces to Multifunction service centers and also partner with 54 authorized service centers. We have also installed 30 power swap stations in five European countries, but in terms of our business.

Development in Europe, we're still at the early stage of the business development and expansion, we want to continue to test the water ensure we have good user experience before we.

Before we scale our operations and the business. There. That's why volume is not a priority for us in terms of our European business and in the coming one year, we will continue to be staying at this stage, we will make sure that our capability and capacity are sufficient to serve our users in Europe before we start to work on.

On a higher scale.

Okay.

Thank you Susan.

What are the main challenge.

Yeah.

Our next question comes from Jason gets away from the senior Securities USA. Please go ahead.

Thanks for letting me ask a question you talked a couple of months back about 20000 vehicles a month in December and we're running a little bit below that now.

What are the biggest headwinds there has been some production challenges maybe broader macro weakness and then what would it take to get to that 20000 units and how should we think about the run rate moving through 2024 with the new sales force.

Okay.

You're welcome to come inside.

All of them that's in Tenda Susana for new workers.

But that is all of the essential aim Thunder CAGR.

And this at home and I'm not sure that Julien <unk> di system.

Elements of each of those <unk>.

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It's the only way that our last sort of on the Chooser woman.

And with our Goldeneye includes a clear yes.

Bob.

Plugged in some way to go to any OTA.

But again for the young who hasnt done that instead of having to chase it or not.

Doing a single with that.

<unk>, Switzerland, Oslo, London.

So I'll answer that.

<unk> wait it out we're going to do the same.

But our goal on anyone who would have some co leadership in kombucha.

Firstly a woman.

Let me see how youll see a nice and then wonder if I'm in Ohio, which <unk> T cells and T cells.

We want them to come in.

Somehow it sounds with lithium southern gentleman.

Showdown.

So the agents, how cola Tania and Callaway to Beaumont without dita.

Daniel.

Michelle.

Hello Chu of meal usual definition.

So we are cheaper.

Uh huh.

Keith will assist with a slowdown of switching has a phase II soil.

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On the timing today has a total chicken dinner.

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On the good quarter, you'll get it conditions the beat in the second quarter.

Figure out to a national one.

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Volume Guy equation <unk> timing.

I'm not sure what particular you had dialogues here one it shows that it appears so.

Thank you for your questions as.

As we've mentioned earlier today in the premium battery electric vehicle segment priced over RMB 300000, New Haswell lives the 45% market share in the third quarter of this year actually our market share in this segment has been pretty stable around 40%.

So this has proven that we have a relatively solid foothold in the premium <unk> segment, we have a pretty significant also stable market share already established in the segment, but when it comes to convincing users of premium I say cost of buying a premium EV. It is actually more difficult time coming soon.

In mass market users because for the mass market users buying a car of a 100000 or 200000 RMB they pace attention they pay attention to the ownership cost and also the usage of the product, but for the users of premium electric vehicles, they pay more attention to other factors and the second reason.

That may be affecting the wider adoption of our premium CEB is reporting the coverage of infrastructure as I've also shared in the Yangtze River Delta area, mainly Shanghai, Jiangsu and Georgia, we have a pretty significant market share. Our software has outnumbered that of BMW Audi and.

Most cities, where there I say herself.

A very important and the reason behind is because we have 700 power swap stations already established in this area. So infrastructure is also playing a very important role in boosting the south volume and the adoption of electric vehicles. So far in China, we have already installed over to southern power swap stations.

But roughly 700 of them are along the highways in some regions and areas. Our power swap stations are still not widely accessible in this case, we will need to also speed up and enhance our infrastructure of coverage. So that we can further boosted the wider adoption of electric vehicles.

Two main reasons. The first is regarding the consumption habits of the premium vehicle users and the second is mainly because of the coverage of the infrastructures for electric vehicles.

But we believe that this trend.

The main thing.

I say users of buying Evs, where this overall trend is transforming into battery electric vehicles will be picking up at speed. Because we also find that some of our peers and competitors before they only have hybrid vehicles, where a range extended vehicles, but now they're also launching their battery electric vehicles such strategy will all.

So push the transformation of the entire industry. So we're actually happy to see such a transformation and also many car companies are now.

Also installing and expanding their charging network and new is working on our part with swap network with wider.

Infrastructure, we will also boost the adoption of the battery electric vehicles. So overall speaking, we believe that 2024 will be better off than that in 2023, because in 2024, we will also be having a more stable product portfolio. We are also frequently product launch and delivery, which has also slightly east Harbin.

Our overall execution.

Got it thanks and then.

Quick follow up on the battery swap partnership side.

Is there any kind of design changes that your partners are they have to do to their vehicles in order for them to use the swap stations and if so.

Have you guys talked about you know what percent of mix of vehicles they produce.

I might need to be changed or edited in the production process in order to do battery swapping.

Well knows.

And.

So it's a massive market branded so you'll need to get battery pack as a standard battery pack.

Okay.

Pamela T well mitigate it in the balance sheet.

Jeff Hammond at certain time, Michelle did coupon shorter term Jim seizure type.

So yes. It doesn't show is just the agenda.

Oh, and then take a closer look at your full time equation. They kept pushing so that sort of pace that again, it's about taking the time.

So on the last I'll cover for you on yeah, Okay, which would put me on the call.

You didn't.

Actually we have shared the batteries spikes and also the design details off hour battery packs for the mass market brands two hour battery swap partners and they will needed to design and engineer their vehicle products I mean, the chassis interfaces following our battery standards it will.

It takes some time for them to decide on the right models and the company to the product R&D, but the overall investments and R&D expenses for developing such new models based on our batteries batteries won't be very high.

Got it thank you.

Thank you.

Yeah.

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

Thank you again for joining us today. If you have further questions. Please feel free to contact meals investor relations team through the contact information provided on our website. This concludes today's conference call. You May now disconnect. Your line. Thank you.

Thank you.

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[music].

Ladies and gentlemen, thank you for standing by for Yale incorporated third quarter 2023 earnings Conference call.

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

This conference call is being recorded I will now turn the call over to your host Mr. Chen head of Investor Relations for <unk>.

Please go ahead ray.

Good morning, and good evening, everyone welcome to Neil's third quarter 2023 earnings Conference call.

Company's financial and operating results were published in the press release earlier today and are posted on the company's IR website.

Today's call we have Mr. William Li founder Chairman and CEO, Mr. David <unk>, our CFO and Danny Chu.

Senior VP of finance.

Before we continue please be kindly remind you 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 995.

Forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the views expressed today further information regarding risks and uncertainties is included in certain filings of the company with the U S Securities and exchange.

Commission the stock exchange of Hong Kong Limited and the Singapore Exchange Securities Trading limited now.

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

Please also note that Nielsen earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

Please refer to <unk> press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures with that I will now turn the call over to our CEO Mr. William Li Please.

Go ahead.

So I don't see it going it's hunger Fanion defensible, yes, if you go to <unk>.

Hello, everyone. Thank you for joining <unk> 2023, Q3 earnings call.

<unk> two <unk> two <unk> <unk> shown them that Houston, social Fool Harpoon along loaded since you called that we license itself, which is about <unk>.

<unk> syndrome patterns its user audience.

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Samsung Togo of patterns.

In the third quarter of 2023 by making the most of a complete product lineup on the <unk> platform the improvement of overall self capacity and capability as well as the continuous expansion of self service and power networks, Neil delivered a total of 55430.

To premium smart electric vehicles.

70.

75, 4% year over year, the retail stats from car Park showed that in Q3, New ranked first in China's CEB segment with an average transaction price of over RMB for Hunter solvent with market share above 45% in the segment.

Joe Bob will hook, Joe Fuller change citizens Johnson, Joe Paul SUV.

Why isn't that.

MTR P&I change your time in that type of detail.

Parkland tantalum chairman in June with Goldentree Nielsen <unk>.

Two <unk> hundred <unk>.

With <unk> with <unk>.

Yes.

<unk> itself was somebody that attending several standouts into <unk> patents to satisfy them up.

Well, maybe it's just some itself wouldn't wait sit in <unk>, South Sudan, Joe right now.

In September new launched under delivered the O'neill East Essex.

He decides coupe SUV upgrade that to the second generation.

It also marked the completion of newest product lineup on the anti 2.0 platform.

In Q4 as twice, where it deepens and the competition gets tighter for smart Abb's New delivered a total of 32033 vehicles in October and November up 32, 2% from last year, while maintaining our prices stable in.

In Q4, the total deliveries are expected to be between 47000 to 40 myself. It constantly trying to sell through affiliated physician, who we showed you that Houston will mean Samson.

Empty tubes.

Pershing.

Generally John Tsai Ming Yang senior leadership.

Going forward, we will stay focused on exactly what he himself strategies and improving operational efficiency. We believe the competitiveness of Nielsen's second generation products well before their unleashed next ear.

I will be able to inform yet so galasso doubt first incentive Houston input in some things that John <unk> agreement Michelle Celsius.

Instead, it seems you'll have some term only houston.

C.

In terms of new financial performance attributed to the increased sales mix for higher priced models decreased the parts costs and improve the economies of scale enabled by more deliveries combined with a refined management of self policies. The vehicle margin in the third quarter reached 11%.

We will conduct a totally without going to the times and again forgive me for a minute.

Next I would like to share with you the raise on the highlights of our products R&D and operations.

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So champions, who realize that use which means that forget it and getting on ships.

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You will find that <unk> got some third changes hold us at home.

Scios.

At the end of it so you wont see that too young.

Young yet cannot wait Javier the agenda <unk> environment.

On September 21st New health, New in Nielsen innovation and technology day.

The event <unk> full stack technology capabilities, covering the holistic business scenarios with smart Ete's broke from multiple brands and platforms were introduced to the public for the first time in.

In the meantime, also unveiled China first vehicle operating system Sky <unk> under the in house developed light our SLC named Youns, yet demonstrating neil's systematic R&D capabilities, leading the industry. So don't trust with them yet.

You can see it on them you know quite sold yet.

So when the peso goes through food being how funding condom PSP the beta <unk> <unk> coastal opinions antigen for PSP, PSP whooping Ninja <unk> plus <unk> into yet.

Also finance Huntington <unk> and <unk>.

Regarding our assisted and intelligence driving Neil has been quickly integrating the system capabilities on November 15th power swap pilot for highway Beta was released in China. So far 29 power swap stations on highways already support this feature.

P seamlessly combines <unk> plus and the power swap, bringing new users a hassle free highway driving and battery swapping experience that is automated and intelligent from end to end answer suddenly sounding.

Sounding harmful so Nokia plus some galasso too.

While you're on could keep them change your attention that D&O again soon I'm, just yet I mean to your point on the farm economy.

Honestly, we haven't done a 30 with Hong Kong, and Louisiana, Louisiana Ghansham questions one on flu.

So you had tested some true since founding harmful Nokia plastic common tier would churn whaler agent that proven throughout the symphonia <unk> co founder changing harmful to our Milky Plasticine, Tommy Lewis forgot hurts without some sort of slowdown sorry, Chris within gap you can toggle our tungsten could you do with Keytruda.

Well maintain that didn't see the southern south with Goldman Sachs could I referenced that in some ways since you could see.

In the meantime, you have thrown out the MLP plus four urban traffic, providing users with uninterrupted driving experience from point a to point b, both on highways and our city streets.

Enabled by Neils generalization capability in house, and we're taking into consideration the high demand. The roads on users wish lists where it started to go out and they'll keep plus four cities you ought to be.

The routes from November and will gradually real life wider coverage.

At present that then I'll keep glass has been released too early bird users in several major cities and is quickly becoming available for more routes and in more cities, which has far surpassed the target announced at new in.

At our upcoming communications event, we will be sharing more information about that.

So those are a few on lithium you get the margin question again women Kassala Sibelius.

Above that we'd like to machines will be like when Jim forgot you bet with other things.

Somebody uses the doubtful.

Such a telco don't forget.

Got it down by <unk> <unk>.

In terms of the sales and service network. So far we have 406 to eight new house, new space and the pop up stores in 152 cities as well as Hunter and a 14th service centers and a 62 delivery centers and 217 cities.

And then one more for me at the margin or the <unk> you can really put you down.

Absolutely and in fact towboat George since the bank.

Total.

Would you be doing this.

<unk>, 20th Towboat your bags with London.

As for the charging and the swapping network to date, we have installed 2000 202006 power swap stations over 90004 hundred power charters and over 11000 destination Carter's worldwide more than a 146 million public charters have been connected with neil's charging map.

Well our funding he didn't call opinion.

Well I can quote you called out Togo, essentially I'm by one slip in here go sell engine, the quantity and pulling through.

Well I am quotation letter.

Well I.

You will have plenty of loblaw has some higher coupon.

Well I <unk> from Baird change without <unk> without telling you can put a higher for daiichi funding against the Belgian <unk>, La Quinta and switching gears.

And Glenn you can be viewed on peso tool.

<unk> maintained when she said you include chicken could.

Cause synergy that dug into yet.

They don't quite get them was the fact that property.

<unk> tested and well proven battery swapping system has offered over 32 million convenient efficient and safe battery swaps to new users, making power swap the most trusted charging solution for them.

<unk> powered cloud and newest power swap that work has been opened to the entire industry in November new partners with China automobile and Geely holding respectively on battery swapping in the future Neil will join hands with more industry partners in such areas as formulation a swappable battery standards.

That was swapped network R&D of battery swapping vehicles, and the management of battery assets. So as to provide the holistic chargeable swappable and upgradable solution to more smart EV users and jointly contribute to the development and wider adoption of battery swap when a young who you do some quick near it.

Some of you, adding a fan yes cellular as a standard <unk> <unk> change in that she didn't fishing <unk> resort <unk> chosen again once you put a casual gogan Indian food and getting on.

She's our chief Financial Officer.

New day newest Grand annual government gatherings, where users will be held on December 23rd NCR Shanxi Province. This year, we will unveil a brand new flagship model a real EPA domain of newer innovative technologies. This product will become a technology benchmark for smart Tvs and.

A trendsetter after smart technologies worldwide.

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<unk> de Wheeler financial issue here, where most of the Huntington Kofu Kinsey Herpangina function show he doesn't.

On September 26, we have contributions to shaping a low carbon industry with innovative EV battery swapping newer received the innovation award after 2023 person price for sustainability. This award is a reclamation of the novelty and expand abilities as well as the economic and <unk>.

Mental benefits of new spots that we're swapping technology and the business model.

So you have asthma.

Wait I paid from what I've heard some functions to the sheer size of that who are based on the type C.

The U S government, so Glenn so, adding union Qi <unk> Jensen.

Are there some functions with Cts Iceland.

<unk>, Susan Lynch telco soybean somewhere to two <unk>.

The 2023, New Cup Formula in China are racing car design competition for college students was held from November eight to November 12th incorporate Neil has been sponsoring and supporting the competition since 2015, so far from Alaska, and China has cultivated more than 40000 young prefer.

I should note for China's automotive industry, becoming one of the most important cradles of young automotive talent in China.

And she's been good teaching and deteriorated.

Whereby funding through the portrait in women's in Q <unk> answer the question will <unk> Shimbun CFO.

Trying to cross sell solutions piece in the meat Houston.

Bob Cushing Quentin tissue, especially total Joseph woman leader than going into it you did a full contingent standup impact your conclusions with you.

<unk>.

Well John So she had been good in April coinciding with me from <unk>.

We dug in and go to Houston console title goes into someone who came in towards the Saudi.

So when when they realize that.

Huntington's and leap.

Jim.

The next two years, we will see the most intense competition during the transformation of the automotive industry faced with massive uncertainty in the external environment recently, we've sorted through and adjusted our key objectives.

Rfps and action plans to become more focused on efficient execution and improvement of system capabilities, while ensuring long term investment in core technologies strong sales and service capabilities to navigate the intense market competition and on time release of the nine core products from the third.

Brands, we will continuously optimize internal working processes and the division of gross and responsibilities stay focused on projects that can contribute to the company's financial performance and comprehensively improve organizational efficiency and resource utilization. We are very confident of neil's long term competitiveness.

And the smart EV industry.

Send that Stephen's done with either <unk> or <unk>.

<unk>.

Uhm Steven.

As always thank you for your support with that I will now turn the call over to Steven to provide the financial details for the third quarter over to you Steven.

William I will now go over our key financial results for the third quarter, often to Missouri and to be mindful of the length of this call I will reference RMB only in MA is cash today.

We encourage listeners to refer to our <unk> press release, which is posted online for additional details.

Our total revenues in the third quarter were $19 1 billion RMB represent an increase of 46, 6% year over year, an increase of 117, 4% quarter over quarter.

Our total revenues are made of two parts.

<unk> and other sales.

Vehicle sales in the third quarter were $7 4 billion RMB represent an increase of 45, 9% of yoga, a year and a 142, 3% quarter over quarter.

The increase in vehicle sales.

The year and quarter over quarter was muni are attributable to higher vehicle deliveries.

Other sales in this third quarter were one 7 billion RMB, representing an increase of 55% year over year, an increase of four 5% quarter over quarter.

Gross margin in the third quarter of two introduce III was 8% comparative ways.

3% in the third quarter of two and a 1% second quarter of 'twenty to mystery there.

10 years of gross margin year over year and quarter over quarter was many attributable to the changes of vehicle margin.

More specifically.

<unk> margin in the third quarter was 11% comparative wise.

16, 4% in the Star CT often facility.

At six 2% in the second quarter of <unk> III.

The decrease in vehicle margin year over year was muni attributable to changes in product mix, partially offset by the decreased battery cost per unit.

The increase in vehicle margin quarter over quarter.

It was mainly due to changes in product mix as well as the cross promotion.

Our R&D expenses in third quarter were <unk>.

<unk> represent an increase of three 2% year over year, and a decrease of nine 1% quarter to quarter.

The slight increase in research and development expenses year over year was mainly attributable to increased personnel costs in research and development functions.

Offset by the decree design and development costs and deduction of expenses due to support for technology advancement provided by local government authorities during the third quarter often mystery.

The decrease in research and development expenses.

Quarter over quarter was mainly due to the support for technological advancement provided by local government authorities.

Third quarter often industry.

SG&A expenses in third quarter were three.

<unk> three 6 billion RMB.

It is an increase of.

That is three 1% a year.

An increase of two six.

Six 3% quarter over quarter.

Loss from operations in the third quarter loss.

ADP now RMB, representing increase of 25, 2% year over year, and a decrease of 23% quarter over quarter.

Net loss.

<unk> Fourth award.

16, RMB, representing an increase of 8% year over year, and a decrease of 24, 8% quarter over quarter.

Our balance of cash and cash equivalents restricted cash.

So our content investment and long term time deposits was.

$45 2 billion RMB.

September 30 as compared to history.

Now this concludes our prepared remarks.

I'll now turn the call over to the operator took precedent our Q&A session.

Yeah.

Thank you.

If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.

If you wish to cancel your request please press star two if.

You're on a speakerphone please pick up your handset to ask your question.

The benefit of our participants on today's call. Please limit yourself to two questions and if you have additional questions you can re enter the queue.

Yes.

Our first question comes from Tim <unk> with Morgan Stanley. Please go ahead.

Thank you very much for taking my questions.

I actually have two parts of the question the first one.

It's about the battery swapping.

Because the new <unk>.

Mentioned for an extended strategic alliance.

Batteries pumping from previous partner like Sinopec to Changan and Judy could.

Could you share.

More about your plans of how to structure, the new alliance of battery swapping.

And the potential financial impact next year.

Opex and operating loss.

In the long term will you consider to spin off the battery swap in business and operate.

Independently or even go public as a stand alone third party battery swapping or utility operator. So that's my first question.

Oh.

So the team there well then figure teaching you announced lower them.

Hum.

And suddenly the whole tool.

Tom take a near total edge on kind of the work station network or Mr. Deng with hospital, that's our cloud service infrastructure sometime this summer.

So you can see it on Chung.

Good tongue Cedar as you go towards a gym.

200 <unk>.

36 <unk>.

That's it for me as well, let's say the <unk>.

The shoe children downloads that cause it to our profile.

It can go.

The union or minimum way.

And that should create the way.

In terms of how far women the league in Cuba, and the coupon and the meat.

Thank you team for your question, Yes, recently, we have announced that the cooperation agreements with both China and the cave and the battery swapping and in terms of the battery swap network. The way we look at it it's a bit similar to the cloud service, where the cloud infrastructure, both power swap stations and cloud infrastructure.

Require and rely on the network effect, both can have a pretty long investment cycles and both are actually started with the internal service at first and after sufficient sufficient validation and verifying the demands and the fulfillment for our users needs. We will then open up the service to the public so after five.

Yourself, a validation and internal services, we believe that we are ready to provide such network and our service to the industry and its about time to open up the network to the industry.

Yes.

So the funding as a whole and when these are sort of titles like Ontario slowdown from quad humidity and Gung Ho.

Coal ash or suddenly cellulosic ethanol, if they don't go to yields.

Well Neal well.

I've got to give it some.

Some good news.

Sure.

Oh sure.

Cool.

The <unk> community.

100 of young who you're buying you're suddenly young horses honestly.

I'm going to go from here.

So you don't go to your job to go one dentist you could TNT holiday you didn't feature whereby you could put up yes.

Matthew for market data and you'll see it and we all know annuity we sound like a golden age yet so it doesn't go on media.

They mostly from obsidian.

Hey, good choices to go out and then go Saturday and longtime they're going to use a computer so instead of the wisdom of women's ready.

They go on the DRP and Baidu is a massive market is a good friend and I figure.

Standard package the standard I'd say good things about co fund it at that you hope will <unk> to go to visit chipsets you hear those things on the TC Mihail digestion, but does it change now <unk> got that handled.

Of course in doing that.

So your assumption.

Food in the meat seafood is shaping useful.

So for so.

Total time in shell.

He is with whom.

You won't could alleviate itself in that tunnel.

The cause of Florida Yosef.

And as we all know that there are quite a lot of benefits where that power swap. It is faster than charging and also it has better user experience. It also brings values and the benefits to users and also the society, especially in China, many users living in urban environments, where a compound Anna.

<unk> does not have a home charter instead in fact actually more than 50% of our users cannot install a charters at home in this case battery swap it becomes even more important in a convenient for those users do not have an home Chargers.

This is also very important for the mass market brands because new is after all a premium brand and many of our users cast you have charters at home, but for the mass market brands the percentage of not being able to having the home Chargers will be higher that's why when we started to share our battery design standards and also specifications for.

The mass market brands to the industry peers. Many of them are very interested in this alliance we have already announced the two agreements and there are several more that are still in negotiation.

They also believe that with news current battery swap technologies service standards and also service network. This is what they need for their product as well as for their users tell them it sounds in.

The business of tons of asphalt convinced we got credits issued Yale.

How dare you meet in the mid Atlantic business figured out when this.

Singleness Dominion will jump in the southern Cynthia Tan.

Danielle part of AR.

Total farmland capex towards if I'm in.

The nucor team in Tulsa.

Can you put a lot of other cancer types of shutdowns.

Capex.

To go towards.

No.

Pharmacists that <unk> all are taking your ECS.

Hello, Good morning.

Ladies and gentlemen.

Jimmy Choo, Jimmy So finance I'm juggling Navy adult co man woman Nintendo trigger.

Timing to for you to go on in that non hotel to lower Hawaii volume and government IV or <unk>.

I mean is that Tiger Tiger Woods agricultural funds through.

Official among them, especially because they were a couple of things.

Yeah. It was all <unk>.

<unk> done it.

Thank you.

Samsung life, So you think about that.

Neil pulp and suddenly I saw women tune Danielle you can keep a breakeven.

The past quarter to go.

Yes.

Neil you widened.

Competitive play so you'll know now I'm hungry, that's all behind them.

To the slot swap services leader.

Thank you Qi <unk>.

No I think you hit towards the door.

Neil powerful entitlements, Luke I shouldn't you Richard Stuber, Richard COVID-19, Hello, Mohammed <unk> information taken that actual book highest within the company.

Yeah.

And also in terms of the business model for the power swap we believe that it's a so so it is sustainable both from the business perspective, as well as from the finance perspective, especially after five years of operations and validation we have confidence in the sustainability of that swap.

In terms of our battery swap network as we will continue to expand our power swap network. It won't be a capex also relevant to such network development, but in the meantime, we are also looking for approaches where we may introduce partners into our Powersoft network.

Basically they will buy the battery swap stations as a product from US and then they will install the stations and hand it over to us for the operations. In this case they will be holding this battery assets for US there are a thousand of such stations already running based on this business model. So for the longer term, we will also be looking for.

Our partners holding the battery swap station assets.

In terms of the neuro powered charging service itself is already almost breaking even as you may know that 80% of our power was charged for the now new users. So for the longer term, our new power charging will also be a profitable business actually in certain areas and web search and charging stations are the operational stage.

With certain swap stations are the operations is already profitable and this is also in terms of spinning off the power swap stations. There are some investors showing their interest into having power swap where power swap the business as a independent business. We are also in conversation with them.

Okay. Thanks team.

Next question.

Sure. Thank you. Thank you Ella for sharing all the details. So my next question is about.

The car manufacturing because.

So you just mentioned you announced you acquired the production facility from JC.

First does that mean <unk> has been granted the manufacturing license.

I mean tied that.

I think that means new officially shifting around the asset light business model, which is at the happy so in the near term how should we think about the unit cost.

Co manufacturing from fourth quarter onwards, So I think previously you would provide a vehicle margin guidance of 50% for December quarter.

And in the long term.

Do you think that the full stack in house development production and director Veeco sales readout, we rely on dealers will be the most ideal model for both new and Alpha.

A mass market brand.

Or if there will be any major difference. That's my second question. Thank you.

Stephen will answer this question.

Yes.

Okay.

Manufacturing how manufacturing.

They are in this acquisition.

<unk> agreements between <unk> and J C.

Steel per full stipulated under production activities of the models in the Corporation.

Normally.

Going forward. If there is any changes to the manufacturing corporation with regards to risk models.

Between EU and Jay Seo, our destination that constitute significant information after this acquisition or in the future. Neil we are complicated ways and disclose the capital market in etame demand manner.

On par with the Red nose and regulations and the rules for listed companies.

Yes.

Yeah.

Okay.

Uh huh.

Women.

<unk> licensed out of them.

Well I mean, the 2000 and personality shut down 10%.

Yeah.

And also to add onto a stainless comment if wave a brain the entire manufacturing fully in house overall speaking our manufacturing cost will be reduced by around 10%.

Yeah.

Yeah.

Great. Thanks.

Well Stephen for.

More details. Thank you thanks a lot.

Our next question comes from Nick <unk> with J.

J P. Morgan. Please go ahead.

Uh huh.

Uh huh.

You can see I'm going to pass through.

Hum.

Thompson.

And that's what's been shown.

Thank you.

Thank you Mike.

We do not see.

Thank you Gian Luca.

I shouldn't be positive.

Susan.

Oh geez.

My first simple question.

Hum.

<unk> efficiency.

Okay, probably soon.

Aren't you.

To some.

As an example.

<unk>.

Thank you Nick.

Thank you Nick.

Some sort of.

And then you gave guidance of about that so we see a woman <unk> Plaza Orben kisser Naples to Sudhakar.

He said do you sell the fifth gens that are done each year.

I see what <unk> has.

Asia regulated from Fujian cities, Yeah, probably you can wait you said bigger T cell. These enable controller, which can go from no one thing it's really shipyard.

You have to get these auto companies Judy as they sell more satellites on the finances.

I mean, you got to get used to the younger the sunny and they put them to use them going through I will be able to sell them with Peru is opened an occasional molly caught up on known to use them take a pan out of them. This year Jacob Suen as soon.

As you sell more dough shared yet whether it takes Oh Gee go live later be useful again.

Got it.

No one can go sell either hot or minimum way take that Tien tsin.

Some have been further density in the shop will not come but I will send you an NK cell.

Josh until a deal whether it's a phone call. How are you having positive attention. However, young Plaza Tyler how far you are in fact of the pack.

Great.

When you put the elephant.

On slide seven.

These elements either.

<unk> had told them that also face hung.

So the two year with a further write down of greater comfort with regard to fit our stupidity in Indonesia to go tell them.

In this round of organizational optimizations, we have identified several our principles.

Because over the years of development, we have some low efficiency positions and drops and also some duplicated roles and responsibilities. In this case, we have identified this no efficiencies or redundancies in the organization, we've improved the processes of lower efficiencies and we've also eliminated jobs and positions that are totally.

<unk> or our outflow efficiencies and also in terms of the projects deferred or timing related basically we'll look at the projects and their financial contributions if they cannot screen any financial contribution in the coming three years, we will be thinking about deferring them. We're terminating them I'm for example, if they cannot contribute to that.

Gross margin, where the P&L there may need to be deferred or reconsidered. A quick example is regarding the in house manufacturing of our batteries, we've identify that in the coming three years, bringing battery production in house will not help us with the gross margin improvement in this case, we have decided to defer the plan.

We will still continue to do that in house R&D of yourself battery materials and the battery packs, but we will outsource the manufacturing of the battery packs for better overall efficiency and performance. So far. This one is optimization with a detailed and thorough review and adjustments and also made unnecessary.

Estimates based on the needs of the business and the resources of the entire company, Yes, Tom women. The Sunbelt go using the system or minimum weight the sunlight.

Daniel minimize the agenda, so that becomes a D gauges.

Uhm, London, Keytruda hits Hunky, Peru.

Triple T shirts or 10 minutes.

The woman in the near term, we'll probably plan changing that she didn't Cushing.

<unk>, who those are starting to retrain Julien.

Tissue power, so, they're telling me <unk> Suzhou, it's usually and useful.

But do you ever go you can get us into the social food a lot more.

Well then you can think you can think galleys as social along again.

Please here shown them European home soda I'll show you should again.

Google kind of Dead Center, the <unk>, Google and what you called out in a social level number one.

Understood Huntington's Atlantis also puts it will go.

Women's or Shanghai, the opinion of some women.

Women the sounds like you sound good sell down or you can toggle.

Balm up into it.

While this amount of commissions to even get a total of push all elements.

So it's unclear on the shelf there used to be done in Germany.

Women the market share.

She is in the fifth Unquiet doesn't want me of Candela can order food Sanitizers cortisol.

So you'll have to pay.

How about half other default interest in Ohio.

Our <unk> polymer that's only showdown Natasha has to stay around to that.

Well Margaret tissue quota, Joseph who onboard to go through them <unk>, So should I sell down in Houston, Houston got via way. So we're not in Saudi Arabia.

Let me say that sounds so Shanghai Sunday.

Solomon Tango to sell down that you talked about that will support the bolus from IBM.

But Tim you can see that this is happening.

Meanwhile, if aman Sehgal wouldn't you Shlomi woman.

Hum.

Oh, we have to tell me when they sell to go through on law say.

Somebody's got caught.

Put us with that.

How are you guys just chill balm in December call, you seemed to do Triple My standup impact Jochen <unk>, which is an issue.

The toll roads and that seems to nucor's engine sales I'm, sorry, I forgot the general language spoken by that you mean.

But in the meantime, we will still make sure that we don't Miss our circa sort of dilute our investment of resources for the high priority items for the coming two years. The first is the long term investment for the core technologies. So that we can still keep leading in terms of the product and the technologies as.

I've mentioned earlier today at the New day 2023, we're going to unveil a brand new flagship model and this car will be equipped with a lot of state of the art technologies that are leading the entire automotive industry and our second priority is the continuous development of our sales and service networks, where suddenly we have in <unk>.

The sales teams. We have also increased the number of the point of itself. So that we can get ready for the more intense competition in the coming two years, because if we don't make such preparation we will not be navigating the intense competition.

How is that in October in Shanghai, our South volume has outnumbered the that of BMW and Mercedes running all running on or power sources.

Including ICU costs as well as Evs and in cities from Jiangsu are towards I'm provinces. We are also establishing a pretty solid foothold with a pretty significant market share, but when it comes to lower tier cities like fourth gear or fifth tier cities, we still have a long way to go we're in cities.

Where the EV infrastructure is not yet ready. We're also not outperforming there was well established brands.

In this case, we needed to continue to develop ourselves and our service networks.

In terms of our soft performance in Georgetown, Jiangsu and Shanghai actually 50% of our sales volume is contributed by the seller in this three areas on the one hand it shows that our products are well recognized in the highly competitive markets and this replaces on the other hand. It also means that we needed to further enhance our.

Brand awareness in the lower tier cities and the third priority in the coming two years is to secure the on time release of our nine core products from the third bench, we have already made investments and the products of this great brands that will be coming into the market very quickly in the coming two years. Thank you Nick.

Hum Huntington Huntington.

Then to your point.

To continue on future Duncan Cooper.

Thanks, Sean.

Thank you so much.

Thank you.

2001.

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Thank you Michelle.

She will go to Glenn.

So sometimes.

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Even with all of them.

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Yeah.

The woman, who was who woman.

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So those are the Hudson holiday season.

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Japan was essentially some of the categories that sell our thought leaders at the center.

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So you see a nice 70 multitude.

Turning to other functions you want to sell down.

Until that doctors they put their income so it should feel I sort of.

Suddenly a T cell.

Time is up.

You said at that moment.

Our strategy for the third quarter is pretty clear.

That is to keep our prices stable earlier this year in June we have adjusted our user benefits actually both our existing users and new users who are accepting this adjustment pretty well so we might be the only company able to satisfy both existing users and new users with a benefit at the <unk>.

And since then we have been keeping a pretty stable price strategy as we believe that it is beneficial to our brand image and also product competitiveness.

And also users are experiencing benefits.

Going into Q4, the press, whereas deepens. The competition also gets more fierce for many well established brands like our competitors BMW and Mercedes there also slashing prices pretty aggressively.

On their EV models, the price reduction can be as high as 31%, but we still keep a pretty stable price Amit. There's fierce competition. This is also reflected the stable prices also are reflected in our improved <unk> margin. So our longer term strategy will be keeping our price stable.

While continuously improving our vehicle margin in the meantime, we will also include our self capacity capability and efficiency. So that we can bolster our sales volume, but this can take time and we will be staying patient we will not we will not realize where boost our resource volume after the cost of our product.

Margin as this is not healthy for the longer route maybe Stanley can also add more information regarding the specific financial numbers.

Our record gross profit margin for Q3, and we are confident in achieving a higher margin in Q4, considering more market.

Efficiency lower price of lithium carbonate and also decreased our part cost.

Our target is also a still kept at 15% for Q4 at a firm long run.

Important.

Project internally, we have started to further improve our cost structure for NTT product.

By optimizing design, improving supply chain and production efficiency and also present is the negotiation with our partners.

As mentioned by William our newer brands keeps focus on premium market segment, and we will keep our product prices relatively stable.

So combine all those factors together, we believe our vehicle margin can be further increased to 15% to 18%.

In 2024.

That's the general guidance for our vehicle margin. Thank you yeah.

Yes.

Yes.

Okay.

Awesome.

Okay.

Okay.

Yeah.

Yeah.

Yeah.

Thank you.

Great.

Yeah.

Yeah.

Right.

Right.

Okay.

Okay.

Okay.

Martin.

Yeah.

I'm going to do.

Sure.

Our next question comes from you counting with HSBC. Please go ahead.

Thanks, Tim.

I got two question, maybe we wrote it one by one the first one is on the cash position, we noticed the cash balance increasing quarter on quarter other than the strategic investment and the convertible bonds, but there is also still a 1 billion increase does that coming from the improving operation can you shed a little bit more light on that.

Okay.

Uh huh.

Hi.

Effect, the new product delivery ramp up in Q3, we achieved we achieved a positive operating cash flow.

Yeah.

Going forward.

So if our sales can continue to grow we are confident.

We realized that our healthy operating cash flow. So that's for your first question yes.

Okay got it thank you.

The second question is on the OPEC reduction thanks for our Williams the sharing optimizing the battery business. We also read that there is also the head count cuts could you share more on whether there will be asset write offs. During the process of the cost optimization and when we would expect us to rich at link yes.

Sustainable shape.

Yeah, hi above the cost of my vision, yes, we reduced 10% of what compositions and complete the adjustment in November.

But for Q4, there will be almost no financial impact things, we need to pay additional compensation for employees, who left the company offset with less payroll costs are but a four for next year together with the headcount reductions.

We also delayed.

Okay. So the certain project as mentioned by William So the total impact of 2024 will be saving of a total cost of around $2 billion.

RMB.

Yes, Scott.

Yes.

Oh my goodness.

Obviously, you'll have all net net there's been things you'd see similar to the Thailand.

And so you'll see some.

I'm going to go.

Yeah to around to 200.

Yeah.

Yes. This one dose optimization has helped us to improve the financial performance slightly over our previous budget. However, we do need to have some one time expenses due to the severance package for the terminated employees.

Okay.

Okay.

Got it.

Thanks, William and Stanley.

Yeah.

Our next question comes from Meng suddenly went with Bank of America. Please go ahead.

Hello.

Management. Thank you for taking my question. My first questions are regarding your second brand.

El Pas in Tony told you for in the future.

You all consider to share the charging station and Patriot substation Hello.

Neil Brent and ozone.

You also constitute to share the sales channel.

Brent Thank you.

Sure Jamie.

Well Matt.

Dr <unk>.

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And then this is since Hershey and maybe China <unk>.

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Ohio, So got a surgeon to switch.

Your classic action.

Women to assume that the co brand it took a woman.

Cui.

Linda <unk>.

Got it.

<unk> Daniel Moore.

Somewhat more minions.

<unk> surgical comes out lot more number of local Macau long Lauder on.

Or are you pushing them yonder.

Opposite of Yahoo, Yes, and no.

Great example.

Time charter in Nevada.

Hello.

I found that synergies come from social if I may a quick <unk>.

Again.

The woman quadrupled.

One law.

So the service to send them away from you.

So it sounds as though neither sunshine.

Okay.

Yes, when it comes to our mass market brand Coke.

<unk> named the Alps actually originally we have just had the very first validation period of this.

This brand I wrote off the production line actually of the condition of this verification period is a pretty good it can be maybe one of the best of VB cars, we have in the history of Neil. So we are very confident in the competitiveness of this project and before the official launch and the delivery. We're still have time to continue.

To optimize and improve the project in terms of our power swap and the charging network strategy for Neil hour battery swap network will be coming in two parts. The first is the exclusive network for new and the new users and then the second will be a shared network not only for new users, but also for <unk> users.

And other brands with Swappable vehicles in terms of the charging network with being sharing our Chargers already Germany now new brands in terms of the South network. This won't be separated so they will have their own self stores.

But we will be sharing their service capacities and the facilities. So service centers will be shared between you and helps.

Thank you William thank.

Thank you.

My second question's regarding your tiny tiny for potash because of this.

This year you already.

Update of your new models, and also announced some new modules.

2010, before well you have with some of the conversion.

A version of <unk>.

Model N to start to use 800 vantage.

Charging system on your car.

In this case do you have any guidance about.

The battery.

Battery substation.

Thank you.

Yeah.

<unk>.

To go to the higher bank, losing the shelter.

Women.

It's a good part of it.

Right.

That's sort of coming on travel may thought youll see some collateral for Mohan liquid bulk so they take a sedan.

And they go with the game.

Oh boy.

Okay.

The peninsula is shorthand Orbitz agents, who would you need to go a lot lower Geo satellite.

Well then its envelope, but it can sort of go go go.

I believe I'm going to go slow.

At this stage in the network.

And what would cause.

Because it seems that they're going down a lot more leeway if I may on the Hanmi EMEA with engineered for the future.

Tell me tell us either way its issue that you change the bank due to the slowdown.

Well as I can say, who the switchover.

<unk> you too.

Uh huh.

Okay.

Yes.

Yes, it's a common standards and the practices for the automotive industry to have model years, where physically that's why our MTT product. We will not have any major modifications were upgrades as many of them were just newly launched were delivered to the market. She was stabilized our quality and the supply.

We will only make minor improvements and upgrades on our part.

And our antitumor projects in terms of our plan for the power swap stations in 2024 as I've mentioned, we will be not only building our exclusive battery swap network, but also a battery swap network for Xiaomi.

On the one hand, we will deal with this.

This power swap network for other brands, where that can be shared with other brands in the meantime, we will also continuously looking at the demand of our new users. So that if there are any requirements, where a high demand stations where locations. We will also install stations there, but we are still working on the specific plants and the numbers.

Thanks.

It's just early.

Yeah.

Okay.

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

Hi, Thanks, Thanks for taking my question. My first question is regarding your sales force sales team.

Last quarter saw earnings you mentioned that Youre going to secretive can increase your sales people.

Double check how you say soft in placebo or the small months.

Have you achieved.

Let's shift to your original target of expanding sales team.

Have you adjusted your original plan.

Yeah.

Thank you Paul.

John.

How much of that down.

Your the salary as you saw in the social to Google in San.

<unk> <unk> with Jefferies.

We can ship items or yield.

Bob within alignment.

TV may come down routes.

Our July both of Metabo assumption.

Publix Untangled into today's chicken Nuggets for the time.

<unk> from <unk>.

Social and to me it shows this is Jim.

Well, many cubans elements him and you go back to that.

You can find me Oh, my goodness, that's what a patient.

But I'm going to choose to go through.

Through social tool number.

Patient Eaglebank Tysons.

Types of localized children's failure Malone combo.

Talk a little bit we had some sort of saying to ourselves.

No mater shown them towards social and EMEA was hot sale setup I may want Marcia mentioned about 100, and so those two efforts.

No no no.

Hey, Jim Mead Gung Ho legal cost for the future.

Hopefully the patient that you thought you were going.

Okay that havent been go shoulder that NCI social country from assumption just highlight some of which will be partly true.

So you're going to be.

At the present for our frontline funnel silos, we have a team of around 5700 persons, but many of them were dressed in newly onboard around the threshold and then for 100 of them or newly onboard into the company and they it still takes some time for them to really get to know the brands and also.

We are familiar with the entire ourselves processes.

Because for the newly hired follows we will spend around one month and a half on the trainees and after what they can start to sell vehicles to our users. According to our history data a season of follow on average well needed to spend around six months to get familiar with the brands ended the processes and will be coming.

Sales force for the company, so we need to be stay patient with this newly hired fallows as many of them just joined the company in September and October but in the meantime, we will also completing and improving our assessment and evaluation systems. Our training systems. We will also bring this follows more efficient tools so that they can work.

Make full use of our make for use of their self capacity and capability.

Thanks. My second question is regarding the R&D spending I think last quarter, you have to drop off 300 million quarter over quarter decline on the on until your explanation.

Some incentives from the local government.

Quantify that manpower and more important to me.

Any forward what would be your.

Projected quarterly R&D spending.

Okay.

Yeah.

Yes Sandy.

Yeah, Hi, there.

There are some.

The slight decrease subsidiary.

Some support we received from the.

Local authorities so.

But on the long run as we mentioned during the part of the earnings call, our non-GAAP R&D investments per quarter.

<unk> will also be kept at a RMB three two to $3 5 billion.

We.

Also mentioned by without prejudice.

The statements. We will also we will use.

<unk> investment in core technologies and also the let's say are the advantages of the technology of the product or the guarantee the timely launch of.

The new product so are the.

Our investments are R&D will not decrease but there will be in a slide like fluctuation cros.

Quarters.

Paul.

Thank you Doug for helpful. Thank you.

Yeah.

Our next question comes from changing with C. I C. C. Please go ahead.

Additionally, residential Lindsey Huber.

Shaking.

Actually in <unk>.

Synergies from huge Manav, it's Josh.

Uh huh.

What should you gentlemen.

Attrition arena.

Okay. Thank you.

Currency unbounded.

Excellent.

So puts him and also thank you Sean and thanks Felicia.

Although D R Horton.

And in California, and Hawaii.

Hum.

Thank you Felicia.

Now many of our children.

Okay.

Good morning, gentlemen.

Yeah.

So my first question is regarding to our autonomous driving or we have already opened.

Now for a wish list in September so.

All groups intelligence, we are.

You're trying to extend the function.

Options.

That's it.

So that's a bit different from other Oems.

Okay.

So new places.

On the <unk>.

Our implementation knock on wood.

East, Canada and also with Howard.

I'll return at all.

Cumulated knowledge for earn.

C J Sullivan Chairman Hurts, a finance lease.

So how many of our current program.

Okay.

Okay.

Seizures hunting.

So Neil I sort of on the woman.

Sure the cigarette and low P.

I don't know if deposit illness.

There's a phone or on the lease longhaul, Louisiana Typhoon.

<unk> done a good future is unknown.

Some of them beyond those entitlements America.

So would it be Honda nipple Hudson Mercer now.

How much lead time.

So I think as soon as that Togo.

The condenser.

And then both Hogan millions <unk> disorder.

So I would tell it's about well the industrial you can chew Bayside you back.

She thinks into June they simply on Hawkeye phone took a carve out because of that so you'll not only because the deal didn't feel them away.

Hum.

<unk> two <unk> tankers.

Take a tongue country the harmful to the telco edge on the EMEA, Canada and daughter.

Women tongue holiday is a market in the south shore.

A woman with concur.

<unk>, that's a good answer who has a phase him.

Seriously.

The Eagle Ford.

Step by step the true that ship out to go.

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Well know sort of what's in the <unk> and as it gets in fact, losing head home change. It's another way of saying it gets into that for a total of women the theater.

Oh sure that you all mentioned that you deal.

With the wind down per se.

Hum.

We're supposed to be up I don't know means that sit on top of it.

Hum.

And in digital.

In terms of news MLP, plus four cities actually we leverage our generalization capabilities as well as the faulting AI capabilities, so that we cant rollout.

And.

Those pilots for our users based on their demand.

Of course, we have in the meantime, we have also formulated the data close to look for capabilities, where we can really leverage all this data coming from the generalization and also our cloud AI at the new and we have announced that by end of this year, we're going to open up the rules covering around the 60000 kilometers of mileage and so far our.

Progress is pretty good and we already have established the capabilities of releasing ILP plus four early bird users in more than 100 cities and we will be rolling out such a service and invite our users into the program step by step and so that it can be a recovery more cities with a with more <unk>.

Users.

Across England.

In terms of facility based where relative based on autonomous driving where anarchy.

Some of our peers they have some a marketing slogan regarding their services, but we believe that MLP, plus especially LP plus four cities is a pretty serious service and we would like to make sure that our users have a safe and also good experience.

And then we will roll out the service and its coverage step by step, but overall speaking our progress has far surpassed our expectations and we as after all we already have more than 100000 vehicles on the road. This will also help us to further formulate and improve our data closer yes.

That goes for our mission.

So any other term is it on purpose.

<unk> take a.

Women take a CCAR in the cigarettes and Ken is going to turn that ship. So that's where there was a young woman.

We'll then send up at <unk> and consistent with a co hosted it yet either.

I'm quite sure so yeah, so I'm totally the user.

Uh huh.

Sometimes on the 17th.

Especially for every new NTT vehicle. It is standard with four arrange ships and also 33 high performance sensors. This will further help us to formulate that data close loop and improve the data capabilities and in return we will also accelerate the capabilities for iteration.

This is also a very unique advantage of new which is quite different from any other competitors offering similar service.

Yeah.

Sure.

Alright.

Hey, how does it go into your questions Andrew.

Average.

Actual J P E G.

Oh no no no cheaper cheaper thank you Matthew Paluch breakeven.

And I'm sure Tom E G.

Mackenzie sell down with clean energy.

Sure.

The only minor children go.

Uh huh.

So my second question is regarding to overseas markets.

Will it still be one of our strategic focus.

Please introduce the.

Current operation.

Our operation situation knock our overseas market this year.

Regarding to the our our sales volumes, our lay out program Arbuckle region.

And also about the dealerships.

Entrust truckers and also our next year's target in place.

Yeah.

What Mattel women also will go even higher.

Near houses.

But we like where <unk>.

Got to go to Oakland, and therefore don't assume so it was a full job. Unfortunately.

Not all of them, Ohio central towards where the tools are.

Susan.

Uh huh.

It says it's also the honeymoon.

Women, but also Goodyear will edge down in Atlanta.

Well then what sense.

So dow has that side of it.

Yeah with a solid silver.

Conversely, our polled all of a sudden good it's a good year with.

Melissa.

<unk> the <unk>.

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The U F C.

<unk> thousand or <unk>.

Union Toyota Sohail Amir.

Well.

Well chip our meals to go quarter to meet Dr. Quay, Good South Alabama.

Some glass Lewis and a soda and tell them that BD has EBITDA data.

Yeah.

At the moment in five European countries. We have opened six new houses, it's Neil spaces to Multifunction service centers and also partner with 54 authorized service centers. We have also installed 30 power swap stations in five European countries, but in turn.

<unk> of our business development in Europe, we're still at the early stage of the business development and expansion we want to continue to test the water ensure we have good user experience before we.

Before we scale our operations and the business. There. That's why volume is not a priority for us in terms of our European business and in the coming one year, we will continue to be staying at this stage, we will make sure that our capability and capacity are sufficient to serve our users in Europe before we start to work on.

Higher scale.

Okay.

Okay.

Good morning and challenge.

Yeah.

Our next question comes from Jason <unk> with Mizuho Securities USA. Please go ahead.

Thanks for letting me ask a question you talked a couple of months back about 20000 vehicles a month in December and we're running a little bit below that now.

What about the biggest headwinds there has been some production challenges maybe broader macro weakness and then what would it take to get to that 20000 units and how should we think about the run rate moving through 2024 with the new sales force.

Hey.

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But that is all of the essential Eng Thunder.

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We're going to come in.

Santa somehow it sounds with lithium southern gentlemen, well, Minnesota she's.

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Daniel.

Michelle here.

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We think it will change the funding now.

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Can you guys.

Two of lateral in gateway from <unk>.

Sure.

Alloys.

Also the castle.

Thank you for your questions.

As we've mentioned earlier today in the premium battery electric vehicle segment, the price to over RMB 300000, New Haswell life's a 45% market share in the third quarter of this year actually our market share in this segment has been pretty stable around 40%.

So this has proven that we have a relatively solid foothold in the premium segment, we have a pretty significant also stable market share already established in the segment, but when it comes to convincing users premium I say your cost of buying a premium EV. It is actually a more difficult time coming thing.

In mass market users because for the mass market users buying a car of a 100000 or 200000 RMB. They pays attention they pay attention to the ownership cost and also the usage cost of the project, but for the users of premium electric vehicles, they pay more attention to other factors and the second reason.

That may be affecting the wider adoption of our premium VEB is reporting the coverage of infrastructure as I've also shared in the Yenisei River Delta areas, mainly Shanghai, Jiangsu and Georgia, we have a pretty significant market share. Our software has outnumbered that of BMW Audi and.

Most cities, where there I say car cells.

Very importantly, the reason behind is because we have several hundred power swap stations already established in this area. So infrastructure is also playing a very important role in boosting the south volume and the adoption of electric vehicles. So far in China, we have already installed over 2000 policy obligations, but.

Roughly 700 of them are along the highways in some regions and areas. Our power swap stations are still not widely accessible in this case, we will need to also speed up and enhance our infrastructure coverage. So that we can.

Further boosted the wider adoption of electric vehicles. So basically assuming reasons. The first is regarding the consumption habits of the premium vehicle users and the second is mainly because of the coverage of the infrastructures for electric vehicles.

But we believe that this trend can be.

Thing.

Users of buying Evs why this overall trend is transforming into battery electric vehicles will be picking up at speed. Because we also find that some of our peers and competitors before they only have hybrid vehicles, where a range extended vehicles, but now they're also launching their battery electric vehicles such strategy will also.

Push the transformation of the entire industry. So we are actually happy to see such a transformation and also on many car companies are now.

Also installing and expanding their charging network and new is working on our archway swap network with wider.

Infrastructure, we will also boost the adoption of the battery electric vehicles. So overall speaking, we believe that 2024 will be better off than that in 2023, because in 2024, we will also be having a more stable product portfolio without the frequent product launch and delivery, which has also slightly east Harbin.

Our overall execution.

Got it thanks and then.

Quick follow up on the battery swap partnership side.

Is there any kind of design changes that your partners would have to do to their vehicles in order for them to use the swap stations and if so.

Have you guys talked about you know what percent of mix of vehicles they produce.

I might need to be kind of changed or edited in the production process in order to do battery swapping.

Right well knows.

And.

Figure massive amounts of the brand.

So youll mitigate battery pack as a standard battery pack.

Okay.

<unk>.

Part of it too.

Given the balance sheet.

500000 ton Michelle did coupon.

Jim seizure types. So yes. It does it shows just the agenda.

Oh, and then take a closer look at the whole time equation, they get squishy, so that sort of pace that again, it's about time.

So on the lateral cutoff for EMEA, Okay up put it in the call.

So you didn't see.

Actually we have shared the battery spikes and also designed to tell us off our battery packs for the mass market brands two hour battery swap partners and that they will need to to design and engineer their vehicle products I mean, the chassis interfaces following our battery standards.

It will take some time for them to decide on the right models and complete the product R&D, but the overall investment and R&D expenses for developing such new models based on our battery standards won't be very high.

Thank you.

Thank you.

There are no further questions now I'd like to turn the call back over to the company for closing remarks. Thank you again for joining US today. If you have further questions. Please feel free to contact meals investor relations team through the contact information provided on our website. This concludes today's conference call. You may now disconnect your line.

Do you.

Thank you.