Q4 2023 Li Auto Inc Earnings Call
Operator: and many more. Thank you. Hello, ladies and gentlemen. Thank you for standing by for Li Auto's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in listen-only mode.
Hello, Ladies and gentlemen, thank you for sending back elite honor its fourth quarter and full year 2023 earnings conference call.
At this time, all participants are in listen only mode today.
Operator: Today's call is being recorded. I will now turn the call over to your host, Kobi Wang, the Head of Capital Markets at Li Auto. Please go ahead, Kobi.
Today's call is being recorded.
I'll turn the call over to your host Toby Langley well head of capital market typically on it. Please go out puppy.
Bin Wang: Thank you, operator. Good evening and good morning, everyone. Welcome to Li Auto's first quarter and four-year, 2023 earnings conference call. The company's financial and operating results were published in a press release earlier today and were posted on the company's IR website. On today's call, we will have our Chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Jiongning Tie Li, begin with a few remarks. Our President, Mr. Dong Huima, and Senior VP, Mr. James Liang Junzhou will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the Safe Harbor Prohibition of the U.S. Private Security Dedication Reform Act of 1995.
Toby Langley: Do you feel are pretty darn well.
Good evening and good morning, everyone welcome to.
They're all towards the first quarter and the full year.
Toby Langley: Turning to her needs rate on its conference call the company's financial and operating results were published in a press of a base already in today.
Toby Langley: And no are posted on the company's IR website.
Toby Langley: On today's call, we will have our chairman and CEO, Mr. Shao Lee and our CFO. Mr. Journey, Sadly became waste of a pill remarks, all will present, Mr. Dong Guillaume and the senior VP, Mr. Joseph downturn until well joining for the Q&A discussion.
Toby Langley: Before we continue.
Toby Langley: Please be reminded that today's discussion will contain forward looking statements.
Toby Langley: Made under the Safe Harbor provisions of the U S. Private it's courageous litigation Reform Act of 90 95.
Bin Wang: For the looking statement in full, inherent risk and uncertainties are such that the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the USSEC and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statement, except as required under applicable law. Please also note that Li Auto's earnings price release and this conference call include discussion of an audit, gap financial information, as well as audit gap financial measures. Please refer to the author's disclosure documents on our IR website, with content recombination of the unaudited non-GAAP measures to compatible GAAP measures. Our CEO will start his remarks in Chinese, and there will be an English translation after he finishes all his remarks. With that said, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead.
Toby Langley: For the looking statements in fall <unk>.
Toby Langley: Risks and uncertainties as such the company is the extra results.
Toby Langley: Be materially different from the pure it's Brad that state as far as like information regarding risks and uncertainties is included in center company filings with the U S. S E T and the Hong Kong stock exchange.
Toby Langley: The company does not assume.
Toby Langley: Any obligation to update any forward looking statements.
Toby Langley: Is that either required under applicable law.
Toby Langley: Please also note that all towards the earnings press release and as these companies call include discussion of our audience.
Toby Langley: GAAP financial information as well as a oh its non-GAAP financial measures. Please refer to the autos, it's crucial document on our IR website.
Toby Langley: Waves of content.
Toby Langley: We had kind of a nation of the audited non-GAAP measures to comparable GAAP metrics, our CEO west out of his remarks in Chinese del Webb English translation I E finish Oh, he's our remarks.
Toby Langley: With that I will now turn the call over to our CEO. Mr. Xiaomi. Please go ahead.
Xiang Li: Thank you. Hello, everyone. I'm Li Jiong.
Xiaomi: Thank you all once it ends up playing in that game.
Xiang Li: Welcome to tonight's phone conference. 2023 is a year of accelerating the growth of the ideal motor vehicle. We deliver 370,000 new vehicles a year. We aim to complete our goal by the beginning of 2023 and become the first Chinese company to sell more than 300,000 units. In the fourth quarter, we sold 132,000 new cars, a growth rate of 184.6%. In December, we also purchased 50,000 volt assets in Yuejiao Prefecture to start a new history for China's luxury car brand. According to Chinese data, in China's 200,000 yuan or more new e-vehicle market, the market share of electric vehicles increased from 10.9% in the first quarter of 2023 to 16% in the fourth quarter.
Xiaomi: And.
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Xiang Li: It has become the highest market share of Chinese e-vehicles in the fourth quarter. In 2024, our market share is expected to continue to expand. I would like to take this opportunity to express my sincere gratitude to all family members, partners, and our team. Thank you for your trust, support, and unwavering efforts all the way.
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Xiang Li: In terms of financial performance, the rapid growth of the E5 scale, the firm's firm-to-firm execution, and the continuous improvement of operating efficiency have not only promoted the company's financial situation but also improved it. In the fourth quarter of 2023, the total income is 417.3 billion RMB. In 2023, their annual income will exceed 100 billion yuan, up to 1,238.5 billion yuan. In addition, in 2023, Ideal Motor won the first all-year lottery and achieved a healthy profit. The annual net profit reached 118.1 billion yuan.
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Xiang Li: Our cash reserve has reached RMB1036.7 billion. In 2024, the growth of the business cycle will stabilize our ability to make a living. With good battles, strong winning power, and a firm financial foundation, Xi Qi will develop products, platforms, and system development to bring excellent products and services to users for a long time. Many of you probably know my father.
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Xiang Li: He started to use his electric bike when he was mostly convinced and focused on learning the first injection of aluminum. His father was also a big fan of the brand Honda; it is from Hong Kong only, that's how it got its shape really. He has been using his bike as his personal motorcycle. The second generation Suzuki motorcycle. What do you think? Good! In March, we will bring you the flagship of home technology, the Ideal Mega. Sabu, Bin Xiaopu, Lijiaomega is based on high-voltage charging architecture development to build the latest technological achievements in 5C charging, smart space, and smart driving. In the same month, the 2024 models of Li Xian R7, Li Xian R8, and Li Xian R9 have been launched for large-scale user interaction.
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Xiang Li: ,312024 Welcome to watch this Friday, March 1st, the Ideal Car, the 2024 Spring Exhibition. To both of you, in this talk, we will explore more product details regarding the Lead Mipher and 2020 L series migrant brands. In addition, this year, we will launch a number of new models, including the Vision 26, to further expand our product range. ,,, to build a highly competitive product combination to meet the diversified needs of home users in all aspects. The launch of the product is just the starting point for the growth of the product. We have completed more than 20 OTA upgrades since the release of the Ideal R series. Over 700 functions and experiences have been upgraded. In December last year, we released the OTA 5.0 update to improve the performance of Nissan R-series car models. In terms of intelligent driving, with this upgrade, AD Max 3.0 brings all users high-speed plus city full-screen intelligent driving MOV to Bnesa, Mauritius, and more than 110 cities and highways. In the second quarter of this year, we will implement a free-to-play version of the city OVA and make it open to the whole country.
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Xiang Li: This will further enhance the ability of the city OVA to use a range that is no longer limited to any city and will be upgraded to all AD Max vehicles via OTA. As of now, the ideal user's smart driving NV accumulation journey has reached 5.6 billion kilometers. In the 10-day spring holiday between February 8 and 17, more than 220,000 ideal users enjoyed the convenience of smart driving NV. The NV accumulation journey is more than 50 million kilometers. In the field of smart space, OT5.0 will be implemented on the full-screen, multi-mochile, large-model, and mini-GPT to attract ideal students to enhance students' ability to understand, generate knowledge, memory, and reasoning. Since the launch of MindVPT, compared to standard command-line dialogues, users can issue commands through natural dialogue, which greatly improves the quality of text-based information and text-based services.
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Speaker Change: Now translating for our CEO, Mr. Li Zhang our welcome to todays earnings Conference call 2023 was a year of accelerated growth for Liana, we delivered a total of 376000 vehicles for the entire year exceeding our target setting at the beginning set at the beginning of 2023 and also making us the first emerging.
Xiang Li: In the 10-day holiday of the Spring Festival, this kind of natural language dialogue, All effective exchanges increased by 7.2%, which is 3 times higher than before OTA 5.0. In 2023, we accelerated the expansion of the direct-to-sales network. In the fourth quarter of 2023, we opened more than one store a day, competing with 106 retail centers. As of January 31, 2024, Li Auto has 474 retail centers covering 142 cities. In 2024, the sales and service network of Li Auto will be further upgraded. By the end of the year, the target number of retail centers will increase to 800, while increasing the 1st and 2nd-tier city layouts and deepening the coverage of 3rd and 4th-tier cities.
Speaker Change: Energy automaker in China to accept a 300000 annual deliveries Marc our total deliveries for the fourth quarter reached 131805 vehicles, an increase of 184, 6% year over year in December we reached another significant milestone of 50000 monthly deliveries.
Speaker Change: Saturday, a new record for Chinese premium car brand.
Speaker Change: According to China, automotive technology, and research centers insurance registration data in Chinas Nev market of RMB 200000 at higher Reorders market share increased from 10, 9% in Q1, 2023% to 16% in Q4.
Speaker Change: Making us a leading Chinese automotive brand by market share growth and will continue in 2024.
Speaker Change: I would like to take this opportunity to express our sincere gratitude to all of our family users business partners and our team for your unwavering trust support and tireless efforts.
Speaker Change: Moving onto our financial performance.
Speaker Change: Our scale expansion effective cost control and increasing operating efficiency.
Xiang Li: In terms of the charging network, Up to now, Ideal Motorcycle has opened more than 340 super charging stations. On the 8th day of the Chinese New Year, we opened the Ideal Supercharger for free to Ideal Motors and provided them with 570,000 free charging services. The total number of service orders in the society is more than 120,000, and the total charging capacity is 2.81 million. Over 99.3% of charging devices are kept online during the peak of the holiday season to In 2024, we will speed up the super charging network in the country's high-speed and urban layout. The goal is to have more than 2,000 super charging stations by the end of this year.
Speaker Change: We improved our financial performance Q.
Speaker Change: Q4 total revenues reached RMB 41, 73 billion in annual revenue surpassed RMB 100 billion Mark at RMB 120 385 billion.
Speaker Change: Additionally, we achieved full year profitability for the first time in 2023 recording on healthy net income of RMB 11, eight 1 billion by the end of 2023, our cash position reached RMB $103 six 7 billion in.
Speaker Change: In 2024, the virtuous cycle of our business growth will solidify our long term profitability cash generation generated generating capabilities and capital base.
Speaker Change: This trajectory will further deepen our R&D efforts across product platforms and systems, ensuring consistent delivery of exceptional products and services to our users in the long run.
Speaker Change: 2024 will be an unprecedented year of new product launches for the auto beginning in March with the launch of our high Tech flagship family MTV Lee makeup.
Xiang Li: In terms of production, the ideal car Beijing Green Supreme Factory has been built and produced since the end of 2023 to prepare for our subsequent production of the Nissan Mega 3. In the first quarter of this year, with the large-scale delivery of the Ideal Mega and the 2020 L7, L8, and L9, we expect that the delivery volume of Ideal Motors will reach 100,000 to 103,000 cars. Strike money in March and have a monthly revenue of 50,000. In 2024, we will continue to learn from excellent companies and continue to evolve beyond expectations. Create a mobile home Create a happy home
Speaker Change: Develop on a pure Vod platform limburger integrates with the latest technological advancements in five CBD technologies smart space in autonomous driving we're also planning to begin math delivery of the 2020 for model year Lee L. Seven L. A and L. Nine models starting in March.
Speaker Change: Well, you're all welcome to tune into our the auto 'twenty 'twenty four spring product launch event. This Friday March one where we'll be unveiling more exciting details about the mega at our 2020 for model year L series.
Speaker Change: Furthermore, we'll introduce several new models over the course of the year, including Lee L. Pics to broaden our auto line up even further by the end of 2024, well, we'll have eight models on the market featuring <unk> and Ford Beth.
Speaker Change: A highly competitive product matrix and satisfying the diverse needs of our family users.
Translator for Xiang Li: Next, let's welcome our CFO, Li Tie, to introduce our financial performance in detail. Now, speaking for our CEO, Mr. Li Xiong, welcome to today's earnings conference call. 2023 was a year of accelerated growth for Li Auto. We delivered a total of 376,000 vehicles for the entire year, exceeding our target setting at the beginning, set at the beginning of 2023, and also making us the first emerging new energy automaker in China to exceed the 300,000 annual delivery mark. Our total delivery for the fourth quarter reached $131,805, an increase of 184.6% year-over-year.
Speaker Change: New vehicle launches are only the starting point since the initial delivery of our L series, We have released over 'twenty over the air update operating over 700 features notably the official release off R. O T. A 5.0 upgrades.
Speaker Change: Remember last year further enhanced product competitiveness of our vehicles move.
Speaker Change: Moving to autonomous driving.
Speaker Change: With the latest release of any Max people know full scenario I know I know covers all highways and city ring road nationwide as well as urban rose across all of our 110 cities, we anticipate to offer city annoy independent of HD maps in all of China by the end of the second quarter. This year and it will be delivered to all eight macs vehicles.
Speaker Change: By a way.
Speaker Change: As of today, our users have accumulated around 560 million kilometers on NOI. During the 10 day Chinese new year holiday from February 8th to 17th over 220000 users enjoy the convenience of an L. A covering close to 50 million kilometers.
Speaker Change: In terms of our space, Okay, 510 integrated mine GPT into lease on culture longevity as a full scenario multimodal large bottle with real time connectivity.
Translator for Xiang Li: In December, we reached another significant milestone of 50,000 monthly deliveries, setting a new record for Chinese premium car brands. According to China Automotive Technology and Research Center's insurance registration data, in China's NEV market of RMB200,000 and higher, Li Auto's market share increased from 10.9% in Q1 2023 to 16.0% in Q4, making us a leading Chinese automotive brand by market share. The growth will continue in 2020. I would like to take this opportunity to express our sincere gratitude to all of our family users, business partners, and our team for your unwavering trust, support, and tireless efforts.
Speaker Change: This development has significantly increased.
Speaker Change: Increased legal fees on Closeouts understanding generating memorizing unreasoning capability set.
Speaker Change: Census release, there's a notable increase in user engagement and giving them instructions are seeking tech space, the information and services to Nashville conversations.
Speaker Change: During the 10 day Chinese new year holiday.
Speaker Change: <unk> of such natural conversations along all effective communications.
Speaker Change: Seven 2% twice the level is good.
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Speaker Change: Amidst our remarkable sales growth in 2023, we accelerated the expansion of our direct sales network.
Fortunately in 'twenty three we opened 106, new retail stores are over one store per day, creating the largest automobile direct sales network in China.
Translator for Xiang Li: Moving on to our financial performance, our scale expansion, effective cost control, and increasing operating efficiency have continuously improved our financial performance. Q4 total revenues reached RMB $41.73 billion, and annual revenues surpassed the RMB $100 billion mark at RMB $123.85 billion.
Speaker Change: As of January 12, 31, 2024, we had 474 retail stores across 142 cities nationwide.
Speaker Change: In 2024, we aim to further expand our direct sales and servicing network targeting 800 retail stores by year end.
Speaker Change: While expanding our presence in first and second tier cities. We also plan to broaden our coverage in third and fourth tier cities.
Translator for Xiang Li: Additionally, we achieved full-year profitability for the first time in 2023, recording a healthy net income of RMB 11.81 billion. By the end of 2023, our cash position reached RMB 103.67 billion. In 2024, the virtuous cycle of our business growth will solidify our long-term profitability, cash generation generating capabilities, and capital base. This trajectory will further deepen our R&D efforts across products, platforms, and systems, ensuring consistent delivery of exceptional products and services to our users in the long run. 2024 will be an unprecedented year of new product launches for Deep V Auto, beginning in March with the launch of our high-tech flagship and family MPV, Li Mega. Developed on a pure B of E platform, Li Mega integrates the latest technological advancements in 5C B of E technologies, smart space, and autonomous driving.
Speaker Change: Turning it over to our Supercharging networks.
Speaker Change: To date, we have over 340 supercharging networks into operation starting from the Chinese new year holiday throughout the entire holiday, we provided family users with free access to the auto Supercharging surfaces, we delivered 57000 free charging sections to be autos users and over 12 Hunt.
Speaker Change: 20000 sessions to all your users delivering over 281 million kilowatt hours of electricity.
Speaker Change: Facing the exceptionally high demand during the holiday season, our supercharge us maintain an all in rate of over 90 999.3.
Speaker Change: 3%, providing uninterrupted access to high quality and efficient charging experience to all users.
Speaker Change: And Tony in 'twenty, four we will continue to accelerate our Supercharging network expansion across highways that cities nationwide targeting 2000, and supercharging stations by year end.
Speaker Change: On the production front Lee auto spacing Green intelligent manufacturing base went into production towards the end of 2023 ready for volume production.
Speaker Change: And subsequent PV model.
Translator for Xiang Li: We also plan to begin mass delivery of 2024 model-year Li L7, L8, and L9 models starting in March. You're all welcome to tune in to our Li Auto 2024 Spring Product Launch event this Friday, March 1st, where we'll be unveiling more exciting details about Li Mega and our 2024 model-year Alpha. Furthermore, we'll introduce several new models over the course of the year, including the Li L6, to broaden our product lineup even further. By the end of 2024, we will have eight models on the market, featuring four EREVs and four BEVs, forming a highly competitive product matrix and satisfying the diverse needs of our family. New vehicle launches are only the starting points.
Speaker Change: With volume production delivery of <unk> and 2024.
Speaker Change: Model year, Lisa all seven eight and nine we expect our total vehicle deliveries for Q1 2024 to range between 200000 units to one.
Speaker Change: 103000 units with March delivery exceeding 10000 units.
CFO Jonny: In 2024, well continue to learn from the best Enterprises, iterate ourself and surpass expectations as we create mobile homes and create happiness with that we'll turn it over to our CFO jonny for a closer look at our financial performance.
CFO Jonny:
Jonny: Thank you Li Hello, everyone.
Jonny: I will now walk you through some of our 2023 fourth quarter financials.
Jonny: He was the 10th time constraints.
Jonny: I'll address financial highlights here and encourage you to refer to our earnings press release.
Jonny: Their diesel.
Jonny: Total revenues in the fourth quarter were RMB 40, 173 billion all.
Translator for Xiang Li: Since the initial delivery of our L-series, we have released over 20 over-the-air updates, covering over 700 features. Notably, the official release of our OTA 5.0 upgrades in December last year further enhanced the product competitiveness of our vehicle. Moving Toward Common Thriving
Jonny: Yeah.
Jonny: Oh.
Jonny: HPV U S dollar.
Jonny: 136.
Speaker Change: All set.
Speaker Change: Year over year.
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Speaker Change: This included RMB.
Translator for Xiang Li: With the latest release of ADMAX 3.0, full scenario NOA now covers all highways and city ring roads nationwide, as well as urban roads across over 110 cities. We anticipate to offer City NOA independent of HDMAX in all of China by the end of the second quarter this year, and it will be delivered to all ADMAX vehicles by then. As of today, our users have accumulated around 560 million kilometers on NLA. During the 10-day Chinese New Year holiday from February 8th to 17th, over 220,000 users enjoyed the convenience of NLA, covering close to 50 million kilometers on NLA. In terms of sparse space, OCA 5.0 integrated MindGPT into Li Xiaotongxue.
Speaker Change: To your 0.3 8 billion or five points.
Six 9 billion U S dollars.
Speaker Change: From vehicle sales.
Speaker Change: Boston Globe 33, 8% year over year.
Speaker Change: On T plus 1% Holdco will culture.
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Speaker Change: The year over year increase was mainly attributable to the increase.
Speaker Change: Ian vehicle deliveries.
Speaker Change: Actually offset by the lower <unk>.
Speaker Change: Average selling price due to different product mix between the two quarters.
Speaker Change: So quarter over quarter increase was mainly attributable to the increased used vehicle deliveries.
Speaker Change: Cost of sales in the fourth quarter was RMB 31 90.
5 billion all fault.
Speaker Change: Point 5 billion U S dollars.
Speaker Change: Mm 126, 8% year over year, and 18, 2% cost of well costs.
Translator for Xiang Li: MindGPT is a full scenario multimodal large model with real-time connectivity. This development has significantly increased Li Jiong's understanding, generating, memorizing, and reasoning capabilities. Since its release, there has been a notable increase in user engagement in giving instructions and seeking text-based information and services through natural conversation. During the 10-day Chinese New Year holiday, the percentage of such natural conversations among all effective communications reached 7.2%, twice the level before OTA
Gross profit in the fourth quarter was RMB nine one.
Speaker Change: Seven 9 billion of <unk>, three 8 billion U S dollars.
Speaker Change: 174, 4% year over year, and 28% Holdco will call here.
Speaker Change: Our vehicle margin in the fourth quarter was.
Speaker Change: <unk>, 7% compare with 20% in the city pair with last year.
Speaker Change: 21, 2% in the prior quarter.
Speaker Change: Excluding the impact of inventory provision related pool, you are in the fourth quarter of last year and true up adjustments of one warranty reserve in the fourth quarter of 2000.
Translator for Xiang Li: Amidst our remarkable sales growth in 2023, we accelerated the expansion of our direct sales network. In Q4 2023, we opened 106 new retail stores, or over one store per day, creating the largest automobile direct sales network in China. As of January 31st, 2024, we had 474 retail stores across 142 cities nationwide.
Speaker Change: And it's really based on updated estimates.
Speaker Change: Of course, all further claims.
Speaker Change: Vehicle markets remain relatively stable over the fourth quarter of two.
Speaker Change: 2022.
Speaker Change: The increase in vehicle margin over the third quarter of <unk>.
Speaker Change: 2023 was mainly due to the <unk>.
Speaker Change: I'll mention swap adjustments.
Speaker Change: Warranty reserve in the fourth quarter.
Translator for Xiang Li: In 2024, we aim to further expand our direct sales and servicing network, targeting 800 retail stores by year end. While expanding our presence in first and second tier cities, we also plan to broaden our coverage in third and fourth tiers and turn it over to our supercharging network. To date, we have over 340 supercharging networks in operation. Starting from the Chinese New Year holiday, throughout the entire holiday, we provided family users with free access to Li Auto's supercharging service.
Speaker Change: Gross margin in the fourth quarter was 23, 5% compared with 22.
Speaker Change: One 2% in the same period of last year.
Speaker Change: Plenty.
Speaker Change: 2%.
Speaker Change: So Carter.
Speaker Change: Operating expenses in the first half in the fourth quarter were RMB six points.
Speaker Change: <unk> 5 billion all.
Speaker Change: 958.
Speaker Change: <unk> meeting U S dollar.
Speaker Change:
Speaker Change: <unk>, 4% year over year, and 27, 2% Cosmo will conquer.
Translator for Xiang Li: We delivered 57,000 free charging sessions to Li Auto's users and over 120,000 sessions to all EV users, delivering over 2.81 million kilowatt hours of electricity, facing exceptionally high demand during the holidays. Our superchargers maintain an online rate of over 99.3%, providing uninterrupted access to high quality and efficient charging experiences to all users. In 2024, we will continue to accelerate our supercharging network expansion across highways and cities nationwide, targeting 2000 supercharging stations by year end. On the production front, Li Auto's Beijing Green Intelligent Manufacturing Base went into production toward the end of 2023, ready for volume production of the mega and subsequent BEV models. With volume production delivery of the Li Mega and 2024 model year Li L7, L8, and L9, we expect our total vehicle deliveries for Q1 2024 to range between 100,000 units and 103,000 units, with March delivery exceeding 50,000 units. In 2024, we'll continue to learn from the best enterprises, iterate ourselves, and surpass expectations as we create mobile homes and create happiness. With that, we will turn it over to our CFO, Johnny, for a closer look at our financial performance. Thank you, Li Xia. Hello everyone.
Speaker Change: R&D expenses in the fourth quarter were RMB.
3.49 billion.
Speaker Change: 491 times seven meeting U S dollar.
68.
Speaker Change: 6% year over year.
Speaker Change: And the 23, 9% Holdco will conquer.
Speaker Change: Primarily driven by increased expense to support our expanded product portfolio.
Speaker Change: And technologies.
Speaker Change: As well as increased employee compensation as a result of our green number I'll stop.
Speaker Change: <unk> expenses in the fourth quarter were RMB.
Speaker Change: So to your 0.2.
Speaker Change: Two seven beating all 465 million U S Saar.
101.
Speaker Change: One 6%.
Speaker Change: Year over year, and 28, 5%, causing real conquer.
Speaker Change: Primarily driven by increased employee compensation as a result of our growing number of staff.
Speaker Change: As well as increased rental expenses associated with the expansion of our sales and servicing network.
Speaker Change: Income from operations in the fourth quarter was RMB, three 4 billion or 427 7 million U S dollars.
Speaker Change: Comparable is RMB 133.6 meeting loss from operations in the same period last year.
Speaker Change: Awesome.
Speaker Change: 29, 8% quarter over quarter.
Speaker Change: Operating margin in the fourth quarter was seven 3%.
Speaker Change: Compared with negative.
Speaker Change: 0.8% in the same period last year and six 7% in the so called here.
Jiong Shao: I will now walk you through some of our 2023 post-quarter financial, due to time constraints, will address financial highlights here and encourage you to refer to our earnings press release for further details. Total revenues in the fourth quarter will earn RMB 41.73 billion, 5.8 billion US dollars, 136.4% year-over-year, and 23.3% sets, also will call... This included RMB 40.38 billion or 5.2 billion.
Speaker Change: I keep usable to the increase of income.
Speaker Change: Operation.
Speaker Change: Yeah.
Speaker Change: The recognition of non cash tax benefit for.
Speaker Change: For the release of valuation allowance.
Speaker Change: Deferred tax assets net income in the fourth quarter was RMB five seven.
Speaker Change: 5 billion.
Speaker Change: 810.2 meeting U S dollar.
Speaker Change: Representing an increase at all.
Speaker Change: 2068, 2% year over year and increased increasing by 112.5% cultural work culture.
Jiong Shao: 6, 9 billion U.S. dollars, from vehicle sales up 133.8% year-over-year and 20.1% cultural cost, and many more. Thank you. The year-over-year increase was mainly attributable to the increase in vehicle delivery, partially offset by the lower average selling price due to the different product mix between the two cultures. The quarter over quarter increase was mainly attributable to the increase in vehicle delivery; cost of sales in the fourth quarter was RMB 31.9 billion. 5 billion, all full.
Speaker Change: And diluted earnings per ads.
Speaker Change: Attributable to ordinary shareholders was RMB 532.
Speaker Change: 0.75 U S dollars in the fourth quarter.
Speaker Change: Comparable is RMB.
Speaker Change: 0.25 in the same period last year.
Speaker Change: RMB coupons.
Speaker Change: Seven in the prior quarter.
And turning to our balance sheet and cash flow.
Speaker Change: Our cash position remains strong and stood at RMB.
Speaker Change: 103 six.
Speaker Change: Six seven beating.
Jiong Shao: $0.5 billion, 126.8% year over year and 18.2% cost over cost. Gross profit in the fourth quarter was RMB 9.79 billion or 1.38 billion US dollars, 174.4% year-over-year and 28% quarter-over-quarter. Vehicle marking in the fourth quarter was 22.7% compared with 20% in the same period last year and 21.2% in the prior quarter, excluding the impact of inventory provision related to Liwan in the fourth quarter of last year and two-up adjustment of the Warranty Reserve in the fourth quarter of 2020, 23, based on updated estimates of costs of further claims. The vehicle marking remained relatively stable over the fourth quarter of 2022; the increase in vehicle margin over the third quarter of 2023 was mainly due to the aforementioned two-hour adjustment of Warranty Reserve in the fourth quarter; gross margin in the fourth quarter was 23.5% compared with 0.2% in the same period of last year and 20.
Speaker Change: All fucking PON fixed speedy U S dollars.
Speaker Change: Off December.
Speaker Change:
Speaker Change: Working for us so to say for 2023.
Speaker Change: Net cash provided by operating activities in the fourth quarter was RMB 17, pardon two 9 billion or 2.4 billion U S. Dollar.
251.1% year over year and 19 point.
Speaker Change: 2%.
Speaker Change: Cultural Mcarthur.
Speaker Change: And the free cash flow was RMB 14.6.
Speaker Change: All feeling.
Speaker Change: Paul.
Speaker Change: 2.0 fixed feeding U S dollar in the fourth quarter.
Speaker Change: 349.4.
Speaker Change: Year over year, and 10.7% Cosmo Conor.
Speaker Change: As of December 31st two.
Speaker Change: 2023 behind the total.
Speaker Change: Certainly 1000.
Speaker Change: 591, I'm probably.
Speaker Change: For more information.
Speaker Change: Details of our 2000.
Speaker Change: 23 full year financial results.
Speaker Change: Please refer to our earnings press release.
Speaker Change: And now for our business outlook.
Speaker Change: For the first quarter of 2000 and plentiful.
Speaker Change: The company expects deliveries to be between 1000 and 103000 vehicles.
Speaker Change: The increase of.
Speaker Change: 92% to 95, 9% from the first quarter of 2023.
Speaker Change: The company also expects first quarter, our total revenues to be between RMB 31.25 billion and RMB 30 219 billion.
Jiong Shao: 2% in the third quarter; operating expenses in the first quarter and in the fourth quarter for R&B 6.2 7-5 Billing, Paul, 950.8 million US dollars, 82.4% year over year and 27.2% cost over cost. RMDA expenses in the fourth quarter were RMB, 3.49 billion or 491.7 million U.S. dollars, 68.6% year over year and 23.9% quarter over quarter. These expenses are primarily driven by increased expenditure to support our expanding product portfolio and technology, as well as increased employee compensation as a result of our growing number of staff.
Speaker Change: The us dollar full time for billing.
Speaker Change: In the U S dollar on a full 0.5 3 billion.
Speaker Change: Representing an increase of 56, 3%.
71, 3% from the first quarter of last year.
Speaker Change: This business outlook reflects the company's current.
Speaker Change: Prudent.
Speaker Change: In our review.
Speaker Change: Business situation from the market condition.
Speaker Change: She is subject to change.
Speaker Change: That concludes our prepared remarks, I will now turn the call over to the operator to start our Q&A session. Thank you.
Speaker Change: Thank you if you wish to ask a question. Please press star one on your telephone and wait and you cannot.
Speaker Change: If you wish to cancel your request please press star two.
Speaker Change: So the benefit of all participants on today's call. Please limit yourself to two questions and if you have additional questions you can reenter the queue.
Jiong Shao: Thank you. Thank you. SV&A expenses in the fourth quarter for RMB, 3.27 billion of 460.5 million U.S. dollars, were 100.6% year over year and 28.5% quarter over quarter, primarily driven by increased employee compensation as a result of our growing number of staff, as well as increased rental expenses associated with the expansion of our sales and servicing network. Income from operations in the fourth quarter was RMB 3.04 billion, or $427.7 million, compared with RMB 133.6 million loss from operations in the same period last year.
Speaker Change: If you are a Mandarin speaker. Please ask your questions in Chinese first and finally with English translation.
Speaker Change: Your first question comes from bin Wang with Deutsche Bank. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Yes.
Hello, Jonathan It sounds good and Gotcha gotcha.
Bin Wang: Just two.
Bin Wang: Quasi on Watson yet.
Bin Wang: Hopefully that answers that answer Tom Yes of course, some impact she went on titanium technologies, starting dump, yes, Jesus you wanted to China to continue.
Bin Wang: Uh huh.
Speaker Change: Hello, gentlemen.
Speaker Change: So under this settlement switching their coach or just demand.
Jiong Shao: And after, 29.8% causal record. Operating margin in the fourth quarter was 7.3%, compared with neck cave. 0.8% in the same period last year and 6.7% in the third quarter. This is attributable to the increase in income from operation and the recognition of non-cash tax benefits for the release of valuation allowance on certain deferred tax assets. Net income in the fourth quarter was RMB 5.75 billion, or 810.2 million US dollars, representing an increase of 2068.2% year-over-year and increasing by 104.5% quarter-over-quarter, and 0.25 in the same period last year and RMB 2.67 in the prior quarter. Now, turning to our balance sheet and cash flow.
Speaker Change: Thank you Betsy.
Speaker Change: And then just yet.
Speaker Change: I'm not saying most of the home in some way.
Speaker Change: Thank you T D.
Speaker Change: Understood.
Speaker Change: Thank God.
Speaker Change: Thank you thanks, Steve So I'll jump on that.
Speaker Change: So much okay.
Speaker Change: Yeah, Oh, sorry.
Speaker Change: Congratulation for a great result, actually got to question number one is that you previously mentioned you wanted to deliver 100 total units instead of masks.
Speaker Change: And then the unit for single products actually the Cambridge.
Speaker Change: Have you talked to the units.
Speaker Change: Let me comment first on pricing.
Speaker Change: <unk> do you change your guidance, even though what are you seeing there must be a bond which is 100000 units.
Speaker Change: Can you provide a breakdown of people behind us, let's say you just bimodal.
Speaker Change: Good question is that the country needs it.
Speaker Change: And that self driving technology China.
Speaker Change: Can I ask what's the difference between that 18 playoffs in China, such as an excellent and what do you see you can catch up and exceed.
Jiong Shao: Our catch position remains strong and stood at RMB 103.67 billion or 14.6 billion US dollars as of December 13th, 31st, 2023. Net cash provided by operating activities in the fourth quarter was RMB 17. $29 billion, or $2.44 billion US dollars, are 251.1% year-over-year and 19.5% two percent, call to record, and the free cash flow was RMB 14.64 billion, uh, 2.06 billion US dollars in the fourth quarter, up 349.4% year-over-year and 10.7% quarter-over-quarter. As of December 31, 2023, we had a total of 31,000, 591 employees.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: We'll take the first question. This is James Solar engine from New York, So SMA feel this.
Speaker Change: <unk> service so very good question.
Speaker Change: The slumping.
Speaker Change:
Speaker Change: Our guidance remains unchanged. So we are still talking to sale.
Speaker Change: Over 100000.
Speaker Change: Hmm models and by end of this year.
Speaker Change: So starting from 'twenty to 'twenty four in March we will commence delivering awfully Mecca and also thank you. Thank you for your mono L. Nine eight and have several models.
Speaker Change: Making all arrangements into a brand new product cycle with.
Speaker Change: With a long channel delivery of more competitive new products, we anticipate all or mostly deliveries to exceed 50000 vehicles.
Speaker Change: In March which is next months.
Speaker Change: And 70000 in June.
Jiong Shao: For more information and details of our 23 full-year financial results, please refer to our earnings price release. And now for our business outlook for the first quarter of 2024. The company expects delivery to be between 100,000 and 103,000 vehicles, representing an increase of 90.2% to 95.9% from the first quarter of 2020. The company also expects first quarter total revenues to be between RMB 31.25 billion and RMB 32.19 billion, or US dollar 4.4 billion and US dollar 4.53 billion, representing an increase of 66.3% to 71.3% from the first quarter of last year. This business outlook reflects the company's current and preliminary view of its business situation and market condition, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Speaker Change: So the first step.
Speaker Change: First half yes.
Speaker Change: So when we hate to sell themselves in the 70000 monthly deliveries milestone in June the market.
Speaker Change: And we'll have a better understanding of all of our companies to assumptions and.
Speaker Change: And education.
Speaker Change: We encourage you we.
Speaker Change: And encourage you to watch our performers in the coming months.
Speaker Change: So I will hand over to Mr. Mark to answer your second question.
Mark: I don't wish him well.
Dodge at all women attaching a N D Tucson, okay with that.
Mark: But I'm not sure I know how change Huntington.
Mark: So I'm like how would you buy you should virtually sure you can pass along.
Mark: How can you do a material hall now moving actually gets done.
Mark: Yeah.
Mark: Sure.
Mark: $73000 back in June sure. Thank you.
Speaker Change: Yeah it'll either.
Speaker Change: The tongue shouldn't come up equally.
Speaker Change: About Wuxi sound good in approach would hope or somebody that's it.
Speaker Change: AEP ear, Bud who greatly shoigu cold weather southern lechuguilla.
Speaker Change: I think you should treat your trip from the introduction of a quick you'll hear that from you were mentioning with the company.
Speaker Change: That's our opinion trial met its a tricky one question yeah, we talked about.
Speaker Change: Not only with that somewhat you can have all necessary with our families potential tool should a good swap for syndrome patients at our soil <unk>.
Speaker Change: So you got cut out on me.
Speaker Change: Well, yes.
Speaker Change: Unless you shouldn't you go through that.
Operator: For the benefit of all participants on today's call, please limit yourself to two questions. And if you have additional questions, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translation. Your first question comes from Bin Wang with Philipship Bank. Please go ahead.
<unk> stands for.
Speaker Change: Does that mean that you're getting all these interest yeah.
Speaker Change: So yeah, well lets see how you were shooting for.
Speaker Change: Our senior Nissan's future Josh at a time.
Speaker Change: So you have on the meat side when it judiciously.
Speaker Change: Yeah.
Speaker Change: When you say at least okay by fidelity around the end of 2023 and la phosphate or <unk> is now available in over 110 cities around China.
Bin Wang: Thank you. Congratulations on a very successful month. I have two questions for the leaders. First, the company mentioned that in 2024, the monthly sales will exceed 100,000 units, and the single-seater sales will exceed 30,000 units a month. Under the intense market competition this year, is there any change in direction? If there is no change, in which month can we achieve 100,000 units a month?
Speaker Change: And based on our statistics.
Speaker Change: Two months after the release the daily active usage for MLA.
Speaker Change: Has increased 50% compared to before the Otas and we have accumulated over 100, and 100 million kilometers on NOI since they really and I know it has healthy our users with over 3 million parking maneuvers.
Speaker Change: Andy has avoided over 30000 accidents car users all this data and all the positive feedback from users and media are great testaments to our product competitiveness.
Bin Wang: And when we achieve 100,000 units, what will be the structure of the vehicle? This is the first question. The second question is, the company mentioned that in 2024, you will be the first team in China to drive autonomous vehicles. I would like to ask, do you have any plans to work with the market? For example, Huang Wei or Xiaopeng, where do they live?
Speaker Change: In the second quarter, a 24 hour Max.
Speaker Change: Well Pete.
Speaker Change: Levering our map.
Speaker Change: Novelis capability city anyway in all cities in China, and will not be constrained by a number of cities.
Speaker Change: And it won't be delivered to all cars equipped with 80 Max through LTA.
Speaker Change: In terms of 80 pro car equipped with <unk> Pro we will also be deploying BV big large model to upgrade highway NOI features are increasing their ramp experience and lane changing experience. So we're very confident to say that 2024 in terms of.
Bin Wang: When can we buy or sell them? Thank you. Let me translate. It reaches 100,000 units, and we can provide a breakdown of this 100,000 years by model.
Bin Wang: And the second question is that the company previously got at a little bit of the first tier in self-driving technology in China. Can I ask what's the difference or gap between the leading players in China, such as Huawei and Xpeng, and where do you think you can catch up and exceed them? Thank you. Okay, I will take the first question.
Speaker Change: Far.
Speaker Change: 80 products and R&D capabilities.
Speaker Change: Among the top in China.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from Ken Zerbe with Morgan Stanley. Please go ahead.
Ken Zerbe: Uh huh.
Ken Zerbe: T Y Nokia of course, you're going to say it has to do without change.
James: This is James, sales and service. So, a very good question, Mr. Wang Bin. Our guidance remains unchanged. So we are still plugged into, say, a... over 100,000 models by the end of this year. So starting from 2024 March, we will commence delivering the MEGA and also 2024 year model L9, L8, and L7 models, making our entrance into a brand new product cycle. With the launch and delivery of more competitive new products, we anticipate our monthly deliveries to exceed. 50,000 vehicles in March, which is next month, and 70,000 in June. So, the first, the first half.
Ken Zerbe: What do you mean that when T or the consensus consensus isn't quite that Tivo in Chinas Sea.
Ken Zerbe: It constitutes themselves are achieved.
Ken Zerbe: Hey.
Ken Zerbe: Yeah.
Finish all that without producing Jack all right yeah.
Ken Zerbe: Yeah.
Ken Zerbe: I'll, let you didn't change your take a phone seal.
Ken Zerbe: Cause you don't say anything you'll make out it sounds good.
Ken Zerbe: She took over as soon as I hear you. Okay I'll leave it there sounds to say closer to that three <unk> interesting. This shows you the chip.
Ken Zerbe: So I say that I'm trying to get a pop or class, which also leaky gut question George T D.
Ken Zerbe: It will be taken at <unk> six engine.
Ken Zerbe: So my first question is about the production and potential Oh go neck, because of the auto first quarter, rather than condos, almost 100 or 203000 units in place of every cigarettes and ramp in March to 50, K and that's really more so considering several new models are coming to the market.
James: So when we hit the 70,000 monthly deliveries milestone in June, the market will have a better understanding of all of our company's assumptions and dedication. We encourage you to watch our performance in the coming months. So I will hand over to Mr. Ma to answer your second question. Hello everyone, I am Ma Zongwei.
Ken Zerbe: It's about the same time.
Speaker Change: We didn't make that how it shakes out for the whole L series.
Speaker Change: Would there be any branch cuts to supply bottleneck into March and April as well.
Speaker Change: Well it one has to accomplish so far to ensure the smooth production van okay.
Ma Zongwei: Let me answer the second question. As you know, at the end of last year, we launched the 5.0 version of OTA animation. At present, the animation of the whole scene has been launched in more than 110 cities across the country. According to our data from the last two months, the rate of fire in N1A has increased by 50% compared to before. And the N1A's smart driving journey has increased by 100 million kilometers, helping users to complete more than 3 million trips. AED has also helped users avoid accidents more than 30,000 times. These data, as well as the car owners' and the media's affirmation and feedback, have helped explain the advantages of our smart driving products. In Q2 of this year, we will launch the Wutu version of the MAX model. NOA will be developed all over the country. The scope of use is no longer limited by the number of cities, and it can be upgraded to all AD Max vehicles. We will also use the BEV model to upgrade the high-speed NV function and improve the experience of high-speed turning.
Speaker Change: So they'd be well keeping the hidden treaty. So that's my first question.
Speaker Change: Yeah.
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Speaker Change:
Speaker Change: A particular into here shortly.
Speaker Change: Sure no problem inside Xinjiang can pop up on me and she'll take us to once again the.
Speaker Change: Total attempting Keith I'll shoot you found out.
Speaker Change: I wish she shops, you hold off.
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Speaker Change: Oh, I'm not participating yet changing Doha, yes, chunky that woman she didn't downhole.
Speaker Change: What does your fishing I should for shingles.
Speaker Change: How how to package it off would you just yet.
Speaker Change: Interest income and a lot of them.
Speaker Change: To your question, Jason that you don't have asthma.
Speaker Change: That's actually all if I'm going to hop on the future.
Speaker Change: Thanks, a lot and good luck.
Speaker Change: Mindful about how long such high tender.
Speaker Change: I didn't go into Don Kimble, He should does that funding a lot when we get to cancel all.
Speaker Change: The channel.
Speaker Change: Well from Canada Vinci now can you ship it out the future you should yeah that'd.
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Speaker Change: Blend of Blender computer future senior teacher.
Speaker Change: Now our senior HR Shaw, sometimes shocking that Tanya.
Speaker Change: She ship off shouldn't NGL for the medium.
Speaker Change: First of all we have a lot of great experience and the new product launches and ramp up to achieve volume shortly after a product launch in the first calendar month. After the launch of Al Saturday and now nine respectively. We have been successfully able to successfully produce and deliver over 10000 units for <unk>.
Ma Zongwei: So we are very confident that the products and development capabilities of ideal smart driving vehicles in 2024 will definitely be one of a kind in China. Thank you. We released our OTA 5.0 around the end of 2023, and NLA, full-scenario NLA, is now available in over 110 cities around China. Based on our statistics, two months after the release, the daily active usage of NLA has increased 50% compared to before the OTA. And we have accumulated over 100 million kilometers on NLA since its release, and NLA has helped our users with over 3 million parking maneuvers. AUB has avoided over 30,000 accidents for our users.
Speaker Change: Each bottle and we have collected all these best practices and lessons learned.
Speaker Change: And.
Speaker Change: Put them into our system, so whether it's new factories are new employees, they're all we're able to very easily.
Speaker Change: Replicate the success in the past in terms of the new models on the R&D front.
Speaker Change: All of the new vehicle lines are deemed evolve on schedule and in terms of production we.
Speaker Change: We have already completed the construction completed the construction of our factories are ahead of time and recruited and trained the relevant product blue collar workers.
Tim Sal: All this data and all the positive feedback from users and the media are great testaments to our product competitiveness. In the second quarter of 2024, our AB Max models will be delivering mapless capabilities city and away in all cities in China, and will not be constrained by the number of cities, and will be delivered to all cars equipped with AB Max through OTA. In terms of AD Pro, cars equipped with AD Pro, we will also be deploying BEV, big, large models to upgrade highway NOA features, increasing the ramp experience and lane change experience. So we're very confident to say that in terms of our AD products and R&D capabilities, we're among the top in China in 2024. Thank you. Your next question comes from Tim Sal with Morgan Stanley. Please go ahead.
Speaker Change: On the supply front, we have already built the supply capabilities and completed the risk analysis and have created plans and strategies are based on the risks identified on.
Speaker Change: On the planning front using our new integrated planning system, we have connected supply in that end to end and have locked down all of the necessary requirements from <unk> 'twenty 'twenty four will be a big year for us in terms of new product launches and we're very confident to maintain the consistency and.
Speaker Change: Thailand is our supply.
Speaker Change: Yeah.
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Speaker Change: N P C a whole huge Huntington Steele Credentialing pool she's.
Tim Sal: Thank you for accepting my question, Mr. Gao. Your company is doing very well in the global market. My two questions are related to products and sales. The first question is about the company's one-year delivery. As Mr. Xiao mentioned, the sales in March will increase to 50,000. This is basically a trend from the end of last year. If we consider that in March, there was a loss of Mega and a change of 2640, and in April, there was a loss of L6.
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Speaker Change: So it just sounds like absolutely it was Hershey chocolate.
Speaker Change: Now that you said.
Speaker Change: The second question is about taught that playing.
Speaker Change: After the auto was the launch of IL six in April I.
Speaker Change: The group's multiple for audio with a comprehensively cooker set minutes past 250, K RMB or around 35, K U S dollar.
Speaker Change: So well the auto consider to tap into that 35000 U S started my Kid anytime soon that's presents a more sizable more carefully AED conversion.
Ma Zonghui: Why, if a new motorbike were to be brought into the market, how could the company ensure that it is exceptionally reliable? Was there anything that you complained about about Fang flying? So my first question is about production and potential bottlenecks because Li Auto's first quarter volume guidance of 100,000 to 103,000 units implies a very significant ramping up march to 50,000 units or more. So considering several new models are coming to the market at about the same time, including MEGA, L6, and SysRib of the whole L series, would there be any risk of a supply bottleneck on March 8, Pro? What has the company done so far to ensure a smooth production run and deliveries while keeping the price? So that's my first question. My name is Ma Zonghui, and I will answer this question.
Speaker Change: And separately is there any country and tour takes advantage likely preventing team the auto from beauty contact or low priced EV SUV.
Speaker Change: We might have to compete with local people. So that's my second question.
Speaker Change: Yeah.
Speaker Change: Or should ease out whenever that go live into you know who can go through it and what's that mean.
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Speaker Change: And then women Huntington I'm glad I was wrong.
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Speaker Change: Do you guys see it hardly at all in that bucket.
Speaker Change: Zinc by Diego.
Speaker Change: Beyond that I think all of that changeover.
Speaker Change: Okay Gotcha.
Speaker Change: Well, they've got utilization off of them when you're Fisherwoman, Oh, Gee do I understand bill.
Ma Zonghui: First of all, we have had successful experience in the new product market, and we are able to market and sell products. After the launch of L9 and L7, we achieved complete production and delivery of over 10,000 units. And we have summarized these experiences in our system.
Speaker Change: If we look five years down the road, we have no plans to launch any vehicles below the 200000 RMB price point, because if we think about long term up to 200 2030.
Speaker Change: If they only focus even if we only focus on the market over 200000, RMB just family users.
Speaker Change: To take one third of that market in China.
Ma Zonghui: In the future, whether it is a new factory or a new worker, they will be able to use these successful experiences. As for the new model, we have developed several new models that are in line with the development plan. In terms of manufacturing, we have completed the factory's production plan in advance, completed the construction of the factory and production line, and recruited and trained L9 workers. In terms of supply, we have prepared the supply production strategy and risk analysis in advance. We have already made a plan for the risk that has been identified.
Speaker Change: Our total sales of our ready to be more than one trillion R&D and if you consider overseas by 2030 this market will create a business.
Speaker Change: Close to the revenue of all iphones sold worldwide combined. So this is huge goldmine that we think we've only minor very very small portion. So there is no need to disrupt ourselves at this point.
Speaker Change: But rather we would like to focus exclusively on over 200000 RMB.
Speaker Change: Family markets globally, and our strategy is to continue to dive deep into this market create a brand and expand our market share.
Speaker Change: Yeah.
Ma Zonghui: And in terms of the plan, we have worked out the supply and demand end-to-end through the integration plan, and we have also completed the production plan in advance. In 2024, it was indeed the year of the launch of our new product. We have confidence in ensuring the stability and timelyness of production interactions.
Speaker Change: Thanks for sharing that with great colors and congratulations on great. Two we felt again thank you.
Speaker Change: Your next question comes from <unk> Securities. Please go ahead.
Speaker Change: Uh huh.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Unknown Securities: Please go ahead.
Unknown Securities: Thank you Joe.
Unknown Securities:
Unknown Securities: Mhm.
Unknown Securities: Seattle.
Unknown Securities: Okay.
Unknown Securities: And with that comes from.
Unknown Securities: So anyway.
Unknown Securities: Since you probably know of course, you know we kind of go sometimes a sequence.
Ma Zonghui: First of all, we have a lot of great experience in new product launches and ramping up to achieve volume shortly after a product launch. In the first calendar month after the launch of L7 and L9, respectively, we were able to successfully produce and deliver over 10,000 units for each model. And we have collected all these best practices and lessons learned and put them into our system. So whether it's new factories or new employees, they're all able to very easily replicate the success of the past. In terms of new models, on the R&D front, all the new vehicle lines are being developed on schedule. And in terms of production, we have already completed the construction of our factories ahead of time and recruited and trained the relevant blue-collar workers. On the supply front, we have already built supply capabilities and completed risk analysis, and we have created plans and strategies based on the risks identified.
Unknown Securities: Now when you go hunting.
Unknown Securities: Okay.
Gosh.
Unknown Securities: Cheetah mobile.
Unknown Securities: Yeah.
Unknown Securities: As you saw.
Unknown Securities: Oh, I'm, sorry about the whole country.
Unknown Securities: Well it depends on the sponsor in the jungle.
Speaker Change: Sounds good.
Speaker Change: And with that Mike I'm sure you'll come to that point.
Yes.
Speaker Change: Yeah.
Speaker Change: I have two questions. The first question.
Speaker Change: It's about the pricing.
Mike: Volume balance and how we see the trough of pellets and.
Mike: The volume increase by Oh, Jasmine Zhou.
Jasmine Zhou: Hmm defined peer right and my question. My second question is about the following EV models are how we plan after the Mag Amato could you. Please give us more colors. Thank you.
Speaker Change: This is.
Speaker Change: Tony.
Speaker Change: Humans for the first question I think.
Speaker Change: So let me set up the full year.
Speaker Change: We will target.
Speaker Change: Iridex since either about the competition and also.
Speaker Change: The pace B launch over time.
Speaker Change: So when.
Speaker Change: When we consider that we still would we want to see.
Ma Zonghui: And on the planning front, using our new integrated planning system, we have connected supply and demand end-to-end and have locked down all the NESS requirements from end-to-end. 2024 will be a big year in terms of new product launches, and we're very confident in maintaining the consistency and timeliness of our. Thank you for your answer.
Speaker Change: Before we will maintain.
Healthy gross profit margin or 20.
Speaker Change: It presents all of it and based on the.
Speaker Change: Market compensation.
Speaker Change: The gross margin.
Speaker Change: Uh huh.
Speaker Change: Between 10% underground percent yeah.
Speaker Change: Different clients.
Speaker Change: Yeah, and just like.
Last quarter I think everyone.
Tim Sal: My second question is about the layout of the product. After the launch of the L6 in April, the whole group has already completely covered the breakthrough of more than 250,000 products. So if we look back, of course, eight models have been confirmed this year. But considering that the penetration rate of new cars seems to be increasing in the public market, I think this is a natural trend to develop airfares. We are currently in the dominion of the fairwares sector.
While the worry about compensation in the fourth quarter and there will be some promotion.
Speaker Change: So I recall that there will be some.
Speaker Change: Other.
Speaker Change: Come out from the.
Speaker Change: The supply side and also from <unk>.
Speaker Change: The material price sizable nuts.
Speaker Change: See.
Speaker Change: See from our first call here.
Speaker Change: Even though we have some promotions in the fourth corner.
Speaker Change: Uh huh.
Speaker Change: Well Yeah mall.
Speaker Change: Good news from the bond side.
Tim Sal: In terms of technology, is there a car model or a price limit? The second question is about product planning. After Li Auto's launch of L6 in April, the group's model portfolio has a comprehensive copper segment of 250k RMB, or around $35k USD.
Speaker Change: Even though our gross margin increased.
Speaker Change: Yeah. So.
Speaker Change: <unk> the so called.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change: Hum whatever that what does that tell me move on to <unk>.
Speaker Change: No.
Speaker Change: The junior golf. So that tells me we will have.
Speaker Change: So many oh considerably that say a year, that's when you have with <unk>.
Speaker Change: So underneath the hard you'll hear about sheet.
Speaker Change: How about if I will or Minitower deal.
Jiong Shao: So will Li Auto consider entering the $35,000 USD market anytime soon? That presents a more sizable market for NEV conversion. And separately, is there any tech constraint or disadvantage likely preventing Li Auto from building a compact or low-priced ERUV SUV or model to compete with the local market? So that's my second question. Hi, I'm Li Jiong.
Speaker Change: Senior that's happened yet.
Speaker Change: Yeah, no I'm with absolutely no less sunquest Hudson didn't on the IC Alere triage here.
Speaker Change: But I cannot do it.
Speaker Change: That's really a choice here and how those should be able to see that ammonia useful in shadow AUM.
Speaker Change: Yeah.
Speaker Change: Tell me the detail.
Speaker Change: Well the way it.
Speaker Change: Sushi bar shoe I mean, you go out and Oh.
Speaker Change: Got it definitely will put us over here.
Speaker Change: Yeah, Josh It sounds you too often which any of that yet.
Speaker Change: And the idea that you're all familiar with.
Jiong Shao: Let me answer this question. According to the company's overall product plan, if we look at the next five years, there won't be any car models under RMB200,000. Because of our long-term judgment, if we look at 2030, if it's just a market with a price of RMB200,000 or more, and there's no family in the market, I think we only need to get 1% of the Chinese market, and it can be a revenue of more than RMB100,000 million. If we can have a good performance overseas, I think by 2030, with a simple family market of RMB I think this is a huge gold mine. Today, we only eat a small part of this gold mine. There's no need to share our energy and look at other places.
Speaker Change: So if you don't close the quad <unk> background.
Speaker Change: <unk> will go up.
Speaker Change: That being able to show.
Speaker Change: For the first half of the year, we will be releasing in our March 1st Spring event, Lee Mega as well as more of a 2020 for model year Lee L. Seven eight and nine.
Speaker Change: Also in first half will be.
Speaker Change: Releasing the <unk> six and.
Speaker Change: In the second half of the year as we've communicated before we will be releasing yet another three pure electric SUV models.
Speaker Change: All standards come standard with five C charging and all wheel drive and I would like to emphasize those cars are very very competitive.
Speaker Change: They will become the top choice for family users in their respective price segments 2024 will be an unprecedented product here for the auto by the end of the year. We will have four range extended models and for very competitive electric D. V models, a products are all very competitive and they will together.
Jiong Shao: We should make the family market of RMB200,000 or more and make it bigger in the world and get more market share. I think this is our most important choice. If we look five years down the road, we have no plans to launch any vehicles below the 200,000 RMB price point because, if we think about the long term, up to 2030, even if we only focus on the market over 200,000 RMB, just family users, if we were able to take one-third of that market in China, our total sales would already be more than 1 trillion RMB. And if you consider overseas, by 2030, this So this is a huge gold mine that we think we've only mined a very, very small portion of.
Speaker Change: Serve the needs of our families.
Speaker Change: Your next question comes from Tito <unk> with Goldman Sachs.
Hey, guys. Good morning, So, Michigan a year.
Tito: Yeah go ahead go ahead she does.
Tito: Oh, Jamie I'll, let Glenn T D.
Tito: <unk>.
Tito: Nowadays that Google is home Jr. Molly do you saw me all that kind of how are you.
Tito: It did show the jackalope alcohol, Paul called Seagull, Chatbot, which in Chicago, Yeah shall it be your women's until they saw it yeah no sorry.
Tito: Some of them are literally Shankar.
Jiong Shao: So there is no need to distract ourselves at this point. But rather, we would like to focus exclusively on over 200,000 RMB family markets globally. And our strategy is to continue to dive deep into this market, create a brand, and expand our market share. Thanks for sharing all the great colors and congratulations on the great results again.
Tito: Sometimes that can be.
Tito: Hi, Qi just Eagle Lynch.
The other one you should so always Douglas J J.
Tito: <unk> do you take a whole lot I suppose how late it sounds like you should realize that.
Speaker Change: Yeah, I'm going to have less.
Speaker Change: Josh it's kind of all your toward.
Ying Bozu: Thank you. Your next question comes from Ying Bozu with SciTech Securities. Please go ahead.
Speaker Change: Toward that you called out that don't.
Speaker Change: Thanks management for taking my questions and congrats on the very strong result, so I have two questions. The first one is in terms of D. B E V. A threep EV models in the second half of the year, so considering the battery price as well as five C charging capability and then initially smaller volume versus.
Ying Bozu: , We've seen thousands, 5000 people in the United States. There are 50 million people here today. Today we should be able to, I have to say, watch TV., So my first question is about how we plan to use prices to balance the price this year. We need to have a reasonable profit margin and ensure that our sales can reach the expected target. The second question is... We want to look at the plan for the pure electric vehicle from now on. We have seen the success of the L-series 6789. Soon, in March, there will be MAGA.
Speaker Change: Your E. R E T models, what kind of like margin difference.
Speaker Change: Should we expect for the VEB models and then the second question is in terms of the overseas expansion. What is the management's latest thoughts are for overseas sales volume target over the next three to five years. Thank you.
Tony: After MAGA, can you give us more details about the pure electric vehicle? Ma, I have two questions- about the pricing and volume balance and how we see the profitability and volume increase by adjustment of pricing in different periods. And my second question is about the following EV models. What do we plan after the MAGA model? This is Tony.
Speaker Change: Yeah.
Speaker Change: Tina this is.
Speaker Change: Tony and Paul.
Speaker Change: <unk> four for the gross margin.
Speaker Change: As we mentioned in the previous calls.
Speaker Change: First of all the BV.
Speaker Change: <unk> a serious the world.
Speaker Change: Blended gross margin will be 25% of full service.
Tony: But for the first question, I think when we set up the full year, field target, we have already considered the competition and also the pace we launch our product. So when we consider that, we feel what we want to say as a... We will maintain a healthy cross-profit margin over 20% always and, based on market commentation, plotting it between 20% to 25% in different quarters. Yeah, and just like last quarter, I think everyone was worried about the commentation in the fourth quarter. There will be some promotion.
Speaker Change: So let me start from Mega hubs.
Speaker Change: And then deny.
Speaker Change: Nancy.
Speaker Change: The cost Martin will start from a high iron to Lora.
Speaker Change: And also we want still tool.
Speaker Change: Uh huh.
Speaker Change: Product gross marketing establish.
Speaker Change: Mind you.
Speaker Change: Finally, our product.
Speaker Change: <unk>.
Speaker Change: Our products are designed to you for a healthy cross marketing and also violence.
Tony: Hi, for every quarter, there will be some other things come up from the supply side and also from like, Thanks everyone for watching; you will catch this. See you from our fourth quarter. Even we have some promotion in the fourth quarter.
Speaker Change: Yeah.
Speaker Change: No.
Speaker Change: The customers.
Speaker Change: If demand falls off on a par or each car.
Speaker Change: And also on the material side like the bathroom material I think it's.
Tony: We have a lot, and more good news from the bomb site. So even though our cost margin is increased and so on. Thank you. Thank you. Thank you.
Speaker Change: Tim.
Speaker Change: Half of last year I think it's.
Speaker Change: It's a good timing to launch Hummer EV models, starting from this year.
Tony: Okay, let's talk about product planning. In the first half of this year's product planning, the company will release the Ideal Mega and the Ideal R9, R8, and R7 of the 2024 models at the spring press conference on March 1. In the second quarter, we will also release our Ideal R6. In the second half of this year, we will release three other pure electric SUV models. These three SUVs are equipped with 5C charging, four-wheel drive, and excellent productivity.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Jim.
Jim: I'll take your second question. So first of all for the overseas small Casey is very important to the auto.
Jim: And we are aiming to start to explore the overseas market and we are accelerating it.
Jim: So regarding our plan for overseas exports. So we remain committed to our direct sales model in overseas markets focusing on building a real burst sales network.
Tony: We will continue to maintain our consistent product competitiveness and become the first choice for home users at the same price. 2024 will be the year of the ideal car. At the end of the year, there will be four high-pressure batteries and four high-voltage batteries. Eight highly competitive products to meet the needs of home users. For the first half of the year, we will be releasing at our March 1st spring event Li Mega as well as 2024 model-year Li L7, L8, and L9. And also, in the first half, we'll be releasing the L6.
Jim: And the comprehensive after sales service offerings.
Jim: Infrastructures, whereas in the auto is growing in popularity globally, we are accelerating.
Jim: Bad for until after sales service Nashville, and the spare parts supply chains to ensure.
Jim: Outstanding service experience for all of our international customers.
Jim: By the way, we have successfully Santa hub.
Jim: Operations in Middle East and.
Jim: Initiated the recruitment of local sales and service teams in Dubai.
Tony: In the second half of the year, as we've communicated before, we will be releasing yet another three pure electric SUV models, all standard comp standard with 5C charging and all wheel drive. And I would like to emphasize that those cars are very, very competitive. And they will become the top choice for family users in their respective price segments. 2024 will be an unprecedented product year for Li Auto. By the end of the year, we will have four range extended models and four very competitive electric BEV models. Eight products are all very competitive, and they will together serve the needs of our family use.
Jim: And in the first half year this year.
We plan to establish dedicated the after sales service network in Central Asia and Middle East.
Jim: By the fourth quarter of this year, we will commands overseas deliveries, starting with introduction of Illinois, and the L. Seven models in local regions, which by the way be cheese also customized for the local environment.
Jim: Hum.
Jim: And the policies of local policies.
Speaker Change #101: Thank you.
Speaker Change #101: Yeah.
Speaker Change #102: Your next question comes sending suddenly with Bank of America. Please go ahead.
Speaker Change #102: Oh.
Speaker Change #103: So that's one that has it been.
Speaker Change #104: But once he has he been.
Speaker Change #105: So you kind of wouldn't it be just thought you get decision.
Ming Sun Li: So our next question comes from Tina Hao at Goldman Sachs. Thank you for your time, and congratulations on your outstanding performance. I have two questions. The first one is about the three pure electric vehicles due in the second half of this year. I would like to know, if we look at the gross profit margin, due to the price of the battery, including the 5C, and the amount of the early stage, which is slightly smaller than our increase, how much difference there will be in the gross profit margin compared to the increase?
Speaker Change #106: Sure Joe.
Speaker Change #107: Uh huh.
Speaker Change #108: If you choose to do.
Joe: Well listen I don't think I'm sure you.
Speaker Change #110: If you do even shut down Oh, sorry, yes.
Speaker Change #110: I'll do it again soon.
Speaker Change #110: So tomorrow he was always that the whole.
Speaker Change #110: And the OTT O who'll go over this.
Speaker Change #110:
Speaker Change #110: And she'd onshore sandwiches at home.
Speaker Change #111: You want me to take them along with you.
Speaker Change #112: So guys I know it doesn't.
Speaker Change #112: Oh, My God, what do you do that.
Speaker Change #112: And of course yet.
Speaker Change #112: Have you seen them go up that might even go places out Joe is not quite the way you sense at all.
Speaker Change #112: Days ago.
Speaker Change #112: But oh excuse me I forgot it neutral how does this show.
Speaker Change #113: And Jim do you think it would be.
Speaker Change #114: So my first question.
Speaker Change #114: Still related to gross margin trend.
Speaker Change #114: First quarter, the second quarter show food or because you are.
Speaker Change #114: Selling.
Ming Sun Li: This is the first question. The second question is about the company's latest ideas on the overseas market. For example, in the next three to five years, how do we view the overseas market, and how much can we achieve? Thank management for taking my questions, and congratulations on the very strong result.
Speaker Change #114: Tiny tiny suite version okay.
Speaker Change #114: 089.
Speaker Change #114: So your gross margin is slightly lower than our second.
Speaker Change #114: Second quarter things do you have a full quarter contribution from Mega.
Speaker Change #114: Do you expect gross margin to.
Speaker Change #114: To counter it.
Speaker Change #114: And also how is the Oh analytics to overall margin.
Yeah.
Speaker Change #114: Oh.
Johnny: The first one is in terms of the three BEV models in the second half of the year. Considering the battery price, as well as the 5C charging capability, and initially smaller volume versus your EREV models, what kind of margin difference should we expect for the BEV models? The second question is in terms of overseas expansion. What is the management's latest thought for the overseas sales volume target over the next three to five years? Tina, this is Johnny.
Hi, This is John.
John Eudy: I think all the factors you mentioned.
John Eudy: Yes.
John Eudy: Clear phone calls.
John Eudy: The cross Marty and the company will.
John Eudy: We maintain a healthy gross margin of about.
John Eudy: 100%.
John Eudy: First culture.
John Eudy: And as we mentioned earlier.
John Eudy: Company.
John Eudy: We'll also maintain a healthy gross margin, which means all of it by about 20% throughout the full year.
Johnny: And for cross-marketing, as we mentioned in the previous call, but both for the BEV and the EREV series, the oral blind date cost margin will be 25% for both series. So when we start from mega, and then the ninth, ninth period, the cost margin will start from high, higher to lower. And also, we want to still advertise. The product cost marking established, When you define your product, it's a... Our products are designed to ensure a healthy gross margin and also balance customers, Bin Wang for the car, for each. And also, from the material side, like the battery material, I think it's...
John Eudy: Fault for automakers.
John Eudy:
John Eudy: 2020 full model of our theories.
John Eudy: It will be a positive factor for further cross marketing staff.
John Eudy: Starting from March.
John Eudy: Uh huh.
John Eudy: All states will be negative if we want to say to be.
Speaker Change #116: I apologize.
Over a 20% gross margin.
Speaker Change #116: And with our volume growth it will be a positive factor.
Speaker Change #116: 40 gross margin, yeah, and it's tough.
Speaker Change #116: If I recall there there are some positive.
Speaker Change #116: Terry.
Well wishes for.
Johnny: Since the second half of last year, I think for us, it's a good time to launch our VU event. Okay, Gina, James, I will take your second question. So, first of all, the overseas market is very important to Li Auto, and we are aiming to start to explore the overseas market, and we are accelerating. Regarding our plan for overseas exports, we remain committed to our direct sales model in overseas markets, focusing on building a robust sales network and comprehensive after-sales service offer for his job. With Li Auto's growing popularity globally, we are accelerating the development of our after-sales service network and spare parts supply chains to ensure our outstanding service experience for our international customers. And by the way, we have successfully set up operations in the Middle East and initiated the recruitment of local sales and service teams in Dubai. And in the first half of this year.
Speaker Change #116: Yes.
Speaker Change #116: Okay.
Speaker Change #116: No.
Speaker Change #116: Do you see a claim utonian side no.
Speaker Change #116: E C L. King Kinzel touch on is that something that would change that.
Speaker Change #116: To help put us in San Antonio Douglas I'm glad that's about the size of the Johnson <unk> Johnson.
Speaker Change #116: Jonathan.
Speaker Change #116: Totally shut will not go through you'll see telephones.
Speaker Change #116: Hum.
Speaker Change #116: With that I'll equal basis, what does it change your meal.
Speaker Change #116: Well things out of the woods.
Oh type things to expand a charging station.
Speaker Change #116: So by the end of this year what.
Speaker Change #116: What do we expect at the total Capex.
Speaker Change #116: As the chairman mentioned, a charging station could be a profitable investment.
Speaker Change #116: Project.
Speaker Change #116: When do you expect to your Chinese station.
Speaker Change #116: Okay and reached breakeven.
Speaker Change #117: Or tasteful breakeven thank you.
Speaker Change #117: Yeah.
Speaker Change #117: Okay.
Speaker Change #118: I'll take these questions James.
James Solar: So by the end of 'twenty 'twenty, four and company plans to build a total of 2000 charging stations.
James Solar: Estimation.
Speaker Change #120: By the end of this year, we have viewed.
Speaker Change #121: We have viewed for the 700 highways supercharging stations covering <unk>.
Speaker Change #122: 70% of the highways in China, Pennsylvania, as 90% of the highway you've seen so far.
James: We plan to establish a dedicated after-sales service network in Central Asia and the Middle East. By the first quarter of this year, we will commence overseas delivery starting with the introduction of L9 and L7 models in local regions, which, by the way, are also customized for the local environment and the police, and the policies, local policies. Thank you. Your next question comes from Ming Sun Li with Bank of America. Please go ahead.
Speaker Change #122: Major economic zones.
Speaker Change #122: We ended the successive no G. So V more of those this year. We have also begun to simultaneously accelerate the expansion of charging stations in cities we enter.
Speaker Change #122: It pays debt by the end of D C. As a number of charging station cities we exceed.
<unk> hundred so totally.
Speaker Change #122: 2010.
Speaker Change #122: Companys cash reserve a M.
Ming Sun Li: Guan Linchen, thank you for accepting my question. I have two questions. The first question is related to the interest rate.
Speaker Change #122: And we have allocated a sufficient capital for the construction.
Speaker Change #122: Of charging stations.
Speaker Change #122: The company has a detailed opry operating models for the evaluation of each charges station and by the way personally.
Ming Sun Li: I will ask a short question. I would like to know, in the first quarter and the second quarter, what was the trend of the interest rate compared to the interest rate in the fourth quarter? For example, in the first quarter, sales were relatively low, and the discounts were relatively high, and Maolili. In the second quarter, after the launch of the new L789 in 2024, will it help Maolili improve? Plus, the full contribution of MEGA for the whole quarter. Can it be faster to recover Maolili?
Speaker Change #122: I'm looking after each and every charges station investment and.
Speaker Change #122: And each station is on profitability and all of our targets.
Speaker Change #122: From a long term perspective, we are very confident in our charger station.
Speaker Change #122: Charging stations profitability prospect.
Speaker Change #122: Sure.
Your next question comes from Ukraine, Deng with HSBC.
Speaker Change #122: Yeah.
Deng: Hi, guys everybody's knowledge and you can now go and teach them teach out thesis. It sounds you know anytime you will have come back into hung. Yeah. Go ahead, Yeah, you know what kind of lead you can all you would sit how they use yet.
Ming Sun Li: I also want to know what L6 means to Maolili. So my first question is still related to the gross margin trend in the first quarter and the second quarter. In the first quarter, because you are selling the 2023 version of L7, L8, and L9, so your gross margin is slightly lower than 4Q, but in the second quarter, since you have a four-quarter contribution from MEGA, so do you expect the gross margin to recover? And also, how is the L6 tool overall?
Deng: England by any chance you have a bunch of them being done such a good she held yardeni legislation like that guy that engine.
Deng: And she said I've seen and I've done that Joan just seen it yet so you'll have that dual.
Deng: Dr. <unk> Zhao Gong suicide Latina changed my Name's, Danielle Asia, a bunch of horses and constant iPhone moment, you did walk on that scientists who finds that they have more tien tsin, it's actually that don't go up.
Jiong: Xie Xie, that's all I can say. Hi, this is Jiong. I think all the factors you mentioned are, yeah, it's clear for the gross margin, and the company will maintain a healthy gross margin of about 20% for the quarter. And as we mentioned earlier, the company will also maintain a healthy gross margin, which means it will always be about 20% throughout the four years, and for the Mega. 2024 model of the L series, it will be a positive factor for the gross margin, starting from Mark. And our stakes will be negative if we want to say them to be for the over 20% gross market.
Deng: I think Oh, yes, I think attempting Columbia itunes you want I can lose him they'll need certain J shall pay more ships.
Deng: Two questions. The first wind out there, saying that it's going through a painful consolidation well. We also booked a record high earnings. Many are struggling how can look at the inflection point of the industry consolidation against the weak car demand and a continuing on some pricing more equal, including the auto which is really all of those Hum what is Lee autos is.
Jiong: And with our volume growth, it will be a positive factor. There are 40 clubs, and it's... For every culture, there are some positives, which is helpful. Thank you. My second question is about charging stations. We are planning to build 2,000 charging stations this year. I would like to know about the overall capital expenditure and the related capital expenditure for charging stations.
Deng: Our strategy priority list this year.
Speaker Change #124: Taking the question.
Speaker Change #124: Do we talked about O T. A L. A more cities and scenarios when would be the iPhone moment for the autonomous driving development from management perspective, and how do you read despite of the technology progress and current that Todd is driving market offering might be running homogenous and lack of revenue model in the knee.
Ming Sun Li: Mr. Lee, you mentioned that 5C charging stations will be a profitable investment project. When do you expect the charging stations to be profitable, profitable, profitable, or profitable? I will translate my question, plans to expand the charging stations to 2,000 by the end of this year. What do we expect in the total capex?
Speaker Change #124: Okay.
Speaker Change #124: What do you do that well that way.
Speaker Change #125: Oh, yes.
Speaker Change #126: Yes, Jim.
Speaker Change #126: Sue I mean, you're going to attack.
Speaker Change #126: Cause you at all.
Speaker Change #126: And again I'm sure that you don't question Kevin question on hopefully that you don't.
Speaker Change #127: Yeah No no until you go you talk kind of at the end of this.
Ming Sun Li: Previously, Chairman mentioned the charging station could be a profitable investment project. So when do you expect your charging station? can reach breakeven or case for breakeven?
Speaker Change #127: Oh Gosh, you might you sound balance sheet.
Speaker Change #128: Thank you to all they would really quickly can you go with that.
Speaker Change #128: Julien, it's usually a wheel hub.
Speaker Change #128: Hopefully that can pass.
Speaker Change #128: And then you said you know Oh.
Speaker Change #128: So looking back people are getting back and she said they jump on that one.
Jim: Okay, I will take this question, Jim. So by the end of 2024, the company plans to build a total of 2000 charging stations, as you just mentioned, and by the end of this year, we will have built more than 700 highway supercharging stations covering 70% of the highways in China, as well as 90% of the highways in the four major economic zones. With the successive launches of BEWARE models this year, we have also begun to simultaneously accelerate the expansion of charging stations in cities. We anticipate that by the end of this year, the number of charging stations in cities will exceed... 1,300, so a total of 2,000. The company's cash reserves are ample, and we have allocated sufficient capital for the construction of charging stations.
Speaker Change #128: Okay, you're talking a lethal acute leukemia.
Speaker Change #128: Sure well then do each I'm glad I should have thought of it and also how are you going to handle that.
Speaker Change #128: Oh, Wow well locally to.
Speaker Change #128: And do the whole jehol generally we gotcha.
Speaker Change #128: So going through that channel.
Speaker Change #128: So yeah.
Speaker Change #129: Yes sure.
Speaker Change #129: Danya.
Speaker Change #129: Oh, Yeah, Oh told me at.
Speaker Change #129: It all depends on the Delta does well.
Speaker Change #129: No.
Speaker Change #129: Uh huh.
Speaker Change #129: Yeah. The total should you don't get to know Josh in general, yes, or no.
Speaker Change #129: How do you feel like you can only I don't know who the Jackson.
Speaker Change #129: Although he had I don't know.
Speaker Change #129: Yes, I'll try that Nino cool yeah sure.
Speaker Change #129: Yes, the war <expletive> hockey took and passionate leader who will be our hobbies.
Speaker Change #129: <unk> gone through the Golar tundra haul billions of Hollywood.
Speaker Change #130: So as we've always maintained before.
Speaker Change #130: We believe in the smart EV industry, there will be a very clear Matthew effect.
Speaker Change #130: Good luck with valves and as you'll see in the very few.
Jim: The company has detailed operating models for the evaluation of each charging station. And by the way, personally, I'm looking after each and every charging station investment. And each station has its own profitability and ROI target. From a long-term perspective, we are very confident in our charging stations.
Speaker Change #130: Very near future here I'll make a prediction by Q4 this year and the market of RMB 200000, RMB and above.
Speaker Change #130: Top three brands as well.
Speaker Change #130: Command around close to 70% of market share or you know where see our free will reach close to 70% and we can test. This hypothesis by the end of this year and in order to prevail in this competitive environment. We will continue to focus on user value creation, which will convert into a competitive advantage.
Yu-Kun Ding: Thank you. Your next question comes from Yu-Kun Ding with HSBC. Thank you, Yuchen. I have two questions for you. First, I'd like to ask you how you see the whole industry. We've seen that Ideal Cars' performance is improving, and we've also seen some news about other companies' shutdowns. How do you interpret the strategic focus of Ideal Cars in 2024 and the pace of implementation in the middle of a low-demand price war? The second question is about the company's plans for a new city.
Speaker Change #130: So on the product front, we're continuing to focus on making albeit details perfect and delivering the full product experience to our users and on the R&D front, we will invest in our autonomous driving smart space and high voltage and range extended TV platforms and convert all of these investments and to use our value.
Yu-Kun Ding: What does Guan Yifeng think about the smart driving iPhone moment? And what do you think about the technology's rapid development, but the smart driving in China's market and the product industry may be more unified, and there is no clear payment model at the moment? Two questions. The first is that the industry is going through a painful consolidation. While Li Auto booked a record high earnings, many are struggling.
Speaker Change #130: With that our goal continues to be selling 800000 units this year in 2020, four and becoming the top one premium brand in China.
Speaker Change #130: Okay.
Speaker Change #130:
Speaker Change #130: And the team is all lined up to be ready to achieve this goal this year.
Yeah.
Speaker Change #131: Well sure.
Speaker Change #131: Government Okay.
Speaker Change #131: That's actually that's a moment in time.
Speaker Change #131: You don't get that.
Speaker Change #131: Our son, yet you need help with all that.
Li Xia: How to look at the inflection point of the industry consolidation? Against weak car demand and a continuous pricing war, including Li Auto, what is Li Auto's strategy priority list this year? And second question, management does talk about OTA, NOA, in more cities and scenarios. When will be the iPhone moment for autonomous driving development from a management perspective? And how to read, despite the technology progress, the current autonomous driving market offering might be running homogeneous and lack a revenue model in the near term. Hi, I'm Li Xia. I'll answer this question. First of all, we will stick to our usual view, which is that the competition of smart e-cars will lead to a concentration of investment. Yes, I can make a prediction. We can see that in the fourth quarter of 2024, with more than 200,000 new cars, there will be an unimaginable situation. That is, there will be three leading brands. By the fourth quarter of this year, these three brands can get nearly 70% of the market share.
Speaker Change #131: Now I feel actually quite good I thought that you can actually see the.
Speaker Change #131: In June <unk>.
Speaker Change #131: It shouldn't be that they'll have a sure thing.
Speaker Change #132: Oh no no.
Speaker Change #132: Wonderful.
Speaker Change #133: Sure Joe.
Joe: Yes sure.
Joe: They did auction with Josh.
Joe: C. J I R. I was that suddenly cash equivalent why they don't have to use.
Joe: Sure.
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Joe: Ed I'm wishing underneath potentiation, north Huntington and Tushar, you cant Cleveland Nashville Hot chicken.
Joe: IPhone moment as to how she could have all of that.
Speaker Change #134: No because I just didn't get that.
Speaker Change #134: Cash out you can teach her for her opinion on shut out I don't see Shanghai, Shenzhen, Shanghai, and Suzhou, China Southern Josh.
Speaker Change #134: Sure Yeah, no hot when they should only tissue shouldn't you go they'll pay.
Speaker Change #135: Thank you Josh.
Speaker Change #135: Well, what about shopping they're trying to keep up that you don't bill pay the hot coffee shortly.
Speaker Change #135: Sure.
Speaker Change #135: The humble bundle one shouldn't it all figured out now towards your women's shop, nobody that yourself.
Speaker Change #135: That's why I keep when she shops generally whether you go shoot you yes sure.
Li Xia: We can verify it in the fourth quarter of this year. So this is our judgment on the market share and trend. So no matter how the market environment changes, we will focus more on making real user value, thereby improving the competitiveness of the company in the market. So 2024 is a big year for our important products.
Speaker Change #136: Uh huh.
Speaker Change #136: Personally I believe.
Speaker Change #136: For a moment for autonomous driving will come in two to three years.
Speaker Change #136: IPhone four completely changed People's perception of smartphones.
Speaker Change #136: But I think for itself may not be perfect but.
Kind of comp assess all of the important factors for success, including industrial design user interaction hardware software and business model and compare that to autonomous driving with alpha to announce that all three.
Li Xia: Every product must be done well from every detail to the complete delivery. On the other hand, we will invest more in R&D to improve the ability of smart driving, smart space, and smart electronics and transform these abilities into user value. In general, we will challenge the annual delivery of 800,000 vehicles this year to achieve the number one goal of China's luxury car brand sales.
Speaker Change #136: Reaching scale and being delivered in volume and data continues to accumulate as well as the deployment of AI large model.
Speaker Change #136: I believe that autonomous driving will reach a inflection point.
Li Xia: For this purpose, all the teams in the company are ready. So, as we've always maintained before, we believe in the smart EV industry, and there will be a very clear Matthew effect as we develop the valve, and as we'll see in the very near future. Here, I'll make a prediction. By Q4 this year, in the market of RMB 200,000 and above, the top three brands will command around close to 70% of the market share. Or, in other words, CR3 will reach close to 70%, and we can test this hypothesis by the end of this year.
Speaker Change #136: Reaching an iPhone for a moment and maybe all of a sudden overnight all of our cars equipped with the hardware.
Speaker Change #136: Maybe 500000 or even over a million well achieve autonomous driving so firstly auto we continue to invest in making autonomous driving hardware standard for all of our vehicles and we have no plans for a subscription of our extra charge at the moment.
Speaker Change #136: Making.
Speaker Change #136: Driving set the standard will bring us as many users as possible collect as much data possible and helped us to increase or improve our algorithms and improve the experience for our users and that creates a very positive cycle.
Li Xia: And in order to prevail in this competitive environment, we will continue to focus on user value creation, which will become our competitive advantage. So, on the product front, we will continue to focus on making all the details perfect and delivering the full product experience to our users. And on the R&D front, we will invest in our autonomous driving, smart space, and high-voltage and range-extended EV platforms and convert all these investments into user value. With that, our goal continues to be selling 800,000 units this year in 2024 and becoming the top premium brand in China. And the team is lined up to be ready to achieve this goal this year.
Speaker Change #136: Actually I, reaching the end of last conference call I'd like to turn the call back over to Koby Wang for any additional or closing comments.
Bin Wang: Thank you once again for joining us today, if you have any more questions. Please feel free to contact the IR towards IR team. So that concludes this conference call. You may now disconnect. Your line. Thank you Scott.
Speaker Change #137: Uh huh.
Okay.
Speaker Change #137: Yes.
Speaker Change #137: Yes.
Speaker Change #137: Yeah.
Speaker Change #137: Yes.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: [music].
Speaker Change #137: Okay.
Speaker Change #137: [music].
Speaker Change #137: Yes.
Speaker Change #137: [music].
Ma Donghui: I am Ma Donghui. I will answer the second question. Speaking of the iPhone Moment, I personally think it will be released in the next 2-3 years.
Speaker Change #137: Yes.
Speaker Change #137: Okay.
Speaker Change #137: <unk>.
Yeah.
Speaker Change #137: Yeah.
Ma Donghui: The iPhone has completely changed people's perception of smartphones. Although the first generation is not perfect, it has a lot of advantages. As Steve said, it has all the advanced features. For example, the design and interaction.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Speaker Change #137:
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Ma Donghui: There are all the aspects of 50% that happens with iPhone. So the video and animation are strong, and excellent performance in the composite mode. And putting it in an industrial world. Every piece is a hit. It's still cheap.
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Speaker Change #137: Yes.
Speaker Change #137: [music].
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Okay.
Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Yes.
Ma Donghui: Because of a really clear concept and even better camera technology. By the way, if you buy an iPhone, just buy it. It doesn't have this opposite of an inverse cameramolass.
Speaker Change #137: Okay.
Speaker Change #137: [noise].
Ma Donghui: But many times, the use of an iPhone is had by the consumer. Ryan Jeffers, I am. What's your name? You don't have to know. So you don't have to know. So you don't have to know.
Ma Donghui: For data accumulation, and the ability of AI models to constantly improve, I believe that smart driving will also lead to change, and iPhone Moment will come at all times. In a blink of an eye, hundreds of thousands or even hundreds of thousands of vehicles that have been pre-configured on the hardware have achieved autonomous driving. For the ideal car, we always stick to the standard of motor driving.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: [noise].
Ma Donghui: For the time being, we don't have any plans for subscription and additional charges. This kind of standardization will make the number of users of smart driving increase, help us collect more data, and promote the improvement of our computing ability. This will further improve the user experience of smart driving and form a positive cycle. Personally, I believe the iPhone 4 moment for autonomous driving will come in two to three years. The iPhone 4 completely changed people's perception of smartphones. The iPhone 4 itself may not be perfect, but it encompasses all of the important factors for its success, including industrial design, user interaction, hardware, software, and business model.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137: Yes.
Speaker Change #137: [music].
Ma Donghui: Compare that to autonomous driving with L2 and L3, reaching scale and being delivered in volume, and data continues to accumulate as well as the deployment of AI-powered large models. I believe that autonomous driving will reach an inflection point, reaching its iPhone 4 moment. And maybe all of a sudden, overnight, all of the cars equipped with this hardware, maybe hundreds, thousands, or even over a million will achieve autonomous driving. So for Li Auto, we continue to invest in making autonomous driving hardware standard for all of our vehicles. And we have no plans for a subscription or extra charge at the moment. Making autonomous driving fit to standard will bring us as many users as possible, collect as much data as possible, and help us to improve and increase our algorithms and improve the experience for our users.
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137:
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: [music].
Bin Wang: And that creates a very positive cycle. As we are reaching the end of our conference call now, I'd like to turn the call back over to Kobe Wang for any additional or closing comments. Thank you once again for joining us today. If you have any more questions, please feel free to contact the Altos IR team. This concludes this conference call. You may now disconnect your line.
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Speaker Change #137: Yes.
Speaker Change #137: Okay.
Speaker Change #137: Yes.
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Operator: Thank you. Bye. Thank you.
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Speaker Change #137: Okay.
[noise].
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Speaker Change #137: Okay.
Speaker Change #137: Okay.
Operator: Google Play 7. Google Play 6. Google Play 5. Google Play 4. Google Play 3.
Speaker Change #137: Yeah.
Yeah.
Operator: Google Play 2. Google Play 1. Google Play 2. Google Play 1. Google Play 2. Google Play 3.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: [noise].
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Okay.
Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: [music].
Speaker Change #137: Okay.
Speaker Change #137: [music].
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Speaker Change #137: <unk>.
Speaker Change #137: Yes.
Speaker Change #137: [music].
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Speaker Change #137: Yeah.
Speaker Change #137: Oh.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
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Speaker Change #137: Yeah.
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Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: [music].
Speaker Change #137: Yeah.
Yes.
Speaker Change #137: [music].
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Speaker Change #137: Okay.
Speaker Change #137: [music].
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Speaker Change #137: Yeah.
Speaker Change #137: Okay.
Speaker Change #137: Okay.
Speaker Change #137: Yeah.
Speaker Change #137: Okay.
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Speaker Change #137: Okay.
Speaker Change #137: [noise].
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