Q1 2024 Li Auto Inc Earnings Call
Operator: Hello, ladies and gentlemen. Thank you for standing by for Li Auto's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode.
Hello, Ladies and gentlemen, thank you for standing by for Lee orders first quarter 2024 earnings Conference call.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: Today's conference call is being recorded I will now turn the call over to your host Ms. Jenny Zhang Investor Relations Director of Liana. Please go ahead Shannon.
Operator: Today's conference call is being recorded. Thank you, Ken. Good evening and good morning, everyone. Welcome to Li Auto's first quarter 2024 earnings conference call. The company's financial and operating results were published in a press release earlier today, and they 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. Johnny Tie Li, to begin with prepared remarks. Our President, Mr. Donghui Ma, and our Senior Vice President, Mr. James Liangjun Zou, will join for the Q&A discussion. Before I continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. The Private Securities Litigation Reform Act of 1995.
Speaker Change: Thank you Kim good Anthony and good morning, everyone. Welcome to <unk> first quarter 2024 earnings conference call. The company's financial and operating results were published in our press release earlier today and they were posted on the Companys IR website on today's call. We will have our chairman and CEO Mr. <unk>.
Ali and our CFO, Mr. Johnny Chile to begin with prepared remarks, our president Mr Don't Lima, and Albert Senior Vice President Mr. Jim downturn, so well who joined 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 provision.
Operator: Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Speaker Change: <unk> of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the views expressed today.
Speaker Change: Information regarding risks and uncertainties is included in certain complex valleys, whereas the U S Securities and Exchange Commission and the.
Speaker Change: Stock exchange of Hong Kong Limited the company does not assume any obligation to update any forward looking statements, except as required and applicable law.
Operator: Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial matters. Please refer to Li Auto's disclosure documents in the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Our CEO will start his remarks in Chinese, 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.
Speaker Change: Please also note that <unk> earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial matters. Please refer to the disclosure documents on the IR section of our about site, which contain a reconciliation of the.
Speaker Change: Audited non-GAAP measures to comparable GAAP measures, our CEO will start his remarks in Chinese there will be an English translation. After he finishes all his remarks with that I will now turn the call over to our CEO. Mr. Shao Lee. Please go ahead.
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Xiang Li: Hello everyone, I am Li Jiong. Welcome to today's night phone conference. First, let's review the first-degree performance of Li Auto. In the first quarter, we delivered 80,400 new cars, which is a 52.9% increase. At the same time, according to the China Air Corporation's statistics, China has seen an increase of 24.8% in the number of large-caliber aircraft with a capacity of more than 200,000.
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Xiang Li: The number of ideal aircraft is higher than that of large-caliber aircraft and is leading the mid-to-high-end new car brands. With the increase in turnover, the total revenue in the first quarter of 2024 reached RMB25.6 billion, an increase of 36.4% compared to the previous year. [inaudible] The exchange rate and the adjustment of the price system Our interest rate is still at a healthy 20.6% In the long run, Li Auto's nearly 100 billion RMB in cash reserves and a healthy asset-asset ratio will continue to support us to focus on the value of users and firmly invest in R&D.
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Xiang Li: Through product and service, we will continue to bring an above-the-expected user experience to our family members. But I have to admit that this year, we are facing a variety of challenges in terms of internal management and external environment changes.
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Xiang Li: The performance of the first quarter is different from what we expected at the beginning of the year. In the face of problems, we will make adjustments. We actively and quickly make adjustments, launch and land organization upgrades and process optimizations, improve internal efficiency and quality of decisions, and seek to better focus on the creation and delivery of user value. On March 1st, we released our first high-pressure charging car model. [inaudible] Based on the 800 VGA platform, the Ideal Mega with Kirin 5C battery is one of the fastest-charging mass-produced motorbikes at present. For a period of 5 days, the average charging time of the ideal MAGA users in the ideal control station is only 12.8 minutes.
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Xiang Li: This is a great way to relieve the inexhaustible anxiety of pure e-commerce users. On April 18th, the 5-seater luxury SUV, the all-new LXR6, was officially launched, to meet the needs of more young families under the age of 30. ??R6??????????????, [inaudible] In terms of safety, the Nissan R6's body-to-body safety is the highest standard in the industry and the standard-pairing continuously evolved full-screen AEB to provide safety guarantee for the whole family, Following the official launch of the Ideal 8 and Ideal 6 and the upgrade of the 2020 model Ideal R7, R8, and R9 Ideal Motors has provided a range of products with a price range of 200,000 to 600,000 yuan for Guangna's family, At the end of the month, we also launched a new pricing system based on the market competition pattern change and quickly meet the needs of users.
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Xiang Li: Our adjustments have also received enthusiastic responses from users. [inaudible] During the May 1st period, the increase in weekly orders created a new high in history. Among them, on April 18th and May 5th, after the release of Ideal 26, 410,000 orders were received in the first half of the first sale.
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Xiang Li: We are doing our best to ensure the fast birth of the ideal 26 supply and manufacturing platform. With the launch of the car model, the car platform is also continuing to evolve. In mid-May, we launched AD Pro 3.0 and upgraded AD Pro to the B1V visual large model architecture to achieve a high-speed AOA of 1,000 km per hour. (Inaudible) It is expected to be upgraded to all ADMACS models by OTA in the third quarter of this year.
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Xiang Li: As of May 19, Ideal Motors has opened 404 Ideal Superchargers, and 1,770 Chinese players. During May 1st, Ideal Super Charge Station provided more than 540,000 free charging services to all Ideal Automobile owners and 960,000 charging services to all New Generation owners across the country We will continue to strengthen and accelerate the investment of the Super Charge network Our goal is to open more than 10,000 Super Charge stations at high speeds and cities across the country by the end of this year and continue to improve the experience of the Ideal Pure Charge users, In terms of sales network, Ideal Car has covered all the first-tier, new first-tier and second-tier cities in China and 89% of the third-tier cities.
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Xiang Li: This year, we will continue to move into more cities to promote the continuous improvement of the new energy car penetration rate. In addition, our service network continues to expand to provide excellent services to ideal users. As of April 30, 2024, Ideal Motor Vehicles operates 481 retail centers in 144 cities across the country and 3.6 billion after-sales repair centers and boardroom services centers in 210 cities.
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Operator: In the second quarter of this year, with the hot sales of the products and the recovery of the orders, we expect that the ideal sales volume will reach 50,000 to 110,000 units. I believe that with the optimization of the business rhythm and the upgrade of the governance organization, the ideal car will further improve the efficiency of the business, enhance the value of the customer, and achieve healthy performance growth. Translating for Mr. Li, first we'll begin with a review of Li Auto's first quarter performance. In the first quarter, we delivered over 80,400 vehicles, up 52.9% year-over-year.
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Operator: According to China Automotive Technology and Research Center, the NUV market priced over RMB200,000 grew by 24.8% year-over-year during the first quarter, while our growth rate far exceeds that of the market, making us the leader among all premium NUV brands. Driven by vehicle delivery growth, our total revenue for the first quarter reached R&D $25.6 billion, a year-on-year increase of 36.4%. Our gross margin for the first quarter remained healthy at 20.6% despite the launch of Li Mega, the changeover of the L-Series, and the following price adjustments.
Speaker Change: Now translating for Mr. Li.
Speaker Change: First of all we'll begin with a review of <unk> first quarter performance.
Speaker Change: In the first quarter, we delivered over 80400 vehicles.
Speaker Change: 52, 9% year over year, According to the China automotive technology and research center, the Nev market priced over RMB 200000 grew by 24, 8% year over year during the first quarter, while our great growth rate far exceeds that of the market, making us the leader among all premium brands.
Speaker Change: Driven by the vehicle delivery growth our total revenue for the first quarter reached RMB 25, 6 billion a year on year increase of 36, 4% our gross margin for the first quarter remained healthy at 26%. Despite the launch of Lee Mega the changeover of the LCR.
Speaker Change: <unk> in the following price adjustments.
Operator: In the long run, our robust balance sheet with cash reserves of nearly RMB 100 billion will continue to support us to focus on user value creation and firmly invest in R&D as we continue to offer products and services for families that exceed their expectations. Nevertheless, we have admittedly encountered multiple challenges since the start of the year from both internal operations and changes in the external environment.
Speaker Change: In the long run a robust balance sheet with cash reserves of over of nearly RMB 100 billion. We will continue to support us to focus on user value creation and firmly invest in R&D as we continue to offer products and services for families that exceed their expectations.
Speaker Change: Nevertheless, we have admittedly encountered multiple challenges since the start of the year from both internal operations and changes in the external environment. Our performance. This quarter fell short of our expectations made at the beginning of this year.
Operator: Our performance this quarter fell short of our expectations made at the beginning of this year. In response, we immediately took action and swiftly implemented adjustments across our business, including an organizational restructure and workflow optimization. We're confident that these initiatives will enhance our internal operating efficiency and improve the quality of our decision making going forward, allowing us to focus more on creating and delivering user value. Turn it over to product.
Speaker Change: In response, we immediately took action and swiftly implemented adjustments across our business, including an organizational restructure and workflow optimization. We are confident that these initiatives will enhance our internal operating efficiency and improve the quality of our decision making going forward, allowing.
Speaker Change: US to focus more on creating and delivering user value.
Speaker Change: Turn it over to products.
Xiang Li: We will release Li Mega on March 1st, our first HPC BEV model and a high-tech flagship MPV for large families. Built on our latest 800-volt battery electric platform and equipped with QINYIN 5C battery, Li Mega is one of the fastest-charging mass-produced passenger vehicles in production today. During China's Labor Day holiday, the average charging time for Li Mega users at our supercharging stations was only 12.8 minutes, significantly alleviating energy anxiety. On April 18th, we launched the L6, a 5C premium family SUV that offers young families who are seeking family vehicles priced below RMB 300,000.
Speaker Change: We released the Mega.
Speaker Change: First our first HBC Bev model and high Tech flagship NPV for large families built.
Speaker Change: Built on our latest 800 volt battery electric platform and equipped with Keane and <unk> battery lead Mega as one of the fastest charging mass produced vehicles passenger vehicles in production today.
Speaker Change: Driven kind of labor day holiday the average charging time for Lee Mega users at our Supercharging stations was only $12 eight minutes significantly alleviating energy with energy.
Speaker Change: Guidance.
Speaker Change: On April 18th we launched <unk>, a <unk> <unk> premium family SUV that offers young families who are seeking family vehicles priced below RMB 300000 liter.
Xiang Li: Li L6 offers a spacious interior and superior configuration and can support a CLTC range of 1,390 km. In terms of safety, the LIAO6 vehicle body is designed to meet the most stringent safety testing standards in the industry.
Speaker Change: <unk> offers a spacious interior and secured configurations and can support a <unk> range of 13, <unk> hundred 90 kilometers.
Speaker Change: In terms of safety, we are fixed vehicle body is designed to meet the most stringent safety testing standards in the industry combined with ever improving full scenario AEP systems.
Xiang Li: Combined with this ever-improving full scenario AEB system, that comes standard on the vehicle, Li L6, offers robust safety for families on the road. With the official launch of Li Mega and Li L6, as well as the 2024 model year Li L7, L8, and L9, we now offer a product portfolio that caters to a wide range of family users at price points ranging from RMB 200,000 to RMB 600,000. They were facing challenges in the competitive market landscape in late April.
Speaker Change: That comes with the fans are come standard on the vehicle. They are fixed offers robust 50 for families on the road.
With the official launch of the Mega <unk> fix as long as the 2020 for model year <unk> seven eight and nine we now offer a product portfolio that caters to a wide range of family users at price points, ranging from RMB 200000 to RMB 600 pounds.
Speaker Change: Challenges in the competitive market landscape in late April.
Xiang Li: We swiftly responded to evolving user needs with the introduction of a new pricing scheme that received very positive feedback, resulting in a substantial increase in store visits. During the Labor Day holiday, weekly order growth hit an all-time high.
Speaker Change: We swiftly responded to evolve evolving user needs with the introduction of a new pricing scheme that received very positive feedback resulted in a substantial increase in store visits driven.
Speaker Change: Driven by Labor day Holiday weekly order growth hits and hit an all time high in particular retail fixed received over 41000 orders within initial launch sales period from April 18 to mainframe.
Xiang Li: In particular, VL6 received over 41,000 orders within its initial launch sales period from April 18 to May 5. We're sparing no effort to ensure a robust supply and production ramp-up for Lee L6 to drive a rapid increase in delivery, along with the release of our new models. We continue to make improvements in our autonomous driving platform. In mid-May, we began releasing LiAD Pro 3.0 to all of our users, with an upgrade to a large model-based BV architecture with improved functionalities, including highway NOA with driver takeover mileage of over 1,000 kilometers.
Speaker Change: We're sparing no efforts to ensure a robust supply and production ramp up for <unk> to drive a rapid increase in deliveries.
Speaker Change: Along with the release of our new models.
Speaker Change: We're continuing to make improvements in our economy driving platform.
Speaker Change: In mid May we began releasing.
Speaker Change: Pro three point out to all of our users with an upgrade to a large volatile base.
Speaker Change: Architect BV architect architecture, with improved functionality, including highway it anyway with driver takeover mileage of over 1000 kilometers city LPC capable of identifying carefully life in real time to autonomy feedstock.
Xiang Li: CDLCC is capable of identifying traffic lights in real time to autonomously stop and go at intersections, and automated parking that can manage complex parking spaces. We launched public beta testing for v80Max 3.0 in May, where approximately 1,000 users tested our latest CDNLA feature, which does not require high-definition maps and covers all roads nationwide.
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Speaker Change: At intersections and.
Speaker Change: An automated parking that can manage complex parking spaces.
Speaker Change: We launched public beta testing for <unk> three in May we're approximately 1000 users tested our latest city MLA feature.
Speaker Change: Which does not require high definition maps and covers all rose nationwide.
Xiang Li: We plan to deploy the city NOA and all ADMAC vehicles through OTA in the third quarter of this year after we complete the initial nationwide testing. Looking at our charging network, we currently have 404 super charging stations in operation with... 1,770 charging stalls. During the May Day holiday, we provided over 54,000 complimentary charging sessions and waived charging fees for users across our network.
Speaker Change: We plan to deploy the city annually in all eight macs vehicles throughout the third quarter of this year. After we complete the initial nationwide testing.
Speaker Change: Looking at our charging network.
Speaker Change: We currently have 404 super charging stations in operation with.
Speaker Change: 1770 charging staff.
Speaker Change: During the May day holiday, we provided over 54000 complementary recharging sections and waived charging fees for users across our models.
Xiang Li: At the same time, we provided over 96,000 charging sessions to NEV users across the country across different brands. We will continue to expand and accelerate investments in our supercharging network and aim to have over 10,000 charging stations and charging stalls in operation on highways and cities in China by the end of this year. Continually improving the ultra-fast charging experience for all of our customers. With respect to our sales network, we have established a presence across all first-tier, new first-tier, and second-tier cities, as well as 89% of third-tier cities nationwide.
Speaker Change: At the same time, we provided over 96000 charging sessions to any of the users across the countries across different brands. We will continue to expand and accelerate investment investments and are Supercharging network and aim to have over 10000 charging stations charging salt.
Speaker Change: In operation on highways and city in China by the end of this year continually improving the ultra fast charging experience for all of our users.
Speaker Change: With respect to our sales network, we have established a presence across all first year, new first year and second tier cities as well as 89% of third tier cities nationwide.
Xiang Li: This year, we will steadily expand our reach into additional cities to boost the penetration rate of any need in China. Moreover, our service network is also expanding very rapidly, ensuring high-quality services to our users. As of April 30, 2024, we will have 481 retail stores covering 144 cities, as well as 361 service centers and Li Auto authorized body shops operating in 210 cities across the country.
Speaker Change: This year, we will steadily expand our reach into additional cities to boost the penetration rate of any of these in China. Moreover.
Moreover, our service network is.
Speaker Change: Also expanding very rapidly ensuring.
Speaker Change: High quality services to our users.
Speaker Change: As of April 30.
Speaker Change: 2024, we have 481 retail stores covering 144 cities as well as 361 service centers and the auto authorized body shops operating in 210 cities across the country.
Speaker Change: Looking ahead to the second quarter, we expect vehicle deliveries to be between 105000 and 110000 driven.
Xiang Li: Looking ahead to the second quarter, we expect vehicle deliveries to be between $105,000 and $110,000, driven by robust market demand and our new products and recovery in order. By fine-tuning the pace of our operations and upgrading our matrix organization, I'm confident that we will further enhance operating efficiency, increase user value, and pursue healthy growth. Next, I will turn it over to our CFO, Johnny. Thank you.
Speaker Change: Driven by robust market demand and our new products and the recovery in orders.
Speaker Change: By fine tuning the pace of our operations and upgrading our matrix organization I am confident that we will further enhance operating efficiency increase user value and pursue healthy growth.
Speaker Change: Yeah.
Speaker Change: Next I will turn it over to our CFO jonny.
Tie Li: I will now walk you through some of our, due to time constraints, I will now address financial highlights here and encourage you to refer to our earnings price release for further details. Total revenues in the first quarter were RMB25.6 billion. All 3.6 billion U.S. dollars are 36.4% year-over-year and down 38.6% quarter-over-quarter. This includes RMB 24.3 billion or 3.4 billion US dollars from vehicle sales, up 32.3% year-over-year and down 39.9% cultural.
Jonny: Thank you Sir Hello, everyone I will now walk you through some of our.
Jonny: 2000, and plentiful first quarter financials.
Speaker Change: Due to time constraints.
Speaker Change: No.
Speaker Change: But financial highlights here and encourage you to refer to our earnings press release for further details.
Speaker Change: Total revenues in the first quarter were RMB $25 6 billion or three.
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Speaker Change: 30.
Speaker Change: 4% year over year.
Speaker Change: 38.
Speaker Change: 6% quarter over quarter.
Speaker Change: These include RMB plentiful points, we are bidding on.
Speaker Change: <unk> been in U S dollars.
Speaker Change: From vehicle sales.
Speaker Change: A 32, 3% year over year.
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Speaker Change: 39, 9% cultural culture.
Tie Li: The year-over-year increase was mainly attributable to higher vehicle delivery, partially offset by the lower average selling price due to the different product mix and pricing strategy change between the two countries. The sequential decrease was mainly due to decrease, [inaudible] which were affected by seasonal factors related to Chinese New Year holidays and lower than expected order intake in March, cost of sales in the first quarter, all R&B.
Speaker Change: Full year increase was mainly attributable to higher vehicle deliveries.
Speaker Change: Totally off site by the lower average selling price of.
Speaker Change: Due to the different product mix and the pricing strategy change between the two quarters.
Speaker Change: The sequential decrease was mainly due to decreased vehicle.
Speaker Change: Musical deliveries reached.
Which were affected by a seasonal factor related to Chinese new year holiday.
Speaker Change: Lower than expected order intake in March.
Speaker Change: Cost of sales in the first quarter.
Speaker Change: While the RMB.
Tie Li: 200.3 billion, or 2.8 billion U.S. dollars, are 36.1% year-over-year and down 36.3% quarter-over-quarter. Gross profit in the first quarter was RMB 5.3 billion all. $731.9 million, are 38% year-over-year and down. 46% cause-over-cost. Vehicle marking in the first quarter was 19.3% 3% worth is 19.8% of the same period last year and 22.7% in the prior quarter. The sequential decrease was mainly due to lower average selling price as a result of pricing strategy changes in the first quarter and throughout adjustments of warranty reserve in the prior quarter based on updated estimates of cost.
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Speaker Change: 36, 1% year over year.
Speaker Change: 36, 3% cultural we'll call it.
Speaker Change: Gross profit in the first quarter was RMB five 3 billion.
Speaker Change: Paul.
Speaker Change: 731, 9 million U S dollar.
Speaker Change: 38% year over year and down.
Speaker Change: 46% cultural Wilcox.
Speaker Change: Vehicle market in the first quarter of malls.
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Speaker Change: 3%.
Speaker Change: 19, 8%.
Speaker Change: In the same period last year.
Speaker Change: Plenty of tool.
Speaker Change: 7% in the prior quarter.
Speaker Change: Vehicle margin remain relatively stable year over year.
Speaker Change: The sequential decrease was mainly due to lower average selling price as a result of.
Speaker Change: Pricing strategy changes.
Speaker Change: In the first quarter.
Speaker Change: The adjustment of warranty reserve in the prior quarter based on updated estimates of costs.
Tie Li: Of course, our future plans. Gross margin in the first quarter was 20.6% versus 20.3% and 4.4% in the same period last year and 23.5% in the prior quarter. Operating expenses in the first quarter were RMB 5.9 billion or 812.9 million US dollars, 71.4% year-over-year and down 13.1% from a cultural cost.
Speaker Change: Cost of future claims.
Speaker Change: Gross margin in the first quarter was 26% with a plenty.
4% in the same period last year and 23 five.
Speaker Change: 5% in the prior quarter.
Speaker Change: Operating expenses in the first quarter were RMB five nine beating all 800.
Speaker Change: 12 point.
Speaker Change: $9 million.
Speaker Change: 71.
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Tie Li: R&D expenses in the first quarter for RMB 3 billion. That's all 422.3 million U.S. dollars. 4.6% year-over-year and down 12.7% quarter-over-quarter. The year-over-year increase was primarily due to increased employee compensation as a result of growth in the number of staff as well as increased spending to support the expanding product portfolio and technology. The sequential decrease was mainly in line with the Timing and Progress of the New Vehicle Program. G&A expenses in the first quarter were RMB 3 billion.
R&D expenses in the first quarter.
Chris: RMB 3 billion.
Chris: 422.
Point 3 million U S dollar.
Chris: 60.
Chris: One 6% year over year, and down 12, 7% cultural culture.
Chris: The year over year increase was primarily due to increased employee compensation as a result of growth the number of staff as well as increased.
Chris: To support the expanding.
Chris: Product portfolio technologies.
Chris: The sequential decrease was mainly in line with.
Chris: Timing on progress of new vehicle programs.
Chris: Yes.
Chris: SG&A expenses in the first quarter were RMB three beating all.
Tie Li: Oh, 412.4 million U.S. dollars, 81%, year over year and down 8.9% culture over culture. The year over year increase was primarily due to increased employee compensation as a result of the growth in the number of staff, as well as increased rental and other expenses associated with the expansion of the sales and servicing network. The sequential decrease was mainly due to lower vehicle delivery; lost from operation in the first quarter was RMB 584.9 million, 81 million U.S. dollars.
Speaker Change: 112 for meeting Us dollar AC.
Speaker Change: 81%.
Speaker Change: Over a year and down eight 9% cultural will culture.
The year over year increase was primarily due to increased employee compensation as a result of the growth in number of staff.
Speaker Change: As well as increased rental and other expenses associated associated.
Speaker Change: With the expansion of sales and servicing network.
Speaker Change: The sequential decrease was mainly due to lower vehicle deliveries.
Speaker Change: Loss from operations in the first quarter.
While it's RMB.
Speaker Change: 584.
Speaker Change: <unk> 9 million or <unk>.
Speaker Change: 1 million U S dollar.
Tie Li: What was the income from operations of RMB? 405.2 million in the same period last year and RMB 3 billion in the prior quarter. Operating margin in the first quarter was negative 2.3% versus positive 2.2% in the same period last year and positive 7.3% in the prior quarter. Net income in the first quarter was RMB1.5 billion.
Speaker Change: What is the income from operations of RMB.
Speaker Change: <unk> was <unk> 2 million in the same period last year, and RMB 3 billion in the prior quarter.
Operating margin in the first quarter was negative <unk>, 3%.
Speaker Change: This positive two 2% same period last year.
Speaker Change: On the positive.
Speaker Change: Seven funds to represent in the prior quarter.
Speaker Change: Net income in the first quarter was RMB.
Tie Li: 591.1 million or 81.9 million US dollars. [inaudible] 36.7% year-over-year. 89.7% cultural
Speaker Change: 591, 9%.
Speaker Change: Maybe one 1 million or $81 9 million U S dollar.
Speaker Change: Tom.
Speaker Change: 36, 7% year over year.
Speaker Change: <unk>.
Speaker Change: 89, 7% cultural recover.
Tie Li: Diluted net earnings per ADS, attributable to ordinary shareholders, was RMB 0.56 or, Eighth sense in the first quarter, versus RMB 0.89 in the same period last year and RMB 5.99. 3-2 in the prior quarter, and turning to our balance sheet and cash flow. Our preparation position remains strong; let's do that.
Diluted earnings per ads attributable.
Speaker Change: Attributable to ordinary share.
Speaker Change: RMB Zero Trust.
Speaker Change: If all states all.
Speaker Change: <unk>.
Speaker Change: <unk> in the first quarter.
Speaker Change: Worth it RMB zero eight.
Speaker Change: <unk> nine in the same period last year and RMB five point.
Speaker Change: Three two in the prior quarter.
Speaker Change: Turning to our balance sheet and cash flow.
Speaker Change: Our cash position remains strong.
Speaker Change: Stood at.
Operator: R&B... 98.9 billion, or 13.5 billion, seven billion US dollars as of March 31st. 2024. Net cash used in operating activities in the first quarter was RMB 3.3 billion, or 462.2% 9 million U.S. dollars, versus net cash provided by operating activities of RMB 7.8 billion in the same period last year and RMB 17.3 billion in the prior quarter. Great cash flow was negative RMB 5.1 billion, and on that too. 700.1 million U.S. dollars in the first quarter was a positive RMB 6.7 billion in the same period last year and a positive RMB 14.6 billion in the protocol.
Speaker Change: RMB.
Speaker Change: <unk> 8.9 billion all 13 pardon.
Speaker Change: $7 billion.
Speaker Change: Sure.
Speaker Change: Okay for us.
Speaker Change: Proceeds plentiful.
Speaker Change: Net cash used in operating activities in the first quarter gross RMB three 3 billion.
Speaker Change: 452.
Speaker Change: 9 million U S dollar.
Speaker Change: Net cash provided by operating activities.
Speaker Change: Of RMB seven eight beauty in the same period last year.
Speaker Change: RMB 17 3 billion in the prior quarter.
Speaker Change: Free cash flow was negative RMB five 1 billion.
Speaker Change: Our net too.
Speaker Change: $701 million in the first quarter.
Speaker Change: Worth its positive RMB six <unk>.
Speaker Change: <unk> 7 billion in the same period last year on the positive RMB.
Speaker Change: 14, 6 billion in the prior quarter.
Operator: And now for our business outlook. For the second quarter of 2024, the company packed the delivery, it could be between $105,000 and $100,000. 10,000 vehicles, presenting a year-over-year increase of 21.3 to 27.1%. The company also expects second quarter total revenues to be between RMB 29.9 billion and RMB 31.4 billion, or 4.1 billion US dollars and 4.3 billion US dollars, representing a year-over-year increase of 4.2% to 9.4%. This business outlook reflects the company's current and preliminary view of its business situation and market conditions, which are subject to change.
Speaker Change: And now for our business outlook.
Speaker Change: The second quarter of 2000 plentiful the company expects the delivery <unk> Wahoo.
Speaker Change: <unk> five target and 100.
Speaker Change: 10000 vehicles.
Speaker Change: Presenting a year over year increase of 20 132.
Speaker Change: 27, 1%.
Speaker Change: The company also expire.
Second quarters total revenues to be between RMB, $29 9 billion and RMB.
Speaker Change: RMB 31.
Speaker Change: For period.
Paul.
Speaker Change: $4 1 billion U S dollar and full point due to U S dollar.
Speaker Change: We have been representing a year over year increase.
Speaker Change: Four 2% to 9.4.
Perfect.
Speaker Change: This business outlook reflects the company's current.
Speaker Change: Preliminary review is basically Asia.
Speaker Change: And the market conditions, which is subject to change.
Operator: That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.
Speaker Change: That concludes our prepared remarks, I will now turn the call over.
Speaker Change: To the operator to start our Q&A session.
Speaker Change: Thank you.
Speaker Change: Thank you can I just ask a question. Please press star one on your telephone plan aimed to bianna.
Speaker Change: Thank you Mr. Cancel your request please press star two.
Operator: For the benefit of all participants on today's call, please limit yourself to two questions. And if you have an additional question, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with an English translation. Your first question comes from Bin Wang of Deutsche Bank. The first one is about sales, and the second one is about the profit margin. In terms of sales, we can see that the market value of Archibald is between 10.5 and 110,000 yuan.
Speaker Change: Benefit of all participants on today's call. Please limit yourself to two questions and if you have an additional question you can reenter the queue.
Speaker Change: Mandarin Speaker, please ask your questions in Chinese.
Speaker Change: With English translation.
Operator: It seems that the bank will exceed 360,000 yuan in the second half of the year, which means that 60,000 units will be sold every month. At present, we see that the amount of Mega is not high, and M9 may be a little late. In other words, in the second half of the year, we may reach 60,000 units every month. May I ask how we can achieve the true sales of 60,000 units?
Kobe Wang: First question comes from bin Wang with Deutsche Bank.
Operator: If there is pressure at that time, will we continue to lower the price to achieve the goal, or will we care about the goal to focus on profits? Let me translate the first question. The first question is about volume.
Bin Wang: Okay.
Hello, gentlemen.
Speaker Change: So I don't want to know what kind of agile changes staying with our CEVA.
Speaker Change: I'm, sorry, if I didn't talk about.
Speaker Change: Matt do you want to.
Speaker Change: We feel we're kind of on the met gala.
Speaker Change: Mitchell.
Speaker Change: So much of the attention that one month at Cowen and company.
Pat: Pat can you, let me tell Mr. Lucas Newmont that attention.
Speaker Change: No.
Speaker Change #101: We actually had a follow up.
John Listen: Sure John I assume we'll go sure.
John Listen: So.
John Listen: So it will be less.
John Listen: The first question is about.
John Listen: Volume.
Operator: Basically, your second quarter will be 105,000 units to 110,000 units, which means in the second half, you need to sell 360,000 units, which means the monthly volume will be close to 60,000 units. Because the Mega volume is quite small, and M9 will be late, so just the EIEV, the monthly volume will go to 60,000 units, which looks challenging. So if you have some pressure to achieve this number, would you further revise the pricing to fight for volume, or actually do you just want to compromise on profit and give up on the volume target? This is the first question. The second question is to think about the interest rate. We predict that the interest rate will be 20% next year.
John Listen: Give us a complete award.
John Listen: Gen five units.
John Listen: Although units, which means the second half you'll be for sale 316000 units, which means most of the volume.
John Listen: 60.
John Listen: Units, because mega boating was quite small.
John Listen: So just the EIA monthly volume.
Speaker Change #102: 60000 students demo reduce churn and Jim So if you have.
Speaker Change #102: To achieve this.
Speaker Change #103: Would you.
Speaker Change #103: Based on the.
Speaker Change #103: Clinical volume actually you would just onto comparable.
Speaker Change #103: Gave us a little bolt on tuck ins.
Speaker Change #104: Steve will then to.
Mike: Hello, Mike give us somewhat of a kind of a multi you know a month.
Speaker Change #106: Containment opinion, Stefan Josh ammonia <unk> and.
Speaker Change #107: And we talked about the most I wanted to ask.
Liangjun Zou: If we maintain this interest rate, I would like to ask, after the price goes down, what factors will cause us to lose 20% of the interest rate in the second half of the year? Is it because the price will go down to 60,000 units, or is it because of other factors? My second question is about the growth margin. Previously, you said that the full-year growth margin would be 20%. If you want to maintain a 20% growth margin after your pricing cut, what's the key driver for the margin? Is it because the volume will increase when the monthly volume goes to 60,000 units, or other drivers for maintaining a 20% growth margin? Thank you. Okay, this is James.
Speaker Change #108: Oh, no I'm not seeing soup since that would mean that by the end of <unk>.
Speaker Change #109: So let me just go down what do you want to add.
Speaker Change #108: Sorry.
Speaker Change #110: How do you see that meaningful.
Speaker Change #110: My second question about gross.
Speaker Change #111: Gross margin previously you kind of had a full year gross margin will be 20%. If you want to maintain a 20% gross margin <unk> I think.
Speaker Change #112: What's the key driver for our margin is it because the bulk.
Speaker Change #111: Chris.
Speaker Change #113: The monthly volume totaled 60, it sounds like you've been kind of.
Speaker Change #114: 20% gross margin. Thank you.
Liangjun Zou: I will take the first question. First of all, the L6 series has been widely recognized by users for each product strand and product point. And during the initial sales period from 18th April to May, to 5th May, the accumulated orders of the L6 reached over 41,000 units, which was an excellent sales performance. The order intake of the L6 series has maintained strong growth momentum post the initial sales period. Additionally, after we implemented the new pricing strategy for Li Auto L7, L8, and L9, their order flow has also shown ongoing improvement. In summary, our sales momentum has gradually improved. And we are optimistic about the continued ramp-up of the monthly sales going forward. And I will hand it over.
James: Okay. This is James I will take your first question.
Speaker Change #116: First of all the six series has been widely recognized by users.
Speaker Change #116: For each product and price point.
Speaker Change #116: And doing the initial sales periods from <unk> April to May.
Speaker Change #116: Two fifths Nate the accumulated orders of <unk> reached over 41 sold in the unit reachable.
Speaker Change #116: Excellent sales performers.
Speaker Change #116: Order intake of <unk> Sirius has maintained strong growth momentum posted the initial sales period.
Additionally, after we implemented a new pricing strategy for the hotel seven eight and nine the order flow has also showed ongoing improvements.
Speaker Change #116: In summary, our sales momentum has gradually improved.
Speaker Change #116: And we are optimistic.
Speaker Change #116: About the continue the ramp up of the monthly sales going forward.
Speaker Change #117: And I will handover.
Jiong Shao: Thank you to our staff for the second question. Hello, my name is Jiong Shao. I think for us, the most important part after Q1 was... [inaudible] I think the most important part at the current stage is still a recovery. I think it's also everyone's... [inaudible] And as we all know, the auto industry has a significant economy of scale, as well as Chuck Stills, can come back and view the blog. It will be nice to come up with your names and also with the L6.
Speaker Change #118: Two our sales for the second question.
Speaker Change #118: Hello.
Speaker Change #118: John.
John: I think.
Speaker Change #119: To us.
Speaker Change #119: The most important task after Q1.
Speaker Change #119: Our challenge us.
Speaker Change #120: <unk> mentioned, the especially after.
Speaker Change #120: March for us.
Speaker Change #120: Okay.
Speaker Change #120: Most important.
Speaker Change #120: The current state of chance to a recovery.
Speaker Change #120: I think that also everyone.
Speaker Change #121: Permits in Sir.
Speaker Change #121: The company.
Speaker Change #121: Brian.
Speaker Change #121: As we all know the auto industry.
Speaker Change #121: Significant economies of scale.
Speaker Change #121: <unk>.
Bill: Thanks Bill.
Speaker Change #123: Can come back.
Speaker Change #123: Bob.
Speaker Change #123: Good.
Speaker Change #123: The gross margin.
Speaker Change #123: Sure.
Speaker Change #123: It will be.
Speaker Change #123: Some opportunities.
Speaker Change #123: So on.
Speaker Change #123: And also with the outfits.
Speaker Change #123: Additionally.
Jiong Shao: [inaudible] Outside of sales growth, product mix, and optimization will be another factor which can impact our costs. And as Alisha mentioned, we implemented a lot of these. Action!
Speaker Change #123: Our outside sales growth product mix optimization.
Speaker Change #123: We will be now.
Speaker Change #123: Obviously, Turkish Ken impact across the market.
Speaker Change #124: As Bobby Thomas B.
Speaker Change #124: Be implementing the rule.
Speaker Change #124: Excellent.
Operator: to control the organization and the credentials will help the organization. And back to... to remind you, I think we faced those challenges since March. So the second quarter will, for the most part, come. Your next question comes from Tim Hsiao with Morgan Stanley. Hello, Kuanlin Chen.
Speaker Change #124: To control.
Speaker Change #124: All the amenities and accretive.
Speaker Change #124: Okay.
Speaker Change #124: No.
Speaker Change #124: The market come back.
Speaker Change #125: But uh huh.
Speaker Change #125: To remind.
Speaker Change #125: Remind you.
Speaker Change #126: I think we face those challenges.
Speaker Change #126: March.
Speaker Change #126: So the second quarter of Bill.
Speaker Change #126: Bob.
Speaker Change #126: The most difficult.
Speaker Change #126: For the company this year.
Speaker Change #127: Thank you.
Speaker Change #128: Your next question comes from Ken Zerbe with Morgan Stanley.
Speaker Change #128: Okay.
Speaker Change #128: Cleansing.
Speaker Change #129: Consistent with Hela without Lindsey <unk>.
Operator: Thank you for answering my questions. I have two. First, I'd like to follow up on what Mr. Xiang just said. This year's market competition is negative. We can see the price of oil products and the price of new products. [inaudible] In the second half of the year, is there any room for improvement in our marketing strategy? Is there any room for improvement in terms of pricing and configuration within a reasonable range?
Speaker Change #129: <unk>.
Speaker Change #130: Cause I sounds really itchy dollars, Virginia and due to this is how good your children. So help me kind of yourself, Tony Kelley childhood severe symptoms.
Speaker Change #129: Quint.
Speaker Change #129: <unk> essentially is in the chicken and Turkey.
Speaker Change #129: Working capital accounts in July.
Speaker Change #129: Can you kind of itchy dogs, who is shopping in the insurance.
Speaker Change #129: In Charlottesville, Ghd, and <unk> pool to tissue culture.
Anthony: So Anthony good question, <unk> and Johnson Sandy Okay.
Operator: In addition to L6, for M789 and the M series in the second half of the year, is it possible to use other ways, whether it is distribution or reduction, to ensure that this box can go up one more level?
Speaker Change #132: <unk> could you shall Daniela and <expletive> in sort of a yieldco and there were total of Chita.
Speaker Change #133: Doesn't take which sounds that sounds to say goodbye to you sounded really saying something pages.
Xiang Li: So I just want to follow up regarding the sales problem, because as management just mentioned, the competition in China in the market has been getting worse year to day. Although Li Auto just launched in 2024, Facebook, Etsy, and the house, and also had a reasonable price adjustment. What would be the company's strategy to further boost the volume from here if sales stay suppressed? Would the company ever consider upgrading the spec or further cutting the prices to provide the actual impact on the sales volume into the second half, not just to L6 but also to L789 and the battery EV, pure EV into the second half? So that's my first question. Hi, I'm Li Xiang.
Speaker Change #134: So just want to follow up regarding the sales part because as management just mentioned the competition in China EV market has been getting worse here today, although the auto just launched 24 phase <unk> seem to L. Shakes and also had the reasonable price adjustment.
Speaker Change #135: What's the company's strategy to further push the ball going Crazy here, you say south stay suppressed with the company ever consider to upgrade this backward freighters to cut prices.
Two to provide day actually and Pat as to the sales falling into second half not just to <unk>, but also to the analysts have been 89.
Speaker Change #136: Bad battery EV pure EV into second half. So that's my first question.
Xiang Li: I'm here to answer your question. In terms of price, the product price after the adjustment in April is very high, and consumers agree with it. At present, L789's new orders are increasing every week. Therefore, the company has no plan to lower the price.
Speaker Change #138: Our design win.
Speaker Change #137: Sure Jack.
Speaker Change #139: So in total for the company in India.
Speaker Change #139: Obviously, if you look for that.
Speaker Change #139: Our <unk>, Manitoba that should even go so in constant motion.
Speaker Change #140: So I have a D var.
Xiang Li: On the other hand, about, we think that for a healthy company, sales and profits are the two most important business indicators. Li Xiang Automobile has been demanding this for a long time. First, in terms of the pricing strategy, in fact, after the price adjustment in April, we received consistent feedback that the current pricing is very competitive in the market, and it's also been very well received by our customers, as shown in continued order intake growth since April.
Speaker Change #141: But anyway, if I may.
Speaker Change #142: So if you can comment here Shawn ophthalmology should have signaled out of the Haynesville, yes. Each other is absolutely Joe Munda Sidoti.
Speaker Change #142: <unk> traditionally John the ASO.
Speaker Change #142: Yes on the year.
Speaker Change #142: First in terms of the pricing strategy in fact after the price adjustment in April.
Speaker Change #142: <unk> consistent feedback that the current pricing is very competitive in the market and it's also been very well received by our customers.
Speaker Change #142: As shown in continuing order intake growth since April.
Xiang Li: So we don't have any further plans for price cuts. In terms of growth margin, we always believe that for a healthy company, sales and growth margin are the two most important operating metrics, and as a company, as a nine-year-old car company, Li Auto has continually held itself against these two important metrics. Thank you, Mr. Xiang.
Speaker Change #142: So we don't have any further plans for pricing.
Speaker Change #142: In terms of gross margin.
Speaker Change #142: <unk> always believed that as it for.
Speaker Change #142: We're a healthy company sales and gross margin are the two most important operating metrics and as a company has a nine year old car company. We also have contingent.
Speaker Change #142: Aldo ourselves against Q2 important metrics.
Operator: My second question is related to the cost. In addition to the project in the Maldives, based on our new project plan for 2024-2025, I'd like to ask the management team what kind of adjustments will be made to the ideal vehicle, which is a reasonable one, which includes the configuration scale of the staff, the number of network points, and the sales and marketing of the whole year, and what kind of relative adjustments will be made in the future? So my second question is about expenses.
Speaker Change #142: So it was a lower <unk> shale.
Speaker Change #142: So we think that channel Muggy July <unk> emissions.
Operator: So based on Li Auto's updated sales targets for 2024 and 2025, what would be the reasonable sizes of employees, sales networks, sales and lock-in expenses, as well as R&D spend? And where will the benefit of the cost savings be meaningfully reflected in the automaker's finances? That's my second question.
Oh <unk>.
Speaker Change #143: So answering your question.
Speaker Change #143: Sure.
Speaker Change #143: According to our high end unionpay to clean more change.
Speaker Change #144: <unk> is Philadelphia.
Speaker Change #145: Telephone shall I believe something I guess Sanjay intelligence.
Speaker Change #145: On the telco space in <unk>.
Speaker Change #145: Because we shall be attrition. So my second question is about expenses. So based on the auto is the updated sales target for 'twenty 'twenty four and 'twenty five.
Speaker Change #146: What would be the reasonable size employees sounds networks on sales and marketing expenses as well as R&D spending.
Speaker Change #145: And.
Speaker Change #145: When well, let's say that the cost savings be meaningful already reflected in the auto exponential. That's my second question. Thank you.
Okay.
Jiong Shao: I think given the new year, new sales growth target, the company has adjusted very quickly in the last two months to adjust resource allocation to better align with this year's operating objectives. Not bad, but we have focused a lot on Richard in the last four years.
Troy: Hi, Ted this is Troy.
Speaker Change #148: I think given the new year, new sales growth target become the bedrock.
Speaker Change #149: Adjusted very quickly.
Speaker Change #149: Laughter.
Speaker Change #149: And pull model.
Speaker Change #149: <unk>.
Speaker Change #149: To adjust.
Speaker Change #149: Resource allocation.
Speaker Change #149: Carl.
Speaker Change #149: Okay.
Speaker Change #149: Our library of thought ECS.
Speaker Change #149: Operating objectives.
Speaker Change #149: That helps us manage it.
Speaker Change #149: For growth.
Speaker Change #149: <unk>.
Paul: A lot Paul.
Paul: Operating agreement.
Rich: Thank you rich at the last four years operation of the company.
Jiong Shao: [inaudible] We expect this job done will have some initial impact on results, but nothing from Q2, but most of them will impact operating efficiency after the second quarter. So our next question comes from Tina Hou with Goldman Sachs. Thank you for your time.
Rich: Despite this tough and we will have some initial.
Rich: The impact by.
Rich: By results.
Rich: Starting from Q2.
Speaker Change #152: Most of them Bill.
Speaker Change #152: Impact.
Speaker Change #152: Oscar.
Speaker Change #152: Okay.
Speaker Change #152: The second quarter.
Speaker Change #153: So our next question comes from <unk> with Goldman Sachs.
Speaker Change #152: Okay.
Speaker Change #154: Hey, guys.
Dan: Sure Dan.
<unk> key issues don't follow up Tim.
Joseph: Thank you Joseph.
Operator: I have two questions. The first one is to follow up on Tim's question. Before this year, we said we would open 400 stores. But now that we have a new strategy, I would like to ask about the goal of opening new stores. What are your thoughts on the new stores?
Joseph: Now women thing and just actually sure yeah. Okay.
Speaker Change #156: Thank you Joshua.
Speaker Change #157: <unk> not only that <unk>.
Speaker Change #158: Mobile knowledge as of Monday, and again, well kind of shifts.
Speaker Change #159: Shantou deal.
Speaker Change #159: Sure.
Speaker Change #160: Hi, Julien.
Speaker Change #160: Yes.
Speaker Change #160: Yeah.
Speaker Change #160: They put home.
Speaker Change #160: And that's sort of a shipment.
Speaker Change #161: J D. The Lindsay.
Operator: This is the first question. So, my first question is in terms of the new store sales network expansion plan. Previously, we had a target of 400 new stores this year, so just wondering, now with our new strategy, what is the target number there? And also, among the stores, what's your split between the city-centered stores as well as, like, city, maybe suburban stores?
Speaker Change #161: So my first question is in terms of the.
Speaker Change #162: New store sales network expansion plan. So previously you had a target of 400 new stores. Just curious so just wondering now with our new strategy.
Speaker Change #162: Target umbrella there and also among the stars Whats your split between the City Center store as well as like city, maybe suburban stores and in terms of different city tiers, whereas your consideration there. Thank you.
Jim: Hi, Tim This is Jim.
Liangjun Zou: And in terms of different city tiers, what is your consideration there? Hi Tina, this is James. I would like to ask you a question, and... Regarding our source expansion plan, and we will, first of all, plan our sales and service networking at once, according to sales demands. While expanding our sales network in terms of quantity, we will also continuously optimize the quality of each retail store by offering more showroom vehicles and improving the store space, considering we now have more and more different models.
Speaker Change #164: We will take your questions.
Jim: And.
Speaker Change #165: So regarding or stores expansion plan and we will.
Speaker Change #166: First of all we will plan, our sales and service and networking are the ones. According to sales demand, while expanding our sales network in terms of quantity. We are also continuously optimize the quality of each retail store by offering more showroom vehicles.
Speaker Change #166: And the improving the store space.
Speaker Change #166: Considering we now have more and more different models. So this year, we have already opened 43, new retail stores with more than half comes in.
Liangjun Zou: So this year we have already opened 43 new retail stores, with more than half of them having the capacity to display over nine showroom vehicles. In the meantime, we have closed some smaller ones. As of 19th May, the number of total retail stores reached 488, so this is the latest number.
Speaker Change #166: Having the capacity to display over nine showroom vehicles.
In the meantime, we have closed some smaller ones.
Speaker Change #166: So 19th May the number of total retail stores reached 488. So this is the latest number.
Liangjun Zou: And by CT tests, as you just asked, we have achieved 100% coverage of all first-tier cities, new first-tier cities, and second-tier cities, and 89 percent coverage of third-tier cities. We also had 215 showrooms across the country to broaden our coverage of more cities, which helped us to penetrate the TO3 and TO4 CT. Aligned with our new sales target, we are gradually changing our pace of market penetration in order to better suit our current business needs.
Speaker Change #166: And by city tiers.
Speaker Change #166: So you just ask we have achieved 100% coverage.
Speaker Change #166: Of all first tier cities.
Speaker Change #166: <unk> and the second tier cities.
Speaker Change #166: And 89% coverage of certain tier cities.
Speaker Change #166: We also had 215 showrooms.
Speaker Change #166: Across the country to broaden our coverage of more cities, which helped us too.
Speaker Change #166: Penetrated to the tier three and tier four cities.
Speaker Change #166: Aligned with our new sales target, we are gradually changing our pace of market penetration in order to better suite to current business needs.
Liangjun Zou: As to the store types of our new stores, we have gradually increased the proportion of stores in automotive parks over the past year. In the long run, we will continue to increase the percentage of stores in automotive parks as we expand our model portfolio and improve our brand awareness and influence. Thanks for your question.
Speaker Change #166: As to the store types of types for our new stores, we have gradually increased.
A portion of sourcing ultimately cube Pax.
Speaker Change #166: Over the past year in the long run we will continue to increase.
Speaker Change #166: Chip.
Speaker Change #166: Percentage of stores in ultimate team.
Speaker Change #166: Parks as we expand our remodel portfolio and improve our brand awareness and influence.
Speaker Change #167: Thanks for your question.
Operator: Your next question comes from Yingbo Xu and Sai. The first one is about the problem of city-to-city and autonomous driving. At present, the hardware of each manufacturer has the same trend, and the software and algorithm have the same trend. However, the FSD of Tesla may be expected overseas. So the first question is how to look at the difference between the current autonomous driving and the future. The second question is about the product rhythm of pure electricity.
Speaker Change #168: Your next question comes from Ian <unk> with <unk>.
Speaker Change #169: Okay. Thank.
Speaker Change #170: Thank you Juanita.
Speaker Change #171: Mechanical mesh claims with essentially Hutzelman gesture does J Lynch.
Speaker Change #172: Sure Jonathan.
Speaker Change #173: So it sounds like hunker, Janet Yang shoot on nutrition.
Speaker Change #174: So one question by Shaoguan Cha Cha.
Speaker Change #173: Sure.
Speaker Change #173: That's how I come into Florida, FFC Merry go round that out.
Speaker Change #173: So it <unk>, so don't Josh that Jacob.
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Operator: Do we need more time to prepare for the future of pure electricity after MEGA in order to be able to put it on the market at a more solid time, which is the subsequent product planning for pure electricity? So I have two questions. The first one is about the autonomous algorithm and the difference between this algorithm and how we see the future of this autonomous thing. The second question is about the product. How do we plan for the pure EV product later this year and next year? Thank you. Hello, Yingbo.
Speaker Change #176: So I have two questions. The first one is about it.
Speaker Change #176: About autonomous.
Speaker Change #176: And then just.
Speaker Change #176: The difference of this algorithm on how we see the future of this autonomous thing.
Speaker Change #176: The second question is about the product.
Speaker Change #177: We plan for it.
Speaker Change #177: The pure EV product.
Speaker Change #177: Later this year and next year. Thank you.
Speaker Change #177: Okay.
Speaker Change #177: Sure.
Donghui Ma: I'm Donghui Ma. I'm going to answer the first question, about the compatibility of autonomous driving technology. For example, in cities, there are several different solutions in the industry. Heavy-duty, light-duty, and no-duty. Of course, no-duty is the most difficult.
Speaker Change #178: At Eaglebank sheet.
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Speaker Change #179: People rushed out tranche at the highway the hiring of the heart tissue, which is only a single focal literature.
Speaker Change #179: We shouldn't have put all the time.
Speaker Change #179: <unk> EBIT.
Donghui Ma: Because it is not open to high-definition maps, range, and update frequency. As long as there is navigation, this function can work.
Speaker Change #179: Sure for sure continuity for the half up five <unk>.
Speaker Change #179: Now.
Speaker Change #179: Let's take a moment logically take Angel <unk> shipyard all Hopkins that we saw <unk> 18 magazine on potential with which we should the only.
Donghui Ma: The ideal car is Q3. It will be like an all-wheel-drive AD Max. It will be like an all-wheel-drive AD Max. [inaudible] to train this model to learn the behavior of human driving and replace the traditional programming rules. Tesla also proposed the most extreme way to achieve similar data driving like the high-end model.
Speaker Change #180: Now what will fund Patricia Sheesh, Josh at the International Congress would you don't like.
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Speaker Change #182: The interim quicker dysfunction supplier controller, San Antonio transmission, less sugar or sugar should Honda fit keytruda she can function.
Donghui Ma: It is easy for everyone to reach a consensus on this technical trend. But, in fact, in order to achieve it, a large amount of data and training computing power are needed. This is not what all car companies can do with their ability and resources. So I think that all companies should choose their own technical solutions based on their own situations. The difference in technology will ultimately be reflected in product power and user value.
Speaker Change #182: So I think it will kill nutrition, HUD doesn't need that joint venture.
Speaker Change #183: Sure sure sure Todd English would you caution in Trinidad the shiny Chipping push Israel, Turkey, Finland, Let's say no I think thats right Adam.
Speaker Change #182: So were really good ships.
Speaker Change #182: As you all can concession that you what I shall industrial but certainly that's useful.
Speaker Change #184: Let's see for the hydrogen Quincy agenda, Kevin Lee.
Speaker Change #185: We talked a format.
Donghui Ma: First of all, on the question regarding CityNOA, there are three major paths in this area, completely dependent on HDMaps, partially independent, and simply independent of HDMaps. And obviously, the completely independent solution is the most difficult path because it doesn't rely on the coverage and update frequency of HDMaps. As long as there's navigation coverage, CityNOA can work.
Speaker Change #186: First of all on the question regarding city underway there are three major path.
Speaker Change #186: In this area.
Speaker Change #186: Completely dependent on HD map, partially independent assembly independent of any feedback and obviously the completed independent solution is the most difficult path because it doesn't rely on coverage and <unk>.
Speaker Change #186: Update frequency of Hot AC Max as long as Theres navigation coverage city and the way it can work.
Donghui Ma: So our plan is to release a completely independent HDMap independent ADMax solution to all users in Q3 this year for CityNOA. And fundamentally, fully independent solutions are real artificial intelligence in terms of autonomous driving. It uses data-driven models to use data to train models to mimic human behavior, in place of completely rule-based solutions.
Speaker Change #186: So our plan is to release a completely independent HD map independent 80, Meg solution to all users in Q3 this year for city anyway.
Speaker Change #186: Fundamentally fully independent solutions is real artificial intelligence in terms of autonomous driving.
Speaker Change #186: Uses data driven model.
Speaker Change #186: Data to train models to mimic human behavior and in place for completely rule based solution.
Donghui Ma: And Tesla's concept of an end-to-end big model is a similar concept driven by data-driven model solutions. It's very easy to reach consensus on this conceptual solution, but to implement it requires a lot of data and computing power. And this is not something that all car companies are capable of or have the resources to achieve. Therefore, we believe that different companies will select one of those three solutions based on their current situations, capabilities, and resources. And these different choices would result in different products and user values. Hi, I'm Yingbo. I'm Li Jiong.
Speaker Change #186: Tablets concept of end to end pig model similar contract driven by data.
Speaker Change #186: Data driven data driven model.
Speaker Change #186: <unk>.
Speaker Change #187: It's very easy to reach consensus on this conceptual solution, but who implement it requires a lot of data and computing power and this is not something that all car companies are capable of we're having resources.
Speaker Change #187: Therefore, we believe that different companies will.
Speaker Change #187: So like one of those three solutions based on their current situations and.
Speaker Change #187: Our capabilities and resources and these different choices would result in different.
Speaker Change #187: Products and user value creation.
Xiang Li: I'm here to answer the question about the product structure. The company will not release pure SBOA this year. It will be released in the first half of next year. First of all, in the current mid-to-high-end sales of SPUA, it is necessary to have enough self-driving supercars. We believe that the number of self-driving supercars should be similar to that of Tesla in China, which is the right time for the product to be pushed into the market. Second, we need to upgrade and increase the total electricity and commercial electricity of more exhibition spaces.
Speaker Change #187: Both were each up without any of the clinical and development.
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Speaker Change #188: Actually on the telephone Rob.
Speaker Change #189: Latin was suddenly Natalia.
Speaker Change #189: And to increase our show on the Ultrashape.
Speaker Change #190: Well Michelle both on the Opco into the churn rate the total.
Speaker Change #190: Not yet.
Xiang Li: The number of booths is very important for our current multi-car, multi-priced period sales. If we want to support a new car model or more than 10,000 sales, we probably need to add 500 to 600 fixed booths nationwide. Otherwise, there will be a problem of increasing the number of products but not increasing the number of additives.
Speaker Change #190: Maybe I should have.
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Speaker Change #190: Toyota.
Speaker Change #191: Digital Igor <unk> Italia, and actually also I am working though.
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Speaker Change #191: For the rest of our footprint.
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Xiang Li: This is a problem that R8 has encountered in the past few months because its number of positions has decreased by 40%. However, we are currently restoring its number of positions. Therefore, a sufficient number of superchargers and a sufficient number of new power stations are necessary conditions for the sale of pure electric SUVs. We will set this time point in the first half of next year. The second question on our later BEV products: first of all, we will not be releasing our BEV SUV later this year.
Yes.
Speaker Change #192: You bet.
Speaker Change #193: Or about the same issue that Jeff Hello, Anastasia well look channel.
Speaker Change #193: Because our people are about it unusually low.
Speaker Change #193: So although the total North Korea.
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Speaker Change #193: Yes.
Speaker Change #193: India, we found that initial amount yet.
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Speaker Change #193: Later best products.
Speaker Change #194: First of all we will not be releasing our best SUV. Later this year. The latest plan is released in the first half of next year and for two reasons. The first reason is we believe in order to sell premium.
Xiang Li: The latest plan is to release it in the first half of next year, and for two reasons. The first reason is that we believe in order to sell premium BEV SUVs, a necessary requirement is to have enough... branded charging stations.
Speaker Change #194: And Suvs.
Speaker Change #194: <unk> requirement is to have enough.
Speaker Change #194: Branded charging stations, we believe.
Xiang Li: We believe the correct level is to get similar levels of Tesla in China. That would be the perfect timing for releasing our next product. And secondly, another constraint is the number of parking spots in stores, in-store parking spots, and display spots.
Speaker Change #194: Correct level is to get similar levels of Tesla in China that would be the perfect timing for releasing our next product and secondly.
Speaker Change #194: Another constraint.
Speaker Change #194: The number of parking spots.
Speaker Change #194: Stores into a parking spot despite stock.
Xiang Li: And this is very critical for us to be able to sell multiple cars across multiple price points and to supply a consistent sales of over 10,000 units per model. And in order to achieve that, we need about an additional 500 to 600 display spots across the country. Otherwise, we will be only increasing the number of products rather than the number of sales volumes. And that was the exact issue that L-8 ran into in the past few months because we decreased the displacement box of L-8 by 40%. But that is being recovered by now, and we are adding more displacement boxes for the L-8.
Speaker Change #194: And this is very critical for us to be able to sell multiple car or across multiple price.
Speaker Change #194: Price points.
Speaker Change #194: And to supply.
Speaker Change #194: System sales of over 10000 minutes per model.
Speaker Change #194: In order to achieve that we need about an additional five to 600.
Speaker Change #194: Despite spot across the country, otherwise, we will be only increasing the number of product rather than the number of sales volume.
Speaker Change #194: And that was the exact issue that all eight ran into in the past few months, because we decreased the displacement of our aided by 40%, but that is being recovered by now and we are adding more despite box for a BLA.
Xiang Li: So, to summarize, enough charting space and enough incremental display spots are two critical and necessary conditions for selling our SUV product, and we believe we'll reach this point in the first half.
Speaker Change #194: So to summarize enough charging stations and enough incremental despite spot are two critical.
Speaker Change #194: Necessary conditions for selling our SUV product and we believe we will reach this point in the first half of next year.
Speaker Change #194: Okay.
Operator: Your next question comes from Paul Gong with UBS. Thank you for answering my two questions. The first question is... (inaudible) At the same time, the stock price has fallen back a little. Will you consider it in any position? So two questions for me. The first one is, sooner or later, we are going to have the full product line within the BGC. Do you consider building a dedicated branch or channel for the BEV? The second question is, given the huge cash reserve and the share price performance recently, will you consider a share buyback? Okay, this is James. I will take your first question.
Speaker Change #195: Your next question comes from Paul Gong with UBS.
Speaker Change #196: Oh assistant <unk> clinical incidence sort of on social.
Speaker Change #197: So I mean going to Gainesville, sweeping completely ones on board.
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Speaker Change #198: To get from the insurance pool, Jimmy because once was a key part of the season.
Speaker Change #199: So I'm sure that you can see a pump <unk> Thiago influence where the <unk> domain.
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Speaker Change #201: Thanks, and well wishes Colby.
Speaker Change #202: So two questions for me. The first one is sooner or later, we're going to have the full points.
Speaker Change #201: Online.
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Speaker Change #201: We will complete our beauty dedicated brands or channel for the.
Speaker Change #201: Florida.
Speaker Change #201: Second question on.
Speaker Change #201: Given the huge cash resource.
Speaker Change #201: Joe.
Speaker Change #201: Recently, we will complete our share buyback on some components.
Speaker Change #201: Okay. This is Jeremy and I will take your first question.
Operator: Regarding the B-Way and our R-Way motorway. So, we will stick to our direct sales model in the domestic market, and we will strive to showcase all of our products in our retail stores and showrooms. In the meantime, we have initiated internal discussions on the Differentiated Retail Strategy, and we may launch some innovative pilot programs in the future. And we will share additional relevant details in due course. And I will hand over to our CFO, Jiong, for your second question. Hi Paul. Paul, the chair, is right back.
Speaker Change #201: And.
Speaker Change #201: Regarding that.
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Speaker Change #201: Arguably models.
Speaker Change #201: <unk>.
Speaker Change #201: We will speak to our direct sales model in the domestic market and it will be we will strive to showcase one of our product in our retail stores and showrooms in the meantime, we have initiated the internal discussion on.
Speaker Change #201: <unk> differentiated retail strategy and we've made launch some a normative pilot programs in the future.
Speaker Change #201: We wish to share additional relevant details in due course.
Speaker Change #203: And I hand over to our CFO joining me for your second question.
Speaker Change #201: <unk>.
Operator: Currently, we don't have a lot, but... And we will make some assessments based on company and stock financial positions. Capital Markets and other, [inaudible] Your next question comes from Yuqian Ding with HSBC. Thank you. I have two questions. First, I'd like to ask about the background of the financial impact of the middle class.
Speaker Change #204: Hi, Paul on sure.
Speaker Change #205: Buybacks currently.
Speaker Change #205: The regional highlights.
Speaker Change #205: And we will periodically.
Speaker Change #205: Make some assessments based on company's position.
Speaker Change #205: Market and other.
Speaker Change #205: Priority <unk>.
Speaker Change #205: Yes.
Speaker Change #206: Chris needs.
Speaker Change #206: Our meeting.
Speaker Change #206: Okay.
Speaker Change #206: Okay.
Speaker Change #207: Your next question comes from you can Deng with HSBC.
Speaker Change #206: Okay.
Speaker Change #209: Hi, guys. Good morning, Hello, Ella and Glenn David <unk>, just said.
Speaker Change #208: J J.
Speaker Change #210: Jake are adapting got Neal no macondo, Jake so don't have done yet.
Operator: Is there any update on the family market that we are positioning? The supply of electric vehicles has increased by more than 200,000. Is there any relative competitiveness in the expansion of the family market in the second half of the year? Could you please explain?
Speaker Change #211: You may all women thing being where the jacking system that Jamie Thank you.
Speaker Change #212: I was wondering if someone can answer then.
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Speaker Change #213: 70, <unk> hundred <unk>, which is on the call Jon <unk> has just said Michael ancient grains and Jcs.
Operator: The second question is, will you consider the expansion of the overseas market in advance? Because the competition and pricing environment in the overseas market is better than that in China. And the U.S. car market is also gradually shifting. Increasing the market share seems to be a good plan. I have two questions.
Speaker Change #214: When he is hunting Dallas Chipotle T cell oncology highlights just on the QUADRA highlights just how they're doing dumb things online GMP Gonna go that's element twice you say, yes that John Chocolate don't then thing simple.
Speaker Change #213: Fine.
Operator: The first is to ask about the growth conviction. Especially, our total addressable market is mainly hinged on family users. That's largely middle class relevant, but it seems to be melting down.
Speaker Change #215: I got two question the first is to too.
Speaker Change #215: To ask about.
Speaker Change #215: The gross conviction, especially our total addressable market is mainly hinged on the family.
Speaker Change #215: That's largely minute costs are relevant but it seems to be melting down so is the growth coming from the increasing 10 or the relative condition.
Operator: So is the growth coming from the increasing TAM or the relative competition versus the other peers offering? But we're seeing above RMB200K, above the increasing model supply? And the second question is whether the company will consider harvesting some low-hanging fruit in the overseas market. With relevance to the domestic market, it seems that pricing and competition are more favorable. And the global OEMs are moving marginally towards hybrids. The range extender seems to be a good solution.
Speaker Change #215: Versus the other peers offering, but we're seeing above RMB 20, 8-K about increasing module supply and second question is whether the company will consider harvesting some low hanging fruit in oversea market with relevance to the development of the domestic market. It seems that pricing and competition is more.
Speaker Change #215: Favorable and the global OEM I'm moving marginally towards hybrid the range extender seems to be a good solution.
Speaker Change #215: Yeah.
Xiang Li: Let me answer the first question, Yixiang. We think that more than 200,000 mid-to-high-end home users are our firm market choice and they won't change in the medium-to-long term. On the other hand, I think we haven't done well enough.
Speaker Change #216: Whenever I do look at retail our data.
Speaker Change #217: Arterial amira that Archie value sounder, how to model it available.
Speaker Change #218: Jetblue electrical jetblue.
Speaker Change #218: Okay.
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Xiang Li: There are more and more detailed user values in this market waiting for us to grow and expand. So on the first question, our focus will remain on the market for any of the vehicles priced over RMB200,000 for family users. And this will continue to be our focus in the mid to long run because we firmly believe that there's still much to be done in the market in terms of products, and there are many areas where we can improve to better serve our users and create value for them in the long run.
Speaker Change #219: Okay cool.
Speaker Change #219: So on the first question our focus will remain on the market of any of them.
Speaker Change #219: The vehicles are priced over RMB 200000 for family users and this will continue to be our focus.
Speaker Change #219: In the midst of long run because we firmly believe that there is still much to be done in the market in terms of product and there are many areas, where we can improve to better serve our users and create value for them in the long term.
Speaker Change #219: Okay.
Xiang Li: Okay, I will take your second question, and regarding the overseas market strategy. As Li Auto vehicle models become increasingly popular overseas, we will accelerate the establishment of our after-sales servicing networks in order to provide the best service experience for our overseas users. We will build an after-sales service network in international markets, where we already have an established user base. We plan to start our own after-sales service network in Central Asia and in the Middle East this year, which is ongoing right now.
Okay I will take your second question.
Speaker Change #220: Regarding the overseas market strategy.
Speaker Change #220: As Lee will tow vehicle models became increasingly popular overseas.
Speaker Change #220: We have accelerated the establishment of our after sales service and networks.
To provide the best service experience for our overseas users will.
Speaker Change #220: It will be viewed in after sales service and network in international market.
Speaker Change #220: We already have an established user base, we plan to start our own after sales network.
Speaker Change #220: After sales service network in a situation and.
Speaker Change #220: In the Middle East this year, which is ongoing.
Speaker Change #220: Right now we.
Speaker Change #221: You select.
Speaker Change #221: Appropriate to dealers for market expansion in overseas countries and the regions outside of Western Europe and America.
Xiang Li: We will select appropriate dealers for market expansion in overseas countries and regions outside Western Europe and North America. Given the adjustment of this year's sales target, we will focus our efforts on the domestic market this year.
Speaker Change #221: Even the adjustments of this year's sales target we will folks.
Speaker Change #221: Our efforts in the domestic market. This year, we will share more details in due course.
Yeah.
Xiang Li: We will share more details in due course. Your next question comes from Ning Sun Li with Bank of America. Hello, I am Ming from Meiyin.
Speaker Change #222: Your next question comes from Nathan Li with Bank of America.
Speaker Change #222: Okay.
Speaker Change #222: Clearly sending homes.
Speaker Change #223: No it would have been <unk>, so glenn since.
Operator: I have two questions. The first question is about the recent media coverage of the company's organizational adjustment. In the first half of the year, we experienced a shortage of orders. In fact, Mr. Li has mentioned before that he is no longer only pursuing the growth of the number of orders. In the direction of the company's future organizational adjustment, which departments or areas do you want to invest more resources in? Recently, the media reported that the company underwent a certain reorganization. In the future, what is your strategy for your organization? What department or what area will you invest more resources in? I'm Li Xiang.
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Speaker Change #229: Once upon a hot area.
Speaker Change #229: Put more resource to do that.
Speaker Change #229: No.
Speaker Change #229: Yes.
Speaker Change #229: Sure.
Speaker Change #229: Or should it anyhow.
Xiang Li: Hello Ming, the core change of this wave of organizational adjustment is to set up a quality-operated team so that the business can focus on making high-quality decisions to improve the efficiency of execution without spending a lot of time on repetitive operations. I think this is the most fundamental change this time. But I think an organization's upgrade and adjustment usually takes 12 to 14 months to see the real results.
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Speaker Change #231: Why don't you.
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Speaker Change #234: Hello, Jason that you book.
Xiang Li: So I think if we want to measure the results of this organizational upgrade, it should be more clear in 2025. So in this most recent organizational restructuring, one of the most important changes is that we've established a new department called Quality Operations. And the thinking behind this change is to allow our business units to really focus on high-quality decision making and operating efficiency instead of focusing on processes and operating these processes. And typically, for an organization change, it takes about 12 to 24 months to see real results.
Speaker Change #231: Yes.
Speaker Change #231: Transfer thresholds technological.
Speaker Change #231: And yet we're kind of going to Argentina.
Speaker Change #231: So in this most recent of our organization restructuring.
Speaker Change #231: One most important changes that we would establish a new department called quality operations and the thinking behind this change is to allow our business units to really focus on high quality decision, making and operating efficiency incentive focusing on processes and operating these processes.
Speaker Change #231: And typically for an organization change it takes about 12%.
Speaker Change #231: 12 to 24 months to see real results. So we think a good time to reevaluate will be sometimes in 2005 and 2026.
Xiang Li: So we think a good time to evaluate it would be sometime in 2025, 2026. Okay, thank you, Mr. Xiang. My second question is about NOA.
Speaker Change #235: Hi, this is it in terms of nodes I mean, the deal go into them.
Speaker Change #236: Later since you mean kind of going through that line.
Operator: This year, we can see that the company's NOA is opening up faster in the city. Does the current management level think that the function of NOA, especially our ideal consumer price of more than NT$250,000, is getting more and more important? Will the behavior of consumers change after the opening of the Tesla FSD V12 in China? Will it be more difficult for future tail-end companies to survive without NOA?
Speaker Change #235: Okay.
Speaker Change #237: Luca quiet, that's where most importantly, no additional feature again.
Speaker Change #237: It would come in <unk>.
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Speaker Change #237: Tom.
Speaker Change #237: Yes.
Speaker Change #238: Sir John Gould zones.
Speaker Change #239: Okay great.
Speaker Change #240: Great idea way put it since you Google meal will either come in.
Speaker Change #241: Thank goodness interim funding.
Operator: So, this year, we can see Li Auto's development in NOA is speeding up. So, right now, for your client base, how important do you think NOA is for your customer base? And after Tesla opens its FSD V12 in China, will this change consumers' behavior? And in the future, if some auto companies don't have NOA functions on the car, will they be able to sell cars well? Thank you.
Speaker Change #241: So this year, we can see our <unk> development in Italy.
Speaker Change #241: It's been speeding up so right now for your client base.
Speaker Change #242: How important do you think that are underway.
Speaker Change #243: Our customer base.
Speaker Change #243: After a test on the.
Charles: Open MST opinion Charles.
Charles: China, we're at least changed consumers' behavior.
Speaker Change #245: Future Auto company, they don't have MLA functions on the car.
On April two and the same kind of way.
Speaker Change #246: She says no to your point.
Donghui Ma: This is my second question. Hello, I am Donghui Ma. We firmly believe that NOA can make ideal users' driving safer and more convenient.
Michael: Sure Michael.
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Donghui Ma: We can also see the NOA test version of Wutu City, which we started to promote in May. According to the first batch of public car owners, we can see that the NOA journey accounted for more than 65% of the usable journey. From the usage rate, we can see the user's recognition level.
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Donghui Ma: Regarding the opening of the Tesla FSD V12 function, we think that the next stage of smart driving competition will be a major factor for consumers to consider. And after the opening of FSD in China, it will make more consumers pay more attention to this function and experience. For the standard and technical development of the entire automotive industry, we think it is a good thing. At the same time, it will also promote development and investment and improve performance in smart driving. First of all, we firmly believe that NOA makes it easier and safer for our users to track.
Brian: Now, Brian because a lot of adversity.
Speaker Change #253: Sure.
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Joel: Total additional indication.
Joel: First of all we firmly believe that NOI and makes it easier and safer.
Joel: Safer for our users described.
Donghui Ma: As we've seen in the latest release of our mapless NOA beta version in May, the feedback from the first group of users has been that they drive over 65% of their total mileage using CityNLA. And this penetration rate is a good testament to why we accepted our latest version of NLA among our users. And in terms of Tesla's FSD V12, we believe that in the next stage of competition for smart electric vehicles, autonomous driving will be a primary reason for our users as they consider buying a car.
Joel: We've seen in the latest release are Matulis NOI, a beta version and May from the feedback from the first group of users.
Joel: Over they drive over 65% of their total mileage using city anyway and this penetration.
Joel: <unk> is a good testament to theirs.
Joel: Widely accepted our latest version of NOI on our users and in terms of.
Joel: The <unk> 12, we believe that the next stage of competition across for Smart electric vehicles.
Driving will be a primary reason for.
Joel: For our users as they consider buying a car.
Donghui Ma: FSD V12, after it becomes available in China, will only make users focus even more on autonomous driving functionalities as well as experience, which will further increase and enhance the importance of the creation of industry standards and the development of the technology in the industry. And again, in return, drive different car companies to invest even further in improving the performance of NLA. As we are now reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks.
Joel: FX TV 12, after it becomes available and China will only make users focus even more autonomous driving functionality that is all ex experience, which will further increase enhance.
Joel: Important.
Joel: Creation of industry standards, and the development of the technology industry.
Joel: Again in return drive different.
Joel: Car companies to invest.
Joel: Further and improving performance.
Joel: Anyway features.
Joel: Yes.
As we are reaching the end of our conference call now I'd like to turn the call back over to the company for closing remarks.
Donghui Ma: Ms. Janet Jiang, please go ahead. Thank you once again for joining us today. If you have any further questions, please feel free to contact Li Auto's investor relations team. That's all for today. You may now disconnect your line.
Joel: Janet Yang Please go ahead.
Janet Yang: Thank you once again for joining us today, if you have any further questions. Please feel free to contact me items Investor Relations team. That's all for today you may now disconnect your lines. Thank you.
Joel: Okay.
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Operator: Thank you. [inaudible] Thank you for watching! [inaudible] Thank you for watching! [inaudible] Thank you for watching!
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Operator: [inaudible] That's all for today. Thank you for watching. Thank you for watching!
Speaker Change #260: Hello, Ladies and gentlemen, thank you for standing by for Lee orders first quarter 2024 earnings Conference call.
Operator: [inaudible] Thank you for watching! [inaudible] Transcribed by https://otter.ai Thank you for watching! [inaudible] Thank you for watching!
Speaker Change #261: At this time all participants are in listen only mode today's.
Speaker Change #261: Today's conference call is being recorded I will now turn the call over to your host Ms. Janet Zhang Investor Relations Director. Please go ahead Janet.
Janet: Thank you Ken good Anthony and good morning, everyone. Welcome jewelry autos first quarter 2024 earnings conference call the company's financial and operating results were published in our press release earlier today and our postpaid on the complex IR website on today's call. We will have our chairman and CEO Mr. Shao.
Operator: [inaudible] TKA Subbers Translators http://otter.ai [inaudible] See you next time. [inaudible] Thank you for standing by for Li Auto's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode.
Operator: Today's conference call is being recorded. Thank you, Kim. Good evening and good morning, everyone.
Operator: Welcome to Li Auto's first quarter 2024 earnings conference call. The company's financial and operating results were published in a press release earlier today, and they 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. Johnny Tie Li, to begin with prepared remarks. Our president, Mr. Donghui Ma, and our senior vice president, Mr. James Liangjun Zou, will join for the Q&A discussion. Before I continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Speaker Change #263: And our CFO, Mr. Johnny Chile to begin with prepared remarks, our president Mr Don't Lima, and average senior Vice President Mr. Jin sang Kim Joe will join for the Q&A discussion.
Operator: Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Speaker Change #263: Before we continue please be reminded that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially differ.
Speaker Change #263: French from the views expressed today.
Speaker Change #263: Information regarding risks and our synthetase is included 18 circuit with the Companys filings with the U S Securities and Exchange Commission and.
Speaker Change #263: Stock exchange of Hong Kong Limited the company does not assume any obligation to update any forward looking statements, except as required and applicable law.
Operator: Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAP financial information as well as unaudited non-GAP financial matters. Please refer to Li Auto's disclosure documents in the IR section of our website, which contain a reconciliation of the unaudited non-GAP financial matters to comparable GAP financial matters. 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.
Speaker Change #264: Please also note that <unk> earnings press release, and this conference call include discussions of unaudited GAAP financial information as well as audited non-GAAP financial matters. Please refer to the disclosure documents on the IR section of our website, which contain a reconciliation of the.
Speaker Change #264: Audited non-GAAP measures to comparable GAAP measures.
Speaker Change #265: He will start his remarks in Chinese there will be an English translation. After he finishes all his remarks.
Speaker Change #266: That I will now turn the call over to our CEO Mr. Shan Li Please go ahead.
Speaker Change #265: Okay.
Xiang Li: Hello everyone, I am Li Jiong. Welcome to today's night phone conference. First, let's review the first quarter performance of Li Auto. In the first quarter, we sold 80,400 new cars, which is a 52.9% increase. At the same time, according to the China Aerospace Corporation's statistics, China's more than 200,000 new energy vehicles have increased by 24.8% compared to large-scale production, and the number of ideal vehicles is higher than that of large-scale production.
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Speaker Change #269: Thank you.
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Xiang Li: [inaudible] With the growth of the turnover, the total revenue in the first quarter of 2024 reached RMB25.6 billion, which is 36.4% higher than the previous year. Even after the release of the Dream Mega, the Dream L series products have been replaced, and the price system has been adjusted, our still remains at a healthy 20.6%. In the long run, Ideal Motors will continue to support us by focusing on user value, investing, and developing with nearly 100 billion RMB in cash reserves and a healthy asset-asset ratio.
Speaker Change #273: We had a delta.
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Speaker Change #279: Got it.
Speaker Change #280: How do you keep European Chinese and India.
Speaker Change #280: Yes.
Speaker Change #281: Good afternoon.
Speaker Change #282: Can you just you want me to Jonathan with Roger Jimmy on Hulu.
Xiang Li: Through product and service, we will continue to bring an exceptional user experience to our family users. But I have to admit that this year, we are facing a variety of challenges in terms of internal management and external environment changes.
Speaker Change #281: Cool.
Speaker Change #283: Hey, Jonathan.
Speaker Change #284: Thank you well because you saw that.
Speaker Change #284: That will remain as the Virginia global bond Youll be able how that's working.
Xiang Li: The performance of the first quarter is different from what we expected at the beginning of the year. In response to this problem, we have made some adjustments. We actively and quickly make adjustments, launch and land organization upgrades and process optimizations, improve internal efficiency and quality of decision-making, and seek to better focus on the creation and delivery of user value. For example, on March 1st, we released our first high-pressure charging car model. [inaudible] Based on the 800 VGA platform, the Ideal Mega with Kirin 5C battery is one of the fastest mass-produced motorbikes with the fastest charging speed.
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Speaker Change #290: We thought that.
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Speaker Change #290: Mega.
Speaker Change #291: Do you buy back without cheating.
Doug Jefferies: Thanks, Doug.
Speaker Change #293: Sure well, Jeff Congrats little to no impact.
Doug Jefferies: Excellent.
Xiang Li: In the period of 5 days, the average charging time of the Ideal Mega users in the Ideal Operation Station is only 12.8 minutes. [inaudible] On April 18th, the 5-seater luxury SUV LXR6 will be officially launched to meet the needs of more young families under the age of 30. The ideal R6 has excellent internal space and a functional configuration, [inaudible] In terms of safety, the Nissan R6's body-to-body safety is the highest standard in the industry, and the standard-pairing continuously evolved full-screen AEB provides safety guarantee for the whole family.
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Marco: Thank you Marco.
Xiang Li: Following the official launch of the Ideal 8 and Ideal 6 and the upgrade of the 2024 Ideal R7, R8 and R9, Ideal Automobiles provides a range of products with a price range of 200,000 to 600,000 yuan for the wider family. At the end of the month, we also launched a new pricing system based on the market competition pattern change to quickly meet the needs of users. Our changes have also received enthusiastic feedback from users.
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Speaker Change #305: How do you hold it up.
Speaker Change #306: Hi, Joe.
Xiang Li: On May 1st, the number of weekly orders increased to a record high. Among them, on April 18th and May 5th, after the release of Ideal 26, 410,000 orders were received in the first half of May.
Speaker Change #307: Questions on golf, which it yet.
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Speaker Change #309: So its ultra in Chile for the loss that you've got within that.
Xiang Li: We are doing our best to ensure the speedy rise of LX26's supply and production. With the launch of the car model, the automotive platform is also continuing to evolve. In mid-May, we launched AD Pro 3.0 and upgraded AD Pro to the B1V visual large model architecture to achieve a high-speed AOA of 1,000 km per hour.
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Xiang Li: [inaudible] It is expected to upgrade to all ADMAP models through OTA in the third quarter of this year after the generalization test in China. In terms of the charging network, as of May 19, Ideal Motors has opened 404 Ideal Superchargers and 1,770 Chou Chongguang. On May 1st, Ideal Super Charge Station provided more than 540,000 free charging services for all Ideal Automobile owners and provided 960,000 charging services for the entire
Sean: Thanks, Sean.
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Speaker Change #317: Congrats Keith.
Speaker Change #318: Judy will answer the front of that.
Xiang Li: We will continue to strengthen and accelerate the investment in the Super Charge network. By the end of this year, our goal is to open more than 10,000 Super Charge Stations on highways and cities across the country and continue to improve the Super Charge capacity of Ideal Pure Charge users. In terms of its sales network, Ideal Car has covered all the first-tier, new first-tier, and second-tier cities in China, as well as 89% of the third-tier cities.
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Xiang Li: This year, we will continue to move into more cities with rhythm to promote the continuous improvement of the new energy car penetration rate. In addition, our service network continues to expand and provide excellent services to ideal users. As of April 30, 2024, Ideal Motor is operating 481 retail centers in 144 cities around the country and 3.6 billion after-sales repair centers and boardroom services centers in 210 cities.
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Xiang Li: In the second quarter of this year, with the hot sales of the products and the recovery of orders, we expect that the ideal sales volume will reach 10.5 to 110,000 units. I believe that with the optimization of the business rhythm and the upgrade of the organization, the ideal car will further improve the efficiency of the business, enhance the value of the customer, and achieve healthy performance growth. Now translating for Mr. Li, first we'll begin with a review of Li Auto's first quarter performance. In the first quarter, we delivered over 80,400 vehicles, up 52.9% year-over-year.
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Operator: According to China Automotive Technology and Research Center, the NUV market priced over RMB200,000 grew by 24.8% year-over-year during the first quarter, while our growth rate far exceeds that of the market, making us the leader among all premium NUV brands. Driven by vehicle delivery growth, our total revenue for the first quarter reached RMB 25.6 billion, a year-on-year increase of 36.4%. Our gross margin for the first quarter remained healthy at 20.6% despite the launch of Li Mega, the changeover of the L-series, and the following price adjustments.
Speaker Change #330: Now translating for Mr. Li.
Speaker Change #331: First of all we will begin with a review of <unk> first quarter performance.
Speaker Change #332: In the first quarter, we delivered over 80400 vehicles up 52, 9% year over year. According to the China Automotive technology and research center, the nev market priced over RMB 200000 grew by 24, 8% year over year during the first quarter, while our great growth rate far exceeds that of.
Speaker Change #332: The market, making us the leader among all premium <unk> brands.
Speaker Change #332: Driven by the vehicle delivery growth our total revenue for the first quarter reached RMB 25, 6 billion a year on year increase of 36, 4% our gross margin for the first quarter remained healthy at 26%. Despite the launch of Lee Mega the changeover of the LCR.
Speaker Change #332: <unk> in the following price adjustments and the <unk>.
Operator: In the long run, a robust balance sheet with cash reserves of nearly RMB 100 billion will continue to support us to focus on user value creation and firmly invest in R&D as we continue to offer products and services for families that exceed their expectations. Nevertheless, we have admittedly encountered multiple challenges since the start of the year from both internal operations and changes in the external environment.
Speaker Change #332: <unk> run a robust balance sheet with cash reserves of over of nearly RMB 100 billion. We will continue to support us to focus on user value creation and firmly invest in R&D as we continue to offer products and services for families that exceed their expectations.
Speaker Change #332: Nevertheless, we have admittedly encountered multiple challenges since the start of the year from both internal operations and changes in the external environment. Our performance. This quarter fell short of our expectations made at the beginning of this year and.
Operator: Our performance this quarter fell short of our expectations made at the beginning of this year. In response, we immediately took action and swiftly implemented adjustments across our business, including an organizational restructure and workflow optimization. We're confident that these initiatives will enhance our internal operating efficiency and improve the quality of our decision making going forward, allowing us to focus more on creating and delivering user value. Turn it over to product.
Speaker Change #332: In response, we immediately took action and swiftly implemented adjustments across our business, including an organizational restructure and workflow optimization. We are confident that these initiatives will enhance our internal operating efficiency and improve the quality of our decision making going forward, allowing.
Speaker Change #332: To focus more on creating and delivering user value.
Speaker Change #333: Turn it over to products.
Xiang Li: We released Li Mega on March 1st, our first HPC BEV model and a high-tech flagship MPV for large families. Built on our latest 800-volt battery electric platform and equipped with QiNan 5C battery, Li Mega is one of the fastest-charging mass-produced passenger vehicles in production today. During China's Labor Day holiday, the average charging time for Li Mega users at our supercharging stations was only 12.8 minutes, significantly alleviat On April 18th, we launched the L6, a 5C premium family SUV that offers young families who are seeking family vehicles priced below RMB 300,000.
Speaker Change #334: Relief be Mega on March one our first HPV Bev model and high Tech flagship NPV for large families.
Speaker Change #335: Built on our latest 800 volt battery electric platform and equipped with Chinas <unk> battery Lee Mega as one of the fastest charging mass-produce vehicle passenger vehicle in production today.
Speaker Change #335: During the labor day holiday, but the average charging time for Lee Mega users at our Supercharging stations was only $12 eight minutes significantly alleviating energy with energy.
Speaker Change #335: Right.
Speaker Change #335: On April 18th we launched <unk>, a <unk> <unk> premium family SUV that offers young families who are seeking family vehicles priced below RMB 300.
Xiang Li: Li L6 offers a spacious interior and superior configuration and can support a CLTC range of 1,390 km. In terms of safety, the LIAO6 vehicle body is designed to meet the most stringent safety testing standards in the industry.
Speaker Change #335: <unk> offers a spacious interior and in security configurations, and can support a C. LTC range of 13, <unk> hundred 90 kilometers.
Speaker Change #335: In terms of safety, we are fixed vehicle body is designed to meet the most stringent safety testing standards in the industry.
Xiang Li: Combined with this ever-improving full scenario AEB system, that comes standard on the vehicle, Li L6, offers robust safety for families on the road. With the official launch of Li Mega and Li L6, as well as the 2024 model year Li L7, L8, and L9, we now offer a product portfolio that caters to a wide range of family users at price points ranging from RMB 200,000 to RMB 600,000. They were facing challenges in the competitive market landscape in late April.
Speaker Change #335: Combined with ever improving full scenario AEP system.
Speaker Change #335: That comes with the fact that become standard on the vehicle. The Opex offers robust 50 for families on the road.
Speaker Change #335: With the official launch of lean Mega <unk> fix as all the 2020 for model year <unk> seven eight and nine we now offer a.
Speaker Change #335: Product portfolio that caters to a wide range of family users at price points, ranging from RMB 200000 to.
Speaker Change #335: To RMB 600 pounds.
Speaker Change #335: Facing challenges in the competitive market landscape in late April.
Xiang Li: We swiftly responded to evolving user needs with the introduction of a new pricing scheme that received very positive feedback, resulting in a substantial increase in store visits. During the Labor Day holiday, weekly order growth hit an all-time high.
Speaker Change #335: Swiftly responded to evolve evolving user needs with the introduction of a new pricing scheme that received very positive feedback resulted in a substantial increase in store visits driven.
Speaker Change #335: During the Labor day holiday weekly order growth hits and hit an all time high in particular retail fixed received over 41000 orders within initial launch sales period from April 18 to mainframe.
Xiang Li: In particular, VL6 received over 41,000 orders within its initial launch sales period from April 18th to May 5th. We're sparing no effort to ensure a robust supply and production ramp-up for Lee L6 to drive a rapid increase in delivery, along with the release of our new model. We continue to make improvements in our autonomous driving platform. In mid-May, we will begin releasing Li AB Pro 3.0 to all of our users, with an upgrade to a large model-based BV architecture with improved functionalities, including highway NOA with driver takeover mileage of over 1,000 kilometers. CDLCCs are capable of identifying traffic lights in real time to autonomously stop and go at intersections, and they have automated parking that can manage complex parking spaces.
Speaker Change #335: We're sparing no efforts to ensure a robust supply and production ramp up for the Opex to drive a rapid increase in deliveries.
Speaker Change #335: Along with the release of our new model.
Speaker Change #335: We're continuing to make improvements in our economy driving platform.
Speaker Change #335: In mid May we began releasing.
Speaker Change #335: Pro three point out to all of our users with an upgrade to a large bottle based.
Speaker Change #335: <unk> BV architect architecture with improved functionality, including highway an MLA with driver takeover mileage of over 1000 kilometers city LPC capable are identifying chartering wise and real time autonomy feedstock.
Speaker Change #335: Go at intersections and.
Speaker Change #335: An automated parking that can manage complex parking spaces.
Xiang Li: We launched public beta testing for Lee80Max 3.0 in May, where approximately 1,000 users tested our latest CDNLA feature, which does not require high-definition maps and covers all roads nationwide. We plan to deploy the City NOA and all ADMAX vehicles through OTA in the third quarter of this year after we complete the initial nationwide testing. Looking at our charging network. We currently have 404 super charging stations in operation, which means... 1,770 charging stalls. During the May Day holiday, we provided over 54,000 complimentary charging sessions and waived charging fees for users across our models.
Speaker Change #335: We launched public beta testing for <unk> three in May we're approximately 1000 users tested our latest city MLA feature.
Speaker Change #335: Which does not require high definition maps and covers all roads nationwide, we plan to deploy the city annually in all eight macs vehicles throughout the third quarter of this year. After we complete the initial nationwide testing.
Speaker Change #335: Looking at our charging network.
Speaker Change #335: We currently have 404 super charging stations in operation with.
Speaker Change #335: 1770 charging staff.
During the May day holiday, we provided over 54000 complementary recharging sections and waived charging fees for users across our model.
Xiang Li: At the same time, we provided over 96,000 charging sessions to NEB users across the country across different brands. We will continue to expand and accelerate investments in our supercharging network and aim to have over 10,000 charging stations and charging stalls in operation on highways and cities in China by the end of this year. Continually improving the ultra-fast charging experience for all of our customers. With respect to our sales network, we have established a presence across all first-tier, new first-tier, and second-tier cities, as well as 89% of third-tier cities nationwide.
Speaker Change #335: At the same time, we provided over 96000 charging sessions to any of the users across the countries across different brands we.
Speaker Change #335: We will continue to expand and accelerate investment investment and are Supercharging network and aim to have over 10000 charging stations tuck charging salt.
Speaker Change #335: In operation on highways and cities in China by the end of this year continually improving the ultra fast charging experience for all of our fab users.
Speaker Change #335: With respect to how our sales network, we have established a presence across all first year, new first year and second tier cities as well as 89% of third tier cities nationwide.
Xiang Li: This year, we'll steadily expand our reach into additional cities to boost the penetration rate of any need in China. Moreover, our service network is also expanding very rapidly, ensuring high-quality services to our users. As of April 30, 2024, we will have 481 retail stores covering 144 cities, as well as 361 service centers and Li Auto authorized body shops operating in 210 cities across the country.
Speaker Change #335: This year, we will steadily expand our reach into additional cities to boost the penetration rate of any of these in China. Moreover.
Speaker Change #335: Moreover, our service network.
Speaker Change #335: Also expanding very rapidly ensuring.
Speaker Change #335: High Salt quality services to our users.
Speaker Change #335: As of April 30.
Speaker Change #335: 2024, we have 481 retail stores covering 144 cities as well as 361 service centers and Lee auto authorized body shops operating in 210 cities across the country.
Xiang Li: Looking ahead to the second quarter, we expect vehicle deliveries to be between $105,000 and $110,000, driven by robust market demand and our new products and recovery in order. By fine-tuning the pace of our operations and upgrading our matrix organization, I'm confident that we'll further enhance operating efficiency, increase user value, and pursue healthy... Next, I will turn it over to our CFO, Johnny. Thank you.
Speaker Change #335: Looking ahead to the second quarter.
Speaker Change #335: Vehicle deliveries could be between 105000 and 110.
Speaker Change #335: Driven by robust market demand and our new products and recovering in our orders.
Speaker Change #335: By fine tuning the pace of our operations and upgrading our matrix organization I am confident that we will further enhance operating efficiency increase user value and pursue healthy growth.
Speaker Change #336: Next I will turn it over to our CFO jonny.
Tie Li: I will now walk you through some of our, Due to time constraints, I will now address financial highlights here and encourage you to refer to our earnings price release for further details. Total revenues in the first quarter were RMB25.6 billion, for 3.6 billion US dollars, are 36.4% year-over-year and down 38.6% cause-over-cost. This includes RMB 24.3 billion or 3.4 billion US dollars from vehicle sales up 32.3% year over year and down 39.9% cultural.
Jonny: Thank you Sir Hello, everyone I will now walk you through some of our.
Jonny: 2000, and plentiful first quarter financials.
Speaker Change #337: Due to time constraints.
Speaker Change #337: No.
Speaker Change #337: But the initial highlights here and encourage you to refer to our earnings press release for further detail.
Speaker Change #337: Total revenues in the first quarter were RMB 25 billion or three points.
Speaker Change #337: In U S dollar.
Speaker Change #337: 30.
Speaker Change #337: 4% year over year on them.
Speaker Change #337: Eight.
Speaker Change #337: 6% quarter over quarter.
Speaker Change #337: These include RMB plentiful rebuilding all three going forward be it in U S dollar.
Speaker Change #337: From vehicle sales.
Speaker Change #337: Although the two 3% year over year.
Speaker Change #337: Okay.
Speaker Change #337: 39, 9% cultural culture.
Tie Li: The year-over-year increase was mainly attributable to higher vehicle delivery, partially offset by the lower average selling price due to the different product mix and pricing strategy change between the two countries. The sequential decrease was mainly due to decreased vehicle deliveries, which were affected by seasonal factors related to Chinese New Year holidays and lower than expected order intake in March, and cost of sales in the first quarter of R&B.
Speaker Change #337: Over a year increase was mainly attributable to higher vehicle deliveries, partially offset by the lower average selling price of.
Speaker Change #337: Due to the different product mix and the pricing strategy change between the two quarters.
Speaker Change #337: The sequential decrease was mainly due to decreased vehicle.
Speaker Change #337: Vehicle deliveries, which were affected by seasonal factors related to Chinese new year holiday.
Speaker Change #337: Sure.
Speaker Change #337: Order intake in March.
Cost of sales in the first quarter.
Speaker Change #337: While the RMB.
Tie Li: 200.3 billion, or 2.8 billion U.S. dollars, are 36.1% year-over-year and down 36.3% quarter-over-quarter. Gross profit in the first quarter was RMB 5.3 billion all. $731.9 million, are 38% year-over-year and down from 46% of cultural cost. Vehicle marking in the first quarter was 19.3%. Three percent, worth 19.8%, in the same period last year and 22.7% in the prior quarter; the vehicle margin remains relatively stable year-over-year. The sequential decrease was mainly due to lower average selling price as a result of pricing strategy changes in the first quarter and throughout adjustments of warranty reserve in the prior quarter based on updated estimates of cost.
Speaker Change #338: Okay <unk>.
Speaker Change #338: Beating all $2 8 billion U S dollar.
Speaker Change #338: 36, 1% year over year and down 30 States fund.
Speaker Change #338: 3% cultural we'll call it.
Speaker Change #338: Gross profit in the first quarter was RMB five 3 billion.
Paul.
Speaker Change #338: 131, 9 million U S dollar.
Speaker Change #338: 38% year over year.
Speaker Change #338: <unk>.
Speaker Change #338: 46% quarter over quarter.
Speaker Change #338: Vehicle market in the first quarter was 19.
Speaker Change #338: 3%.
Speaker Change #338: At 19, 8% in the same period last year and 22.
Speaker Change #338: 7% in the prior quarter.
Speaker Change #338: Vehicle margin remained relatively stable year over year.
Speaker Change #338: The sequential decrease was mainly due to lower average selling price as a result of <unk>.
Speaker Change #338: Pricing strategy changes.
Speaker Change #338: In the first quarter.
Speaker Change #338: Adjustment of warranty reserve in the prior quarter based on updated estimates of costs.
Tie Li: Of course, our future plans. Gross margin in the first quarter was 20.6% versus 20.3%. 4% in the same period last year and 23.5% in the prior quarter. Operating expenses in the first quarter were RMB 5.9 billion or US$812.9 million at 71.4% year-over-year and down 13.1%. RMB Expenses in the First Quarter for RMB 3 Billion, All 422.3 million U.S. dollars.
Speaker Change #338: Cost of future claims.
Speaker Change #338: Gross margin in the first quarter was 26% with a plenty.
4% in the same period last year and <unk> III fund.
Speaker Change #338: In the prior quarter.
Speaker Change #338: Operating expenses in the first quarter were RMB five nine beating all 800.
Speaker Change #338: 12 point.
$9 million.
Speaker Change #338: <unk> one.
Speaker Change #339: Or is that year over year.
Speaker Change #338: <unk>.
Speaker Change #338: Thirdly pardon, 1% cargo work harder.
Speaker Change #338: R&D.
Speaker Change #338: In the first quarter were RMB 3 billion.
Speaker Change #338: All 400 funded pool.
Speaker Change #338: Point 3 million U S dollar.
Tie Li: 5, 6, 7, 8, 4.6% year-over-year and down 12.7% quarter-over-quarter. The year-over-year increase was primarily due to increased employee compensation as a result of growth in the number of staff as well as increased spending to support the expanding product portfolio and technology. The sequential decrease was mainly in line with Timing and Progress of New Vehicle Program. At Q&A expenses in the first quarter were RMB 3 billion.
Speaker Change #338: Okay.
Speaker Change #338: One 6% year over year and down two.
Speaker Change #338: <unk>, 7% quarter over quarter.
Speaker Change #338: So the year over year.
Speaker Change #338: The increase was.
Speaker Change #338: Primarily due to increased employee compensation as a result of growth the number of staff.
Well increase.
Speaker Change #338: This past Tuesday.
Paul the expanding.
Speaker Change #338: Product portfolio technologies.
Speaker Change #338: The sequential decrease.
Speaker Change #338: Was mainly in line with.
Speaker Change #338: Timing on progress of new vehicle programs.
Speaker Change #338: <unk>.
Speaker Change #338: SG&A expenses in the first quarter were RMB three beating.
Speaker Change #338: Paul.
Tie Li: 412.4 million U.S. dollars, up 81% year over year and down 8.9% culture over culture. The year over year increase was primarily due to increased employee compensation as a result of the growth in the number of staff, as well as increased rental and other expenses associated with the expansion of the sales and servicing network. The sequential decrease was mainly due to lower vehicle delivery; lost from operation in the first quarter was RMB 584.9 million, or 81 million U.S. dollars.
Speaker Change #338: <unk> hundred 12 funds for meeting Us dollar up 81%.
Speaker Change #338: Year over year and down.
Speaker Change #338: Eight 9% cultural culture.
Speaker Change #338: The year over year increase was primarily due to increased employee compensation as a result of the growth in number of staff.
Speaker Change #338: As well as increased rental and other expenses associated facilitated.
Speaker Change #338: With the expansion of sales and servicing network.
Speaker Change #338: The sequential decrease was mainly due to lower vehicle deliveries.
Speaker Change #338: Loss from operations in the first quarter.
Speaker Change #338: The RMB.
Speaker Change #338: 584.
Speaker Change #338: $9 million.
Speaker Change #338: 81 million U S dollar.
Tie Li: What was the income from operations of RMB? 405.2 million in the same period last year and RMB 3 billion in the prior quarter. Operating margin in the first quarter was negative 2.3% versus positive 2.2% in the same period last year and positive 7.3% in the prior quarter. Net income in the first quarter was RMB1.5 billion.
Speaker Change #338: Income from operations of RMB.
Speaker Change #338: <unk> was $5 2 million in the same period last year and RMB 3 billion in the prior quarter.
Speaker Change #338: Operating margin in the first quarter was negative <unk>, 3%.
Speaker Change #338: This positive two 2% same period last year.
Speaker Change #338: Positive.
Speaker Change #338: Seven funds to represent in the prior quarter.
Speaker Change #338: Net income in the first quarter was RMB.
Tie Li: 591.1 million or 81.9 million US dollars. [inaudible] 36.7% year-over-year. 89.7% cultural. Diluted net earnings per ADS attributable to ordinary share was RMB 0.56 or 8 cents in the first quarter, versus RMB 0.89 in the same period last year and RMB 5.99.
Speaker Change #338: 591, 9%.
Speaker Change #338: 91 1 million.
Speaker Change #338: Paul.
Speaker Change #338: One 9 million U S dollar.
Speaker Change #338: Tom.
Speaker Change #338: Six 7% year over year.
Speaker Change #338: And.
Speaker Change #338: 89, 7% quarter over quarter.
Speaker Change #338: Diluted earnings per ads attributable.
Speaker Change #338: Attributable to ordinary share.
Speaker Change #338: RMB rural part.
Speaker Change #338: While states.
Speaker Change #338: <unk>.
<unk> in the first quarter.
Speaker Change #338: Worth it RMB zero.
Speaker Change #338: Eight nine in the same period last year and RMB five point.
Tie Li: 3-2 in the prior quarter, and turning to our balance sheet and cash flow. Our pack position remains strong; let's do that. 98.9 billion, or 13.5 billion, seven billion US dollars as of March 31st.
Speaker Change #338: Three two in the prior quarter.
Speaker Change #338: Turning to our balance sheet and cash flow.
Speaker Change #338: Cash position remains strong.
Speaker Change #338: Do that.
Speaker Change #338: RMB.
Speaker Change #338: 98.9 billion all 13 pardon.
Speaker Change #338: 7 billion U S dollar.
Speaker Change #338: Okay.
Operator: In 2024, net cash used in operating activities in the first quarter was RMB 3.3 billion, or 462.2 million U.S. dollars, versus net cash provided by operating activities of RMB 7.8 billion in the same period last year and RMB 17.3 billion in the prior quarter. Great cash flow was negative RMB 5.1 billion on that too. 700.1 million US dollars in the first quarter was a positive RMB 6.7 billion in the same period last year and a positive RMB 14.6 billion in the protocol.
Speaker Change #338: 'twenty is plentiful.
Speaker Change #338: Net cash used in operating activities in the first quarter gross RMB three 3 billion.
Speaker Change #338: 452.
Speaker Change #338: 9 million U S dollar.
Speaker Change #338: Net cash provided by operating activities.
Speaker Change #338: Of RMB seven 8 billion in the same period last year.
Speaker Change #338: RMB 17 3 billion in the prior quarter.
Speaker Change #338: Free cash flow was negative RMB five 1 billion.
Speaker Change #338: Our next <unk>.
Speaker Change #338: $701 million in the first quarter.
Speaker Change #338: Was it positive RMB six.
Speaker Change #338: 7 billion in the same period of last year on the positive RMB.
14, 6 billion in the prior quarter.
Operator: And now, for our business outlook. For the second quarter of 2024, the company packed the delivery, it could be between $105,000 and $100,000. 10,000 vehicles, presenting a year-over-year increase of 21.3 to 27.1%. The company also expects second quarter total revenues to be between RMB 29.9 billion and RMB 31.4 billion, or 4.1 billion US dollars and 4.3 billion US dollars, representing a year-over-year increase of 4.2% to 9.4%. This business outlook reflects the company's current and preliminary review of a specific situation and market conditions, which are subject to change.
Speaker Change #338: Now for our business outlook.
Speaker Change #338: For the second quarter of.
Speaker Change #338: 2000, Okay for the company expects the delivery.
Speaker Change #338: Wahoo.
Speaker Change #338: <unk> five target and 100.
Speaker Change #338: 10000 vehicles, representing a year over year increase of 20 132.
Speaker Change #338: 27, 1%.
Speaker Change #338: The company also expects.
Speaker Change #338: Second quarter total revenue to be between RMB, $29 9 billion and RMB 31 point for creating all.
Speaker Change #338: $4 1 billion U S dollars and the full points.
Speaker Change #338: In the U S dollar, we have been representing a year over year increase.
Speaker Change #338: Ill qualify in 2% to nine.
Perfect.
Speaker Change #338: This business outlook reflects the company's current and preliminary review business basically Asia.
Speaker Change #338: And the market conditions, which is subject to change.
Operator: That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.
Speaker Change #340: That concludes our prepared remarks, I will now turn the call over.
Speaker Change #341: To the operator to start our Q&A session.
Speaker Change #342: Thank you.
Speaker Change #343: Thank you can I just ask a question. Please press star one on your telephone plan aimed to Vienna.
Speaker Change #344: If you wish to cancel your request please press star two.
Operator: For the benefit of all participants on today's call, please limit yourself to two questions. And if you have an additional question, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with an English translation. Your first question comes from Bin Wang of Deutsche Bank. The first one is about sales, and the second one is about the profit margin. In terms of sales, we see that Altitude is between 10.5 and 110,000 yuan. It seems that the bank will exceed 360,000 yuan in the second half of the year, which is 60,000 units a month.
Speaker Change #345: Benefit of all participants on today's call. Please limit yourself to two questions and if you have an additional question you can reenter the queue.
Speaker Change #346: Mandarin Speaker. Please ask your questions in Chinese correct, then followed with English translation.
Speaker Change #347: Your first question comes from bin Wang with Deutsche Bank.
Speaker Change #348: I should take over to you.
Jonathan Quarry: Hello, Jonathan Quarry.
Speaker Change #350: Client <unk>.
Speaker Change #351: What kind of agile changes still $1 Steve.
I'm, sorry, Brian and I'll tell you about it.
Speaker Change #351: The land that we sold were kind of on the met.
Operator: At present, we see that the amount of Mega is not high, and M9 may be a bit late. In other words, in the second half of the year, we may reach 60,000 units per month. May I ask how we can achieve the sales of 60,000 units per month? If there is pressure at that time, will we continue to raise the price to achieve the goal, or will we focus on the profit margin instead? Let me translate the first question. The first question is about volume.
Speaker Change #351: Yes.
Speaker Change #351: Mitchell.
Speaker Change #352: So much of a detrimental months at Cowen and company.
Pat: Pat do you want to tell Mr. Lucas New Montana.
No.
Speaker Change #353: Yeah sure I'll quit tissue, John actually came with Shaw.
Speaker Change #354: Got it.
Neil: So Neil.
Speaker Change #356: On the first question.
Speaker Change #356: Our volume.
Operator: Basically, your second quarter will be 105,000 units to 110,000 units, which means in the second half, you need to sell 360,000 units, which means the monthly volume will be close to 60,000 units. Because the Mega volume is quite small, and M9 will be late, so just the EIEV, the monthly volume will go to 60,000 units, which looks challenging. So if you have some pressure to achieve this number, would you further revise the pricing to 54 volumes, or actually do you just want to compromise on the profit and give up on the volume target? That's the first question. The second question is about the interest rate. We expect the interest rate to be 20% by the end of the year.
Speaker Change #356: Kind of as a competitor.
Speaker Change #357: 105 total units.
Speaker Change #357: And then all the.
Speaker Change #357: The units, which means the second half you'll be put.
Speaker Change #357: I'm, just closing units, which means most of the voting will be close to 60.
Speaker Change #357: Minutes, because mega boating was quite small and it will be.
Speaker Change #357: So if the EIA monthly volume will go to 60000 due to stable with no subtenant Jami. So if you have some pressure to achieve.
Speaker Change #358: Chip it's timber.
Speaker Change #358: Sure.
Speaker Change #358: Based on the.
Speaker Change #358: Clinical volume actually Europe onto comparable.
Speaker Change #358: I'll get back in the bottle market.
Steve will then to.
Speaker Change #358: Do you want me to give us somewhat of a kind of a multi you know a month.
Speaker Change #359: Continuing on Dominion, Stefan Josh I'm already well below <unk>.
Operator: If we keep this interest rate, I would like to ask, after the price is lowered, what factors will cause us to lose 20% of the interest rate in the second half of the year? Is it because the volume will be 60,000 units, or is there some other factor? My second question is about the growth margin. Previously, you said that the full-year growth margin would be 20%. If you want to maintain a 20% growth margin after your pricing cut, what's the key driver for the margin? Is it because the volume will increase when the monthly volume goes to 60,000 units, or another driver for maintaining a 20% growth margin? Thank you. Okay, this is James.
Speaker Change #359: We talked about the most I wanted to ask.
Speaker Change #360: Oh, no I'm not so sure.
Speaker Change #361: That will be helped by the increase in <unk>.
Speaker Change #362: So let me just go down what do you want to add.
Speaker Change #362: Hi.
Speaker Change #362: It doesn't mean.
My second question.
Speaker Change #363: Gross margin previously you kind of had a full year gross margin will be 20%. If you want to maintain a 20% gross margin <unk> I think.
Speaker Change #367: What's the key driver for our margin.
Speaker Change #364: Does the new at.
Speaker Change #365: Can you please.
Speaker Change #366: The monthly volume totaled 60, it sounds like you maybe I'll, let drive about.
Speaker Change #368: 20% gross margin. Thank you.
Liangjun Zou: I will take the first question. First of all, the L6 series has been widely recognized by users for each product strand and price point. And during the initial sales period from 18th April to May, to 5th May, the accumulated orders of the L6 reached over 41,000 units, which was an excellent sales performance. The order intake of the L6 series has maintained strong growth momentum post the initial sales period. Additionally, after we implemented the new pricing strategy for Li Auto L7, L8, and L9, their order flow has also shown ongoing improvement.
James: Okay. This is James I will take the first question.
Speaker Change #369: First of all the six series has been widely recognized by users.
For each product and price point.
Speaker Change #369: And doing the initial sales period from <unk> April to May.
Speaker Change #370: Two fifths Nate the accumulated orders of <unk> reached over 41000 the unit reachable.
Speaker Change #370: <unk> sales performers there.
Speaker Change #370: Order intake of <unk> series has maintained strong growth momentum posted the initial sales period.
Speaker Change #370: Additionally, after we implemented a new pricing strategy for the hotel seven eight and nine.
Speaker Change #370: The order flow has also showed ongoing improvements.
Liangjun Zou: In summary, our sales momentum has gradually improved, and we are optimistic about the continued ramp-up of monthly sales going forward. And I will hand over. There are two hours left for the second question. Hello, my name is John.
Speaker Change #370: In summary, our sales momentum has gradually improved.
Speaker Change #370: And we are optimistic.
Speaker Change #370: About the continue the ramp up of the monthly sales going forward.
Speaker Change #371: And I will handover.
Speaker Change #372: Two our sales grew for the second question.
Speaker Change #371: Tom.
Tom: Hello, Amit.
Speaker Change #371: John.
Jiong Shao: I think for us, the most important task after Q1 is to challenger as well. [inaudible] I think the most important task at the current stage is still recovery. I think it's also everyone.
Speaker Change #374: I think.
Speaker Change #375: To us.
Speaker Change #375: The most important task after Q1.
Speaker Change #375: Our challenge.
Speaker Change #375: E Commerce and especially after.
Speaker Change #375: March for us.
Speaker Change #375: Okay.
Speaker Change #375: Most input costs.
Speaker Change #375: The current state of chance to a recovery.
Speaker Change #375: I think that also everyone.
Speaker Change #375: Permits et cetera.
Speaker Change #375: The company.
Jiong Shao: And as we all know, the auto industry has a significant economy of scale, as well as Chuck Stills, can come back, I believe, but... will be some of the affiliates. So, and also with the L6. Outside of the sales growth, product mix, and optimization will be another factor which can impact our growth. And as Alisha mentioned, we implemented a lot of several. Action!
Speaker Change #375: Brian.
Speaker Change #375: As we all know the auto industry in particular.
Speaker Change #375: Significant economy of scale.
Speaker Change #375: Yes.
Bill: Thanks Bill.
Speaker Change #376: Kind of come back.
Bill: Bob.
Bill: Good.
The gross margin.
Bill: Sure.
Bill: It will be.
Some opportunities.
Bill: So on.
Bill: And also with the outfits.
Additionally.
Bill: Our outside sales growth product mix optimization.
Bill: We will be now.
Bill: Turkish Ken impact our across the market.
Speaker Change #377: As Bob is on must be implemented along with the rule.
Bill: Yes.
Jiong Shao: to control organization and efficiency will help the [inaudible] I think we have faced those challenges since March. So the second quarter will, 5, be the most favorite for the company. Your next question comes from Tim Hsiao with Morgan Stanley. Hello, Kuanlin Chen.
Bill: To control.
Speaker Change #378: Organization accretive fee.
Speaker Change #378: Which will help.
Speaker Change #378: Sure.
Speaker Change #378: The market come back.
Speaker Change #378: But.
Speaker Change #378: True.
Speaker Change #378: To remind.
Speaker Change #378: To remind you.
Speaker Change #378: I think we face those challenges.
Speaker Change #378: March.
Bill: So the second quarter Bill.
Bill: Bob.
Bill: The most difficult.
Bill: Portfolio company this year.
Speaker Change #379: Thank you.
Speaker Change #380: Your next question comes from Ken Zerbe with Morgan Stanley.
Speaker Change #380: Clayton.
Speaker Change #381: Together with you in what I'm Lindsay <unk> T cell antigen <unk>.
Operator: Thank you for taking my question. I have two questions. First, I'd like to follow up on what Mr. Xiang just said: this year's market competition is negative.
Speaker Change #382: Because it sounds like <unk>, so <unk> tended to telecom.
Operator: We can see the price of oil products and the price of new products. [inaudible] In the second half of the year, is there any room for improvement in our marketing strategy? Is there any room for improvement in terms of pricing and configuration in a reasonable manner? In addition to L6, is it possible for the M-series in the second half of the year and the 789 series to be equipped or downgraded in other ways to ensure that the car can go up another level?
Speaker Change #381: Yes.
Speaker Change #383: So the retail clinic.
Speaker Change #383: It's a little momentum.
Simeon: Thanks Simeon.
Speaker Change #385: <unk> chicken.
Speaker Change #385: Working capital accounts in July.
Speaker Change #385: Can you kind of itchy dogs, who is shopping in format in Charlottesville, DHT into Iot and pool two teaching content.
Speaker Change #386: So does that include <unk> <unk>.
Speaker Change #387: <unk> okay.
Okay.
Speaker Change #387: July will be <unk> <unk> hit in the Yieldco Nobody telco Chita.
Speaker Change #388: We're talking about sounds to say chip onto your account I'm really saying is showing good hygiene.
Operator: So I just want to follow up regarding the sales problem because, as management just mentioned the competition in China, the market has been getting worse here today. Although Li Auto just launched in 2024, Facelet, Alstom, and also had a reasonable price adjustment. What would be the company's strategy to further boost the volume from here if sales stay suppressed? Would the company ever consider upgrading the spec or further cutting prices to provide the actual impact on the sales volume into the second half, not just to L6 but also to L789 and the battery EV, pure EV into the second half? So that's my first question.
Speaker Change #388: So just want to follow up regarding the sales problem because.
Speaker Change #389: As management just mentioned the competition in China, EV market has been getting worse year to date.
Speaker Change #389: The auto just launched 234 based <unk> and also had the reasonable price adjustment.
Speaker Change #390: What would be the company's strategy to further boost evolving from here.
Speaker Change #391: A solid stay suppressed with the company ever consider too.
Speaker Change #392: <unk>. So there is to cut prices too.
Speaker Change #393: <unk> to provide <unk>.
Speaker Change #394: Ray and Pat as to the sales volume into second half not just to <unk>, but also to analysts had an 89.
Speaker Change #395: That battery EV pure EV into second half. So that's my first question.
Xiang Li: Hi, I'm Tim. I'm the CEO of E-Xiang. In terms of pricing, after the adjustment in April, the price of the product is very high, and the consumers agree with it. At present, L789's new orders are increasing every week, so the company has no plan to lower the price.
Speaker Change #396: Our either good.
Speaker Change #397: Good job of putting yourself affiliates on charter for this coming year.
Pete: So Pete I apologize I was having relationship with us.
Speaker Change #399: Our <unk>, Manitoba that shutting them down.
Speaker Change #399: Most of them will Cabo.
Speaker Change #399: So with that out of Dubai.
Mike: I think Mike if I may of <unk>.
Speaker Change #400: If you can comment here John Ophthalmology.
Speaker Change #401: Signal out of the Haynesville, yes, each other is absolutely Joanne.
Speaker Change #402: Additionally, John the ASO.
Speaker Change #403: The other deal.
Xiang Li: On the other hand, we think that for a healthy company, sales and sales profit are the two most important business indicators. E-Xiang is a car company that has always been demanding this kind of product. First, in terms of pricing strategy, after the price adjustment in April, we received some consistent feedback that the current pricing is very competitive in the market, and it's also been very well received by our customers, as shown in continued order intake growth since April.
Speaker Change #403: First in terms of the pricing strategy in fact after the price adjustment in April.
Speaker Change #404: <unk> consistent feedback that the current pricing is very competitive in the market and it's also been very well received by our customers.
Speaker Change #404: As shown in continuing order intake growth since April.
Xiang Li: So we don't have any further plans for price cuts. In terms of gross margin, we always believe that for a healthy company, sales and gross margin are the two most important operating metrics, and as a company, as a nine-year-old car company, Li Auto has continually held itself against these two important metrics. Okay, thank you, Mr. Xiang.
Speaker Change #404: So we don't have any further plans for price cuts.
Speaker Change #404: In terms of gross margin.
Speaker Change #404: Always believed for.
Speaker Change #404: For a healthy company sales and gross margin are the two most important operating metrics.
Speaker Change #404: The company has a nine year old car company. We also have continued and we hold ourselves against Q2 important metrics.
Speaker Change #404: Yeah.
Xiang Li: My second question is about possible costs. Apart from the project in the Maldives, based on our new project plan for 2024 and 2025, I'd like to ask the management team what kind of adjustments will be made to the ideal vehicle, which is a reasonable one, which includes the personnel configuration scale, the number of network points, and the development and marketing of the whole year, and what kind of relative adjustments will be made in the future? So my second question is about expenses.
Speaker Change #405: So I don't know, what youre going Tcl, Glenn Tilton and sale.
Speaker Change #405: So that's kind of a multichannel TV will missions.
Speaker Change #406: They seem to chevron to Johan.
Speaker Change #407: Sounds good.
Speaker Change #407: Six <unk>.
Speaker Change #407: And going into <unk>.
Speaker Change #407: <unk> that you don't want it shortly.
Speaker Change #407: Telephone <unk> intelligent channeling that tells you a horse race <unk>.
Speaker Change #407: TSA because they shall lead adhesion so.
Speaker Change #408: My second question is about expenses. So based on the auto is the updated sales target for 2024 and 'twenty five.
Operator: So based on Li Auto's updated sales targets for 2024 and 2025, what would be the reasonable sizes of employees, sales networks, sales and marketing expenses, as well as R&D spend? And where will the benefit of the cost savings be meaningfully reflected in the automaker's finances? That's my second question. Hi Tim, this is Xiang Li.
Speaker Change #409: What would be the reasonable size as employees sounds networks on sales and marketing expenses as well as R&D.
Speaker Change #410: <unk> spending.
Speaker Change #410: <unk>.
Speaker Change #411: Well, it's a benefit that the cost savings be minimum already reflected in the auto was financial that's my second question. Thank you.
Xiang Li: I think given the new year, new sales growth target, the company has adjusted very quickly in the last two months. Thank you for adjusting resource allocation across various impacts to better align with this year's operating objectives. Not bad, but... We focus a lot, and Richard has focused on the last four years.
Charlie: Hi, This is Charlie.
Speaker Change #413: I think given the new your new store growth target the company has.
Speaker Change #414: Got it very quickly.
Speaker Change #414: Laughter.
Speaker Change #415: And for modeling tools.
Speaker Change #415: Cool.
Speaker Change #416: We will adjust our.
Speaker Change #416: Resource allocation.
Speaker Change #416: Carl.
Speaker Change #417: <unk> Pak.
Speaker Change #417: Through both our lives easier.
Speaker Change #417: Creating objectives.
Speaker Change #417: That helps us manage it.
Speaker Change #417: For growth.
Speaker Change #417: <unk>.
Speaker Change #417: The loss of operating agreement.
Speaker Change #418: Thank you rich at the last four years.
Xiang Li: I appreciate it. We expect this job done will have some initial impact on results, but nothing from Q2, but most of them will impact operating efficiency after the second quarter of the century. So our next question comes from Tina Hou with Goldman Sachs. Thank you for your time.
Speaker Change #418: The company.
Speaker Change #418: Hi.
Speaker Change #418: We will have some initial.
Speaker Change #418: The impact of.
Speaker Change #419: <unk> resolved.
Speaker Change #419: Starting from Q2.
Speaker Change #420: Most of them Bill.
Speaker Change #419: Impact.
Speaker Change #419: After.
Speaker Change #419: Okay.
Speaker Change #419: The second quarter.
Speaker Change #421: Your next question comes from Ciena with Goldman Sachs.
Speaker Change #419: Okay.
Speaker Change #422: Hey, guys.
Dan: Sure Dan.
Operator: I have two questions. The first one is to follow up on Tim's question. We said we would open 400 stores this year. But now that we have a new strategy, I would like to ask about the goal of opening a new store. What are your thoughts on this?
Tim: <unk> key issues now follow up Tim.
Joseph: Thank you Joseph.
Joseph: Now women Tinyurl just as usual.
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Speaker Change #424: Donlin, Dan mentioned that Joseph J.
Speaker Change #425: <unk> not only that.
Speaker Change #424: <unk>.
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Speaker Change #426: How do you slow it down the age of the ship.
Speaker Change #427: J Jovian Mindy.
Speaker Change #428: Yes, Jay.
Operator: And what are your thoughts on dividing the stores into different cities? This is the first question. So my first question is in terms of the new store sales network expansion plan, so previously we had a target of 400 new stores this year, so just wondering now with our new strategy, what is the target number there? And also, among the stores, what's your split between the city-centered stores as well as the like city, maybe suburban stores? And in terms of different city tiers, what is your consideration there? Hi Tina, this is James.
Speaker Change #428: Yes, Google and up at home.
Speaker Change #428: Shipments to the ocean.
Speaker Change #429: J D. The Lindsay.
Speaker Change #430: So my first question is in terms of the.
Speaker Change #430: New store sales network expansion plan. So previously you had a target of 400 new stores. This year. So just wondering now with our new strategy.
Speaker Change #431: Target number there and also among the stars Whats your split between the city center stores as well as like city, maybe suburban stores and in terms of different city tier what is your consideration there. Thank you.
Jim: Hi, Tim This is Jim.
Speaker Change #432: I will take your questions.
Jim: And.
Liangjun Zou: I will take your question, and... Regarding our source expansion plan, and we will, First of all, we will plan our sales and service networking in advance according to sales demands. While expanding our sales network in terms of quantity, we will also continuously optimize the quality of each retail store by offering more showroom vehicles and improving the store space, considering we now have more and more different models. So this year, we have already opened 43 new retail stores, with more than half of them having the capacity to display over nine showroom vehicles. In the meantime, we have closed some smaller ones. As of 19th May, the number of total retail stores reached 488, so this is the latest number.
Speaker Change #433: So regarding or stores expansion plan and we will.
Jim: First of all we will plan, our sales and service network into the ones. According to sales demands while expanding our sales network in terms of quantity. We will also continuously optimize the quality of each retail store by offering more showroom recourse.
Jim: And the improving the store space.
Jim: Considering we now have more and more different models. So this year, we have already opened 43, new retail stores with more than half of them.
Jim: Having the capacity to display over nine showroom vehicles.
Jim: In the meantime, we have closed some smaller ones.
<unk> 19 may the number of total retail stores reached 488. So this is the latest number.
Liangjun Zou: And by CT Tiers, as you just asked, we have achieved 100% coverage of all first-tier cities, new first-tier cities, and second-tier cities, and 89 percent coverage of third-tier cities. We also had 215 showrooms across the country to broaden our coverage of more cities, which helped us to penetrate tier 3 and tier 4 cities. Aligned with our new sales target, we are gradually changing our pace of market penetration in order to better suit our current business needs.
Jim: And by city tiers.
Jim: So you just ask we have achieved the 100% coverage.
Jim: Hubs or first tier cities.
Jim: New first tier cities and the second tier cities.
Jim: And 89% coverage of certain tier cities.
Jim: We also had 215 showrooms across the country to broaden our coverage of more Cts, which share price too.
Jim: Penetrated to the tier three and tier four cities.
Jim: Aligned with our new sales target, we are gradually changing our pace of market penetration in order to better suited to current business needs.
Liangjun Zou: As to the types of stores for our new stores, we have gradually increased the proportion of stores in automotive parks over the past year. In the long run, we will continue to increase the percentage of stores in automotive parks as we expand our model portfolio and improve our brand awareness and influence. Thanks for your question.
Jim: As to the store types of types for our new stores, we have gradually increased.
Jim: Portion of stores seeing ultimately Pax.
Jim: Over the past year in the long run we will continue to increase.
Jim: Chip.
Jim: Percentage of stores in automotive.
Jim: Parks as we expand our mobile portfolio and improve our brand awareness and the insurers.
Speaker Change #434: Thanks for your question.
Operator: Your next question comes from Yingbo Xu with SAI. I have two questions. The first one is about the problem of city NOA and automatic driving. At present, the hardware of each manufacturer has the same trend, and the software and algorithmic effects also have the same trend. However, the FSD of Tesla may be expected by everyone overseas, so the first question is how to look at the perspective of the difference between the current automatic driving and the future. The second question is actually about the product rhythm of pure electricity.
Speaker Change #436: Your next question comes from Yang.
Speaker Change #435: Slide decks.
Speaker Change #437: Okay. Thank you Juanita.
Speaker Change #438: Mcgee sure claims with essentially only hutsell ingestion J Lynch.
Speaker Change #439: Good job.
Speaker Change #440: Tom Joseph Vitale go Janet Yang Zheng should hold nutrition.
Speaker Change #441: Jim question on shallow water.
Speaker Change #440: Sure.
Speaker Change #442: Thank you Hello come into Florida, FFC might Yolanda that also showed that <unk>.
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Speaker Change #444: You can't go to India The championship.
Speaker Change #444: Michelle.
Speaker Change #445: Now that you have you guys heard from Dan Mckenzie shelf Hawkins Thomas Thank you.
Speaker Change #446: Thank you Jack Conjuncture that Johan local telco infrastructure as a whole should have been.
Speaker Change #445: Great.
Operator: At present, we are looking at whether it means that pure electricity products need more time to prepare to be able to go into the market at a more solid time, that is, subsequent pure electricity product planning. So I have two questions. The first one is about the autonomous algorithm and the difference between this algorithm and how we see the future of this autonomous thing. The second question is about the product. How do we plan for the pure EV product later this year and next year? Thank you. Hello, Yingbo.
Speaker Change #447: So I have two questions. The first one is about it.
Speaker Change #447: About autonomous.
Speaker Change #447: And then just the difference of this algorithm on how we see the future updates autonomous thing.
Speaker Change #447: The second question is about product.
Speaker Change #447: Alright.
The pure EV product later this year and next year. Thank you.
Speaker Change #447: Okay.
Donghui Ma: I'm Donghui Ma. I'm going to answer the first question about the similarity of autonomous driving technology. For example, in cities, there are several different solutions in the industry. Heavy-duty, light-duty, and no-duty. Of course, no-duty is the most difficult.
Speaker Change #447: Okay.
Speaker Change #447: Sure.
Speaker Change #448: I will get audio Vinci.
Speaker Change #449: So that was our strategy for the Triple machine.
Speaker Change #449: We will push out Felicia the highway the hiring of the heart tissue, which is only applicable literature.
We seem to have.
Speaker Change #449: The dial with Wuxi.
Donghui Ma: Because it is not open to high-definition maps, range, and frequency of updates. As long as there is navigation, this function can work.
Speaker Change #449: EBIT.
Speaker Change #450: Sure push or continue with you for the kind of top five <unk>.
Speaker Change #450: Let's take a moment to hydro <unk>.
Speaker Change #450: Angel.
Donghui Ma: The ideal car is Q3. It will be like an all-wheel-drive AD Max. It will be like an all-wheel-drive AD Max. [inaudible] to train this model to learn the behavior of human driving and replace the traditional programming rules. Tesla has also proposed the most extreme implementation of this kind of data drive, similar to the end-to-end big model. This kind of technical trend is easy for everyone to reach an agreement on.
Speaker Change #450: Sure they'll hockey was that we saw <unk> 18 might have potential with which we said the only.
Speaker Change #451: Now, what we'll find Patricia sheesh, Josh at the luncheon on commercially.
Speaker Change #451: And to what degree.
Speaker Change #452: Listen I appreciate that nice acceleration.
Speaker Change #453: Thank you.
Speaker Change #453: Quicker to function.
<unk> controller, and we can let you should or should it should Honda.
Speaker Change #454: She can function.
Tricia Sushi: Tricia the hydride doesn't need.
Donghui Ma: But in fact, in order to achieve it, it requires a lot of data and training calculations. This is not what all car companies can do with their ability and resources. So I think that all companies should choose their own technical solutions based on their own situation. The difference in technology will ultimately be reflected in productivity and user value. First of all, on the question regarding CityNoA, there are three major paths in this area, completely dependent on HD maps, partially independent, and simply independent of HD maps. And obviously, the completely independent solution is the most difficult path, because it doesn't rely on the coverage and update frequency of HD maps. As long as there's navigation coverage, CityNoA can work.
Speaker Change #456: That's just really not sure sure Todd English food you heard kidney.
Speaker Change #456: So if you can push Israel, Turkey, Finland, let's say no I think thats right.
Speaker Change #456: Sure.
Speaker Change #456: As you all can get special niche and what I show industrial, but such a digital file.
Speaker Change #457: <unk> for the top quintile agenda can lead.
Speaker Change #458: We've talked to from here.
Speaker Change #458: First of all on the question regarding city, Illinois, There are three major path.
Speaker Change #458: Area.
Speaker Change #458: Completely dependent on HD map, partially independent assembly independent of HD map, and obviously as a completely independent solution is the most difficult path because it doesn't rely on coverage.
Speaker Change #458: Update frequency of <unk> as long as Theres navigation coverage city and the way. It can work. So our plan is to release a completely independent HD map independent 80 back solution to all users in Q3 this year for city anyway.
Donghui Ma: So our plan is to release a completely independent HD map, independent ADMACS solution to all users in Q3 this year for CityNoA. Fundamentally, fully independent solutions are real artificial intelligence in terms of autonomous driving. It uses data-driven models, it uses data-tray models to mimic human behavior, and in place for completely rule-based solutions.
Speaker Change #458: And fundamentally fully independent solution is real artificial intelligence in terms of.
Thomas Thank: Thomas driving.
Thomas Thank: Uses data driven model.
Thomas Thank: Year to date of the tree modeled to mimic human behavior and in place for completely rule based solution.
Donghui Ma: And Tesla's concept of an end-to-end big model is a similar concept driven by data-driven model solutions. It's very easy to reach consensus on this conceptual solution, but to implement it requires a lot of data and computing power. And this is not something that all car companies are capable of or have the resources to achieve. Therefore, we believe that different companies will select one of those three solutions based on their current situations, capabilities, and resources.
And tablets concept of end to end pig model similar context, driven by data.
Thomas Thank: Data driven data driven model.
Thomas Thank: <unk>.
Speaker Change #460: It's very easy to reach consensus on this conceptual solution, but who implement it requires a lot of data and computing power and this is not something that all car companies are capable we're happy resources.
Thomas Thank: Sure.
Thomas Thank: Therefore, we believe that different companies will.
Thomas Thank: So like one of those three solutions based on their current situations and.
Thomas Thank: <unk> capability and resources and these different choices would result in different.
Thomas Thank: Products and user value creation.
Donghui Ma: And these different choices would result in different products and user values. Hi, I'm Yingbo. I'm Li Xiang. I'm here to answer a question about the product structure. The company won't release the full FBOA results this year.
Speaker Change #461: Bob already talked quite out of the clinical and give a little bit here.
Speaker Change #461: To close within.
Xiang Li: It will be released in the first half of next year. First of all, in the current mid-to-high-end sales of SUVs, it is necessary to have enough self-driving supercars. We believe that the number of self-driving supercars should be similar to that of Tesla in China, which is the right time for the product to be pushed into the market. Second, we need to upgrade and increase the number of exhibition and mall stores. The number of booths is very important for our current multi-car, multi-price range sales.
Speaker Change #462: Clarify that.
Speaker Change #462: English ammonia.
Speaker Change #463: The social scenario.
Speaker Change #464: Worldwide, Jimmy IPO Ed.
Speaker Change #464: So all those other things.
Speaker Change #464: Total block should be archived yet.
Speaker Change #464: Actually on the total drop.
Speaker Change #464: Latin was that initially.
Speaker Change #464: 603 assets on the Ultrashape.
Speaker Change #465: Yeah, well, Michelle Sandy both under our control the churn rate the total yet.
Speaker Change #465: When they're done they slowdown.
Speaker Change #466: What are your thoughts on what CN is also to repeat how Toyota.
Xiang Li: If you want to support a new car model to get more than 10,000 sales, you probably need to add 500 to 600 fixed booths nationwide. Otherwise, there will be a problem of increasing the number of products but not increasing the price.
Speaker Change #467: Digital <unk> Italia.
I'm working though.
Speaker Change #467: <unk>.
Speaker Change #467: <unk>.
Speaker Change #467: So not something you should have et cetera et cetera.
Xiang Li: This is a problem that R8 has encountered in the past few months. Because R8's number of positions has decreased by 40%, but we are currently restoring R8's number of positions. Therefore, a sufficient number of superchargers and a sufficient number of new power stations are necessary conditions for selling pure-circuit SOAs. We will reach this time point in the first half of next year. The second question on our later BEV products: first of all, we will not be releasing our BEV SUV later this year.
Speaker Change #468: Patricia <unk>.
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Speaker Change #468: There are about the same issue that other vendors this year.
Speaker Change #468: Because our people are about a dime Israel.
Speaker Change #468: So, although the total and ultimately.
Speaker Change #468: <unk> syndrome.
Speaker Change #469: Sure It does okay.
Speaker Change #468: Yes.
Speaker Change #468: India, we found that initial budget.
Speaker Change #468: The second question on our.
Speaker Change #470: Later best products first of all we will not be releasing our best SUV. Later this year. The latest plan there to releases in the first half of next year and for two reasons. The first reason is we believe in order to sell premium.
Xiang Li: The latest plan is to release it in the first half of next year, and for two reasons. The first reason is that we believe in order to sell premium BEV SUVs, a necessary requirement is to have enough... branded charging stations.
Speaker Change #470: Bev Suvs.
Speaker Change #470: Necessary requirement is to have enough.
Speaker Change #470: Branded charging stations.
Xiang Li: We believe the correct level is to get similar levels of Tesla in China. That would be the perfect timing for releasing our next product. And secondly, another constraint is the number of parking spots in stores, in-store parking spots, and display spots.
Speaker Change #470: Belief correct level is to get similar levels of Tesla in China that would be the perfect timing for releasing our next product and secondly.
Speaker Change #470: Another constraint.
Speaker Change #470: The number of parking spots.
Speaker Change #470: <unk> stores into a parking spot displace spot.
Xiang Li: And this is very critical for us to be able to sell multiple cars across multiple price points and to supply a consistent sales of over 10,000 units per model. And in order to achieve that, we need about an additional 500 to 600 display spots across the country. Otherwise, we will be only increasing the number of products rather than the number of sales volumes. And that was the exact issue that L8 ran into in the past few months because we decreased the distribution box of L8 by 40%.
Speaker Change #470: And this is very critical for us to be able to sell multiple car or across multiple price.
Speaker Change #470: Price points.
Speaker Change #470: And to supply a consistent sales of over 10000 minutes per model.
Speaker Change #470: In order to achieve that we need about an additional five to 600.
Speaker Change #470: Despite spots across the country, otherwise, we will be increasing the number of product rather than the number of sales volume.
Speaker Change #471: And that was the exact issue that all eight ran into in the past few months, because we decreased the displacement of our aided by 40%, but that is being recovered right now and we are adding more despite box for a BLA.
Xiang Li: But that is being recovered by now, and we are adding more displacement boxes for the VL8. So to summarize, enough charting stations and enough incremental display spots are two critical and necessary conditions for selling our SUV product. And we believe we'll reach this point in the first half.
Speaker Change #471: So to summarize enough charging convictions and enough incremental despite spot are two critical.
Speaker Change #471: Necessary conditions for selling our SUV product and we believe we will reach this point in the first half of next year.
Speaker Change #471: Okay.
Operator: Your next question comes from Paul Gong with UBS. Thank you for answering my two questions. The first question is... (inaudible) to build an exclusive brand and a unique channel. This is the first question. The second question is: at this moment, our cash reserves are close to 100 billion.
Speaker Change #472: Your next question comes from Paul Gong with UBS.
Speaker Change #471: Okay.
Paul Gong: My assistant just over Q Wednesday, <unk> vehicle incidents sort of light social.
Speaker Change #474: So I mean, so in Gainesville, sweeping you clearly want to see.
Speaker Change #475: So quick from me.
Speaker Change #476: The insurance pool, Jamie because once with a key part of the season.
Speaker Change #476: So I'm sure that you can see a bump until <unk> Thiago.
Speaker Change #476: Thiago influence, where the <unk> domain question, which will be the Ohio will continue.
Speaker Change #477: Turning to Asia.
Speaker Change #478: With us on the <unk>.
Operator: At the same time, the stock price has fallen back a little. Will you consider it in any position? So two questions for me. The first one is, sooner or later, are we going to have the full product line within the BGC? Do you consider building a dedicated branch or channel for the BEV? The second question, given the huge cash reserve and Jioquan's performance recently, will you consider a share buyback? Okay, this is James. I will take your first question.
Speaker Change #479: So two questions for me. The first one is sooner or later, we're going to have the full points online.
Speaker Change #479: We will complete our beauty dedicated brands or channel for the EV.
Speaker Change #479: Program.
Second question, given the huge cash resource.
Speaker Change #480: Joe Klein's performance recently, where you can see those buyback on system components.
Jim: Okay. This is Jim we will take your first question.
Speaker Change #481: And regarding that.
Liangjun Zou: Regarding the BEV and our REV model. We will stick to our direct sales model in the domestic market, and we will strive to showcase all of our products in our retail stores and showrooms. In the meantime, we have initiated an internal discussion on a differentiated retail strategy, and we may launch some innovative pilot programs in the future. And we will share additional relevant details in due course. And I will hand over to our CFO, Jiong, for your second question. Hi Bob.
Speaker Change #481: BV.
Speaker Change #481: Sure.
Speaker Change #482: Arguably motives.
Speaker Change #482: So we.
Speaker Change #482: We will speak to our direct sales model.
Speaker Change #482: Peak market.
Speaker Change #482: It will be we will strive to showcase one of our product in our retail stores and showrooms in the meantime, we have initiated the internal discussion.
Speaker Change #482: <unk> differentiated retail strategy and we've made launch some a normative pilot programs in the future.
Speaker Change #482: We wish to share additional relevant details in due course.
Speaker Change #483: And I hand over to our CFO Jonny for your second question.
Speaker Change #482: <unk>.
Speaker Change #484: Hi, Paul on sure.
Speaker Change #485: Buybacks currently.
Speaker Change #486: We don't.
Jiong Shao: We don't have a lot, and we will periodically make some assessments based on company and stock financial position, capital market, and other [inaudible]. Your next question comes from Yuqian Ding with HSBC. Thank you, Director Chen. I have two questions. First, I would like to ask about the basic family users. We see that the background is that the wealth effect of the middle class is relatively weak.
Speaker Change #487: Hi lore.
Speaker Change #486: Sure.
Speaker Change #486: We will periodically.
Speaker Change #486: Assessment based on company's thoughts on acquisition.
Speaker Change #486: Market and other.
Speaker Change #486: Priority <unk>.
Speaker Change #486: <unk>.
Speaker Change #488: Got it.
Speaker Change #489: Chris needs.
Speaker Change #489: Pharmacy.
Speaker Change #489: Okay.
Speaker Change #489: Okay.
Speaker Change #490: Your next question comes from you, Ken Zhang with HSBC.
Speaker Change #491: Because everybody is now around <unk> <unk> just won the J D.
Operator: Are there any updates to the family market that we have positioned? We also see that the supply of electric vehicles above 200,000 has increased. For the future, especially in the second half of the year, the growth space mainly comes from the expansion of the family market, relative competitiveness, or something else. Can you please explain that, Director Chen? I have two questions.
Speaker Change #492: Jake adapting Jack Niall Nolan will come out and say thank you.
Speaker Change #491: Yes.
Speaker Change #493: You may all women thing being where the jacking system that Jacob Thank you.
Speaker Change #494: I was wondering if someone can answer going out now.
Speaker Change #495: Now women.
Speaker Change #496: 70, <unk> hundred <unk> definitely.
Speaker Change #497: On the call Jon <unk>, Hi, Susan Micromanaging, Glanton, Jcs, <unk>, Dallas Chipotle GTE oncology highlights just on the QUADRA highlights just how that <unk> going to go at the element POC.
Operator: The first thing to ask is about the growth conviction. Especially, our total addressable market is mainly hinged on family users. That's largely middle class-relevant, but it seems to be melting down.
Speaker Change #496: Yes.
John: John I don't think so.
Speaker Change #496: Fine.
Speaker Change #498: I got two question the first is to.
Speaker Change #498: To ask about.
Operator: Can you please explain it, Director Chen? And the second question is whether the company will consider harvesting some low-hanging fruit in the overseas market. With relevance to the domestic market, it seems the pricing and competition are more favorable, and the global OEMs are moving marginally towards hybrids. The range extender seems to be a good solution.
Speaker Change #498: The gross conviction, especially our total addressable market is mainly hinged on the family.
Speaker Change #498: Use us that's largely minute cost relevant but it seems to be melting down so is the growth coming from the increasing 10 or the relative condition.
Speaker Change #498: The other peers offering, but we're seeing above RMB 20, 8-K about increasing module supply and second question is whether the company will.
Speaker Change #498: Neither Hudson harvesting some low hanging fruit in oversea market with relevance to the development of the domestic market. It seems that pricing and competition is more favorable and the.
Speaker Change #498: Global OEM I'm moving marginally towards hybrid the range extender seems to be a good solution.
Speaker Change #498: Yeah.
Xiang Li: Let me answer the first question, Yixiang. We think that more than 200,000 mid-to-high-end home users are our firm market choice, and there will be no change in the medium-to-long term. On the other hand, I think we are still far from being good enough.
Speaker Change #499: Whenever I do look at visa.
Speaker Change #499: Due to our material value sounder.
Speaker Change #499: Mobile is that being able for.
Speaker Change #500: Jetblue electrical jetblue.
Speaker Change #500: Okay.
Speaker Change #500: But if I remember.
Speaker Change #500: We will do that.
Speaker Change #501: Go ahead.
Xiang Li: This market still has more and more detailed user values waiting for us to grow and expand. So our first question, our focus will remain on the market for any of the vehicles priced over RMB 200,000 for family users, and this will continue to be our focus in the midst of the long run because we firmly believe that there's still much to be done in the market in terms of products, and there are many areas where we can improve to better serve our users and create value for them in the long run.
Speaker Change #502: Hey, guys just a higher you are going to consider.
Speaker Change #502: Consider that Youll go gotcha.
Speaker Change #502: Sure.
Speaker Change #502: Okay cool.
Speaker Change #502: So on the first question our focus will.
Speaker Change #502: We remain on the market of any of the.
<unk> vehicles are priced over RMB 200000 for family users and this will continue to be our focus.
Speaker Change #502: The mid to long run because we firmly believe that there is still much to be done in the market in terms of product and there are many areas, where we can improve to better serve our users and create value for them in the long term.
Xiang Li: Okay, I will take your second question, and regarding the overseas market strategy. As Li Auto vehicle models become increasingly popular overseas, we will accelerate the establishment of our after-sales servicing networks in order to provide the best service experience for our overseas users. We will build an after-sales service network in international markets, where we already have an established user base. We plan to start our own after-sales service network in Central Asia and in the Middle East this year, which is ongoing right now. We will select appropriate dealers for market expansion in overseas countries and regions outside Western Europe and North America.
Speaker Change #503: Okay I will take your second question.
Speaker Change #503: And regarding the overseas market strategy.
Speaker Change #503: As Lee will tow vehicle models.
Speaker Change #503: Increasingly popular overseas.
Speaker Change #503: We have accelerated the establishment of our after sales service and networks in order to provide the best service experience for our overseas users.
Speaker Change #503: It will be viewed in after sales service and network in international market.
Speaker Change #504: Well, we already have been.
Speaker Change #504: Tablet user base, we plan to start our own after sales network.
Speaker Change #504: After sales service network in.
Speaker Change #504: Central Asia and.
In the Middle East this year, which is ongoing.
Speaker Change #504: Right now we.
Speaker Change #504: Select.
Speaker Change #504: Appropriate to dealers for market expansion in overseas countries and.
Speaker Change #504: In regions outside of Western Europe, and North America.
Xiang Li: Given the adjustment of this year's sales target, we will focus our efforts on the domestic market this year. We will share more details in due course. Your next question comes from Ning Sun Li with Bank of America. Hello, Mr. Guan. I'm Ming from Meiyin.
Speaker Change #504: Steven.
Speaker Change #505: Estimates of this year's sales target, we will folks.
Speaker Change #505: Our efforts in domestic market. This year, we will share more details in due course.
Speaker Change #506: Your next question comes from Nathan Li with Bank of America.
Speaker Change #506: Okay.
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Operator: I have two questions. The first question is about the recent media coverage of the company's organizational adjustment. After the first half of the year, the orders for some of the car parts have not been met. Mr. Li has mentioned before that he is no longer just pursuing the growth of the number of orders. In the direction of the company's future organizational adjustment, which departments or areas do you want to invest more resources in? Recently, the media reported that the company underwent a certain reorganization. In the future, what is your strategy for your organization? What department or what area will you invest more resources in? I'm Li Xiang. Hello, Ming.
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Xiang Li: The core change of this wave of organizational adjustment is to set up a quality-operated team so that the business can focus on making high-quality decisions to improve the efficiency of execution and not spend a lot of time on repetitive operations. I think this is the most fundamental change this time. But I think an organization's upgrade adjustment usually takes 12 to 24 months to see the real results.
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Xiang Li: So I think if we measure the results of this organization upgrade, it will be more clear in 2025. So in this most recent organizational restructuring, one of the most important changes is that we've established a new department called Quality Operations. And the thinking behind this change is to allow our business units to really focus on high-quality decision-making and operating efficiency instead of focusing on processes and operating these processes. And typically, for an organization change, it takes about 12 to 24 months to see real results.
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Speaker Change #517: So in this most recent of our organization restructuring.
Speaker Change #517: One most important changes that we've established new department called quality operations and the thinking behind this change is to allow our business units to really focus on high quality decision, making and operating efficiency and seven focusing on processes and operating these processes.
Speaker Change #517: And typically for an organization change it takes about 12%.
Speaker Change #517: 12 to 24 months to see real results. So we think a good time to reevaluate will be sometimes in 2025 and 2026.
Xiang Li: So we think a good time to evaluate it would be sometime in 2025 or 2026. Thank you, Mr. Li. My second question is about the NOA. This year, we can see that the company's NOA is opening up more quickly in the city. Does the current management level think that the function of NOA, especially our ideal consumer price of more than NT$250,000, is getting more and more important? Will the behavior of consumers change after the opening of the Tesla FSD V12 in China? Will it be more difficult for future tail-end companies to survive without NOA? Let me translate this question for you.
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Operator: This year, we can see that Li Auto's development in NOA is speeding up. Right now, for your client base, how important do you think NOA is for your client base? After Tesla opens its FSD V12 in China, will this change consumers' behavior? In the future, if some auto companies don't have NOA functions on the car, will they be able to sell cars well? Thank you. This is my second question. Hello, I am Donghui Ma.
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Donghui Ma: We firmly believe that NOA can make ideal users drive safer and more convenient. We can also see the NOA test version of Wutu City, which we started to promote in May. According to the first batch of public car owners, we can see that the NOA journey accounted for more than 65% of the usable journey. From the usage rate, we can see the user's recognition level.
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Donghui Ma: Regarding the opening of the Tesla FSD V12 function, we believe that the next stage of intelligent driving competition will be a major factor for consumers to consider. And after the opening of FSD in China, it will make more consumers pay more attention to this function and experience. For the standard and technical development of the entire automotive industry, we think it is a good thing. At the same time, it will also promote the development and investment in intelligent driving and improve performance.
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Donghui Ma: First of all, we firmly believe that NOA makes it easier and safer for our users to track. As we've seen in the latest release of our mapless NOA beta version in May, the feedback from the first group of users, they drive over 65% of their total mileage using CityNLA. And this penetration rate is a good testament to why we accepted our latest version of NLA for our users. And in terms of Tesla's FSD V12, we believe that in the next stage of competition for smart electric vehicles, autonomous driving will be a primary reason for our users as they consider buying a car.
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Donghui Ma: FSD V12, after it becomes available in China, will only make users focus even more on autonomous driving functionalities as well as experience, which will further enhance the importance of the creation of industry standards and the development of the technology in the industry.
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Donghui Ma: And again, in return, driving different car companies to invest even further in improving. As we are reaching the end of our conference call now, I'd like to turn the call back over to the company for closing remarks. Ms. Janet Jiang, please go ahead. Thank you once again for joining us today. If you have any further questions, please feel free to contact Li Auto's investor relations team. That's all for today. You may now disconnect your line. Thank you.
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Speaker Change #539: As we are reaching the end of our conference call now I'd like to turn the call back over to the company for closing remarks.
Speaker Change #539: Janet Yang Please go ahead.
Janet Yang: Thank you once again for joining us today, if you have any further questions. Please feel free to contact me items Investor Relations team. That's all for today you may now disconnect. Your line. Thank you.