Q4 2024 Li Auto Inc Earnings Call
Higher robotics 5,000 people A time larger world 10 countries 1,000 missions
Speaker Change: Hello ladies and gentlemen, thank you for standing by for Lee Otter's fourth quarter and full year 2024 earnings conference call.
Speaker Change: At this time, all participants are in listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Janet Zhang, investor relations director of Li Auto. Please go ahead, Janet.
Janet Zhang: Thank you. Good evening and good morning everyone. Welcome to Li Auto's fourth quarter and full year 2020-24 earnings conference call. The Complaced Financial and Operating Results were published in a press release earlier today and it will postate on the Complaced IR website.
Janet Zhang: On today's call, we will have our chairman and CEO , Mr. Xiang Li, and our CEO , Mr. Zhong Li, Tie Li, to begin with, prepare remarks. Our president, Mr. Dong Lin Ma, and our senior vice-president, Mr. Jiang Jingzou, will join for the Q&A discussion.
Janet Zhang: Before I continue, please be reminded that today's discussion will contain four looking statements made and the safe harbor provisions of the U.S. private security litigation reform act of 1995-5.
Following the key statements involve inherent risks and uncertainties.
Janet Zhang: as such, the company's actual results may be materially different from the views expressed today. For information regarding risks and incentives, it's included in certain company failings with the U.S. Securities and Exchange Commission and the stock exchange of Hong Kong limited.
Janet Zhang: The complaint does not assume any obligation to update any four-looking statements except as required and a applicable law.
Janet Zhang: Please refer to Li Auto's disclosure documents on the IR section of our website, which contain a re-sensitulation of the unaudited non-GAAP matters to comparable U.S. get matters.
Speaker Change: Overseo will start his remarks in Chinese. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO , Mr. Jiang Li. Please call a hat.
Speaker Change: Hello everyone, I am Li Xiang. Welcome to today's earnings conference call.
In 2024, China's new energy vehicle market continues to maintain a rapid growth trend.
Speaker Change: According to the data on insurance volume from China Automotive Salt, the penetration rate of new energy vehicles in China has exceeded 50% for several consecutive months, with the annual penetration rate of new energy vehicles reaching 45.9%.
Speaker Change: Year-on-year growth of 12 percentage points. Li Auto, with its outstanding product strength and organizational efficiency, as well as continuous breakthroughs in artificial intelligence.
Speaker Change: Continue to consolidate the position as the sales champion of Chinese brands in the light energy vehicle market above 200,000 yuan, with a market share of 15.3% for the whole year.
Speaker Change: In the fourth quarter of 2024, Li Auto delivered over 158,000 vehicles, setting a new quarterly record.
Speaker Change: By the year before 2024, Li Auto's cumulative deliveries exceeded 500,000 units, becoming the first new energy vehicle brand to achieve annual deliveries of 500,000 units, and also the first Chinese luxury brand to reach this milestone.
Speaker Change: In addition, the cumulative delivery volume of the entire Ideal L series, including the L6, L7, L8, and L9 models, has exceeded 200,000 units. This demonstrates the high level of user recognition for Ideal's products and our consistently efficient delivery capabilities.
Speaker Change: Here, I would like to express my heartfelt gratitude and look forward to continuing to work together with everyone to reach new milestones.
Speaker Change: With the growth of business scale, several financial indicators of Li Auto have also reached a quarterly historical high.
Speaker Change: In the fourth quarter of 2024, Beixiang Auto's total revenue reached 44.3 billion RMB, driving the total annual revenue for 2024 to 144.5 billion RMB. By the end of 2024, the company's cash on hand amounted to 112.8 billion RMB.
Sufficient ability to acquire resources and strong cash reserves provide a solid guarantee and continuous motivation for our long-term investment in electrification technology and enhancement of intelligent layout, steadily realizing the company's vision.
[inaudible]
[inaudible]
You You You You You
Speaker Change: There is no doubt that intelligence is the second half of the automotive industry's development. For this reason, we continuously invest in research and development and accelerate innovation. Over four years, our R&D investment exceeded 11 billion RMB, effectively driving breakthroughs and growth in Li Auto's intelligent driving.
Speaker Change: In the field of intelligent driving, Li Auto firmly remains in the first tier. Our industry-first end-to-end JW2M dual-system intelligent driving solution not only leads the industry development trend but also achieves industry-leading levels in terms of iteration speed and performance.
Speaker Change: In January , we launched the brand new ADMAX V13, and the high-speed NV was upgraded to an end-to-end technology architecture, achieving an end-to-end urban high-speed full-scenario experience.
Speaker Change: We have also launched the industry's first AI inference visualization feature for brackets, allowing users to clearly understand how intelligent driving works.
Speaker Change: In February , we further achieved the full deployment of the end-to-end doubling of the 2F1000 ten million particle large model.
Speaker Change: Becoming the first company in China to adopt a 10 million kilometer large model, from 1 million kilometers to 10 million kilometers in just 7 months, Li Auto's intelligent driving upgrade speed continues to maintain an industry-leading level.
Speaker Change: In terms of performance, the AD Max V13 with 70 million kreyz cycles also holds a leading position in the industry.
Speaker Change: Based on recent evaluations by multiple automotive professional media on sub-top brands both domestically and internationally, the AB MAX V13 has consistently achieved first place in multiple competitions. The advantage in terms of average takeover times is very evident.
Speaker Change: In addition, we have also initiated the development of the next-generation technology architecture, VLA, which stands for Vision, Language, and Action model. The new plan will be launched alongside the first pure electric SUV, the Li Auto i8, this year, and we look forward to bringing users a brand new intelligent driving experience.
Speaker Change: In terms of the charging network, in coordination with the launch of our all-electric SUV in 2025, our construction is also accelerating comprehensively. In 2024, we will add up to 1,420 new Ideal Supercharging Stations.
Speaker Change: Industry-leading site construction speed. In addition, Li Auto has built the largest high-speed supercharging network in terms of vehicle body scale. As of now, we have over 1,900 Li Auto supercharging stations and more than 10,000 charging piles in operation.
Speaker Change: Li Auto's supercharging network not only has wide coverage but also fast charging speeds and a high equipment online stability rate.
Speaker Change: Even after enabling automatic charging preheating in winter, the Ideal LiGAR can still achieve 12 minutes at the Ideal Control Station.
The charging efficiency for a full 500 kilometers remains at a high industry level of 99.9% online rate for charging equipment, even under the high load of the Spring Festival holiday.
Speaker Change: Such a high-quality and efficient energy replenishment experience is precisely the rigid demand of pure electric users.
Speaker Change: Looking ahead, we will continue to accelerate the deployment of the supercharging network, aiming to have a maximum of 2,500 supercharging stations by the time the first pure electric SUV, the Li Auto F8, is released, and to increase the number of supercharging stations to 4,000 by the end of 2025.
Speaker Change: In terms of sales network, in 2024, both our store opening quality and sales efficiency have significantly improved.
By gradually replacing the northern mall stores with flagship stores in major auto cities, the proportion of flagship stores has increased from 24% at the end of 2023 to 42% at the end of 2024.
From the perspective of electricity efficiency, taking the newly opened Cangzhou High-tech Zhongxin Electric in 2024 as an example, within just four months of operation, the monthly electricity efficiency has already reached 175 units, which fully demonstrates our Jindian's high operational efficiency.
As of February 28, 2025, Li Auto has 500 retail centers nationwide, covering 150 cities. Looking ahead to 2025.
Speaker Change: While we continue to strengthen our offline channel layout, we will also continue to expand and build our sales network in a rhythmic and quality manner, with the principle of improving operational efficiency.
Speaker Change: Looking ahead to 2025, we will continue to focus on user value, maintain consistent product competitiveness, and work on launching pure electric SV models while upgrading existing models.
Speaker Change: In addition, we will continue to embrace intelligent transformation and continuously strengthen research and development.
Speaker Change: Technological innovation and the ability to create oneself ensure sustainable long-term development and breakthroughs in the era of intelligence.
Speaker Change: Next, let's welcome our CFO , Li Tie, to give a detailed presentation of our financial performance.
[inaudible]
Hi, everyone. Welcome to today's conference call.
China's NEV market maintained rapid growth in 2024.
Speaker Change: According to insurance registration data from the China Automotive Technology and Research Center, China's NEV penetration rate exceeded 50% for many consecutive months in 2024, reaching 45.9% for the full year, 12 percentage points a year over year.
Speaker Change: Leveraging our outstanding product portfolio, organizational efficiency, and continuous breakthroughs in artificial intelligence.
Speaker Change: We further solidified our position as the sales champion, Amon Chinese Autobrand in the RMB 200,000 and above any of the market, taking our full year market share to 15.3%.
Speaker Change: In the fourth quarter of 2024, we delivered over 158,000 vehicles, setting a new quarterly record. Our full-year deliveries exceeded 500,000 units, making us both the first emerging NEV brand and first Chinese premium auto brand to reach this milestone.
Speaker Change: In addition, each model in our Lee L series, including the L6, L7, L8, and L9 have reached achieved cumulative deliveries of over 200,000 units respectively.
Speaker Change: Showcasing the strong user recognition of our products and our highly efficient and consistent delivery capabilities.
Speaker Change: These achievements will not have been possible without the effort and dedication of every team member in the auto, the support of our partners, and the trust of our users.
Speaker Change: I would like to express my heartfelt gratitude to them and look forward to reaching new milestones in collaboration.
Speaker Change: As our business continues to expand, a number of financial metrics have reached record high for the quarter. In Q4, 2020, 4th,
Speaker Change: Total revenues reached RMB 44.3 billion, taking full-year total revenues to RMB 144.5 billion.
Speaker Change: As of the end of 2024, our cash on hand has reached R&B 112.8 billion
Speaker Change: Our robust cash generation capabilities and substantial cash reserves provide solid support to our long-term investments in electrification and artificial intelligence, abancing our progress toward our long-term vision.
Speaker Change: Looking forward, we expect continued growth in 2024, aiming for 88,000 to 93,000 vehicle deliveries in Q1.
Speaker Change: There is no doubt that intelligence is the theme of the next phase of auto industry's evolution.
We continue to invest in R&D and accelerate innovation.
Speaker Change: Our R&D investments exceeded RMB 11 billion in 2024, driving further breakthroughs and growth in our autonomous driving system.
Speaker Change: In terms of autonomous driving, we solidified our position as a top tier player in the sector.
Speaker Change: Our industry pioneering dual system, autonomous driving solution, combining an end-to-end model with a vision language model sets in trend in the industry with industry leading pace of iteration and performance.
Speaker Change: In January , we rolled out AD Max V13, upgrading highway NLA to an end-to-end architecture, providing end-to-end capability across both urban and highway driving scenarios.
Speaker Change: In parallel, we introduced a first-of-the-kind AI reasoning visualization feature for autonomous driving, providing users with a better understanding of how did the autonomous driving function
Speaker Change: In February , we rolled out our latest end-to-end and VLM models trained on 10 million video clips for all 80 Mac users.
Speaker Change: Megan is the first automaker in China to deploy large models to train out 10 million video clips.
Speaker Change: Our autonomous driving system has been evolving at an industry-leading pace, taking only seven months to grow from 1 million to 10 million video clicks.
Speaker Change: In addition, our 10 million video clips, 80 max V13, both industry leading performance which was clearly demonstrated in our recent press reviews that evaluated top tier on the time-striping systems from global and domestic auto-brands.
Speaker Change: 80 Max V13 secured first place in a number of these head-to-head reviews with a significant advantage in terms of number of interventions.
Speaker Change: Additionally, we have already initiated R&D for next-generation model base on the vision language action or viola architecture.
Speaker Change: We plan to launch it alongside our first battery electric SUV, L8, this year delivering refreshment on a driving experience to our users.
Moving on to the supercharging network.
Speaker Change: We're accelerating its deployment and preparation for the Lancha B-EV model in 2025.
Speaker Change: In 2024, we built 1,420 super charging stations and an industry-leading pace. We operate the largest highway super charging network of any auto OEM in China.
Speaker Change: As of now, we have over 1,900 supercharging phasions with over 10,000 charging
Speaker Change: Our supercharging network covers a wide range of regions, both in rapid charging speed and high uptime rate. In even a winter, Li MAGA can charge up to 500 kilometers in 12 minutes with battery
Speaker Change: Even under the heavy load of spring festival holiday, our charging facilities reach an uptime rate of 99.9%, the overall charging experience and efficiency are essential to be the user.
Speaker Change: Looking forward, we will continue to accelerate the deployment of our super-target network, aiming to have 2500 super-targeting stations by the time we launch the EI-8, our first battery electric SUV.
Speaker Change: We plan to expand to 4,000 stations by the end of 2025.
Speaker Change: Moving on to a sales and service in network. In 2024, the overall quality and sales efficiency of our retail stores have improved substantially.
Speaker Change: By replacing low-performing shopping mall stores with fail centers located in the major auto parks, our proportion of fail centers has increased from 24% at the end of 2013-20-20-20-3 to 42% at the end of 2024.
Speaker Change: Total nationwide display stock increase from over 2,600 to over 3,700.
Speaker Change: In terms of same-store sales, taking the newly opened Cundle Hightech Zone Sales Center as an example, it's same-store sales has reached 175 units per month in just four months since OK.
Speaker Change: The fully demonstrate the operating efficiency of our new sales centers.
Speaker Change: As of February 28th, 2025, we have 500 retail stores in 150 cities nationwide.
Speaker Change: Looking at Hou to 2025, while we continue to strengthen our offline presence, we will continue to pursue high-quality expansion of our failed networks as a reasonable pace, prioritizing operating efficiency.
Speaker Change: We're also advancing our overseas expansionist plan. In January of 2025, we open our R&D Center in Munich, Germany. This is our first overseas R&D Center marking the first step in our globalization R&D strategy.
Speaker Change: Additionally, we have established directly-operated service incentives in three reasons, Kazakhstan, Dubai, and Uzbekistan.
Speaker Change: In 2025, we plan to enhance our overseas expansion efforts with a continued focus on markets with high growth potential. We believe that in the future, we will see an increasing number of Le Auto vehicles on the road in different countries.
Speaker Change: Looking forward to 2025, we will maintain our product competitiveness with a relentless focus on creating user value. We will further upgrade our existing models and ensure the smooth launch of our new BEV models.
Speaker Change: In addition, we will continue to embrace intelligent transformation by strengthening our R&D technological innovation and cash generation capabilities to ensure sustainable long-term development and breakthroughs in this artificial intelligence era.
Speaker Change: I will now turn the call over to our CFO Johnny to walk you through our financial performance.
Johnny: Thank you, Xiang, hello, everyone. I will now walk you through some of our thoughts caught here.
2024, Wen Anshou, due to time constraints.
Johnny: I will assign financial highlights here and the encouragement you to refer to our early press release for further details.
Johnny: Total RAM in the first quarter will be 44.3 billion, Paul, 6.1 billion US dollars.
up 6.1% year-over-year and 3.3% quarter-over-quarter.
Johnny: This included R&B 42.6 billion or 5.8 billion US dollars from vehicle sales.
up 5.6% year-over-year and 3.2%.
Carter-Walker, both the Year-Way Year and Sequential Inquiry.
or primarily attributable to the increase in vehicle delivery.
Johnny: The year-year AFP decline was mainly due to different product mix.
Johnny: while the sequential AFP change was milled due to the interest subsidies provided to customers.
Johnny: The cost of sales in the box coder was RMB 35.3 billion, all.
4.8 billion US dollars, up 10.5% euro a year and
4.9% culture over culture.
Johnny: Groff's profit in the fourth quarter was R&B 9 billion or 1.2 billion US dollars.
down 8.3% year-over-year and 2.8% quarter-over-quarter.
Vehicle Marketing in the fourth quarter was 19.7%
Johnny: Compared with 22.7% in the same period last year and 29.9% in the prior quarter.
The year-over-year decrease was mainly due to different product mix.
Johnny: The sequential decrease was mainly due to the loss on purchase commitment and lower average its starting price due to interest subsidies provided to customers.
cross-marking in the both-color walls.
20.3 percent
Johnny: worth 23.5% in the same period last year, and 21.5% in the prior quarter.
21.6 million US dollars, done 22% year over year, and 9.1% quarter over quarter.
[inaudible]
R&D expenses in the fourth quarter.
for RMB 2.4 billion or US$329.9 million.
Dong 31% year-over-year, and six points.
9% cultural culture.
Johnny: The year-old year decrease was primarily due to the decreased expenses related to product.
Johnny: Paul Follows, and Technologies, and Decrist Employee Commensation. The sequential Decrist was primarily due to the Decrist Employee Commensation.
Thank you.
Johnny: IC&A expenses in the post-culture were RMB 3.1 billion or 421.5 million US dollars.
down 5.9% year-over-year.
and 8.4% quarter-over-quarter.
Johnny: The year-old year's decrease was primarily due to decreased employee compensation and the improved operating efficiency.
Johnny: Reignation of Theo's performance based award in the third quarter of 2024, partially outside by the increased marketing and promotion activities.
Johnny: Income from operations in the box cutter was RMB 3.7 billion, or 500, 7.4 million US dollars, 22% year-to-year, and 7.9% call to a call to a call to a call to a call to a call.
Johnny: Operating marketing in the fourth quarter was 8.4% input from 7.3% in the same period last year and 8% in the prior quarter.
Johnny: Net income in the both-quarter was RMB 3.5 billion or $484 million US dollars.
down 38.6% year-over-year and up 25.3% quarter-over-quarter.
Thank you.
Johnny: Deluted NetEarnings per share, attributable to ordinary shares, both R and B, three points.
4 5 US dollars in the fourth quarter.
Johnny: Workings, RMB 5.32 in the same period last year, and RMB 2.66 in the prep order.
Johnny: $112.8 billion or $15.5 billion US dollars as of December 31st, 2024.
Johnny: Net cash provided by operating activities in the fourth quarter was R&B 8.7 billion of 1.2 billion U.S dollars worth is R&B 17.3 billion in the same period last year and R&B
11th Building in the Prague Quarter.
Free cash flow was R&B.
$6.1 billion or $830 million.
Johnny: $1.1 million US dollars in the bought powder. Worthless R&B 14.6 billion in the same period last year.
and RB 9.1 billion in the prior culture.
Heizle of December
31st, 2024. We had a total of...
32,248 employees.
Johnny: 2024, four-year financial results, please refer to our early press release.
[inaudible]
and now for our business outlook.
Johnny: 88,000 and 33,000 vehicles representing a year-to-year increase of 9.5% to 15.7%
Johnny: The company also expects the first quarter total revenue to be between R&B 23.4 billion and R&B 24.7 billion.
or $3.2 billion US dollars.
U.S. dollars and then 3.4 billion U.S. dollars.
Rebranding a year-to-year decrease of 8.7% to 3.5%
Johnny: This business outlook reflects the company's current and preliminary review on its business situation and market condition, which is subject to change.
Johnny: That concludes our prepared remarks. I will now turn the call over to the operator and start our Q&A session. Thank you.
Johnny: Thank you. If you wish to ask a question, please press door one on your telephone and wait for your name to be announced.
Johnny: If you wish to cancel your request, please press star 2.
Johnny: If you want to speak of them, please pick up the hand set to ask your question.
Speaker Change: For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first and follow with English translation. Your first question comes from Paul Gong with UBS.
Paul Gong: Okay, thank you for accepting my question. I have two questions. The first question is about the company's all-electric vehicle models. I would like to ask what the overall release schedule is for this year according to the management.
Then, are there any highlights in the subsequent pure electric test that can be shared with everyone?
Speaker Change: Spending more focus, increasing more focus on the AI, and you can share us with the latest development strategy. Thank you.
I'm Li Xiang. I'll answer these two questions.
Speaker Change: My first question is whether two brand new all-electric SUVs will be released this year.
This is the first piece for chocolate lip gloss,
Speaker Change: The I8 will be released in July , and then the I6 will also be released in the second half of the year.
Speaker Change: This release schedule will be quite similar to the pace we had in 2022 when releasing the L9 and L8. The advantage of this is that, in addition to achieving good sales in the second half of the year, it also allows us to store more orders for the following year's different locations.
Speaker Change: On the other hand, we will not disclose too much information about the product before the launch event, hoping to closely connect the product's highlights with the user's real experience, purchase, and delivery.
Speaker Change: We're planning to launch two pure nitrites as you'll use this year. The first one being the LDI-8 which will be launched in July and the second one, the I-6 will be launched in the second half of this year.
There are two cars that will be...
Speaker Change: What part of the reason we launch it in the second half of this year is probably to catch the sales momentum in typically the sales of the season of Q3 and Q4 and also partly to save enough order to support the deliveries for next Q1 and Q2.
Speaker Change: We tend not to release too much information before our official product release because we think it needs to be considered holistically with user's buying experience, delivery experience. So please stay tuned for our official product release.
Speaker Change: The second strategic plan regarding artificial intelligence is that we believe the most essential task of AI at the current stage is still to achieve significant breakthroughs in capability.
Take our most important autonomous driving as an example, under this rule-based algorithm, it is actually quite similar to how insects or lower-level animals learn to drive.
Speaker Change: Later, we upgraded to end-to-end V2M. End-to-end V2M is somewhat similar to a monkey driving, combined with some simple human-assisted guidance.
Speaker Change: End-to-end and VRM are still in two different brain systems, and each brain system is not strong enough.
So one problem we need to solve is
Speaker Change: How to enable a large model to learn driving like a human, understand the real physical world, comprehend software including navigation, and also understand the various needs expressed by the passengers inside the car.
Speaker Change: This requires us to train the different models from today's three fields on a single platform, including spatial intelligence for 3D Vision.
It also includes the language intelligence of today's large language models, as well as the embodied intelligence implemented by Duan Daoduan.
Speaker Change: Only by placing these three categories on a single base for training
Speaker Change: He can truly understand the physical world like a human, understand human intentions, understand everything about software, drive like a human, and ultimately surpass the level of professional drivers. This is our understanding of the breakthrough in artificial intelligence capabilities.
Speaker Change: or primitive creatures of drive. And later, when we move on to end at BLM, it's comparable to a monkey learning drive with a human on the side.
Speaker Change: It is an improvement versus previous rule-based system but it's still nothing comparable to a professional driver and this is determined by the fundamental architecture of the models because VLM and N2N are two separate brain systems.
and either of them are strong enough.
Speaker Change: So the real question for us is how can we allow a big model to operate just like human beings like they could understand the physical world, understand the software world, which includes navigation, much of other things, as well as the intentions of the passengers.
Speaker Change: So we need to build a model that combines all three categories and build them into one foundational model which includes understanding a physical space using three division and understanding of a language space using LLM and understanding the physical world.
Speaker Change: I'm using N to N. Only if we combine these three into one model can we understand the world just like human beings and drive like human beings.
Speaker Change: and this is our overall understanding of breakthroughs in artificial intelligence, and we don't tend to make specific plans in this area.
[inaudible]
Your next question comes from Tim Hsiao with Morgan Stanley .
Thank you for your attention. We have a good question.
Speaker Change: The first question might also continue because it mentioned the rhythm of new car launches.
Speaker Change: I would like to ask how the management views the sales score of Tianyan Group.
Speaker Change: Also considering the structure and production ramp-up of the upcoming new car launch, when will the replacement of our L series and the pure electric vehicles mentioned earlier in the second half of the year help the sales of the two phases return to last year's peak season levels or challenge previous highs? Is it more likely to happen in the second half of the year?
Thank you.
Speaker Change: So my first question is about how do we think about the re-authored following self-growth this year?
Speaker Change: I'm against the backdrop of the top competition. When would you expect Leonardo's multi-cells to be returned to the previous state level, or even chief record level, considering the new phase phase of our series, and together with the ED launches into second half. That's my first question.
Kim: Hello, I am from the United Nations Forces, and I am here to answer your question.
Kim: This year, we will expand our sales network and strengthen marketing through product upgrades.
Kim: At the same time, we will accelerate the expansion of overseas markets to achieve a breakthrough in sales growth. In terms of products, this year we will successively launch the updated versions of the L series and MAGA's autonomous driving, as well as a new pure electric SUV model.
The new all-electric SUV will gain us a larger market space.
Kim: In terms of sales network, we currently have more than 502 sales outlets, and on this basis, we have also launched the Star Plan.
That is, by working with social service partners to increase coverage in fourth- and fifth-tier cities.
To obtain a larger congratulatory opening
Kim: In terms of marketing, we have iterated the operational formation of the frontline sales team, added a dedicated online live streaming team, and expanded the customer acquisition channels. At the same time, through the dedicated DCC, which is the configuration of call center personnel, we have improved our conversion efficiency.
Come on up.
Kim: We will also continue to increase our investment in the Latin American, Middle Eastern, and European markets.
With the addition of a group of high-quality and experienced authorized dealers, we are confident that we can achieve a good market increment in overseas assets this year.
Kim: Therefore, relying on the improvement in product competitiveness brought by technological iteration, as well as flexible and precise market strategies and channel expansion, overall, I am confident in the company's sales growth this year. Thank you.
Kim: Our overall strategy for sales work for this year consists of several aspects. One is product of great expansion of sales network as well as reinforced marketing practices and expansion overseas.
First of all, the product front. We'll be launching...
Kim: the 80 upgraded version of Al series and mega series this year, as well as our completely new bad logic, I should remodel.
Kim: The new Pure Electric SUV will help us tap into a bigger market. In the meantime, our
Kim: Autonomous Driving System, V13, trained on 10 million video clips, has also improved its capability significantly, which also forms a solid foundation for our sales growth.
Kim: On the sales network front, we currently operate 502 retail stores. And on top of that, we have started to work with Park Arthur sales partners to increase coverage in Tier 4 and Tier 5 cities.
Kim: Apart from the official stores, we have all, apart from these permanent stores, we have also opened over 200 retail stalls and pop-up stores, 60 pop-up stores and shopping malls to open up our customer acquisition channel.
Kim: On the marketing front, we have introduced professional live streaming sales representatives to help us open up our customer acquisition channel. In the meantime, with our dedicated DCC call center personnel,
Kim: We can also increase conversion rate of these increased new customers acquired through those above channels.
Kim: on the overseas front. Our overseas expansion plan is proceeding as planned. And we have...
Kim: We've made significant progress in Middle Asia, in Asia-Pacific, and various other markets. We will continue to increase our investments in Latin America, Middle East, and European and European markets.
Kim: We have also made progress in working with authorized dealers overseas at through a group of high quality and experienced authorized dealers who are confident to achieve a major growth overseas this year.
Kim: and overall with technology improvements and nimble marking strategies as well as expansion sales numbers, I'm pretty confident about overall sales growth this year.
Speaker Change: Thank you to the management for the detailed response. My second question is also a follow-up on a possible AI-related issue. Since Ideal Auto mentioned on the call earlier about continuously strengthening R&D, I would first like to know what the scale of investment in AI-related R&D might be for Ideal Auto over the next three years.
Speaker Change: In addition to the two major core applications currently, which include the Ideal Student App for voluntary large models and the autonomous driving mentioned earlier, we will see new AI application scenarios in the future, whether in cars or flying cars.
So my second question is also related to AI.
Speaker Change: because Li Auto has been investing in AI aggressively over the past four quarters. What would be the scale of Li Auto's AI-related investment?
Speaker Change: in the following years. And in addition to two key applications, one is my GP, the Empower, the Shanghai GP, and the other one is the Tom Tribing, where there are many new applications for or beyond the close and all the quarters. That's my second question. Thank you.
Speaker Change: Well, I am Li Xiang, and I will answer this question. The company's investment in research and development in the entire AI field in the future will definitely increase significantly, but our basic principle is still to rely on our own ability to generate revenue to solve this.
Li Auto, Tim Hsiao, Li Auto,
Speaker Change: Overall, investments in air-related initiatives will seek substantial growth in the next few years but will mainly be funded by our cash firm operations.
Speaker Change: Yes, I think this is the issue we need to consider. After we have determined our positioning, it will also raise requirements for our own capabilities and the real value we provide to users.
Speaker Change: If we look after 1975, actually when the first personal computer technology changed, Apple's Mac appeared, as well as Microsoft's Dock and later Windows.
Speaker Change: I think this is a phase, then I reached the second phase, and then when we look at the entire mobile internet era, actually the Apple iPhone will appear.
Speaker Change: Then Google's Android will also appear, one representing the terminal and the other representing the operating system and open software platform.
Speaker Change: I think both types of companies have achieved great market success.
However, their own positioning and choices are different.
A vertically integrated terminal like Apple may reduce a certain level of openness, but it will better ensure the user experience.
Speaker Change: If it is the Android ecosystem, it will choose to increase its openness, but it will also affect part of the experience. I think these are completely different choices.
Speaker Change: So if we go back to Li Auto, and back to ourselves, which role should we actually play? This is the first question we should consider.
Speaker Change: We believe our role should be to act as a mid-level enterprise in the AGI era.
Speaker Change: It's just that the requirements for terminals in the ATM era are different from those in the PC era and the mobile internet era.
Speaker Change: For example, you can imagine that all future AGI terminals that will appear in the physical world are actually robots.
Speaker Change: Then he must have the ability to perceive, the ability to make decisions and deductions, the necessary ability to execute, and the ability to have self-feedback.
He truly works like a human.
Yes, the operating system needed to be changed.
Speaker Change: The hard part will involve the capabilities of the hardware itself, including the powerful computing capabilities later on.
Speaker Change: I think there will be two challenges in terms of operations. One is how to operate the design model of the AGI project in such a context.
Instead of just writing a set of IT software to operate AGI robots, it also includes managing these rule-based robots. The management methods for humans exploring machines will also be completely different.
Speaker Change: I think this is the necessary challenge faced by mid-sized enterprises that want to achieve a true AGI era in the future.
Speaker Change: I think this is the key to thinking about the underlying issues, and if we look at it from the perspective of our users' scenarios, I actually think that related to their lives, over time, there will be three types of robots.
Speaker Change: One is an L4 level autonomous driving space robot that operates in an open space.
Speaker Change: In the second step, robots that merge with humans will appear.
Speaker Change: These are robots that enhance human capabilities and also serve as terminals. I think the third one, which might be more challenging, is actually humanoid robots in space. I believe these three types of terminals, or AGI robots, will transform the user's life.
Done very well
Speaker Change: It's similar to how we use Apple products today, where we have Mac, iPhone, iPad, and also the Apple Watch. Yes, I mean this is our perspective on the entire AGI era. Looking forward three to five years or even longer, I believe what we should do and our own positioning.
Speaker Change: So when we think about this overall positioning of what we need to do in the AI period, I think the first fundamental question is our positioning.
Speaker Change: Because different positions requires different types of capability and provide different types of user value. So let's take an example of
Speaker Change: After 1975, in the PC world, there was Apple making Macintosh and there was Microsoft making Macintosh and Windows.
and there were also device manufacturing.
Speaker Change: and similarly, in the mobile age, there was iPhone and there was Android offering device OS and open platform and etc.
Speaker Change: models, and they have to make different trade-offs. For example, Apple chose a less open approach and provided better user experience, whereas Android had a more open approach, but user experience may not be perfect at all times.
Speaker Change: So, coming back to Li Auto, which one of these positioning positions should we choose?
Speaker Change: First of all, we think in the AGI world our positioning is to become a hardware or device manufacturing.
Manufacturer, but different from TC or mobile world, device manufacturer for AGI world requires a different set of capabilities and experience. So, in general, the...
Speaker Change: The device we make in the AGI world, or the AGI device, is broadly speaking a robot. Therefore, it needs to have the cognitive, the execution, the feedback, the reasoning, and decision-making capabilities.
Speaker Change: and that, of course, includes software AI functionalities OS on software side and on the hardware side includes not only the physical movement pieces but also the computing power.
Speaker Change: and on top of that it also requires operation. We need a robust system to operate these devices in the AGI world. We can't simply rely on an IT software. Probably we need to use something more like a world model.
Speaker Change: So how do we manage these silicon-based devices is also going to change and at the same time how we manage carbon-based human beings are also going to be, also going to change and they're going to be managed differently.
Speaker Change: So in the AGI world, we want to become a device maker, providing with the above-capability.
The second thing we need to think about is...
Speaker Change: user scenario. And from this point I can see three types of robots in general. The first is more closely L4 vehicle, or we call space robot. It can navigate itself in open space with its own cognition and decision making and execution power.
Speaker Change: The second type is the type of robot that enhances human capabilities.
Speaker Change: And the third one, which I think is the most difficult one, operates indoors. It has the shape of a human being and it can navigate itself.
So these are three different.
Speaker Change: Robots that I see in the AGI world and they combine pretty much cover all aspects of human life and we want to be a maker of all these devices so we can provide services to our users in different scenarios.
Speaker Change: It is comparable, for example, to Apple, which provides the Macintosh, the iPhone, the iPad, and I watch, which covers different aspects of user's life. Here's our latest thinking for the next three to five years, and probably even longer.
We will iterate over time.
Thank you.
Your next question comes from Tina Hou with Goldman Sachs [inaudible]
Thank you to the management for your time. I have two questions. The first one is about our current outlook for the car industry in 2026, including overall sales and potential market competition. This year, we are mainly focused on the framework. Next year, where do we think market competition will be more focused? And the second question is
Speaker Change: You can change your ability. This is my second question. Let me turn it off. Thanks management for your time. So my first question is in terms of the 2026 outlook, in terms of the overall auto industry and NEV industry, your volume outlook as well as competition intensity, and then also...
Speaker Change: This year, the competition is mainly focused on autopilot, so next year, use...
Speaker Change: You see a continuation or change in that. And then the second question is regarding autonomous driving itself. So in the future in the world of L3 and L4, becoming more like prevalent, does management think there is a monetization method for these autonomous driving software? Thank you.
Speaker Change: I am Ma Donghui, and I will answer these two questions. Regarding the first question about the industry and competition in 2026, we first believe that in 2026, the penetration rate of the new energy market in the domestic market will continue to rise.
Speaker Change: In the market, this competition will shift from real quantity competition to pure quantity competition.
Speaker Change: And the influence of brands on each company's sales will become increasingly significant, so consumers tend to choose brands with a better reputation.
Speaker Change: In addition, leading brands in each price segment will rely on product technology.
Speaker Change: The comprehensive advantages of brands and services will lead to a further diversification and increase in market share, meaning that market integration will further diversify and improve.
Speaker Change: Additionally, in terms of technology, we also believe that competition will intensify.
Speaker Change: Many car companies will accelerate their layout in advanced manufacturing. The competition in intelligent driving will become increasingly fierce. In addition, we also believe that the development and competition of diverse technologies will still exist, such as the technology of intelligent signal chassis to improve handling and comfort.
Speaker Change: And the cabin AI technology that enhances the interactive experience may become a focal point for strengthening product capabilities in 2026 and beyond.
Speaker Change: As for ourselves, we will continuously improve our product matrix with our strategy. In 2020, we will also launch new products.
Speaker Change: Will complete the construction of a matrix of pure electric models, then cover multiple levels and different price ranges to meet the needs of more consumers.
Speaker Change: Additionally, we will increase our investment in AI technologies such as frameworks to maintain a leading product capability. As for the hyper-network aspect, we will continue to accelerate the deployment of hyper-networks.
Improve coverage and quality of service to address consumers' underlying anxieties
Speaker Change: Then in the whole
Speaker Change: In terms of global network expansion, besides the domestic market, we will also accelerate the establishment of overseas sales and service networks through various forms of cooperation. Thank you.
First of all, on industry and competition.
Speaker Change: We believe that penetration rate of NEV will continue to increase in 2026, but market competition will transition from competing from growth to competing from market share. Brand will play an important role in user's purchase decisions, and users tend to choose brands that are well known and have good word of mouth.
Speaker Change: In different price segments, the top brands are going to increase market share through their advantages in product, technology, brand, and overall service experience.
Speaker Change: Well, in other words, the market cost situation is going to continue to increase.
Speaker Change: Another trend that we see is many car brands will continue to improve and accelerate their development of advanced autonomous driving. The competition here is going to be more intense.
on the technology front.
Speaker Change: Technology is like drive by wire, which includes writing and handling experience. Technology is like AI cockpit, which includes user interaction experience will also become a focus of top issue in 2026 and beyond.
Speaker Change: and for Li Auto, our strategy is to continue to complete our product portfolio.
Speaker Change: with several cars launching in 2026. We will complete our full coverage of the range extended at pure electric product matrix. Carbon different price ranges and different segments.
Speaker Change: and to cater to more users as many users as possible. And meantime, we'll increase our investments in autonomous driving and other artificial intelligence technologies to maintain our lead-in products.
Speaker Change: in an overall product experience. We will also expand our expansion for a super-charging network and increase coverage as well as service experience and to fully eradicate rain and anxiety for our users.
Speaker Change: And apart from the domestic market, we will work with different types of partners through different methods to accelerate our growth in overseas sales and services networks. Thank you.
Speaker Change: But if it is said that autonomous driving evolves to L4, a driver loves the political arena.
Speaker Change: This will lead to a qualitative leap, at which point the system will transform from a tool into an assistant, truly capable of replacing humans in driving.
Speaker Change: It's equivalent to hiring a full-time driver. In this situation, we believe users will be willing to pay for it.
Speaker Change: Not only that, after users no longer need to drive themselves, cars will also be upgraded to a space robot of the AI era.
Speaker Change: At this time, the software services within the car will be given higher value, and it is expected that new business models will emerge, providing greater potential for software monetization.
Facing the huge potential of the F4 phase, our team is actively exploring and striving to seize this market opportunity when the F4 era arrives.
Speaker Change: on L3 and L4. So come back to the current stage of including L2 and L3. They're essentially
Assisting Human to Drought. They're really tools.
Speaker Change: There may be different approaches to L2 and L3, but the main difference is in the range of usage, the coverage of usage and also the availability of different features but fundamentally is really still the human driver taking control of the car. There's no fundamental change in the relationship between human and the car.
Speaker Change: But as we evolved to L4, the car will become an agent, or we call it a driver agent. So there's going to be a fundamental change between this human and car relationship.
Speaker Change: The autonomous driving system will evolve from just being a tool to become an actual agent that can replace human beings in driving. It's comparable to hiring a professional driver. In this scenario, we believe that users will be willing to pay for this kind of service.
Speaker Change: And on top of that, when users are relieved from the burden of driving, cars will become part of the 8th.
Speaker Change: Robot, what we call space robot that can navigate the physical world in the AIH. And in this era, the in-car information, the in-car software and experience and services.
Speaker Change: will have greater value and may lead to new business models, which give us more room for imagination. So with the huge potential of L4 era, our team is already very actively exploring, and our goal is to capture this very big opportunity when the time of L4 comes.
Thank you.
Your next question comes from Bin Wang with Deutsche Bank.
Speaker Change: Thank you, my first question is about finance. I would like to ask if you could provide guidance on the gross profit margin for the first quarter. We have observed some positive factors, such as the decrease in component costs, and some negative factors, like the reduction of final payments. Could you please tell us approximately what level the gross profit margin will be in the first quarter?
Speaker Change: My first question is about the first quarter of Gross Marching Guidance. We have been noticing some of the politicized from the components of pricing deduction. We also noticed that you provide some cash discount. So, can you provide the first quarter of Gross Marching Guidance? Thank you.
Li Jie: Hi, I'm Momin, this is Li Tian, and I'm the first caller in the low season due to Chinese New Year, and also we have Sama.
Silver Promotion [inaudible]
after Chinese New Year.
So, uh...
Li Jie: All that's concluded together, we expect our Q1 vehicle of South Martin to be around 19%.
Yeah.
Thank you.
Bright.
The second question, I would like to ask about recent media reports saying that Mr. Li might not be in charge of the automotive business in the future and will focus on AI. In that case, I would like to ask if there will be any adjustments in management responsibilities, and how we will balance between the automotive and AI sectors?
Li Jie: My second question is about the media reports that on the term actually we are no longer taking off of auto business and the focus we are shifting to the AI and D. My question is that what's the change in the marginal education and how to balance the vehicle business and the upcoming AI business? Thank you.
[inaudible]
Li Jie: I am Li Jiang, and I am still the company's CEO , managing the automotive business-related product lines, product department, brand, strategy, and other teams. This is completely consistent with 2024.
Li Jie: Indeed, we have made new divisions in the leadership of BLM and DST strategically, and it is still effective to implement the strategy through the entire company's connectivity. That's roughly how it is.
Speaker Change: Mr Lee is still the CEO of the company and he's still oversees the different departments related to the car business including vehicle lines including product department branding and strategy department.
Speaker Change: This remains unchanged from 2024. And we have allocated new responsibility under our BLM and BDST Framework, assigned view person in charge.
and we remain...
Speaker Change: and the devoted to relying on efficient collaboration across the company to support our
Your next question comes from Yingbo Xu with Sytech Security.
Yingbo Zhu: Thank you to the management team. I have two questions. The first question is about the product MAGA. A year has passed, how does the management view the market performance of MAGA? Do we have any expectations for the product itself in the future?
Yingbo Zhu: Then I will also ask the second question together, which is about the short-term issue of internationalization and export that was just mentioned. How do we view the strategic planning of internationalization in the medium to long term?
Yingbo Zhu: So, I have two questions. The first one is how we can make our market performance and with our expectation or plan for that in future. And the second question is, what are our long-term plan for internal internals?
Internationalization. Thank you.
Hello, I am Zhou Liangjun. I will answer these two questions for you.
Yingbo Zhu: First of all, the first question is that the Ninja Mega is a luxury pure electric MPV positioned above 500,000.
Yingbo Zhu: In long-distance travel scenarios such as the Spring Festival, the chassis, seat comfort, NVH, smart seating, intelligent driving, and high-speed capabilities of the Ideal MEGA
Yingbo Zhu: The 5C supercharging service has provided users with a product experience that exceeds expectations.
Yingbo Zhu: Therefore, the NPS and sales of Li Xiang MEGA have shown a significant increase after the Spring Festival, indicating that users are highly satisfied with the products and services of Li Xiang MEGA and are willing to recommend them to people around them.
At the same time, as we have built over 1,900 5C control stations,
Yingbo Zhu: Mega users can enjoy a 5C supercharging experience whether on the highway or city roads.
Yingbo Zhu: We will complete the construction of a supercharging network with over 2500 stations by the time the Ideal i8 is released.
Yingbo Zhu: In April this year, we will complete the construction of the 5C supercharging network on the G318 highway, allowing Ideal car owners to drive their MAGA along the G318 route.
Yingbo Zhu: By the end of the year, we will cover more than 67,000 kilometers of national-level expressway trunk lines and 10,000 kilometers of high-traffic provincial expressways.
Yingbo Zhu: The total coverage exceeds 77,000 kilometers
目前
Yingbo Zhu: A total of 483 high-speed supercharging stations have been built along the four major economic belts in the country, with an average interval of 99 kilometers.
At this end of the year,
Yingbo Zhu: We will achieve full coverage of supercharging stations on the four major economic highways.
Yingbo Zhu: With the continuous improvement of the supercharging network this year and the launch of other pure electric models such as the Li Auto i8 into the market this year
Yingbo Zhu: Multiple pure chain models will bring scale effects. We are confident in the sales of the Ideal MAGA.
Yingbo Zhu: The number two ensailed in this segment for many consecutive months only second to the Toyota Alphard. This year we hope that the MEGA will remain top 3 in this segment and we expect it annual sales between 10 and 15,000.
Yingbo Zhu: On top of that, Slimaga is one of the cars with the highest net promoter score among our product portfolio.
in
Periods like the Chinese Processuals.
Yingbo Zhu: Li Megah has been widely praised for its chassis, C comfort, NDH, smart cockpit, Thomas driving and highway 5C charging experience and has significantly exceeded our user expectations.
Yingbo Zhu: which further led to an increase in mega-NPS after the Spring Festival, which speaks to user satisfaction with the product services and their willingness to recommend a card to the people around us.
Yingbo Zhu: In the meantime, we are the number of our directly operated 5C charging stations as exceeded 1900. So mega users, whether they're driving the highways or driving in cities, they have easy access to 5C charging experience.
Yingbo Zhu: over 2000 stations by the end of the first quarter, connecting the nine transfers in the last two to know highway routes in China.
Yingbo Zhu: By the time we launched the I-8 this year, we expect to have over 2,500 stations of super
Yingbo Zhu: And in April this year, we plan to cover the entire distance of the G318, a well-known Chinese
Yingbo Zhu: So that our mega users can drive their cars on G318 and we also have plans to open up 50 travel routes or road trip routes to provide you the charge experience for our users.
Yingbo Zhu: By the end of this year, our charging stations will be covering over 67,000 kilometers of highway and over 10,000 of inter-proven highways.
Yingbo Zhu: Totaling over 77,000 kilometers, and we have already be built 483 charging stations across the four major economic zones in China with an average interval of 99 kilometers.
Yingbo Zhu: By the end of this year, we will be covering all of our four economic zones with highly
Yingbo Zhu: As we continue to build out our super charging station and as we roll out VI8 and other pure electric models, with the economy scale, we are very confident in the sales volume of
Then I'll proceed to answer the second question.
Yingbo Zhu: In 2025, the company's management has made it clear that internationalization and overseas markets are one of the company's core strategies. We will seriously explore overseas markets.
Yingbo Zhu: And build relevant capabilities from aspects such as brand marketing, channels, social service systems, organization, and teams. At the beginning of this year, we established an independent overseas market expansion department.
Yingbo Zhu: A group of experienced personnel has been transferred from within the company to join this team. In terms of the market, we will rely on the luxury brand image that has already been established in markets such as Central Asia, and continue to expand our market presence.
Yingbo Zhu: At the same time, over the past year, we have established our own after-sales service centers for Li Auto in markets such as Kazakhstan, Uzbekistan, and the UAE.
Yingbo Zhu: At the same time, we also provide original parts and technical support services to the qualified local after-sales service network.
Ensure that overseas customers can receive the time-saving, worry-free, and cost-effective services that Ideal Auto has always upheld for its users.
Yingbo Zhu: At the same time, we are also expanding our presence in the Middle East, Latin America, and Asia-Pacific markets.
We will work with excellent local partners.
Expand efforts to explore overseas markets
Build a comprehensive social service network
Yingbo Zhu: The year 2025 marks the official start of Li Auto's overseas production.
With the product capabilities accumulated in the Chinese market over the past years
Yingbo Zhu: With sales and service systems and other benefits, we believe we can achieve certain successes in overseas assets this year. Thank you.
Speaker Change: In 2025, we are very aligned that overseas expansion is going to be one of the core strategies of this company.
Speaker Change: So we will be devoted to expanding the overseas market and building capabilities across branding, marketing, channel, and after sales, as well as organization and recruiting.
Speaker Change: At the beginning of this year, we had already established an independent overseas expansion department and have moved many experienced personnel from the company.
Speaker Change: On the market front, we will be building on this luxury brand image that we have already established in Middle Asia and other markets to expand our market share.
Speaker Change: In the meantime, in the past year, we have already built service centers and after-sales centers in the Kazakhstan, Uzbekistan, and UAE.
Speaker Change: At the same time, we will also provide original spare parts and tech support to qualified after sales partners so that our overseas customers can enjoy the same level of service that we provide to our domestic customers.
Speaker Change: In the meantime, we also expand our market in Middle East, Latin America, and Asia Pacific working with high quality local partners to expand our overseas market. We will also be picking a small number of...
Speaker Change: dealers as our local partners to expand the market together. We will also expand our marketing and building out a very complete after-sales market, after-sales network.
Speaker Change: 2025 is our first year officially launching into the overall overseas market, and we will be building on capabilities that we have built in the domestic market, and we're confident to have make significant progress in the overseas market this year.
Speaker Change: 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. Miss Janet Zhang, please go ahead.
Janet Zhang: Thank you once again for joining us today. If you have further questions, please feel free to contact Li Auto's investor relations team. That's all for today. Thank you and have a nice weekend.
Speaker Change: The personal MDMA examiner will begin the interview after the conclusion assessment. It is known that this is a petty checkup before the exam. Initiate one of four comprehensive examiners. If finally a match is recognized in particular, then you can begin the required part of the calculation. Attend for both the single and dual exam to the point in which the activity is considered a healthy state of mind.
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