Q3 2025 Li Auto Inc Earnings Call

Speaker #1: Today's conference call is being recorded. I will now turn the call over to your host, Ms. Janet Chang, Investor Relations Director of Li Auto.

Speaker #1: Please go ahead, Janet.

Janet Zhang: Thank you, Auto Inc. Chair. Good evening and good morning, everyone. Welcome to Li Auto's Q3 2025 earnings conference call.

Speaker #2: Thank you, our pleasure. Good evening and good morning, everyone. Welcome to Li Auto's third quarter 2025 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.

Janet Chang: 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. Zhong Hui Ma, and CTO, Mr. Yan Xie, 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 US 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. Further information regarding risks and uncertainties is included in certain company filings with the US Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited.

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. Zhong Hui Ma, and CTO, Mr. Yan Xie, 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 US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

Speaker #2: 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.

Speaker #2: Our President, Mr. Zhong Hui Ma, and CTO, Mr. Yan Xie, will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the Safe Harbor Provisions of the U.S.

Speaker #2: 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.

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 US Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited.

Speaker #2: 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.

Speaker #2: Any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Li Auto's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

Janet Chang: Any obligation to update any forward-looking statements except as required under applicable law. 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 measures. Please refer to Li Auto's disclosure documents on 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. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead. ?????????2025???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????2022??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????1998??????27??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???????????????????????????????????????????????????????????????????????????????????20?????20??????????????????????????????????????????????????copy???????????????????L9??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????APP??????????????????????????????coding?????deep research?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????? ????????????????????????? 3D BEV?OCC?????2D VIP??????????????????????????????????????????????????????? 3D VIP???????????????????????? 50%??????????????3D VIP????????????????????????????????????????????????????????????????????????? M100 ????????????????????????????????? ???????? 3D VIP???????????????VLA???? VL ????????????????????????????????????????????????????????????????????? 4B ? MOE ????????? 10 ????????? 60 ????????????????????????????????????????????????????????????? GPU ??????????????????????????M100??????????????????????? ????????????????????? 450 ??????????????????????? 550 ????????????????????????????????????????????????????? 350 ??????? 200 ????????????????? 50%???????????????????????????????????????????????????????????????????????????????????????????????????????????? 5%? 10%????????????????????????????????????????????????? 5 ? 10 ???????????????????????????????????????? ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Now, translation for Mr. Li. The third quarter of 2025 was also the first quarter in the second decade of Li Auto. We went through many challenges, including supply chain, product lifecycle, PR challenges, as well as changing policies.

Any obligation to update any forward-looking statements except as required under applicable law. 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 measures. Please refer to Li Auto's disclosure documents on 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. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead.

Speaker #2: Please refer to Li Auto's disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

Speaker #2: 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. Xiang Li.

Xiang Li: ?????????2025???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????2022??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????1998??????27??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???????????????????????????????????????????????????????????????????????????????????20?????20??????????????????????????????????????????????????copy???????????????????L9??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????APP??????????????????????????????coding?????deep research?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????? ????????????????????????? 3D BEV?OCC?????2D VIP??????????????????????????????????????????????????????? 3D VIP???????????????????????? 50%??????????????3D VIP????????????????????????????????????????????????????????????????????????? M100 ????????????????????????????????? ???????? 3D VIP???????????????VLA???? VL ????????????????????????????????????????????????????????????????????? 4B ? MOE ????????? 10 ????????? 60 ????????????????????????????????????????????????????????????? GPU ??????????????????????????M100??????????????????????? ????????????????????? 450 ??????????????????????? 550 ????????????????????????????????????????????????????? 350 ??????? 200 ????????????????? 50%???????????????????????????????????????????????????????????????????????????????????????????????????????????? 5%? 10%????????????????????????????????????????????????? 5 ? 10 ???????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #3: ?????????2025?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????2022??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????$10??????????$8??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????1998??????27?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????20?????20??????2?????2??????????????????????????????????????????????????????????R9?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????APP??????????????????????????????coding?????deep research????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????IT???AI??????????????????????????????????????????????????3D BEV?OCC?????2D VIP????????????????????????100???????????????????????????3D VIP????????????????????????50%???????????????3D VIP?????????????????????????????????????????????????????????????????????????M100??????????????????????????????????????????3D VIP??????????????VRA????VR?????????????????????????????????????????????????????????????????????4B?MOE?????????10Hz???????60Hz???????????????????????????????????????????????????????????GPU??????????????????????????M100????????????????????????????????????????????450???????????????????????550?????????????????????????????????????????????????????350???????200?????????????????50%????????????????????????????????????????????????????????????????????????????????????????????????????????????5%?10%?????????????????????????????????????????????????5?10???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????3?5?????????????????????????????????????

[Translator]: Now, translation for Mr. Li. The third quarter of 2025 was also the first quarter in the second decade of Li Auto. We went through many challenges, including supply chain, product lifecycle, PR challenges, as well as changing policies.

Speaker #2: Now, it's time for Mr. Li's translation. The third quarter of 2025 was also the first quarter in the second decade of Li Auto. We went through many challenges, including supply chain issues, product lifecycle matters, PR challenges, as well as changing policies.

Speaker #2: All these factors have had a negative impact on our operations and deliveries. However, today I want to take this opportunity to talk about our long-term thinking in the next decade and three most important choices that we need to make.

Janet Chang: All these factors have had a negative impact on our operations and deliveries. However, today I want to take this opportunity to talk about our long-term thinking in the next decade, and three most important choices that we need to make: organization, products, and technology. The first choice we need to make is organization. The challenge we're facing is whether to choose an entrepreneurial model or a professional management model. In the last ten years of Li Auto, the first seven of those years we operated as an entrepreneurial model company. As we scaled over time to a scale that we've never seen before, especially in terms of revenue, around the time of 2022, many people suggested to us to shift to a professional management model.

All these factors have had a negative impact on our operations and deliveries. However, today I want to take this opportunity to talk about our long-term thinking in the next decade, and three most important choices that we need to make: organization, products, and technology. The first choice we need to make is organization. The challenge we're facing is whether to choose an entrepreneurial model or a professional management model. In the last ten years of Li Auto, the first seven of those years we operated as an entrepreneurial model company.

Speaker #2: Organization, products, and technology. The first choice we need to make is organization. The challenges we're facing are whether to choose an entrepreneurial model or a professional management model.

Speaker #2: In the last 10 years of Li Auto, the first seven of those years we operated as an entrepreneurial model company. But as we scaled over time to a scale that we've never seen before, especially in terms of revenue, around the time of 2022, many people suggested to us to shift to a professional management model.

As we scaled over time to a scale that we've never seen before, especially in terms of revenue, around the time of 2022, many people suggested to us to shift to a professional management model.

Speaker #2: Because historically, whether it's Mercedes or BMW or any of these 100-year-old car enterprises, as well as Microsoft and Apple, which are the tech giants, they have all operated under this model and have experienced great success.

Janet Chang: Because historically, whether it's Mercedes-Benz, BMW, or any of these 100-year-old car enterprises, as well as Microsoft and Apple, which are the tech giants, have all operated under this model and have great success. In the last three years, we tried very hard to make ourselves used to this professional management model. After implementation, we came to the realization that the entrepreneurial model and the professional management model are fundamentally different, and it is irrelevant to processes and organization structures. The difference really lies in management principles and key operating principles. They are also tailored to different stages of growth and industry environment. The professional management model can be very successful, but it relies on three factors. The first one is that the industry and technology cycle has to be relatively stable.

Because historically, whether it's Mercedes-Benz, BMW, or any of these 100-year-old car enterprises, as well as Microsoft and Apple, which are the tech giants, have all operated under this model and have great success. In the last three years, we tried very hard to make ourselves used to this professional management model. After implementation, we came to the realization that the entrepreneurial model and the professional management model are fundamentally different, and it is irrelevant to processes and organization structures. The difference really lies in management principles and key operating principles.

Speaker #2: In the last three years, we tried very hard to make ourselves used to this professional management model. But after implementation, we came to the realization that the entrepreneurial model and the professional management model are fundamentally different.

Speaker #2: And it is irrelevant to processes and organizational structures. The difference really lies in management principles and key operating principles. They are also tailored to different stages of growth and industry environments.

They are also tailored to different stages of growth and industry environment. The professional management model can be very successful, but it relies on three factors. The first one is that the industry and technology cycle has to be relatively stable.

Speaker #2: The professional management model can be very successful, but it relies on three factors. The first one is that the industry and technology cycle has to be relatively stable.

Speaker #2: And the second is that the enterprises already in a leading position and the position is relatively stable. And the third one is that the founding founder and the founding team have either lost their motivation or are not actively involved in the company.

Janet Chang: The second is that the enterprise is already in a leading position, and the position is relatively stable. The third one is that the founder and the founding team have either lost their motivation or are not actively involved in the company. If all these three criteria are satisfied, a professional management model could be a very ideal choice. Whether it's Apple or Microsoft, both have flourished after professional management took over and grew from hundreds of billion dollars in revenue to trillion-dollar companies. However, the entrepreneurial model is catered to an entirely different environment. First of all, the industry and technology cycles are going through fundamental changes. Second, the industry is very unstable, and the company enterprise itself is not yet a leader. Thirdly, the founder and the founding team are still devoted to everyday work with their full passion and fully motivated.

The second is that the enterprise is already in a leading position, and the position is relatively stable. The third one is that the founder and the founding team have either lost their motivation or are not actively involved in the company. If all these three criteria are satisfied, a professional management model could be a very ideal choice. Whether it's Apple or Microsoft, both have flourished after professional management took over and grew from hundreds of billion dollars in revenue to trillion-dollar companies. However, the entrepreneurial model is catered to an entirely different environment.

Speaker #2: If all three of these criteria are satisfied, a professional management model could be a very ideal choice. Whether it's Apple or Microsoft, both have flourished after professional management took over and grew from hundreds of billions of dollars in revenue to trillion-dollar companies.

Speaker #2: However, the entrepreneurial model is catered to an entirely different environment. First of all, the industry and technology cycles are going through fundamental changes. Secondly, the industry is very unstable.

First of all, the industry and technology cycles are going through fundamental changes. Second, the industry is very unstable, and the company enterprise itself is not yet a leader. Thirdly, the founder and the founding team are still devoted to everyday work with their full passion and fully motivated.

Speaker #2: And the entrepreneur and the company enterprise itself is not yet a leader. And thirdly, the founder and the founding team are still devoted to everyday work with their full passion and are fully motivated.

Speaker #2: As AI is shaping many industries today, the environment that we live in, and considering the traits of this company, we think that we fit into the entrepreneurial model way better.

Janet Chang: As AI is shaping many industries today, the environment that we live in and considering the traits of this company, we think that we fit into the entrepreneurial model way better. The entrepreneurial model really is about four things. First of all, there needs to be more conversations as opposed to reports. In a rapidly changing environment, deep conversations are really key to increasing our knowledge and judgment of the world, as well as to making bold decisions. Secondly, it's focusing on user value as opposed to just short-term deliveries. Only those things that create value for the users are worthy to be delivered, as opposed to only focusing on how many tasks that we delivered on. The third one is keep increasing efficiency as opposed to occupying more resources.

As AI is shaping many industries today, the environment that we live in and considering the traits of this company, we think that we fit into the entrepreneurial model way better. The entrepreneurial model really is about four things. First of all, there needs to be more conversations as opposed to reports. In a rapidly changing environment, deep conversations are really key to increasing our knowledge and judgment of the world, as well as to making bold decisions. Secondly, it's focusing on user value as opposed to just short-term deliveries.

Speaker #2: The entrepreneurial model really is about four things. First of all, there needs to be more conversations as opposed to reports. In a rapidly changing environment, deep conversations are really key to increasing our knowledge and judgment of the world, as well as to making bold decisions.

Speaker #2: And secondly, it's focusing on user value as opposed to just short-term deliveries. Only those things that create value for the users are worthy of being delivered, as opposed to only focusing on how many tasks we delivered on.

Only those things that create value for the users are worthy to be delivered, as opposed to only focusing on how many tasks that we delivered on. The third one is keep increasing efficiency as opposed to occupying more resources.

Speaker #2: And the third one is to keep increasing efficiency as opposed to occupying more resources. For example, if we spend $10 on doing something last year, and this year we need to do it with $8, that's how we have resources to really spend on projects and investments that do not generate short-term revenue but really benefit us in the long term.

Janet Chang: For example, if we spent $10 on doing something last year, and this year we need to do it with $8, that's how we have resources to really spend on projects and investments that do not generate short-term revenue, but really benefit us in the long term. Fourth, the key is to recognize the key issues as opposed to just creating information asymmetry. Only as we create more value, increase efficiency, and solve the key issues can we really thrive in a highly competitive and rapidly changing environment, and consistently meet customer demands. In the last three years, me and my team have tried very hard to adapt to the professional management model, and we have forced ourselves to embrace all kinds of changes. However, we all realized that we became diminished versions of ourselves. NVIDIA and Tesla are still operating as an entrepreneurial company.

For example, if we spent $10 on doing something last year, and this year we need to do it with $8, that's how we have resources to really spend on projects and investments that do not generate short-term revenue, but really benefit us in the long term. Fourth, the key is to recognize the key issues as opposed to just creating information asymmetry. Only as we create more value, increase efficiency, and solve the key issues can we really thrive in a highly competitive and rapidly changing environment, and consistently meet customer demands.

Speaker #2: And fourth, the key is to recognize the key issues, as opposed to just creating information asymmetry. Only by creating more value, increasing efficiency, and solving the key issues can we really thrive in a highly competitive and rapidly changing environment, consistently meeting customer demands.

In the last three years, me and my team have tried very hard to adapt to the professional management model, and we have forced ourselves to embrace all kinds of changes. However, we all realized that we became diminished versions of ourselves. NVIDIA and Tesla are still operating as an entrepreneurial company.

Speaker #2: In the last three years, my team and I have tried very hard to adapt to the professional management model, and we have forced ourselves to embrace all kinds of changes; however, we all realize that we have become a diminished version of ourselves.

Speaker #2: NVIDIA and Tesla are still operating as entrepreneurial companies. If the largest and strongest companies are all operating in the entrepreneurial model, there's no reason for us not to utilize our strengths and what we're most used to.

Janet Chang: If the largest and strongest companies are all operating in the entrepreneurial model, there is no reason for us not to utilize our strengths and what we're most used to. Since 1998, I have 27 years of running entrepreneurial companies, and I have never worked in any large corporation as a professional manager. Now we're facing a highly competitive and rapidly changing environment with rapidly changing technologies. I personally am passionate about products, about automobiles, and about AI. Work is my largest passion. Why don't I focus on what I'm most used to and what I'm best at to manage Li Auto? That's the most important first choice as we look into our second decade. As a result, starting from Q4 this year, I and my founding team will firmly revert back to the entrepreneurial model to embrace the new era and new technological challenges.

If the largest and strongest companies are all operating in the entrepreneurial model, there is no reason for us not to utilize our strengths and what we're most used to. Since 1998, I have 27 years of running entrepreneurial companies, and I have never worked in any large corporation as a professional manager. Now we're facing a highly competitive and rapidly changing environment with rapidly changing technologies. I personally am passionate about products, about automobiles, and about AI. Work is my largest passion. Why don't I focus on what I'm most used to and what I'm best at to manage Li Auto?

Speaker #2: Since 1998, I have 27 years of running entrepreneurial companies, and I have never worked in any large corporation as a professional manager. Now we're facing a highly competitive and rapidly changing environment with rapidly changing technologies.

Speaker #2: I personally am passionate about products, about automobiles, and about AI. Work is my largest passion. So why don't I focus on what I'm most used to and what I'm best at to manage Li Auto?

Speaker #2: And that's the most important first choice as we look into our second decade. As a result, starting from Q4 this year, I and my founding team will firmly revert back to the entrepreneurial model and embrace the new era and new technological changes and challenges.

That's the most important first choice as we look into our second decade. As a result, starting from Q4 this year, I and my founding team will firmly revert back to the entrepreneurial model to embrace the new era and new technological challenges.

Speaker #2: The choice of organizational model is the foundation of everything. Looking into the next decade, the next key question is how we really solve issues for our customers.

Janet Chang: The choice of organizational model is the foundation of everything. Looking into the next decade, the next key question is how we really solve issues for our customers. First of all, what products do we build? Where is technology headed? That's always the essence of everything. First of all, on products, we also need to make an important choice. What kind of products should we really build for our users? Is it electric vehicles? Is it smart devices? Is it embodied robots? If we only focus on electric vehicles, competition is really all about an arms race in spreadsheet. Do you have 20km of range more? Do you have a car that's 2cm longer in dimensions? If it's only focused on electric vehicles, it's all about larger space, more range, and cheaper prices.

The choice of organizational model is the foundation of everything. Looking into the next decade, the next key question is how we really solve issues for our customers. First of all, what products do we build? Where is technology headed? That's always the essence of everything. First of all, on products, we also need to make an important choice. What kind of products should we really build for our users? Is it electric vehicles? Is it smart devices? Is it embodied robots? If we only focus on electric vehicles, competition is really all about an arms race in spreadsheet.

Speaker #2: First of all, what products do we build? And where is technology headed? That's always the essence of everything. First of all, on products. We also need to make an important choice.

Speaker #2: What kind of products should we really build for our users? Is it electric vehicles? Is it smart devices? Or is it embodied robots? If we only focus on electric vehicles, competition is really all about an arms race in spec sheets.

Do you have 20km of range more? Do you have a car that's 2cm longer in dimensions? If it's only focused on electric vehicles, it's all about larger space, more range, and cheaper prices.

Speaker #2: Do you have more 20 kilometers of range? More? Do you have a car that's two centimeters longer in dimensions? And if it's only focused on electric vehicles, it's all about larger space, more range, and cheaper prices.

Speaker #2: And maybe copy some proven designs, just like how the Li Auto 9 has been copied. Other than that, all R&D investments are a waste. Stronger sensors, bigger models, more computing power, and better active suspension are always a waste of cost.

Janet Chang: Maybe copy some proven designs, just like how Li L9 has been copied. Other than that, all R&D investments are a waste. Stronger sensors, bigger models, more computing power, better active suspension are always a waste of cost. Even stronger computation power and active suspension may even have a negative impact on range. If we choose to focus on smart devices, then we'd automatically be focused more on what happens in the screen. Features that used to belong to smartphones and smart tablets will be migrated to the car environment. In fact, most of the innovations in smart devices are really about moving what's already available in smartphones into vehicles, moving mobile apps into head units, deploying larger language models in head units, and even doing coding in cars and conducting deep research.

Maybe copy some proven designs, just like how Li L9 has been copied. Other than that, all R&D investments are a waste. Stronger sensors, bigger models, more computing power, better active suspension are always a waste of cost. Even stronger computation power and active suspension may even have a negative impact on range. If we choose to focus on smart devices, then we'd automatically be focused more on what happens in the screen. Features that used to belong to smartphones and smart tablets will be migrated to the car environment.

Speaker #2: And even stronger competition power and active ride suspension may even have negative impacts on range. And secondly, if we choose to focus on smart devices, then we'd automatically be focused more on what happens on the screen.

Speaker #2: Features that used to belong to smartphones and smart tablets will be migrated to the car environment. In fact, most of the innovations in smart devices are really about moving what's already available in smartphones into vehicles.

In fact, most of the innovations in smart devices are really about moving what's already available in smartphones into vehicles, moving mobile apps into head units, deploying larger language models in head units, and even doing coding in cars and conducting deep research.

Speaker #2: And moving mobile apps into head units, deploying larger language models in head units, and even decoding in cars and conducting deep research. But then we ask ourselves the question: Would our users buy our cars?

Janet Chang: We ask ourselves the question, when our users buy our cars, do we really buy it for their work or to live a better life? If certain experiences are already better in mobile phones, tablets, or computers and more natural, why should we even bother putting them in cars? All these investments create very little incremental value for users. Thirdly, the third route is for us to make our cars into an embodied AI in the physical world, or in layman's terms, robots. The moving transformer told us that there are broadly two types of robots. The first type looks like human beings, and the second type looks like cars. Knight Rider and Cars, these TV shows or movies have clearly shown us car-shaped robots are going to be a mainstream form factor of robots going forward. How do we transform our cars into robots?

We ask ourselves the question, when our users buy our cars, do we really buy it for their work or to live a better life? If certain experiences are already better in mobile phones, tablets, or computers and more natural, why should we even bother putting them in cars? All these investments create very little incremental value for users. Thirdly, the third route is for us to make our cars into an embodied AI in the physical world, or in layman's terms, robots. The moving transformer told us that there are broadly two types of robots. The first type looks like human beings, and the second type looks like cars.

Speaker #2: Do we really buy it for their work or to deliver a better life? If certain experiences are already better on mobile phones and tablets or computers and feel more natural, why should we even bother putting them in cars?

Speaker #2: All these investments create very little incremental value for users. And thirdly, the third route is for us to make our cars into an embodied AI in the physical world.

Speaker #2: Or in layman terms, robots. The moving transformer told us that there are broadly two types of robots. The first type looks like human beings, and the second type looks like cars.

Knight Rider and Cars, these TV shows or movies have clearly shown us car-shaped robots are going to be a mainstream form factor of robots going forward. How do we transform our cars into robots?

Speaker #2: Knight Rider and cars—these TV shows or movies have clearly shown us that car-shaped robots are going to be a mainstream type of form factor for robots going forward.

Speaker #2: So, how do we transform our cars into robots? We need to give them ears and eyes for perception. We need to give them brains and nerves, which is modeling capability.

Janet Chang: We need to give it ears and eyes for perception. We need to give it brains and nerves, which is modeling capability. We need to give it hearts, which is computing power. We need to reshape the hardware to make it a stronger physical presence. Our robots need to parallel the top drivers. They can not only drive, but also pick you up, park for you, help you charge the car up, help you close the door, open the door, and meticulously make your life more convenient and safer. It can also play the role of parents, assistants, or even flight attendants, and provide you the convenience and take care of you within the sphere of the car, just like first-class cabin and the services on planes. It's also like when we're little that our mother takes care of us and makes us happy.

We need to give it ears and eyes for perception. We need to give it brains and nerves, which is modeling capability. We need to give it hearts, which is computing power. We need to reshape the hardware to make it a stronger physical presence. Our robots need to parallel the top drivers. They can not only drive, but also pick you up, park for you, help you charge the car up, help you close the door, open the door, and meticulously make your life more convenient and safer.

Speaker #2: We need to give it hearts which are computing power. And we need to reshape the hardware to make it a stronger physical presence. So our robots need to parallel the top drivers and can not only drive but also pick you up, park for you, have to charge the car up, have to close the door, open the door, and meticulously make your life more convenient and safer.

It can also play the role of parents, assistants, or even flight attendants, and provide you the convenience and take care of you within the sphere of the car, just like first-class cabin and the services on planes. It's also like when we're little that our mother takes care of us and makes us happy.

Speaker #2: It can also play the role of parents, assistants, or even flight attendants, providing you the convenience and taking care of you within the sphere of the car.

Speaker #2: Just like first-class cabins and the services on planes. And it's also like when we're little, that our mother takes care of us and makes us happy.

Speaker #2: So, how do we define a good embodied robot? How do they make them change from passive machines into automated machines, and then further into proactive machines?

Janet Chang: How do we define good embodied robots? How do they make them change from passive machines into an automated machine and then further into proactive machines? In the next decade, the most valuable embodied AI product is going to be vehicles that are automated as well as proactive. Competition is really how automated and proactive can we make these products, and how can we fuse them into high-frequency life experiences, something that once we get used to, we can never go back. Whether it's electric vehicles or smart devices, these are not necessarily bad choices, but we think they're not sufficient. Only if we choose embodied AI, which is the hardest of all these three problems, can we really change the life of our users and really provide automated and proactive services that only embodied AI products can provide.

How do we define good embodied robots? How do they make them change from passive machines into an automated machine and then further into proactive machines? In the next decade, the most valuable embodied AI product is going to be vehicles that are automated as well as proactive. Competition is really how automated and proactive can we make these products, and how can we fuse them into high-frequency life experiences, something that once we get used to, we can never go back. Whether it's electric vehicles or smart devices, these are not necessarily bad choices, but we think they're not sufficient.

Speaker #2: And in the next decade, the most valuable embodied AI product is going to be vehicles that are automated as well as proactive. Competition is really about how automated and proactive we can make these products.

Speaker #2: And how can we fuse them into high-frequency life experiences? Something that, once we get used to, we can never go back. So whether it's electric vehicles or smart devices, these are not necessarily bad choices.

Speaker #2: But we think they're not sufficient. Only if we choose the embodied AI, which is the hardest of all these three problems, can we really change the lives of our users?

Only if we choose embodied AI, which is the hardest of all these three problems, can we really change the life of our users and really provide automated and proactive services that only embodied AI products can provide.

Speaker #2: And really provide automated and proactive services that only embodied AI products can provide. It's really like what you see in Transformers movies—there are car-shaped robots, like what we see in cars or Knight Rider; they're robots that are shaped like cars.

Janet Chang: It's really like what you see in Transformers and movies. They're car-shaped robots. What we see in cars or Knight Riders, they're robots that are shaped in cars. I believe that this is the biggest challenge and opportunity that we entrepreneurs see in this new era. The next choice is about technology, or more specifically, our full-stack AI system. What do we choose? What kind of technology do we choose to power this full-stack AI system? Is this something that's language-based, that's faced towards the digital world, or is it something faced towards the physical world? These two options require completely different system capabilities.

It's really like what you see in Transformers and movies. They're car-shaped robots. What we see in cars or Knight Riders, they're robots that are shaped in cars. I believe that this is the biggest challenge and opportunity that we entrepreneurs see in this new era. The next choice is about technology, or more specifically, our full-stack AI system. What do we choose? What kind of technology do we choose to power this full-stack AI system? Is this something that's language-based, that's faced towards the digital world, or is it something faced towards the physical world? These two options require completely different system capabilities.

Speaker #2: And I believe that this is the biggest challenge and opportunity that entrepreneurs see in this new era. The next choice is about technology, or more specifically, our full-stack AI system.

Speaker #2: What do we choose? What kind of technology do we choose to power this full-stack AI system? Is this something that's language-based, that's faced towards the digital world, or is it something faced towards the physical world?

Speaker #2: These two models, these two options, require completely different system capabilities. If we want to build a good embodied AI, we need to build an AI system that's completely different from language-based AI models.

Janet Chang: If we want to build a good embodied AI, we need to build an AI system that's completely different from language-based AI models, including perceptions like eyes and ears, including the model itself, like brains, including the operating system, like nerves, and including the computation power, which is like hearts, and also, of course, the physical body itself, just like human body. At this moment, there's no third-party supplier that can provide this full-stack system. In fact, not any company can provide even part of this system. The focus of large language models is really focusing on the model itself and computation. Larger models and more computation power are always going to generate stronger capabilities. However, for embodied AI, we need to better understand the physical world. The model is also built on our understanding of the physical world.

If we want to build a good embodied AI, we need to build an AI system that's completely different from language-based AI models, including perceptions like eyes and ears, including the model itself, like brains, including the operating system, like nerves, and including the computation power, which is like hearts, and also, of course, the physical body itself, just like human body. At this moment, there's no third-party supplier that can provide this full-stack system. In fact, not any company can provide even part of this system. The focus of large language models is really focusing on the model itself and computation.

Speaker #2: Including perception, like eyes and ears; including the model itself, like brains; including the operating system, like nerves; and including the computation power, which is like hearts and also the body.

Speaker #2: The physical body itself, just like human. At this moment, there's no third-party supplier that can provide the full-stack system. In fact, no company can provide even part of this system.

Speaker #2: And the focus of large language models is really on the model itself and computation. Larger models and more computational power are always going to generate stronger capabilities.

Larger models and more computation power are always going to generate stronger capabilities. However, for embodied AI, we need to better understand the physical world. The model is also built on our understanding of the physical world.

Speaker #2: However, for embodied AI, we need to better understand the physical world. The model is also built on our understanding of the physical world.

Speaker #2: Accuracy is the first priority, and generalization only comes next. The operating system needs to ensure optimal integration between the hardware and the software, while also providing higher frequency.

Janet Chang: Accuracy is the first priority, and generalization only comes next. Operating systems need to make sure the optimal integration is made between the hardware and the software, and also provide higher frequency. The system needs to be fast and precise. The computation power that powers the perception, the model, and the operating system needs to reside on the device side as opposed to the cloud side. Lastly, we'll also need to modify the hardware itself to become a really embodied hardware. For example, our active suspension is just like a 3D nerve system, nerve control, and it can increase the efficiency and position of execution in the physical world. If we look at this entire AI system through the lens of embodied AI, you will see that there are so many changes that need to happen and desperately need to happen.

Accuracy is the first priority, and generalization only comes next. Operating systems need to make sure the optimal integration is made between the hardware and the software, and also provide higher frequency. The system needs to be fast and precise. The computation power that powers the perception, the model, and the operating system needs to reside on the device side as opposed to the cloud side. Lastly, we'll also need to modify the hardware itself to become a really embodied hardware. For example, our active suspension is just like a 3D nerve system, nerve control, and it can increase the efficiency and position of execution in the physical world.

Speaker #2: And also, the system needs to be fast and precise. Additionally, the computational power that supports the perception, the model, and the operating system needs to reside on the device side, as opposed to the cloud side.

Speaker #2: And lastly, we also need to modify the hardware itself to become a truly embodied hardware. For example, our active suspension is just like a 3D nerve system, nerve control.

Speaker #2: And it can increase the efficiency and precision of execution in the physical world. So, if we look at this entire AI system through the lens of embodied AI, you will see that there are so many changes that need to happen and desperately need to happen.

If we look at this entire AI system through the lens of embodied AI, you will see that there are so many changes that need to happen and desperately need to happen.

Speaker #2: The first change comes in perception. Based on the current model and the computation power that can be deployed on the device, the current 3D BV or occupancy network or 2D vision transformer, the effective range of perception—I'm talking about effective as opposed to theoretical maximum—is only just about over 100 meters, which is way less than human to 3D vision transformer, which is work. This range can be increased by two eyes.

Janet Chang: The first change comes in perception. Based on the current model and the computation power that can be deployed on the device, the current 3D BEV or occupancy network or 2D vision transformer, the effective range of perception—I'm talking about effective as opposed to theoretical maximum—is only just about over 100m, which is way less than human eyes. However, if we upgrade it to 3D vision transformer, which is just similar to how human eyes work, this range can be increased by two, three times. It can solve more than 50% of the common issues we see in autonomous driving. A 3D vision transformer is not only limited to autonomous driving, but it can also benefit interactions with the car inside and outside of the car. These can also all become possible. That requires fundamental breakthroughs in perception models, both in research and also development.

The first change comes in perception. Based on the current model and the computation power that can be deployed on the device, the current 3D BEV or occupancy network or 2D vision transformer, the effective range of perception—I'm talking about effective as opposed to theoretical maximum—is only just about over 100m, which is way less than human eyes. However, if we upgrade it to 3D vision transformer, which is just similar to how human eyes work, this range can be increased by two, three times. It can solve more than 50% of the common issues we see in autonomous driving.

Speaker #2: Just similar to how human eyes work, if we upgraded three times, it can solve more than 50% of the common issues we see in autonomous driving.

A 3D vision transformer is not only limited to autonomous driving, but it can also benefit interactions with the car inside and outside of the car. These can also all become possible. That requires fundamental breakthroughs in perception models, both in research and also development.

Speaker #2: The 3D Vision Transformer is not only limited to autonomous driving, but it can also benefit interactions with the car, both inside and outside of the vehicle.

Speaker #2: These can also all become possible. So that requires fundamental breakthroughs in perception models, both in research and also development. It also requires tailored chips for embodied AI, just like M100, which we have developed. Additionally, it requires a very strong compiler team and high-efficient cooperation.

Janet Chang: It requires tailored chips for embodied AI, just like M100, which we have developed, and also requires a very strong compiler team and high-efficiency cooperation. The next area of improvement is in models. It's only with 3D vision transformer can we really understand the world. The VL in the VLA can really understand and perceive the world better. Human data can be more effectively used for training, and world model can also be used more effectively for training. For example, in the status quo computation platform, a 4 billion parameter MOE model can only run at 10 Hertz, but the execution frequency is 60 Hertz. If we can increase the frequency of the model by two, three times, it can also automatically solve many issues, including comfort and speed of reaction in autonomous driving.

It requires tailored chips for embodied AI, just like M100, which we have developed, and also requires a very strong compiler team and high-efficiency cooperation. The next area of improvement is in models. It's only with 3D vision transformer can we really understand the world. The VL in the VLA can really understand and perceive the world better. Human data can be more effectively used for training, and world model can also be used more effectively for training. For example, in the status quo computation platform, a 4 billion parameter MOE model can only run at 10 Hertz, but the execution frequency is 60 Hertz.

Speaker #2: The next area of improvement is in models. It's only with the 3D Vision Transformer that we can really understand the world. The VL in the VLA can really understand and perceive the world better.

Speaker #2: And human data can be more effectively used for training, and more models can also be used more effectively for training. For example, in the status quo computation platform, a 4 billion parameter MOE model can only run at 10 hertz.

Speaker #2: But the execution frequency is 60 hertz. We can increase the frequency of the model by two to three times; this can automatically solve many issues, including comfort and speed of reaction in autonomous driving.

If we can increase the frequency of the model by two, three times, it can also automatically solve many issues, including comfort and speed of reaction in autonomous driving.

Speaker #2: And it also requires us to fundamentally modify and customize the traditional GPU architecture and to have a dedicated operating system. And M100, again, is really designed for solving these embodied AI problems.

Janet Chang: It also requires us to fundamentally modify and customize the traditional GPU architecture and to have a dedicated operating system. M100, again, is really designed for solving these embodied AI problems. Lastly is the embodied hardware itself. A human being can typically react to braking and steering in about 450 milliseconds. For a typical autonomous driving system, from perception to execution, the entire closed loop takes about 550 milliseconds. For a typical driver today, they can easily—it's very obvious to them that autonomous driving is much slower. It's like an elderly driving car. The drive-by-wire system can reduce the response time to about 350 milliseconds. The difference of 200 milliseconds is not to be underestimated. It can roughly reduce the accident rate by over 50%. It also feels better even than driving by themselves, and it's also safer.

It also requires us to fundamentally modify and customize the traditional GPU architecture and to have a dedicated operating system. M100, again, is really designed for solving these embodied AI problems. Lastly is the embodied hardware itself. A human being can typically react to braking and steering in about 450 milliseconds. For a typical autonomous driving system, from perception to execution, the entire closed loop takes about 550 milliseconds. For a typical driver today, they can easily—it's very obvious to them that autonomous driving is much slower. It's like an elderly driving car.

Speaker #2: And lastly, there is the embodied hardware itself. A human being can typically react to braking and steering in about 450 milliseconds. For a typical autonomous driving system, from perception to execution, the entire closed-loop takes about 550 milliseconds.

Speaker #2: For a typical driver today, it is very obvious that autonomous driving is much slower. It's like an elderly driver behind the wheel. The drive-by-wire system can reduce the response time to about 350 milliseconds.

The drive-by-wire system can reduce the response time to about 350 milliseconds. The difference of 200 milliseconds is not to be underestimated. It can roughly reduce the accident rate by over 50%. It also feels better even than driving by themselves, and it's also safer.

Speaker #2: And the difference of 200 milliseconds is not to be underestimated. It can roughly reduce the accident rate by over 50%. And it also feels better even than driving by themselves.

Speaker #2: And it's also safer. It's safer both in a subjective as well as an objective sense. So, based on these needs, the entire control mechanism will be different.

Janet Chang: It's safer both in the subjective as well as the objective sense. Based on these needs, the entire control mechanism will be different. If we only focus on increasing the scale of models, just like we did in language models, for example, if we increase the size of model two times, with corresponding increase in computation power, the real performance increase is only going to be 5% to 10%. If we look at this from an embodied AI perspective and solve the key issues in every stack, on every level of stack, the next generation autonomous driving can really increase the performance by five to tenfold. That is what can power embodied AI to perform fast, accurate, and valuable services. That's the difference between zero to one.

It's safer both in the subjective as well as the objective sense. Based on these needs, the entire control mechanism will be different. If we only focus on increasing the scale of models, just like we did in language models, for example, if we increase the size of model two times, with corresponding increase in computation power, the real performance increase is only going to be 5% to 10%. If we look at this from an embodied AI perspective and solve the key issues in every stack, on every level of stack, the next generation autonomous driving can really increase the performance by five to tenfold.

Speaker #2: And if we only focus on increasing the scale of the model, just like we did in language models, for example, if we increase the size of the model two times, and with a corresponding increase in computation power, the real performance increase is only going to be 5 to 10 percent.

Speaker #2: However, if we look at this from an embodied AI perspective, and to solve the key issues in every stack, on every level of the stack, the next generation of autonomous driving can really increase performance by 5 to 10 times.

That is what can power embodied AI to perform fast, accurate, and valuable services. That's the difference between zero to one.

Speaker #2: And that is what can power embodied AI to perform fast, accurate, and valuable services. And that's the difference between 0 and 1. In the past three years, we have made a lot of progress in technology and systems for embodied AI.

Janet Chang: In the past three years, we have made a lot of progress in technology and systems for embodied AI. That makes us very confident about the next generation of products. The start of embodied AI robots starts with car robots, and it's starting this year, I believe. Hundreds of billions of revenue is only a starting point. The above three key strategic choices really lay the foundation for the next decade of our development. It's more challenging than the last decade. We're deeply aware that real competition isn't really about short-term wins. It's about staying on the right path over the long term, and having the dedication to keep investing in it. Backed by a strong financial foundation, we will stay focused, embrace our beloved entrepreneurial management style, and build leading body intelligence products.

In the past three years, we have made a lot of progress in technology and systems for embodied AI. That makes us very confident about the next generation of products. The start of embodied AI robots starts with car robots, and it's starting this year, I believe. Hundreds of billions of revenue is only a starting point. The above three key strategic choices really lay the foundation for the next decade of our development. It's more challenging than the last decade. We're deeply aware that real competition isn't really about short-term wins. It's about staying on the right path over the long term, and having the dedication to keep investing in it.

Speaker #2: And that makes us very confident about the next generation of products: the start of embodied AI robots starts with car robots. And it's starting this year, I believe.

Speaker #2: And hundreds of billions of revenue is only a starting point. So the above three key strategic choices really lay the foundation for the next decade of our developments.

Speaker #2: As more challenging than the last decade. And we're deeply aware that real competition isn't really about short-term wins. It's about staying on the right path over the long term and having the dedication to keep investing in it.

Backed by a strong financial foundation, we will stay focused, embrace our beloved entrepreneurial management style, and build leading body intelligence products.

Speaker #2: Backed by a strong financial foundation, we will stay focused, embrace our beloved entrepreneurial management style, and build leading embodied intelligence products. Li Auto can navigate market cycles, lead technological transformation, and become a company that creates unique, lasting value for users and society in the long run.

Janet Chang: Li Auto can navigate market cycles, lead technological transformation, and become a company that creates unique, lasting value for users and society in the long run. Finally, I will also look forward to engaging with you guys in this manner moving forward rather than presenting a quarterly report in a fixed format. I want to express my gratitude to all of you for your support and trust, especially during our most challenging times. We are fully committed to making Li Auto the best-performing company in embodied intelligence, and the greatest creator of user value within the next three to five years. Thank you. Thank you, John. Hello, everyone. I will now walk you through some of our third-quarter financials. Given time constraints, my remarks today will be limited to the financial highlights. All figures will be called in RMB unless otherwise stated.

Li Auto can navigate market cycles, lead technological transformation, and become a company that creates unique, lasting value for users and society in the long run. Finally, I will also look forward to engaging with you guys in this manner moving forward rather than presenting a quarterly report in a fixed format. I want to express my gratitude to all of you for your support and trust, especially during our most challenging times. We are fully committed to making Li Auto the best-performing company in embodied intelligence, and the greatest creator of user value within the next three to five years. Thank you.

Speaker #2: Finally, I’d also look forward to engaging with you all in this manner moving forward rather than presenting a quarterly report in a fixed format.

Speaker #2: And I want to express my gratitude to all of you for your support and trust, especially during our most challenging times. We're fully committed to making Li Auto the best-performing company in embodied intelligence and the greatest creator of user value within the next three to five years.

Speaker #2: Thank you. Thank you, John. Hello, everyone. I will now walk you through some of our third-quarter financials. Given time constraints, my remarks today will be limited to the financial highlights.

Johnny Tie Li: Thank you, John. Hello, everyone. I will now walk you through some of our third-quarter financials. Given time constraints, my remarks today will be limited to the financial highlights. All figures will be called in RMB unless otherwise stated.

Speaker #2: All figures will be quoted in RMB, unless otherwise stated. For further details, we encourage you to refer to our earnings press release. Total revenues in the third quarter were RMB 27.4 billion.

Janet Chang: For further details, we encourage you to refer to our earnings press release. Total revenues in the third quarter were RMB 27.4 billion, decreased 36.2% year over year, and 9.5% quarter over quarter. This included RMB 25.9 billion from vehicle sales, decreased 37.4% year over year, and 10.4% quarter over quarter. Mainly due to lower vehicle deliveries, the sequential decline was partially offset by a higher average selling price due to the different product makes. Cost of sales in the third quarter was RMB 22.9 billion, down 22.1% year over year, and 5.3% quarter over quarter. Gross profit in the third quarter was RMB 4.5 billion, down 51.6% year over year, and 26.3% quarter over quarter. Vehicle margin in the third quarter was 15.5%, versus 20.9% in the same period last year, and 19.4% in the prior quarter.

For further details, we encourage you to refer to our earnings press release. Total revenues in the third quarter were RMB 27.4 billion, decreased 36.2% year over year, and 9.5% quarter over quarter. This included RMB 25.9 billion from vehicle sales, decreased 37.4% year over year, and 10.4% quarter over quarter. Mainly due to lower vehicle deliveries, the sequential decline was partially offset by a higher average selling price due to the different product makes. Cost of sales in the third quarter was RMB 22.9 billion, down 22.1% year over year, and 5.3% quarter over quarter.

Speaker #2: Decreased 36.2% year-over-year. And 9.5% quarter-over-quarter. This included R&B 25.9 billion from vehicle sales, decreased 37.4% year-over-year, and 10.4% quarter-over-quarter. Mainly due to lower vehicle deliveries, the sequential decline was partially offset by a higher average selling price due to the different product makes.

Speaker #2: Cost of sales in the third quarter was RMB 22.9 billion, down 22.7% year-over-year, and 5.3% quarter-over-quarter. Gross profit in the third quarter was RMB 4.5 billion, down 51.6% year-over-year, and 26.3% quarter-over-quarter.

Gross profit in the third quarter was RMB 4.5 billion, down 51.6% year over year, and 26.3% quarter over quarter. Vehicle margin in the third quarter was 15.5%, versus 20.9% in the same period last year, and 19.4% in the prior quarter.

Speaker #2: Vehicle marketing in the third quarter was 15.5% versus 20.9% in the same period last year and 19.4% in the prior quarter. The year-over-year decrease was mainly due to estimated lead mega recall costs and lower production manufacturing costs from higher per-unit volume.

Janet Chang: The year-over-year decrease was mainly due to estimated Li Mega recall cost and the higher per-unit manufacturing cost from lower production volume. The sequential decline was mainly due to the same recall-related cost. Excluding such recall costs, vehicle margin would have been 19.8% in the third quarter. Gross margin in the third quarter was 16.3%, versus 21.5% in the same period last year, and 20.1% in the prior quarter. Excluding the above-mentioned Li Mega recall cost, gross margin would have been 20.4% in the third quarter. Operating expenses in the third quarter were RMB 5.6 billion, down 2.5% year over year, and up 7.8% quarter over quarter. R&D expenses in the third quarter were RMB 3 billion, up 15% year over year and 5.8% quarter over quarter.

The year-over-year decrease was mainly due to estimated Li Mega recall cost and the higher per-unit manufacturing cost from lower production volume. The sequential decline was mainly due to the same recall-related cost. Excluding such recall costs, vehicle margin would have been 19.8% in the third quarter. Gross margin in the third quarter was 16.3%, versus 21.5% in the same period last year, and 20.1% in the prior quarter. Excluding the above-mentioned Li Mega recall cost, gross margin would have been 20.4% in the third quarter. Operating expenses in the third quarter were RMB 5.6 billion, down 2.5% year over year, and up 7.8% quarter over quarter.

Speaker #2: The sequential decline was mainly due to the same recall-related cost. Excluding such recall costs, vehicle margin would have been 19.8% in the third quarter.

Speaker #2: Gross margin in the third quarter was 16.3% versus 21.5% in the same period last year, and 20.1% in the prior quarter. Excluding the above-mentioned lead mega recall cost, gross margin would have been 20.4% in the third quarter.

Speaker #2: Operating expenses in the third quarter were R&B 5.6 billion, down 2.5% year-over-year, and up 7.8% quarter-over-quarter. R&B expenses in the third quarter were R&B 3 billion, up 15% year-over-year, and 5.8% quarter-over-quarter.

R&D expenses in the third quarter were RMB 3 billion, up 15% year over year and 5.8% quarter over quarter.

Speaker #2: The year-over-year increase was mainly due to the impact of the pace of new vehicle programs and the increased investment in expanding our product portfolio and technology.

Janet Chang: The year-over-year increase was mainly due to the impact of the pace of new vehicle programs, the increased investment in expanding our product portfolio and technology, along with expenses from the product configuration adjustment. The sequential increase was mainly due to those same product configuration adjustment expenses. FT&A expenses in the third quarter were RMB 2.8 billion, down 17.6% year over year, and up 1.9% quarter over quarter. The year-over-year decrease was mainly due to the recognition of share-based compensation expenses regarding the CEO performance-based awards in the third quarter of last year. Loss from operations in the third quarter was RMB 1.2 billion, versus RMB 3.4 billion income from operations in the same period last year, and RMB 827 million income from operations in the prior quarter.

The year-over-year increase was mainly due to the impact of the pace of new vehicle programs, the increased investment in expanding our product portfolio and technology, along with expenses from the product configuration adjustment. The sequential increase was mainly due to those same product configuration adjustment expenses. FT&A expenses in the third quarter were RMB 2.8 billion, down 17.6% year over year, and up 1.9% quarter over quarter. The year-over-year decrease was mainly due to the recognition of share-based compensation expenses regarding the CEO performance-based awards in the third quarter of last year.

Speaker #2: Along with expenses from the product configuration adjustment, the sequential increase was mainly due to those same product configuration adjustment expenses. As Q&A expenses in the third quarter were R&B $2.8 billion, down 17.6% year-over-year, and up 1.9% quarter-over-quarter.

Speaker #2: The year-over-year decrease was mainly due to the recognition of share-based compensation expenses regarding the CEO performance-based awards in the third quarter of last year.

Loss from operations in the third quarter was RMB 1.2 billion, versus RMB 3.4 billion income from operations in the same period last year, and RMB 827 million income from operations in the prior quarter.

Speaker #2: Loss from operations in the third quarter was R&B 1.2 billion, versus R&B 3.4 billion income from operations in the same period last year and R&B 827 million income from operations in the prior quarter.

Speaker #2: Operating margin in the third quarter was negative 4.3% versus 8% in the same period last year and 2.7% in the prior quarter. Net loss in the third quarter was RMB 624.4 million, versus RMB 2.8 billion net income in the same period last year.

Janet Chang: Operating margin in the third quarter was negative 4.3%, versus 8% in the same period last year, and 2.7% in the prior quarter. Net loss in the third quarter was RMB 624.4 million, versus RMB 2.8 billion net income in the same period last year, and RMB 1.1 billion net income in the prior quarter. Diluted net loss per ADS attributable to our ordinary shareholders was RMB 0.62 in the third quarter, versus diluted net earnings of RMB 2.66 in the same period last year, and RMB 1.03 in the prior quarter. Pending to our balance sheets and cash flow, our cash position remains strong with a quarter-ended balance of RMB 98.9 billion. Net cash used in operating activities in the third quarter was RMB 7.4 billion, versus RMB 11 billion provided in the same period last year, and RMB 3 billion used in the prior quarter.

Operating margin in the third quarter was negative 4.3%, versus 8% in the same period last year, and 2.7% in the prior quarter. Net loss in the third quarter was RMB 624.4 million, versus RMB 2.8 billion net income in the same period last year, and RMB 1.1 billion net income in the prior quarter. Diluted net loss per ADS attributable to our ordinary shareholders was RMB 0.62 in the third quarter, versus diluted net earnings of RMB 2.66 in the same period last year, and RMB 1.03 in the prior quarter. Pending to our balance sheets and cash flow, our cash position remains strong with a quarter-ended balance of RMB 98.9 billion.

Speaker #2: R&B 1.1 billion net income in the prior quarter. Diluted net loss per ADS attributable to our ordinary shareholders was R&B 0.62 in the third quarter.

Speaker #2: Versus diluted net earnings of R&B 2.66 in the same period last year and R&B 1.03 in the prior quarter. According to our balance sheets and cash flow, our characterization remains strong with a quarter-ending balance of R&B 98.9 billion. Net cash used in operating activities in the third quarter was R&B 7.4 billion, versus R&B 11 billion.

Net cash used in operating activities in the third quarter was RMB 7.4 billion, versus RMB 11 billion provided in the same period last year, and RMB 3 billion used in the prior quarter.

Speaker #2: And R&B 3 the same period last year, provided in billions used in the prior quarter. Free cash flow was third quarter, versus R&B 8.9 billion in the negative R&B 9.1 billion in the same period last year.

Janet Chang: Free cash flow was negative RMB 8.9 billion in the third quarter, versus RMB 9.1 billion in the same period last year, and negative RMB 3.8 billion in the prior quarter. Now for our business outlook. For the fourth quarter of 2025, the company expects the delivery to be between 100,000 and 110,000 vehicles, and total revenue to be between RMB 36.5 billion and RMB 29.2 billion. This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator and start our Q&A session. Thank you.

Free cash flow was negative RMB 8.9 billion in the third quarter, versus RMB 9.1 billion in the same period last year, and negative RMB 3.8 billion in the prior quarter. Now for our business outlook. For the fourth quarter of 2025, the company expects the delivery to be between 100,000 and 110,000 vehicles, and total revenue to be between RMB 36.5 billion and RMB 29.2 billion. This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator and start our Q&A session. Thank you.

Speaker #2: And negative R&B 3.8 billion in the prior quarter. Now, for our business outlook for the fourth quarter of 2025, the company expects deliveries to be between 100,000 and 110,000 vehicles, and total revenues to be between R&B 26.5 billion and R&B 29.2 billion.

Speaker #2: This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which are subject to change. That concludes our prepared remarks.

Speaker #2: Now, I'll turn the call over to the operator to start our Q&A session. Thank you.

Speaker #2: you. Thank

Speaker #1: If you do wish to ask a question, please press star, then one on your telephone, and wait for your name to be announced.

Operator: Thank you. If you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you may re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translations. Your first question comes from Yingbo Xu at Citi. Please go ahead.

Operator: Thank you. If you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you may re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translations. Your first question comes from Yingbo Xu at Citi. Please go ahead.

Speaker #1: If you wish to cancel your request, please press *2. If you are on a speakerphone, please pick up the handset to ask your question.

Speaker #1: For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you may re-enter the queue.

Speaker #1: If you are a Mandarin speaker, please ask your questions in Chinese, first, then follow with England's English, pardon me, translations. Your first question comes from Yingbo Xu at Citics.

Speaker #1: Please go ahead.

Speaker #2: Product. so I have two questions. The first question is about we are very glad to hear the company's return to entrepreneurship and next decade's plan.

Yingbo Xu: I have two questions. The first question is about, we are very glad to hear the company's return to entrepreneurship and next decade's plan. Any R&D and development needs time. My first question is that if we just say next year, 2026, what kind of technology or product progress can we expect? Also, from the investor's perspective, how long can we really see a technology or product jump in the future? How long? The second question is related to BEV. The company's transition from EREV to BEV faced challenges. Can you please give us more information or confidence in this BEV part, how we prepare for the effective technology reserve and the supply chain preparation? Thank you.

Yingbo Xu: I have two questions. The first question is about, we are very glad to hear the company's return to entrepreneurship and next decade's plan. Any R&D and development needs time. My first question is that if we just say next year, 2026, what kind of technology or product progress can we expect? Also, from the investor's perspective, how long can we really see a technology or product jump in the future? How long? The second question is related to BEV. The company's transition from EREV to BEV faced challenges. Can you please give us more information or confidence in this BEV part, how we prepare for the effective technology reserve and the supply chain preparation? Thank you.

Speaker #2: But any R&D and development needs time, so my first question is that if we just say next year, 2026, what kind of technology or product progress can we expect?

Speaker #2: And also, from the investors' perspective, how long can we really see a technology or product jump in the future? How long? And the second question related to BEV: the company's transition from EREV to DEV challenges.

Speaker #2: So can we please give us more information or confidence in this BEV part? How do we prepare for the effective technology reserve and the supply chain preparation?

Speaker #2: Thank you.

Speaker #1: Yingbo, what I've already done when I was ask 2026年的时候，也就是在明年，然后搭载我们以M100芯片，然后为核心的，然后AI系统，然后开始交付在产品端上的时候，然后我觉得这个真正的价值和体验就会发生改变。那我觉得具体的改变还是我之前讲的，对，会让汽车这样的产品，然后从被动的使用，然后变成真正的，然后自动化和主动化来为用户提供服务。而且这种服务和体验，然后并不是说我们要搞一个deep

Xiang Li: ??????????????????????????????????2026???????????????????M100????????????AI??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Deep Research?????????Coding?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Xiang Li: ??????????????????????????????????2026???????????????????M100????????????AI??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Deep Research?????????Coding?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #1: research，或者我们去做一个coding，或者我们生成一个视频，然后而是它会体现在我们日常的生活和高频体验中，每天都会感触到，每天都能够体验到这样的价值带来的根本性的变化。对，我觉得这是讲的第一点。我第二点说，如果未来的十年，然后到底有什么样的，然后明确的功能啊，或者价值啊，然后可以呈现。那我觉得基于我们对，然后人工智能和提升智能的理解，对，它没有办法像传统的编程或者硬件功能，对，给出明确的功能这样的一个特性。而是说当我们去构建整个人工智能的系统化能力的时候，只要一些关最关键的核心的问题被解决，或者一些关键的性能进行突破，它会带来一系列的，然后体现在我们具体的生活中，或者产品价值上的，然后一系列的，然后改变。而这些改变甚至会远超我们的预期。我觉得这是我们正确的，我们自己理解的人工智能和具身智能，然后能够给我们的物理世界给产品，给我们日常的生活，然后带来的转变以及背后的驱动力，而非传统的编程啊和功能模式的这样的一个呈现方式。 On

Speaker #3: On your first question about 2026, next year we will be launching our AI system based on our internally developed M100 chips. And once this system gets into the car, that's where we will start to see real value and changes in user experience.

Xiang Li: On your first question about 2026, next year we will be launching our AI system based on our internally developed M100 chips. Once this system gets in the car, that's where we will start to see real value and change of user experience. As I mentioned earlier, our products would go from a machine that passively takes orders to a more automated machine, and even a proactive machine that can provide services for the users. Unlike large language models, which can conduct deep research or video generation, these embodied AI products can really benefit our users in their everyday use at a very high frequency. On the second part about the next 10 years, unlike programming or traditional rule-based programming, we do not have a feature list or a list of functions.

[Translator]: On your first question about 2026, next year we will be launching our AI system based on our internally developed M100 chips. Once this system gets in the car, that's where we will start to see real value and change of user experience. As I mentioned earlier, our products would go from a machine that passively takes orders to a more automated machine, and even a proactive machine that can provide services for the users. Unlike large language models, which can conduct deep research or video generation, these embodied AI products can really benefit our users in their everyday use at a very high frequency.

Speaker #3: As I mentioned earlier, our products will evolve from a passive machine that passively takes orders to a more automated machine, and even a proactive machine that can provide services for the users.

Speaker #3: So, I like large language models that can conduct deep research or video generation. This embodied AI product can really benefit our users in their everyday use at a very high frequency.

On the second part about the next 10 years, unlike programming or traditional rule-based programming, we do not have a feature list or a list of functions.

Speaker #3: And on the second part about the next 10 years, I like programming or traditional rule-based programming. We do not have a feature list or a list of functions instead.

Xiang Li: Instead, AI really, for a complex AI system, if we can solve key issues in some important areas and improve performances in some bottleneck points, then we will start to see a series of changes that are unimagined before. That's our late understanding of embodied AI and AI system. This is really the room for imagination, for the next 10 years. Thank you.

Instead, AI really, for a complex AI system, if we can solve key issues in some important areas and improve performances in some bottleneck points, then we will start to see a series of changes that are unimagined before. That's our late understanding of embodied AI and AI system. This is really the room for imagination, for the next 10 years. Thank you.

Speaker #3: AI is a really complex system. If we can solve key issues in some important areas and improve performance in certain bottleneck points, then we'll start to see a series of changes that are unimaginable before.

Speaker #3: And that's our understanding of embodied AI and AI systems. This is really the room for imagination for the next 10 years. Thank you.

Speaker #3: you. Let me go Yingbo,

Xiang Li: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????5C??????????????????????????????????????BMS?????????????????????????????????????????????????????????????????????????????????????????????????????????5C?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????PCB layout?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Xiang Li: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????5C??????????????????????????????????????BMS?????????????????????????????????????????????????????????????????????????????????????????????????????????5C?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????PCB layout?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #1: 你好。我是理想汽车马东辉。我来回答第二个问题，关于三电领域的研发和供应的布局。其实理想汽车一直聚焦在三电核心技术上，进行的话自研，包含电驱动、电池和电控技术的一些突破。然后我们在电驱系统方面的话，我们主要是聚焦对于用户有价值的像能效啊，以及的话体验。那我们自己的话是自研代工了碳化硅功率芯片，然后并且我们自研自制了功率模块以及电机控制器的生产和研发。那同步呢，理想汽车也自己建成了专属驱动电机的工厂。那这样的话就构建了从碳化硅功率芯片，然后再到功率模块，再到电机的全链条自研能力。然后并且我们的电驱技术啊，不仅是用在纯电车型上面，也包含征程的全系车型，可以保证在驾驶过程当中很安静很平顺，然后并且也有效的话是优化了能耗的水平，提升的话车辆的续航里程。那关于电池技术的话，我们是聚焦在充电速度和安全，然后我们围绕的话5C超充的电池，然后也构建了全栈的自研能力，包括电芯的化学体系，然后电池管理系统BMS控制模型和算法，然后以及电池pipe的布局和结构设计，可以实现超快充、长续航、长寿命三重的核心优势。然后在电池的供应布局方面的话呢，我们规划的话是采用外购，然后加自研合资的双模式。那明年我们也将量产理想自主品牌5C的电池，然后通过自研技术产业化的落地，进一步强化电池的安全性能，然后升级啊，用户的本能体验。那最后一点的话是在电控，我们通过软硬件的全自研，然后打造极致的驾驶质感。那在软件端，我们可以实现对于动力的控制啊，能量的管理以及发动机的标定等全栈的话自研。然后在硬件端的话，像一些核心的预控制器啊，PCB

Speaker #1: layout呀，以及底层软件的自主研发啊，都是我们全栈自研。通过于自研底盘技术的协同，然后可以实现对于车辆驾驶性和平顺性的精准优化，然后打造好开一上手的驾驶特质。那总体来说，通过三电技术的自研，我们是希望能够以技术硬实力，然后为用户带来充电快啊，续航长好开又安全的确定性体验。 On

Speaker #3: On the key areas in health-related technologies, we focus on three aspects: electric drive, battery systems, and electronic control. First of all, on the electric drive system, our focus is on efficiency and user experience.

Xiang Li: On the key in-house battery-related technologies, we focus on three areas: electric drive, battery systems, and electronic control. First of all, on the electric drive system, our focus is on efficiency and user experience. We have in-house developed and outsourced our manufacturing of silicon carbide power chips, and in-house developed and in-house manufacturing of power modules and motor controllers, but also established our own dedicated drive motor factory. We have built a full chain in-house development capability, spanning from silicon carbide power chips, power modules, to electric motor assemblies. Our electric drive technology covers all battery and EREV models, ensuring quiet and smooth driving experience while also optimizing for energy consumption and vehicle driving range. Secondly, on the battery system, our focus is on ultra-fast charging and safety.

[Translator]: On the key in-house battery-related technologies, we focus on three areas: electric drive, battery systems, and electronic control. First of all, on the electric drive system, our focus is on efficiency and user experience. We have in-house developed and outsourced our manufacturing of silicon carbide power chips, and in-house developed and in-house manufacturing of power modules and motor controllers, but also established our own dedicated drive motor factory. We have built a full chain in-house development capability, spanning from silicon carbide power chips, power modules, to electric motor assemblies.

Speaker #3: We have an in-house developed and outsourced our manufacturing of silicon carbide power chips and in-house developed and self and in-house manufacturing of power modules and motor controllers.

Speaker #3: But we also established our own dedicated drive motor factory. We have built a full chain in-house development capability spanning from silicon carbide power chips, power modules, to electric motor assemblies.

Our electric drive technology covers all battery and EREV models, ensuring quiet and smooth driving experience while also optimizing for energy consumption and vehicle driving range. Secondly, on the battery system, our focus is on ultra-fast charging and safety.

Speaker #3: Our electric drive technology covers all Bad and ERAF models, entering a quiet and smooth driving experience while also optimizing for energy consumption and vehicle driving range.

Speaker #3: And secondly, on the battery system, our focus is on ultra-fast charging and safety. We have built a full-stack in-house capability around 5C ultra-fast charging batteries with full control over self-chemistry, BMS control modules, and algorithms.

Xiang Li: We have built a full stack in-house capability around 5C ultra-fast charging batteries, with full control over self-chemistry, BMS control modules and algorithms, as well as battery pack layouts and structural design, achieving three core advantages across ultra-fast charging, long driving range, and long service life. On the supply front, we also have a combined strategy of external procurement and in-house development. Li Auto's own 5C batteries will enter mass production next year. This industrialization of in-house developed technology will further strengthen our battery safety and also improve user experience. Thirdly, on the electronic control system, our goal is to provide the best driving experience also through in-house developed hardware and software. On the software side, we have full stack in-house development capability of powertrain control, power management, and engine calibration.

We have built a full stack in-house capability around 5C ultra-fast charging batteries, with full control over self-chemistry, BMS control modules and algorithms, as well as battery pack layouts and structural design, achieving three core advantages across ultra-fast charging, long driving range, and long service life. On the supply front, we also have a combined strategy of external procurement and in-house development. Li Auto's own 5C batteries will enter mass production next year. This industrialization of in-house developed technology will further strengthen our battery safety and also improve user experience.

Speaker #3: And that, as well as battery pack layouts, structural design, and achieving three core advantages across ultra-fast charging, long driving range, and long service life.

Speaker #3: On the supply front, we also have a combined strategy of external procurement and in-house development. Li Auto's own 5C batteries will enter mass production next year.

Speaker #3: This industrialization of in-house developed technology will further strengthen our battery safety and also improve user experience. Thirdly, on the electronic control system, our goal is to provide the best driving experience through in-house developed hardware and software.

Thirdly, on the electronic control system, our goal is to provide the best driving experience also through in-house developed hardware and software. On the software side, we have full stack in-house development capability of powertrain control, power management, and engine calibration.

Speaker #3: On the software side, we have full on-stack in-house development capability for powertrain controls, power management, and engine calibration. On the hardware side, our core domain controller PCB layout is all developed in-house, as well as the underlying software.

Xiang Li: On the hardware side, our core domain controller PCB layout are all developed in-house, as well as the underlying software. Together with our in-house chassis technology, we were able to enhance driving smoothness and comfort, and make the drive experience easy and intuitive to our users. Through a combination of three electrical technology, including battery electric control and electric drive, we provide our users with special fast charging, long range, and smooth and safe driving experience. Thank you.

On the hardware side, our core domain controller PCB layout are all developed in-house, as well as the underlying software. Together with our in-house chassis technology, we were able to enhance driving smoothness and comfort, and make the drive experience easy and intuitive to our users. Through a combination of three electrical technology, including battery electric control and electric drive, we provide our users with special fast charging, long range, and smooth and safe driving experience. Thank you.

Speaker #3: Together with our in-house chassis technology, we were able to enhance driving smoothness and comfort, making the driving experience easy and intuitive for our users.

Speaker #3: Through a combination of three electrical technologies, including battery, electric control, and electric drive, we provide our users with a special, fast charging, long-range, and smooth and safe driving experience.

Speaker #3: Thank

Speaker #3: you. Thank you.

Janet Chang: Thank you. Your next question comes from Tim Chang from Morgan Stanley. Please go ahead.

Yingbo Xu: Thank you. Your next question comes from Tim Chang from Morgan Stanley. Please go ahead.

Speaker #2: Your next question comes from Tim Hsiao from Morgan Stanley. Please go ahead.

Speaker #4: ????????????????????????????????????????????????????????????????????????????????????I6??I8???????????????????????????????????????????????????????????????????????????????Q3?????????????????????????????????????????????????????????????????So have two quick questions focusing on the near-term operation. The first one about the products, the I series. Could you imagine you can share the latest updates on orders and deliveries of the Li I6 and I8? In the meantime, how and where could you address the current supply bottleneck of the Li I6 and I8? How should you think about the normalized sales volume of the two I series models in the following months?

[Analyst]: you to the management team for sharing the strategy and vision for the next decade and giving me some thoughts, and also thank you for taking my questions. I have two quick questions, focusing on the near-term operation. The first question is about pure electric, specifically, I would like to understand the current order situation and delivery status for Li I6 and I8. At present, how is the company solving the supply issue, and how do you view the future sales outlook for these models? The second question is about cash flow. We have seen that the company registered increasing operating cash outflow in Q3, with free cash outflow of about RMB 7.4 billion and free cash outflow of RMB 8.9 billion during this quarter. This caused quite a significant drop in the company's cash reserve. What are the main reasons for this, and how should we think about the improvement of cash flow in the following quarters? Thank you.

Tim Hsiao: you to the management team for sharing the strategy and vision for the next decade and giving me some thoughts, and also thank you for taking my questions. I have two quick questions, focusing on the near-term operation. The first question is about pure electric, specifically, I would like to understand the current order situation and delivery status for Li I6 and I8. At present, how is the company solving the supply issue, and how do you view the future sales outlook for these models? The second question is about cash flow.

Speaker #4: The second question is about cash flow. Li Auto actually registered an increasing operating cash outflow of about 7.4 billion RMB for free cash flow outflow of 8.9 billion during this quarter.

We have seen that the company registered increasing operating cash outflow in Q3, with free cash outflow of about RMB 7.4 billion and free cash outflow of RMB 8.9 billion during this quarter. This caused quite a significant drop in the company's cash reserve. What are the main reasons for this, and how should we think about the improvement of cash flow in the following quarters? Thank you.

Speaker #4: This caused quite a significant drop in the company's cash reserves, Green OY. Why is that, and how should you think about the cash flow in the following quarters?

Speaker #4: That's my second question. Thank

Speaker #4: you. Tim

Xiang Li: This year we established our BEV portfolio with I8 and I6 models, and respectively they cover the mainstream and premium segments for the family BEV market. These two cars create a solid foundation for the long-term stable growth of our BEV business. We also deployed our products to support the dual energy strategy, namely EREV and BEV, which effectively complement each other and meet the diverse needs of our users. A key highlight that's worth mentioning is that we have made breakthroughs in key regional markets. The I series has successfully entered core BEV markets such as Beijing, Shanghai, Jiangsu, and Zhejiang, with orders in these areas starting to increase significantly from September. Li I8 and I6 are steadily going through the path of production ramp-up, delivery acceleration, and market penetration.

Speaker #3: 你好，我是理想汽车马德辉。我来回答第一个问题，然后呃今年的话我们通过I6和I8，然后构建了BEV的产品矩阵，然后分别去覆盖主流和高端的家庭纯电市场。也为理想汽车纯电业务长期的稳定增长奠定了坚实的基础。那对于我们来说的话，我们也完成了征程和纯电三能源形式的产品的一个布局，实现的话有效的互补，满足用户不同的需求。那对于纯电车型的话，核心亮点那I系列产品实现了区域渗透率的大幅突破，特别是像对于像上海啊北京江州沪等纯电的话，核心市场。那9月份上述地区的订单大幅的话增加。那关于供应的话，目前呃理想I8和I6两款产品呃正经历产能爬坡啊交付提速以及市场渗透发展的路径。那从11月份起，为了解决产能爬坡，然后I6电池的供应将正式启用，双供应商的模式。但是我们会保障两家供应商电池的性能跟质量标准是一致的，然后预计的话呃明年年初啊I6的月产能将稳步提升到2万台。那在此呢呃我们也想向理想I6的订单车主啊致以诚挚的歉意，受核心零部件供应的规划和产能爬坡的影响啊，您的提车时间有所延迟，感谢您的信任和选择，也恳请啊给予我们更多的支持和时间啊，我们将全力加班加点提升产能，加速交付的进程，谢谢。

[Translator]: This year we established our BEV portfolio with I8 and I6 models, and respectively they cover the mainstream and premium segments for the family BEV market. These two cars create a solid foundation for the long-term stable growth of our BEV business. We also deployed our products to support the dual energy strategy, namely EREV and BEV, which effectively complement each other and meet the diverse needs of our users. A key highlight that's worth mentioning is that we have made breakthroughs in key regional markets.

Speaker #5: We established our vast models, and respectfully, they cover the mainstream portfolio with I8 and I6, as well as the premium segments for the family bed market. These two cars create, this year, a solid foundation for the long-term stable growth of our best business.

Speaker #5: The I series has successfully entered, mentioning that we have made breakthroughs in core bed markets such as Beijing, Shanghai, Jiangsu, and Zhejiang, with significantly increased orders in these areas starting in September.

Speaker #5: for to support the dual energy strategy, namely EREV and BEV. which diverse needs of our users. A key highlight that's worth effectively complements each other and to meet the in key regional markets.

The I series has successfully entered core BEV markets such as Beijing, Shanghai, Jiangsu, and Zhejiang, with orders in these areas starting to increase significantly from September. Li I8 and I6 are steadily going through the path of production ramp-up, delivery acceleration, and market penetration.

Speaker #5: I8 and I6 are Li steadily going through the path of production ramp-up, delivery acceleration, and market penetration. And starting in November to address production ramp-up challenges, we have we will officially start to begin a on Li I6.

Xiang Li: Starting in November, to address production ramp-up challenges, we will officially start to begin a dual supplier strategy for our batteries on Li I6. We'll ensure consistent performance and quality standards between these two suppliers. We expect monthly Li I6 production capacity to steadily increase to about 20,000 units starting from early next year. We sincerely apologize to customers who placed orders on I6 and are still waiting for their cars to be delivered. Due to constraints in the supply chain planning of key components and the pace of production ramp-up, your vehicle delivery schedule has been affected. We deeply appreciate your trust and choice of Li Auto, and we kindly ask for your continued understanding and patience. Our team is working around the clock to accelerate production and expedite the delivery process.

Starting in November, to address production ramp-up challenges, we will officially start to begin a dual supplier strategy for our batteries on Li I6. We'll ensure consistent performance and quality standards between these two suppliers. We expect monthly Li I6 production capacity to steadily increase to about 20,000 units starting from early next year. We sincerely apologize to customers who placed orders on I6 and are still waiting for their cars to be delivered. Due to constraints in the supply chain planning of key components and the pace of production ramp-up, your vehicle delivery schedule has been affected.

Speaker #5: We'll ensure consistent performance and quality through a dual supplier strategy for our battery suppliers. We'll expect standards between these two monthly Li I6 production capacities to steadily increase to about 20,000 units starting from early next year.

Speaker #5: We sincerely apologize to customers who placed orders on I6 and are still waiting for the cars to be delivered. Due to constraints in the supply chain and production ramp-up, your planning of key components and the pace of the schedule has been affected.

Speaker #5: vehicle is still delivery we deeply appreciate your trusted choice of Li Auto and we kindly ask for your continued working around the clock to accelerate understanding and patience.

We deeply appreciate your trust and choice of Li Auto, and we kindly ask for your continued understanding and patience. Our team is working around the clock to accelerate production and expedite the delivery process.

Speaker #5: Production and expedite the delivery process.

Speaker #6: And for the second question, Tim, this is John. Same for the operating cash flow; it's about two reasons.

Johnny Tie Li: For a second question, Tim, this is John. I think for the operating cash flow, it's about two reasons. First, as we guided in the last earnings release, the third quarter we faced great pressure on the deliveries, and the delivery decrease will make the revenue decrease, which will finally impact the operating cash flow. Also, the impact of shorten of the payment cycle to suppliers. This is, as you may know, due to the government's authority starting from June in the national line. Actually, we value our partnership with our supply chain partners and actively respond to their requirements. Currently, the settlement period for all our accounts payable is 60 days, and the payment is either the wire transfer or bank notes without any business notes or some kind of certificates from the year, just the normal bank note. Thank you.

Johnny Tie Li: For a second question, Tim, this is John. I think for the operating cash flow, it's about two reasons. First, as we guided in the last earnings release, the third quarter we faced great pressure on the deliveries, and the delivery decrease will make the revenue decrease, which will finally impact the operating cash flow. Also, the impact of shorten of the payment cycle to suppliers. This is, as you may know, due to the government's authority starting from June in the national line. Actually, we value our partnership with our supply chain partners and actively respond to their requirements.

Speaker #6: First, as we guided in the last earnings release, our team is under pressure on the deliveries. Delivery decreases will affect our revenue, which will impact our operating cash flow.

Speaker #6: finally impact the And also the impact of shorten of the payment cycle to is as you may know it's due to the the government's authority starting from June in the national wide actually we value our partners and actively respond to their requirements.

Speaker #6: Currently, the settlement period partnership with our supply chain for all our accounts payable is 60 days, either the very transfer or bank notes without the payment or some kind of certificates from the bank.

Currently, the settlement period for all our accounts payable is 60 days, and the payment is either the wire transfer or bank notes without any business notes or some kind of certificates from the year, just the normal bank note. Thank you.

Speaker #6: Just the normal bank note. Thank you.

Speaker #6: you. Thank you.

Janet Chang: Thank you. Your next question comes from Ming Hesun Li from Bank of America. Please go ahead.

Operator: Thank you. Your next question comes from Ming Hesun Li from Bank of America. Please go ahead.

Speaker #1: Your next question comes from Ming Husin Lee from BofA. Please go ahead.

Speaker #7: ???????????????????????????????????????5%???????????????????????????????? So my first question is, trade-in subsidy policy will change and also the EV purchase tax will increase to 5% next year.

[Analyst]: policy benefits. In the long term, we must strengthen user value and offset the impact through technological upgrades. There is no shortcut. In 2026, our entire lineup will adopt the 800V high-voltage platform and 5C ultra-fast charging batteries to improve efficiency and reduce energy consumption. In 2026, we will also have built about 4,800 super charging stations, and the proportion of high-speed charging piles is expected to exceed 35%. Through the localization of the supply chain, scale effects, and stable pricing, we will further enhance competitiveness. For product strength, we must accelerate iteration, and then accelerate iteration again. In summary, the policy phase-out is definitely a watershed for high-quality industry development. In 2026, Li Auto is confident in achieving a historic breakthrough in deliveries, and will use product strength and user value to navigate cycles and consolidate our leading position in the high-end market. Thank you. We believe this change marks the auto industry's transformation from policy-driven adoption to organic market-driven adoption, and it is precisely during this phase that the value of stronger players can really stand out. As the purchase tax policy phases out, there will be fluctuations in the short term, we believe.

Ming Hsun Lee: [audio distortion]

Speaker #7: if the subsidy declines next year your sales strategy for from 0 percent to 5 20 26. now我第二个问题呢是这个呃因为我们明年2026年的这个呃L系列呃也会有呃重大的改款。那请问有哪一些呃亮点呃可以期待。 so my next second question is that in 2026 your EREVL series will have a new generation.

Speaker #7: So, what can we expect the most: the new features, specs, and what will be the new advantages for our new models?

Speaker #7: 谢谢。

[Translator]: We believe this change marks the auto industry's transformation from policy-driven adoption to organic market-driven adoption, and it is precisely during this phase that the value of stronger players can really stand out. As the purchase tax policy phases out, there will be fluctuations in the short term, we believe.

Speaker #6: 呃

Speaker #6: Tim你好我是马东辉。我来回答这两个问题。然后第一个问题的话是关于呃置换补贴以及购置税的问题。然后我们认为的话这也是汽车行业从原有的政策驱动然后转向的话市场驱动的一个过程。呃这也是企业核心竞争力的一个凸显期。然后购置税政策的拓退坡呀呃短期市场一定会产生波动。因为用户会在呃2025年年底然后集中去锁定优惠然后会出现类似的翘尾效应。啊并且在2026年Q1的销量啊自然会出现环比的下调。但长期来看的话我们还是呃维持这个乐观。那NEV的话渗透率呀也会稳步的增加。那2026年国内的话新能源渗透率我们预估啊可能会达到55%到60%。那对于高端市场的NEV渗透率啊会突破的话60%。然后对于理想汽车的应对呃策略的话首先的话在过渡阶段还是要保障用户的利益。啊并且我们20年新开发的车型要适配新的法规的规范。那在过渡期的话我们也推出了安心购车的方案比如承担啊I6年底前锁单用户跨年交付的购置税的一个差额。然后并且我们二流款所有产品油耗电耗啊全部达成新政策的要求。啊可以享受26年新政策的优惠。呃长期的话呢还是要强化用户的价值。通过技术的升维来对冲影响。呃没有捷径。那2026年的话呢呃我们全系采取800伏高压平台以及5C的超充电池。啊提高效率降低能耗。并且在2026年我们也将建成啊大约啊4,800座超充站。并且高速充电桩的占比呀预计也会超过35%。啊以及通过深化供应链的国产化啊规模效应。啊稳定的的价格。呃对于产品力我们只有家属迭代。在家属迭代。那总结来说的话这个政策退坡肯定是行业高质量发展的一个分水岭。那理想2026年我们是有信心哈这个实现交付量历史的突破。然后以产品力和用户价值去穿越周期巩固我们在高端市场的领先地位。谢谢。

Speaker #8: Change marks the auto industry's transition from policy-driven adoption to organic market-driven adoption. It is precisely during this phase that the value of stronger players can really stand out.

Speaker #8: As the purchase tax policy phases out, there will be fluctuations in the short term, we believe. We expect to see a pull-forward effect.

[Analyst]: We expect to see a pull forward effect, namely as customers rush to lock in their incentives at the end of 2025. That will naturally lead to a substantial dip in the deliveries in Q1 2026. Looking into the longer term, we are optimistic about the penetration rate of NEVs in 2026. The NEV penetration rate in the domestic Chinese market will probably reach between 55% and 60%, with the rate in the premium segment exceeding 60%. At Li Auto, our response strategy is to guarantee user benefits and adapt to new standards with our new vehicles rolling out during the transition period. For the transition period, we have a peace of mind purchase program, covering the purchase tax difference for I6 customers who locked in their orders in 2025 but paid deliveries in 2026.

We expect to see a pull forward effect, namely as customers rush to lock in their incentives at the end of 2025. That will naturally lead to a substantial dip in the deliveries in Q1 2026. Looking into the longer term, we are optimistic about the penetration rate of NEVs in 2026. The NEV penetration rate in the domestic Chinese market will probably reach between 55% and 60%, with the rate in the premium segment exceeding 60%. At Li Auto, our response strategy is to guarantee user benefits and adapt to new standards with our new vehicles rolling out during the transition period.

Speaker #8: Namely, as customers rush to lock in their incentives at the end of 2025, they will naturally lead to a substantial dip in the deliveries in Q1 2026.

Speaker #8: Looking into the longer term, we are optimistic about the penetration rate of NEVs. In 2026, the NEV penetration rate in the domestic Chinese market will probably reach between 55% to 60%, with the segment exceeding 60%.

Speaker #8: At Li Auto, our response strategy is to guarantee user benefits and, with the rate of premium adaptation to new standards, we are rolling out our new vehicles during the transition period.

For the transition period, we have a peace of mind purchase program, covering the purchase tax difference for I6 customers who locked in their orders in 2025 but paid deliveries in 2026.

Speaker #8: And for the transition period, we have a peace of mind purchase program covering the purchase tax difference for I6 customers who locked in their orders in 2025 but take deliveries in 2026.

Speaker #8: All of our 2026 models meet the new standards for gas and energy consumption, so they will qualify for 2026 incentives. In the longer term, we will continue to be dedicated to user value and offset policy impacts through technology advancements.

[Analyst]: All of our 2026 models meet the new standards for gas and energy consumption, so they will qualify for 2026 incentives. In the longer term, we will continue to be dedicated to user value and offset policy impacts through technology advancements. For example, we will be fully adopting 500-800 volt high voltage platform, and 5C ultra-fast batteries to enhance efficiency and reduce energy consumption in 2026. We aim to operate about 4,800 super charging stations by 2026, 30% to 35% of which will be on highway service stations. We'll continue to deepen our supply chain localization and leverage economies of scale to stabilize pricing, while accelerating product iteration to keep all of 2026 models at the forefront of product competitiveness. At the product strength, we must accelerate model iteration and accelerate further.

All of our 2026 models meet the new standards for gas and energy consumption, so they will qualify for 2026 incentives. In the longer term, we will continue to be dedicated to user value and offset policy impacts through technology advancements. For example, we will be fully adopting 500-800 volt high voltage platform, and 5C ultra-fast batteries to enhance efficiency and reduce energy consumption in 2026. We aim to operate about 4,800 super charging stations by 2026, 30% to 35% of which will be on highway service stations.

Speaker #8: For example, we will be fully adopting a 500-800 volt high-voltage platform and 5C ultrafast batteries to enhance efficiency and reduce energy consumption in 2026.

Speaker #8: We aim to operate about 400 to 4800 supercharging stations by 30% to 35% of 2026, which will be at highway service stations. We'll continue to deepen our supply chain localization and leverage economies of scale to stabilize pricing while accelerating product iteration to keep all of our 2026 models at the forefront of product competitiveness.

We'll continue to deepen our supply chain localization and leverage economies of scale to stabilize pricing, while accelerating product iteration to keep all of 2026 models at the forefront of product competitiveness. At the product strength, we must accelerate model iteration and accelerate further.

Speaker #8: As the product strength we must accelerate model iteration and accelerate further. In summary this policy phase-out marks a watershed moment for the industry's shift from towards high-quality development.

[Analyst]: In summary, this policy phase out marks a watershed moment for the industry's shift towards high quality development. Li Auto is poised to achieve a historic breakthrough in deliveries in 2026, and we will navigate this cycle through superior product strength and user value, thereby consolidating our leadership in the premium market. ??????????2026?L??????????????????????????????????????????????????????????????????????2026?L??????????????????????????????????????????2026?????????????????????????????????????SKU???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????5C????????????????????????????????????????????????????????????????????????????2026?L????????????????????????????????????????????????????? Usually on product release dates and more details we would need to choose an appropriate time to release publicly, but today I still want to take the opportunity to give a glimpse on our products rollout for next year. Next year for L series is going to be a major generational upgrade, and the changes are based on deep research of users and their feedback, as well as our accumulation of technology over the years. We want to build a very strong product that's also fundamentally different from the current generation.

In summary, this policy phase out marks a watershed moment for the industry's shift towards high quality development. Li Auto is poised to achieve a historic breakthrough in deliveries in 2026, and we will navigate this cycle through superior product strength and user value, thereby consolidating our leadership in the premium market.

Speaker #8: Li Auto is poised to achieve a historic 2026. And we will navigate this cycle through superior product strength and user breakthrough in deliveries in value thereby consolidating our leadership in the premium market.

Xiang Li: ??????????2026?L??????????????????????????????????????????????????????????????????????2026?L??????????????????????????????????????????2026?????????????????????????????????????SKU???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????5C????????????????????????????????????????????????????????????????????????????2026?L?????????????????????????????????????????????????????

[Translator]: Usually on product release dates and more details we would need to choose an appropriate time to release publicly, but today I still want to take the opportunity to give a glimpse on our products rollout for next year. Next year for L series is going to be a major generational upgrade, and the changes are based on deep research of users and their feedback, as well as our accumulation of technology over the years. We want to build a very strong product that's also fundamentally different from the current generation.

Speaker #6: Uh关于第二个问题就是2026款哈 L系列的改款的车型的一些这个时间跟亮点啊本来应该是说产品这个具体发布时间和细节呀我们应该在合适的时机证实全面的对外公布。那今天呢我还是想稍微的话这个透露一下啊首先那个2026年L系列的大改款呃我们是基于用户啊这个反馈以及核心技术积累然后想去打造的代际型的迭代产品。然后去承接2026年我们要重回征程产品领先地位的整体战略目标。然后在车型配置方面的话我们。 回归啊精简的SQ模式然后兼顾市场的覆盖和这个供应的效率。呃希望实现核心体验全系拉满然后彻底消除啊入门版体验打折的一个痛点。然后在设计方面的话我们也会延续家族的经典设计基因同时强化豪华质感的升级然后去平衡品牌的高辨识度以及用户体验的话新鲜感去打造更加贴合家庭需求的产品形态。那在技术方面的话全系会标配5C的超充技术。那和我们现在的纯电的超充网络更好协同然后更好的话去解决补能的焦虑。那同时呢也依托征程领域先发的优势和技术沉淀然后进一步去强化理想汽车是征程领导者的品牌认知。呃2026年啊L系列大改款的核心就是用确定性的技术升级确定性的交付节奏确定性的用户价值从容去回应市场的不确定性。谢谢。

Speaker #8: We are usually on product release dates and more details, so we need to choose an appropriate time to release publicly. But today, I still want to take the opportunity to give a glimpse of our product's rollout for next year.

Speaker #8: The next major generational year for the L series is going to be an upgrade, and the changes are based on deep research of users and their feedback, as well as our accumulation of technology over the years.

Speaker #8: And we want to build a very strong product that's also fundamentally different from the current generation. All this is to support our goal of reclaiming leadership in the E E REV market in 2026.

[Analyst]: All this is to support our goal of reclaiming leadership in the EREV market in 2026. In terms of model configuration, we'll be going back to the simplified SKU approach, which balances market coverage, as well as supply chain efficiency. Even the base model will not compromise in terms of user experience and will have all features as standard. In terms of design upgrades, while retaining our iconic design DNA, we will be upgrading the premium feel and craftsmanship. We'll strike a balance between strong brand identity, fresh user feel, and refine our products to better serve the needs of family users. On the core technology front, 5C standard supercharging will be standard on all models and seamlessly integrated with our existing charging network to efficiently address range anxiety.

All this is to support our goal of reclaiming leadership in the EREV market in 2026. In terms of model configuration, we'll be going back to the simplified SKU approach, which balances market coverage, as well as supply chain efficiency. Even the base model will not compromise in terms of user experience and will have all features as standard. In terms of design upgrades, while retaining our iconic design DNA, we will be upgrading the premium feel and craftsmanship. We'll strike a balance between strong brand identity, fresh user feel, and refine our products to better serve the needs of family users.

Speaker #8: In terms of model configuration, we'll be going back to the simplified SKU approach, which covers both market demand as well as supply chain efficiency. So, even the base model will not balance market preferences while compromising user experience that we'll have.

Speaker #8: All features as standards. In terms of design upgrades, while retaining our iconic design DNA, we will be upgrading the premium feel and identity, as well as enhancing fresh user appeal.

Speaker #8: And to refine our products to better serve the needs of family craftsmanship users. On the core technology front, 5C standard supercharging will be standard on all models.

On the core technology front, 5C standard supercharging will be standard on all models and seamlessly integrated with our existing charging network to efficiently address range anxiety.

Speaker #8: And We'll strike a balance between strong brand seamlessly integrating with our existing charging network to efficiently addre address range anxiety. And at the same time we will re reinforce our position as the E REV leader building on our first mover advantage and deep expertise in E REVs.

[Analyst]: At the same time, we will reinforce our position as the EREV leader, building on our first mover advantage and deep expertise in EREVs. The 2026 L series refresh is about responding to market uncertainty with certainties on technological upgrades, delivery cadence, and user value. We'll announce the specific launch timing and further details at the appropriate time. Please stay tuned. Thank you. Thank you. Your next question comes from Paul Gong at UBS. Please go ahead.

At the same time, we will reinforce our position as the EREV leader, building on our first mover advantage and deep expertise in EREVs. The 2026 L series refresh is about responding to market uncertainty with certainties on technological upgrades, delivery cadence, and user value. We'll announce the specific launch timing and further details at the appropriate time. Please stay tuned. Thank you.

Speaker #8: The 2026 L Series refresh is about responding to market uncertainty with three certainties: technological upgrades, delivery cadence, and user value. We'll announce the specific launch timing and further details at the appropriate time.

Speaker #8: Please stay tuned. Thank you.

Operator: Thank you. Your next question comes from Paul Gong at UBS. Please go ahead.

Speaker #1: Question comes from Paul Gong at UBS. Please go ahead.

[Analyst]: the AI. Can you please update us on the latest development of VLA or world model and the user feedback? If possible, please also give more color for the future targets and upgrades process. Thank you. Paul, this is Johnny. I think I will, due to time constraint, respond to your question very shortly. First, we recognize this in Q3 as we regard this event as a subsequent event, so it will be accrued in the most recent quarter we can recall. So it's basically calling center. For the recall, we have an announcement, and I don't want to repeat most of the details covered. Currently, we just make all the battery pack to fulfill the recall requirement, that there's the demand, which means we lower the delivery of our 2025 Mega's delivery. So all the battery pack, we shift most of them to replace the 2024 recall. I think that best serves the customer's benefits, and that's the company's value proposition. Hello, I am Ma Donghui. I will answer the second question regarding the current progress and iteration speed of VLA. For Li Auto, the VLA 11 large model was pushed to all AD Max vehicles in September. With the model's migration capability, we quickly covered from the new I series to the second-generation Li L9, allowing all users to experience its core capabilities and enabling older vehicles to enjoy new technology and experiences. Through user feedback and data analysis, the experience upgrade has shown significant results, especially for I series owners. Their willingness to test drive and use is very strong, and both daily active users and MPI, which is the average mileage before takeover, are showing an upward trend. Users generally report that VLA is smoother in longitudinal control, more decisive in detour decisions, and significantly improved in route selection accuracy at complex intersections. Going forward, we will continue to iterate and make functional breakthroughs. OTA 8.0 was the first full rollout version, focusing on safety as the core optimization. In early December, we will push OTA 8.1 to further enhance VLA's perception capabilities for more precise responses. At the end of December, we will upgrade the architecture, focusing on strengthening the interaction between language and behavior information, optimizing the decision-making process, and adapting to the 2026 in-house developed M100 chip. We will also launch more innovative features, including the industry's first defensive AES feature to upgrade safety protection, and we are exploring full-scenario parking from any spot to any spot, combined with our self-built super charging stations to realize smart car-finding functions, truly perfecting the smart mobility ecosystem. Thank you. We rolled out our VLA driver to all of our AD Max vehicles in September, and with the strong migration capability of our model across all releases, all of our AD Max users have access to this new model, including the new I series users as well as the L9 users who bought the car back in 2022, and they're able to experience its core capabilities across the board. User feedback and data analysis have very clearly shown the effectiveness and the level of experience improvements. We can see that the L series and I series owners have a strong—the I series owners have a stronger willingness to use VLA driver, with both DAU and MPI showing improvements. In the meantime, users generally report the VLA to be smoother, especially in longitudinal control, and more proactive and decisive in detours, and more accurate in route selection at complex intersections. With ongoing iterations, the functions of VLA will continue to achieve further breakthroughs. For OTA 8.0, which is our first full-scale rollout, the priority is mostly focused on safety. In early December, we will release OTA 8.1, which further enhances VLA perception capabilities for more precise and responsive behavior. By year end, we will deploy an architecture upgrade to strengthen language-behavior interaction and streamline the decision-making process, which will be compatible with our upcoming in-house developed M100 chip. Beyond core system improvements, we're rolling out a series of innovations, including the industry's first defensive driving AES feature to enhance safety capability, and any point to any point full scenario automated parking, and a smart finder to find charging stations and park automatically. All this completes the smart mobility ecosystem. Thank you. Thank you. Your next question comes from Tina Hu from GS. Please go ahead. Thank you to management for taking my question. I am Tina from Goldman Sachs. Due to time constraints, I will just ask the last question. The company just mentioned our in-house developed chip, so I would like to ask about the progress of our in-house chip and in-house operating system, the progress of open source, and future plans. Thanks, management, for taking my question. I just have one question. What is the progress in terms of our in-house developed SOC as well as the operating system, and then the progress in terms of open source and then future development? Thank you. Hi Tina, let me answer your question. We believe that efficient AI infra system is a core foundation for intelligent vehicles. To achieve this efficiency, the system must be designed as integrated architecture, not as separate parts. Our in-house design controller hardware and the operating system have enabled us to reduce development time from industry average of 15 months to 9 months while lowering cost by 20%. Many modules in the inference stack still come from suppliers. To innovate faster together, we open sourced the Halo OS, enabling collaborative developments with our partners and ecosystem. In September, we established the Halo OS technical steering committee, and assisting companies across intelligent vehicles value chain signed the community charter, including OEM, chip makers, software and hardware service providers, and component suppliers. At the same time, we are undergoing our own vehicle foundation model for physical AI. Our focus is to improve perception, understanding, and response so the model can see further, understand better, and react faster. The AI inference chip is the computing engine of this system. Our controller built with our in-house design chip M100 is now undergoing large-scale system testing. We expect commercial development to take place next year. Co-designed with our foundation model compiler and software system, we expect the M100 within our next generation VLA-based autonomous driving system to achieve at least 3x the performance-to-cost ratio of today's high-end chips. On the basis of highly efficient AI inference and execution systems, our next priority will be faster iteration, continuous performance improvement, and lower cost. Development of our next generation platform and chip has already begun. Thank you. Thank you. As we are now reaching the end of our conference call today, I would like to turn the call back over to the company for closing remarks. Miss Janet Chang, please go ahead. 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.

Paul Gong: [audio distortion]

Speaker #2: I'm sure Guan Chen接受我的提问。啊我有两个问题。啊第一个问题是关于这个 Mega 的召回的。嗯就我们了解到就这召回是四季度宣布的。啊为什么这个成本是记在三季度。啊然后这个金额是怎么确定的。啊有多少是由供应链承担多少由我们自己承担。嗯它对于四季度的毛利率会有些什么影响。啊然后在当前这个召回的情况的更新以及就是最新的 Mega 的这个订单。啊能否也分享一下。啊这是第一个问题。嗯第二个问题是关于这个呃 AI 的这一边的。啊能否请管理层分享一下啊 VOA 和事件模型。啊当前的进展用户的反馈。嗯后续的研发目标和迭代的进度。啊是 Let me translate I have two questions. the first one is regarding the recall of the Mega.

Speaker #2: I noticed this was announced in Q4. Why are you booking it in Q3, and how did you determine the amount and the sharing between yourself and the supply chain? What's the impact for the Q4 GP margin? And if possible, please also update us about the latest situation of the callback of the recall, as well as the latest order of Mega.

Speaker #2: My second question is regarding the AI. Can you please update us on the latest developments of VOA, including what model is being used and user feedback? If possible, please also provide more details on the future targets and upgrade process.

Speaker #2: Thank

Speaker #8: Paul, this is Johnny. I think I was shortly in a time constraint.

Speaker #8: We'll respond to your question very shortly. First, we recognize that this event in Q3 is regarded as a subsequent event. So it will be accrued in Q4.

Speaker #8: Most recent quarter we can recall. So it's a basic all-housing standard. And for the recall, I think we have an announcement.

Speaker #8: I don't want to repeat most of the details covered. And currently, we just make all the battery packs to...

Speaker #1: The delivery of the battery. The proposition is most of all. Fixed price. Do you think about the 2024 recall?

Speaker #1: that's better the Via . The the we to ship , The company's 2025 Mega I replace customers benefit

Speaker #2: . To . Well . The . the To G . The to the . The to the . The . Are . To .

Speaker #2: The G . The . To the . To . The . To the . To the . To .

[Translator]: We rolled out our VLA driver to all of our AD Max vehicles in September, and with the strong migration capability of our model across all releases, all of our AD Max users have access to this new model, including the new I series users as well as the L9 users who bought the car back in 2022, and they're able to experience its core capabilities across the board. User feedback and data analysis have very clearly shown the effectiveness and the level of experience improvements. We can see that the L series and I series owners have a strong—the I series owners have a stronger willingness to use VLA driver, with both DAU and MPI showing improvements.

Speaker #1: We out rolled our driver . To all of our vehicles in September . And with the strong migration capability of our model across all all of our Admag users have access to releases , this new model , including the new series users .

Speaker #1: As well as the bought the car back in 20 users who 2012 . And they're able to experience its core across the board .

Speaker #1: capabilities The user feedback and data analysis have very clearly showed the effectiveness and the the level of experience improvement . We can see the L series and series owners have a the series owners have a stronger that use strong valet driver with both do and showing .

Speaker #1: MPI improvement means that the vehicle is generally smoother, especially in control, as well as more proactive. The users are decisive in detours, and the route selection is more accurate and complete at complex intersections with ongoing route iterations.

In the meantime, users generally report the VLA to be smoother, especially in longitudinal control, and more proactive and decisive in detours, and more accurate in route selection at complex intersections. With ongoing iterations, the functions of VLA will continue to achieve further breakthroughs. For OTA 8.0, which is our first full-scale rollout, the priority is mostly focused on safety. In early December, we will release OTA 8.1, which further enhances VLA perception capabilities for more precise and responsive behavior.

Speaker #1: The functions of Villa and with will continue to achieve further breakthroughs for OTA 8.0 , which is our first full scale rollout . The priority is mostly focused on safety , and in early December we will release OTA 8.1 , which further enhances the LA perception capabilities .

Speaker #1: For more precise and responsive And behavior . by year end , we will deploy an architecture upgrade to strengthen language behavior , interaction and decision making streamline the process , which will be compatible with our in-house developed M100 chip .

By year end, we will deploy an architecture upgrade to strengthen language-behavior interaction and streamline the decision-making process, which will be compatible with our upcoming in-house developed M100 chip. Beyond core system improvements, we're rolling out a series of innovations, including the industry's first defensive driving AES feature to enhance safety capability, and any point to any point full scenario automated parking, and a smart finder to find charging stations and park automatically. All this completes the smart mobility ecosystem. Thank you.

Speaker #1: upcoming The on core system improvements . We're out rolling a series of innovations , including the industry's first defensive driving feature enhance to safety capability and any any full scenario automated parking and a point to find charging point stations and park automatically .

Operator: Thank you. Your next question comes from Tina Hu from GS. Please go ahead.

Speaker #1: And all of this completes the Smart Mobility ecosystem you. Thank you.

Tina Hou: [audio distortion] Thanks, management, for taking my question. I just have one question. What is the progress in terms of our in-house developed SOC as well as the operating system, and then the progress in terms of open source and then future development? Thank you.

Speaker #3: Thank you. Next question comes from Tina, who is from GS. Please go ahead.

Speaker #4: The . Thanks . Management , for taking my question . So I just have one question . the is What progress in terms of our in-house developed SOC , as well as the operating system the progress in terms of open source and then future development ?

Speaker #4: Thank you .

Speaker #5: Tina . Hi , Let me and then answer your question . We believe that this is AI system is a core foundation for intelligent vehicles .

Yan Xie: Hi Tina, let me answer your question. We believe that efficient AI infra system is a core foundation for intelligent vehicles. To achieve this efficiency, the system must be designed as integrated architecture, not as separate parts. Our in-house design controller hardware and the operating system have enabled us to reduce development time from industry average of 15 months to 9 months while lowering cost by 20%. Many modules in the inference stack still come from suppliers.

Speaker #5: To achieve this efficiency, the system must be designed as an integrated architecture, not as separate parts. Our in-house design, controller hardware, and operating system have enabled us to reduce development time from the industry average of 15 months to 9 months.

Speaker #5: While lowering costs by 20%, many modules in the inference stack still come from suppliers. We innovate faster, together with open source, the Halo OS, enabling collaborative development with our partners and ecosystem.

To innovate faster together, we open sourced the Halo OS, enabling collaborative developments with our partners and ecosystem. In September, we established the Halo OS technical steering committee, and assisting companies across intelligent vehicles value chain signed the community charter, including OEM, chip makers, software and hardware service providers, and component suppliers. At the same time, we are undergoing our own vehicle foundation model for physical AI. Our focus is to improve perception, understanding, and response so the model can see further, understand better, and react faster.

Speaker #5: In September, we established the Halo OS Technical Steering Committee to assist companies across the intelligent vehicle value chain. We signed a community charter that includes OEMs, chip makers, software and hardware service providers, and component suppliers.

Speaker #5: At the same time, we are undergoing our vehicle's own foundation model for physical. Our focus is to improve AI perception and response.

Speaker #5: So they can see the model further, understand, and react faster. Better AI inference chip. Inference is the computing engine of the system.

The AI inference chip is the computing engine of this system. Our controller built with our in-house design chip M100 is now undergoing large-scale system testing. We expect commercial development to take place next year. Co-designed with our foundation model compiler and software system, we expect the M100 within our next generation VLA-based autonomous driving system to achieve at least 3x the performance-to-cost ratio of today's high-end chips. On the basis of highly efficient AI inference and execution systems, our next priority will be faster iteration, continuous performance improvement, and lower cost.

Speaker #5: Our built this in-house controller design chip and 100 , is undergoing large system scale testing . We expect commercial development take place . The next year Co-designed now with our foundation model , compiler and software system .

Speaker #5: We expect the M100 within our next generation based autonomous driving system VRA achieve at three times the performance cost . of today's least high end chips ratio .

Speaker #5: the On basis of highly AI efficient inference and to system execution . Our next priority will be faster iteration , continuous performance improvements , and lower cost development of our generation next platform and chip has already begun .

Speaker #5: you Thank .

Development of our next generation platform and chip has already begun. Thank you.

Speaker #3: Thank you. As we are now reaching the end of our conference call today, I would like to turn the call back over to the company for remarks from Miss.

Operator: Thank you. As we are now reaching the end of our conference call today, I would like to turn the call back over to the company for closing remarks. Miss Janet Chang, please go ahead.

Speaker #3: Zeng, please go ahead with Janet's closing.

Speaker #6: Thank you once again for joining us today. If you have further questions, please feel free to contact the Li Auto Inc. Investor Relations team.

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.