XPeng Inc. Price & Performance (XPEV)

Thank you. Hello, everyone, and welcome to XPeng's fourth quarter and fiscal year twenty twenty four earnings conference call. Our financial and operating results were issued via newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaopeng.com. Participants on today's call from our management will include Co Founder, Chairman and CEO, Mr. He Xiaopeng Vice Chairman and President, Doctor. Brian Gu Vice President of Corporate Finance and VW Projects Mr. Charles Zhang Vice President of Finance and Accounting Mr. James Wu and myself. Management will begin with prepared remarks and the call will conclude with a Q and A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U. S. Securities and Exchange Commission, The company does not assume any obligation to update any forward looking statements [indiscernible] as required under applicable law.

Please also note that XPeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non GAAP financial measures XPeng's earnings press release contains a reconciliation of the audited non GAAP measures to the unaudited GAAP measures. I will now turn the call over to our Co Founder, Chairman and CEO, Mr. He Xiaopeng, Please go ahead.

Hello, everyone. I'm He Xiaopeng. In the fourth quarter of twenty twenty four, we achieved significant milestones, including a record 91,507 vehicle deliveries in a single quarter, six consecutive quarters of improving vehicle margins and over RMB 4,000,000,000 in free cash flow. In the second half of the year. These results highlight our significant progress in scaling, organizational improvement and strategic execution. As we move into 2025, XPeng has topped monthly deliveries among China's emerging EV companies for two consecutive months, demonstrating our robust momentum. I believe that the key to achieving long term goals lies in steady progress This year, I'll dedicate myself to further enhancing XPeng's organizational capacity user centric product development, AI and automotive technology, commercialization and globalization. In our last earnings call and AI Tech Day, I emphasized that the next decade in the auto making industry will be the era of AI. And by 2025, advanced AI models will revolutionize autonomous driving The AI advancement led by China in the first quarter of this year have only strengthened my conviction. I'm now more confident than ever in XPeng's strategy and technology road map for AI large model in the physical world. We've developed a cloud based foundational model that boasts tens of billions of parameters, leveraging over 100,000,000 kilometers of real driving data for pre training.

This marks an unprecedented scale of model parameters, and data volume in the field of autonomous driving in China. Zafata enhanced the model's generalization capabilities and its ability to manage long tail scenarios, we and employ reinforcement learning techniques. We then implement the model in vehicles applying distillation, pruning and quantization techniques and have successfully boosted the model's accuracy by over 100%. In January 2025, DeepSeq R1 made significant strides in large language models, advancing AI capabilities in the digital realm. Much of its technology roadmap resonates with ours. I'm thrilled to see that large models are integrating in various industries and XPeng is exploring the frontier of technology together with leading AI tech companies from different fields. I truly believe AI will transform the automotive industry in a few years' time, speeding up the development of L3 and L4 autonomous driving. Additionally, I see a growing trend of smart vehicles and Embody AI evolving together, and Smart Vehicles may pave the way for humanoid robots. I'm confident that all future smart cars will be embodied AI vehicles. My goal for this decade is to build XPeng into an AI empowered global automotive company and a smart technology brand cherished by users worldwide.

We're currently undergoing a transformational shift from the era of vehicle electrification to the era of AI. If 2025 marks the beginning of the AI application, then XPeng's in house developed AI vehicles and humanoid robots will be two of the most significant applications of AI in the physical world. I believe that a top AI company should possess cutting edge full stack software and hardware capabilities and be able to iterate closed loop data effectively across large cloud based AI models, in vehicle models, vehicle electronic architecture or EEA, and system on chips or SoC. We expect to begin mass production of our self developed Turing chip which by the way is progressing really well for vehicles flying cars and humanoid robots this year. This chip is also designed for swift deployment across global markets and diverse scenarios. The Turing chip, combined with our full stack in house developed software and hardware will enable XPeng to fully leverage scaling law of our vehicles. Our model architecture will not only remain a generation ahead of the industry, but the effective parameters used in our vehicles, will also be dozens of times larger than those of our competitors creating a significant gap between us and them.

I believe that in the second half of this year, will be the first in China to offer a smart driving experience that boasts software capabilities and user experience equivalent to L3 autonomous driving. L3 autonomy will generate strong user demand and exceptional user loyalty, marking an iPhone four moment for AI defined cars. Additionally, in 2026, we plan to master produce vehicle models that will support L4 autonomous driving in low speed scenarios. True success will be achieved when smart driving earns the trust of a broad range of family users, so even those from my parents generation can use it confidently and frequently. An interesting figure to share with you is that starting from 2025, the penetration rate of advanced urban smart driving among new car buyers in China will exceed 10% for the first time, marking a turning point in the demand for smart driving. This growth trend is expected to be nonlinear presenting a significant opportunity for us We're well prepared in terms of technology, cost, and model lineup to rapidly ramp up the sales of AI vehicles and promote the global adoption of AI powered smart driving. From a technology standpoint, XPeng and Tesla are the only two companies worldwide that are capable of providing globally reliable AI smart driving experience without relying on high definition maps or LIDAR and using a single software suite across the vehicle models.

Going forward, we look forward to competing alongside the world's leading AI autonomous driving companies in both the Chinese and global markets. Jointly accelerating the penetration and adoption of AI driven autonomous driving technologies. Starting from the piece plus all new XP models, including the recently launched twenty twenty five G6 and G9, will come with industry leading pure vision based AI smart driving, as a standard feature across all trims. No extra costs or add ons.

Our upcoming Mona M03 MAX set to launch in May will lower the entry barrier for urban AI smart driving to the RMB 150,000 range for the first time making advanced vehicle technology more accessible to younger consumers. By integrating cutting edge AI technology with a well developed and highly efficient platform based approach, XPeng is democratizing AI technology across the widest price range. Making it affordable and reliable for the broad for a broad base of ordinary users. [indiscernible] As the AI boom accelerates, over the next three years, we'll focus on refining, differentiating and globalizing our well defined product portfolio. This will enable us to achieve rapid sales growth and scale leadership through our three year product cycle. While also ensuring sustainable profitability. Starting in 2025, we plan to launch new models or updated versions every quarter. All equipped with XPeng's latest next gen AI technologies. On March 13, we launched a new 2025 QC and G9. Their comprehensive upgrades and top tier product capabilities have been widely recognized and appreciated by our users. Orders continue to pile up and have exceeded our expectations. Additionally, the surge in store visits following the new model launches has driven an increase in demand for our entire lineup.

We plan to begin deliveries of the new G6 on March 21, and we're currently working closely with our supply chain to ramp up production capacity. Ensuring that more customers can receive their vehicles as soon as possible. Next, our Mona M03 g seven and x nine will introduce new Max streams and launch new models for our facelift. I'm confident that our strong product offerings represented by the M03, G6, G7, P7 plus G9 and X9 will respectively cater to the diverse needs of young consumers, families, and those seeking premium upgrades, ultimately helping us increase our market share across diverse market segments. With the deliveries of our new models and updated ramping up, I expect ourselves to steadily navigate a transitional period of product generational change, continue to grow and reach new highs in the second quarter. In the second half of the year, we plan to deliver several new products, including battery electric vehicles or BEVs and Kwun Peng super electric vehicles. Most of our models will feature dual energy or power, significantly broadening our addressable market through super electric models. By the end of twenty twenty six, we'll have a comprehensive product lineup across the 100,000 to RMB500000 price range, covering all mainstream segments from compact to large models.

We are also thrilled to report that our design center in Shanghai is now operational. And the team is growing rapidly. The integration of art and technology is gradually unleashing its full potential. I believe our new models will impress users with their aesthetics and refined [indiscernible] Additionally, the development of our new models will adhere to thorough platform based approach, sharing a unified set of underlying technologies, including AI driven smart driving, AI cockpit, EEA, and AI powered powertrain. This will enable efficient R and D advancement and strong economies of scale. Our growth momentum in overseas markets is also strong, and there is still significant potential for both electrification and smart technologies. In 2024, XPeng's overseas vehicle sales exceeded 20,000 units ranking first in export volume among China's emerging EV brands and also also leading in the export of China's mid to high end BEV. I want to express my heartfelt gratitude to all XPeng owners around the world for their unwavering support and passion for our brand. Looking ahead to 2025, our overseas business milestones include doubling our sales and establishing over 300 sales and service stores worldwide, double the number we had at the end of 2024.

Beyond expanding our vehicle sales globally, we're committed to establishing ourselves as a leader in advanced technology and high quality. In 2025, we'll set up new overseas R and D center and Thomas Overseas and commence our overseas research and testing for our Turing AI powered driving. Our goal is to bring XPeng's AI smart driving capabilities to more countries and users around the world in 2026 and beyond. Also ensuring compliance with local regulations. With the launch of more competitive products and ongoing global expansion, I'm confident that XPeng's total sales in 2025 will more than double that of 2024. This will significantly increase our market share in both the Chinese and global smart EV sectors. And establish us as a leading AI automotive brand widely recognized by consumers. Alongside our growth, ongoing technology driven cost reductions and economies of scale will help further improve our vehicle margins in 2025. This allows us to continue our investment in AI research and development while moving towards profitability in the fourth quarter. In the long run, I believe AI will evolve from being just an assistant to becoming a crucial part of our social infrastructure. Woven into the fabric of our daily lives.

When I think about the future of an AI driven mobility ecosystem, I envision driverless vehicles cruising through cities flying cars for intercity travel, and humanoid robots integrated into our factories and communities. Regarding my strategic plan for XPeng, I have identified three primary growth trajectories. First, we're working on AI powered vehicles equipping our cars with cutting edge AI technology. Second, we're focusing on global market expansion. Actively broadening our presence beyond China and into international markets. Lastly, we're dedicated to the development of humanoid robot that can seamlessly integrate with the automotive industry.

Our amazing team is committed to excelling in each of these areas. Putting in the hard work to deliver the best AI driven products to consumers around the world and to provide greater value overall. 20,000 We anticipate that our total deliveries for the first quarter of twenty twenty five will be between 184,000 units. Reflecting a year over year increase of 317% to 326.2%. At the same time, we forecast our total revenue to fall between 15,000,000,000 and RMB15.7 billion, which represent a year over year growth of 129% to 139%. Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the fourth quarter of twenty twenty four.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the fourth quarter of twenty twenty four. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were CNY 16,110,000,000.00 for the fourth quarter of twenty twenty four.

An increase of 23.4% year over year and an increase of 59.4% quarter over quarter. Revenues from vehicle sales were JPY 14,670,000,000.00 for the fourth quarter of twenty twenty four. An increase of 20% year over year and an increase of 66.8% quarter over quarter. The year over year and quarter over quarter increases were mainly attributable to our higher deliveries. Revenues from services and others were CNY 1,430,000,000.00 for the fourth quarter of twenty twenty four. Representing an increase of 74.4% year over year and an increase of 9.7% quarter over quarter. The year over year increase was mainly attributable to the increased revenue from technical R and D services related to the Volkswagen Group. The quarter over quarter increase was mainly attributable to the increased revenues of maintenance services and auto financing services. Gross margin was 144% for the fourth quarter of twenty twenty four. Compared with 6.2% for the same period of 2023 and fifteen point three percent for the third quarter of twenty twenty four. Vehicle margin was 10% for the fourth quarter of twenty twenty four. Compared with 4.1% for the same period of 2023 and eight point six percent for the third quarter of twenty twenty four, The year over year and quarter over quarter increases were mainly attributable to the cost reduction.

R and D expenses were 2,010,000,000.00 for the fourth quarter of twenty twenty four, representing an increase of 53.4% year over year and an increase of 22.9% quarter over quarter. The year over year and quarter over quarter increases were mainly due to higher expenses related to the development of new vehicle models as the company expanded its product portfolio to support future growth. SG and A expenses were 2,280,000,000.00 for the fourth quarter of twenty twenty four. Representing an increase of 17.5% year over year and an increase of 39.3% quarter over quarter. The year over year and quarter over quarter increases were mainly attributable to the higher commissions paid to the franchise stores. Driven by our higher sales volume. As a result of the foregoing, loss from operations was 1,560,000,000.00 for the fourth quarter of twenty twenty four, compared with CNY 2,050,000,000.00 year over year and CNY 1,850,000,000.00 quarter over quarter. Net loss was CNY 1,330,000,000.00 the fourth quarter of twenty twenty four, compared with CNY 1,350,000,000.00 year over year and CNY 1,000,000,000 quarter over quarter. As of 12/31/2024, our company had cash, and cash equivalents, restricted cash, short term investments and time deposits in total of CNY42 billion.

To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our fourth quarter and full year 2024 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

Star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask a question. For the benefit of all participants on today's call, you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow-up with your next question. Your first question comes from Tim Hsiao with Morgan Stanley.

My first question is about the autonomous driving.

So with the AD autonomous driving or auto autopilot functions, [indiscernible] AI democratization in China, [indiscernible] can really help to widen the gaps between the leaders and the laggards. Or it would remain a tight race over time. That's my first question. Thank you.

First of all, thank you so much for your question. Indeed, we have seen for the past several months that basically all OEMs in China have made huge announcement of entering the realm of smart which is really exciting because when you look back at 2020 or 2021, people were still talking about the future being just new energy vehicle instead of traditional ICE. And right now, we are actually in a new generation of technology advancement. And I believe that this is going to trigger a wider adoption of smart driving for the whole society. All people, all consumers will become more and more interesting interested in understanding what smart driving is and what ADAS really is and what kind of experience it's going to generate and bring forth to our society. And actually, during the past period of time, I think that a lot of the so called smart driving was limited to high speed driving, I mean highway driving and also auto parking, which already achieved a lot of progress. However, since last year, our launch of the so called AI plus vehicle or AI empowered vehicle which really allow AI capability to be embodied in vehicle in the physical world.

And it comes as a standard feature in our line up to have this high level advanced ADAS capability not only in the software, but also in the hardware as well. And I believe this series of change is going to allow AI vehicles to actually become AI agents. And that will also bring forth a lot of unique capabilities that people have longed for or have never envisioned to be able to have. And as regard to the second part of your question, which is how do we view L3 capability as a turning point? First of all, I believe that first of all, it represents an investment in technology not only in the software, but also in the hardware and the integration of both as well. And also the model capability, large model capability, I believe, will be way higher than even the advanced level of L2 right now. Maybe by 10 times or even more. And that is definitely very clear and foreseeable. And also another point that I want to mention is that when we look at, as I mentioned in my prepared remarks that when the whole adoption array penetration rate of high level autonomous driving in the market reaching 10%, it's going to generate a lot of user following up and understanding of events capability of smart driving.

And when it comes to making the purchase decision, people is going to more and more prioritize having this advanced level of ADAS capability. I'm going to pause in here and I'll continue to answer your question. And I think in the foreseeable future, you're going to see that XPeng is going to create bigger and bigger gaps between ourselves and our competitors. From multiple perspectives. First one, we have the capability to do full stack self development, and we are able to leverage all resources across different domain and different scenarios. If we look at that, when we claim to have the full sex cell capability, if it was 100 points right now, we're looking at 30,000 points. The reason for that is because we are looking at huge data and also large model. And that kind of smart driving capability is going to require closed loop end to end closed loop capability across different domains from the cloud to in vehicle to data to chip system on chip, etcetera, and also your engineering and your hardware. And because of our early vision and also early investment in our resources and time and capability we invested way I mean, way ahead of our competitors we are able to create a very significant huge I mean, first, mover advantage.

Another big advantage that we're going to have is our capability of doing smart driving combined with our smart cockpit, our platform, our powertrain. And also, we're able integrate not just vertically but horizontally as well, which can also create a lot of value because it requires a lot of cross domain self development capability.

Another area that I want to highlight, which is advantageous to ourselves, that when we look at AI plus vehicles, we actually leverage one platform to achieve all the capabilities I just mentioned, which allow us to have higher efficiency of iterating our data and capability in the future when data explodes. And another aspect that I want to mention is that when we first envision, AI plus vehicle, we already have included not only the Chinese market, but the global market. So when it comes to the deployment of our capability, the efficiency and the implementation and execution, we're going to have very significant first mover advantage in terms of globalization as well. But the list goes on and on and on. I mean, in summary, I just want to highlight that when it comes to advance ADAS capability, we are going to create a huge gap between ourselves and our competitors. Thank you.

So my second question is about the decode applications. Are we going to see any meaningful synergy across XPeng investment in AI applications, I. E. Autonomous vehicles, humanoid and Evoque. And when are we going to see revenue contribution from the vehicle products? And whether those non vehicle projects would lead to a more meaningful increase in R and D. And other operating expenses in the following quarters? That's my second question. Thank you.

Thank you. Indeed, as we mentioned, our long term vision for the company is to become an explorer of future mobility. And on a deeper level, we are actually exploring the future of mobility, which means that we want to empower new energy together with AI you know, so that we can create a new way of travel. And that would include not only vehicles, but also flying vehicles or humanoid robots. And for the past ten years, we have been invested in not only smart driving vehicles, but also humanoid robots. And in the coming decade or two, we believe that a true intelligent or AI powered vehicle manufacturer will definitely be a producer or manufacturer of embodied intelligence new mobility or vehicle manufacturer. And that includes vehicle flying cars, or humanoid robots. And in this area, if you have a very early preparation you can definitely create a lot of synergies across different domains. For example, what we are developing right now is the L3 capability for our autonomous driving vehicles. And this physical world AI model is definitely compatible with the humanoid robot's L3K capability. The only difference is the data that they collect to train a model which is different.

But across many other domains and aspects, there's a lot of capabilities that can actually be shared. And also when you look across other domains, you know, from other aspects of development, end to end AI development, or global sales network and distribution network. And even when we look at the manufacturing manufacturing capability and also capacity network, there's also a lot of synergy that you can have across different types. Of mobility. And I believe that by 2026, you are going to see excellent outcome from our synergy as we mentioned in the prepared remarks previously, we believe that by 2026, we can actually mass produce offline cars. And by that time, you'll be able to see that XPeng will be the first in China, if not globally, to actually mass produce flying cars. Thank you.

Thank you, Your next question comes from Ning Soon Li with Bank of America.

So my first question is still related to autonomous driving, especially right now, we are seeing more and more auto companies they are using end to end model or the model to train their autonomous driving. System. So, is it possible that the leading AD companies and also the companies we who are behind. Is it possible that the technology get to be narrow? And also for because you will start to use your Turing cheaper this year. So besides the cost control, how can these chips to help you to advance your AI AD capability? Thank you.

Thank you. At Actually, the first part of your question sounded similar to some the previous questions. I'm trying to I'm going to respond to both of your questions at once. First of all, after the emergence of high level autonomous driving or smart driving, I believe that for any players and automotive industry, you will have to have the so called comprehensive full stack sales development capability. What I mean is that you not only need have the software capability, but also hardware and also your supply chain capability that allow you to work with the top tier suppliers and also have more and more resources. And having that comprehensive capability is going to draw a bigger advantage for you and create bigger gap ourselves and our competitors, not to mention we have this very, very powerful data close loop iteration capability and efficiency together with our profitability that we are generating right now and also our economies of scale, I believe is going to allow us to be even more competitive than ever before. In addition to that, we also have our self developed chip and the capability to actually deploy it across multiple scenarios in different markets.

That is why we are very, very confident in our competitive leadership because newcomers or existing incumbents are not easily surpassing us just because they may do better in one aspect or two. Which really is very different than the digital competitive landscape as you mentioned in your question, such as DeepSeek and other AI software company. The second part of your question, this is a very interesting question. How the self developed Turing chip really empower our for the future. Let me just give you an example. The reason why so many companies, OEMs or self smartphone manufacturers try to develop their own chips is because you will realize not only can you gain cost benefit from developing your own chip, but also it allows you to customize a lot of your products and also have a lot of potential of development as well. And the fact that we are able to self develop our tooling chip allow us to maintain our leadership And because we do everything within our own system in the company, you realize that it also allows you to achieve energy benefits and efficiency and improve your performance of your products significantly. And you also can work with other players and other suppliers more effectively as well.

It allow us to have the unparalleled cell development capability to also leverage data and have very effective and fast iteration. That is the reason why we really invest heavily in our self developed Turing chip. Thank you.

So my second question is related to the humanoid robot product development. So since you just mentioned that the you plan to mass production your human known robot in 2026?

So will you also start to sell the product next year? And currently based on your development progress, which area you feel you are satisfied and what is area that you think you still need to continue to make more progress before you officially launch it? [indiscernible] r, Thank you for your question. This is definitely not an easy question to answer because it involves our next generation of technology and products. Now when we talk when we the mass production of humanoid robots by 2026. We're definitely talking about the commercial market and large production. But when it comes to the manufacturing of humanoid robots, it's actually more challenging than even producing AI vehicles. The reason for that is because it really requires fully integrated capabilities across the board. Because a humanoid robot requires not only the hardware, but also real data from our human activities and also simulated data. And it's very hard to achieve this comprehensive level of full integration. Right now, when you look at the available products in the market, a lot of our peers are actually focusing on the lower body motion capability of humanoid robot. And I believe that is still very limiting because it's restricting themselves to the level two or L2 level kind of capability, which is not enough For example, if you have an AI vehicle, but you don't fully have the AI capability, integrated in it, you can still drive it because it's a car.

But a humanoid robot without the AI capability, without that L3 level capability, it's basically useless. So even the most for the most basic model of the humanoid robot, you still required a lot including all of the the joints that you have for your arm, and also the motion capabilities that you need and the agility that you need for a robot, which is not easy to achieve. When you set the target of achieving the L3 AI capability. And right now, what I can share with you that our humanoid robot r and d is progressing very well. And I believe that what we are able to do right now not only is just the basic lower body capability, but also legs, arms, mouth, and also some very simple but necessary brain capability. We call it the agent capability and the combination of basically humanoid or human semi human kind of brain intelligent capability that we incorporated in our humanoid robots. But that is very, very challenging. And I hope that in maybe the near future, I can share more update with you when we have more information. Thank you.

That's all my question.

Your next question comes from Bin Wang with Deutsche Bank.

My two questions are about the financial. The first one, can you provide first quarter gross margin guidance? And the second question is about your financial actually improvement in the long term investment. The other one is the fair value games. Which may be linked to the DD acquisitions.

You.

Wen, this is James. I'll answer your question. Yes. So what you've seen, first of all, in Q4 is our vehicle margin has improved versus the prior quarter. And this is primarily due to our cost reduction efforts as well as higher scale to the forecast in on our to improve our vehicle margin to be stand solidly on the double digit vehicle margin. We continue to from a cost front and as we continue to improve scale, we would benefit from a manufacturing cost perspective as well. With regard to your second question on the DD related transaction, yes, there was an adjustment that was made. If you recall, as we closed the transaction with DD, there was a earn out mechanism that has baked in, with DP that is linked to the delivery of vehicles registered in the DD platform for ride hailing purposes. Now as we introduce Mona product, we have made decisions internally and obviously align with TP that we are going to focus on the 2C customer rather than the 2B customer And therefore, on our assessment, the first milestone is unlikely to be met. And therefore, we have released that liability which is what you've seen in our financials.

Thank you.

And then there was long term investment.

Long term investment, we've we had some long term investment revaluations based on our invested companies. And the impact in the fourth quarter is relatively not significant, I would say. That would come from the sum would come from, for example, the Weichen investment we had as an equity order. And then there are a variety of other investment as well. But overall, change in the fourth quarter is not as meaningful as what you've seen on the DD transaction release. Thank you.

Very good.

Thanks.

Your next question comes from Tingyu Wu with SciTech Securities. Thank you for the opportunity to ask a question. And my first question is about the oversea market. And as we can see, the overseas market is one of the pillars for our long term development. And are we considering to build a factory or some kind of cooperation in terms of capacity overseas? Thank you.

Hi, it's Brian. Let me address this question.

Yes, it's correct that I think international expansion is a key pillar of our growth curve. Xiaopo articulated in the earlier opening speech. We see there's tremendous demand for our high quality technology products for a number of overseas markets. In fact, last year, I think we saw a very encouraging robust reception to our market and into a number of new markets. So by the end of year, we actually are now selling in over 30 countries globally. And also in a number of those countries, we saw our product has been positioned as the top three EV models in the respective categories. So I think so far, we are very encouraged by the response to our product and technology. In terms of going forward contribution, I think this year, we continue to see increased expansion of our global platform. Our number of stores internationally will double I think our sales outlets will double from probably roughly 150 to probably over 300 this year. Our number of countries that we're selling our product were close to double as well. And also, we anticipate close to also about doubling of our international sales as a consequence of all these expansion.

We also are indeed invest in teams, invest in international sort of infrastructure. We mentioned that we're going to be building overseas R and D centers this year, which will help us to really recruit local talents to focus on international technology development. At the same time, we'll also kind of look at a number of local sort of potential protection solutions. I think we earlier, I think we have jointly announced with our partner in Indonesia to explore local manufacturing production solutions. We'll be also spending time in other regions. So will obviously share with the market once we actually have these determined. But we do have a very detailed and also, I would say, aggressive plan to make sure that we are well positioned to enter these international markets with the products with the brand and also with the local capabilities.

Let me translate the question. My second question is about autonomous driving. And as we are going to enlarge the MPI to 100 kilometers by the end of this year. Do we think it is a ultimate goal for for us or we aim higher And also, do we consider how do we think of the possibilities for the the OEMs or the insurance company to take some of the responsible of the of the of the driving systems. Thank you.

Right. Thank you for your question. Now about the human intervention or takeover, per hundred kilometers, I think this is quite an interesting paradox. We're trying to navigate ourselves within this paradox. The reason for that is because first of all, it depends on the scenarios and the application of the ADAS capability. For example, if you are covering different scenarios, if you are driving within a neighborhood or within a parking lot, the possibility is that you're going to take over more than let's say if you were just driving on the highway. And also, it depends on who you are and what your purpose is with the testing and calculation of the human intervention, right? If you are a media member of the media, you're going to test the limit of the ADAS capability, which means that you're not going to take over unless it's absolutely necessary. However, for just an ordinary driver on for example, daily commute, they might tend to take over more when they feel like it. So it really depends. And as an OEM, we need to really collect huge amount of data before we can claim that we can achieve, for example, level two or level three ADAS capability or some sort of milestone.

And when you look at a lot of our peers, even when you know, they claim that they have l two plus plus or even l three four capabilities, they're a hundred kilometers human intervention rate might actually be quite high. And so it really depends. I think it is part of our next milestone. And even though achieving L3 capability can be challenging, I also believe I still believe that it's achievable depending on the next generation of model, computing power and capability and data. And with that combination, I believe that we can actually utilize and leverage ADAS more and more. And in the future, perhaps maybe on a weekly basis or on a monthly basis, will be driving maybe hundreds of kilometers or even thousands of kilometers And if we only have to take over maybe once a week, two weeks, or once a month, we definitely will promote the whole penetration rate of high level intelligent driving for the whole society. And I think this is our goal. And when we mentioned that we need to achieve such a milestone of one takeover per 100 kilometers of mileage or driving range, we're actually talking about some sort of measurement of our milestone And essentially, we're talking about the LTV capability that we expect to achieve and that we believe and we are confident that we can achieve with our capability as well.

And also we believe that we are way ahead of the game and we have a higher and more advanced capability than industry average.

Thank you.

And even for that, let me just add that it's only an initial or an early stage of L3 capability. And in the future, maybe we can only we only need to take over every thousand kilometers or tens of thousands of kilometers. Thank you.

And about the second part of your question regarding the safety issues of driving and also regulation and related accountability of traffic accidents. We actually have been exploring that very early on including our proposal during the two sessions of the MPC recently, we have proposed to actually do more so that we can really push the next generation of regulation that can allow us to have more have safer environment of driving. We believe that in this process, China is going to lead the world in becoming a safer environment having more regulation in this regard.

Thank you. [indiscernible] Your next question comes from Nick Lei with JPMorgan. [indiscernible] Let me translate my question very briefly. Chairman had mentioned that in the longer term, we have three major business drivers including AI car, overseas market, and humanoid robot. That's that's that's forward to say 2030. How should we think about the scope of each of these products? Thanks.

Thank you. It's very hard to answer your question. What I can only say for now is that in the coming ten years, meaning by 02/1930, '4, we hope that half of our sales will come from China and the other half will come from the overseas market. We do have our internal plan and targets for 02/1930, but unfortunately, I have to keep it confidential. And the second part of your I mean, second aspect that I want to mention to respond to your question is regarding humanoid robot. It's very hard to predict when the turning point will come technologically and commercially or when it comes to the mass production. We might have more visibility by the end of twenty twenty six or end of twenty twenty seven when we saw the emergence of mass produced humanoid robots I think right now, for now, things are still very foggy. We're probably at about 2010 or 2011 for new energy vehicles. When it comes to comparing humanoid robot development. Thank you.

My second question is really about new policy announced by the U. K. Government. Lately on encouraging overseas foreign investment in European car market. Especially in AI autonomous driving car. And given our partnership with Volkswagen, there any new opportunity we can explore from there? Thanks.

Hi, Nick. I think as we laid out our autonomous driving strategy before, think we're setting up our overseas R and D center And also, we're in the process bringing our autonomous driving technology to the global customers. I think that we are right now, we're setting up the infrastructure to to start a preparation I think in terms of the collaboration with Volkswagen, currently, think that we are, I think our teams, engineering teams are working really hard to push for the SOP of the G9 platform collaboration as well as the EEA collaboration We do believe that there is a potential and also the industrial logic to collaborate in the potential overseas market. Thank you.

That does conclude our question and answer session. I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's Investor Relations through the contact information provided on our website the Pearson Financial Communications.

That does conclude our conference for today. Thank you for participating. You may disconnect your line.