Hello, everyone. The call is hosted by He Junyi, Auto Analyst with Zhongtai Securities. Welcome to the Leapmotor 2024 Interim Results Conference Call. Joining us from the management, we have Founder, Chairman, CEO, Mr. Zhu Jiangming, Co-President, Mr. Wu Qiang, and Mr. Shen Ke, Board Secretary. First of all, I will have Mr. Shen Ke to read out the disclaimer. Thank you. Dear investors, good evening. The content of Leapmotor 2024 interim results may contain certain forward-looking statements, specifically, including but not limited to statement regarding the company's future financial conditions, strategies, objectives, indicator, and future market development in which the company is or will be involved. These forward-looking statements are based on the company's current and future business development strategy, as well as the company's assumption about the future business environment, which inevitably involve a number of known or unknown risks and uncertainties. These factors, which the company cannot predict nor control, could cause the company's actual results and industry performance to differ from future results expressed or implied in forward-looking statements. Therefore, we caution you not to place undue reliance on the forward-looking statements discussed on this call. These statements reflect only the company's management opinion as of this call, and the company undertakes no obligation to update or revise any statements made in this call in light of new information, future events, or otherwise. The forward-looking events discussed in this conference call may not occur due to various uncertainties and assumptions. The above disclaimer applies to all forward-looking statements refers to in this call. In addition, shareholders and potential investors are also reminded that nothing contained in this earnings call constitute any investment advice, nor does it constitute a basis for any contract, commitment, or investment decisions. Shareholders and potential investors are urged to exercise discretion and caution when trading the company's shares. Thank you, Mr. Shen. May I invite Mr. Wu Qiang to update us on the 2024 interim results? Good evening, welcome to this, 2024, the interim result. First of all, Leapmotor in the first half of the year, based on our style operation, we have make, very good results. In the six months, we deliver 86,696 vehicles, compared with the 45,000, we have increased by 95%. In March, we also launched the brand-new remodel and also based on the, developed Leap 3.0 architecture and with C11, C01, and we have been launching the global, Leapmotor C10, based on the Leapmotor 3.0. In June, we also launched the brand-new six-seater SUV, C16, and it was being very welcome. The launch of C16 has not impacted the good momentum of C10, C11, and with the new model, we have bring in more traffics into the showroom, promoting the sales for other vehicles. So this has to do with the demonstration of our solid style in operation and sales. Now, Leapmotor C10, particularly C16, since the launch in March, C10 sales have been growing steadily. As of end of June, we deliver 24,100. C16, first month after launch, we have order over 10,000. Now, based on the improvement and in of the product execution, our delivery continued to improve. In June, we deliver more than 20,000 units for the first time, becoming tier one in all the EV startups. In comparison, in July, our net order exceed 28,000 for the same month. In July, the delivery has reached 22,993. In the first half of the year, we have delivered over 400,000 vehicles, a milestone, given the external momentum and internal driver, we are accelerating the sales this year. Further, we expect Q3 sales will hit a new high. So therefore, in 2024, we will further aiming for the 250,000 total sales. We're gonna make further actions. Financially speaking, in the first half of the year, we have excellent results. Thanks to growing sales, our sales in the first half of the year has been CNY 8.85 billion, which is 52% year-on-year growth. In the first half of the year, GP was a hundred and one million, which is improving more than 7% compared with same period last year. The improvement of GPE comes from the economy of scale, based on higher sales... the optimization of product mix, and also we have been sticking to the full house in-house R&D vertical integration, which give us advantage of cost and cost management. In the first half of the year, our Q2 margin has improved to 2.8% for the quarter. We expect in the second half of the year, GP margin will perform even better. We're aiming at 5% GP margin for the full year. In the first half, the company recorded a loss of CNY 2.2 billion, which is similar to the same level last year. I'd like to make a note here. In terms of, while we are seeing improvement in the GP margin, but the loss was not narrow significantly. It's based on the fact that we have stepped up efforts in investing more on R&D. Now, in the first half of the year, compared with the last year, our GP has improved by CNY 400 million, but for this half year, in 2024, we invest CNY 1.22 billion in R&D, which is 48% higher than last year. So higher R&D input come from four, in about CNY 400 million. That CNY 400 million basically have already offset some of the GP gain compared with last year. That's really because the EV market had been growing fast this year. In the first half, penetration has reached around 50%. Leapmotor, as a result, is accelerating some of the project. We are running seven model in the pipeline. In the coming two years, we're gonna be launching multiple new models, so we're accelerating R&D. We're also investing end-to-end large model technology. So based on this R&D investment, but despite higher R&D, Leapmotor is keeping as the highest efficient company in R&D efficiency. Now, when it comes to R&D, the R&D continue to make new progress and breakthroughs. In twenty twenty-four, we are accelerating. Now, we achieved the Leap 3.0 iteration, and after that, our CTC battery, 8295 Smart Cockpit, and smart driving in urban and expressway, and also in the big, in the six top blocks of intense driving, we are taking shape already. In 2024, in C01, C11, and C16, in June, we have the latest 800-volt platform, with characterization of high performance, high efficiency, high intelligence, and life durability, providing convenient and efficient charging experience. Subsequently, we are also going to iterate and upgrade the current products so that we can enjoy latest R&D outcome. In the smart cockpit, in 2024, we launched the first Qualcomm 8295 cockpit chips, with excellent human-machine interaction and intelligence performance, which is the key to connect the passenger and the vehicle feature, which is welcomed by consumers. The latest cockpit is based on SOV software architecture. We have over 300 developers, you know, with the... And also we have the unique customization and user experience. And also, the 21-speaker algorithm, we support the Dolby Audio with the first-class interior audio experience. And also, all these features, like the voice control for all scenarios, voice wake-up. We also have the OTA upgrade based on the current cockpit. On C10, we are providing AI model on the vehicle, so we are using the AI LLM to provide text to message, text to graphic and other LM applications. And also, with the application of smart driving, we are seeing more certainty of urban driving. We're investing more, and based on the high-speed urban architecture, Leapmotor is now activating end-to-end LLM test driving system. So this year and the coming days, we are going to step up our investment of human power, computing power, and equipment. In 2024, we also have a smart intelligence technology institute, so we expanded the team to about 500 to develop algorithm and application. At end of July, we are performing OTA upgrade on the L2+ autonomous driving to the welcomed by consumer. In the second half of the year, we are also going to launch further optimization, like, point-to-point commuting on open road, the memory of parking in parking lots. In 2024, sorry, 2025, we're going to launch point-to-point smart driving, large model, CNAP, so that we can continue to provide comfortable and safe experience. In October, in Paris Car Show, we're gonna make debut of the first Class B model, which is called a B10. This is targeting the largest segment using the latest architecture, Leap 3.5, which is going to be a next blockbuster, supporting our sales target next year. In terms of marketing, we continue to dive deep based on the users, and services, and experience of purchase... continue to improve our marketing network. We continue to drive 1+ N channel model, with one 4 S feature region supporting multiple urban showrooms. So around the end users, we're providing customized, personalized, and convenient services. As of end of June, we have 470 outlets, including 320 outlets providing services, covering 187 cities in the country. In the second half of the year, we're going to accelerate the channel layout. We'll increase the coverage, penetrate deeper into the uncovered cities and the county level penetration. We're going to improve the Leapmotor Center to provide optimal service experience. In terms of sales, still, we are using the vertical management model led by retail manager, so that they are helping to improve the refined management of stores. In terms of management, we're going to use the full chain digital marketing service center. It's serving the end users, making alignment of all touch points, offline and online, covering all scenario, and they have worked very well. In terms of globalization, we're actively exploring the global business, and to increase the revenue streams, providing implementation overseas business. In May, Stellantis Group and Leapmotor JV has been established the build-up of the core team, and we plan to start to sell and deliver C10 in Europe from September. Both model has been certified by EU. Right now, we have about 2,000 C10 being shipped to Europe by marine shipping. In the coming months, we're gonna ship out more vehicle to Europe. We plan that by the end of the year, we're gonna expand about 200 sales network, 200 sales outlets in Europe, and by 2026, we're gonna expand to 500. In Q4, other than Europe, we're going to go into Asia Pacific, Middle East, Africa, and South America. To promote the sales of Europe, we plan a four-day Leapmotor International media event at the end of September, inviting first-class media to test drive C10 and T03. Working with Stellantis, we come from channel, network, after-sale service, auto finance, product, spare parts, and empowerment. It's a comprehensive collaboration. Recently, we worked with Maserati under Stellantis in terms of the chassis R&D and also the adjustment. We are working together to improve the global competitiveness of Leapmotor. We're making significant outcomes and results in ESG. In the first half, we received EcoVadis global certification. We received a bronze medal of certification. We are among the top 35 in 130,000 companies worldwide, which is strong support of our supply to the 3.0 parts, and also funding the third-party supply chain. Our globalization is a globalization of whole vehicle plus auto parts, providing Chinese market and global market in making breakthrough in tier one. Okay, thank you. That was wonderful. We're now going to open up for questions. Operator, how do you do with questions? those of you on the Chinese line, you can press star one. On the Chinese line, you can also enter your question by entering your question in a text chat box. We're now taking questions from the Chinese line. The audience from the Chinese line can either ask question by raising a hand or writing it down. Yeah, let me start with a few questions with the management team. First question has to do with the GP margin. My question is, in Q2, what are the major impact on GP margin in Q2, and what is the outlook for GP margin Q3? You talk about, you know, the, you know, the better margin models in 2024, and what's the contribution of C16? Yeah, let me take you back to the Q1. Q1 was the Chinese New Year, which is a low season, and also in model 2023, switching to model 2024, so we're making some of the price giveaways. So the GP margin was a bit low. Starting from March, as we are launching the new model 2024. The overall GP margin has improved a lot. We are clearing our 2024 stock already. So in March, April, May, we are seeing year by month-by-month improvement. So Q2, we got to a 2.8% GP margin. In June, we are close to 5% already, so this is on the uptrend. So that's on Q1 plus Q2, on average, 1%, Q2 to 18%, and Q3, we know in July, GP margin in July is over 5%. So basically, we are very upbeat about the full year GP margin. We're trying to get to our target. For the full year, we aim to get to 5% and above 5% as our GP margin target. Thank you, Mr. Zhu. My second question has to do with the C16. C16 and C10 was made from the same line, so how would you expect to adjust the split of the models? And what about the delivery and ramp-up? And based on the current order at hand or the backlog, what is the stable sales number for C16? Are you revising your sales projection? Well, C10, C16 were made from the same line, same factory. That factory has tech. We have 3 GPH. So we have two shifts, over 20 hours for... So 10 hours per shift, we can get to 600 vehicles. At full capacity, we can get to 16,000-18,000 of a total volume. C10, starting from launch in March, four, five, six, April, May, June, July. Well, because of the first launch, we have about 5,000 units of sales. That was April. In May, it was slightly down, but still is close to 5,000. But in June, July, we're getting 6,000, even 7,000. So for C10, the sales was a continuation of all the product of Leapmotor. So we are seeing steady growth. So now we are seeing the C10, it is still on the growth trajectory. In the future, we think it will get to 7,000-8,000 or even higher sales. So that, that's for C10. What about C16? From 28th of May, after the launch, the overall. Well, that was the June 28th, sorry, June 28th. And then in June, for the from 28th of June to 28th of July, the company have got 10,000 order. This is really the best order number in the history of Leapmotor. So in the first month of launch, C16, we're getting 10,000 order. Compared with the C10, we clearly have 30%-40% growth compared with what happened in C10. So that was a single month order for C16. So I think C16 has huge potential. In August, except for the first week, because for the end of the month, the policy, Well, we have been taking back the, the favorable policy for the first month, but starting from the second week of August, we are seeing the order picking up speed again. So we think, based on the current capacity planning and based on the order, for both C10, C16, we can get to 18,000 units combined as a sales. Our capacity has sufficient capacity to plan for that. Thank you. Those are my two questions. Okay. Phone number 0464, you have the floor. Mr. Zhu, Mr. Wu, Mr. Shen, I'm Deng Lei from CICC Auto. Congratulations to the results. I have two questions. First of all, on the R&D expenses, Mr. Wu mentioned R&D expenses has grown a lot this year. What about a full year outlook? What the R&D expense will be? And also, smart driving. You mentioned that you, based on the end-to-end investment, you're gonna invest more on end-to-end. So what are the exactly you're planning to invest in those regard? Now, my second question has to do with the new trade-in policy. Have you seen the trade-in policy having results? You have some promotion campaign, a policy to go with that. So I was wondering, how the management evaluate the benefit from the trade-in policy to sales. Yeah, thank you. First of all, R&D spend. In the first half, it grew by about 50%, mainly because we are increasing the investment of smart driving, including people, computing power, operating expenses. And on the other hand, as we have more models, as we say, we have seven model in the pipeline, which will be launched in the coming year two. So we need more R&D headcounts, so that means more investment. For the full year outlook, for this year, the R&D spend for the full year will be growing by about 50%. Because the second half last year, compared with the first half last year, we have seen a big growth of headcounts. So therefore, for the full year, we will say 50% growth of R&D compared with last year. So that will be R&D. Secondly, for smart driving, Leapmotor smart driving was developed, was established four years ago, where we have a dedicated team on smart driving algorithm. Previously, in terms of people, algo, or the computing power, we have limited investment. But starting from last year, we have been gaining traction, growing headcount to 200 to 300 people. We have 400 people. So by the end of the year, we're gonna get a team of 500 in smart driving. So more headcounts. At the same time, we publish the smart driving algorithm. Coming from the electronic architecture, is now spin-off as a special institute for smart driving. So that team has spun off to be a dedicated team to invest in that area. And also, we have the BEV model, using BEV architecture, so that our autonomous driving algorithm, we have OTA or C10, is using BEV model. In the second half of the year, we are going to do the end, point-to-point commuting model, so that we can provide OTA for users, maybe in Q3 or Q4. Now, subsequently, we're also going to implement the urban NOA and large language model, which is end-to-end. Well, when it comes to progress, people are all going that direction. There's not much of a gap, so we hope to take one or two years, maybe by the end of next year, the Leapmotor autonomous driving could become tier one player, which is our goal. Right now, this is the biggest part of investment of R&D by Leapmotor. The third part, when it comes to trade-in policy, old-for-new policy, it has brought a lot of sales, like, like T03. T03 really see some growth from trading in, because it has a lower selling price. So compare with the subsidy or without the subsidy, well, this is quite a significant portion when it come to the trade-in subsidy, which allow the customer to find it more affordable. So therefore, with the old-for-new trade-in policy and the C16 launch, all these factor has resulted in a nice sales breakthrough in July, from 20,000 to 28,000, close to 30,000. We expect in August, we should be selling more than 30,000 units. That's the way it looks like in terms of orders. It's only the 15th of August, halfway through the month, but we have over 15,000 orders, which is a new record for Leapmotor. So going forward, we are very optimistic of our sales. Thank you, Mr. Zhu. That was very clear. Next question is from Oh Five Eight Five. You have the floor, please ask your question. Thank you, Mr. Zhu. I'm CLSA analyst, Kang Kai. I have two questions. First of all, as you mentioned, early August, you have adjustment of the sales policy. You are favorably optimistic, and indeed, if it go on like this, what's the sales target this year? Are you going to be focused a bit more on the profit side? Or even if you are achieving higher sales, are you going to ensure higher volume, striking the right balance? Because right now, we can see you are having more capability in autonomous driving. So does it mean more consumer are buying the high-config versions, contributing to SP, contributing to GP margin? So my second question has to do with overseas. You talk about the T03 have achieved the launch of the pilots of T03 in the short term. So what is the ramp-up in Europe? Are we going to see the launch really quickly in Europe in terms of the production? Okay, the first question you are asking about the sales target. Well, we are still aiming at 250,000, quarter million unit. As it stands now, we are pretty comfortable and confident that it will happen. Now, in terms of balance of sales and profit, definitely, we want to strike the balance. We want to achieve 5%-10% GP margin as a target and also 250,000 sales target. We hope that... We want to reach the minimum of each and every of the target. That is a balance in its own right, so that's between GP and sales. Now, as for Leapmotor's autonomous driving, having improvement of performance and also C10, the APA, autonomous parking. I think the autonomous parking is at the top level in the industry already. In terms of autonomous driving, the expressway NAP, we have got to the level, which is the leading or at the top level, equivalent to the industry. And also, we are doing point-to-point commuting model. The point-to-point commuting is aimed to be launched within the year. It's a great benefit, so there's no need to take over. And for the usual route from your home to company, a fixed commuting route can be done with zero handover. It's kind of autonomous driving model. So this is really thanks to the autonomous driving investment, and we are enjoying the benefits. People are most popular about the end-to-ends. We are not really different from others. We are at the same level. So Leapmotor, based on our autonomous driving technology, we are confident that in terms of timing, we should be able to launch this point-to-points autonomous driving at similar time points. Now, to your second question, in Europe, the production in Europe. Now, previously, as mentioned, Leapmotor's two model, T03, C10, have both been certified by EU. T03, the, right steering model and right steering model C10, have also been certified, which means we are able to sell in many countries. Many country, the, many country with, right steering wheel, many small countries. So basically, you need to have the permit, right? You have to have the permit and license. We are able to sell, so that has been done. And now the 200 stores, the 200 outlets will also be deployed in Europe. Starting from Europe, in September, we're gonna have the sales in September. We're also going to have the media test drive campaign in Europe, which is official launch of the Leapmotor overseas sales. Now, because EU policy uncertainties, so we are taking two models at Leapmotor. The first model is we're using KD, the knockdown approach, to be assembled in Poland. So that model, of course, there are many details to be R&D, including to what extent are we going to break it down for final assembly in Poland and to meet the European policy? Are they calling for 40% or whatever threshold? Is it really based on the requirement on the policy for localization. So, but still, we have to be doing this way in Europe for local manufacturing. It's a matter of time. It's just a matter of timing. We're doing it already. We're evaluating the best way to work with the Stellantis, to work with them, to produce the models in their European factories. So this is the end game. We are going to get to the end game, Europe. So are we going to get there earlier as or, or later? Well, it depend on ourselves, depend on sales in Europe, that depends on the final tariff from EU toward Chinese EVs. And we have to strike the balance of these factors and the cost structure to balance our progress of localization. Thank you. Thank you so much. Now, 4, 5, 3, 0, please ask your question. Hello, everyone. I'm from BofA Securities. I have two questions. First of all, based on ASP, you know, the Q2 ASP is about CNY 100,000 compared with Q1, which is CNY 104,000, slightly lower. So I was wondering, is it because in Q2 you have some promotion or clearance of stock, clearance of the 2023 models? And also, what do you think of the ASP in the second half? What's the trend of the average selling point, price, C10, C16? You're gonna see some momentum and also the exports. Well, exports, export is not much of impact because you are selling to Leapmotor International. That price is still kind of low, just kind of a cost plus, so it's not going to contribute too much on the sales. So but my first question is the trend of ASP. My second question is about next year, Leapmotor International outlook. Because previously, when we talked to management, you mentioned that Leapmotor, working with Stellantis, in terms of the sales next year, the year after next... And you actually have very high target for GP margin, operating margin. But considering recently in Europe, in macro, and the weakness of the sales of vehicle, including IC vehicles, and so Stellantis margin is actually lower than the expectation. So I wonder, is it going to have any impact on the margin target next year, coming from these macro factors? Are you going to revise the target for margin? Thank you. Thank you. First question on the ASP. Now, in Q3, Q4, it could be slightly better than Q2, because C16, for a high price model, we have more high price model and also some offsets. As mentioned, the trade-in policy, which brought about the sales of T03, we might have more T03 sales. But in the end, we still hope to strike a balance. The several models, C11, C10, C16, and T03. C01 is a bit smaller in volume. So basically, they are a bit average, even, about 25%. They are all about 25%. By that target, the ASP will be further improved, coming from CNY 100,000 to CNY 110,000. Another source of high ASP, we are different from XPeng and NIO. Our distributor model, you know, for distributor, we are eliminating the CNY 10,000 distribution fee. So based on the direct sales model, our price is CNY 120,000 under CNY 30,000, because the distributor fees is actually net of the sales dollar amount. So for overseas, we are pretty optimistic because indeed, Stellantis, they have their strength, they have channels, they have resources, they have the service, they have the spare part distribution, finance, insurance. They have a very healthy system. And because of that, that's the reason why we're going to have 200 outlets in Europe in September to sell Leapmotor brands. So those are in our favor. Of course, we have to be looking at the EU policy. If the tariff are increased, Leapmotor will be the fastest to make in Europe to avoid some of the tariff. So this effective way to circumvent tariff. These are unique advantage to Leapmotor. In terms of sales, we are maintaining 6-7,000 or even higher, our sales target to overseas. Next year, we're going to aim for tens of thousands. Of course, there are some uncertainties because of geopolitics. The overseas, like in Europe and U.S., the trend for new energy vehicle will be slowing down. That is a big hurdle. As mentioned, tariff, they might slow down our progress of internationalization. But compared with our peers, compared with the market at large, I think Leapmotor's overseas operation in our localization, local manufacturing, local sales, we are at a better advantage compared with peers. Thank you, Mr. Wu and Mr. Zhu. Thank you. Now, phone number ending with 7946, you have the floor. Hello, Mr. Zhu. I'm Yongxing Securities. My name is Yu Xiaofei. Congratulations to excellent Q2 results. I have two questions for you. First of all, some other analysts has mentioned about the volume and price. So for this year, we can see, like, BYD, they are pricing quite aggressively. Joint Venture, they are now taking back discounts, rebates. They're taking back rebates. So I wonder, what Mr. Zhu have seen in the market? What's the market demand since August? What do you think of the competition landscape in the days to come, and what about demand? And also, my second question is, like, you have done a lot of optimization reform in channel. You are driving the N +1 model, which is quite a success. So my question is, the new channel models, how does it contribute to the customer satisfaction and brand, reputation? Okay, starting from the market, in July, NEV penetration is over 50%. Our estimates is, well, if it's above 50%, it will mean it's all going to be downhill from here. It's gonna be accelerated from here. If someone is buying ICE now, people are going to question you, "What are you thinking? Because you are buying something that's backward as a technology." That's the point of view from China. I think the market demand for NEV or for electrification will be further accelerated. So that's what we think for every OEM, we have to capture the important period of the next three years. After three years, we're barely gonna see ICE vehicles. It's gonna be EREV, hybrid, plug-in hybrid, or even BEV. We are not going to see pure ICE vehicles. That's our view. So in three years. In three years for Leapmotor, this is critical. Are you able to to become a top player in 3, 5 years? Are you going to be the top 5 in the market? That has to do with your survival. If you can survive, if you couldn't survive, there's no, no chance. Right now, we are grabbing share from ICE, it's still easy, but in the future, no more share to be grabbed from ICE. You're going to compete with each other. It's going to be more difficult. And if you don't have the size, if you don't have the size, you're not able to compete. 'Cause if you don't have the volume, you're not having the size, you don't have the cost advantage, it will be difficult to compete. So therefore, from the point of view of Leapmotor, we are feeling volume is more important than GP margin and GP. Of course, we are not going to sell at a loss. We definitely need to have some GP margin. But our strategy is to improving the GP margin year by year. We do it with a plan. We do it with a plan, like last year, we still have a loss, but this year, our average margin, we are seeking to get to 5% or even higher. Next year, we are aiming at 10% margin. Ultimately, I think Leapmotor's GP margin should be 15%, which is a midterm target. So that's our strategy for mid-, for GP margin. Now, for the volume, our position in the market, we do have a good plan. Like, first of all, on the C- series, C11, C16 was the last of the C- series. C11, C01, C10, C16. We have deployment of models across the board for 150,000. So in that segment of 150,000, we are now selling 30,000 units. 30,000 units means a certain market share. So we are gradually expanding the market share of every product model, so the four models will always be there. In 20 years, Leapmotor will still be C11, C10, C16, and C01. We're going to capture this segment still in 20 years. And Mr. Wu was talking about in October Paris Car Show, we're gonna launch the first B-series, B10, which is a 5-seater SUV. The B-Series is a traditional, just like traditional Class B vehicle in the ICE world. However, it's going to be a very competitive, even though it's a Class B vehicle, but it's, it's priced as Class A vehicle, and we are aiming to price it as a Class A. So next year, B10, we are very happy about it, and be using the Leap 3.5 architecture, and also using... It, it's actually CNY 100,000-CNY 150,000, which is going to the top volume segment, 100-150 thousand. So in next June, we're gonna have the second model from the B-Series. We're looking at the model. I, I really like the styling of the model. I'm very confident that the B01, which is a sedan on the same B platform, and also B05, which is the crossover style, Class B vehicle. So the three model, we're aiming at 40,000 units of sales. So if you got 40,000 per month for B-Series, then in 2026, we're gonna have a series A and Series D corresponding to 60,000-80,000 and 250,000 CNY. So Class A, Series A and Series D. So we have A, B, C, D as four platform. So we have 3, 4, 4, 3 as a lineup, so the monthly sales will be able to cover the full scenario, the full market demand. That's how we plan to deploy our lineup from CNY 60,000-CNY 250,000 price range. Now, Leapmotor, we're looking at the NEV ranking. We're ranking number seven, ranking number eight or nine. So by the end of the year, we want to become top eight. We're not saying, like, if GD, they have many brands, we don't put them together. Changan, they have many brands, we don't put them together. We're actually looking at as a, as a group, including overseas OEM, domestic OEM, we are aiming to become top eight. And next year, we're going to top six, the after next, top five. So that's how we are looking at, the ranking of sales. We want to climb up the ladder. Leapmotor, we call ourselves turtles. In the race, the turtles making, step out, one step after step, improving market share, improving our GP margin. After three years, three years from now, you won't be talking about the new startup or the old ones or incumbent. There will be no ICE. There will be no incumbent. Everything will be electric. By then, you have to be top five in China. If you're top five in China, it will mean that in NEV, you're gonna be the leader in global NEVs. It's, it's, it's virtually the same thing. So that's our view on the market landscape and our own strategy. Number three, channels. You asked about channels. Our market strategy, like in China, we want to dive deep into the Chinese market. For overseas, we rely on partners. We rely on Stellantis with their global sales network, global sales system, as the resources to support us, to plug in our competitive product by Leapmotor. For domestic market, we, as we say, this year and next year, we are optimizing the channel mostly. We're optimizing channels and to refine our management. By optimization, I mean, we want to reduce the investment entities. Within the same city, we want to break it down by different regions. So I don't want the region to be overlapped, so that people can actually capture one region and dominate that region. So normally, in a Tier 1 city, even for Tier 1 city, we want no more than four distributors. We hope three distributor can cover one Tier 1 city. So we can cut back on unnecessary competition among investors, so we can optimize the, the outlets. The 1+ N model is to have more touch points with low-cost touch points. Of course, we'd also need a full 4S store as a showroom, delivery, service, and sales, so that we can put the mind of user at peace, but it's also making it easier to buy. So this is the standard we want to build up the system. In the end, it comes down to the service capability, the user satisfaction, and the cost benefits. So how do we refine the management? This is what we are thinking in terms of optimizing the channel, so that it can rationalize the outlets. Like urban showroom is only about sales. The 4S store, there are the sales, delivery, repair, service integrated in the 4S store. That is the model, so that we can achieve the lowest cost, but we can have the widest coverage. At the same time, Leapmotor has been sticking to the refined management approach, which means for all distributors, we don't ask them to stock up. We just care about the out, we don't care about the stock in. So I don't care how much you stock in. We just care about how much stock out you have, how many orders you have a day, how do you satisfy users? We don't force them to stock in. We just care about the stocking out. So for end-to-end, we want to optimize the entire process, so that we can improve the whole flow from lead to to deal. This is what we are different from others. We have a retail manager. A retail manager come from a VP of a distributor group. So the retail manager is managing about 10 stores to optimize the store management, the 5 S management, from customer invitation, to arrival, to test drive, kind of a full life stage, life cycle, user management, and providing coaching, providing supervision and training. So that, you know, we're using the original distributor model, where they are motivated to, to operate on the distribution, and now we're combining that with the direct sales model so that we can achieve this kind of benefit with our mass investment. Because if everything is full-time, it's gonna be costly. If everything is professional manager, it's going to be costly. We don't want that kind of cost, but at the same time, we want some sort of professionalism to refine the management, improving satisfaction, improving the conversion rate. So I, I think by one year effort this year, our sales capability will be significantly improved. In next two to three years, by continuously improvement, I think the distributor model that is, categorized by Leapmotor will surely become a role model for others in this sector. It's definitely going to work very well. Thank you. Thank you, Mr. Zhu. I have no further question. Thank you. Next question from phone number 9596. You have the floor. Thanks to Mr. Zhu and management, thanks to the host. I'm from Haitong Securities. I'm Liu Yiming, an auto analyst. Congratulations to the domestic and international business progress. I have one question: How do you play your product advantage in Europe? In the last period of time, in Europe, passenger vehicle are not seeing growth in penetration of NEV. So how do you leverage your strength or product so that those people who are not choosing the local European NEV, how do you compel them to buy from you? Okay, in Europe, the demand from customers are very different from China. You can see in Europe, there are two types. The first are the Italian, Spanish countries, like in Israel, they are the A0 or the A0 kind of small vehicle, not many Class B. In Germany, it's better. Nordic country, a bit better. They also have some C-class, larger vehicles. So there are different preference in terms of the size of the, model. So those are differentiated. Starting from last year, Leapmotor has planned big. So based on the European demand, we want to focus on the B10, code name B10, which is kind of, a B-Series and A-Series. We're gonna prioritize smaller models. Secondly, indeed, electrification is slow going in Europe. They don't have enough infrastructure. So therefore, in Europe, other than pushing for BEV, we are also going... Many users are saying about EREV, because in Europe, EREV will be popular. So B10, we don't launch EREV version in China, but we will have a EREV and more EREV version of B10. Like, they can commute by using battery during the weekend, on a trip. They can travel across Europe. They need a long distance commuting, and then EREV is a great option for refueling. So we think in the future in Europe, EREV is going to be a, a good option, kind of a transition before electrification take place, completely. And it's excellent option. In the end, we still hope that for a OEM, particularly for this mid to low-end product, we're not like luxury vehicles, they don't care about the freight. But actually, we care about the freight. It costs 1,400-1,500 EUR to ship a vehicle from China to Europe. If you added tariff, you basically have no profit to speak of. So therefore, you have to go for local manufacturing. So from that end, we are actively planning local manufacturing in Europe, using the current facilities and resources for the NEV retrofits. So we can achieve local manufacturing by a low cost of retrofitting, so that we can reduce the cost, expenses, improving margin, and more competitiveness. So in Europe, definitely, we have to go for local manufacturing. It has to be done fast. And also, it has to be based on what they need in Europe. They want more AO, Class A, but it doesn't mean low-end, right? They still need maneuverability, even for the smaller vehicle. They, it's not like they want bigger vehicles, it's the different preferences. So we have to understand their demand and needs sufficiently, so that we can plan our product accordingly to adapt to the global market. Thank you, Mr. Zhu. I have no further question. Thank you. Next question is from phone number 6861. Hello, I'm from Shanghai Securities. I have two questions for you. I'm sorry, your, your connection is broken up. We're not able to hear you. Yeah, my question is about— Is it better now? Yes, yes, it's better. Please go ahead. Yeah, you are, you're loud and clear now. Okay, great. So, I have two questions for you, Mr. Zhu. At smart driving. Your goal that the end of last year, we're gonna be tier one in smart driving. So are you become more aggressive or more positive and active in smart driving? And what do you think of investment of R&D, of autonomous driving this year? Secondly, on overseas, because in September, we're gonna have, you're gonna have, sales starting up in overseas. How is marketing channel ready by September? How many channel will be available to sell your vehicle? On the marketing side, you talk about in end of September, you're gonna have a test drive campaign. Are you planning for other things, like, a release, a launch ceremony, or other campaigns? Yeah, first of autonomous driving, for myself, for the Leapmotor team, intelligence has been something we do long ago. We started with deep learning in 2011, 2012. We have facial recognition, license plate recognition, we have deep insight. But for onboard application. You can see people are keep saying, by 2014 and 15, when we started to make vehicles, Elon Musk have been saying that Tesla will have autonomous driving right away. But now, all the way to now. But now, with the LLM, BEV, with this new technology, smart driving or assisted driving, or the high performance assisted driving become more and more, you know, kind of something that's more visible. We can see this is more and more reliable. This will help to relieve the fatigue of driver, so making driving easier. That is actually a bit more certain now, much more certain now. So which is why we're investing more, starting from the first half last year, including investing on BEV, investing on end-to-end. We're investing more on the people, computing power, and, data management platform. By using last year and this first half this year's investment, now, for BEV has been launched. At the same time, the point-to-point commuting model will be launched by the end of the year by way of OTA. And next year, we are very confident that when it comes to end-to-end, we're gonna launch the end-to-end capability. So how much money to spend? I think, the current investment make the most sense now, because in many area, people have been talk a lot. They have already make a lot of pitfall, they have made all the mistakes already, like the map or without map, or the. We don't want to follow those pitfalls. If they have already done all this, so we will go back to the end-to-end large model. So in some cases, there is only some foundation, some basis. We don't really want to reinvent the wheels if they already have the foundation. This will be time saving. So in terms of the investment, Leapmotor has always been seeking the minimum R&D investment, but we're aiming the best outcome. That's always been the philosophy of Leapmotor. We're looking at the best timing for making that investment. It's not like the earlier the better, the more the better. We are seeking the best timing. Sometime you start early, but you arrive late. Sometimes you are just going after the hype, and Leapmotor never go after the hype. We'll invest when we should, when it makes sense, because this is the best thing that makes sense to us. And computing power used in a most economical way. Right now, we have surplus of computing power. Many government, many organization buying NVIDIA server. We just want to rent them out. We don't want to buy. A lot of people are selling them. A lot of people are renting them. It make the most sense. I can rent computing power. This is a saving of R&D. That's on the computing power. And also, the management, data management platform, we developed the platform in-house. We don't go for the outsourcing. So this is all about improving efficiency and improving optimization, so we have the minimum investment, but maximum output. So that's on the autonomous driving. We'll only invest CNY 100 million on the computing power server. The rest, we rent them out for CNY 100 million or CNY 200 million. For overseas channel, as we say, in September, we're gonna have 200 outlets ready to be selling Leapmotor. On the marketing side, in September, we're gonna have a test driving campaign. In October, we'll be part of the Paris Auto Show in France. That auto show is gonna be the largest in Europe, which is also a great opportunity for us to make our name heard. Thank you. Those are my two questions. Thank you. Next question from phone number 1909. Next question from phone number 7820. Thank you. I'm Jefferies analyst, Li Xiaoyi. My question is, in the first half of the year, what about tier one sales of components? What is the revenue generated from tier one sales? And, what is the full year outlook and profit outlook for the full year from component sales? And also, you have mentioned that you've been working with the brand under Stellantis on working together on the chassis. So I wonder, in terms of supply chain, are you having progress working with Stellantis? Is it possible that you're going to sell some product to them later? Yeah, component sales in the first half, we have good results. We have added two SOPs. So SOP will not generate sales until 2025, 2026. So automobile industry analysts, you know that very well, from SOP to sales, is a lengthy process. Now, in terms of batteries, and this year, in the first half, we have a few tens of millions of sales, including ESS, and some of the electric, you know, utility vehicles. And they have generated quite a bit of sales, close to, how much? 60, 70 sales. For working with Stellantis, based on, light fixture, lamps is a business. There are some sales to Stellantis, electric drive, and also subsequently, we are going to, make announcements accordingly or, or publish some of the news. I got it. So you're saying working with Stellantis, we have some SOP to Stellantis already? Yes, that's right. Understood. A further question on your chassis collaboration with Stellantis. Is it for any model under Leapmotor? Well, C10 and the subsequent models in the lineup, the chassis remodeling will be supported by the chassis team from Stellantis. They will work with us for the chassis, you know, remodeling or tuning, chassis tuning. Yeah, another question, because the end of the year, we're gonna have another model, SUV, five-seater SUV. What about the SOP? What about the sales? Any launch time point? Any guidance? Well, that product will be launched, making debut in Paris Car Show in October. The first time we use Leap 3.5. Price Price within CNY 100,000-CNY 150,000. So for that product, we are having high hopes. This is going to be another blockbuster product. I see. Well, this is going to be making debut in Paris Car Show, but in China, it's going to be debuted in Guangzhou Car Show, aiming at next Q2. We're gonna start the delivery next Q2. Okay, no further question. Thank you. Thank you, Mr. Zhu. Well, can we have the last question? Yes, the question is from phone number 6132. Thank you. I have two questions about overseas. First of all, I'm from Cinda Securities, Wu Pingyuan. My question is on Leapmotor. How many people are working on international business, including Leapmotor, Leapmotor International JV? In terms of roles, sales, marketing, production, R&D, is there any split of the headcounts? Secondly, some other have been talking about overseas demand. Overseas demand is very different from China demand. Europeans, they like to travel a lot. They like to put a hook, a tow hook, at the back of the vehicle. So other than the, these models, is it possible that you're gonna localize design so that it meet the demand overseas? Those are my questions. Thank you. All right, Leapmotor International business, overseas business, as mentioned, it is a SLI model. SLI, meaning they can use their advantage without repetition overlap. So we have very few management team of Leapmotor International. We aim to keep it below 50 people. They're just working on the product, demand, market management. As to every country, every city, we want to use the original, teams on the ground, the sales and marketing team on the ground. So in every country, they are running many brands. So Leapmotor could be just one part of the brand portfolio. Like, they used to run 14 brands, now they run 15 brands. We just, some of the management fee allocated to them, so we can quickly deploy in multiple countries. At the same time, this will make saving of the operating costs. So that's our, structure. So this year, we, we want to have a team that are small in headcount, but those are elites. In terms of role assignment, like the, the model that we have, the Stellantis, we're using mostly team from Stellantis. Leapmotor is in supporting role, supporting Stellantis, so that we can cut back on operating costs. Now, overseas models, indeed, there are many differences. For example, charging, the three-phase, 1,000 watts, this is a demand, but in China, 6,000-watt use, two-phase, not three-phase. As you talk about tow hook, this is also going to be... The hook is going to be fitted on C10, a large vehicle. This is a necessary component, right? In Australian market or European markets, those are necessary features, something that can be personalized. And because the market, we are predominantly relying on the market team on the ground, so we actually will have better understanding of the demand compared with our peers. We could get a better insight, faster insight, we can act faster to be part of the market compared with the peers. Okay, thank you. Thank you. That's very clear. Okay, thank you so much. In the end, I'd like to thank all of you for joining this earnings call. Hope to meet you next time. If you have further questions, feel free to reach out to the, Leapmotor, our team. With that, we conclude the call today. Thank you, and goodbye.