Hello, ladies and gentlemen. Thank you for standing by for Li Auto's second quarter 2021 earnings conference call. At this time, all participants are in listen only mode, and today's conference call is being recorded. I will now turn the call over to your host, Janet Zhang, Director of Investor Relations of the company. Please go ahead, Janet. Thank you, Annie. Good evening and good morning, everyone. Welcome to Li Auto's second quarter 2021 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. On today's call, we have our President, Mr. Kevin Yanan Shen, and our CFO, Mr. Johnny Tie Li, to begin with prepared remarks. Our Founder and CEO, Mr. Xiang Li, and our CTO, Mr. Kai Wang, will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain filings of the company with the U.S. Securities and Exchange Commission and announcements published on the website of the Hong Kong Stock Exchange and the company. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to Li Auto's press release and interim results announcement, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our president. Please go ahead, Kevin. Thank you, Janet. Hello, everyone, and thank you for joining our call today. First of all, we are proud that our Class A ordinary shares started trading on the main board of the Hong Kong Stock Exchange on August 12th, opening a new chapter for our company. We are honored and also humbled by the support we received from all investors. With the Hong Kong dual primary listing, we significantly strengthened our equity base with over $1.5 billion of net proceeds raised. This will provide strong financial support for our R&D initiatives and the direct sales and servicing network expansion, as well as enhanced protection for our shareholders. We will continue to take the responsibilities associated with being a publicly traded company seriously, work to build out our long-term vision, and create value for our users, shareholders, and our employees alike. Moving to the key highlights of our second quarter results. Our 2021 Li ONE has been an exceptional performer since its debut on May 25th. Our 2021 Li ONE boasts an enhanced NEDC range of 1,080 kilometers, optimize the mobility comfort and a more intelligent cockpit. It has received rave reviews and strong user endorsement for its outstanding features and performance. Our second quarter deliveries achieved 17,575 units, increasing 166% year-over-year. Our July deliveries reached 8,589, hitting a new record. In July, Li ONE topped sales chart in the new energy SUV and large SUV categories, according to new car insurance registration data reported by China Automotive Technology and Research Center. It is a powerful testament to Li ONE's highly competitive product features, making us a leading domestic NEV manufacturer in China. While these rankings and the Li ONE's strong performance and popularity are exciting achievements, yesterday's home run do not win today's game. We will continue to be disciplined and dedicated, and we will strive to constantly surpass ourselves in products and services to earn the support, trust, and loyalty from our users. Our record high deliveries would not have been possible without the cooperation and the assistance of our supply chain partners. They have been helping us navigate the ongoing semiconductor shortages. Turning to the profitability. Our gross margin reached 18.9% this quarter, up 5.6% points year-over-year, and 1.6% quarter-over-quarter. Our operating cash flow was RMB 1.4 billion or $218 million during the second quarter, demonstrating our consistent high operating capability. In the second quarter, we aimed to further broaden and deepen city coverage to address increasing demand from prospective users across China and prepare ourselves for our new model launches in 2022 and beyond. We accelerated the expansion of our direct sales and servicing network. As of July 31st, 2021, we had 109 retail stores covering 67 cities and 176 servicing centers, and the Li Auto authorized body and paint shops operating in 134 cities. We are on track to reach our year-end target of 200 retail stores. We have expanded our footprint to lower tier cities in China. In August, we opened a retail store in Lhasa, Tibet. This has taken us direct sales and servicing network geographical coverage of provinces, autonomous regions, and centrally administered municipalities in mainland China to 100%. The industry-wide semiconductor shortage has affected our monthly deliveries in recent months, resulting in undelivered backlogs. As our new order exceeded 10,000 in June, we tried our best to utilize alternative solutions to enhance our flexibility and acquire industry sources. Going forward, we'll continue to collaborate closely with our supply chain partners to mitigate the semiconductor shortage and minimize the impact on our production. Given the proven success of our Li ONE catering to the needs of families, we are working to diversify our product portfolio to appeal to an even broader family user base. We have three platforms under development. The X platform for our next generation EREV, with the first model to be released in 2022, and the Whale and the Shark platform for our BEV models to be launched in 2023. The development of these new platforms are progressing smoothly, and we are confident to launch new vehicle models on time. In July, we also signed a MOU with a local company for collaboration in reconstruction and expansion project of an automobile manufacturing plant in Beijing. This will further expand our production capacity and support the increasing vehicle sales volume with future models. On August the 27th, 2021, we also signed an investment agreement with a wholly owned subsidiary of Xinchen China Power Holdings Limited to form a new company in Mianyang, Sichuan Province, China, to develop and manufacture our next generation range extension system. We firmly believe that smart EREVs will be a superior replacement to ICE vehicles and increase the overall NEV penetration rate in the medium to long term. We continue to view it as one of our core strategic development directions. The cooperation will leverage the R&D and production capabilities of both companies to provide high-quality products and further extend market share of smart EREVs in the domestic market. With respect to international market, we will keep our strategy to always make plans before taking actions, as we want to be a winner, not just a mere participant in the global market. To win market share overseas, a car company has to develop the right product to attract customers with tastes and requirements that are different from domestic customers. We have set up a team dedicated to the overseas market, and we are meticulously working on the plans to find a winning formula. As a corporate citizen, we are proud to have passionately engaged in social relief activities to help people in need. In July, in response to the flood in Henan Province, we organized the emergency relief with donations to support the affected people, including our users. We also mobilized all trailers we have access in the adjacent provinces to join the rescue effort. In addition, we provide our users with services such as warranty extension for replacement parts, free replacement of flood-damaged charging posts, and free vehicle inspections for all disaster-stricken vehicles. We made our efforts to reassure them and help in any way possible for a smooth transition back to normalcy. Lastly, we achieved a A A MSCI ESG rating in April, making us a leader in ESG among 40 rated automotive companies. Going forward, we will continue to undertake social responsibilities and view this as an integral part of our mission to build smart electric vehicles that make families happier. I will turn this call over to our CFO, Mr. Tie Li, to review our financial performance in the second quarter. Thank you, Kevin. Hello, everyone. I will now walk you through some of our financial results for the second quarter of 2021. Due to the time constraints, I will address financial highlights here and encourage you to refer to our earnings press release for further details. Total revenues in the second quarter of 2021 were RMB 5.04 billion, or $780.4 million, representing an increase of 40.7% from RMB 3.58 billion in the first quarter of 2021. This included RMB 4.9 billion, or $759.4 million from vehicle sales, which increased 41.6% quarter-over-quarter. This increase in vehicle sales was mainly driven by the increase in delivery of the 2021 Li ONE since its release on May 25th, 2021. Revenues from other sales and services were RMB 135.7 million, or $21 million in the second quarter of 2021, representing an increase of 21.7% quarter-over-quarter. The increase in revenue from other sales and services over the first quarter was mainly due to the increased sales of charging stalls, accessories, and services in line with higher accumulated vehicle sales. Cost of sales in the second quarter was RMB 4.09 billion, or $632.9 million, representing an increase of 38.2% quarter-over-quarter. Gross profit in the second quarter of 2021 was RMB 952.8 million, or $147.6 million, growing 54.5% compared with the first quarter of 2021. Vehicle margin in the second quarter was 18.7%, compared with 16.9% in the first quarter of 2021. The increase in vehicle margin from the first quarter was primarily driven by higher average selling price in the second quarter of 2021 due to our launch of 2021 Li ONE in late May. Gross margin in the second quarter of 2021 was 18.9%, compared to 17.3% in the first quarter of 2021, which was mainly attributable to the increase of vehicle margins. Operating expenses in the second quarter of 2021 were RMB 1.49 billion, or $230.6 million, representing an increase of 45.3% quarter-over-quarter. R&D expenses in the second quarter of 2021 were RMB 653.4 million, or $101.2 million, representing an increase of 27% quarter-over-quarter. Excluding share-based compensation expenses, non-GAAP R&D expenses were RMB 543.7 million, or $84.2 million, increasing 36.6% quarter-over-quarter. The increase in R&D expenses over the first quarter of 2021 was primarily attributable to the increased high cost and increased R&D activities for the company's future vehicle models. Selling general administrative expenses in the second quarter of 2021 were RMB 835.3 million, or $129.4 million, representing an increase of 63.8% quarter-over-quarter. Excluding share-based compensation expenses, non-GAAP selling general administrative expenses were RMB 780.9 million or $129.9 million, increasing 73.6% quarter-over-quarter. The increase over the first quarter of 2021 was primarily driven by increased marketing and promotion activities, as well as increased headcount and rental expenses with the expansion of the company's distribution network. Loss from operations in the second quarter of 2021 was RMB 535.9 million or $83 million, representing an increase of 31.4% compared with the first quarter. Excluding share-based compensation expenses, the non-GAAP loss from operations was RMB 365.5 million or $56.6 million, representing an increase of 62.6% quarter-over-quarter. Net loss was RMB 235.5 million or $36.5 million in the second quarter of 2021, compared with RMB 360 million net loss in the first quarter of 2021. Non-GAAP net loss was RMB 65.1 million or $10.1 million in the second quarter of 2021, compared with RMB 177 million net loss in the first quarter of 2021. Now, turning to our balance sheet and cash flow. Our cash and cash equivalents, restricted cash, term deposits, and short-term investments totaled RMB 36.53 billion or $5.66 billion as of June 30th, 2021. Operating cash flow in the second quarter of 2021 was RMB 1.41 billion, or $218 million. Free cash flow was RMB 982.1 million or $152.1 million in the second quarter. Now for our business outlook. For the third quarter of 2021, the company expects deliveries to be between 25,000 and 26,000 vehicles, representing an increase of approximately 188.7%-200.2% from the third quarter of 2020. The company also expects the third quarter total revenue to be between RMB 6.98 billion and RMB 7.25 billion or US$1.08 billion and US$1.12 billion, representing an increase of 177.8%-188.9% from the third quarter of 2020. This business outlook reflects the company's current and preliminary view on the business situation and market condition. In particular, the ongoing industry-wide semiconductor shortage due to the global COVID-19 pandemic, which are all subject to change. I will now turn the call to the operator to facilitate our Q&A session. Thank you. Thank you. As a reminder, to ask a question, you will need to press star then number one on your telephone, and to withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can re-enter the queue. If you're going to ask the question in Chinese, please follow with English translation. Once again, for your questions, please press star one and wait for your name to be announced. Our first question is from the line of Fei Fang of Goldman Sachs. Your line is open. Please go ahead. Great. Thanks for the opportunity. Congratulations on the results. Can management talk a little bit about competition and regulation? On competition, some of your incumbent peers have really sped up launching new products. Great Wall, Geely, BYD, for instance. The frequency of their launches have increased, and the hit rate seems also increased. Just wonder if you have refreshed thoughts on their progress and also the potential for them to enter into the premium segment. That's the first question. Second is about regulation. What's your thoughts on regulatory risks around autonomous driving and assisted driving development? Do you think if there's any regulation intention to slow down things a bit in order to perfect the safety and customer experience? [Non-English content] This is Kevin. Thank you for the question. I think for the product development cycle, we have our own strategy and schedule to launch new product. We are accelerating our development, our next generation of the EREV platform and also the HPC BEV platform. As we shared before, we will roll out our brand new EREV models based on our next generation EREV platform next year. 2023 will be a big year for us. We'll have two new models on the X platform and then another two HPC BEV model launch. For the regulation, in fact, we have been closely communicating and engaging with the authorities. I think the intention from the MIIT is to standardize the overall smart electric vehicle industry and raise the technology requirement for the ADAS solution. I think overall this is a good thing. This will ensure the healthy development of this industry. I think the impact to us is, basically, in the future, we need to be more cautious when we launch the product with the ADAS solution. I think it will take us more effort to fully develop a function before the launch into the market. That's what our original plan. There is no change of our strategy. Overall, I think our focus on ADAS will not change. This is very helpful color. Thank you, Kevin. Thank you. Thank you. you. Thank you. Our next question is from the line of Tim Hsiao of Morgan Stanley. Line is open. Please go ahead. Thanks for taking my question. Congratulations on the solid results. I have two questions. The first question, could the management team shed some light on what components or type of chips are currently in short supply for Li Auto? If you look at the numbers, I think Li Auto's production seems more resilient than peers. How can we manage the supply disruption better than our peers? Is there any alternative sources Li Auto could secure the component and the support, likely more than 12,000 monthly run rates into fourth quarter? This is the first question about the supply. My second question, I think Johnny touched briefly on during the presentation. What's the progress in our new plans for capacity expansion in Beijing? What's the nameplate capacity, and when will the contribution from the new capacity start to kick in? [Non-English content] Thank you, team. This is Kevin. I will answer the first question about the shortage. Right now, the single biggest shortage we are facing is an industry-common shortage due to the COVID-19 situation in Malaysia, especially from STMicroelectronics. This is an industry-common shortage. In the past several months, we have been fighting every day for the supply. I don't think our situation is better than the other competitors. The outlook for the next quarter, if the COVID-19 situation will be getting better, we believe overall the industry supply will become more balanced. The COVID-19 situation is not predictable, so it's still a risk for us. Yeah. Johnny, you want to comment on this? Yes. For the Beijing site, I think we will release more details in the future. One thing you can make sure is it's on track to get ready for the BEV launch in 2023. Yeah. Thank you. Great. Thanks for sharing. Thank you. Our next question is from the line of Ming-Hsun Lee of BofA Securities. Please go ahead. Line is open. Thank you. you. [Non-English content] My first question is regarding the gross margin improvement trend, especially in the second quarter. Your ASP is increasing, but also your cost of goods sold by car is also decreasing. Could you elaborate more and also comment on the third quarter and fourth quarter trend? That's my first question. The second question, could you give us more details regarding your collaboration with Xinchen Power on the cooperation of EREV? Thank you. Can you share with us some more detailed cooperation with Xinchen Power on EREV? Thank you. Lee, thank you. This is Kevin. Very quickly, your first question, besides the sales price increase of the new Li ONE, from the cost perspective, primarily we had partially due to the BOM cost reduction from some of our suppliers and also because of the sales volume increase, therefore the amortization will reduce. That results in the gross margin increase. I think for the third quarter and the fourth quarter, we will continue to see the gross margin will gradually improve also. Yeah. We still see that overall for this year, blended gross margin will be somewhere between 19%-20%. Yeah. Your second question is about our joint venture with the Xinchen Power. Yeah. Actually, Xinchen Power is a leading engine company in China, especially they have been a long-term partner with BMW. Yeah. We have this joint venture jointly R&D, develop and manufacture our next generation EREV engine with Xinchen. For this joint venture, we have 51% of the shares. Thank you, Lee. Thank you. Thank you. Our next question is from the line of Bin Wang of Credit Suisse. Line is open. Please go ahead. Thank you. I got two questions. Number one, about the long-term borrowing. We found out in the second quarter, our long-term borrowing actually had gone to CNY 5.6 million. Given you have so much cash on hand, can you explain why the debt had a big jump in the end of June? That's the number one question. Number two is about volume guidance. You actually used to be kind of September number can go to 10,000, if you see the third quarter guidance, it seems like if we maintain the 10,000 guidance for September, that August should be a very low number. How should we think about the third quarter guidance? You also actually have 1.6 million units by 2025 and in prior to maybe next year, talked about 150,000 units. During next year, 2022, the volume should be 150,000 units. Thank you. [Non-English content] First of all, the long-term borrowing, because we do a CB in April, so it's the CB on the long-term borrowing. Yeah. Kevin? Yeah. This is Kevin. Thank you, Wang Bin, for the question. I think when we give out the guidance for this quarter, we have already taken into consideration of the potential risk of the impact of the COVID-19 in Malaysia. Yeah. Therefore, we don't want to be too aggressive. I think today is already the 30th, in the next two days, you will see our August number. Yeah. For the next year, I think your estimation is within the range of our plan. Yeah. Of course, we want to further increase the monthly delivery of our Li ONE. Thank you. Thank you. Our next question is from the line of Chang Liu of CICC. Please go ahead. Line is open. [Non-English content] Hey, I will translate my question. My first question is about our financial expenses. Could you give us some details on the acceleration of SG&A in the second quarter and any guidance on the full-year R&D and SG&A expenses? My second question is on our pure electric models to be launched in 2023. Could you give us some updates on its development, especially from the key milestones HPC charging system? Thank you. For the SG&A, this is Johnny. For the SG&A, as I just mentioned, it's more related to the network expansion and also the marketing and promotion activities in the second quarter. Also the increased head count and the rental expenses. In the second half of this year, we will continue to expand our retail stores towards our target of 200. For R&D, we still want to keep the whole year guidance, which is around RMB 3 billion. Second question. Yeah. This is Kevin. For the HPC BEV models, we are on track in terms of our R&D process. To share some of the milestones, for example, we already have our 4C new battery heat sample ready. Yeah. That's a big milestone, and also for our HPC super-fast charging pole design, we have already finished the concept design, and we plan to have our first pilot charging station within this year. Yeah. Okay, thank you. Thank you. Our next question is from the line of Xinyu Fang of UBS. Line is open. Please go ahead. Hi. I'm not sure if this is my line. This is Paul Gong, UBS. I have two questions. The first one is regarding your split of the BEV versus the EREV in terms of positioning. Starting from 2023, you will have both. How do you position the different segment and the size of each segment? How should we think, is this going to be the EREV is more focused on the larger vehicle or SUV, MPV, et cetera, and the BEV more focused on the smaller vehicle, like the sedans, et cetera? How shall we think about the different positioning of the BEV versus EREV? My second question is regarding your R&D spending split going forward. For second half of this year, for next year, and going forward, how much portion is going to be spent on the BEV, how much on the EREV, and how much on the autonomous driving? Let me translate my questions quickly. [Non-English content] Paul. Let me take the first question. This is Kevin. In the future, when we have a BEV and an EREV at the same time, actually, we are not differentiate these two based on size or car form factor. Basically, all these two driving powertrains, we will, based on these developer cars to cover the price band from RMB 200,000-RMB 500,000, and each will have a different size of cars designed for family users. I think the key difference between these two are based on the customer's preference. If they are more concerned about the BEV's range anxiety and they don't have access to good charging infrastructure, we believe they will choose EREV. If they have a good charging infrastructure, they will choose BEV. That's our viewpoint. Yeah. For the R&D expenses, we still want to keep our original guidance from now on to 2023 to $1 billion. Yeah, that will cover the vehicle, the coming models, and also the ultimate driving and also some area we want to do in-house in the next two to three years, and also some investment on the R&D side for the future intelligent cabin side. Thank you, Paul. Thank you. Thank you. Once again, as a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound or hash key. Once again, please press star one on your telephones. Our next question is from the line of Yingbo Xu of Credit Suisse. Please go ahead, your line is open. [Non-English content] My first question is, what's our pricing strategy? Are we trying to maintain our high margin, or maybe we have more flexibility in the pricing items? The second question is that considering a lot of newcomers in this sector, maybe 2023 is a period that a lot of newcomers join in, and they launch new models. By the year 2025, maybe the market share is going to be concentrated again. How we expect the next three or five years competition, like technical products and also actors. Could you give us some colors? Thank you. Thank you, Yingb o. This is Kevin. First of all, about the pricing. From our point of view, for each of the product, we design it based on a price point. Unless we see the competitiveness issue, otherwise, we'll not alter the price point of this product. I think, to answer your question in another way, to gain more volume, definitely, we'll launch product cover wider price band. As we mentioned, that in the future, our product will cover between RMB 200,000- RMB 500,000. That's not to say we are going to reduce the price of some of our product. It's we are going to design different product to cover different price point. That's our philosophy. Also, by the way, the market size of between CNY 200,000- CNY 500,000 is increasing. That's probably the only increasing segment, the volume is increasing. About the future competition, starting from 2023, I think we will stick to our three key choices. The first one is that we compete in the overall PV market. That's why we believe we have to solve the range anxiety issue. That's one of the core value we want to deliver to our customer. That's why you see we already have a EREV solution, and we are going to have our next generation EREV solution to completely solve the range anxiety issue for our customer. This is our midterm, long-term strategy. We'll continue to launch EREV products. On the other hand, we also see the opportunity to solve the range anxiety issue with the high-power charging solutions. That's why we have this new Whale and Shark platform. This is the first choice. The second choice is our target customer choice. We want to focus only on the family users. Yeah. We see this is a growing demand segment. Yeah. When we design our car, we want to design the car catering the needs of all the family members. Yeah. The third thing is that we will continue to focus on the autonomous driving solution development and also the smart cabin solution development. These three things are the fundamental building block of our product competitiveness. We believe we'll stick to these three key things. Yeah. Thanks, Kevin. That's very helpful. Thank you. Thank you. As we are reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Ms. Janet Zhang, please go ahead. Thank you, Annie. Thank you once again for joining with us today. If you have any further questions, please feel free to contact Li Auto's investor relations team. That's all for today. Thank you and have a good one.