Ladies and gentlemen, thank you for standing by for Li Auto's Q3 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Kobe Wang, the Head of Capital Markets of Li Auto. Please go ahead, Kobe. Thank you, operator! Good evening and good morning everyone, welcome to Li Auto's Q3 2023 earnings conference call. The company's financial and operating results were published in a press release earlier today, and are posted on the company's IR website. On today's call, we will have our Chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tie Li, begin with prepared remarks. Our president, Mr. Donghui Ma, and Senior VP, Mr. James Liangjun Zou will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made as the safe harbor provision 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 different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. SEC and the Hong Kong Stock Exchange. The company doesn't assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Li Auto's earnings release and this conference call include a discussion of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. Please refer to Li Auto's disclosures and comments on the IR section of our website, which contain a reconciliation of unaudited non-GAAP measures comparable GAAP measures. Our CEO will start his remarks in Chinese. There will be English translation after he finished all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead. 大家好，我是李想，欢迎各位参加今天的业绩电话会议。2023年第三季度，尽管中国新能源汽车市场竞争激烈，但是理想汽车仍然凭借强大的产品力和出色的执行力，保持了强劲的增长势头。第三季度总交付量超过105,000，105,000辆，较去年同期增长3倍，再次创下单季度交付记录。九月底，我们完成了第50万辆理想汽车的交付，成为最快达成这一里程碑的中国汽车品牌。在十月，我们更是跨过了单月交付40,000辆这一重要的里程碑。根据中期数据，第三季度，理想L9蝉联全尺寸SUV销量冠军，理想L7和L8两款车分别稳居中大型SUV销量的前二。理想汽车在20万元以上新能源汽车市场的销量保持前三，市占率持续提升，从今年第一季度的10.9%，到第二季度的13.7%，一直提升到今年第三季度的15.4%。相信理想L系列持续强劲的销售表现和明年大量纯电动车型的交付，将支持理想汽车在2024年进一步大规模替代传统燃油车。财务表现方面，快速增长的规模推动成本持续降低，公司财务状况健康稳定。第三季度收入同比上涨271.2%，达到364.8亿元人民币，净利润攀升至28.1亿元人民币，自由现金流达到了132.2亿元人民币，均再创历史新高。截止第三季度末，我们的现金储备已经达到885.2亿元人民币。我们的健康经营能力将撑理想汽车长期坚定地投入研发，包括大家看到的5C纯电动车大幅领先的充电能力，便是过去这么多年来研持续投入的体现。在生产方面，十月，理想汽车的常州制造基地完成了产能升级，为第四度进一步的生产爬坡做好准备。在供应链管理方面，我们通过优化管理策略，升级管理流程，加强与供应商的高效协同，不断打破零部件供应的瓶颈。预计第四季度我们的总交付量将达到125,000至128,000辆。接下来再说说重要的理想MEGA。支持充电12分钟，续航500公里，有着领先一个时代的造型设计的理想MEGA，获得了超出预期的市场关注和认可。理想MEGA，理想MEGA极致的大空间，更好地满足中国大家庭的全家出行需求，其以纯电动车属性和谐一致的外形，也让MEGA实现了全球MPV中最低的风阻系数0.215。... It perfectly balances energy consumption and space. Benefiting from the 800-volt Platform and 5C charging rate, the Li MEGA's peak charging power exceeds 520 kW, making it the fastest-charging mass-produced passenger vehicle. The Li MEGA will be officially released in December, with show cars entering stores in January 2024, and user deliveries starting in February after the Spring Festival. For more details about the Li MEGA, everyone can look forward to our December launch event. At the same time, we continue to expand the construction of the 5C high-voltage charging network. As of now, Li Auto has built and operated 130 Li Auto supercharging stations along national highways. By the end of this year, we will complete the construction of 300 highway supercharging stations, covering the Beijing-Tianjin-Hebei, Yangtze River Delta, Greater Bay Area, Sichuan-Chongqing and other four major economic zones. In the future, we will accelerate the deployment of the Li Auto supercharging network, while densely covering the national highway network, we will promote the layout of urban supercharging stations to enhance users' full-scenario recharging experience. In terms of intelligent driving, the R&D progress of City NOA on AD Max is smooth, and we plan to push the official version of AD Max 3.0 software to users by the end of the year, providing full-scenario NOA capability. At the same time, we will push the official software of AD Pro 3.0 to users in the first half of next year, and some algorithm capabilities of AD Max will be released on AD Pro. We are confident to become the first tier of intelligent driving that has been market-validated in the first half of next year. In terms of the direct sales network, as of October 31, 2023, Li Auto has 372 retail centers nationwide, covering 133 cities. In the Q4, we will continue to accelerate the speed of store expansion, with the goal of having more than 400 stores by the end of this year, covering 140 cities nationwide, further helping Li Auto's market share in China's new energy vehicle market. Finally, I want to share with everyone our achievements in ESG. At the end of September, Li Auto received an AAA rating from MSCI ESG, the global highest rating, the first, the first Chinese car company to receive an AAA rating. This rating fully affirms our efforts in corporate governance, product quality and safety, product carbon footprint, clean technology development, organization and talent, and other aspects. In the future, we will adhere to the values of exceeding user needs and creating the most excellent products and services, and continuously challenge the limits of growth. Next, please welcome our CFO Tie Li to introduce our financial performance in detail. Hello, everyone, and welcome to today's earnings conference call. In the Q3 of 2023, despite the intense competition in China's NEV market, we maintained strong growth momentum propelled by our compelling product lineup and strong execution. Total deliveries for the quarter surpassed 105,000 vehicles, almost four times the volume for the same period last year, setting another new quarterly delivery record. By the end of September, we have delivered our 500,000 Li Auto vehicles, becoming the fastest Chinese emerging new automaker to reach this benchmark. Moreover, in October, Li Auto achieved another new milestone with over 40,000 monthly deliveries. According to the insurance registration data of China Automotive Technology and Research Center, Li L9 maintained its position as the full-size SUV sales champion during the quarter, while L7 and L8 continued to occupy the first and second spots in the large SUV market, respectively. We remained one of the top three NEV brands priced over CNY 200,000 in China, while our market share continued to grow, reaching 15.4% in NEV brands priced over CNY 200,000 in China, compared with 10.9% in the Q1 and 13.7% in the Q3. We believe that our L Series robust growth momentum, together with deliveries of our upcoming BEV models next year, will enable us to accelerate the large-scale transition from traditional ICE vehicles in 2024. Turning over to our financial performance, our rapid scale growth has driven continued cost reduction, resulting in steady improvements across multiple financial metrics. Total revenues for the Q3 were RMB 34.68 billion, up 271.2% year-over-year. Our net income and free cash flow increased to RMB 2.81 billion and RMB 21.32 billion, respectively, both hitting new historical highs. Notably, our cash position reached RMB 88.52 billion as of the end of the Q3. Our healthy operations reaffirms our strong operational capabilities, underpinning our long-term firm commitment to R&D. Our market-leading charging capability for 5C BEVs is just one great example of our exemplary achievements made through R&D investments. With respect to production, in October, our Changzhou manufacturing base completed its capacity expansion and is now well positioned for its production increase in Q4. In terms of supply chain management, we continue to break through the component supply chain bottleneck by enhanced supply chain management strategies, improved processes, and more efficient collaboration with our suppliers. We expect total deliveries in the Q4 to be between 125,000-128,000 units. Now, I would like to talk about Li MEGA. Li MEGA can gain up to 500 kilometers of driving range with a 12-minute charge, and features an industry-leading silhouette. Its market reception has exceeded our expectations. Li MEGA's extremely large interior space meets the travel needs of large Chinese families. At the same time, its unique body style and silhouette are intended to reach the perfect balance between interior space and energy consumption. It is the most aerodynamic MPV in the world, with a drag coefficient of only 0.215. Based on our 800-volt BEV platform, Li MEGA is capable of 5C charging, with a peak charging power exceeding 520 kilowatts, higher than any other passenger vehicle in production in the world. Li MEGA is targeted for launch in December 2023. Showroom vehicles are scheduled for debut at our retail stores in January 2024, and deliveries will commence in February. We will share more details about Li MEGA during our product launch event this December. In the meantime, we have been making progress with our 5C supercharging network expansion. To date, we have built and started operating 130 supercharging stations along highways nationwide. We expect to establish 300 highway supercharging stations by the end of this year, covering four major economic zones, including the Beijing-Tianjin-Hebei economic belt, the Yangtze River Delta region, and the Greater Bay Area, and Sichuan-Chongqing economic belt. Going forward, we will further accelerate the rollout to increase nationwide highway coverage, while also actively building urban supercharging stations, thereby greatly improving users' energy replenishment experiences across all scenarios. Moving on to autonomous driving. Our City NOA and on our AD Max platform continue to progress smoothly. We expect to push the official version of AD Max 3.0 by the end of this year, with full-scenario NOA function. Meanwhile, the AD Pro 3.0's official version will be released in the first half of next year. By then, part of AD Max algorithm capability will also be available on AD Pro. We're confident that Li Auto will become a market-proven first-year player in the autonomous driving market in the first half of next year. Turning to the development of our direct sales and servicing network. As of October 31, 2023, we had 372 retail stores in 133 cities. Moving to the Q4, we will continue to accelerate our network expansion, aiming to cover over 400 stores across 140 cities nationwide, further increasing Li Auto's market share in China's new energy automotive market. Last but not least, I would like to share some details regarding our accomplishments in ESG. In September, our company was upgraded to the highest triple AAA rating by MSCI ESG research, making Li Auto the first Chinese automaker ever to receive this rating. The rating validates our steadfast efforts across corporate governance, product safety and quality, clean tech development, and organization and talent, among other areas. Moving forward, we'll continue to uphold our value proposition of providing outstanding products and services that exceed our family users' needs, as we constantly push the limits of growth. With that, we'll turn it over to our CFO, Johnny, for a closer look at our financial performance. Thank you, Xiang. Hello, everyone. I will now walk you through some of our 2023 Q3 financials. Due to time constraints, I will address financial highlights and encourage you to refer to our earnings press release for further details. Our total revenues in the Q3 were RMB 34.68 billion, or $4.75 billion, up 271.2% year-over-year, and 21% quarter-over-quarter. This included revenue from vehicle sales, RMB 33.62 billion, or $4.61 billion, up 271.6% year-over-year, and 20.2% quarter-over-quarter. Mainly driven by increased vehicle deliveries. Revenue from sales and services—revenue from other sales and services were RMB 1.06 billion, or $145.7 million in Q3, growing 258.7% year-over-year and 56.2% quarter-over-quarter. The increase was mainly due to the increased sales of accessories and provision of services in line with higher accumulated vehicle sales, as well as increased sales of charging stores in line with higher vehicle deliveries. Cost of sales in the Q3 was RMB 27.03 billion, or $3.71 billion, up 231.3% year-over-year and 20.6% quarter-over-quarter. Our gross profit in the Q3 was RMB 7.62 billion, or $1.05 billion, growing 546.7% year-over-year, and 22.6% quarter-over-quarter. Vehicle margin in the Q3 was 21.2%, compared with 12% in the same period last year, and 21% in the prior quarter. Excluding the impact of inventory provision and the losses on purchase commitments related to Li One in the Q3 of 2022, the vehicle margin remained stable over the Q3 of 2022. Gross margin in the Q3 was 22%, compared with 12.7% in the same period last year, and 21.8% in the last quarter. Operating expenses in the Q3 were RMB 5.31 billion, or $727.1 million, growing 60.2% year-over-year and 15.1% quarter-over-quarter. R&D expenses in the Q3 were RMB 2.82 billion or $386.1 million, up 56.1% year-over-year, and it's 16.1% quarter-over-quarter. Primarily driven by increased employee compensation as a result of our growing number of staffs, as well as increased expenses to support our product portfolio expansion and technology advancement. SG&A expenses in the Q3 were RMB 2.54 billion or $348.7 million, up 68.8% year-over-year and 10.2% quarter-over-quarter. Primarily driven by increased employee compensation as a result of our growing number of staff, as well as increased rental expenses associated with our sales and service, servicing network expansion. Income from operations in the Q3 was RMB 2.34 billion or $320.6 million, compared with RMB 2.13 billion loss from operations in the same period last year, and growing 43.9% from RMB 1.63 billion income from operations in the last quarter. Net income in the Q3 was CNY 2.81 billion, or $385.5 million, compared with CNY 1.65 billion net loss in the same period last year, and increasing 21.8% from CNY 2.31 billion net income in the Q3 of this year. Now turning to our balance sheet and cash flow. Our cash position remains strong and stood at CNY 88.52 billion or $12.13 billion as of September 30, 2023. Net cash provided by operating activities in the Q3 was CNY 14.51 billion or $1.99 billion. Free cash flow was RMB 13.22 billion, or $1.81 billion in the Q3. Now for our business outlook. For the Q4 of 2023, the company expects the deliveries to be between 125,000 and 128,000 vehicles, representing an increase of 169.9%-176.3% from the Q4 of 2022. The company also expects Q4 total revenues to be between RMB 38.46 billion and RMB 39.38 billion, representing an increase of 117.9%-123.1% from the Q4 of last year. This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which is subject to change. This concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you. Thank you. If you wish to ask a question, please press 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 are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can reenter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translation. Your first question comes from Tim. Pardon me, one moment. Tim Hsiao with MS, please go ahead. 感谢管理层接受我的提问啊，也首先感谢公司三季度业绩十分亮眼。我有两个问题，那第一个问题有关促销和汽车毛利率。因为公司三季度的一个汽车毛利率呢，较整体市场一起来的高。但我们也看到了，这个理想汽车从三季底开始加大促销的力度，那整体的一个促销折扣在四季度好像也没有明显的收窄。那随着年底去看，对标竞品的一个集中上市啊，就是目前单车的促销优惠，就管理层来看，是否会成为一个常态或在年底进一步的加大？那我们怎么看待对于四季度以及明年单车毛利率和盈利的一个影响，那这个三季度毛利的表现是否能够持续？这是第一个问题。 So my first question is about the margin, despite the quarter margin beat, Li Auto has been scaling up the vehicle discount and benefits since the late the quarter, and most of the promotions seemingly continue in Q4. As there are more competitive models coming to the market in the following months and the top team to take on the Li Auto, would the company consider to respond with more aggressive promotions or spec upgrade to your current lineup? And would that affect, the Li Auto's vehicle margin in Q4 and beyond? So in short, should we still consider 20%+ a reasonable and sustainable level for vehicle gross margin against such a tough competition backdrop? That's my first question. Thank you. Thank you, Tim, this is Johnny. I think, for every quarter and every year, we will take a full consideration between sales volume growth and the gross margin when we plan our sales policy and promotion policy. And also every quarter, our sales policy will also at our supply chain effort, which absorb some of the sales policy promotion. So I still want to emphasize the from the company's operation side, each quarter and every year, we want to keep our gross margin above 20%. We believe that will be a healthy margin to keep enough money on hand to invest on either R&D and also the service network expansion for the future. Thank you. Thank you, Jason. So my second question is about autonomous driving. Li Auto is now attaching greater importance to the development of smart driving and planning to increase the overall investment. So could the management team help us to quantify Li Auto's investment plan in autonomous driving? Like how much you are going to spend in 2024 and 2025, and how many people are you planning to hire? And in the meantime, what would be the best way for investors to track the progress? For example, when will Li Auto activate the City NOA function to all public users across the cities, and will you keep offering such function for free after more sizable investment this year? That's my second question. Thank you. Hello, Tim. I am Donghui Ma. I will answer this question. First, our company has always attached great importance to investments in the areas of intelligence and intelligent driving. Then, at this year's autumn strategy meeting, we conducted in-depth discussions and reached a consensus. In the future, we will take leading in intelligent driving as the goal of our core strategy. In terms of investment, currently our autonomous driving personnel is about 900 people. Our plan is that next year, the intelligent driving R&D personnel number will exceed 2,000 people. In 2025, it will exceed 2,500 people. With the increase in talent scale and talent density, we will simultaneously advance the R&D of products and technologies. On one hand, we will launch multiple models with full-scenario NOA, including highway and city development. On the other hand, we will increase the R&D efforts for forward-looking technologies, including intelligent driving AI algorithms. In terms of the amount, in the future we will increase, including vehicle testing, computing power as well as personnel R&D investments. We have sufficient cash reserves and cash flow, which can support the funding required for this intelligent driving. In terms of project progress, just now Xiang Li also mentioned. We plan to push to all AD Max users by the end of December this year the official version of AD Max 3.0, providing full-scenario NOA functionality. And uniformly adopt the first-class level. Additionally, we will upgrade the parking functionality. At the same time, in the first half of next year, for the Pro users, we will also push AD Pro 3.0 version's functionality. And we will release some algorithms of AD Max on Pro. We believe that its Pro assisted driving capability will also improve significantly. Then we have confidence in becoming, after market verification, the first echelon in the first half of next year. Regarding this standard configuration issue, we will always adhere to intelligent driving as a standard configuration. Because standard configuration allows us to have the largest intelligent driving fleet in the country, letting us have more training mileage data. So much training mileage data can promote the iterations of our large model algorithms. Okay, thank you. Donghui Ma. First of all, on the strategic level, the company has always been very focused on investment in autonomous driving. In the fall, strategy summit of our company, we had a thorough discussion around autonomous driving and reach consensus to make making smart autonomous driving leading in the market our core strategic goal. So the company will continue to increase our investment in autonomous driving. At this point, the R&D team for autonomous driving is around 900 people, and it's expected to reach about 2,000 by the end of 2024, and over 2,500 by the end of 2025. As the scale and talent density of our R&D team growth, we will develop technology as well as product at the same time. On the one hand, we will continue to deploy our AD products across multiple vehicle lines, across multiple scenarios, deploying NOA in multiple scenarios. On the other hand, we will continue to invest in AI algorithms of autonomous driving as well as other cutting-edge technology. In terms of investments, we will continue to increase the amount of investments in vehicles, in testing, computing power and personnel. Our ample cash reserve and cash flow will be a very strong support for our continued investments. In terms of progress, as Xiang Li mentioned earlier, we plan to deploy AD Max 3.0 software on all of our Max, our vehicles equipped with AD Max, providing full- scenario NOA features using the same BEV architecture, and we will also be adding valet parking feature to our AD Max users. At the same time, in the first half of 2024, we will be releasing AD Pro 3.0 to our Pro users. Part of the AD Max algorithms will be deployed on AD Pro, and the capability of autonomous driving will also be significantly improved. We're confident to become one of the top tier player, tier- one players in the market that is proven by the market. In terms of product lineup strategies, we will continue to make AD standard on all of our vehicles, which allows us to have the largest training fleet of autonomous driving vehicles in the country, and also more training mileage, which will accelerate the deployment and iteration of our foundational model algorithms. Thank you very much for sharing all the details. Super helpful. Thank you. Your next question comes from Tina Hou with Goldman Sachs. Please go ahead. Okay, so thank you, management, for taking my question, and congratulations on a very strong set of results. So I have two questions. The first question is, as we expand to more cities, how do we view the difference in user demand between high-tier cities and low-tier cities? For extended-range or pure electric models, the differences in their existence, then how Li Auto adjusts its own marketing strategy to better capture these differences in demand. Then the second question is about the supply chain and our cost reduction plans. May I ask, has the current supply chain capacity bottleneck been completely resolved? Additionally, does our supply chain cost reduction have targets and specific plans? For example, in the future, related to this, also our capacity and capital expenditure plans for the next two years. Thank you. The first one is, as we are expanding our footprint into more and more cities, so how does management view the different type of customer need or demand in higher tier city versus lower tier city, for both EREV product as well as BEV product? And how does Li Auto plan to adjust its, marketing and sales, strategy to better capture these, differentiated demand? The second question is regarding your supply chain as well as cost reduction plan. So, wondering if our supply chain bottleneck has been completely resolved at this point, and how do we, going forward, how do we best manage the supply chain to, to be able to fulfill our growing demand? Related to that is, do we have any cost reduction plans and targets over the next few years? And lastly, over the next two years, what is our capacity plan as well as our CapEx guidance? Thank you. Okay, Tina, this is James, and I will take your first question. And In the SUV market, priced over 300,000 CNY, our market share in our well-developed cities reached 50%, and in some of the cities. While our average market share across the whole market is less than 20%, which means there is plenty of rooms for our future growth. Overall, we will continue to focus on first tier, new tier, new first tier, and second tier cities, aiming to increase our market share in these top-tier cities. Currently, we haven't reached market saturation in first-tier and second-tier cities, and we will have huge growth potentials in those cities. In the 300,000 CNY and higher SUV market, the monthly sales of BBA are approximately 55,000 units in total. And if we consider the second-tier premium and automotive, brand, which including BBA and the other brand, and they are around 90,000 units. Which means we have ample room to achieve our next stage of growth. Additionally, we have begun to accelerate our deployment in third-tier cities and speed up our store openings in certain key fourth-tier cities. Let me give you some numbers. As of today, we have more than 300 retail stores nationwide, among which there have already more than 100 retail stores deployed in the third-tier and fourth-tier cities. According to our current progress, we expect to have more than 110 retail stores in third-tier and fourth-tier cities by end of this year. I hope I have answered your first question. I will hand over to Mr. Ma for the second one. Uh, first of all, regarding supply chain bottleneck, all of the issues that we have encountered before have all been successfully resolved. As opposed to, regarding new models and our sales target for next year, we have made ample preparations across not only whole vehicle production capacity, but also part supply. We have made medium to long-term supply chain strategies to make sure that our supply chain is resilient over time. On cost reduction, our overall view is that OEMs should establish long-term and stable partnerships with our suppliers to achieve a mutually beneficial relationship for the two sides. For the short term, our short-term cost reduction measures will mostly be focused on business measures through platformization, volume aggregation and cost accounting to drive our procurement costs to a reasonable level. For the medium to long term, we will look at the entire value chain from end to end to find ways to increase efficiency and reduce costs, including from product R&D, technology innovation to drive down costs. At the same time, we will also work with our suppliers to help them digitize and industrialize, to increase the efficiency in the production process and reduce quality-related costs. In terms of overall vehicle production capacity, we have two manufacturing base in Beijing and Changzhou, three production lines in Changzhou dedicated to EREV models: L9, L8, and L7, as well as L6, which will be launched next year. In Beijing, there is one production line dedicated to our BEV products. Our production capacity is sufficient to meet the needs for sales and deliveries for the next two years. Hello, good morning. Thank you very much, management, for the clear answers. Your next question comes from Jiong Shao with Barclays. Please go ahead. Thank you very much for taking my question, and big congrats on the very strong results. I mean, competition has been on the top of the mind for many investors, with reason the launch by Huawei AITO of the sort of the larger SUVs, and that SUVs also EREV, and also the Denza, the BYD DENZA brand is launching some of the large SUVs as well. I was wondering, could you share with us your thoughts around competition, around customers buying behavior? You talked about market share earlier. Are you seeing any impact yet on market share and, and on your market positioning? Thank you. 我自己来翻译一下吧。我的问题就是关于竞争啊，因为，华为和，问界的这个M7和腾讯的一些新的产品，很多投资人都非常担心或者在考虑这个竞争格局以后会不会对我们理想汽车有任何的变化？谢谢。 John, this is James. I will take your question. So although this year the competition in the new energy vehicles market is relatively intense, we once again achieved the impressive sales results. Our models retained strong sales momentum, and each model is a blockbuster. Till now, the delivery of all of four models, including L9, L8 and L7, also has exceeded 100,000 units. And just like yesterday, our L7 has exceeded 100,000 units in less than 10 months, because this product launched in March this year. Our... And also our sales have achieved a steady and continuous growth while our share in the NEV market priced above RMB 200,000 continued to rise from 10.9% in the Q1 to 15.4% in the Q3. And I can give you another number, like in last month October, our market share is already more than 17%. At present, the penetration rate of the new energy vehicle market had exceeded 35% across in the innovation diffusion gap to entering the early mass period. The concentration in effect of leading auto companies will become increasingly evident, and our accumulated user base and the market share will support our further increase in delivery volumes and market share gains. And I hope I answer your questions. Thank you very much, James. Thank you。 Your next question comes from Yingbo Xu with CITIC Securities. Please go ahead. 祝贺管理层取得，呃，优异的成绩。我有两个问题，第一个问题呢，其实是关于MEGA，我们看到了一些宣传里面在讲技术的领先性，尤其是风阻，那么我们最终怎么去平衡这种技术的领先性和市场营销和消费者认知之间的一个关系，更好地去吸引消费者？而且后面我们看到可能MEGA会有一个盲订，那这种盲订怎么能够吸引到消费者来突出卖点？My first question is how we balance the technological advantage, especially we mentioned about the low drag coefficient and balance that between... Consumer recognition for market management, especially for blind order. 哎，英博，我来回答这个问题，理想。对，我觉得这Mega在传统汽车价值体系，然后评估下的整车安全，然后功能配置，还有舒适性等方面，以家庭用户的需 求为标准，我们肯定可以做到行业最顶尖。对，但我们认为这还是不够的。除此之外，我们所有的纯电动车产品都要有三个重要的突破。第一个是充电的突破，12分钟补500公里，并且在高速上大规模建充电站，从而让任何一个消费者都可以放心地购买一辆纯电动车，我觉得这是第一点。然后第二点是空间的突破。借助整个高压电动化结构的重设计，我们的任何产品都将是同级别车里空间最大的，是高一个级别的大。对，同样尺寸，高一个级别的大。对，突破了传统，然后的外形尺寸，这将给家庭用户带来最好的空间体验。第三是造型的突破。我们所有的纯电动车的造型设计都将重新定义各个级别，无论是MPV、SUV还是轿车，我们会把来自未来几十年后的这种设计直接放在今天的电动车上，把大家认为概念车里才会出现的造型和理念放在今天的电动车上推出，从而把我们用户最重要的三个价值进行一个更高维的突破。充电带来的安全感，空间带来的价值感，以及领先的造型带来的向往感。对，我们所有的纯电产品都将坚持这三个重要的原则。 ... talk about MEGA and all of our BEV products. In terms of traditional values, including safety features and comfort, MEGA will continue to focus on family's needs and make sure that we will be the absolute best or among the absolute best in the industry. On On top of that, all of our BEV products will have three breakthroughs. The first one is breakthrough on charging experience. It can provide up to 500 kilometers of range with 12 minutes of charging, and we will also be deploying large-scale charging stations on major highways in China, so any consumer can buy one of our BEV vehicles with total confidence about their charging experience. And secondly, is a breakthrough on interior room. With our high-voltage, pure electric architecture, we will be able to completely redesign vehicle architecture to make sure that the interior space of our products are always the biggest among their segments, even reaching the level of next segment up, which provides the best interior experience for family users. Thirdly, all of our products will have a breakthrough in terms of styling and body style. All of our styling will be redefining each one of the traditional categories, whether it's MPV, SUVs, or sedans. We will be bringing design language from decades down the road, and to launch them our existing vehicles as if they come, they're only concept vehicles, but they're actually production vehicles that we will launch into the market. Through these three breakthroughs, we'll be able to provide three very unique value to our customers. The first one is the sense of safety from charging or the experience of charging, and the second is the sense of value from a very large interior space, and third is the sense of longing from very exciting styling. And all of our BEV products will be following these three principles. 好的，谢谢，谢谢蒋总。我的第二个问题其实是接着这个问题来的，就是我们其实最近在观察到，一系列的汽车公司推出的产品具备比较强的同质化，更多更大的屏幕，然后更好的这个人机交互。实际上我们也在想，未来大家对这个竞争的担心，一方面是产品同质化的担心，哦，然后更多的体现在财务上。我不知道以上您讲的这三点，就是关于充电、空间和造型，是不是我们对于差异化竞争最最核心的体现，是否还有什么更多的信心给到投资者，哦，让我们对于明年的价格和盈利上更大的信心。啊，My second question is how we see, we see that the EV product become more and more homogenization, and more larger screens, more smart interactions and controls, how we make EV product more differentiation? Thank you. 好，我来回答这个问题。对，那我觉得其实我刚才说的已经挺全面了。对，然后这个如果能够在用户的最核心的价值方面，因为我们讲的不是说一个我们所做的最关键的事情，并不是说做一些量化的改变，对，然后因为量化的改变其实已经是一个竞争的基础了，比如更便宜的价格，更高性价比，更多的配置，然后更多的屏幕，更多的功能。对，那我觉得我们实打实地，然后是希望，然后在三个用户最关键的价值层面，然后实现一个更高维度的突破。对，那我觉得这个其实是我们最重要的。比如我还是说呢，就是我们5C的充电，对，然后我们整个充电速率看整个周期，一直到我们充到然后85%，对，我们的最低速度都超过了整个行业目前表现最好的人的最高速度。对，那我觉得这就是，然后我们要树立出来一个全新高度的一个门槛。对，我觉得这是理想汽车持续地然后在产品研发和这种价值上进行创新，从而持续地给予我们的家庭用户然后带来更多的价值。我觉得除此之外，没有什么捷径。 I think our, my earlier response covered a lot of your question, and I just want to emphasize that our focus has always been on core user value. What makes the most creates the most value for our users? I think with the intense competition, as you mentioned, incremental changes are definitely taken for granted, whether it's lower price, whether it's more features or more screens, these are things we'll definitely do well in. But, when we think about competition, we think the real way to stand out is to compete on a higher dimension and to really focus on the three values that consumers care about most. And taking 5C charging as an example, in our real-time, real-world charging testing, even when the battery state of charge reaches 85%, it can still have a charging power of over 300 kW, which is even higher than the maximum charging rate of many other competitors. This really established a new standard for the industry, and that is only the result of years of innovation through products and R&D in our efforts, and that is something we will continue to invest in and continue to improve and create value for our users. 非常清晰，谢谢蒋总。 Your next question comes from Ming Hsun Lee with BofA. Please go ahead. 谢谢，关于以前的，让我这边有两个问题，那第一个问题是 目前的一个品牌的充电站跟充电桩，已经在国内快速建设。请问，公司在城市内以及高速公路上的充电站布局，会有什么不同？另外，刚才肖总也提过了，包括这个充电技术，充电，但是还是想，再了解一下咱们的这个产品。如果说从这个充电技术和体验，公司希望能够跟竞争者，如何奠定我们的差异化。所以让我翻译一下我的问题。So currently, Li Auto has built a lot of charging stations in China. So, what is the difference on charging stations within the cities and also on the highway? And in terms of your charging technology and also the user experience for your BEV, how do you want to differentiate from your competitor? Okay, Min, thanks for your question. This is James. I will take your question. At present, in urban areas, whether it is public charging or home charging, consumers have good access to charging facilities that provide a decent charging experience. Therefore, for BEVs, we must first tackle the most critical pain point and focus on fulfilling the need for rapid energy replenishment during highway long distance travel. Through the construction of large-scale charging stations along the highways, coupled with the experience of charging for 12 minutes to support 500 km driving range, we strive to eliminate consumers' worries around BEV purchases. Furthermore, with the launch and the delivery of the BEVs next year, we will also start the construction of charging stations in cities. In addition, with respect to product experience, we will consider both the hardware and the software as a whole product. For example, when the Li Auto car owners is looking for a charging pile, the status of charging gun and charging pile can be checked on the infotainment system in the car. We also provide plug- and- play, password-free payment among those services to provide a better experience for our users and for BEVs, the batteries can be remotely preheated. We think from user experience perspectives, aiming to help our users have a better charging experience. Okay, this is my answer. 好的，谢谢。那我这边的第二个问题呢，是关于这个EV市场的这个新对手，因为，我们其实都算是EV这些是一个1.0的这个阶段，那，其实包括去年这个华为开始，它也培养很多这个伙伴，那，其实在市场上逐渐这个销量越来越好，那包括明年的这个小米汽车，也要进入市场，那，就是想要了解管理层认为，就是中国的这个电动车企业，到时候在国内，会是一个什么格局。因为我们其实之前也讲过，说，我们要一个比较高的这个销量，希望能够达到比如说150万台这样，那您觉得就是最后中国企业的格局是什么？那如果说对这个电动车企业来讲，能够活下来或者运营得好的话，关键的指标又是什么？那我也再问一下这个问题。So, Li Auto, and also some other EV companies are first generation we start up in China. But currently we are seeing more and more competitive with peers to enter the market. For example, Huawei cooperate with a lot of partners in China and also start to bring some good sales. Xiaomi will also launch a car in 2024. So in your view, for the longer term, how do you think of the market dynamic in China for EV the EV industry? And for auto companies, how do they, how can they survive or operate well? How to think, what is the most important in your view? Thank you. Okay, I am Xiang Li. I will answer this question. I think the first thing that everyone may be more interested in is the current situation, Huawei's products and our competition. Yes, our internal understanding is now actually very consistent. Our attitude toward Huawei is 80% learning, 20% respect, and 0% complaints. Yes, this is our internal very unified attitude. As a startup, we are able to reach a CNY 100 billion revenue scale and encounter such a technology role model that once achieved several trillion CNY in revenue. Actually, I think we are still very lucky and excited. Yes, so I think this is our real attitude. Yes, I think this is the first point. For the second point, if we internally diagnose, if we want to achieve a scale of over 1 million units, yes, in today's such intense competition, I think it is actually three levels. This is three dimensions, nine levels of competition. I think first, at the enterprise consensus level, it must include our enterprise culture, our user brand, and our enterprise strategy. Yes, the synergy of these three levels must be done very well. 对，我觉得第二个层面是我们面向消费者的业务层，包含我们的产品和研发，我们的销售和服务，然后以及我们的供应和制造。那这三个层面的协同也要做得非常的好。对，那第三点，然后也是我们过去一直非常重视的，就是我们的整个职能体系的建设，对，那包含我们的人力和组织，然后这个IT和流程，还有我们的财经和公司的运营。对，那我觉得从这9个维度啊来看，然后要想做到一个，然后超过一年100万辆规模的时候，那这9个点其实它会形成一个短板理论，就是你每一个方面都要做得然后足够的好的话，我觉得才能够然后胜任一家，然后每年然后销售超过100万辆的这样的一个，然后高度竞争下的智能电动车企业，我觉得这是我们自己的一个很基础的一个认知。 First of all, I think when many people are really asking is, how do we look at the competition from Huawei? And this is actually a question we have broad consensus across the company. When we look at Huawei, we 80% of what we're thinking is how do we learn from them? 20% is really respect, and there's zero complaint, in fact, because as we become a company that has, we were still a startup company, and as we reached the CNY 100 billion revenue benchmark, road milestone, we're actually very lucky and impressed to have a role model, which has done businesses on the scale of CNY 1 trillion. So we're very excited to have Huawei along the way. And when we look internally, in terms of how we want to weather the storm and stand out in intense competition, we look at really 9 areas across three broad categories. The first category is really the consensus across the company, and that includes culture, brand, consumer brand, and strategy. The second category is our business operations, which covers from R&D, sales and services, supply chain, and manufacturing. Lastly, is back-office functions, which includes HR and organization, IT and processes, and finance and operations. To become a company that can really handle CNY 100 billion of revenue, we really need to excel in all areas. There can't be any one shortcoming, and that will be the core foundation for any company that wants to reach this scale of 1 million unit sales annually. 好的，谢谢。 Your next question comes from Jane Cheng with CICC. Please go ahead. 哎，好的，感谢接受我的提问。那我这边再跟进问两个问题，第一个是，相对短一点，那关于，MEGA的整体的一个生产的一个爬坡和盈利性，早期的盈利性。那北京纯电工厂这边可能伴随MEGA上市开始投产，我们预计这边多久能够，爬升到一个相对比较稳态的生产？然后尤其是，MEGA既然它可能定价比较高，我们相信可能达到稳态的盈利水平也会比较高，但是相对这个投产这个初期，我们怎么看MEGA的一个盈利水平，会否对这个可能2024年的一二季度的毛利形成一个拖累？这是第一个问题。然后第二个问题是关于这个2024年的一个新车规划，尤其是这个纯电动的几款车型，后续的MEGA，后续的几款车型，我们也是了解，有这个包括像Whale，Shark两个平台，可能前者对应这个更大的这个车型啊。那，那关于他们，明年的这个可能产品的定位，包括可能有一些上市的节奏和交付的时间，目前有没有更多的信息可以分享？主要是两个问题。 So my first question is about, short term, a question regarding the production ramp up and profitability of MEGA. As our Beijing BEV platform will be put into production along with the launch of MEGA. How long do we expect it to climb to the steady capacity? What is the early stage profitability level of MEGA? Will it be a drag, a dragging problem on our gross profit margin in the first and Q3 next year? My second question is about our new product pipeline next year, especially for the BEV models. We know that there are two platforms, Whale and Shark, and the former one corresponds to maybe larger and more expensive models. So do you have any more information about their product positioning, and in order to launch the market out of all the timing of the delivery? I am Donghui Ma. I will answer the first question about MEGA mass production. MEGA is our first electric vehicle model, and it is also a brand new electric platform, and it is produced on the new production line in our new Beijing factory. Indeed, the entire mass production process will have a lot of challenges, but we also have this very big opportunity point. On one hand, we have mature experience in this aspect, regardless of whether it is the L7 or L9. In the process when these few models just came to market, we also experienced a very short time and completed this relatively high delivery volume level. We also went through a review and accumulated a lot of experience. Then the second point is that we and our supplier partners together sorted out the NUDD parts, and also formulated quality control and capacity ramp-up activities. Additionally, in the personnel aspect, we also conducted recruitment and training of factory personnel in advance. Overall, we have confidence to be able to ensure MEGA mass production proceeds smoothly, ensuring shipment and launch, and launch and sales. ...另外一点就是说，MEGA的话，在十二月份我们会正式发布，那在投产的初期爬坡过程当中的话，对毛利会有一定的影响，但是我们相信在产量稳定之后的话，毛利会在很短的时间之内达到正常水平。 Speaking of challenge, MEGA will be our very first BEV vehicle and also, the debut of our BEV platform, also in a new factory in Beijing as well, a new production line. So there's definitely challenges. But at the same time, we think there are many opportunities for us to overcome the challenge. First of all, we have plenty of experience in rapid production ramp up. The Li L8, L9, and L7 all these three vehicles have ramped up pretty rapidly, and reached very high delivery numbers within a short period of time. And as we look back at these experience, we've accumulated a lot of great experience in rapid production ramp up. At the same time, we've also worked with our suppliers to work through our NUDD parts, namely new, unique, different, and difficult. We have created very detailed quality control and production ramp- up plans. In terms of personnel, we will front load our recruiting and training to prepare for the start of production. Overall, we are pretty confident that the ramp up of MEGA will be relatively successful, and it will be able to reach volume immediately after it comes to the market. It will be able to be delivered immediately after the product launch and reach volume immediately after its first delivery. MEGA will be officially launched in December, and at the beginning of production ramp up, we expect to be a slight impact on gross margin, but we believe that as production rate steadies, gross margin will very rapidly recover to a very healthy level. I am Xiang Li. I will answer the 2024 product plan. Yes, in 2024 we will in total release and deliver four products. It is the most abundant year in products since the company was founded. That will be in the first half of 2024 to release the mid-to-large SUV facing younger families, Li L6, and in the second half there will also be three pure electric products to deliver. The rhythm of the models' release and delivery will continue our past excellent traditions. That's all. So, Mr. Li Xiang, to answer the question on product lineup, next year, we will be launching four new, completely new models, which creates a record for since the company's beginning. In the first half, we'll be launching another large SUV product catered towards younger families, called the L6. And in the second half, we'll have three BEV models. The rate and the method of launch will be very similar to the successful experience from our previous products. 好的，谢谢。我这边没有其他问题。 As we are reaching the end of our conference call now, I'd like to turn the call back over to management for any additional or closing comments. Thank you once again for joining us today. If you have any other questions, please feel free to contact Li Auto's IR team. Thank you. Have a good one. Bye-bye. That does conclude our conference for today. Thank you for participating. You may now disconnect.