Hello, ladies and gentlemen. Thank you for standing by for Li Auto's first quarter 2025 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, Ms. Janet Zhang, Investor Relations Director of Li Auto. Please go ahead, Janet. Thank you, Kelly. Good evening and good morning, everyone. Welcome to Li Auto's first quarter 2025 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, to begin with prepared remarks. Our President, Mr. Donghui Ma, and our Senior Vice President, Ms. Liangjun Zou, and our CTO, Mr. Yan Xie, will join for the Q&A discussion. Before I continue, please be reminded that today's discussion will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company's filings with the U.S. Securities and Exchange Commission and the Stock Exchange of Hong Kong, Limited. 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 disclosure documents on the IR section of our website, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Our CEO will start his remarks in Chinese. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead. [Foreign language] Hi everyone, this is Li Xiang and thank you for joining today's conference call. In the first quarter of 2025, we delivered more than 92,000 vehicles, an increase of 15.5% year- over- year, bringing total revenues to RMB 25.9 billion. We performed strongly in the RMB 200,000 and above NEV market in China, growing at twice the market rate according to the insurance registration data from the China Automotive Technology and Research Center. As of April 2025, we have been the segment sales champion among Chinese auto brands for 14 consecutive months. In particular, we topped the market with a 14.1% market share in April, further reinforcing our leadership. As of the end of April, we have delivered more than 1.26 million vehicles. As a pioneer and leader in EREV, Li L series continues to enhance user value through ongoing innovation and product iteration, maintaining a competitive edge despite challenges from newcomers. Recently, we launched the new Li MAGA and new Li L series. The refreshed Li AD Max models received NVIDIA's latest Thor U chip, while Li AD Pro models upgraded from Horizon Robotics' Journey 5 to Journey 6M chips and include ATL LiDAR sensors co-developed with Hesai as standard. In addition to these upgrades for assisted driving, we have enhanced chassis control, exterior and interior design, and smart cockpit across the new Li L series. On April 23, we launched Li MAGA HOME at Shanghai Auto Show 2025, reflecting our latest understanding of multi-generational families and their mobility needs. Featuring top-tier configurations for our flagship model, Li MAGA HOME aligns closely with our mission to create a mobile home that creates happiness. Since its launch, Li MAGA HOME has accounted for over 90% of Li MAGA orders, demonstrating its strong value proposition and user recognition. Li MAGA currently has a robust order backlog with continuous inflow. To meet growing demand, we're increasing our production capacity to achieve 2,500-3,000 monthly deliveries by July. With the delivery of Li MAGA HOME, the new Li MAGA ULTRA, and the new Li L series in May, we expect second quarter deliveries to reach between 123,000-128,000 units. The success of Li MAGA HOME strengthens our confidence in becoming a top-tier player in the premium BEV market with a robust pipeline. Preparations for our upcoming event are progressing smoothly, with Li I8 and Li I6 scheduled for launch in July and September, respectively. Li I8 test vehicles are currently undergoing road tests across the country and have already logged over 9.5 million kilometers as part of our preparation for mass production. An efficient and convenient charging network is critical for electric vehicle user experience. To support our BEV launch, we have built the largest urban highway supercharging network among all automakers in China, covering over 50,000 kilometers of highways as of the end of the first quarter. Currently, we operate 2,350 supercharging stations equipped with over 12,800 charging stalls. Additionally, we completed the deployment of a supercharging network along 20 long-distance tourist routes, including the G318 Sichuan to Tibet highway. We will continue to accelerate the supercharging network deployment, with plans to deploy over 2,500 stations in June and aim for 4,000 stations by the end of the year. We will further enhance our competitive edge over other automakers on charging network going forward, ensuring a hassle-free charging experience for our users. We continue to rapidly develop our ADAS technology. Our in-house developed VLA Driver model as our next-generation ADAS architecture integrates spatial, language, and behavioral intelligence into a single model, enabling ADAS to perceive, think, and dynamically adapt to the environment. VLA Driver will redefine user experience and deliver innovative product formats, transforming vehicles into smart agents capable of communicating with users, understanding intentions, and acting as dedicated drivers that can comprehend, see, and locate. Our proprietary reconstructive and generative cloud-based world model creates realistic simulation environments that will support the closed-loop reinforcement learning of VLA Driver at scale. This will drive a continuous improvement in iteration efficiency and quality. We plan to launch VLA Driver with Li I8 and then roll it out to all Li AD Max equipped vehicles by OTA updates. We firmly believe that VLA Driver will bridge the physical and digital worlds. Going forward, we will continue exploring opportunities to seamlessly integrate multimodal interaction to deliver a more natural human-vehicle co-driving experience. Li Xiang Tongxue also continues to evolve. The latest OTA update at the end of May introduced new design memory capabilities to recognize each family member's and agent functions that allow it to act as an assistant for daily activities such as placing orders, making reservations, and tracking package deliveries via voice commands. Our aim is to create increasingly personalized smart space that can make human-vehicle interaction as intuitive as interacting with a family member. In April, we published the Li Halo OS technical architecture white paper and released initial code to the open-source community. As the first automaker globally to open source its proprietary smart vehicle operating system, we hope to empower industry partners and foster industry-wide progress through Li Halo OS. Moving on to our sales and servicing network, we're preparing for this year's expected growth in sales and new vehicle launches. We will continue to expand our network in major auto parks and shopping malls while penetrating lower-tier cities through the STAR plan to boost overall coverage efficiently. As of April 30, 2025, we had 500 retail stores in 151 cities nationwide, alongside 500 servicing centers and Li Auto authorized body and paint shops operating in 223 cities. Looking ahead, we remain committed to our user-centric approach driven by innovation and will continue to enhance our industry-leading product strength to deliver a greater happiness to more families. I will now turn the call over to our CFO, Johnny Li, to walk you through our financial performance. Thank you, Xiang. Hello everyone. I will now walk you through some of our 2025 first-quarter financials. Due to 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 first quarter were RMB 25.9 billion or $3.6 billion, up 1.1% year- over- year and down 41.4% quarter- over- quarter. This included RMB 24.7 billion or $3.4 billion from vehicle sales, up 1.8% year- over- year and down 22.1% quarter- over- quarter. The year-over-year increase was mainly attributable to the increase in vehicle deliveries, partially offset by the lower average selling price, mainly due to different process product mix. The sequential decrease was mainly due to the decrease in vehicle deliveries, which were impacted by seasonal factors related to Chinese New Year holidays. Cost of sales in the first quarter were RMB 20.6 billion or $2.8 billion, up 1.3% year- over- year and down 41.6% quarter- over- quarter. Gross profit in the first quarter was RMB 5.3 billion or $732.9 million, up 0.6% year- over- year and down 40.7% quarter-over-quarter. Vehicle margin in the first quarter was 90.8%, versus 90.3% in the same quarter, same period last year, and 17.7% in the prior quarter. The year-over-year increase was mainly due to cost reduction and the pricing strategy changes in the first quarter of 2024, which were partially offset by different product mix. Vehicle margin remained relatively stable over the prior quarter. Gross margin in the first quarter was 20.5%, versus 20.6% in the same period last year and 20.3% in the prior quarter. Operating expenses in the first quarter were RMB 5 billion or $695.5 million, down 14% year-over-year and 4.2% quarter-over-quarter. R&D expenses in the first quarter were RMB 2.5 billion or $346.4 million, down 17.5% year-over-year and up 4.4% quarter-over-quarter. The year-over-year decrease was primarily due to decreased employee compensation and the impact of the pace of new vehicle programs. The R&D expenses remained relatively stable over the prior quarter. SG&A expenses in the first quarter were RMB 2.5 billion or $348.8 million, down 15% year-over-year and 17.7% quarter-over-quarter. The year-over-year and the sequential decrease were primarily due to decreased employee compensation, improved operational efficiency, and decreased marketing and promotion activities. Income from operations in the first quarter was RMB 271.7 million or $37.4 million, versus loss from operations of RMB 584.9 million in the same period last year and income from operations of RMB 3.7 billion in the prior quarter. Operating margin in the first quarter was 1.0%, versus - 2.3% in the same period last year and + 8.4% in the prior quarter. Net income in the first quarter was RMB 646.6 million or $89.1 million, up 9.4% year-over-year and down 81.7% quarter-over-quarter. Diluted net earnings per ADS attributable to ordinary shareholders were RMB 0.62 or $0.08 in the first quarter, versus RMB 0.56 in the same period last year and RMB 3.31 in the prior quarter. Turning to our balance sheet and cash flow, our cash position remained strong and stood at RMB 110.7 billion or $15.3 billion as of March 1, 2025. Net cash used in operating activities in the first quarter was RMB 1.7 billion or $234.4 million, versus RMB 3.3 billion in the same period last year. Net cash provided by operating activities was RMB 8.7 billion in the prior quarter. Free cash flow was negative RMB 2.5 billion or negative $348.7 million in the first quarter, versus negative RMB 5.1 billion in the same period last year and positive RMB 6.1 billion in the prior quarter. Now for our business outlook. For the second quarter of 2025, the company expects deliveries to be between 121,000-128,000 vehicles, representing a year-over-year increase of 13.3%-17.9%. The company also expects second quarter total revenues to be between RMB 32.5 billion and RMB 33.8 billion or $4.5 billion and $4.7 billion, representing a year-over-year increase of 2.5% to 6.7%. This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator and start our Q&A session. Thank you. We will now begin the question and answer session. 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 participants on today's call, please limit yourself to two questions. If you have additional questions, you can re-enter 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 Zhou with Morgan Stanley. [Foreign language] My first question is about the following growth, because Li Auto's new L Series has received great market feedback, but in the meantime, we also noticed that competitors are trying very hard to benchmark the L Series with much more aggressive pricing and specs. How would Li Auto keep growing vehicle sales two times faster than the overall high-end market throughout the rest of the year and keep gaining market share at the expenses of peers in China? That's my first question. Thank you. [Foreign language] After we launched the new L Series, its sales performance met our expectations and has shown healthy growth. Our weekly sales are now over 10,000 units, and month to date, our market share in RMB 200,000 and higher NEV market has reached 14.7%. We're very confident the monthly deliveries of our new L Series will return to the 50,000 per month level pretty soon. Thank you. [Foreign language] My second question is about the products. Aside to the current SUV lineup, when would Li Auto consider selling sedans? Will the company also adopt the dual powertrain strategies to include both EREV and the BEV for sedan product line to cater to a broader consumer base? That's my second question. Thank you. [Foreign language] In our view, with Li MAGA, the Li Range Extended SUV Series, and the Li BEV SUV Series in full sales production, we can reach up to RMB 300 billion in terms of revenue. After we reach that level of revenue scale, we will review, based on user demand and market conditions, when to launch sedan models and MPV models covering a more affordable price range. These products in combination will also be offered not only in China but also other Asian markets and European markets. Thank you. Thank you. Thanks a lot for sharing all the insightful information. Thank you. Your next question comes from Yingbo Xu with CITIC Securities. [Foreign language] So I have two questions, and the first one is about Li Halo OS. Could you please give us more colors about the intelligence level and how to cut in cost and the difference between Autostar and Halo OS? And the second question about product. For L6 and L8, what's the real difference between their users? And in future, how about I8 and I6? How can they want consumers in the BEV market? Thank you. Hi, Yingbo. This is Yan. I will answer your first question. Right now, we are seeing strong interest in our Halo OS from three main types of companies: automakers, chip manufacturers, and other ecosystem suppliers. In fact, some of these suppliers have already started contributing code to the open-source community. For us, the stronger the overall industry ecosystem becomes, the faster we can iterate on our own products and technologies. As our partners grow in capability and collaborate with us more closely, we also see meaningful cost efficiencies. As the open-source community matures, our investments in certain areas can be reduced, allowing us to focus more resources on what truly sets us apart, our core strengths. At the same time, our operating system gives us a unique opportunity to vertically integrate hardware, software, and algorithm capabilities. Over time, we are confident this will allow us to continuously enhance the AI user experience on Halo OS. How does Halo OS compare to Autostar? First of all, Halo OS can fully replace the core functionalities of standard Autostar operating system. On top of that baseline, Halo OS brings significant advantages in areas where traditional Autostar OS does not do very well, such as more efficient resource usage and true end-to-end time determinism. What is more, by redefining the system architecture, we are able to address some of the limitations of the relatively heavyweight Autostar framework, especially when it comes to enabling faster, more agile innovation. Thank you. [Foreign language] The Li Auto brand is positioned as a premium brand. Therefore, additional purchases and upgrades are a big part of our customer base. Specifically, our range extended models are catered towards customers who currently own ICE models as an upgrade to ICE models, whereas BEV models are upgrades for NEV car owners. I8 and I6 will be targeted towards the current ownership base of NEV cars. Our expectations for this year are that the overall NEV market over RMB 200,000 will be about 3.8 million units this year, among which 1.69 million will be PHEVs and 2.13 million will be BEVs. Therefore, by introducing BEV models, we will be taken into a bigger market. Thank you. [Foreign language] Your next question comes from Tina Hao with Goldman Sachs. Hi, management. Thanks for taking my questions. I have two questions. The first one is regarding our balance sheet. I am just wondering, what is our target leverage ratio? Also, what is our payable cycle, including some of the bank bills payable to the supply chain? The second question is regarding our upcoming I8, the BEV model. Could management share with us what you think is the biggest selling point and advantage versus other BEV models in the same segment? [Foreign Language] Okay. Jian, this is Johnny. I'll take the first question. We are very committed to maintain good relationships with supplier partners. We strive to maintain the payable days at a reasonable and healthy level, basically ranging from two to four months. If you see our payable days at the end, it's because there are some reconciliation days that need to be spent after we book the balance, and we will finally reconcile the balance with our suppliers. At the end of Q1, the payable balance didn't change much compared with the end of last year. The overall increase in the payable days was mainly due to the calculation method, which is due to the lower cost of sales in the first quarter. Yeah. Thank you. [Foreign language] To brief a few points on I8's key selling points, apart from the VLA Driver model, which I mentioned earlier, I8 also has a very innovative styling, exterior and interior. The exterior styling is really designed around smart packaging to allow for the most space inside as well as a very low drag coefficient. In the meantime, I8 also offers very good handling and ride comfort. Apart from that, I8 also supports charging up to 500 km in 10 minutes with this high-voltage charging technology. By the time we launch I8, we also would have built 2,500 supercharging stations to prepare for the launch of I8. All these charging stations are built around the surroundings and the travel routes of our potential customers. We have reason to believe that the I8 will be a top choice for existing owners of NEV cars as a replacement or upgrade to their current models. Thank you. [Foreign language] Your next question comes from Jing Cheng with CICC. [Foreign language] This is my first question. It's regarding to our sales target and also some trends outlook. Will we set up clear sales target this year, or will we flexibly adjust our volume and price strategy according to the market changes? Also in the longer term, previously we have our calculations about the market size. Given the changes in recent two years, have there been any changes in our adjustment? Regarding to the mid to high-end SUVs and especially family target cars, what's our mid-term sales target in domestic market? [Foreign language] As we communicated before, we expect our growth in 2025 to be double the growth rate of overall CNY 200,000 above NEV market. In terms of energy type, as we launch our BEV models, we'll be taken into a bigger panel. As I mentioned earlier, the overall market of NEV over CNY 200,000 and more is 3.8 million this year expected, and 2.1 million, which is BEV. Our new BEV model launches will take us into this bigger market. In terms of market demand, we think there's still great potential. I'll give one example with Tier 4, Tier 5 cities. We've recently announced what we call SAR program, which will expand our coverage in Tier 4 and Tier 5 cities. We've run some pilot programs last year in these Tier 4 and Tier 5 cities. For example, in Sichuan, Dazhou, and Zigong, both of which are Tier 4, Tier 5 cities. Since we've opened our stores in last September, in less than half a year, we've reached over 28% market share in all passenger vehicle markets over RMB 200,000, regardless of energy type. Another example in Shaanxi, Yan'an, we've also reached 25% market share in all PV market over RMB 200,000 and above. As the overall penetration rate of NEV reaches over 50%, more and more users are choosing new energy vehicles. Also, as we launch L6 and other models, we are seeing bigger opportunities in Tier 4 and Tier 5 cities. This year, we'll continue to expand our STAR program and bring incremental sales to the company. Our goal is to expand to 100 cities this year in Tier 4, Tier 5 cities and bring in 100,000 incremental sales in 2026. [Foreign language] So my second question is regarding to AD. Mr. Li Xiang elaborated in detail on how we do VLA in the previous AI Talk, talking about our driver large model subprogresses, including the pre-training of the foundation model and the different types of reinforcement learning, etc. What's core difficulties do you think are there and how we do to differentiate ourselves from peer companies? [Foreign language] Our training process for basically replicating an experienced driver is divided into four steps. Step one is training what we call a VL foundational model, pre-training. Second step is post-training into a VLA model. And then is reinforced learning with human feedback or RLHF. And finally, RL, reinforced learning. This is how we train an experienced driver through AI. The hardest part of all this is the pre-training, which is the VL foundational model, as well as the last step, the reinforced learning step. This is a problem that all enterprises are trying to solve. First of all, in the VL foundational model training process, we're trying to add specific video data so that the foundational model can understand three-dimensional space as opposed to other models which only understand 2D space. This is a key differentiation of our foundational model. In reinforced learning, it requires us to train the model in real-world simulated environments to iterate the VLA model and improve its capabilities. Through reconstruction and generative processes, a combination of these two methods, we can build world models that actually follow the physical laws of physics in the real world and replicate traffic participants and other elements. With very accurate simulation capabilities, the VLA Driver model can train at very low cost and very accurately verify real issues in a simulated world model. It can also significantly reduce the iteration period. Thank you. [Foreign language] Your next question comes from Bin Wang with Deutsche Bank. [Foreign language] I got two questions. One is about your gross margin. Second one is about the export. In the first quarter, you actually enjoying the margin expansion. You mentioned you start pricing strategy change. Can you provide more detail about this strategy change? Meanwhile, what's your outlook for the second quarter? Basically, we think that when you launch a new facility and actually reduce the cash subsidy, we assume your margin actually will increase in the second quarter. And for the second question about export, you previously. This year will be the starting point for export. Do you think when the meaningful volume will be emerged for the export business when you can start to say monthly export volume exceed 1,000 units? Thank you. Hi, this is John. I think our first, we expect the vehicle margin to still remain around 19% for the second quarter. As you know, the second quarter is we have the April and May, the Mega is not there. As of today, we have a lot of new Mega home order on hand. That is still we'll still start huge volume delivery just starting from this week. Also, it's a switch from the 2024 version of L-Series to the 2025. It's a combination. We still keep the vehicle margin around 19%. Thank you. [Foreign language] We have three prerequisites for entering an overseas market, entering any market, which is offering a good hardware. The second is being able to provide after-sales support. The third is to provide smart software services. Only when we meet these three conditions can we enter a new market, because we consider ourselves to be selling AI air terminals as opposed to just selling physical products. Over the next few years, we will be focusing on Asian and European markets and recruit established distributors across these countries. In the meantime, we are also stepping up our efforts to identify and assign top talents, internal talents to our overseas market team, while also recruiting actively professionals with international experience to join our international team. Overall market, overseas market is a part of our long-term strategy. We will be working very hard and with a goal of reaching 30% of overall sales overseas. Thank you. Thank you. Our next question comes from Paul Gong with UBS. [Foreign language] So my first question is regarding the VLA timing for availability to the consumers, especially given the tightening of the regulation on the driving assistance recently by the government. Do we need more time to verify it, or are we still confident that it would be available for consumers to use in July? The second question is regarding the implication of Mega Home. This has definitely shown some improvement from the previous Mega sales. And what do you think are the lessons learned, and what would be the lessons for the upcoming I8 and I6 launch? [Foreign language] We're still on track to releasing our VLA Driver model in July together with our BEV electric SUV I8. We'll then be rolling out VLA Driver to all of our users in August. Our drivers can also, or our customers can also, experience VLA Driver in our test drives in all of our stores. We view regulations on safety and assisted driving to be absolutely necessary. In fact, we view stringent regulations to be more favorable to companies with solid technical fundamentals. For Li Auto, our super alignment technology will address many of the safety concerns and allow us to prioritize safety as the top consideration in all development stages. Enhanced regulatory requirements will not hinder our R&D efforts. Thank you. [Foreign language] In fact, our previous steady rate of Mega deliveries was about 1,000 per month. Our expectation was for it to increase by 50% with the launch of the new model. In fact, it eventually increased by over 150%, significantly exceeding our expectations. Obviously, we hope to increase production capacity to maintain a steady state delivery rate of 2,500-3,000 as we expect. As we look back at the previous year and how we got to where we are today, we realized the most important thing was not to focus on our own internal desires or focus too much on competition or on specific market segments on which competitors enter this market and do things based on our fear. In fact, we return to the users and focus on the family users and what they actually need and how we can surpass what they're looking for or other products or offering in the market and innovate around their needs. One opportunity that we see as we see the success with the new Li MAGA HOME and what we've done, the explorations we did last year was really this opportunity around mobile space. There are so many things that we can do to innovate around this mobile space experience, and there is so much exciting product features that we're exploring. We hope the car going forward is not the experience is not going to be just focused on hardware, but actually an integrated AI experience enabled by hardware and software. Looking forward, we know when we talk about user-machine interaction, we think of Apple as a company that does it best in the world. We hope when people talk about space experience, people think of Li in the future. Thank you. Thank you very much. Thank you. As we are reaching the end of our conference call now, I'd like to turn the call back over to the company for closing remarks. Ms. Janet Zhang, please go ahead. Thank you once again for joining us today. If you have further questions, please feel free to contact Li Auto's investor relations team. This concludes today's conference call. You may now disconnect your line. Thank you. Thank you.