Hello, ladies and gentlemen. Thank you for standing by for NIO Inc.'s second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Today's conference is being recorded. I will turn the call over to your host, Ms. Eve Tang, Investor Relations of the company. Please go ahead, Eve. Good morning and good evening, everyone. Welcome to NIO's Q2 2021 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted at the company's IR website. On today's call, we have Mr. William Li, Founder, Chairman of the Board, and Chief Executive Officer, Mr. Steven Feng, Chief Financial Officer, Mr. Stanley Qu, VP of Finance, and Ms. Jade Wei, AVP of Capital M arkets and Investor Relations. Before we continue, please be kindly 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. 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 Co mmission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that NIO'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 NIO's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our CEO, Mr. William Li. William, please go ahead. [Non-English content] Hello, everyone. Thank you for joining NIO's second quarter 2021 earnings call. [Non-English content] In the second quarter of 2021, NIO delivered 21,896 ES8, ES6, and EC6, a new quarterly record representing a strong increase of 111.9% year-over-year. In July, NIO delivered 7,931 vehicles, representing a strong 124.5% growth from last year. All three models have achieved a solid performance in the premium SUV market. [Non-English content] According to the data published by China Passenger Car Association, in the first half of 2021, the penetration rate of battery electric vehicles has reached 8.4% in China. NIO's penetration in the Tier 1 and the Tier 2 cities in China has been growing at a much faster pace. In Shanghai, the first half of this year has witnessed overall penetration in the premium SUV segment, reaching 13.7% among all ICE and electric vehicles. Our monthly order intake keeps growing, but the delivery volume will be determined by the overall capacity of the supply chain. We expect the total delivery in the third quarter to be between 23,000 and 25,000 vehicles. In terms of our gross margins, we have achieved a steady performance with the vehicle gross margin and overall gross margin standing at 20.3% and 18.6% respectively. [Non-English content] I would like to share with you some recent operational highlights of the company. [Non-English content] Since the first validation build of ET7 rolled off the production line in May, a series of rigorous tests of vehicle functionality, performance, and homologation have been kicked off. We are very confident with the on-time delivery of ET7 next year. Meanwhile, the developme nt of NAD, New Generation Autonomous Driving system, is also advancing smoothly. We believe that NAD will deliver the best experience of autonomous driving and lead the charge of autonomous driving technology development in the industry. 2022 [Non-English content] In 2022, we plan to deliver three new products based on new technology platform 2.0, including ET7. Our teams are devoting every effort to press forward the development of the new product. [Non-English content] In the meantime, we are also constantly optimizing and upgrading the new technology platform 1.0 to strengthen the competitiveness of our current three models. In late August, we will release the NIO OS 3.0, which will roll out with a fresh new look of UI/UX design, new features, and further optimization of the existing functions. Through continuous over-the-air updates, the functionality and experience of the NIO Pilot have also been improved. As a result, more and more users have chosen and enjoyed NIO Pilot. In the second quarter, the take rate of NIO Pilot exceeded 80%. As of July, NIO Pilot has been engaged for a total of over 200 million kilometers. [Non-English content] In terms of production capacity, despite the semiconductor supply volatility in the 2nd quarter, with joint efforts of the teams and other partners, the production and delivery have met our expectations in the quarter. Since July, the COVID-19 pandemic and extreme weather events have posed a series of challenges to the global supply chain. The most recent COVID situation in certain regions in China have already affected our production. We will continue to work closely with our supply chain partners to minimize the impact on the production and delivery in the 3rd quarter. [Non-English content] With regards to the sales and service network, we now have 25 NIO Houses and 243 NIO Spaces in 128 cities in China. We will continue to deploy our NIO Houses and NIO Spaces, improve operational efficiency and quality, and expand sales network coverage to quickly build our presence in the Tier 2 and Tier 3 cities. As of now, we have set up 36 NIO Service Centers and 171 authorized service centers in 133 cities. We will further increase the number of service centers to meet the rapidly growing user service demand. [Non-English content] Up until now, we have deployed 361 swap stations in 103 cities and completed over 3 million battery swaps for our users. In July, we announced NIO Power's battery swap station deployment plan by 2025. We plan to increase the total number of battery swap stations to over 700 by the end of 2021, and to over 4,000 globally by the end of 2025. We are also expanding our power charging and destination charging network. As of now, we have established over 238 power charging stations and installed 2,416 destination chargers in China. With the accelerated deployment of the charging and swapping network, and deepening understanding of BaaS, more and more people can truly experience and recognize the benefits of battery swapping and BaaS, which has attracted more users to choose Battery as a Service. [Non-English content] On the front of the global market, the Norway market entry has been progressing as planned. The first batch of ES8 has been shipped, and is expected to arrive in Norway in mid or late August to be ready for the pre-order and delivery in September. Starting from September, NIO app, NIO Life, NIO House, NIO Power to chargeable, swappable and upgradable service system, NIO Service Center, and the delivery center will gradually become available to users in Norway. [Non-English content] As a user enterprise, our users are playing an increasingly important role in the NIO community. The preparation for NIO Day 2021 has been kicked off with the active participation of our users. Suzhou, out of 10 candidate cities, has been voted to be the host city of this year's NIO Day. [Non-English content] Our user community has also joined us in making a positive difference in the world. In July, the city of Zhengzhou and a few places in Henan province were hit by heavy rainfalls and floods. NIO dispatched service resources nationwide to support users in Henan, provided real-time usable charging power information to both NIO users and users of other EV brands, and supported the disaster response and relief work with donation and the special purpose fund of NIO User Trust. [Non-English content] 2021 is a critical year for NIO to lay a solid foundation for its long-term development. Going forward into the second half of our 2021, we will accelerate the pace of new products and full stack technology development, enhance our charging and swapping network, as well as the sales and the service network to be fully prepared for the delivery of the three new models in 2022. [Non-English content] At the same time, we have also stepped up our mass market entry preparation. We will enter the mass market with a new brand. The core team of the new brand has been assembled, marking the first step of the strategic initiative of NIO. [Non-English content] As always, thank you for your support. With that, I will now turn the call over to Steven to provide the financial details for the quarter. Steven, please go ahead. Thank you, William. I will now go over our key financial results for the second quarter of 2021. To be mindful of the length of this call, I encourage listeners to refer to our earnings press release, which is posted online for additional details. Our total revenues in the second quarter were CNY 8.45 billion, or $1.31 billion, representing increase of 127.2% year-over-year, an increase of 5.8% quarter-over-quarter. Our total revenues are made of two parts, Vehicle sales and other sales. sales. Vehicle sales in the second quarter were CNY 7.91 billion or $1.23 billion, accounting for 94% of total revenues in this quarter. It represented an increase of 127% year-over-year, an increase of 6.8% quarter-over-quarter. The increase in vehicle sales year-over-year was mainly attributed to higher deliveries achieved from more product mix offered to our users. The increase in vehicle sales quarter-over-quarter was mainly due to higher deliveries. Other sales in the second quarter were CNY 536.2 million or $83.1 million, representing an increase of 130.3% year-over-year, and a decrease of 7% quarter-over-quarter. The increase in other sales year-over-year was in line with the incremental vehicle sales in the second quarter of 2021. The decrease in other sales quarter-over-quarter was mainly due to the less revenues derived from 100 kilowatt-hour battery upgrade service. Cost of sales in the second quarter was CNY 6.87 billion, or $1.06 billion, representing increase of 101.8% year-over-year, an increase of 6.9% quarter-over-quarter. The increase in cost of sales was in line with revenue growth, which was mainly driven by the increase of vehicle delivery volume in the second quarter of 2021. Gross profit in the second quarter was CNY 1.57 billion or $0.24 billion, representing an increase of 402.7% from the same quarter of 2020, an increase of 1.2% from the first quarter of 2021. The increase in gross profit was mainly contributed by increased vehicle sales. Gross margin in the second quarter was 18.6%, compared with 8.4% in the same quarter of 2020 and 19.5% in the first quarter of 2021. The increase of gross margin compared to the second quarter of 2020 was mainly driven by the increase of vehicle margin in the second quarter of 2021. 2021. Gross margin remained relatively stable compared to the first quarter of 2021. More specifically, vehicle margin in the second quarter was 20.3%, compared with 9.7% in the same quarter of 2020 and 21.2% in the first quarter of 2021. The increase of vehicle margin year-over-year was mainly driven by the increase of vehicle volume, higher average selling price, as well as lower material cost. Vehicle margin remained relatively stable quarter-over-quarter. R&D expenses in the second quarter were CNY 883.7 million, or $136.9 million, represent increase of 62.1% year-over-year, an increase of 28.7% quarter-over-quarter. The increase of R&D expenses year-over-year and quarter-over-quarter was mainly attributed to incremental design and development costs for new products and technologies, as well as the increased number of employees in research and development functions. functions. SG&A expenses in the second quarter were CNY 1.5 billion or $0.23 billion, representing an increase of 59.9% year-over-year, an increase of 25.1% quarter-over-quarter. The increase in SG&A expenses year-over-year was primarily due to the increased marketing activities, as well as the increased number of employees in sales and service functions. The increase in SG&A expenses quarter-over-quarter was primarily due to the increased marketing and promotional activities and professional services. Loss for operations in the second quarter was CNY 763.3 million, or $118.2 million, representing a decrease of 34.2% year-over-year, an increase of 158% quarter-over-quarter. Share-based compensation expenses in the second quarter were RMB 251.4 million, or $38.9 million, representing an increase of 455% year-over-year, an increase of 160.5% quarter-over-quarter. The increase in share-based compensation expenses was primarily attributed to additional options and restricted shares granted. Net loss in the second quarter was RMB 587.2 million, or $90.9 million, representing a decrease of 50.1% year-over-year, an increase of 30.2% quarter-over-quarter. Net loss attributable to NIO's ordinary shareholders in the second quarter was RMB 659.3 million or $102.1 million, representing a decrease of 45.4% year-over-year and a decrease of 86.5% quarter-over-quarter in the second quarter of 2021. Basic and diluted net loss per ADS in the second quarter were both RMB 0.42 or $0.07 per ADS. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, non-GAAP adjusted basic and diluted net loss per ADS were both RMB 0.21 or $0.03 per ADS. Our balance of cash and cash equivalents, restricted cash and short-term investment was CNY 48.3 billion, or $7.5 billion as of June 30th, 2021. Now, for this outlook. As William mentioned, for the third quarter of 2021, the company expects deliveries to be between 23,000 and 25,000 vehicles, representing an increase of approximately 88.4%-104.8% from the same quarter of 2020, an increase of approximately 5%-14.2% from the second quarter of 2021. The company also expects the total revenues of the third quarter 2021 to be between CNY 8.91 billion and CNY 9.63 billion, representing an increase of approximately 96.9%-112.8% from the same quarter of 2020, an increase of approximately 5.5%-14% from the second quarter of 2021. This business outlook reflects the company's current and preliminary views on the 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 facilitate our Q&A session. Thank you so much. If you would like to ask a question, it's star and one on your telephone keypad. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you can re-enter the queue. Again, it's star and one if you wish to ask a question. Our first question comes from the line of Tim Hsiao from Morgan Stanley. Tim, your line is now open. Hi, William, Steven, and team. Thanks for taking my questions. Just two quick questions from me. First question is about the new models. Could you please elaborate a little more about the two new models scheduled for 2022, other than ET7, regarding the timing, spec, rough price range, et cetera? As market previously anticipate to have just one new model next year, I think this serves as upside surprise. Any colors would be highly appreciated. That's the first question. My second question is that, with news to the battery consumption likely reaching 16 or 18 gigawatt hours next year, will there be any major changes to NIO's battery sourcing strategy? Will CATL stay as the sole supplier or NIO might consider looking for a second source? In light of such close tied up between CATL and NIO for both EV and the battery asset management company, can NIO diversify to other partners to hedge the risk if needed? Those are my two questions. Thank you. [Non-English content] I believe everybody knows that the NIO new technology platform 2.0 is going to be first applied to ET7. The current development progress of ET7 and NAD is on track, we are quite confident about the on-time delivery of ET7 next year, although the challenges is quite significant. For the other two products, I believe probably it's better for me to share more information at a more appropriate time. Regarding the pricing, of course, in recent years, the battery cost has declined a little bit and as our volume goes up, our BOM cost will also have some opportunity to go down. For the next year's product, we probably will have one of the lowest pricing products under the NIO brand. As I explained before, we are going to have a new brand for the mass market. Under the NIO brand, we're not going to have many low pricing products. [Non-English content] Next year, we believe the demand for the battery capacity is going to go up significantly, especially considering the new product lineup. We believe the battery production capacity demand is going to jump significantly compared with this year. We are having intense discussions with CATL regarding the battery capacity supply. Currently, we believe CATL is a very good and important partner for us, and we also have a very good relationship with CATL. We have very in-depth discussions regarding the battery technology as well as the battery production assurance. We believe this current strategy can serve the best interest of the company at the current stage of development. Thank you, Tim. Thank you. Very clear. Thank you so much. Your next question comes from the line of Ming-Hsun Lee from BofA Securities. Ming, your line is now open. Thank you. Good morning, William, Steven and the team. Congrat for the good results. I have two questions. The first question is regarding the component supply. We know you already have more large size battery supply starting in June, but right now consider the pandemic in China and also overseas countries such as Malaysia. What kind of impact do you expect on the production side, especially for your component supply capacity? That's my first question. The second question is regarding your business in overseas markets. In your third quarter voting guidance, how many units do you expect to ship in Norway? Will you start to provide better service in overseas markets? That's my two questions. Thank you. [Non-English content] Yes, the pandemic situation is affecting the global supply chain. Last year, I believe our supply chain partners and NIO have been trained significantly to cope with these kind of challenges. In my prepared remarks, I have also mentioned the recent COVID situations in certain regions in China have affected our production. Specifically, it is a just-in-time component partner located in Nanjing's high-risk area. This partner has already suspended their production, and we have seen some good news coming out of Nanjing. It seems that the COVID cases in Nanjing have already dropped to zero, so we hope this partner can resume the production as soon as possible. The third quarter delivery volume will mainly be determined by the overall capacity of the supply chain. There will be a lot of challenges that we need to deal with. For example, you also mentioned about the pandemic situation in Malaysia. This has also affected the semiconductors supply to the global market, not just for NIO, but also many other companies. The pandemic situation in Malaysia, basically, we believe the impact for us is not that big and should be under control. Another situation is the flood in Germany. Our partner is also affected in the flooding because one factory is flooded during the extreme weather event in Germany, and our partners have been working with us to identify the solution. Right now, we believe that the situation is under control. Overall speaking, the delivery volume in the third quarter will mainly be restrained by the overall capacity of the supply chain. [Non-English content] Regarding the delivery in Norway, we believe for this year the contribution is not going to be that significant because our priority is to make sure we can ensure high user satisfaction in the Norway market by building of a brand, expanding of our sales and service network. For the global market, we believe the more important thing is to focus on the long-term thinking, and we would like to ask everyone's patience in this regard. Recently, we have been working together with our prospective users in Norway to set up a user advisory. They have helped us significantly and provided many constructive and good feedback to us. We believe this is a very good beginning for us, and this is part of our long-term strategy for the global market. Thank you, Ming. Steven? Ming, of course. We also offer our BaaS business model. We believe BaaS together with Battery as a Service swap can offer user a very holistic experience, and combined together is a very efficient way for our users to get the cars charged at home and on the go. [Non-English content] According to the preliminary feedback we got from the NIO Norway User Advisory Board, it seems that everyone is quite excited about the battery swapping stations and the Battery as a Service business model. Thank you. Thank you, Ming. Thank you so much. Once again, ladies and gentlemen, it is star and one if you wish to ask a question. Again, it is star and one if you wish to ask a question. Once again, ladies and gentlemen, if you wish to ask a question, it is star and one on your telephone keypad. Your next question comes from the line of Nick Lai from JP Morgan. Nick, your line is now open. Yes. Thank you, William and Steven. Great result indeed. I have two number related question. The first one is related to gross profit margin. Yeah, I mean, 2Q against 1Q, roughly margin was flat, but still at the vehicle level or overall GP margin, it was still down roughly about 1 percentage point. Can you help us understand or explain a little bit more on the margin, let's say margin slide for in 2Q? Is that related to BOM or improvement material price or other factor? I noticed 2Q ASP is slightly down from 1Q. How should we think about 3Q? That's one, it's a margin related question. Can you help us understand a bit more or explain a bit more on 2Q margin dynamic against 1Q, and how should we think about that as we enter 3Q? The second question also related to number is, look at the cash on balance sheet, altogether cash equivalent and short investment. By the end of first half, we have CNY 48 billion, I mean, big cash, that's roughly about $7.5 billion. That's a lot of cash on balance sheet. If you can help us understand what's our strategy using the cash on balance sheet, in terms of CapEx investment. I noticed JAC has new capacity expansion and presumably, as we are launching more model in 2022, we'll need to invest in R&D, new model tooling altogether. If you can help us understand a bit more on our capital investment in the next one year or so, that'll be very useful. Thank you. Hi, Nick. This is Stanley. Regarding your first question about the gross profit margin. There are two reasons, if we break down into details. The first is average selling price decreased about CNY 8,000 per vehicle in Q2. The main reason is more ES6 were sold in Q2 compared with Q1. Since ES6 is with a little bit lower gross profit margin and selling price. Due to our costing efforts in Q2, the average vehicle cost also decreased about CNY 3,000 per vehicle. Combine the two factors together, our net gross profit margin per vehicle decreased about CNY 5,000. Okay? That's the reason for the vehicle margin. Today we announced three brand new product we will deliver in 2022. We also refreshed our product plan. For the conservative perspective, we like to shorten the depreciation, amortization periods for our existing products. That will lead to the D&A increase. For the second half year of 2021, this impact to gross profit margin will be like 2% per vehicle. That's the first question. The second one is regarding the cash balance. As you mentioned, the cash balance at the end of Q2 is 48 billion. As we mentioned, we will still focus on the research and development of our new product technology. About the other usage, we will also increase our CapEx investments, including our new plant and new sales and marketing network infrastructure in the coming years. It will be in line with our business plan in the next years. Yeah. Okay. Yeah. Can you remind us what our CapEx target for the year? Do you have any number or guidance, please? We expect the total CapEx this year will be CNY 5 billion, inc luding the new plant and also the service and sales network and also power swap station. Yes. Thank you very much. Thank you so much. Thank you, Nick. Thank you, Nick. Yeah. Thank you so much. Your next question comes from the line of Bin Wang from Credit Suisse. Bin, your line is now open. Okay. Thank you so much. My first one is more follow-up about our gross margin, you actually guide that NIO Pilot has been increased quite substantially in the attach rate to 80%. What's the number in the first quarter, and what's the margin increase from this increasing NIO Pilot take rate? That is the number one question. Number two is about your long-term market share, one peer has actually announced a 10% market share and the other one 20%. What's the NIO's p lan for 2025 for the market share? We have a mass market plan. Can I assume that the mass market plan will start to sell in 2023? This year three products seem to have all come from NIO plan. You already accelerated the R&D, so it's now going to be 2023. That is the second one. The third one is about your data or offline store expansion plan. If you see your peers who actually gain more strategic cooperation with the big dealer groups such as Zhongsheng, but I heard that some of your existing partners for NIO Space seems to be bought back by NIO. Which means in the long term, maybe NIO doesn't have any third-party partners for NIO Space. Is that true? What's your long-term strategy about the offline store expansion plan? Thank you. [Non-English content] Regarding the margin contribution of the NIO Pilot, as we mentioned, the take rate of a NIO Pilot has reached 80%. For this 80%, it includes both the selected pack and the full pack of the NIO Pilot. We believe the overall contribution from the NIO Pilot is around 3%-4%. Since the price of NIO Pilot is included in the selling price of vehicles, we have no separate gross profit margin calculation for the NIO Pilot. [Non-English content] For the NAD, because we are going to use the AD as a service model to provide the NAD services to our users. Long-term speaking, we believe the AD as a service contribution is going to be included in the other margin, and the long-term plan for the margin of the NT 2.0 is going to be much better than the margin of the NT 1.0. For the vehicle gross margin, we believe the target for us in the long run is 25%, excluding the carbon credits. The carbon credits should be included in other margins. We believe the logic of other margin is about the install base of our users. For the long run, it will get better considering the future possibilities and opportunities, including AD as a service, Battery as a Service, NIO Life, carbon credits. We believe overall speaking, the overall gross margin and the vehicle gross margin will improve. [Non-English content] Regarding the long-term target of the market share. For us, of course, we pay attention to our specific market share or the penetration in the corresponding segment of our products. For example, the ES8 in the large and mid-size SUV market segment and the ES6 in the mid-size SUV segment. Internally, of course, we have a very aggressive market share target by 2025. We don't actually want to disclose these targets. For us, we believe our target as a company should be to build a company with the highest user satisfaction rate. That is why our focus is on the product and the service. We believe that if we can achieve the highest user satisfaction rate with our product and service, then it should be a natural thing for us to achieve satisfactory market share. In the China market, I would like to talk a little bit about the battery electric SUV premium market segment. For this segment, I would like to emphasize a little bit about the pricing, because when we compare the specific sales volume of one brand or one product, I think it does not make sense to compare those kind of metrics without thinking about the specific pricing segment. For example, it does not make sense for us to compare the sales volume of Wuling MINI EV with the sales volume of NIO, because we don't have the same pricing, and we don't actually compete in the same segment. In our specific pricing segment, we have companies like Audi, BMW, Mercedes, and for Tesla, they also have Model S and Model X and Model Y. In this specific pricing segment, our overall market share has already exceeded 50%. We are quite confident to further improve our market share in this specific segment. In Shanghai, as I mentioned before, in the premium SUV segment, including the ICEs and the electric vehicles, we have already reached close to 14% market penetration in the first half of this year. This is already quite high, and we have already achieved this in the Tier 1 cities. We believe this is a very good indicator for our next step to penetrating to more markets in different cities. As I mentioned, our focus is to make sure we have the best product and the services and achieve the highest user satisfaction. We believe as long as we stick to this vision and this objective, it should be a natural thing to achieve our market share targets in the long run. [Non-English content] Yes, from the second half of 2019 to the first half of 2020, we have tried the NIO Space Partner approach. We believe the NIO Space Partners have contributed to our expansion of the sales network and the sales volume growth. Right now, when we look at the overall brand and the management complexity, we believe it makes more sense for us to manage the NIO Spaces by ourselves. Starting from the third quarter of 2020, we have changed this strategy, and we would like to make sure for the NIO Spaces we can manage and build by NIO. We discussed with our NIO Space Partners and reached agreements with the majority of the NIO Space Partners to transform their NIO Spaces to the NIO Spaces operated by NIO. The majority of the NIO Space Partners have already signed the agreement with us and for the rest of the NIO Space Partners, we will continue the cooperation with them until the termination of the contract. For all the new NIO Spaces, these are all built and operated by NIO. Thank you, Bin. Thank you. By the way, can you answer the question about whether it will be 2023 for the new mass market brand business? Thank you. [Non-English content] Regarding the launch of the mass market products, of course, our R&D efficiency is quite high, and I believe this is the common understanding of everyone. NIO has been able to launch products one after another in a very fast manner. For the mass market brand, this is part of our long-term thinking, and we believe the efficiency and the speed of the product launch is going to be probably even faster built on top of the capabilities that we have already accumulated under the NIO brand. Regarding the specific timing and the launch cadence of those products under the mass market brand, we can still have time to decide based on the market conditions and the R&D progress of those products. We believe it's still too early for us to share those information for now. Thank you. Thank you. Thank you so much. Your next question comes from the line of Chang Liu from CICC. Chang, your line is now open. Yes, thank you for taking my questions. My first question is about R&D. We know that there is a fierce competition in acquiring talent people in autonomous driving development. Could you share with us NIO's advantages in acquiring them? More in details, could you share with us our current team size of AD development and our targeted team size? Is there any updates on our R&D expenditure for this year? My third question is that could you update the take rates of BaaS and NIO Pilot for us? [Non-English content] Thank you for your question. AD is a very important initiative for us, and we are quite decisive to make investment in the autonomous driving technology and organization. Our autonomous driving organization is quite different from other companies, probably because we have four VPs that report directly to me personally. As you can see that the autonomous driving is not just one department, it's actually an initiative of our company. We have a team focusing on hardware, autonomous driving system, autonomous driving algorithm and the autonomous driving operation. We believe that this is not just the effort of one AD department, we will need to leverage all the capabilities we have across the company. Right now, for our AD department, we have around 500 people. By the end of this year, we expected to have additional 300 to 800 people for the AD team. team. We will continue to make a decisive investment in the autonomous driving technology and the talent acquisition. Starting from 2016, we have already built our ADAS team and autonomous driving team, and NIO is the first company to have a mass production of the EyeQ4 chipset, and we have built our domain controller, the autonomous driving assistant in-house right from day one. We have already accumulated many experiences and capabilities in this regard. Starting from last year, the main focus of us is to build up the capabilities in terms of the autonomous driving algorithm and the computer vision. We believe right now we have already built a very strong team. [Non-English content] Regarding the R&D expenses, starting from the second quarter, we have accelerated our research and development in the company. As I mentioned, in 2022, we are going to deliver three new products, and in 2023 and beyond, probably we are going to deliver even more products. I believe NIO is the fastest company in the industry to deliver products to the market. Averagely speaking, the R&D timeline for us is around two years, which is already the fastest in the auto industry. This year, we have already kicked off many different R&D programs. Starting from the third quarter of this year, we believe we are going to step up our R&D expenses due to the team size and the programs we have in the R&D pipeline. Previously, we also mentioned that the R&D expenses in 2021 should be around RMB 5 billion. We would like to see this RMB 5 billion spent according to the plan, because this shows that our R&D progress is actually on track. The current focus of us is to build up our R&D team and make sure all the develop ment projects are on track according to the plan. We believe probably by the end of this year, the size of our R&D team is going to be doubled compared with the size last year. [Non-English content] The take rate of Battery as a Service in July has reached 60% and is growing month-over-month. Previously, I have also mentioned the take rate of NIO Pilot has reached 80%, including the selected package and the full package. Overall speaking, the take rate of BaaS and the NIO Pilot is on the rise. Yeah. Thank you. Thank you. Liu Chang. Thank you so much. Your next question comes from the line of Edison Yu from DB or Deutsche Bank. Edison, your line is now open. Thank you for taking our questions. I have two follow-ups on Europe. First, it seems there is quite a bit of hiring going on in the Netherlands and a little bit in Germany. Could you maybe discuss the next phase of Europe after Norway? The second question on Europe, it's very encouraging to see this User Advisory Board. Can you maybe discuss some of the things that you're doing differently in Europe relative to what's been going on in China? Thanks. I think for hiring, I wanted to share some numbers with our investors. First, in Norway, our team size has already increased to 40 employees in Norway. Of course, Norway is only our first stop to go overseas, to go global. In the following years, we will also enter other European countries and also other regions. That's why we continue to hire more people in Amsterdam. [Non-English content] Another point is, actually in the 2nd quarter of this year, we have appointed the CEO of NIO Europe. He is already on board, and he has been building up the team for NIO Europe. Of course, we are going to enter more markets in Europe, including Germany. For most of the products we are going to deliver to Europe, it's going to be based on the new technology platform 2.0, except the ES8. This is our current strategy for the European market. [Non-English content] For NIO as a user enterprise, when we enter the market or different regions, we have always believed the user participation and support is a very important principle that we should uphold. For different markets, they have different cultures, different environment, different use cases. We will need to adapt to those different situations. We believe the user community and the user enterprise concept should apply to overall markets in the world. Our vision is to make sure that we can put the user experience and the user interest first. This is a general principle for us. A very interesting fact that I would like to share with you is that in Norway, when we initiated the User Advisory Board, we thought that probably we should have around 200 people, but in the end, 700-800 people signed up for the User Advisory Board. From this example, we can see that actually the Norwegian people are quite willing to participate in those community events because previously through the media reports and other literature, they think that the Norwegian people are more cautious towards socializing with other people. This example has proven this is the wrong interpretation or the wrong stereotype of the Norwegian people. We believe that the user community concept should apply to all people in the world. Thank you, Edison. Thank you. Thank you so much. Your next question comes from the line of Paul Gong from UBS. Paul, your line is now open. Yeah, thanks everyone. I have two questions. The first question is regarding your plan to add three new models based on the NT2 in 2022. Given most of the NIO Space probably cannot put six models together, will you try to expand the average size of your NIO Space, or are you going to gradually phase out the existing first generation of the products? As just now you mentioned that you have shortened the depreciation and amortization of the first generation of your products. Does that mean it would be gradually phased out and migrated to the second generation of the platform? This is my first question. My second question is regarding the mass market brand. Can we have a little bit color when you think about the relationship of NIO brand versus your NIO mass market brand? It be more similar to let's say Mercedes-Benz and the smart, or BMW and MINI, or Audi versus say Volkswagen brand. How do you think about the relationship of the two brands? I recall in last quarter's results you mentioned that there is only one model in the Shanghai auto show that is Wuling Hongguang MINI EV Kiwi version. Is that an indication that somehow the recent online discussion say NIO's mass market brand would also launch some tiny small vehicles? Is it something you are bearing in mind at this moment? Thank you. [Non-English content] Overall speaking, we understand that different companies will have different strategies regarding their product offering. We would like to offer more diversified choices to our users, but we also need to strike a balance, because we're not going to like the traditional OEMs to launch a sea of products for the users to choose from. We are also not going to like other companies to just offer two to three products for the users to choose. We believe different users will have a different preference and taste regarding the body size, the body type, the design. That is why we would like to offer limited but diversified product offerings to our users. We understand the era of Model T happened 100 years ago, and right now the time and age is quite different for us. That is why this is our strategy. Regarding the products and the NIO Houses and the NIO Spaces, of course, we are going to adopt the digital technologies or probably use the rotation mechanism to make sure users can still experience our products in the NIO Houses and in NIO Spaces. According to the current data we have right now, it seems that the majority of our users actually place their orders online, we believe that this is not going to pose a significant issue for us. Regarding the new technology platform 1.0, we understand our current product based on the NT 1.0 is actually quite competitive if we compare with Audi, BMW, for example, their EV products. I believe our products are still quite competitive, and when it comes to their ICE products, I think our product actually does not belong to the same generation with their ICE products. For the new technology platform 1.0 products, we believe that they are still quite competitive and will continue to sell those products in the market. Regarding the three new products we are going to deliver in the 2022, we believe that this is not going to affect the upgrade pace or the normal upgrade pace of the products on the new technology platform 1.0. Just now, Stanley has also mentioned that we have taken a more prudent approach to shorten the depreciation and amortization period for the new technology platform 1.0. This also shows that in the future, we are going to upgrade our products on the NT 1.0. [Non-English content] I believe you have a very good question and you made a very good comparison. Yes, if we just take the positioning of the new brand and the new mass market brand, a simple comparison is going to be more like the relationship between Audi and Volkswagen, and Lexus with Toyota. This is more about the positioning of these two new brands. Of course, we are not going to enter the segment of Wuling Hongguang, we believe that they have already done a very good job in their specific segment. We would like to do something different and offer different products for the mass markets. Basically, our thinking is that we would like to launch a product that can have competitive pricing compared with Tesla's product, but have much better products and services. Not much better. Better. And have b etter. Much better service. Products and much better services compared with Tesla. Thank you very much. Very helpful. Thank you. Thank you so much. Your next question comes from the line of Jeff Chung from Citi. Jeff, your line is now open. Hey. Hi. Hello, Willie and Steven. Great results. I have three questions. One is about the ET7. If this price being set above CNY 400,000, can we say that the GP margin should be much higher than the current level of, let's say, around 30%-35% level GP margin, which is a potential? Secondly, it's about the export margin. Let's say if the scale reaches 2,000-3,000 units a month, can we say that that is a GP margin accretive? We heard that exports to overseas ASP could be much higher. Could you give us a little bit color, or do you think the export margin will be similar than the China domestic? That is the first area. The second question is about the D&A, and as you just mentioned that it's going to accelerate into the second half of the year. I just heard you said that that equivalent to the cost per car to increase by about 3%, right? Can I clarify this a little bit? Whether this would mainly reflect in the GP margin or the EBIT margin? Finally, it's about the R&D and SG&A. Previously, we expect this year's R&D to be around CNY 5.2 billion, SG&A above CNY 6 billion. Going forward into 2022, do you see that there could be still a potential that this cost should be increasing faster than our revenue growth? When do you think this cost growth will be slower than our revenue growth? Will it start from 2023 or 2024? Yeah, that's my three questions. Thank you. [Non-English content] Thank you for your question, Jeff. Overall, speaking for the gross margin targets, previously I have also mentioned that on the new technology platform 2.0, the vehicle gross margin target should be at the level of 25%. From the current data we gathered, it seems that the ET7 should be able to reach this target. But the actual vehicle gross margin of ET7 will need to be validated until the mass production and the delivery of ET7 to our users. For the other products or for the product on the new technology platform 2.0 including ET7, it will probably meet the 25% vehicle gross margin level, and this is the overall target for us. For the other margins, just like I explained, that we have a Battery as a Service, NIO Life, Battery as a Service upgrade, and the swapping services. All this is included in the other margins. This will also contribute to the improvement of other margins. For the export business, our current strategy is that we would like to have a global pricing. For the specific pricing in different markets, it will vary a little bit, considering the tax and the tariffs in different countries. We accelerated our depreciation and amortization for the fixed assets for NT1 product. That will be booked in the cost per vehicle. Gross profit margin, starting from Q3, will decrease by 2%, as I mentioned in prior questions. Yeah. Okay. Jeff, with regard to the expense ratio, we believe for now the next 12 months is a very decisive window for us to accelerate our product development and also service and charging infrastructure deployment. However, from the second half of 2022, our economy of scale will gradually manifest, and our expense ratio will start to decline again. Okay. Thank you. Thank you, Steven. Thank you, William. Thank you so much. Thank you. As there are no further questions, I'd like to turn the call back over to the company for closing remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact NIO's investor relations team through the contact information provided on our website. This concludes the conference call. You may now disconnect your line. Thank you. That does conclude our conference for today. Thank you for participating. You may all now disconnect.