Hello, ladies and gentlemen, and thank you for standing by for the third quarter 2021 earnings conference call for XPeng Inc. At this time, all participants are in listen-only mode. After the management's remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex Xie, Head of Investor Relations of the company. Please go ahead, Alex. Thank you. Hello, everyone, and welcome to XPeng's third quarter 2021 earnings conference call. Our financial and operating results were issued by our newswire services earlier today and are available online. You can also view the earnings press release by visiting the IR section of our website at ir.xpeng.com. Participants on today's call from our management will include Co-founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Finance, Mr. Dennis Lu; Vice President of Corporate Finance and Investments, Mr. Charles Zhang; and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1994. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as are required under applicable law. Please also note that XPeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP financial measures to unaudited GAAP financial measures. We will now turn the call over to our Co-founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead. [Non-English content] In the third quarter of 2021, XPeng achieved another record with deliveries reaching 25,666 units, representing a year-on-year increase of 199%. Our total deliveries for the first nine months of 2021 exceeded 56,400 units, more than double last year's full year delivery. Furthermore, our monthly deliveries surpassed 10,000 units consecutively in both September and October, and will strive to reach the target of 15,000 units of delivery per month. Rapid growth in deliveries continue to drive our economies of scale, and P7's mix in our deliveries grew substantially to around 77%. Our gross margin in the third quarter increased to 14.4%, up 250 basis points from last quarter. [Non-English content] Our unwavering commitment to in-house developed full stack, autonomous driving software and core hardware underpins XPeng's ability to continuously strengthen our technology leadership. [Non-English content] At our annual Tech Day event, we showcased a P5 equipped with our City NGP development version, which was able to navigate through the complex driving scenarios in downtown Guangzhou. This highlights technological breakthroughs and rising popularity of advanced driver assistance system are transforming users' mobility experience at an unprecedented speed. As our mission, XPeng is accelerating technology, innovation and disruption in this field. [Non-English content] In our view, our competitive advantages on driver assistant systems stem from our capabilities, including passenger safety to vertically integrate hardware, software and massive data set in-house, overall cost-effectiveness, efficiency and rapid product iterations globally. Our ability to accumulate corner cases from complex and real-life driving scenarios across China is XPeng's core competitive edge, and will continue to strengthen our technology leadership over peers. The attach rate of XPILOT 3.0 software reached close to 20% in P7s in the third quarter, and revenue from software increased quarter-over-quarter. Among the more than 50,000 P7s that we have delivered as of September 30, over 11,000 units were equipped with XPILOT 3.0. During the third quarter of 2021, the average monthly utilization rate of our NGP for highway and the highway NGP mileage penetration rate each exceeded 60%. The NGP assisted our customers in driving approximately 5.51 million km or 3.42 million mi on highways. [Non-English content] Actually launch XPILOT 3.0 in the second half of 2022, we'll begin to explore the Robotaxi business. Our strategic goal in the near term is to improve the robustness and safety of our autonomous driving algorithms through generalization. I believe our ability to mass produce turnkey solutions, including vehicles and software, to potential mobility service operators, will bring a revolutionary mobility experience to users and create significant business value. [Non-English content] XPeng not only develops full-stack software in-house, but also design and integrate core hardwares in-house to achieve rapid iteration of technologies. For instance, we'll be one of the first in China to mass produce 800-volt high-voltage silicon carbide XP platform, and 480 kW high-voltage supercharging piles, which will allow 200 km of driving range through only five minutes of charging. The domain controller and the electric and electronic architecture equipped in our fourth EV model G9 were also developed in-house. We believe our ability to design these core hardware in-house will compound our competitive advantage in software, which will further cement our technology leadership. [Non-English content] We are accelerating our product rollouts in order to increase our product penetration in our target market with price ranges between RMB 150,000-RMB 400,000. In the third quarter of 2022, we'll begin the deliveries of our fourth EV model, the G9, which supports XPILOT 4.0. In our view, XPILOT 4.0 is going to fundamentally transform mobility experiences into the next stage. Our mission is to make smart EV accessible to a broader user group in largest passenger vehicles market segments, delivering revolutionary smart EV experience across our target market segments. [Non-English content] The G9 will be our first mass produced smart EV that supports XPILOT 4.0. Meanwhile, the G9 will be equipped with an 800-voltage high voltage silicon carbide platform, and XPeng's new proprietary X-EEA 3.0 electric and electronic architecture that hardware, software architecture to achieve power performance and high flexibility. Also, I would like to highlight that G9 is our first model to be conceived and developed from the ground up for the international as well as the Chinese market. [Non-English content] We also continue our charging network. As of September 30, the number of XPeng-branded supercharging stations is 90 across 121 cities. The total number of supercharging stations reached 1,648. We are the industry pioneer deploying supercharging capabilities across the entire Beijing to Shanghai. The 30 XPeng-branded supercharging stations enable XPeng's customers to access our supercharging facilities every 170 km on average. We expect XPeng-branded supercharging stations to be more than 600 by the end of the year, accelerating our supercharging network expansion across lower-tier cities. We expect to accomplish the construction of infrastructure supporting XPeng's supercharging network spanning all prefecture-level cities in China this year. Furthermore, we will build on our well-established charging facilities. [Non-English content] On the overseas business front, XPeng P7 was launched in Norway on October 25th. We will explore opportunities to expand in Norway and other European markets such as Sweden, Denmark and the Netherlands, and improve our sales, delivery and service network continuously. [Non-English content] With respect to manufacturing capabilities, our first plant, Zhaoqing plant, is currently running on double shifts, with production lines working up to 20 hours per day and production is ramping up rapidly. Total designed production capacity of Zhaoqing plant and the plants being built in Guangzhou and Wuhan will be more than 400,000 units per year. By adopting a double shift production at these plants, annual production can reach up to 600,000 units, laying a strong foundation for our high growth in the next two years. [Non-English content] On October 19th, XPeng's Urban Air Mobility affiliate, HT Aero, announced that it has entered into a definitive agreement with a consortium of investors to raise over $500 million for its Series A capital funding. This marks the largest single-round fundraising to date in Asia's low-altitude flying vehicle sector. [Non-English content] XPeng is always committed to upholding the highest standards in ESG practices and is driving contributions to China's carbon neutrality goal by advancing our green, eco-friendly, smart mobility offerings. On October 15th, XPeng released its inaugural ESG report and notably, for two consecutive years, XPeng received an AA rating from MSCI ESG Research, topping its global auto peers. In the near future, we expect to make greater contributions to carbon neutrality through technological innovations utilizing our in-house developed full stack technologies. [Non-English content] In conclusion, we'll make every endeavor to overcome the challenges stemming from chip shortages and the COVID-19 pandemic, which is still prevalent in some parts of the world. In the fourth quarter of 2021, we expect our Smart EV deliveries to be approximately 34,500-36,500 units, and our total revenue to be approximately RMB 7.1 billion-RMB 7.5 billion. [Non-English content] Thank you everyone. With that, I'll now turn the call over to our VP of Finance, Mr. Dennis Lu, to discuss our financial performance for the third quarter of 2021. Thank you, Mr. He, and hello everyone. Now I would like to provide a brief overview of our financial results for the third quarter of 2021. I will only reference RMB in my discussion today, unless otherwise stated. Our total revenues were RMB 5.7 billion for the third quarter of 2021, an increase of 187% year-over-year, and an increase of 52% quarter-over-quarter. Revenues from vehicle sales were RMB 5.5 billion for the third quarter of 2021, an increase of 188% year-over-year, and an increase of 52% from last quarter. The revenue increase were mainly attributable to higher vehicle deliveries, especially of the P7, resulting from channel expansion and brand equity improvement. Revenues from service and others were RMB 0.3 billion for the third quarter of 2021, an increase of 182% year-over-year, and an increase of 47% quarter-over-quarter, mainly attributed to more income from service, parts, and accessory sales in line with higher accumulated vehicle sales. Gross margin was 14.4% for the third quarter of 2021, compared with 4.6% for the same period of 2020, and 11.9% last quarter. Vehicle margin reached 13.6% for the third quarter of 2021, compared with 3.2% for the same period of 2020 and 11% last quarter. The vehicle margin improvement was primarily attributable to better product mix and manufacturing efficiency enhancement driven by economies of scale. R&D expenses were RMB 1.3 billion for the third quarter of 2021, an increase of 99% year-over-year, and an increase of 46% quarter-over-quarter, mainly due to one, increase in employee compensation as we grew and expanded research and development staff. Two, higher expense relating to the development of the G9, the P5, and related software technology to support future growth. SG&A expenses were RMB 1.5 billion for the third quarter of 2021, an increase of 28% year-over-year, and an increase of 49% quarter-over-quarter, mainly due to one, higher marketing, promotional, and advertising expenses to support vehicle sales. Two, expansion in our sales network and associate personnel costs and commission for franchise store sales. Our income was RMB 0.2 billion for the third quarter of 2021, including government subsidies of approximately RMB 0.3 billion, partially offset by relocation and disposal costs, about RMB 0.1 billion related to the Haima brand. Loss from operations was RMB 1.8 billion last quarter. Excluding share-based compensation expense, the non-GAAP loss from operations was RMB 1.7 billion for the third quarter of 2021, compared with RMB 0.2 billion for the same period of 2020 and RMB 1.3 billion last quarter. Net loss was RMB 1.6 billion for the third quarter, compared with RMB 1.1 billion for the same period a year ago and RMB 1.2 billion last quarter. Non-GAAP net loss was RMB 1.5 billion for the third quarter of 2021, compared with RMB 0.9 billion for the same period of 2020 and RMB 1.1 billion last quarter. In July, we completed dual primary listing in Hong Kong. As of September 30, 2021, our company had cash equivalent, restricted cash, short-term and long-term investment, and deposits in total of RMB 45 billion. To be mindful of length of our earnings call, I will encourage listeners to refer to our earnings press release for further details. This concludes our prepared remarks. I will now open the call to questions. Operator, please go ahead. Hi, operator, would you please go ahead? We are ready for Q&A. Hello, can you hear me? Yes, we can hear you. Please go ahead to start Q&A. Thank you. Again, to ask a question, please press star one on your telephone keypad. For the benefit of all the participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. Our first question comes from Tim Hsiao from Morgan Stanley. Your line's open. Hi，Mr. He, Brian, Dennis. Again, thanks for taking my questions and congratulations on the great results. I have two questions. The first question is just want to quickly follow up about the robotaxi plans we just mentioned during the presentations. Could you share more details in terms of the scale, business motive, business model and more? Is it more like a demonstration of the capability of XPILOT 4.0 taxi fleet operation next year or simply leverage P5 for the fleet operation in Gu--[Non-English content] [Non-English content] Thanks for your first question. Now still in the process of doing internal discussion, so I can only share with you some of the basic and initial frameworks and some thoughts. Basically we are going to adopt the current models that we have, and we are going to use XPILOT 3.5 to 4.0 or even further future OTA versions on these fleets. Our motives or targets to test and train our closed-loop capability of integrating software, hardware and also our data capability in urban roads, so that we can serve the future development of XPILOT 4.0, 5.0 or even further more advanced versions of our XPILOT software upgrades. We are also not looking into doing mass services in the future, we are looking to partner with the current operators so that we can together contribute to the development of this industry. Great. My second question is about P5. I think we already touched on the topic a little bit during the presentation, but could we have more updates on P5 order intake and backlog at the moment? Probably just some rough quantitative guidance would be great. Roughly what percentage of the consumers are willing to take the cars first without LiDAR? In the meantime, could we have a rough idea about the order mix of 550P and the 600P, are the two models with LiDARs integrated? Thank you. [Non-English content] Hi Tim, it's Brian. Let me first of all respond. We never give guidance or forecasts on our specific orders and backlogs, so that has been our policy since our listing. Just to give you some color on P5, we actually saw very robust demand as Mr. He stated in the opening speech. We actually saw the backlog now extends to post the Chinese New Year. On average in some models up to four months of backlog wait time. That's also very indicative of robust demand. In terms of the mix, the only thing I can tell you is just a few facts. One is that more than 50% of the orders that we received are for software subscription models, which incorporate XPILOT 3.0 or 3.5, what percentage of those have chosen to take delivery and have a future install. Actually more than 80% of people actually have chosen that option. We actually see very strong, favorable, sort of reception to our P5. Thank you, Brian. Thank you, Mr. He. Congratulations again on the great result. Thank you very much. Our next question comes from Jeff Chung from Citi. Your line is open. [Non-English content] OK, so let me trans-- so question one is about Robotaxi. So can we quantify our solution on Robotaxi how much cheaper than Baidu and uh... Secondly is about our autopilot first half next year, given that our autopilot 3.5 urban version OTA. For P5, the three out of five model will offer this function, and this is a much higher than the P7. One model out of three. My last question is about thank you. [Non-English content]. [Non-English content] Thank you. Let me take the first question. Now in regards to Robotaxi, basically we're going to adopt all of our mass produce models, so technically speaking, their cost would be a lot cheaper to our competitors. On average, every month, we expect to see 8,000-10,000 km of driving mileage that we can accumulate from our fleet. The purpose for using those kind of fleet as Robotaxi is to gain further ability and capability of getting more knowledge in the maps and also accumulated corner cases in our database, so that we can further explore and enhance our overall capability of integrating the software, data capability, hardware, and also to build up a higher level of safety and reduce the cost further. Thank you. Tim, this is Brian. Let me address your next two questions. First of all, on the question of P5 software subscription. Again, I don't want to offer any guidance and forecast, but I want to point to a few facts. First of all, right now we're seeing more than 50% of the orders for P5 are for the software subscription-ready hardware models. So definitely you can see the mix is higher than the P7 that we actually see in terms of the software capable models. Secondly, the delivery of the software subscribing models also was subject to some supply chain bottleneck, as you saw earlier. We actually need to install some of the radars post the delivery. So as a result, we also offered software for free for some of these customers. So I think in the short term, you will see the impact due to a number of these factors. But in the long run, we're confident that P5 will see higher software subscription rates for both XPILOT 3.0 or XPILOT 3.5 software. As you know, XPILOT 3.5 software is priced higher than XPILOT 3.0. Your third question on the guidance. Again, I don't want to give additional color on specific month delivery, but I want to reiterate two things. One is that striving for hitting a monthly peak delivery of 15,000 per month in the next two months. So that's our goal and I think we have Good chance of hitting that. Second thing I want to mention is that the supply chain constraint is still very severe. The visibility to the chip shortage as well as some other constraining factors is very short and not very reliable in the coming months or so. That's why I think we provided the guidance with the best knowledge that we see today. I think you know this is where we see and also how we feel about the monthly delivery peak of our ride. Our next question comes from Ming Li from Bank of America. Your line's open. [Non-English content] My first question is regarding the G3. Because in third quarter, you start to make G3 in your own plant. How do you see the margin improvement after you make the car in your own plant? Also, in the future, when do you expect to launch a facelift or a new generation of G3 to improve the margin of the product? My second question is what is the different functions between XPILOT 3.5 and 4.0 City NGP? Yeah, Ming, this is Dennis. Let me address the first question. We actually moved our G3 to our Zhaoqing own plant in August to commence with the facelift model, the G3i. As you rightly pointed out, we actually can see the scale improvement. So we see the better labor and overhead efficiency compared with in old days we have the Haima to do the contract manufacturing. So we are seeing the margin improvement on G3i already, which we have launched and we are selling the vehicle already. That's number one. [Non-English content] For your second question, actually, we're not going to disclose any more details of the difference between XPILOT 3.5 and XPILOT 4.0, because we're gonna launch and talk more about XPILOT 4.0 next year. But right now I can give you a general idea about the differences. Basically, for XPILOT 3.5, we are able to cover the urban NGP function that supports quite a number of cities and some urban roads. But that is comparatively smaller in number compared to XPILOT 4.0 because we expect XPILOT 4.0 to be able to support the majority number of roads and cities in not just China, but also Europe as well. On top of that, XPILOT 4.0 is also equipped with a higher level of sensing capability, electrical and electronic architecture and also a more stronger sort of algorithm calculation computing power as well. [Non-English content] Thank you. Our next question comes from Bin Wang from Credit Suisse. Your line's open. Thank you. I got two questions. Number one is about the margin improving. Can you break down the different factors about gross margin increase? For example, how much came from the higher take rate of the XPILOT? How much came from the efficiency and how much came from the product mix? Thank you. That's number one. Number two is more technology question, because you actually will migrate to the 800V system. Does that mean for current supercharging network need to have a dramatic rebuild? What's the rough cost for rebuilding from current maybe 350V to 800V? Thank you [Non-English content]. [Non-English content] Hey, Bin Wang, this is Dennis Lu. Let me address your first question. Regarding the quarter-over-quarter margin improvement, the margin improvement came from the mix improvement. You know in quarter two, our total P7 accounted for about 66% of our sales in quarter two. In third quarter, because of the G3 migration, we actually sold more P7. P7 accounted for about 77% of total sales in quarter three. That's the major reason for the margin improvement. The other improvement would be for the labor and overhead efficiency due to the economies of scale, because now we are producing all the vehicle in our plant, so we see the kind of efficiency improvement. However, we also have some cost increase to offset partially the good news, for example, the raw material increase and also the chip shortage that offset partially the good news I mentioned, briefly. I hope I address your first question. [Non-English content] Let me take the second question. Now for G9 and other future models, we are going to adopt the 800-volt high-voltage charging. For our current charging piles, we are going to upgrade them to, I mean in the future to 360 kW, and also in the future 480 kW. As we lay out our deployment of super charging stations, we are going, I mean the new ones we're going to take the high-voltage charging facilities, such as 380 kW and 480 kW for sure. There won't be any waste because we will gradually roll out our plan and network building for a construction for the charging facilities. [Non-English content] [Non-English content] Yes. Because each charging station consists of different piles of the different voltage. We are going to be able to diversify the kind of piles in each single station. Yeah。 Our next question comes from Nick Lai from JP Morgan. Your line is open. [Non-English content] Nick, we lost you. You still there? Nick? His line got disconnected. Are you back? Our next question will be. Okay。 Yes. Our next question will be from Edison Yu from Deutsche Bank. Your line is open. Great. Thank you for taking the question. I actually just have one, could you maybe go over long term what kind of opportunity you see in Europe? Obviously don't expect anything too concrete, but what kind of potential volume or what kind of percentage of market you can maybe target or expect to see there, you know in the longer term. [Non-English content] Hi, Edison, it's Brian. First of all, I mean to answer your question, I want to emphasize that our current plan in Europe is mainly focused on building our presence- Capabilities and also make sure we have the right network and brand awareness build up. We are not emphasizing on delivery numbers in the near term. In the long run, I would say that multi-year, we actually see ourselves as in a global company with around half of the volume ultimately will come from outside of China and half volume inside China. That's our goal. That's again, this multi-year goal, but that's what we're striving for. Thank you. Our next question comes from Paul Gong from UBS. Hi, thanks for taking my question. I have two questions. The first one is still regarding the autonomous driving. My understanding is, from the XPILOT 3.0 to 3.5, hardware-wise, you cannot migrate to the newer version because of the different configuration of the hardware. How about from 3.5 to 4.0, will you support upgrades among the hardware for the previous buyers of the system? [Non-English content] [Non-English content] Actually, the hardware cannot be migrate to XPILOT 4.0 because of the fundamental upgrade in computing power and sensing capability. We also upgrade the whole electronic and electrical system as well. Basically, these two XPILOT systems are built on top of two very different infrastructure. Also, we are laying the foundation for the future development of L4 level of autonomous driving. You will see fundamental changes in terms of the ACC, LCC and also APA programs. Okay. My second question is regarding the Norway operation. I think G3 has been available there for over one year, and P7 was available since last month. So far, how have you been faring in the learning process in Norway? Like, what lessons have you learned? What has been preventing you from selling more vehicles over there, given the cost advantage and some of the smart features of XPeng's cars are pretty competitive in that market? [Non-English content] [Non-English content] Our international strategy determines that our target between 2020 to 2022 is to lay the good foundation for our international expansion in the following aspects, which are the software and hardware R&D development, our safety and data protection, and also our team and organization structure revamp. Basically, in Norway and other international market, you would see us doing more restructuring and exploration in terms of our products, technology and also our organization. Sales right now is not our priority in the international market. In the future, from 2020 on to 2025, we are going to conceive and develop models that are suitable for not just the Chinese market, but for the international market, in the sense that we are going to comply with all the safety regulations and environmental regulations to the highest standards in the European market as well as just global market in general. By that time, I think we'll be more prepared to hit the sales target or further expand into the overseas market. Thank you very much. We're clear. Hi, operator. We are ready for closing remarks. Thank you. All right, please go ahead. Okay, operator, Nick, you still have one more question left for JP Morgan Nick Lai. Okay. Our next question again is from Nick Lai. Your line's open. Okay, can you hear me? Hello? Yes. Okay, perfect. Yeah, now let me ask question very briefly. I know I'm running out of time, but maybe two questions quickly. One is on the profit margin outlook, and the second is on G9 sales outlook. Let me ask quickly in English and then translate in Chinese. On the profit margin, indeed, great result in third quarter. As we move toward first half next year, how should we think about possibility considering positive and potential industry headwind? On the positive side, P5 should contribute to the initial volume, and P5 share large part of component with G3, so we should have some efficiency gain. At the same time, we have incremental material price hike and also P5 carry the profit margin. That could be margin dilutive as we sell more P5 into first half next year. That's the first question on margin. The second on G9 sales. Considering G9 addressable market, how should we think about the monthly run rate when G9 is fully ramped up? Is it fair to compare G9 with comparable peers like NIO's ES8 or maybe Li Auto's product? [Non-English content] Hey, Nick, this is Dennis. Let me address the first question regarding the margin. As I mentioned previously, our quarter three margin improvement compared with quarter two is primarily due to the product mix improvement, more P7. You're right, going to the first quarter, we will deliver P5, and then the G3i volume will be better than the old model. The mix will have the impact. I mean, the P7 percentage in terms of total sales will reduce. Having said that, we are actually in our future product, including the G9 and the future model, we will have better margin. For example, bigger car, we have foreseen a better margin for the future models. You will see, you know, the near-term impact due to the mix change. Going to next year, we actually will see more good news from the better product mix, including the new product introduction. Yeah, Nick, it's Brian. Again, no forecast on G9 unfortunately. I just wanted to tell you that we are very confident that G9 will be a flagship product that, you know, will deliver, I think, results similar to our top-selling models for a number of reasons. First of all, the G9 is positioned and the size more similar to ES6 than ES8, so the addressable market is actually much bigger. Second, upon the launch of G9 at the time, it will offer superior, you know, capability in a number of areas in terms of autonomous, highly capable autonomous driving capabilities, as well as fast charging capabilities, and leading electric architecture component for, you know, much faster upgrades, et cetera. We think it will be probably one of the most technologically superior products coupled with you know the attractive design and also by then a leading you know infrastructure of XPeng network. We're very actually confident that it will achieve you know strong debut. Also to note that G9 is designed for the global market so that product not only will be sold in China it also be designed and sold in international markets and with Europe specifically in mind. I think we think this is gonna be a very important product for XPeng going forward. Yes. Thank you, Brian. Thank you, Dennis. There is no further question this time. You may continue. Thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's investor relations through the contact information provided on our website or The Piacente Group Investor Relations. This concludes today's conference call. You may now disconnect your line. Thank you.