Hello, ladies and gentlemen. Thank you for standing by for the second quarter 2022 earnings conference call of XPeng Inc. At this time, all participants are in listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. I would now like to 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 second quarter 2022 earnings conference call. Our financial and operating results were announced 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 the prepared remarks and the call will conclude with a Q&A session. A webcast recorded 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 U.S. Private Securities Litigation Reform Act of 1995. 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 included in the relevant public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that XPeng's earnings press release and this conference call include the potential 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 measures to the unaudited GAAP measures. I will now turn the call over to our co-founder, chairman, and CEO, Mr. He Xiaopeng. Please go ahead. [Foreign language] Hi, everyone. In the second quarter of 2022, XPeng delivered 34,422 vehicles, representing 98% growth year-over-year. For the fourth consecutive quarter, we ranked number one among emerging EV makers in China, as measured by vehicle insurance registration volume. Starting from the second half of this year, we'll launch a suite of industry-leading products and technologies developed in-house, as well as next generation smart EV models equipped with these state-of-the-art technologies. These upcoming product launches will bring our customers an unparalleled driving experience through innovation in both electrification and smart technologies. On August 10, we unveiled interior design of our new flagship G9 SUV and began accepting reservations. The pre-orders of G9 exceeded 22,000 within 24 hours, and this has exceeded the models that we launched previously, which were the P7 and G9 that were launched at the same period. The orders of G9 keeps increasing, which shows the strong demand from our customers. On August the 26th, the G9 will join us at the Chengdu Auto. We plan to announce the G9's price during its official launch in September and commence deliveries in October. With its stylish design, superior control and driving performance, lavish comfort and other luxury features that benchmark against luxury SUVs priced nearly CNY 1 million, the G9 has already proven itself a veritable flagship model in the SUV segment. The G9 also showcases our leadership position in electrification technology innovations as the first model to offer our groundbreaking end-to-end high voltage charging technology, which is comprised of an onboard 800V high voltage platform and 480 kW supercharging station, bringing the ultimate charging experience to our customers. With respect to smart technology configurations based on our industry leading city navigation guided pilot or CNGP, G9 will provide our next generation full scenario advanced driving assistance system to market. The G9 will significantly expand the coverage of advanced level driving assistance system, making driving easier and safer. I believe the G9 will be the market's best SUV under CNY 500,000 and become one of the best sellers among medium to large size SUVs. [Foreign language] I believe that based on our technological innovation and our platform, systems architecture, we will actually innovate and accelerate the pace of our new product launches to round out our offering with vehicles priced between 150,000-500,000 CNY. In 2023, we plan to launch a new B-class model, which will help us expand our market share in this segment. We'll also roll out a new C-class model next year to bring a compelling product to customers in need of additional cabin space with greater comfort. These two new models, in addition to the G9, will bolster our strong sales growth momentum to carry through next year. Meanwhile, leveraging our top-notch electrification and smart technologies and our platform development system developed in-house to constantly upgrade product performance, the average selling price of our products will rise accordingly. As our products' superior features boost their competitiveness among same class and even higher class models. With our concerted efforts to advance our platform-based vehicle architecture and multiple technological improvements in manufacturing, such as integrated die casting techniques, we expect a meaningful vehicle margin expansion for the G9 as well as our new models coming next year. Starting from G9, XPeng's commitment to long-term investment in proprietary electrification technology has fostered our leading edge in this area, while significantly enhancing our customers' experience. The G9 has leveled up XPeng's electrification technologies to the next generation. What's more, the G9 and subsequent new models will be fully compatible with high-power supercharging system, and we will consistently enhance charging efficiency for customers through technological upgrades. Our new models can not only achieve the best charging speed on XPeng's self-operated high-power supercharging network, but also allow our customers to have better charging experience in third-party charging stations. Benefiting from our leading high voltage platform, XPeng's new models will be able to obtain a higher power allocation and longer lasting peak power at third-party charging piles than other EV models. Besides, we have built our in-house capabilities in both the development and production of electric motors, where we also have been accelerating technology innovations. Looking ahead, we'll continue to uphold our unique approach to incorporate powertrain system designs into one cohesive vehicle architecture, leveraging a growing suite of electrification technology innovations to provide consumers with smart EVs supporting longer range, faster charging, and lower cost. XPeng's self-operated Supercharging network will further compound our advantages in electrification, technologies, and establish competitive edges. Our well-established self-operated Supercharging network already features one of the broadest coverage and the best customer experience among China's independent EV brands. As of early August, the number of XPeng's self-operated Supercharging stations reached 1,000, which is a new milestone. To fully support the mass delivery of our vehicle models featuring 800V high-power charging, we in-house developed 480 kW Supercharging stations, surpassing the industry's benchmarks in terms of performance and cost. Through technology innovations, our new generation Supercharging station not only achieves the power three times higher than the industry's mainstream 120 kW Supercharging station, but also make the cost at the same level of the previous generation Supercharging stations. XPeng's Supercharging system can charge up to 200 km range in five minutes. This outstanding charging performance demonstrates our end-to-end high-power fast charging capability constituted by EV battery capable of fast charging, onboard high-voltage platform, and Supercharging station, underlying the best charging efficiency in our industry. We began building our self-operated 480 kW Supercharging stations in August, and we'll soon step up our development in major cities and along main highways nationwide. By 2025, we hope to build another 2,000 high-power Supercharging stations to provide the best-in-class charging experience for our consumers and customers. In the upcoming years, XPeng's customers' charging experience will be completely revolutionized across all scenarios, including vacation trips, returning to their hometowns for the Chinese New Year, or long-distance travels. The scenario of using EV to drive in the city and ICE for cross-country driving will be completely changed very soon. Moving on to our smart technology advancements. [Foreign language] We are very excited to see that customers' acceptance of our advanced driver assistance system is growing at a steady pace, as is the positive influence of word of mouth among customers. As a result, our highway NGP mileage penetration rate in the second quarter reached over 65%. Beginning in early May, we integrated our XPILOT software as standard configurations on mid to high-end versions of our models, allowing a broader customer base to experience our industry-leading, best-in-class, more advanced driver assistance functions at an affordable price. It has helped us cultivate trust in XPILOT, reshaping driver habits towards a human machine co-pilot pattern, and provide hardware platform support for more innovative intelligence functions in the future. Among orders received from early May to the end of July, the proportion of buyers who chose mid- and high-end versions of our models equipped with XPILOT grew significantly to over 50%. [Foreign language] We are also expanding the boundaries of smart driving at an accelerated pace as we roll out next generation products that create greater value for customers. For instance, we have completed the development and testing process for City NGP in the second quarter. During an array of tests throughout challenging driving situations such as crowded downtown streets and rainy nights, our P5 model equipped with only 30 TOPS of computing power in combination with its sensor hardware to achieve the industry's highest safety and driving efficiency levels among similar scenarios. By taking the lead in exploring urban driving scenarios, we have amassed a tremendous amount of experience and developed deep insights into complex city road scenarios. Notably, the autonomous driving computing center we co-developed with Alibaba Cloud, Fuyao, commenced operations in early August. Fuyao's computing power can reach 600 PFLOPS, making it the largest domestic autonomous driving computing center in China. It will provide the requisite foundation of computing power for deep learning training, which empowers our full scenario advanced driver assistance system, and will facilitate the future development of level four autonomous driving algorithms. All of these advancements will greatly enhance our competitive advantages in smart technology. [Foreign language] Since this year, we have been very happy and excited to see the development of smart driving technology has received active support from governments at all levels. The Ministry of Natural Resources recently announced a pilot project that high-definition maps apply in smart driving vehicles in six cities including Beijing, Shanghai and Guangzhou. On this basis, we look forward to the public beta tests of the City NGP in the near future. The launch of City NGP showcases our capabilities as a pioneer in smart technology. We will leverage our competitive edges in talent, data, and system efficiency to further cement our leadership position in autonomous driving technologies, broadening our advantages in coverage, user experience, safety, performance and cost. [Foreign language] I believe that the revolution of driving habits and car purchase decision making driven by technology has begun. Our next generation technology to be unveiled next year will upgrade the architecture in all fronts, paving the way for fast and widespread adoption of Full-S cenario ADAS-enabled driving nationwide, and making safe and convenient intelligent driving software a reliable partner for users. I firmly believe that a Full-S cenario ADAS will become a core deciding factor in consumers' car purchase decisions, and that consumer adoption of ADAS software will become mainstream after the adoption increase of Full-S cenario ADAS in the future. Additionally, we have already commenced R&D for our robotaxi software based on a Full scenario ADAS, in an effort to utilize lower cost, mass-produced smart EV models and algorithms with strong generalization capabilities to lead the innovation. [Foreign language] Moreover, I would like to share recent development of portfolio companies in our ecosystem. XPeng Robotics completed over $100 million in Series A fundraising in July. Upon completion of the fundraising, XPeng Robotics will accelerate its R&D of bionic robots while pursuing synergies with E-smart EV technologies to create greater value. XPeng AeroHT's first manufacturing factory for production trials of flying cars officially came into service in July, marking a significant milestone in the development of XPeng flying cars. According to China Passenger Vehicle Insurance Registration data, BEV penetration rate reached nearly 20% in the second quarter of 2022, while BEV penetration rate excluding A0 class and A00 class was only 14%, clearly indicating a vast market potential with long-term disruptive opportunities for us. Although market competition is becoming increasingly intense, I believe we'll reap the rewards of XPeng's steadfast long-term investment in electrification and core smart technologies for years to come, as we bring more highly competitive new products to market. With the G9, we have taken electrification, smart technology, and platform development architecture to new heights. We will continue to propel innovations across software and hardware products, bringing consumers smart EVs featuring an unparalleled combination of advanced technology, brilliant design, and an exceptional smart driving experience. With the continuous advancement of our advantages in longer driving range, higher charging efficiency, and broader charging network coverage, XPeng will accelerate the transformation from ICEs and PHEVs in the mid to high-end markets towards BEVs. In the third quarter, we will work to overcome the impact of COVID-19 as well as seasonal factors. We expect to deliver a total of 29,000-31,000 vehicles in the third quarter of 2022, with estimated revenue of CNY 6.8 billion-CNY 7.2 billion. [Foreign language] 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 second quarter of 2022. Thank you, Mr. He Xiaopeng, and hello, everyone. Now I would like to provide a brief overview of our financial results for the second quarter of 2022. I will reference RMB only in my discussion today unless otherwise stated. Our total revenues were CNY 7.4 billion for the second quarter of 2022, an increase of 98% year-over-year, and equivalent to the level of the last quarter. Revenues from vehicle sales were CNY 6.9 billion for the second quarter of 2022, an increase of 94% year-over-year, and a decrease of 0.9% from the last quarter. The year-over-year increase was mainly attributable to higher vehicle deliveries, especially for the P7 and P5. Gross margin was 10.9% for the second quarter of 2022, compared with 11.9% for the same period of 2021 and 12.2% for the last quarter. Vehicle margin reached 9.1% for the second quarter of 2022, compared with 11% for the same period of 2021 and 10.4% for the last quarter. The quarter-over-quarter decrease was mainly attributable to battery cost increase, offset partially by the revenue increase as a result of selling price adjustment. Our R&D expenses were CNY 1.3 billion for the second quarter of 2022, an increase of 46.5% year-over-year, and an increase of 3.6% quarter-over-quarter. The year-over-year and quarter-over-quarter increase were mainly due to, number one, the increase in employee compensation as a result of expanded research and development staff. Number two, higher expenses relating to the development of new vehicles to support our future growth. SG&A expenses were 1.7 billion for the second quarter of 2022, an increase of 61.5% year-over-year and equivalent to the level of the last quarter. The year-over-year increase was mainly due to, number one, higher marketing, promotional and advertising expenses to support vehicle sales. Number two, the expansion of our sales network and the associated personnel costs and commission for the franchise store sales. As a result of foregoing, loss from operations was CNY 2.1 billion for the second quarter of 2022, compared with CNY 1.4 billion for the same period of 2021, and CNY 1.9 billion for the last quarter. Exchange loss from foreign currency transaction was CNY 0.9 billion for the second quarter of 2022, primarily resulting from the revaluation impact of RMB-denominated assets held in the U.S. functional currency subsidiaries and rapid depreciation of the RMB against the U.S. dollar in the second quarter of 2022. Net loss was CNY 2.7 billion for the second quarter, compared with CNY 1.2 billion for the same period a year ago and CNY 1.7 billion for the last quarter. As of June 30, 2022, our company had cash and cash equivalents, restricted cash, short-term deposits, short-term investments, and long-term deposits in total of CNY 41.3 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our second quarter financial results. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead. Thank you. If you would like to ask a question, please press star then one. We do ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Also, 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 questions. Today's first question comes from Tim Hsiao with Morgan Stanley. Please. My first question is about the technology innovation and how we are going to translate that into our vehicle sales, because XPeng is the leader in several technology domains, for example, like, CNGP and 800 V supercharging. How could we maximize the traction of all the technological innovation, especially in the premium mass market, where we notice consumers might be less tech-savvy and care more about their price-performance ratio and hardware spec? That's my first question. [Foreign language]一个新车，如果它的配价比合适，它在初期是会有比较好的销量的。但是如何在六个月到十八个月，甚至更长的时间内都有一个比较好的销量，我相信更重要的来自于它的品牌，以及来自于它持续给客户带来的这个产品上跟客户上的差异化。在过去的时间里面，小鹏P7实际上最开始交付的前六个月的销量并不大，但是当我们推出来了高速NGP的时候，以及当我们逐步推出来的新的配置之后，我们看到的这个销量的差异，这个变化是非常之大的。那么在过去的时间里面呢，实际上…… 先帮我翻译第一段吧。 All right. Thank you for the question. Actually we do not talk about performance over price ratio that much, rather we put more emphasis on the configuration versus pricing more. If the configuration for a particular pricing is good of our vehicle, then the sales will naturally increase. However, if you look at the sales performance for, you know, the subsequent six months and 18 months after the launch of a particular product, you actually have to rely on the branding, the after sale services, the product quality and the unique competitiveness of our products themselves. Let's take P7 for example. If you look at the first six months of sales performance of that particular product after its first launch, the sales wasn't that great. However, ever since we launched the City NGP function as well as other high quality configurations, in accordance with the P7's model, we definitely see a huge increase in the sales. 我相信在过去的时间里面，作为新能源汽车的这个客户，他们会关注整体汽车的这个配价比和平衡。那么更多的会在，在去年，在今年会关注整体的包括了续航，续航的成本、续航的安全、补能的方便性等一系列的问题。那么小鹏在过去的时间里面获得了很多对智能化感兴趣、充满爱好的这样一客户。那么我相信在小鹏从七九开始，我们在电动化如何能够在更低的成本、更长的续航、更好的安全性，更快速的充电的效率，以及更有规模化效应的这个充电网络里面，我们会做到第一个的平衡。那么这会导致了在未来的时间里面，对于纯电的整个使用体验，原来有认为不足的这个客户会得到满足。其次，我们小鹏的智能化，我相信在2023年从七九开始，这个我们的全场景智能辅助驾驶会是在智能化上第一个Killer App这样的一个应用，那么它会去打通客户在全场景使用智能辅助驾驶，在安全、成本、体验上的闭环的感受。 For the past four years, we have been able to attract a large quantity of customers that are interested in the configuration versus price ratio, or that kind of balance in new energy vehicles. Ever since last year, we notice that customers begin to pay more and more attention to the driving range of new energy vehicles, and also the safety of driving, and the charging experience, etc. As a result, because of our concerted efforts and commitment into boosting our performance in those areas for the past four years, we are also able to gain a lot of trust, and love and support from our loyal customers as well. In the future, especially going forward, as we continue to develop our smart technologies and electrification in different aspects in terms of extending the driving range, driving, safety, as well as the charging network and the convenience of charging, we will be able to enjoy the economies of scale benefiting from our previous R&D efforts. As a result, we believe that we can gradually convert those customers that were not so happy with the, for example, charging experience for new energy vehicles, as well as other aspects of the performance of new energy vehicles, and slowly transition them into adopting more and more new energy vehicle, especially BEVs. Going forward, especially since the launch of G9, we believe that with the adoption of full scenarios ADAS technology, we will be able to boost our performance of our products up a whole new level. Ever since that, we will be able to attract more and more users, and that will translate into our sales performance. Thank you. 那么以上两点增强了小鹏在下一代汽车里面的能力。但是还有一个非常重要点是，如何让整车的研发制造成本得以大幅度地下降。那么在这年，这里面我举出两个例子，第一个就是说从G9开始，是小鹏第一次将智能化、电动化跟整车技术平台统一成平台化。在过去的时间里面，小鹏每一款车都在进行快速的技术向前的迭代。那么从G9开始，我们在三条线的技术都能达到一个90分的这样的一个情况，我们会统一平台化，使大幅度价下降研发成本，并且提高整车的质量跟效率。其次，我们在制造工艺上面做了大量的研发，从2019年底，那么到了未来的两到三年里面，在制造工艺上会大幅度提高，我们在包括感官质量，包括颜值，包括一体化压铸，包括整车的这个CTC、C2、CTB等系列的，在制造工艺里面的我们的向前走的这样一个情况，那么这会相当幅度地降低整车的研发成本，提高效率。那么这三点的组合，我更有信心在未来的多款车里面，小鹏对于这一个全新技术里面，既能够满足客户的闭环的需求，又能够获得更好的这个销售的体验。 In addition to that, I would also like to mention that actually, with our commitment and investment in our R&D technologies, we are able to further decrease our cost of manufacturing and R&D in the future with the adoption of our platform based vehicle architecture, as well as our new generation of smartification and electrification technologies. Let's say G9, for example. This is our first flagship products that actually adopts the mature level of these three areas of technologies, which, as a result, are able to bring down our manufacturing costs as well as our R&D costs as well. Because for the past years, we've been, you know, every single product that we launch has been focusing on advancing technologies and iterating next generation technologies. In the future, we will begin to reap the rewards of our previous investment in the R&D. As a result, that will translate into a lot of reduction in our R&D costs as well as manufacturing costs. That will also contribute to the enhancement of our overall quality of the products that we are going to launch in the future, as well as enhancing the manufacturing efficiency and R&D efficiency as well. Since 2019, we've been investing in improving our manufacturing craftsmanship as well. As a result, in the upcoming 2-3 years, we believe that we will also welcome in a new generation of quality boost in terms of the overall user view of our both the interior and the exterior of our vehicles in the future, as well as, you know, the adoption of more and more integrated die casting technologies that will allow us to achieve future upgrade of our product quality. As a result, as I mentioned earlier, we will be able to actually lower our R&D and manufacturing costs as well as, you know, enhancing our overall product quality. In the future, we believe that we will be able to actually witness better sales performance as a result. Thank you. 好，非常感谢小鹏总详尽的分享。那我第二个问题想要跟进一下，因为刚才其实也提到了我们一些平台的策略，那是不是可以分享一下，就是我们在G9，好，就是X-PILOT 4.0之后的一个后续平台的一些策略。因为之前提到明年会有一个，好，两款车，B-class跟C-class的车型，那也会基于两个新增的平台。那我们有鉴于现在整个产品技术迭代也在加速，竞争也在加剧，那就您觉得新的这些智能电动车的平台合理的生命周期是多长？那每一个平台在生命周期里面能够支持多少数量一个车型的开发？My second question is about the platform strategy. Following the launch of G9 powered by X-PILOT 4.0, I think XPeng is going to launch two new models next year based on two platforms. In light of faster iteration and more intense competition, what would be the reasonable life cycle of our next generation platform? And how many models we plan to build on each of the platform throughout their life cycle? That's my second question. Thank you. 是的。我们在2023年会推出两个全新的平台，我们相信这两个平台加总共我们就会研发最少六款全新的汽车。我们相信在这两款平台的生命周期，最起码在第一个终期改款之前，我们认为它大概有三年的这样的一个生命周期。我们在最近还在讨论从现在的平台向无人驾驶里面升级过渡的方式，我们可以非常清晰地看到，其实到了2025年，我们这两款平台能够进行快速的平台升级，能够进入到下一步的智能化跟下一步的电动化的这样一个领域里面。所以我们相信，在智能汽车的平台化，我们相信小鹏已经进入到一个，我们相信进入了三到六年的这样一个平台化的一个周期，这会导致了我们在除了在最开始的开发成本会有一定的之后，后面每一款车的开发成本都会有大幅度的收减。 Thank you for your question. Indeed, in 2023, we aim to launch two new platforms to develop, in total, six new vehicles in the future that's based on our current platforms in total. We also estimate an average of three years lifecycle for each single platform before any system upgrade for those platforms. We also have been discussing internally a lot of possibilities to upgrade our current platforms to allow them to empower our next generation of smartification and electrification technologies in the future as well. In the future, we estimate that actually our products have already entered into a very good cycle of developing based on our platform-based vehicle architecture technology of using at least 3-6 years of lifecycle for those platforms, which will continue to fuel our future product development. Thank you, Mr. He Xiaopeng, for sharing. Thank you very much for sharing all the insight. Thank you. Our next question today comes from Jeff Chung with Citi. Please go ahead. 小峰总，各位投资者好，我是花旗的Jeff，那个想请问，就是看来明年是一个大的产品周期，因为有刚才听说这个有C级车、B级车、G9的这个revamp，然后，新的P7的话会有一个这个全新的大改款。所以我就想问，就是说新旧的车型加起来就，可能会达到这个六台新产品，啊，六台产品，啊，再加这个G3i和P5，那明年有没有可能就是挑战三十万这个，全年的这个销量。因为，感觉新产品的话应该也，也会大概是一万五千台，到两万台的一个单元销量，那旧产品可不可以就是维持在，一万到一万五这个水平，那更加是贴近可能一万台一个月，就，就是现在的这个旧的这个P7、P5和G3更加可能是贴近，一万到一万二的这个成熟的每月的这个销量，还是可以回到一万五，啊。就，就就是想问一下，到底是维持这个旧产品，在一万二的水平，这个难度会更大，还是就是说新产品，这个，这个增量，这个难度会更大，就想大家平衡一下。My first question is about the strong model cycle ahead in 2023. We are going to launch a full brand new product, the C segment, B segment, G9 and the midterm facelift P7. Could you give us some insight that whether we can challenge the annual sales run rate at about 300,000 unit level. If yes, could you break down the the portion between the old products and the new products. Whether the current old product P7, G3 and P5 mature sustainable monthly run rate can be maintained at 12,000 units. Thank you. 这 是 我 的 第 一 个 问 题 啊 。 谢 谢 。 Hey Jeff, this is Brian. Let me answer your question. First of all, as you know that we don't give guidances that far out, so I cannot give you a number, but I can give you some color regarding how do we see the new models gonna position and compete in our line up. First of all, I think we still see continued growth in our core product. For example, P7 with the update next year, we believe P7 will renew and continue strong performance. We have hope that G9 next year will exceed the monthly delivery of P7, so you can actually do a little bit calculation of what number that will represent. The next year's new models, the first half will launch a B-class based product that's actually gonna target even larger market segment. You could, you know, probably, you know, consider that to be a strong competitor to the current Model Y in the market. We believe that will actually also be a model that can generate substantial numbers in terms of delivery and sales. Obviously the fourth new product, the C-class product will be launched in the second half. Given the premium and large format positioning, the number may be limited in terms of contribution. Again, it's still gonna be targeting a brand new segment that we did not cover before. With that, you can get a sense of what the likely sort of peak level monthly delivery next year will look like. We're very confident about our strong growth. 好的，谢谢。我还有第二个问题，很快的，就是这个二季度的毛利率就是掉了一点点嘛，也是我感觉还是比市场想的要好一些。但是我们就看的话，就P7这个高毛利车，就是跟一季度比少了大概三千多台嘛，然后电池成本其实也有增加，那就感觉就是说我们的这个二季度的毛利率就相对还是比较defensive的，就是防守性比较强。就能不能给我们拆一拆，就是说P7的这个减少的产品组合可能降低了多少毛利率，电池成本是多少，降低了多少，然后毛利率的这个可能是防守性比较强，可能是那边软件那边的一些收入啊，能不能帮我们拆一拆啊，这个比预期还是比较好的。然后如果是这个可以给我们一个回答的话，那三季度我们怎么看这个毛利率的这个margin trend啊，因为我们之前给过一个指引，就是说三季度的这个margin可以回到一季度，那现在就是说这个三季度的毛利这个量的话还是比较保守啊，但是二季度的毛利又没有想象这么差，所以现在这么看的话，就怎么看这个三季度，那如果三季度还是防守性很强的话，那这就是一个底部，然后明年的model cycle就是一个大的model cycle啊。就想搞清楚这个逻辑，这个是怎么去想啊。 So my second question is about the GP margin in the second quarter. I think it's a little bit better than consensus. On the negative side, we had P7 sales volume declined by 3,500 units Q on Q, and this was a high margin product. Also after factoring the battery cost high Q on Q, it seems that the GP margin was still quite resilient. Could you break down the details, elaborate a bit on the second quarter? And also how about going to the third quarter? How do we see the margin trend? Thank you. Hey, Jeff, let me answer your questions, and Brian or Charles can supplement later. You are right, in the first quarter our vehicle margin was 10.4%. In the second quarter, the vehicle margin was 9.1%, so we dropped about 1.3 points. This was better than our original expectation, because we were able to price the battery cost increase. However, due to some you know accumulating the orders, so the new price order were delivered until late May. We could not fully recover the battery costs through the price adjustment. That's one difference. The other one would be, as you mentioned, the P7 mix in the second quarter was lower than 50%, so that has some mix impact. I cannot read the detailed numbers to you, but basically the margin reduction was primarily due to number one, the cost increase, which were not fully covered in the second quarter and then the mix changing. Looking forward to the third quarter, I think we will be able to deliver the new price orders starting from July, so that's good news compared with the second quarter. More importantly, we will have better product mix in terms of the P7 as a percent of the total deliveries compared with second quarter. We are anticipating the margin in the third quarter will improve compared with the second quarter, will be equivalent or very close to the first quarter level for the moment. That's all I can tell you, for the moment. Yeah. Jeff, let me comment on your sort of point about product cycle and also the current sort of whether if both from the margin as well as from growth rate, how do we see the current situation. As Dennis mentioned, the margin because of the mix change as well as the stabilization of battery, and also our orders are now reflective of the few price changes as well as there were sort of you know incentive mix change. We see third quarter margins should be stabilized and then perhaps better than the second quarter. Because we are starting to launch new products, obviously G9 being delivered in October will be the first of the few new product that we can launch. We start to see a growth being sort of generated from these new product launches as well as going to fourth quarter, we feel like the seasonality is in our favor. We do think there is a strong chance and strong confidence that we are going to a growth cycle led by our new product launches this end of this year as well as throughout the next year. As well as I think, with these new models also representing better margin due to the platform design as well as higher price points, compared to our ASP. Those are the observations I can make at the moment. Our next question today comes from Benjamin Wong with Credit Suisse. Please go ahead. [Foreign language] Ben, this is Brian. To answer your question, first of all, third quarter delivery guidance is what, you know, is considered all the information to date. It will include, you know, obviously all the promotion and price adjustments that were made in the past. I think the guidance is also reflective of the fact that we are entering to a relatively slow season. We can see that some of the traffics in the stores are less than what we've seen before because of post-COVID situations. I think there's a part also due to that, before the new model launch and deliveries, there are a little bit of people waiting to compare to existing purchases. All that I think you will see both from our experience as well as from peers' performance as well. On the margin front, I think what I would say is that the promotions that we offer to the models actually is less than the price increases that we made in the second quarter. Net-net actually the margin on the products is actually slightly better in this current sort of pricing environment, pricing mix. We are seeing improvement in third quarter or stabilization in third quarter margins. I don't think we have actually guided to back to the first quarter level yet, but I think we see stabilization improvement in the third quarter versus second quarter. Okay, thank you. Thank you. Our next question today comes from Ming Hsun Lee at BofA. Please go ahead. [Foreign language] My question is regarding the battery technology because you just mentioned that the charging speed is much faster than a current battery. Do you own the patent and the technology, or your supplier own it? Can they supply such kind of battery to other OEMs? What is the reason for you to manufacture the motor on yourself? [Foreign language] Now, thank you for your question. In regards to supercharging, now there are several aspects of the consideration in the technologies behind the supercharging. First of all, you have to look at the battery themselves and the management of the battery, the battery pack, as well as the whole vehicle manufacturing and design, as well as the charging piles. Now, we do conduct collaborations in terms of the R&D of the development of the batteries with our suppliers and our partners. We share some of those patents in those areas. However, we have in-house R&D capabilities, and we own the patent of our management of the batteries as well as the design and manufacturing of the whole vehicles and the charging piles as well. That's to the first part of your question. In regards to the second part of your question, which is about the reasons behind or the rationale behind the in-house development and research of our motors, it is because it's very important for us to control the quality for the development of the motors and to uphold the highest standards of the, for example, quality of our products, as well as to maintain the level of technology that we aim to achieve. In order to achieve that, we have to do the R&D in-house. Thank you. Hey, Ming, let me just add to answer your second question, the reason is better performance because our self-designed motor actually has a very compact design, also efficiency that allows us to prolong the range of the vehicles better than what we can get on the market. Okay. Thank you, Brian. Sorry, and a quick follow-up questions. Regarding a new model in 2023. Brian just mentioned that the product could be a comparable product of Model Y. Can I say it will be slightly smaller than G9, and price-wise will be slightly lower, so it has a large addressable market. Thank you. Yes, that's what it will likely to be positioned. All right. Thank you. Thank you. Our next question today comes from Paul Gong with UBS. Please go ahead. Yeah, hi. Thanks for taking my question. Just two questions. The first one, still want to discuss a little bit more on the Q3 guidance. Do you see it is more like a supply side constraint or demand side constraint? Is it like the supply chain, or do you see really it's a demand side, tempered due to the seasonality? And the second question is regarding the potential cannibalization. You are going to have a B segment SUV as well as a C segment model next year. Given you already have the medium sized sedan and SUV, P7, G9, how do you see the cannibalization versus each other? 和这个G9的一个内耗，我们能不能分享一下有没有一些相互的蚕食？ Hey, Paul, on the first question, I think I mentioned earlier that we see the weakness mostly due to seasonal weakness, but also post COVID control measures. There's a lack of traffic, and also ahead of the new model launches, there's a little bit of a comparison and wait-and-see attitude, which you saw, I think, in other models or other peers as well. From our own perspective also there's the level of orders not comparing with the supply chain because the mismatch in some of the order models. Those are the reasons that I think we have currently provided such a delivery estimate view. That's to answer your first question. Second question, you had on the new models versus our current lineup. We feel like first of all, there's very minimal overlap in cannibalization as what I answered just before this question, the new B-class model product in terms of size and in terms of price points will be different, compared to G9. It will be positioned also very differently, and competing with the very different, you know, different segment. Also, next year, the new models are not sedan models, so it does not compete with P7 as well. There's minimal cannibalization from our model positioning and lineup. Okay, thank you very much. Our next question today comes from Nick Lai with JPMorgan. Please go ahead. 关于全班，大家晚上好，我就两个简单的问题吧。很多问题其他的分析师都已经问了，第一个是有关这个芯片供应的问题，想 update 一下，我们理解是现在芯片的短缺应该不是个问题了，去年是 Bosch 这边 MCU 缺少比较多，但是现在我们去从供应商跟这个渠道了解，像芯片的除了少部分 Intel 的这些驱动芯片之外，应该大部分都没有 shortage 的问题了。那这部分有关芯片的，我想跟公司 update 一下，是不是当前的状况跟我们的理解差不多？那同样的有关这个供给链的问题，最近有些客户关心到这个国内一些限电的问题，不晓得对咱们供应有没有一些影响？这是第一个有关供给的问题，假设我可以的话，我直接问第二个问题，有关财务的问题，我们在二季度的时候有一个 8.9 亿的这个 FX 的外汇的损失，刚刚 Dennis 有提到说这个是子公司的一些研发抵扣等等，这个部分可不可以再帮我们多详细说明一下，就是因为这个人民币在四月、四月中有大幅贬值造成的 FX loss，但是假如人民币回升的话，这是可以 write back 的。The first question is really an update on chip supplies condition as well as any production impact from power shortage currently in China if at all. That's the first question related to production and supply equation. The second question is really on second quarter first half, we book about CNY890 million FX loss. Can we explain a little bit more on that? Thank you. 对，我觉得回答您的第一个问题，这个从去年开始，电芯和芯片的短缺问题始终在围绕着小鹏汽车。从我们现在目前来看的话，我相信从明年年初开始，电芯的整个的产能问题，在包括小鹏，包括整个行业会有一个比较好的缓解，这是我认为。那么在芯片上的话呢，在上半年这个有数十款芯片都是经常处于长期的高风险的这样一个情况，但是从目前来看的话，还处于高风险的芯片的数量有比较大的下降，但是就如同我们所说的这个，我们一台汽车有五千个芯片，所以芯片肯定可能或多或少的在这个智能汽车的体系里面，还会存在一些轻微的瓶颈，但是我相信在明年的时候也会相当程度的缓解。关于四川等一些城市的限电，目前来看的话，我们在供应链的管理上面，跟他们做了沟通，在比较提前就已经在有相关的沟通，所以从目前我们的小鹏的供应链里面来看，限电对我们的供应链的影响并不大。谢谢。 Let me address your questions. First of all, in regards to the chip and battery shortage, definitely since last year, we have been greatly challenged by these two problems in the supply chain. However, since we believe that the problem, the shortage in these two raw materials will be greatly relieved by the beginning of next year. Now for the first half of this year, there were a total of about 10 types of chipsets that were in high risk of supply shortage. So far we have seen a reduction in the number of the types of shortage that face high risk of supply shortage. As I mentioned, you know, previously there is a total of 5,000 different types of chips included in every single vehicle. So definitely chip shortage will still be a big problem. However, we are very excited and glad to see that the supply shortage is being relieved. Definitely by the beginning of next year, the problem will be much less stressful and dire for us. Now, in regards to the second part of your questions, because of very early preemptive measures and communications, we are not being challenged or troubled or concerned with the power shortage or a power supply shortage in, for example, provinces such as Sichuan. Thank you. Hey, Nick, this is Dennis. Let me first explain the so-called currency and exchange laws from the foreign currency transaction. Because when we had the U.S. IPO and the Hong Kong IPO, major money was raised and kept in the U.S. subsidiaries. The functional currencies, the U.S. dollar and through kind of intercompany lending, the U.S. subsidiary lend the money to the—I mean, the company, the subsidiaries in China through kind of intercompany lending. This is kind of the RMB-denominated assets held by the U.S. subsidiaries. In the future, the money should be returned back to the U.S., so to convert back to the U.S. dollar. When RMB has the appreciation, we will get the revaluation benefits. In the second quarter, due to the rapid RMB depreciation against the US dollar, this negative revaluation impact held in the second quarter. In the future, if the currency change, we would do that on a monthly basis. If RMB appreciates against the US dollar, that will have the positive gain on the foreign currency transaction. You're right, that's the trend. Nick, just to make it clear, first of all, it's not cash. It doesn't mean that we have converted the cash. It's just the valuation because of the currency exchange rate differences result in such sort of swings. Obviously, you know, every quarter we have to value the assets using our functional currency, and that's why there's differences resulting from that. Because the RMB exchange rate reacted pretty, I would say, significantly in the last quarter. Yeah, I understand. It's non-cash item. Thank you indeed, Dennis and Brian. Thank you. Our next question today comes from Jing Sang with CICC. Please go ahead. [Foreign language] This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000, compared with peer models? Can you share what we think are our major advantages and disadvantages? Whether there would be a new version of P5 next year? How should we expect the monthly sales volume at a steady state? year? How should we expect the monthly sales volume at a steady state? This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000, compared with peer models? This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000, compared with peer models? Can you share what we think are our major advantages and disadvantages? Whether there would be a new version of P5 next year? How should we expect the monthly sales volume at a steady state? next year? How should we expect the monthly sales volume at a steady state? This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000 compared with peer models? Can you share what we think are our major advantages and This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000 compared with peer models? Can you share what we think are our major advantages and This is my first question. How do we look at the competition pattern and consumer preference of the market priced at CNY 200,000 compared with peer models? Can you share what we think are our major advantages and disadvantages? Whether there would be a new version of P5 next year? How should we expect the monthly sales volume at a steady state? [Foreign language] I believe that the CNY 20,000 price range for the entire vehicle will continue to increase this year and even next year. The the CNY 20,000 price range for the entire vehicle will continue to increase this year and even next year. The competition in this range is mainly due to the driving range and the price-performance ratio. The second competition, I believe, is mainly due to the balance between the driving range, design and intelligence. due to the balance between the driving range, design and intelligence. In the P5 system, the P5 as a whole is able to achieve a better advantage in terms of intelligence and space. From what we see now, the sales of the entire P5 is stable. How do you now, the sales of the entire P5 is stable. How do you look at the P5 sales situation next year? [Foreign language] We may not give such detailed guidance now, including the quantity and level. I think that we, because the P7 has a new update, I think it will have the potential for continuous growth. The P5, I think, I think it will have the potential for continuous growth. The P5, I think, the competition is increasing. We believe the P5 volume will be at the current that level, there may be some reduction. I still think it has a strong competitiveness. With the launch of the CNGP, we believe it will be similar to the launch of the high-speed NGP of the P7. There will be a wave of sales to a higher level. This is our judgment. Thank you. Okay. Thank you. Thank you for your question. Now, in regards to the competitive landscape within the price range of CNY 200,000, we believe the competition will continue to be very intense for this year and the coming year as well. There are two types of competition out there, really. The first type is regarding the driving range as well as the performance over pricing ratio. The other is about the overall design and the smartification features for those kind of products. For P5, its advantages, it's definitely in regards to the you know it's very outstanding in terms of the overall design, its smart features, as well as its immersive and very immense sort of cabin space as well. We have observed a very steady sales performance for P5. In regard to P5 sales performance guidance for 2023, we do not give out guidance with that kind of level of details in terms of specific quantity of sales expectation. You know, because there are some smaller, you know, some new updates for P7, we definitely believe that, you know, maybe it will have a small impact on the sales performance of P5. Overall, we expect to see very good performance in terms of the sales for P5 overall. Also, as we observe, for P7 with the newly launched city NGP, we observed a boost in the sales performance, and we expect to see the same situation happen for P5 as well, which means that with the launch of a higher level of smart features, such as city-level NGP, the sales performance for P5 will grow. Thank you. 好的。我这边第二个问题是关于我们这边也主要提及了关于这个超级快充这边网络的一些建设，那也会进行一个比较大规模的一个推广。那想问一下，就是你们是怎么考虑可能这个超快充这边一个大规模使用的一个时间节点，我们认为是会可能非常快速的，可能普及到各个价格段的车型，然后包括可能消费者还是说可能需要通过可能这个几年的一个时间逐步地进行渗透，然后另外就是在这个高压平台，对整车可能核心的部件的一些采购和制造成本端，这边的一个成本的增加应该怎么去预期，然后高压平台的这个应用的车型，能不能够具备这样的一个降本的能力去实现一个价格的下探。My second question is how do you think about the timing of mass usage of super charging? Will it be popularized quickly or will it need to gradually penetrate over a few years? In addition, how should the high-voltage platform increase the per-unit manufacturing cost of the vehicle? Can it achieve a rapid penetration to a lower price model? 关于超快充网络，我们的建设速度跟使用的范围，我相信会比我们想象的要快。我们从这个季度开始，就开始在建设超快充，我们在下个季度，也就是今年第四季度，就会建立数十个站点。那么在2023年，我们会极大加速整个超快充建设。那么例如G9，G9除了在高配支持4C的充电之外，其他的配置全部都支持3C的，是这个超快充。我们在G9以后的平台上也都支持高电压大电流的快充、超快充体系。所以，包括G9在内的后面的平台，因为统一都在使用高压平台，实际上我们在高压平台的这一个供应链的管理、成本的管理上面，我们还是非常有信心的。那么只有把这样一个做出来，才有可能把超规模，就是说第一，车上要支持这个超快充，第二个，桩要能够布局的速度足够快。我们相信在明年的下半年，我们的超快充的网络就已经初步成型，以及在后年我们会进行大范围的成型。谢谢。 Now, in regards to the construction and the adoption of our super charging network, definitely it's developing quicker than expected. This quarter we started, you know, the aggressive construction of our network. By Q4 this year, we believe that we will have another dozens of new stations equipped with these supercharging facilities. By 2023 our supercharging network will be constructing even at a higher pace. Now for example, G9, you know, with its highest configuration model, you know, fully compatible with the 4C supercharging facility, all the other configurations and other, you know, models actually of G9, other versions of G9 actually support 3C supercharging function. In the future, you know, because our platforms right now will support this high voltage and high power supercharging facility, we believe that our future models will all be equipped with this kind of functionality, which means that we can be able to do better supply chain control to equip our future products with this kind of facility and allow us to achieve better economies of scale as well as cost control effects. Now, there are two things that we need to focus on when we talk about the supercharging network construction. One is development and the design of our vehicle products, you know to support this kind of high voltage super charging function. The other is the quickening construction of our super charging network and the charging piles. By the second half of 2023, we believe that you know we expect to see a very well established super charging networks that can fully you know promote the adoption of our super charging quick charging facility. Thank Thank you. 哎, 好的, 谢谢。 Ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference 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 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.