Hello, ladies and gentlemen. Thank you for standing by for Zeekr's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Yuan Jing, the CFO of Zeekr. Please go ahead. Hi, this is Jing. I'm the CFO of Zeekr. Thank you, operator. Good evening, good day, and good night, everyone. Good morning, everyone. Welcome to Zeekr's second quarter twenty twenty-four earnings conference call. I will now read the standard disclaimer. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission. The company does not take any obligation to update any forward-looking statements except as required under applicable law. Joining us today from Zeekr senior management are Mr. An Conghui, Co-Founder and CEO, Ms. Xu Yun, VP of Vehicle Development, Mr. Chen Qi, VP of ADAS, and Mr. Jiang Jun, VP of Smart Cockpit. I am Jing Yuan, CFO. Our CEO will make his remark in Chinese, followed by an English translation. With that said, I will now turn the call over to our CEO, Mr. An. Hello, everyone. Thank you all for joining Zeekr's second quarter twenty twenty-four earnings call. In the second quarter of twenty twenty-four, the new energy vehicle market sustained its strong growth momentum, with BEV market penetration rates climbing to a record 28%. However, the competition across the board, broader market remain fierce. Despite economic headwinds and industry challenges, Zeekr remain deeply committed to the product excellence and delivering an ultimate user experience. We are relentlessly pursuing the next stage of growth, driven by our efforts to heighten the brand awareness, ongoing investment in cutting-edge technologies, and a laser focus on improving operational efficiency. Today, I would like to change the pattern of our earnings call, and to leave more time for the Q&A session and to improve the efficiency. Today, I am very pleased to welcome our Mr. Yuan Jing, our CFO, Mr. Chen Qi, our Vice President for the ADAS Development, Ms. Xu Yun, who's in charge of our product lines, and Mr. Jiang Jun, who is in charge, Vice President in charge of our infotainment development. So if our dear members have some specific questions on our latest technologies, please feel free to raise the questions to them. So now here is my opening, and now I give the floor to the Q&A session. Thank you. To our CFO. Thank you. Thank you, Andy. Hello, everyone. I will spend the next five to ten minutes, very quickly go through the financials. If you look at our total revenue for the second quarter this year, it amounts to CNY 20 billion, which is an increase of 58% year over year or 36% quarter over quarter. As you can see, the total revenue are made up of three parts: vehicle sales, sales of batteries and other components, and R&D services and other services. If you look at the vehicle sales revenue, it amounts to CNY 13.4 billion, with a year-on-year increase of almost 60%, of course, on quarter increase of almost 65%.... The gross margin of that segment raised slightly to 14.2%, thanks to a increase the sales volume of our vehicles in the quarter, which are slightly offset by the lower average selling price due to different product group and pricing strategy. Revenue from sales batteries and the components was RMB 5.3 billion, representing an increase, year-on-year increase of more than 36%, and a quarter over quarter decrease of slightly over 16%. The gross margin of this segment for this quarter is more than 20%. Thanks to the kicking of cost reductions, we obtained some surprise in second quarter of this year. If you look at the 2024 first half numbers, the gross margin is around 12%-13%, which we believe will be in line with our overall annual guidance, gross margin guidance for this segment. The gross margin for this year will be around 10%-12%. If you look at the R&D service revenue, it amounts to CNY 1.2 billion for the quarter, represents a more than 300% increase year-over-year or more than 400% increase quarter-over-quarter. Having said that, the absolute amount of that segment revenue from that segment is slightly, is also quite small. So, we do believe, you know, it will, it won't impact on the performance of the company that much. R&D expenses was 2.6 billion RMB for the second quarter of this year, representing an increase of almost 90% year-over-year or 46% quarter over quarter. The increase is mostly due to share-based compensation. The allocation of share-based compensation to my R&D personnel for the quarter is about CNY 530 million. The SG&A for this quarter is 2.6 billion RMB, which implies a year-over-year increase of more than 60% and a quarter over quarter increase of more than 33%. That increase is also mostly due to the share-based compensation, which amounts to CNY 390 million for my SG&A personnel. The net loss for the company for this quarter is 1.8 billion RMB. But if you look at the non-GAAP net loss, which I know, as you can see, subtract the share-based compensation is 865 million CNY, which implies a year-on-year decrease of more than 36% and quarter over quarter decrease of more than 57%. The share-based compensation we recorded for the quarter amounts to 940 million CNY. And we expect the full year share-based compensation hit to my P&L at around 1.1-1.2 billion CNY. If you look at my CapEx for the quarter, it amounts to 680 million CNY. For the first half, the CapEx, about 1.1 billion CNY, which is in line with my guidance of around 1.9-2.1 billion CNY CapEx for the year. We also recorded a positive operating cash flow and free cash flow for the quarter. The quarterly operating cash inflow is 1.5 billion CNY, and the free cash flow inflow is around 820 million CNY. So which leads to my balance of cash and cash equivalents, and restricted cash at hand at more than CNY 8 billion by end of June thirtieth, by end of June. So, this concludes my prepared remarks. As Andy promised, we will now turn the call over to the operator to start our Q&A session. Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, 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 raise your question in Chinese, please immediately repeat your question in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. Thank you. And our first question comes from the line of Tim Hsiao with Morgan Stanley. Please proceed with your question. [Foreign Language] An Zong, 你好，各位管理层好，感谢接受我的提问。我一个问题是有关我们这个车型的一个计划，因为，今天其实在稍早的这个吉利控股的业绩会上也提到了，好，就是我们明年上市的这个大型的SUV车型，和可能部分改款会将考虑使用这个插电的平台，那是不是可以还是请安总，以及管理层稍稍分享一下，就进一步的一个车型规划。那目前上市车型是不是也会后续会有一个插混的一个版本？那我们对于这个销量的比重大概会有什么样的预期？那另外，当这个极氪这边纯电和插混车型布局完整之后，会不会也和领克，就集团这边领克的目标市场会有部分的重叠？这是我的问题。My question is about the model pipeline, especially regarding the types of the powertrain. Because management mentioned at Geely's result briefing that, there's a subsequent large SUV launch next year, with that also adopt a PHEV powertrain, the hybrid powertrain. So just wondering if the management can share a bit more information about the plan. In addition to the new launches, will Zeekr also launch PHEV versions, for incumbent models? And what kind of volume mix, we should be looking for, between the BEV and PHEV? In the meanwhile, after having both the BEV and PHEV ready, will Zeekr's new market partially overlap with that of, Lynk & Co on the Geely Group, despite the difference brand positions? That's my question. Thank you. [Foreign Language] Okay, thank you, Xiao. First, I want to briefly introduce this year's situation, our product situation this year, and then introduce next year. This year, our 001 and 007, in August, just a few days ago, as everyone saw, we completed the entire upgrade plan. The 009, in July, last month, we launched the all-new 009 as well. This means that this year we have already completed the upgrade plan for our existing products. That is our product situation. For this year, we also have two brand new models. The 7X will be unveiled at the end of August at the Chengdu Auto Show, and at the end of September, we expect to start deliveries. The MIX, we expect to start deliveries in the fourth quarter. This is the overall new product plan for this year. I also believe that after the completion of the upgrade for the 001, 007, and 009, we can maintain or even increase their sales. We also believe that this year's 7X will further boost our sales and provide strong momentum. Thank you so much, Mr. Xiao. I would first like to introduce our product planning for this year. This year in August, we launched our facelift top model year versions for the Zeekr 001 and Zeekr 007, and we also launched the upgraded Zeekr 009 in July. We have finished the upgrade of all our existing models. With regards to the new models, we would unveil our Zeekr 7X SUV at Chengdu Auto Show, which would take place in the end of August. We plan to start deliveries of Zeekr 7X from the end of September. With regards to the MIX, we plan to start the deliveries of this brand-new model from the fourth quarter of this year. I have a confidence that with the upgrade of Zeekr 001, Zeekr 007 and Zeekr 009, these existing models would contribute to and improve their sales. I also have confidence that the launch of a new model, Zeekr 7X, and Zeekr MIX would further support our sales growth. [Foreign Language] 那，对于明年的整个产品规划呢，下午的时候，在007的业绩发布会上，我也进行了这个公布。我们在明年四季度会有一款大型的SUV，当然它会搭载两种动力，一个是纯电，一个是我们超级电混的一套系统。 And with regards to the product in the pipeline for the next year, I announced at this 0175 Geely Auto Holdings earnings conference that we planned to launch a full-size flagship SUV in the fourth quarter in 2025. This flagship SUV would offer two different powertrain offerings. One is a pure battery electric vehicles, and the other is a powertrain which we call the super electric hybrid. [Foreign Language] 对于使用纯电的技术线大家也都很清楚了，但大家一定会问，为什么要使用，同时又使用超级电混的技术啊？那我想是大家一定会问，这个原因是什么？原因是我們通过对市场的调研，以及对于未来这个大型车的市场是有这个混动的需求。 So our investors might be very familiar about our pure battery electric vehicle technologies. So you might wonder, why we choose to introduce the super electric hybrid powertrain to our future product? So I can explain here, and that is because we conduct the, we listen to the voice of our customers, and we understand that in the future, when it comes to the, larger size, larger sized vehicles, there is a customer demand base for the hybrid powered vehicles. [Foreign Language] 对这项超级电混的技术呢，我们会专门未来先发布。当然在这里我可以简单地说一下我们这个技术是什么。 We would have a specific product technology launch for this super electric hybrid technology. But I can give you a quick look and briefly about the advantage of this technology. [Foreign Language] Simply put, Zeekr's super electric hybrid system is a new power form that integrates the advantages of pure electric, plug-in hybrid, and range extender technologies. That is, it combines the advantages of these three. To simply put, Zeekr, the electric hybrid, is a new form of powertrain that combines the advantage and benefits of a pure battery, electric vehicle powertrain, PHEV powertrain, and range extender powertrain. [Foreign Language]...它能够保证在所有的纯电驾驶这种体验情况下，就能够兼顾了高速的低能耗和长的续航里程。 It can secure an excellent pure battery electric vehicles driving experience, at the same time, when it is on the highway, the fuel efficiency is very good, at the same time, we can ensure that our customers can enjoy long driving range. [Foreign Language] 那么，对于这个，这项技术的实现，我们是有非常强的 基础的，因为我们至今三十年，我们对发动机和电子箱，这些有非常强的 基础和储备的技术。 After we have extensive car manufacturing experience of over three decades of car manufacturing experiences, we have a very strong technology base foundation on the technologies of engines and gearbox. [Foreign Language] 这款车也将面对全球市场，我们将会，这款车将要实现在全球大型豪华车的一个颠覆者。 So this type of vehicle, this model will be facing the global market, and we want to have some breakthrough in the global big size vehicles, premium vehicles. [Foreign Language] 好，这是刚才你关心的这个SUV大型旗舰的这个SUV。当然，今天大家，我们在明年我们也会有款在这个零零七的这个架构的基础上，我们还有一个猎装车，也会在明年将投放市场。这个因为它，大家知道，极氪在猎装车这个市场有一个非常好的口碑，那我们会把这些在零一一上的技术也会再应用在新的款稍微小一点的这个那种车上，这个信息也可以告诉大家。 So apart from that full size flagship SUV, next year, we also plan to launch another, a new shooting brake model based on the platform of Zeekr 007 sedan, which we plan to launch next year. Zeekr, as a matter of fact, is good at making, delivering, and launching the electric vehicles, and we are recognized by our customers, and we have enjoyed very good reputations for that. We would carry over some good technologies from the current Zeekr 001 to that new shooting brake vehicle. I think that can also further expand our shooting brake product lineup. [Foreign Language] 好的，我不知道我有没有答清楚，谢谢。 I hope my explanation answers your question. Thank you. [Foreign Language] 好，谢谢安总，非常清楚。可不可以就是后面有一个很快的这个跟进一下，就是刚才其实也想跟您请教一下，因为极氪现在在整个产品跟品牌上面有一定的优势，但是，纯电跟混动，或者是说这个插混出来之后，会不会跟集团其他比如说像领克这些品牌，这个目标市场是有一些重叠的，那虽然我们是有一定的优势，我们怎么去看待啊，这个情况？谢谢。 [Foreign Language] 好的，你这个问题问得非常好啊，这个首先一个呢，就是说和领克品牌没有任何冲突，啊，我们在整个内部有品牌管理委员会，啊，我们对于这几个品牌和各个品牌的管理是非常严格的，啊，不会重复重叠的产品，啊，这是一个。 So this is a very good question. To answer your question that I can say there's no conflict. In the Geely Group, we have a branding committee, and we have a very organized and strict management of different brands to prevent the overlap of the models. [Foreign Language] 第二呢，从品牌来说，两个品牌定位也不一样，极氪是豪华品牌，高端豪华的。领克是一个个性的，潮流的品牌，中高端的品牌，所以从品牌方面也是不一样的。 Another brand positioning of these two brands are different from each other. Zeekr is positioned as a premium luxury brand, and Lynk & Co is a trendy high-end brand with a strong personalities. [Foreign Language] 还有一个很重要的信息，就是说它这个大型SUV是建立在浩瀚架构进化的一个产品，是高度的平台化，很有高度的平台化和通用化的能力。 Another very key information I want to share with this meeting is that the new flagship SUV full-size SUV will based on a upgrade of existing SEA architecture and with a strong commonality with other products. [Foreign Language] 当然还有我们对成本的控制。 Of course, I have confidence that our cost management has some special competitiveness. [Foreign Language] 谢谢. Thank you. [Foreign Language] 感谢安总详细的解答，非常感谢。 [Foreign Language] 嗯 。 ...Our next question comes from the line of Tina Hou with Goldman Sachs. Please proceed with your questions. [Foreign Language] 感谢管理层回复我的问题。我这边有两个问题，第一个是关于咱们销量的，就首先今年咱们二十三万的销量目标是否就是还会维持？那样看来话，可能就是下半年稍微压力比较大，就管理层现在有没有这个信心来达到这个目标，以及，这个七月份、八月份，我们009、001还有007都做了这个改款，有一些新的政策，想要管理层分享一下，就是最近的一个订单情况怎么样？然后第二个问题是看到咱们这个季度，这个电池和一些其他的这个产品销售这一块的毛利率，有百分之二十，比一般的水准好像高很多，想要问一下这是有什么特殊的原因，然后以后会不会继续这样的一个高毛利。So, I can do the translation now. Thanks, management, for taking my questions. My first question is regarding volume, so does management still maintain the 230,000 units volume guidance for 2024? It seems that into the third quarter and fourth quarter, it will be a little bit pressure. So wondering if management is still confident on that. And also, since we did some new launches for 009,001 and 007 in July and August, what has been the latest order trend? If management can share some color with us. And the second question is regarding the second quarter, the battery and other components sales business growth margin, margin was actually 20%, much higher than like previous norm. So wondering what's the reason there? And should we expect this high margin to continue going forward? Thank you. [Foreign Language] 好的，那第一个问题来回答一下，这个何老师。这个首先一个呢，对全年二十三万台这个目标呢，我们还是充满了信心，虽然压力比较大。大概在九十、十一、十二，整月不算的情况下，在未来的四个月，我大致算了一下，每个月大概两点五万台左右，大致这么一个情况。 Thank you, Ms. Hou. Questions. I will take the first question. With regards to our full year sales target over 230,000 units, we still have full confidence, despite that we are facing some pressures. I have done a rough calculation to achieve that sales target in the months between September and December, we need to deliver 25,000 vehicles per month. [Foreign Language] 对于这个，001、007、009已经完成了迭代。从目前完成迭代以后，目前我们的订单虽然受到了一些雨的影响，但是大家也看到了，我们的订单在增长，到今年的预计吧，我这么预计，还有30%以上。这个对于本月的销量，因为刚刚进行产品的切换，需要一个爬坡过程，所以我预计这个的销量应该也有20%以上提升，起码20%以上提升，环比。 So with regards to the 001, 007 and 009, which we have already upgraded. Of course, we are seeing that we got some feedback from the media outlets on the strategy of the launch, but despite that, we are seeing a growth of our orders intake and we forecast that their orders for these three models would increase by over 30%. With regards to the sales volume of this month, as we just launched the new models, so the factories are still ramping up the production. Still, I think our forecast that we can report over 20% month-on-month growth. [Foreign Language] 从线索发布以后，基本上一周，有比较大的一个上涨，从线索试驾，试驾量也创造了新高。订单刚才讲了，到目前为止，也有30%以上增长。还有一个定金的转化率，现在也有比较大的提升。 After we launched the new model in the past week, we saw that our lead intake increases significantly and our test drive applications also hit record high and our orders intake climbed by 30%, and the turnover rate also improved significantly. [Foreign Language] 这些形成了我们的基础销量。那我们也随着7X和MIX的上市，因为7X九月份开始交付了，7X的话，也非常有信心在这个细分市场取得很好的表现。因为产品的一些通过一些专业媒体的一些评价，我相信一些内容大家也看到了。这个产品也非常有竞争力，它直接的竞品我们要和Model Y来进行对比。 These existing models lay good foundations for our sales volume for this year, and we also plan to launch two new models, Zeekr 7X and Zeekr MIX, in the remaining of this year. In September, we plan to start deliveries of 7X. We have confidence that it can achieve a very good performance in its segment. As we already reported by many professional industry media, the product is very competitive and it would compete with Tesla's Model Y. [Foreign Language] 对MIX这款车呢，今天下午我讲了，在四季度上市交付，那我预计在十一月份左右，这款车也非常有创新性和市场的引领。所以这个，也通过简单地通过7X和MIX作为新增量。 Zeekr MIX, as I explained this afternoon, we plan to launch it in the Q4 this year. Actually, I will can go further, more, go into more detail here to say that we plan to start deliveries of Zeekr MIX from October. This model is highly innovative, so with the introduction of Zeekr 7X and Zeekr MIX, these two new models, we hold the view that they will support our sales growth in the remaining of this year. [Foreign Language] There is also one very important thing, that is to say, Zeekr's overseas market, because through nearly two years of layout, our sales volume in the overseas market in the fourth quarter will increase significantly quarter-over-quarter compared to the third quarter, the sales volume in the overseas market will start to achieve relatively good results in the fourth quarter. With regard to the overseas market, after two years of cultivating our global market, I can share with the investors here that in the fourth quarter of this year, we will report a significant growth in the overseas market sales volume compared to the third quarter. [Foreign Language] 在这里多讲一点的是，大家看到了这个零零一、零零七，一定要在八月份我们完成迭代。实际上，这个迭代和七月份完成了这个零零九的迭代，实际上也是为了下一步更好地承接九月份、十月份的新产品。 Also we launched the upgraded zero zero one and zero zero seven in August, and upgraded zero zero nine in July, also as a way, as in our strategy to prepare for the new product launch, in September. [Foreign Language] 我们在七、八、九、十这四个月的部署，老产品迭代和新产品的投放，来确保我们年底的，这个销量的旺季，年底和明年年初的销量的旺季。所以我们整个的战略的计划都在准确，都在这个准确地实施。 So we have a product launch upgrade and a new product launch in the months in July, August, September, and October, in a way to ensure that we can have a good sales performance in the high season, usually take place in China in the end of this year. So this is-this has been the strategy, and we are very carefully implementing this strategy. [Foreign Language] 来，电池的事情请我们财务方面的执行袁静回答。 Mr. Yuan Jing, our CFO, will take the question on the battery. Thank you, Andy. With regard to the revenue from sales of batteries and the components, you can see we recorded say maybe about CNY 5.3 billion revenue for the second quarter of this year, representing a year-on-year growth of 36% and quarter-on-quarter decrease of 16%. The quarter over quarter decrease was mainly attributable to a lower sales of battery modules in the China domestic market compared with the previous quarter. If you look at the margins, as you pointed out, the second quarter business margin for this particular segment is around 20%. This is mostly due to the kicking in of cost reductions from our suppliers in the second quarter this year. But if you look at the overall first half this year, gross margin for that particular business segment, it's around 12-13%. And going forward to look at the full year, we'd be looking at anywhere between 10-12%, the business gross margin for that particular segment. And so I would say the increase or the spike of the margin in the second quarter for this segment, I think will be smoothed out throughout the whole year. [Foreign Language] 好的，非常感谢安总和袁总的解答。 Yeah. Next question, operator. Thank you. Yes, thank you. The next question is from the line of Ming Hsun Lee with Bank of America. Please proceed with your question. [Foreign Language] 谢谢，安总跟袁总，那我这边也是，主要就一个问题，那，主要考虑到我们未来一到两年内，国内的，新能源车的这个价格在持续，那我们公司除了规模效应之外，认为还有哪些方面可以促使...... [Foreign Language] 科技降本，从而使得毛利，继续增长。那我也多问一下，因为今天，这个智驾的主管也在啊，那，那比如说我们公司将来会考虑，比如说像是这种，端到端啊，或者是这种纯视觉的方案，也可以进一步的这个推进科技降本吧。那我翻译一下我的问题。So, in next one to two years, the price competition in China will likely continue. So besides the economies of scale, company think in what area that you can continue to reduce your cost and to improve your gross margin? Especially will you consider to choose the pure vision solution for your ADAS solution in order to reduce the cost? Thank you. [Foreign Language] 谢谢李总。这个电动车，新能源汽车竞争可能依然还是非常激烈的。那么我们怎么保持我们Zeekr的能够未来有个很好的发展，对成本方面的一些考虑吧。 So thank you for Mr. Lee for the questions. And it is right that the competition in the new energy vehicle industry remain quite fierce. So to ensure we have a good potential and a good strength in the future competition, I have some thinking about the cost management. [Foreign Language] 好了，我现在几个方面，一个呢，刚才也提到了，这个规模化，就像看到了，就是说我们浩瀚架构规模化的效应开始得到了体现。这个，我们现在二季度保持比较好的毛利率，我相信三季度，四季度，我相信仍然可以保持，甚至可能会，提升。这是一个规模化，平台化所带来的效应，这也是我们和其他车企的一种区别。毕竟经过了三十年的造车的实践，我们非常注重平台化和这种平台化的这种架构造车的这种技术能力。 So first of all, with regards to the platforms and the scale effect, I think the beauty of our SEA architecture as a platform strategy gradually to show to us, and in the second quarter we have already reported quite a good gross margin. So I forecast that in the third quarter and the fourth quarter, it will remain good, and probably it is possible that the gross margin level would improve in the third quarter and the fourth quarter. So this is actually a big differentiator, a differentiator of our company compared to the other automakers, because we have over thirty-three decades of car manufacturing experiences, and we deeply understand that the benefits brought out by the platform strategy. [Foreign Language] 这个规模化也体现在我们在制造方面，我们都应用了吉利已有的产能，所以我们代工方面的成本是很优越的。 And they also, we also share the fact utilizing the existing manufacturing capacities under Geely Group. And so that's why we enjoy very good contract manufacturing service at a very competitive cost. [Foreign Language] 第二个呢，就是我们整个吉利通过多年的努力，现在已经将产业链的垂直整合能力，开始发挥作用。这个具体体现在，比如说三电，我们形成了有电池、电机、电控，这都是我们自研自制，甚至已经到了电控的碳化硅芯片，这我们也有自研自制了。所以这个只是三电方面。比如说，我们从这个刚讲电动化，比如说智能化方面，我们实现了全栈自研，对于核心的一些重要的成本高的一些的控制器，比如说座舱、支架这些硬件，不仅软件全栈自研，硬件我们也自己设计，和部分的代工和外部代工。所以这样，这只是举一些例子，所以已经实现了，产业链的垂直整合能力，这个我相信，其他企业现在还不具备这个条件。这也是我们整个多年来布局，这个，这个现在开始得到体现。 I know after years of the efforts, and devoted to this industry, we also build up our capabilities to vertically integrate the technologies and manufacturing. With regards to the E powertrain, we have our in-house technologies for the batteries, E-motors and E-controllers, and we have our in-house manufacturing facilities for these components, especially for some very advanced, very cutting edge technologies such as the silicon carbide chips in some controllers. We have our in-house R&D, and we have the capability to make them via our in-house facilities. Secondly, with regards to the intelligence functions, we also have built up the full stack in-house technologies, and especially on some new high value product controllers, especially around the infotainment and ADAS. We have our technologies for the software, and especially on the technology around the hardwares, we have our capability to design them, and we go with our some contract manufacturer suppliers to make our hardwares designed by our in-house engineers. So these are just some rough examples, but they can tell the story that we have the capability to do our vertical integration, and this is a key differentiator that I don't believe many of our competitors have. That's a result of years of efforts on those cutting-edge technologies. [Foreign Language] 这些产业垂直整合形成这些产品，它也具备规模化的效应，因为它也可以给其他品牌供货，比如说沃尔沃呀，比如说Smart呀，等等多个品牌供货，所以它有规模化的效应，所以它的成本肯定就很强，竞争力。 So these are products, also can have a very good effect on scale. We can supply those products and technologies to other sister brands, including like Volvo and Smart. So the cost accordingly would also be lowered. [Foreign Language] 第三个呢，就是这个国际化，这个极氪计划战略的整个的推进，因为我们的毛利率，一定是远远高于中国市场，所以这也是我们具备的，优势。 Also with regards to globalization, as we push forward our global strategy, we also can enjoy a higher growth margin in the other markets. [Foreign Language] 好吧，谢谢。 Thank you. [Foreign Language] 好，谢谢。自动驾驶方面，自动驾驶方面，需要这个陈琪来给你补充吗？一些详细的技术需要吗？ [Foreign Language] 需要的，谢谢安总。 Mr. Chen Qi, our Vice President for ADAS Development, would answer your question from the latest ADAS. [Foreign Language] 行，那我简单的补充一下我刚才的那个问题吧。就是刚才您听到的那个，提到的那个端到端，那首先，首先一点，就是我觉得端到端肯定是一个方向，其实，现在其实我们也已经组建了一个，一个...... [Foreign Language] 我们已经组建了一个团队在研发，也已经有了一定的成果啊，就是这个，要不你先翻译一下，还是我讲完？ And so I will take the questions on the ADAS with regards to the end-to-end capabilities. So of course, this is what the industries are working on. And actually inside our company, we also built up a team to do research and develop this end-to-end capabilities, and we have already achieved some good results. [Foreign Language] 但是怎么达到端到端这一块，就是可能大家就步骤可能有一些，有一些区别，就有些不一样。因为我们现在也是，就说目前来讲，就是就是一个是端到端，全部端到端，one model形式，一个是分段式的端到端，那我们可能两个方向都是先分开，然后再逐渐地走向一个one model的形式。 But these people, different companies, they have different approaches to achieve this end-to-end. Some might use the one model end-to-end, and some might take some steps to achieve the end-to-end. And people have different approaches, and the end target is the same as to achieve the end-to-end. [Foreign Language] 因为端到端上面就是有一些，就是它的那个过程，有一些不可解释性，所以这也是基于我们这个考虑，就是说现在收敛的速度可能会稍微慢一点，因为需要大量的数 据再去训练，或者是去收集，去训练，所以我们也会基于一些规则去兜底。 Of course, there's some- [Foreign Language] 翻译的话，你。 Some process, not easy to explain here, but we are gathering a large amount of data with regards to the ADAS, and we have built up our own policies to regulate our system. [Foreign Language] 啊，所以这是我们整个端到端的一个策略。 This is our strategy on the end-to-end. [Foreign Language] 另外，就关于纯视觉这块，其实纯视觉，我觉得纯视觉只是一个技术方向，就是我们纯视觉也会根据我们的车型定位来决定我们到底是用纯视觉还是带激光的一些版本。 And with regards to the approach of a pure vision ADAS, this is a way to achieve a good ADAS. But we, in our company, we have a strategy that to based on different positioning of the different models, to decide which kind of ADAS sensors which would be equipped on the more specific model. Some might carry the pure vision system, and some might carry a system equipped also with a LiDAR. [Foreign Language] 其实今年年初上市的那个零零七，极氪零零七，我们就有纯视觉的版本，其实体验也是相当不错的。 The 007, which we launched at the beginning of this year, we also have a variant, which is based on a pure vision ADAS solution. [Foreign Language] 那大家也知道，就是camera这一块，也是有其固有的劣势，就是比方说在暗光啊，强光啊，等等条件下，它，你再强的算法，它其实也是无济于事的。 So in some disadvantages of the camera, in some ultra dark scenario or ultra light bright scenario, even though we have a strong algorithm in our system, that cannot overcome some of those advantages of the cameras, so that's why I think that LiDAR can help us, even though we equipped with LiDAR, the functions might not add, but still we can achieve a higher safety and a higher ADAS performance. [Foreign Language] So ultimately, our technology will continue to push the boundaries, but in the end, it still comes down to the specific positioning of the vehicle model to determine our final ADAS solution. Technology-wise, we are working on a pure vision ADAS solutions, as well as the solutions empowered by a LiDAR. But at the end of day, we would decide which solution to be equipped on our specific models, depending on the model's specific positioning. [Foreign Language] I don't know if this is what you were asking earlier. The question is, am I answering the questions you raised earlier? I hope I answered your question. [Foreign Language] Yes, yes. This is my question. Thank you for understanding. Then I will ask one more question, because on August thirteenth, our Zeekr 001 also launched this 2025 model. The autonomous driving solution was also replaced with NVIDIA. I would like to understand, that is, in this, this 2025, with this, upgrade, I would like to understand the consumers' feedback on our new, self-driving experience, and also their feedback on us, and how it helps with orders, roughly. I will also translate it into English. So, in August, thirteenth, Zeekr 001 has upgraded its, autonomous driving, solution, based on NVIDIA's, chips. So what is the, consumer feedback, and how does this help the owners on 001? Thank you. Thank you, Mini. So, as you can see, our customers actually recognize the capabilities of our own in-house ADAS system, as evidenced by the acceptance of the 007s ADAS system. Within the orders received with regard to the 2025-year model of 001, in vast majority of the orders received are using the in-house ADAS system. Thank you. Thank you. Thank you. Thank you, Ming. Our next question is from the line of Danlin Ren, with CICC. Please proceed with your question. [Foreign Language] Hello, Andy. Hello, management team. I am CICC automobile analyst, Danlin Ren. The previous questions have been very comprehensive. I may have two follow-up questions. First, do we have any outlook or guidance for the profit margin of vehicle sales in the subsequent quarters? And the second one is, I would like to ask the management about our CapEx plan and allocation plan. I've got a couple of quick questions. First, what's the outlook or guidance for our gross margin on vehicle sales going forward, like quarter by quarter? And could you give me a bit more detail on how we are distributing our CapEx? Like, how much are we investing into our charging stations or into our autonomous driving system? Thank you, Danlin Ren. This is Jing. So, as we communicated earlier to the investor community, at the beginning of the year, we had a guidance of around 15.5% vehicle business segment gross margin, and that guidance still remains valid. As you can see, in the first half of this year, we achieved a 14.1% vehicle segment gross margin. In the second half, we expect, thanks to, say, for example, introduction of all new 009, and increasing sales, and increased economy scale due to more and more vehicles being sold, et cetera, we hope we can achieve a slightly better vehicle business segment performance. With regarding to the CapEx, as mentioned earlier, for the first half of this year, on the U.S. GAAP, we had a CapEx of about CNY 1.1 billion. Among this, CNY 1.1 billion, about 800 million with regarding to fixed asset investment, and the rest are related to software, et cetera, et cetera. And in the second half this year, we expect to continue investing some of capital expenditure, including opening up new stores, investing in the battery pack component segment, infrastructure investment, et cetera, et cetera. And overall, we'll be looking at about CNY 1.9 billion-CNY 2.1 billion CapEx for the full year. If you look at the charging network expansion, the charging network and management and the expansion plan are handled by a company called Haohan Energy, which is managed by our company, but financially, 70% owned by Geely Holding and 30% owned by us, so it is an associate company. The CapEx related to the charging network expansion is not included in my financial statement. Thank you. At this time, that concludes the question and answer session. I would like to turn the conference back over to Mr. Yuan for any- Yeah, I'll take that. Yes. ... Sorry, operator. Yeah, so I think we maybe can have another 10-20 minutes if there's more questions. Sure. Yes, sir. I can, I can bring up our next question, that is from the line of Bin Wang with Deutsche Bank. This is you with your question. Hello, Wang Bing. [Foreign Language] Thank you. My question is about the autonomous driving solution. You actually may upgrade from Mobileye's version to NVIDIA. So what's the impact for the gross margin? Meanwhile, you have solutions within the Geely Group. Then we have the two versions of radars, one is the high performance, likely high price version, the other is the lowest performance, but lower cost. So what's your short-run product go for different solution? And for the first upcoming in 2024 to 2026, would that all go for NVIDIA solution? Thank you. [Foreign Language] 这个，首先，就是英伟达这套系统从成本来说是高于Mobileye的。但是我们在001和007，特别是001上切换以后，从单从智驾系统来说是要高一点，但是我刚刚讲了，我们规模化效应的实施和电子成本的降低，完全覆盖这块增加的成本。所以我，对于未来毛利率的判断来说的话，我相信不会受影响。同时，我觉得009，产品在上月发布以后，无论是中国市场还是海外市场，十分受用户的欢迎，订单也很好。大家也知道009的毛利率好得很好，可以说非常好。所以对于未来的业绩的趋势来说，我觉得应该说吧，能够实现我们年初所制定的全年15%的目标，我觉得应该是很有信心的。对于今天我在这个7X发布会上，关于极氪聚焦高阶智驾，这个高阶智驾主要就是英伟达的系统。那对于吉利品牌，银河为代表的，他们主要聚焦高价值，也就是在高性价比车上的搭载的低成本的智驾方案。那目前来说，这个，这个高价值的这个，智驾方案，现在还没有计划进入极氪，还没有这个计划。 So if we compare the system level cost, the NVIDIA-based ADAS system's cost is higher than the Mobileye's solution. So after we introduced the new 001, the ADAS system cost is actually higher. However, that higher cost can be offset by the scale effect, as well as the cost reduction of the battery part. In the future, I don't see that as an impact factor to impact our gross margin. And secondly, with regard to the 009, after we launch the new all new 009, we received a very strong customers feedback from the China market and overseas market, and we receive a very good numbers of orders intake. As we all know, the gross margin for the 009 model is quite good, quite high. So I think that with those good momentums and we have confidence to achieve the 15% gross margin target for the whole year. Second, answering your second question. This afternoon at 0175's earnings conference, I explained that inside our group we have Zeekr with the focus on the high-end ADAS solution, which will be based on the NVIDIA's product component. The Geely and the Galaxy, they were more focused on the lower cost ADAS system. At this stage, we have no plan to introduce the Geely's low-cost ADAS solution on Zeekr product. [Foreign Language] 可以吗？ [Foreign Language] 可以。我这边有一个问题，就是我们出口今年还是维持三万台，还是有一个更新的目标，谢谢。 I just want an update about the export volume target this year. Thank you. [Foreign Language] 我们年初所制定的三万台的出口的目标，说实话，到现在为止有比较大的压力，因为欧洲对中国增加关税以后，我们对欧洲这一块的市场拓展，我们的进度放慢了。我们，重点速度放慢，但是要提升我们的这个单店的效率。所以，但总的来说，会影响我们这边销量。... 对于除了欧洲、美国之外的其他新兴市场，我们还是按照计划在推进，没有受影响。那么，如果说我们也做好了充分准备，如果说国际市场量一定受影响情况下，我们努力地从国内市场来进行弥补。但是总的二十三万的销量，我们到现在还充满信心。 To be honest, and thirty thousand global market sales target we set in the beginning of this year. Actually, we are facing some big challenges. We are under pressure, especially after the EU Commission introduced hike the tariff on the China-made EVs, we slow down our expansion pace in the Europe market. But at the same time, we are improving our operational efficiency and to mitigate the situation. With regards to the other markets, we are moving forward our strategy, implement our strategy, and we are also ready, if we fail to achieve this thirty thousand sales target for the global market, we will strive to ourselves in the domestic Chinese market. So we remain confident about achieving the total hundred and thirty thousand units sales target for the whole year. 好, 谢谢. Thank you! Thank you. As a reminder, to ask a question, may press star then one on your touchtone phone. If you're using a speakerphone, please keep up your handset before pressing the keys. For the very question, please press star two. Thank you. Thank you. And our next question is from the line of Paul Gong from UBS. Please just give us your question. [Foreign Language] Thank you for taking my question. My first question is regarding the comparison between the Mobileye solution versus NVIDIA plus LiDAR solution. You have mentioned earlier today that even the Mobileye solution would further progress in terms of the technology, but as a forward-looking, do you expect the technology gap of the two solutions to converge or to further apart? Then, An Zong also mentioned many times about platformization and scale to control costs. I would say the overall Zeekr scale is not particularly large right now, and at the same time maintaining these two solutions, would that dilute our limited scale effect? And you have also mentioned, emphasize a lot on the scale and, platform wise, from the relatively limited volume of vehicle are still allocated into two solutions, isn't that a dilution of your limited volume scale? [Foreign Language] 好的，这个Mobileye产品呢，它的规划是我们 在001上面看到的保留的一款车型。这款车型呢，实际上也是和以前的搭载Mobileye的产品是一样的。这个可以，我们对国内的用户，我们承诺了，我们是负责任的企业，所以要不断地来进行迭代和维护，这是一点。第二点呢，就是Mobileye的产品呢，是用于国际市场，国际上也是，国际市场就是都是用Mobileye的。因为从目前对各国的一些法律法规，这个隐私数据等等各方面的 一些研究，Mobileye的方案对国际市场是非常好的，所以把国际市场和国内的部分结合在一起，实际上这样的话能够有一定的规模化的效应。 So with regard to the Mobileye solution, we actually, if you look at our product lineup, we still have a offering of a zero zero one model based on using the Mobileye ADAS solutions. And we, as a responsible company, made a commitment to our customers that we will keep iterating the technologies and offering the maintenance services to this software. And with regards to the overseas market, because Mobileye solution can meet the regulatory requirements on many areas and also on the privacy. So after study, we choose to use the Mobileye solution on our products that are sold in the overseas markets. With that, we think we can achieve a good scale to manage a good cost well. [Foreign Language] 第二点呢，就是Mobileye呢，你们也看到了，Mobileye和这个极氪是战略合作伙伴，他们前期也对外公布了，他们对这个项目的支持的力度也越来越大，开放程度也越来越高，也随着我们之前的一种合作，不断的磨合，这样使我们的效率会更高，也使这个投入的成本费用也会越来越低。 And also, Mobileye is a strategic partner of Zeekr. They have already publicly announced that they would keep upgrading the technologies, and they will be more open on this collaborations. And so after years of working with each other, we can now work with each other quite efficiently and at a quite competitive cost level. So my second question is regarding the MIX. On one hand, it's never existed in the China market, so theoretically it's in the niche market. But on the other hand, it has received a lot of attention during the Beijing Auto Show earlier this year. So do you expect this model to be more like the niche markets, a relatively small volume, or is likely to significantly exceeds in terms of the demand? So this is a very interesting question. Zeekr actually is a highly innovative, tech-driven company, and in our product strategy, we start by launching the products, high-end products, and those are different, very differentiating products in our product lineup. So when we launched the Zeekr 001, it was regarded as a niche market, niche segments model. But in the end, because it offers a very good user experiences to our customers, it is a popular model now. So Zeekr MIX, same story. It is a highly innovative product, and we strive to offer very unique and new innovative experiences and functions to our customers. And more importantly, Zeekr MIX cannot only meet the requirements from the private purposes, it can also be a perfect model for the mobility services. You can tell you can see at this point from the choice made by Waymo. As a matter of fact, Zeekr MIX and another model, internally coded CM1e, used, that is used by Waymo project. They share the same platform, and the commonality level is very high. We also have a good hardware embed on the model that can support the Level 4 autonomous driving in for the future. We are approached by many mobility companies in China and outside China on the collaborations on this. Thank you. Yeah. Thank you very much. Quite helpful. Thank you. Thank you. As a reminder, to ask a question, you may press star one on your touchtone phone. If you're using a speakerphone, please pick up the handset before pressing the star keys. Thank you. Thank you. That concludes the question and answer session. I would like to turn the conference back over to Mr. Yuan Jing for any additional or closing comments. Thank you. Thank you all for joining this call. As always, if you have any questions, please feel free to contact us or any of your banks, and we'll be happy to have a separate session with you. Thank you very much, and have a good day. Today's conference has concluded. Thank you for your participation. All right. Bye. In the end, I would like to express my appreciation on all your investors and analysts participation on this call. Zeekr, as the new energy vehicle brand, strives to report even better results to the industry in the future. Thank you. Thank you. Yes, thank you. Bye-bye. Yes, bye-bye.