Ecarx Holdings Inc. (ECX) 2023 Q4 法說會逐字稿

Good morning and welcome to ECARX fourth quarter and full-year 2023 earnings conference call. With me today for ECARX are Chairman and Chief Executive Officer, Ziyu Shen; Chief Operating Officer, Peter Cirino; and Chief Financial Officer, Phil Zhou. Following their prepared remarks, they will all be available to answer your questions during the Q&A session that follows. Please note today's call is being recorded.

早上好，歡迎參加 ECARX 第四季和 2023 年全年財報電話會議。今天與我一起出席 ECARX 的有董事長兼首席執行官沉子宇 (Ziyu Shen)；營運長彼得·西里諾；和財務長 Phil Zhou。在準備好發言後，他們將在隨後的問答環節回答您的問題。請注意今天的通話正在錄音。

Before we start, I would like to refer you to our forward-looking statements at the bottom of our earnings press release, which also applies to this call. Further information on specific risk factors that could cause actual results to differ materially can be found in our filings with the SEC. In addition, this call will include discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP measure to GAAP measure can be also found at the bottom of our earnings release.

在我們開始之前，我想請您參閱我們收益新聞稿底部的前瞻性聲明，該聲明也適用於本次電話會議。有關可能導致實際結果出現重大差異的特定風險因素的更多信息，請參閱我們向 SEC 提交的文件。此外，本次電話會議也將討論某些非公認會計準則財務措施。非公認會計準則衡量標準與公認會計準則衡量標準的調節表也可以在我們的收益發布的底部找到。

With that, I'd like to hand the call over to Ziyu. Please go ahead.

說完，我就把電話轉給子玉了。請繼續。

Thank you, Rene. Hello, everyone and thank you for participating in our fourth quarter and full-year 2023 earnings call. 2023 was a pivotal year for China's automotive industry. China exported 4.9 million vehicles in 2023, surpassing Japan to become the world's top auto exporter. Global auto sales topped at 74 million as EVs continue to gain significant market share with their global penetration hitting another record high of 23% in December. With demand for EVs expanding globally, the software that defines them and the enriched in car experiences they offer will grow in tandem.

謝謝你，雷內。大家好，感謝您參加我們的 2023 年第四季和全年財報電話會議。 2023年是中國汽車產業關鍵的一年。2023年中國出口汽車490萬輛，超越日本成為全球第一大汽車出口國。隨著電動車繼續獲得顯著的市場份額，全球汽車銷量達到 7,400 萬輛，12 月全球滲透率再創歷史新高 23%。隨著全球對電動車的需求不斷擴大，定義電動車的軟體及其提供的豐富的汽車體驗將同步成長。

According to BCG, software platforms for vehicles are forecast to grow at a 12% CAGR by 2030 with a market value of $13 billion, creating enormous market opportunity that we are uniquely positioned to benefit from with our innovative product portfolio. There are now over 6 million vehicles on the road that incorporate our technology across 25 brands offered by our 16 automotive OEM customers.

據BCG 稱，預計到2030 年，車輛軟體平台將以12% 的複合年增長率增長，市場價值將達到130 億美元，創造巨大的市場機會，我們擁有獨特的優勢，可以透過我們的創新產品組合從中受益。目前，有超過 600 萬輛汽車在路上行駛，這些車輛採用了我們 16 個汽車 OEM 客戶提供的 25 個品牌的技術。

ECARX-equipped vehicles on the road increased 8% from last quarter and 30% from the same period last year. We are starting out the year strongly with a solid pipeline that includes the expected launch of 49 vehicle models over the next 18 months, which we expect to translate into an additional 1 million vehicles on the road that incorporate our technology. This growth is reflected in our financial results where our revenue during the fourth quarter hit a record high of RMB1.87 billion, up 22% year over year, while for year 2023, revenue hit RMB4.67 billion, up 31% year over year.

道路上配備 ECARX 的車輛較上季增加 8%，較去年同期增加 30%。我們以堅實的管道開啟了新的一年，其中包括預計在未來 18 個月內推出 49 款車型，我們預計將有 100 萬輛採用我們技術的車輛上路行駛。這種成長反映在我們的財務表現中，第四季營收創歷史新高，達到人民幣 18.7 億元，年增 22%，而 2023 年營收達到人民幣 46.7 億元，年增 31% 。

The sector continues to present enormous opportunities for growth despite increasing price pressure and competition intensifies. While we continue to invest in our future long-term growth, we are simultaneously working to improve operating efficiency across our supply chain to build a sustainable path towards profitability as our business grows to scale. Our net loss for the year narrowed significantly to RMB1 billion compared to RMB1.6 billion in 2022.

儘管價格壓力不斷增加且競爭加劇，但該行業仍繼續提供巨大的成長機會。在我們繼續投資於未來長期成長的同時，我們同時致力於提高整個供應鏈的營運效率，以便隨著我們的業務規模不斷擴大，建立一條可持續的獲利之路。與 2022 年的 16 億元人民幣相比，我們今年的淨虧損大幅收窄至 10 億元。

Our customer base continues to grow as automotive OEMs increasingly recognize the significant value proposition that our solution offer them. We added one new mass-market Japanese brand in December, and multiple EV project wins through our strategic collaboration with one of China's top automotive OEM groups. This is all in addition to winning three new projects within the Geely Ecosystems during the quarter. Our international portfolio and brand awareness continues to strengthen alongside our expanding customer base. Last month, we showcased our full product line and met with a number of well-known global automotive OEMs at CES in Las Vegas.

隨著汽車原始設備製造商越來越認識到我們的解決方案為他們提供的重要價值主張，我們的客戶群不斷成長。12 月，我們增加了一個新的大眾市場日本品牌，並透過與中國頂級汽車 OEM 集團之一的策略合作贏得了多個電動車項目。除此之外，本季還贏得了吉利生態系統內的三個新項目。隨著我們不斷擴大的客戶群，我們的國際產品組合和品牌知名度不斷增強。上個月，我們在拉斯維加斯CES上展示了我們的全產品線，並與多家全球知名汽車主機廠會面。

Quarter four also saw the launch of the Polestar 4 and Volvo Car EX30 which showcase the Polestar OS, the customized OS based on Flyme Auto and ECARX Cloudpeak software stack. Both vehicles are equipped with Google Automotive Service, which highlights our ability to deploy these services at scale and support both Chinese and global automotive OEMs with the launch of their vehicles internationally.

第四季還推出了 Polestar 4 和沃爾沃汽車 EX30，其中展示了 Polestar OS，這是基於 Flyme Auto 和 ECARX Cloudpeak 軟體堆疊的客製化作業系統。這兩款車都配備了 Google 汽車服務，這突顯了我們大規模部署這些服務並支援中國和全球汽車原始設備製造商在國際上推出車輛的能力。

Our unique partnership ecosystem continues to be a key driver of our success. During quarter four, we embarked on our new joint venture with smart to collaborate on intelligent automotive products and the strength to our existing partnership with Black Sesame to further develop our intelligent driving ecosystem. This is in addition to our partnership with Mobileye which was on full display with the launch of the Polestar 4.

我們獨特的合作夥伴生態系統仍然是我們成功的關鍵驅動力。第四季度，我們開始與smart成立新的合資公司，在智慧汽車產品方面進行合作，並利用我們與黑芝麻現有的合作夥伴關係，進一步發展我們的智慧駕駛生態系統。這是我們與 Mobileye 的合作關係的補充，這種合作關係在 Polestar 4 的發布中得到了充分體現。

I am extremely pleased with the progress we have made throughout the year. With our profile growing internationally, strong partnerships, and cutting-edge solution, we couldn't be in a better position to benefit from the enormous growth opportunities ahead.

我對我們一年來的進展感到非常滿意。隨著我們在國際上的知名度不斷提高、強大的合作夥伴關係和尖端的解決方案，我們處於有利的位置，可以從未來的巨大成長機會中受益。

I will now pass the call over to Peter who will go through the operating results for the quarter in more detail.

我現在將把電話轉給彼得，他將更詳細地介紹本季的營運表現。

Thank you, Ziyu, and good day, everyone. We gained significant momentum in diversifying our business and partners during the quarter. As Ziyu mentioned, we added a mass-market Japanese brand to our customer base and recently picked up multiple project wins for EV models throughout our collaboration with one of China's top automotive OEM groups, with the start of production expected by the end of 2024 or early 2025.

謝謝子玉，大家好。本季我們在業務和合作夥伴多元化方面取得了顯著進展。正如Ziyu 所提到的，我們在客戶群中增加了一個大眾市場的日本品牌，並且最近在與中國頂級汽車OEM 集團之一的合作中贏得了多個電動車型項目，預計將於2024 年底或2024 年底開始生產。2025 年初。

To sustain this momentum and boost the visibility of our solutions, we held eight tech shows across five cities in China in Q4, which generated significant engagement with over 2,000 attendees. We also won three new projects from existing customers within the Geely Group and Ecosystem brands during Q4. Our recent progress underscores the significant market opportunity for our innovative product portfolio and the strength of our technology.

為了保持這一勢頭並提高我們解決方案的知名度，我們於第四季度在中國五個城市舉辦了八場科技展，吸引了 2,000 多名與會者的大力參與。第四季度，我們也從吉利集團和生態系統品牌的現有客戶那裡贏得了三個新項目。我們最近的進展凸顯了我們的創新產品組合和技術實力的巨大市場機會。

I'll start with the ECARX Antora series, which embodies the fundamental requirements needed for a truly intelligent vehicle. The Antora series integrates the world's leading 7-nanometer high-performance automotive grade SoC, SE1000, which features unique hardware architecture including built-in function and information safety islands that don't require virtualization and a high-performance programmable MPU with 8 TOPS AI computing power and multiple acceleration engines.

我將從 ECARX Antora 系列開始，它體現了真正智慧車輛所需的基本要求。Antora系列整合了全球領先的7奈米高性能汽車級SoC SE1000，具有獨特的硬體架構，包括內建不需要虛擬化的功能和資訊安全島以及具有8 TOPS AI的高性能可編程MPU計算能力和多個加速引擎。

Building on the Q3 debut of the Lynk&Co 08, the first vehicle to launch with our full stack solution, Q4 saw the mass production of the Antora 1000 computing platform to be integrated into the updated version of the Lynk&Co 06. The Antora series has become a benchmark platform for a number of car models in our pipeline.

繼第三季領克08（首款搭載我們全端解決方案的車型）首次亮相的基礎上，第四季我們見證了Antora 1000 運算平台的量產，並將整合到領克06 的更新版本中。Antora系列已成為我們在研多款車型的標竿平台。

The Makalu platform is one of the most powerful intelligent cockpits available on the market with its ultra-high performance digital cockpit computing platform with unparalleled 3D graphics, security, and entertainment features. The Makulu platform is expected to begin production in the first half of this year on two car models, which we are very excited about.

Makalu平台是市場上最強大的智慧座艙之一，其超高效能數位座艙運算平台具有無與倫比的3D圖形、安全性和娛樂功能。Makulu平台預計今年上半年開始生產兩款車型，我們對此感到非常興奮。

ECARX Skyland Pro, our first-generation autonomous driving control unit with L2 plus capabilities, integrated safe parking and driving solutions, Highway NoA, and remote parking assist was deployed on the Lynk&Co 08 last September. With computing power of 118 TOPS and a high safety MCU, ECARX Skyland Pro is able to support more advanced software such as bird's-eye view and LiDAR perception. Its integrated ADAS solutions combined with our cockpit solutions, strengthen the loyalty of our automotive OEM customers while providing end users a seamless in-car experience.

ECARX Skyland Pro是我們的第一代自動駕駛控制單元，具有L2+功能、整合安全停車和駕駛解決方案、高速公路NoA和遠端停車輔助功能，去年9月部署在領克08上。ECARX Skyland Pro憑藉118 TOPS的算力和高安全性的MCU，能夠支援鳥瞰、雷射雷達感知等更先進的軟體。其整合 ADAS 解決方案與我們的駕駛艙解決方案相結合，增強了我們汽車 OEM 客戶的忠誠度，同時為最終用戶提供無縫的車內體驗。

One of the key growth drivers for ECARX has been our focus on innovation. We continue to invest in research and development to ensure a steady pipeline of cutting-edge technologies and features for our products. This keeps us ahead of the curve.

ECARX 的主要成長動力之一是我們對創新的關注。我們繼續投資於研發，以確保我們的產品擁有穩定的尖端技術和功能。這使我們保持領先地位。

As of December 31, 2023, we had 563 registered patents and 557 pending patent applications globally. We have a clear product roadmap that spans from entry-level solutions to premium level with plans to integrate next-generation supercomputing platforms starting later this year and into 2025, a key driver for our ambitious market share objectives.

截至 2023 年 12 月 31 日，我們在全球擁有 563 項註冊專利和 557 項正在申請的專利。我們擁有清晰的產品路線圖，涵蓋從入門級解決方案到高端解決方案，並計劃從今年稍後開始到2025 年整合下一代超級運算平台，這是實現我們雄心勃勃的市場份額目標的關鍵驅動力。

Our profile continues to grow globally as more vehicles with our technology hit the road. The Polestar 4 launch was a significant milestone during this quarter. It is the first model to feature Polestar OS and an operating system based on Flyme Auto, which highlights our ability to build custom operating systems with iconic brand designs for global automakers. Polestar 4 also marked the debut of the integrated driver assist system we developed in partnership with Mobileye. This mass-produced, one-box solution is a strong testament to our ability to put advanced technologies from our partner ecosystem onto the road.

隨著越來越多採用我們技術的車輛上路，我們的形像在全球範圍內不斷擴大。Polestar 4 的發布是本季的一個重要里程碑。它是首款搭載 Polestar OS 和基於 Flyme Auto 的作業系統的車型，凸顯了我們為全球汽車製造商打造具有標誌性品牌設計的客製化作業系統的能力。Polestar 4 也標誌著我們與 Mobileye 合作開發的整合式駕駛員輔助系統的首次亮相。這種大量生產的一體式解決方案有力地證明了我們將合作夥伴生態系統中的先進技術投入使用的能力。

The Volvo EX30 was launched across 33 markets internationally during the quarter and comes equipped with ECARX Cloudpeak cross-domain software stack and Google Automotive Services. ECARX Cloudpeak manages the seamless integration of all the information an EX30 driver's needs, including navigation instructions from Google Maps, hands-free help from the Google Assistant, and apps of Google Play. Of particular note, it also integrates wireless CarPlay for the first time in Volvo in addition to wireless Android Auto. Cloudpeak is also networked into the vehicle's comprehensive suite of ADAS features, including collision avoidance and mitigation, traffic jam assist, lane change assist, park pilot assist, door opening alerts, and 360 camera views. Cloudpeak is a fully flexible modular platform created to provide global automotive OEMs with a customized and intelligent platform for state-of-the-art infotainment and advanced driver assist systems in the market today. This is a key product line for us and leverages our unique ability to develop full SaaS solutions in-house in close collaboration with other suppliers, technology companies, and automotive OEMs. The successful launch of the Volvo EX30 will significantly boost our brand recognition in the industry.

Volvo EX30 本季在全球 33 個市場推出，並配備了 ECARX Cloudpeak 跨域軟體堆疊和 Google 汽車服務。ECARX Cloudpeak 管理 EX30 駕駛員所需的所有資訊的無縫集成，包括 Google 地圖的導航說明、Google Assistant 的免持協助以及 Google Play 的應用程式。特別值得注意的是，除了無線Android Auto之外，它還首次在沃爾沃整合了無線CarPlay。Cloudpeak 也連網到車輛的全套 ADAS 功能中，包括防撞和緩解、交通擁堵輔助、變換車道輔助、停車引導輔助、開門警報和 360 度攝影機視圖。Cloudpeak 是一個完全靈活的模組化平台，旨在為全球汽車原始設備製造商提供客製化的智慧平台，以實現當今市場上最先進的資訊娛樂和先進的駕駛員輔助系統。這是我們的一個關鍵產品線，利用我們與其他供應商、技術公司和汽車 OEM 密切合作在內部開發完整 SaaS 解決方案的獨特能力。沃爾沃EX30的成功上市將大大提升我們的品牌知名度。

We also had a great presence at this year's CES in Las Vegas where we showcased our latest cutting-edge technology offerings and sought to make new connections with global automotive OEMs. It was a highly productive week as we were able to meet over 50 customers and partners on the sidelines of the events.

我們也在今年的拉斯維加斯國際消費電子展上大展身手，展示了我們最新的尖端技術產品，並尋求與全球汽車原始設備製造商建立新的聯繫。這是非常有效率的一周，因為我們能夠在活動期間與 50 多個客戶和合作夥伴會面。

Lastly, I'll share a couple of key updates on our partnership ecosystem. In December, we formed a new joint venture with smart to locally develop intelligent experiences within smart vehicles. We previously worked with smart to co-develop a customized smart OS operating system for two of their earlier models and are excited about what we can accomplish as we deepen our collaboration.

最後，我將分享我們合作夥伴生態系統的一些重要更新。12月，我們與smart成立了一家新合資企業，在本地開發智慧汽車的智慧體驗。我們之前與 smart 合作，為他們的兩款早期型號共同開發了定制的智慧型作業系統作業系統，並且對隨著我們加深合作所能取得的成就感到興奮。

We also strengthened our partnership with Black Sesame, which will pave the way for us to bring a powerful new ADAS solution into the market. We have lots of synergies with Black Sesame and are incorporating their cutting-edge intelligent driver technologies into our products, and this will enable us to offer a compelling full stack solution to automotive OEMs.

我們也加強了與黑芝麻的合作關係，這將為我們將強大的新型 ADAS 解決方案推向市場鋪平道路。我們與黑芝麻有許多協同效應，並將其尖端的智慧驅動技術融入我們的產品中，這將使我們能夠為汽車原始設備製造商提供引人注目的全端解決方案。

In conclusion, our growing commercial momentum, leading technology, and rich partner ecosystem ideally positions us to seize the tremendous opportunities created by the growth of the EV and software-defined vehicles in China and globally. While we are pleased with the progress we've made in 2023, we recognize that we are still in the early stages of our journey with a lot of work ahead of us to meet our ambitious market share goals. With confidence at all-time high, we look forward to execute our plan and our vision for the future.

總之，我們不斷增長的商業動力、領先的技術和豐富的合作夥伴生態系統使我們能夠抓住中國和全球電動車和軟體定義汽車的成長所創造的巨大機會。雖然我們對 2023 年的進展感到滿意，但我們認識到，我們仍處於旅程的早期階段，為了實現雄心勃勃的市場份額目標，我們還有大量工作要做。我們充滿信心，期待著執行我們的計劃和對未來的願景。

I will now turn the call over to Phil who will go through our financial results.

我現在將把電話轉給菲爾，他將審查我們的財務表現。

Thank you, Peter, and hello, everyone. We closed out the year with strong momentum as our business continues to grow and our financials improve. Total revenue for the quarter was RMB1.87 billion, a significant increase of 22% year over year. Computing hardware goods revenue was RMB1.31 billion, up 26% year over year driven by volume increases in digital cockpit sales for new vehicle programs. Software license revenue came in at RMB93 million, a decrease of 62% year over year and 32% sequentially, primarily due to the timing of booking intellectual property license revenues and the decrease in volume of software sales. Service revenue maintained a strong growth momentum, surging 95% year over year to RMB463 million. This remarkable increase was primarily due to launch of Volvo EX30 and Polestar 4 during the quarter.

謝謝你，彼得，大家好。隨著我們的業務持續成長和財務狀況改善，我們以強勁的勢頭結束了這一年。該季度總收入為人民幣18.7億元，較去年同期大幅成長22%。受新車項目數位座艙銷售成長帶動，計算硬體產品營收為人民幣13.1億元，較去年同期成長26%。軟體授權收入為人民幣9,300萬元，較去年同期下降62%，季減32%，主要是因為智慧財產權授權收入入帳時機及軟體銷售量下降。服務收入維持強勁成長勢頭，較去年同期成長95%至人民幣4.63億元。這一顯著增長主要歸功於本季度沃爾沃 EX30 和 Polestar 4 的推出。

Gross profit was RMB432 million, an increase of 1% year over year, which translates into a gross margin of 23.1%. Total cost of revenue was up 31% year over year, primarily driven by an increase in sales volume of digital cockpits and service revenue.

毛利為人民幣4.32億元，較去年成長1%，相當於毛利率為23.1%。總收入成本較去年同期成長31%，主要得益於數位座艙銷售和服務收入的成長。

As discussed on the last earnings call, we expected margin pressure on our hardware products continue over the medium term, driven by enhanced industry-wide pricing competition, customer EE architecture evolution and transition, acquisitions, and strategic progress we have in the pipeline.

正如上次財報電話會議上所討論的那樣，我們預計，在全行業價格競爭加劇、客戶EE 架構演變和轉型、收購以及我們正在進行的戰略進展的推動下，我們的硬體產品的利潤率壓力在中期內持續存在。

Our focus going forward will remain on enhancing the adaptability of our business and improving operating efficiency. We will do this by driving products and solutions revenue growth, strategically cutting costs, and making targeted new investments. This will allow us to strike a balance between topline growth and profitability as well as mitigate any potential impact on our margins.

我們未來的重點仍然是增強業務的適應性和提高營運效率。我們將透過推動產品和解決方案收入成長、策略性削減成本以及進行有針對性的新投資來實現這一目標。這將使我們能夠在營收成長和獲利能力之間取得平衡，並減輕對利潤率的任何潛在影響。

Operating expense during the quarter increased 28% sequentially and decreased 37% year over year. The sequential increase was primarily due to the impact of seasonality as well as continued investments in our core product roadmap and the international R&D expansion. The year-over-year decrease was mostly due to lower share-based compensation expenses.

本季營運費用較上季成長 28%，年減 37%。環比成長主要是由於季節性的影響以及對我們核心產品路線圖和國際研發擴張的持續投資。年比下降主要是由於股權激勵費用減少。

Adjusted EBITDA loss was RMB232 million, up from a loss of RMB222 million during the same period last year, primarily attributable to change in fair value of equity investment. Loss per share was minus RMB0.87 compared to minus RMB3.26 due in the same period last year. Having finished the year on a solid footing, 2023 full-year revenue came in at RMB4.67 billion, up 31% year-over-year, with gross profit of RMB1.27 billion, an increase of 28% year-over-year, giving a gross margin of 27.2%.

調整後EBITDA虧損為2.32億元，高於去年同期虧損2.22億元，主要由於股權投資公允價值變動所致。每股虧損為-0.87元人民幣，去年同期為-3.26元。穩紮穩打，2023年全年營收46.7億元，年增31%，毛利12.7億元，年增28% ，毛利率為27.2%。

Throughout the year, we further optimized and improved operating efficiency by prioritizing investments in our global expansion and the technology development. Full-year operating expenses decreased 17% year over year with adjusted EBITDA loss of RMB710 million, an improvement of RMB37 million from last year.

全年，我們透過優先投資全球擴張和技術開發，進一步優化和提高營運效率。全年營業費用較去年減少17%，調整後EBITDA虧損人民幣7.1億元，較去年減少3,700萬元。

Moving on to our balance sheet. As of December 31, 2023, we had RMB588 million of cash and restricted cash, which gives us sufficient resources to invest in our future and accelerate growth. Going forward, we will further optimize our operating expenses with a particular focus on product, sales, and supply chain and manufacturing strategies. On the product side, we will continue to invest in R&D to drive mid to long-term growth opportunities. On the sales side, we will focus on engaging with new automotive OEM partners, both in China and internationally. And finally, we will further optimize the supply chain management and improve cost structure of products and components. This will also support the strategic transition of our manufacturing strategy from ODM to an OEM model.

繼續我們的資產負債表。截至2023年12月31日，我們擁有現金和限制性現金人民幣5.88億元，這使我們有足夠的資源投資未來並加速成長。展望未來，我們將進一步優化營運支出，特別關注產品、銷售、供應鏈和製造策略。在產品方面，我們將持續加大研發投入，以推動中長期成長機會。在銷售方面，我們將專注於與中國和國際上新的汽車原始設備製造商合作夥伴合作。最後，我們將進一步優化供應鏈管理，改善產品和零件的成本結構。這也將支持我們的製造策略從ODM向OEM模式的策略轉型。

To summarizing all of this, a focus on a balanced portfolio and a wider array of higher-margin premium products. Lastly, in order to proactively mitigate the impact of an increasingly challenging geopolitical environment, we are strategically expanding our global presence for both R&D and customer acquisition. We want to build two closed loop systems, one for China and the other for global markets. Each closed loop system will span the entire process from R&D to delivery. To do so, we have had to make acquisitions, strategic investments, and the supply chain upgrades that will take time to mature but are critical to ensuring the sustainability of our business model.

總而言之，重點是平衡的投資組合和更廣泛的高利潤優質產品。最後，為了主動減輕日益嚴峻的地緣政治環境的影響，我們正在策略性地擴大我們在研發和客戶獲取方面的全球影響力。我們希望建立兩個閉環系統，一個面向中國，另一個面向全球市場。每個閉環系統將跨越從研發到交付的整個過程。為此，我們必須進行收購、策略性投資和供應鏈升級，這需要時間才能成熟，但對於確保我們業務模式的可持續性至關重要。

The acquisition of JICA and investments in ADAS over the past few quarters reflect the careful and strategic nature of this approach. We will ensure our business will be in a healthier and more sustainable position over the long-term. In conclusion, we are pleased with the strong finish to 2023 and eagerly look forward to the enormous opportunities ahead of us.

過去幾季對 JICA 的收購以及對 ADAS 的投資反映了這種方法的謹慎性和策略性。我們將確保我們的業務長期處於更健康、更永續的狀態。總之，我們對 2023 年的強勁收官感到高興，並熱切期待前方的巨大機會。

That concludes our prepared remarks today. I would now like to hand the call back to the operator to begin the Q&A session.

我們今天準備好的演講到此結束。我現在想將電話轉交給接線員以開始問答環節。

(Operator Instructions) Derek Soderberg, Cantor Fitzgerald.

（操作員說明）德里克·索德伯格、坎托·菲茨杰拉德。

Yes. Good evening, everyone. Congrats on reaching the 6 million vehicle mark. So you talked a bit about operational efficiencies. How will that impact gross margins for 2024? Can you talk about your expectations on how gross margins will trend throughout the year? And when do you guys think you'll hit EBITDA profitability?

是的。各位晚上好。恭喜您達到 600 萬輛大關。您談到了營運效率。這將如何影響 2024 年的毛利率？您能談談您對全年毛利率趨勢的預期嗎？你們認為什麼時候能夠實現 EBITDA 獲利？

This is Phil. I'm happy to address your questions. So we had communicated earlier that we foresee pricing competition in the entire industry, right? And we were so glad that many Tier-1 players are having profit decrease due to the faster pricing erosion, while the cost optimization is behind the pricing erosion. So we also foresee that the hardware product profitability will face headwinds in the upcoming quarters as we see a continued high competition of pricing pressure through our customers. And we also want to do new business acquisitions and the strategic program developments in the pipeline.

這是菲爾.我很高興回答您的問題。所以我們之前就溝通過，我們預見到整個產業的價格競爭，對嗎？我們很高興看到許多一級供應商因定價侵蝕速度加快而利潤下降，而成本優化是定價侵蝕的背後原因。因此，我們也預計，由於客戶的定價壓力競爭持續激烈，未來幾季硬體產品的獲利能力將面臨阻力。我們也希望進行新的業務收購和正在進行的戰略計劃開發。

So in order to mitigate the headwind impact, so we will continue to provide our diversified and full stack solutions. And we will also implement our proactive pricing and improve our cost structure through our proactive cost down activities. And at the same time, our consistent strategy is to embrace the software-defined EV evolution in a big way, okay? And as a result, the share of wallet in the BOM structure keeps increasing and the content of vehicle keeps improving as well.

因此，為了減輕逆風的影響，我們將繼續提供我們多元化的全端解決方案。我們還將實施主動定價，並透過主動降低成本活動來改善我們的成本結構。同時，我們的一貫策略是大力擁抱軟體定義的電動車演進，好嗎？因此，錢包在BOM結構中所佔的份額不斷增加，車輛的內容也不斷改進。

And we also expand our coverage to serve OEM brands with footprint both in China and overseas markets. Lots of customer names like in the smart, Lotus, Volvo, and Polestar. And the Volvo EX30 is a typical example. We supported Volvo to launch their flagship vehicle in 33 global markets with our unique Cloudpeak cross-domain software which is highly integrated into the advanced ADAS features. And we are very few players in the market in the industry with the ability to deploy Google Automotive Services globally.

我們也擴大了覆蓋範圍，為在中國和海外市場都有足跡的 OEM 品牌提供服務。許多客戶名稱如 smart、Lotus、Volvo 和 Polestar。沃爾沃EX30就是一個典型的例子。我們利用我們獨特的 Cloudpeak 跨域軟體支援沃爾沃在 33 個全球市場推出其旗艦車型，該軟體高度整合到先進的 ADAS 功能中。我們是業內市場上極少數有能力在全球部署 Google 汽車服務的參與者。

So most dedicated focuses enable us to diversify our business portfolios, and we are able to drive sustainable profit growth. So in a word, Derek, we will maintain our focus on the product software service portfolio selling and drive ECARX series products and solutions from growth, cost reduction, supply chain and fulfillment efficiencies while staying very disciplined on new investments and balance between topline growth and profitability in order to mitigate margin impact.

因此，最專注的焦點使我們能夠實現業務組合多元化，並且我們能夠推動可持續的利潤成長。總而言之，Derek，我們將繼續專注於產品軟體服務組合的銷售，並從成長、降低成本、供應鏈和履行效率方面推動ECARX 系列產品和解決方案，同時對新投資以及營收成長和成長之間的平衡保持嚴格的紀律。獲利能力，以減輕利潤率影響。

Got it. That's helpful. And just on a little bit of the pricing pressure, what's your average content per vehicle today? And how do you see that trending through 2024 as you guys continue to innovate, add new feature sets? You guys continually sign new partnerships. And it seems like from an R&D standpoint, you continue to add more features. Can you just talk about how you expect that to trend?

知道了。這很有幫助。就價格壓力而言，今天每輛車的平均內容是多少？隨著你們繼續創新、增加新功能集，你們如何看待 2024 年的趨勢？你們不斷簽署新的合作關係。從研發的角度來看，您似乎持續增加更多功能。您能談談您對這一趨勢的預期嗎？

And additionally, can you talk a bit about the software element within the content per vehicle, and how we should think about how you're allocating the content on the software side per vehicle? What's the revenue per vehicle on the software side? Or maybe talk about some of the attach rates on software? Anything there would be helpful. Thanks.

此外，您能否談談每輛車內容中的軟體元素，以及我們應該如何考慮如何在每輛車的軟體方面分配內容？軟體方面每輛車的收入是多少？或者也許可以談談軟體的一些附加費率？那裡的任何事情都會有幫助。謝謝。

Yeah, sure, Derek. So I will talk about content per vehicle numbers, and Peter, maybe you can address the question regarding how to allocate the software, how to increase our profitability through the content per vehicle improvement. So Derek, we have a wide portfolio of our product solutions and the content per vehicle range from RMB1,000 to RMB15,000 per car.

是的，當然，德瑞克。所以我將談論每輛車的內容，Peter，也許你可以解決有關如何分配軟體，如何透過每輛車的內容改進來提高我們的獲利能力的問題。因此，Derek，我們擁有廣泛的產品解決方案組合，每輛車的內容從 1,000 元到 15,000 元不等。

We have solutions covering low end to high end and just want to meet the different customer demands on their vehicle programs. And take Lynk&Co 08 for example. Last time, we discussed it's almost our full-stack solution. You saw that on Lynk&Co 08. We provide Antora 1000 Pro computing platform. We provide the Flyme Auto Solution, the operating system and on top of that, we also provide our Skyland Pro, the ADCU, the autonomous driving solutions. And then that helped us increase our content per vehicle to RMB10,000 -- RMB9,000 to RMB10,000 around.

我們擁有涵蓋低端到高端的解決方案，只是想滿足客戶對車輛專案的不同需求。以領克08為例。上次，我們討論了它幾乎是我們的全端解決方案。你在領克08上看到了這一點。我們提供Antora 1000 Pro運算平台。我們提供 Flyme Auto 解決方案、作業系統，除此之外，我們還提供 Skyland Pro、ADCU、自動駕駛解決方案。然後，這有助於我們將每輛車的內容增加到人民幣 10,000 元——人民幣 9,000 元到人民幣 10,000 元左右。

And take the Volvo EX30, for example, we also provide our unique cross-domain Cloudpeak solution. And that is also our newly developed functionality, and it's the first launch in the market, and that means the software will improve our profitability as well. So these are the numbers I can share with you. And Peter, maybe you can add on more information.

以VolvoEX30為例，我們也提供了我們獨特的跨域Cloudpeak解決方案。這也是我們新開發的功能，也是市場上首次推出，這意味著該軟體也將提高我們的獲利能力。這些是我可以與您分享的數字。彼得，也許你可以補充更多資訊。

Yeah, sure. So just a few comments on the product portfolio and the impact of software. This tends to be a very OEM-specific topic. With some OEMs, we're providing a base platform with base-level capabilities and then working with that OEM to build the software stack on top of it. Others -- Phil mentioned a few examples, Lynk&Co and Volvo, we're doing the complete software stack. So I think it's very dependent on the OEM strategy and how we engage with them.

好，當然。因此，僅對產品組合和軟體的影響進行一些評論。這往往是一個 OEM 特有的主題。我們為一些 OEM 提供具有基礎級功能的基礎平台，然後與該 OEM 合作在其之上建立軟體堆疊。其他 - Phil 提到了一些例子，Lynk&Co 和沃爾沃，我們正在做完整的軟體堆疊。所以我認為這很大程度上取決於 OEM 策略以及我們如何與他們合作。

But certainly, I think we're very confident from ECARX perspective that with our capabilities, really from silicon to cloud, we bring a unique value proposition that we can work very closely with the OEMs and mine up to their model and make sure we can drive value to those customers in all markets.

但當然，我認為從ECARX 的角度來看，我們非常有信心，憑藉我們的能力，真正從晶片到雲，我們帶來了獨特的價值主張，我們可以與OEM 密切合作，挖掘他們的模型，並確保我們能夠為所有市場的客戶創造價值。

Appreciate the detail.

欣賞細節。

Xiaoyi Lei, Jefferies.

雷曉毅，傑弗里斯。

My first question is regarding ECARX cooperation with Mobileye. It was mentioned that we will have a collaboration with Mobileye on IQ 6 platform. And I'm just curious if there are more details to be provided for the IQ 6 project at the moment?

我的第一個問題是關於ECARX與Mobileye的合作。提到我們將與Mobileye在IQ 6平台上合作。我只是好奇目前是否有關於 IQ 6 項目的更多細節？

This is Peter. I'll address that question. I think we announced we were collaborating with Mobileye on a number of different platforms. The first one will come out with Polestar in 2024, and then the one you mentioned, the more advanced chauffeur system, we would expect to be a few years later to launch. So we're very excited with the collaboration with Mobileye. They've got a great system.

這是彼得。我來回答這個問題。我想我們已經宣布與 Mobileye 在許多不同的平台上進行合作。第一個系統將於 2024 年與 Polestar 一起推出，然後是您提到的更先進的司機系統，我們預計將在幾年後推出。因此，我們對與 Mobileye 的合作感到非常興奮。他們有一個很棒的系統。

And we've partnered with them in a unique way where we can bring our specific value propositions to the table as we integrate the systems into the vehicles. So I think as we are able to help customize and adapt those solutions into the OEMs' needs and requirements. We're pretty excited about what we can see on a go-forward basis from Mobileye across a number of different brands.

我們以獨特的方式與他們合作，當我們將系統整合到車輛中時，我們可以將我們特定的價值主張帶到桌面上。因此，我認為我們能夠幫助客製化和調整這些解決方案以滿足原始設備製造商的需求和要求。我們對 Mobileye 在許多不同品牌上的進展感到非常興奮。

That's very helpful. And my second question is regarding the progress of overseas expansion. So what proportion of overseas revenue do we expect longer-term? And do we have any breakdown by each market?

這非常有幫助。我的第二個問題是關於海外擴張的進展。那麼，長期來看，我們預期海外收入的比例是多少？我們是否對每個市場進行了細分？

Yeah, sure. I mean, as you know, we started our international expansion a few years ago. I think this year marks a very significant event that we're able to launch the Volvo EX30 with the Google Automotive Services on top and bring that across north of 30 different markets throughout the world. So it's a big -- a very significant milestone for ECARX to be able to demonstrate that capability. As we continue to move forward, we're having a number of great engagements with a few European OEMs. And I think hopefully, we'll be able to make further announcements as we go throughout the year.

好，當然。我的意思是，如您所知，我們幾年前就開始了國際擴張。我認為今年是一個非常重要的事件，我們能夠在 Google 汽車服務的基礎上推出沃爾沃 EX30，並將其帶到全球 30 個不同的市場。因此，對於 ECARX 來說，能夠展示這種能力是一個非常重要的里程碑。隨著我們不斷前進，我們與一些歐洲原始設備製造商建立了許多良好的合作關係。我認為，希望我們能夠在全年中發布更多公告。

Design cycles in this industry can be a number of years. So as those programs continue to develop and launch and ramp up in terms of volume, it could be this period of time before we start to see meaningful movement on the financial numbers. But I think the traction we're seeing is, we're approaching a number of different large customers now that we demonstrated clear capability. We're quite excited about the potential there.

該行業的設計週期可能長達數年。因此，隨著這些計劃的不斷開發、啟動和數量的增加，我們可能會在這段時間內開始看到財務數據出現有意義的變化。但我認為我們看到的吸引力是，我們正在接觸許多不同的大客戶，因為我們展示了明確的能力。我們對那裡的潛力感到非常興奮。

Okay, understood. I have no more questions.

好的，明白了。我沒有更多問題了。

(Operator Instructions) Ivan Zhang Soochow Securities Financial Holdings Limited.

（操作員指令）Ivan Zhang 東吳證券金融控股有限公司。

Congratulations on the performance. My first question is, Intel has already applied AI PC to the call. Therefore, I would like to know if there is any impact on our company? Is it a challenge or an opportunity?

恭喜你的表現。我的第一個問題是，英特爾已經將AI PC應用到了通話中。所以我想知道這對我們公司有沒有影響？這是挑戰還是機會？

If we look at the AI impact, I think we'll see a broad set of changes throughout the entire environment. You look at the application, the vehicle, speech can be enhanced, the capabilities of the vehicle to provide a better user experience can show significant details. We've got a number of projects inside our pipeline that we anticipate providing more detail on, especially as we have some events as we go through this quarter. But we've got a large number of programs and projects deploying AI into our systems throughout our -- both what the user will experience plus the back-end capability to drive efficiency and effectiveness inside the software.

如果我們看看人工智慧的影響，我認為我們將看到整個環境發生一系列廣泛的變化。你看看應用程序，車輛，語音可以增強，車輛的功能可以提供更好的用戶體驗，可以顯示重要的細節。我們的管道中有許多項目，我們預計會提供更多詳細信息，特別是因為我們在本季度將要舉辦一些活動。但我們有大量的計劃和項目將人工智慧部署到我們的整個系統中——包括用戶體驗以及提高軟體內部效率和有效性的後端功能。

I think we also see very significant opportunities internally to improve our capability to deliver great software in the vehicle by using AI in our internal development processes and even rapidly accelerate our capabilities to deliver solutions very quickly in the automotive market, and we see that as a strong capability of the company, our ability to operate very effectively in tight development timelines, and I think the use of AI can even enhance that capability as well.

我認為我們在內部也看到了非常重要的機會，可以透過在內部開發流程中使用人工智慧來提高我們在車輛中提供出色軟體的能力，甚至可以快速提高我們在汽車市場上快速提供解決方案的能力，我們認為這是一家公司的強大能力，我們在緊張的開發時間內非常有效地運作的能力，我認為人工智慧的使用甚至可以增強這種能力。

And the next question is, I would like to know how we view the impact of exchange rate collections on our company?

接下來的問題是，我想知道我們如何看待匯率徵收對我們公司的影響？

Okay, thank you for the question. So we are monitoring the Chinese yuan, the RMB trend carefully, but decide not to do any hedge, considering the cost of hedging could be higher than the benefit. And we also observed that many multinational companies are also not -- chose not to hedge RMB for their business operations in China because of the same reason. And our revenue and the operating expense is mainly in RMB, while 70% of our costs are in foreign currency. So in order to mitigate the risks we have the foreign exchange rate cost, cost is in the procurement and sales contract to mitigate the potential ForEx fluctuations.

好的，謝謝你的提問。所以我們正在仔細監控人民幣，人民幣走勢，但決定不做任何對沖，考慮到對沖的成本可能高於收益。我們也觀察到，出於同樣的原因，許多跨國公司也沒有選擇不對它們在中國的業務運作進行人民幣對沖。我們的收入和營業費用主要是人民幣，而70%的成本是外幣。因此，為了減輕風險，我們有匯率成本，成本是在採購和銷售合約中，以減輕潛在的外匯波動。

And meanwhile, we are reinventing ECARX outside of China, as I called in my script. We will form closed loop systems in overseas market from R&D, production to customer delivery. And with the overseas revenue mix increasing, we will launch proactive treasury tactics, including currency hedging to stabilize the ForEx impact.

同時，正如我在劇本中所說，我們正在中國境外重塑 ECARX。我們將在海外市場形成從研發、生產到客戶交付的閉環系統。隨著海外收入結構的增加，我們將採取積極的財務策略，包括貨幣對沖，以穩定外匯影響。

Okay. I have no more questions.

好的。我沒有更多問題了。

(Operator Instructions) Jiaqi Zhang, CICC.

（操作員指示） 張嘉琪，CICC。

Thank you for taking my questions. Big congratulations for the team for having a very strong revenue for the year 2023. So I have three questions. The first one is regarding the gross margin. The gross margin for the 2023 we have seen there's a trend of erosion. And we are also experiencing that there’s fierce competition going on in China, and the trend is definitely going to be more fierce for the year 2024. So my question is, could the team give us a forecast on the quarterly gross margin in 2024? And what are the actions you guys will take to improve the profit margin, for example, to have more software content? So that’s my first question, please.

感謝您回答我的問題。熱烈祝賀該團隊在 2023 年取得了非常強勁的收入。所以我有三個問題。第一個是關於毛利率。2023年的毛利率我們看到有侵蝕的趨勢。我們也看到中國的競爭非常激烈，2024年的趨勢肯定會更加激烈。所以我的問題是，團隊能給我們2024年季毛利率的預測嗎？你們將採取哪些行動來提高利潤率，例如擁有更多的軟體內容？這是我的第一個問題。

Since the second half of 2023, we observed the fierce pricing competition throughout the entire industry, and the value chain profits are compressed. Well, our goal is still to maintain a 20%-ish gross margin through our product, service, software, portfolio selling, as well as the premium product launching, while managing a good balance between our revenue growth and profitability achievements. And as I mentioned earlier, ECARX has very unique solutions.

自2023年下半年以來，我們觀察到整個產業價格競爭激烈，價值鏈利潤被壓縮。嗯，我們的目標仍然是透過我們的產品、服務、軟體、產品組合銷售以及優質產品的推出來保持 20% 左右的毛利率，同時在收入增長和盈利能力之間取得良好的平衡。正如我之前提到的，ECARX 擁有非常獨特的解決方案。

And we also launched a proactive pricing protection plan, and we aggressively drove cost down, cost reduction initiatives in 2023, and we are going to do that in '24 as well. We will continue to increase the average selling price of content per vehicle, the example like Lynk&Co 08 and Volvo EX30. The successful launch demonstrates what our ecosystem can deliver and support our path to profitable growth.

我們還啟動了主動定價保護計劃，並在 2023 年積極推動成本降低和成本削減計劃，我們也將在 2024 年這樣做。我們將繼續提高每輛車內容的平均售價，例如領克08和沃爾沃EX30。此次成功發布展示了我們的生態系統可以提供什麼並支持我們實現盈利成長。

Again, we will mitigate the impact of this pricing competition or margin erosion with our diversified and full-stack solutions, proactive pricing activities, and cost structure improvement. That is basically our approach to drive the mitigation of margin erosion, and we will continue to fight for the margin improvement or margin stabilization in 2024.

再次，我們將透過多元化和全端解決方案、主動定價活動和成本結構改善來減輕這種定價競爭或利潤侵蝕的影響。這基本上是我們推動緩解利潤率侵蝕的方法，我們將繼續爭取 2024 年利潤率改善或利潤率穩定。

So my second question is regarding the project design win with the Japanese company. So congratulations on the design win. Could you provide us more insights into how did you manage to secure this design win with this Japanese OEM? And is this project to be a global project or it's going to phase into the Chinese market?

所以我的第二個問題是關於與日本公司合作的專案設計。恭喜設計獲勝。您能否向我們提供更多關於您如何設法贏得這家日本 OEM 的設計勝利的見解？這個項目是全球項目還是將逐步進入中國市場？

Yes, sure. We have put a lot of energy inside the organization towards customer diversification. I would say it's certainly one of our top priorities to continue to broaden our customer base, onboard new clients, and then execute with excellence as we work very closely with them. So I think we have made some significant progress as we have gone through the quarter. As we got through the end of last year, today, we talked about onboarding of two new customers. These will initially start with the market here in China, and I think we have an opportunity to continue to work more closely with those customers to broaden that partnership and grow beyond -- grow outside of China as well.

是的，當然。我們在組織內部投入了大量精力來實現客戶多元化。我想說，繼續擴大我們的客戶群、吸引新客戶，然後在與他們密切合作時以卓越的方式執行，這當然是我們的首要任務之一。因此，我認為我們在本季取得了一些重大進展。去年年底，今天我們討論了兩位新客戶的入職事宜。這些最初將從中國市場開始，我認為我們有機會繼續與這些客戶更密切地合作，以擴大合作夥伴關係並實現超越——也在中國境外發展。

So we are continuing to put tremendous amount of focus inside the organization. And I think we will see continued advancements as we go through 2024 of similar announcements where we can engage quite deeply with new customers, both in our markets in China as well as in markets in the rest of the world.

因此，我們將繼續在組織內部投入大量精力。我認為，隨著 2024 年類似公告的發布，我們將看到持續的進步，我們可以與中國市場以及世界其他市場的新客戶進行深入接觸。

Right. The engagement is definitely very important. So my third question is regarding actually segmentation from the previous Mobileye questions. So could you give us a more clear indication of the boundary of collaborations? Are we going to develop the Mobileye's domain controller or Mobileye are going to develop on the -- maybe JICA's domain controller, et cetera?

正確的。參與度絕對是非常重要的。所以我的第三個問題是關於之前 Mobileye 問題的實際細分。那麼您能否更明確地說明一下合作的邊界呢？我們是要開發 Mobileye 的網域控制器還是 Mobileye 將在——也許是 JICA 的網域控制器等等上開發？

Yeah, sure. I mean, our engagement with Mobileye is really quite a tight collaboration of ECARX capabilities as well as Mobileye capabilities as we implement those systems. So I think we are bringing the best of both organizations together. Mobileye certainly brings some fantastic technology in their SoCs, in their perception software stack, in their sensor set for the vehicles. ECARX brings an overall system integration capability to that partnership, supply chain capabilities as well.

好，當然。我的意思是，我們與 Mobileye 的合作實際上是 ECARX 功能以及我們實施這些系統時 Mobileye 功能的緊密合作。所以我認為我們正在將兩個組織的優點結合在一起。Mobileye 無疑在其 SoC、感知軟體堆疊和車輛感測器組中帶來了一些出色的技術。ECARX 為這種合作夥伴關係帶來了整體系統整合能力和供應鏈能力。

And we also help inject key software that's inside our portfolio in terms of spaces like driving decision software in the vehicle as well as some parking and other functions that we bring to that overall systems solution to the automakers. So we had a great discussion with the Mobileye team in CES, and I think we will continue to work on opportunities to collaborate quite closely with them and bring great systems into the vehicle.

我們還幫助注入我們產品組合中的關鍵軟體，例如車輛中的駕駛決策軟體以及我們為汽車製造商提供的整體系統解決方案的一些停車和其他功能。因此，我們在 CES 上與 Mobileye 團隊進行了深入的討論，我認為我們將繼續尋找與他們密切合作的機會，並將出色的系統引入車輛中。

Right. That's very clear.

正確的。這非常清楚。

Megan Jin, Macquarie.

梅根金，麥格理。

I have two questions. One is on our overseas business. I noticed that from this year in Europe and the US, the trend of the EV transition seems to start slow, there are plans of delaying the deadline of transitioning? And also like Mercedes Benz has been announcing the delaying plan. I am wondering how this would impact on the growth outlook for this year to our business? And also, on overseas business, what is our competitive advantage versus the more established Tier 1 player like Bosch and the Continental when we try to get orders in this OEM? That's my first question.

我有兩個問題。一是我們的海外業務。我注意到今年以來歐洲和美國電動車轉型的趨勢似乎開始緩慢，有計劃延後轉型期限嗎？和賓士一樣，也已經宣布了延後計畫。我想知道這對我們今年的業務成長前景有何影響？另外，在海外業務上，當我們試圖在這個主機廠獲得訂單時，我們與博世和大陸集團等更成熟的一級廠商相比，有什麼競爭優勢？這是我的第一個問題。

Yeah. Thank you. I think that's a great question. You look at, first of all, outlook on the market. We continue to see a lot of significant opportunities in the market for our technologies. As we continue to advance in this industry, these spaces in the vehicle are definitely undergoing significant investment. I think they tend to be often focused on EVs, but not exclusively. So the digital experience inside the vehicle, autonomous driving, the software-enabled vehicle, the OEMs have tended to make those investments in the big EV platforms as they launch those new.

是的。謝謝。我認為這是一個很好的問題。首先，你看市場前景。我們繼續在市場上看到我們技術的許多重大機會。隨著我們在這個行業的不斷進步，車輛中的這些空間無疑地正在經歷大量投資。我認為他們往往關注電動車，但並非只關注電動車。因此，汽車內部的數位體驗、自動駕駛、軟體驅動的汽車，原始設備製造商在推出新產品時往往會在大型電動車平台上進行投資。

But certainly, those same technologies are somewhat drivetrain agnostic because they provide great experience for the vehicle driver. There is a number of opportunities concerning connectivity and electrification that can help these systems work efficiently, but they are not exclusive to the EV industry. So we continue to see, as we scan the market, both ECARX, all of our markets, a very large and growing opportunity in our space. And carmakers are making fairly significant investments in these technologies. And I think we will continue to do as we go through future cycles.

但當然，這些技術在某種程度上與傳動系統無關，因為它們為車輛駕駛提供了良好的體驗。連接性和電氣化方面有很多機會可以幫助這些系統有效運作，但它們並不是電動車產業獨有的。因此，當我們掃描市場時，我們繼續看到，無論是 ECARX 還是我們所有的市場，我們的領域都存在著巨大且不斷增長的機會。汽車製造商正在對這些技術進行相當大的投資。我認為我們將在未來的周期中繼續這樣做。

When we look at the ECARX capabilities, the number of unique capabilities that ECARX brings into the market and as we talk with new customers, I think the first one we would highlight very frequently, our full stack solution.

當我們審視 ECARX 功能、ECARX 引入市場的獨特功能數量以及與新客戶交談時，我認為我們會經常強調的第一個功能是我們的全堆疊解決方案。

So, as we look across our – us in a very tight partnership ecosystem, whether that's through joint ventures or deep strategic collaborations, we are able to take a very unique self-developed full stack solution from the silicon all the way to the cloud services through the entire full stack of the system capabilities. And that deep understanding helps us bring a very customized, unique solution built on platforms to each customer. And today, we operate with a very broad set of customers, those that are very cost conscious and extremely cost competitive to extremely premium brands throughout the customers that we talk about in these calls and having that capability and that wide breadth and build on platforms, I think is something very unique to ECARX.

因此，當我們在一個非常緊密的合作夥伴生態系統中審視我們時，無論是透過合資企業還是深入的策略合作，我們都能夠採用非常獨特的自主開發的全端解決方案，從晶片一直到應用。雲端服務貫穿整個全端系統能力。這種深刻的理解有助於我們為每個客戶提供基於平台的高度客製化的、獨特的解決方案。今天，我們與非常廣泛的客戶合作，這些客戶對成本非常敏感，對非常優質的品牌具有極高的成本競爭力，我們在這些電話中談到的客戶擁有這種能力和廣泛的廣度並建立在在平台上，我認為這是 ECARX 非常獨特的東西。

The second piece, I think, is speed. I mean we operate at an extremely rapid speed with scale and with high quality. We are able to deliver systems that drive safety, operate at an automotive capability into vehicles at a very rapid pace. We are a company that's been operating only since 2017, and we have already got 6 million vehicles on the road, and that continues to grow quite substantially. Last year, we saw a 30% growth in those number of vehicles. So, to be able to operate at that speed with the number of launches in our pipeline with the strong capability, I think is very impressive. And then you talk about scale. Again, 30% growth on a number of vehicles last year, a wide variety of brands and you see the capabilities we are bringing to the international market. These are big differentiators for ECARX as we are talking to our existing customers as well as new customers.

我認為第二部分是速度。我的意思是，我們以極快的速度、規模和高品質開展業務。我們能夠以非常快的速度為車輛提供可提高安全性、具有汽車功能的作業系統。我們是一家自 2017 年才開始營運的公司，目前已有 600 萬輛汽車上路，數字仍在持續大幅成長。去年，我們看到這些車輛數量增加了 30%。所以，能夠以這樣的速度運行，我們的管道中的發射數量和強大的能力，我認為是非常令人印象深刻的。然後你談論規模。同樣，去年許多車輛、各種品牌的銷量成長了 30%，您可以看到我們為國際市場帶來的能力。當我們與現有客戶以及新客戶交談時，這些都是 ECARX 的巨大差異化因素。

Thanks and that was very clear. My second question is on the China's market. I also noticed that there was the fast-growing trend to have more and more advanced features installed in the cheaper and cheaper models in China. And I am wondering how do we think about this trend and how that impacts our business? Especially, how do I think about the competition as we move into maybe more lower end of the product in the market?

謝謝，這很清楚。我的第二個問題是關於中國市場的。我還注意到，在中國越來越便宜的型號中安裝越來越多先進功能的趨勢正在快速增長。我想知道我們如何看待這一趨勢以及它如何影響我們的業務？特別是，當我們進入市場上更低端的產品時，我如何看待競爭？

I think we see the China market is a very dynamic market, right. This market evolved very quickly. Customers move very fast and react to the advancing trends in the industry. And ECARX is a company over our 7 years has done a fantastic job executing in that market, and we continue to do that. There are times we conceive – bring new technologies into a vehicle within less than 12 months. And I think this is something very unique that we can demonstrate that capability and do it with a high quality and at a global quality level certification, and this is something very special for ECARX. I think the market in China will continue to be very dynamic and diverse. For sure, there is a lot of pressure on cost. There is a lot of pressure on competition here, but ECARX has been very successful competing in that environment in our 6 years, 7 years of existence, I think we will continue to do very well in that environment.

我認為我們看到中國市場是一個非常有活力的市場，對吧。這個市場發展得非常快。客戶的行動速度非常快，並對產業的發展趨勢做出反應。ECARX 是一家 7 年來在該市場上表現出色的公司，我們將繼續這樣做。有時我們會設想 – 在不到 12 個月的時間內將新技術引入車輛。我認為這是非常獨特的，我們可以展示這種能力，並以高品質和全球品質等級認證來做到這一點，這對 ECARX 來說非常特別。我認為中國市場將繼續充滿活力和多樣化。當然，成本壓力也很大。這裡的競爭壓力很大，但是ECARX在我們存在的6年、7年的時間裡在這個環境中競爭得非常成功，我認為我們會繼續在那個環境中做得很好。

Got it. Thanks for taking my questions.

知道了。感謝您回答我的問題。

(Operator Instructions) Michel Liu, HSBC.

（操作員指示） Michel Liu，匯豐銀行。

Thanks management for taking my questions. I have two, following the previous investors' questions. And the first one is regarding the customer. Could you just roughly map out the models equipped with our smart hardware this year in both domestic market and in the global market? And what is the pipeline in the next few years as well?

感謝管理層回答我的問題。根據之前投資人的問題，我有兩個問題。第一個是關於客戶的。您能否大致列出今年國內市場和全球市場搭載我們智慧硬體的車款？未來幾年的管道是什麼？

Yes, for sure. I mean we don't – in the environment we are in, I don't think we always get hyper specific on launches that we see coming. But we have had a great '23, especially kind of capped off with the Volvo EX30 launch. I think we certainly talked about the Polestar launch inside of China. We will launch that vehicle at global scale as we go through 2024. We already talked about that. We will continue to see a broad set of launches. I think we have discussed two new customers.

是肯定的。我的意思是，我們不會——在我們所處的環境中，我認為我們並不總是對即將推出的產品非常具體。但我們度過了一個偉大的 23 年，特別是隨著沃爾沃 EX30 的發布而結束。我想我們確實討論了 Polestar 在中國的發布。到 2024 年，我們將在全球推出該車輛。我們已經討論過這一點。我們將繼續看到一系列廣泛的發布。我想我們已經討論了兩位新客戶。

We will probably see at least one of them launch vehicles towards the end of this year, so we can start to get more specific on those platforms that are coming. I have mentioned earlier, we are having some great dialogue with some customers in Europe that I think could even produce launches as we go into 2025. So, that shortening of the development cycle I will continue to see across the global market. And as I have said earlier, I think ECARX is executed extremely well in that tight launch window environment. So, I think we are excited to see that pressure come to the global markets. And you see that we can add a lot of value in our ability to deliver great solutions at automotive grade quality at a very, very fast and rapid pace.

到今年年底，我們可能會看到至少其中一種運載火箭，因此我們可以開始更具體地了解即將推出的這些平台。我之前提到過，我們正在與歐洲的一些客戶進行一些很好的對話，我認為這些對話甚至可能會在 2025 年推出。因此，我將在全球市場上繼續看到開發週期的縮短。正如我之前所說，我認為 ECARX 在緊張的啟動視窗環境中執行得非常好。因此，我認為我們很高興看到全球市場面臨這種壓力。您會看到，我們能夠以非常非常快的速度提供汽車級品質的出色解決方案，從而增加很多價值。

Got it. Thanks. And the second one is regarding the cost. Obviously, we note that the competition environment is very fierce this year, and you touched on this in previous questions. And also, we see customers attaching more importance on the smart functions, including the digital cockpit and autonomous driving functions. But the willingness of the customers to pay for this kind of smart hardware or software is not that strong. So, last year, the OEMs, we mentioned in their earnings call that they are going to cut 50% of their smart hardware of the car. So, how do we project our trajectory of cost reduction as well as the overall smart hardware cost reduction in the coming years? Thanks.

知道了。謝謝。第二個是關於成本。顯然，我們注意到今年的競爭環境非常激烈，你在先前的問題中也提到了這一點。此外，我們看到客戶更加重視智慧功能，包括數位座艙和自動駕駛功能。但客戶購買此類智慧硬體或軟體的意願並不強烈。所以，去年，我們在 OEM 廠商的財報電話會議上提到，他們將削減 50% 的汽車智慧硬體。那麼，我們如何預測未來幾年的成本降低軌跡以及整體智慧硬體成本降低？謝謝。

Thank you. This is also a very good question. So, for cost, because ECARX provides our full stack solution covering computing platform, software and a lot of advanced features to our customers. So, regarding the hardware solution, for sure, we will drive – and we are driving our cost down activities aggressively. So, there is always no boundary about the cost of optimization. So, we have a large scale. We have a lot of bargaining power and we can work on the effective price negotiation with our suppliers. At the same time, as I mentioned earlier, we also put some protection costs into software products. All those activities can protect us from a faster cost challenge.

謝謝。這也是一個非常好的問題。所以，就成本而言，因為ECARX為我們的客戶提供了涵蓋運算平台、軟體和許多進階功能的全端解決方案。因此，就硬體解決方案而言，我們肯定會推動——並且我們正在積極推動降低成本的活動。因此，優化成本始終沒有界線。所以，我們有很大的規模。我們有很強的議價能力，可以與供應商進行有效的價格談判。同時，正如我前面提到的，我們也將一些保護成本投入軟體產品。所有這些活動都可以保護我們免受更快的成本挑戰。

With that, we are able to maintain relatively healthier cost structure in our hardware solution. At the same time, right, we are investing heavily into our next-generation computing solutions as well. And with that, actually, we can build up our price premium. And we can launch those solutions firstly in the market. And all those time window can gain us a lot of pricing room for us to play. At the same time, our service revenue mix and the service margin mix also play a significant supply of our total business. So, as long as we can deliver our service to customer, within a faster timeframe and we can satisfy our customer in terms of those features will comment. We still can make lots of profit from service revenue. So, again, with our software service and hardware portfolio today, at the same time, driving effective cost down activity from our hardware, we have full confidence in delivering a balanced profitability in the coming year.

這樣，我們就能夠在硬體解決方案中保持相對健康的成本結構。同時，我們也在大力投資下一代運算解決方案。事實上，這樣我們就可以提高我們的溢價。我們可以先在市場上推出這些解決方案。而所有這些時間窗口可以為我們贏得很大的定價空間供我們發揮。同時，我們的服務收入組合和服務利潤率組合也在我們的總業務中發揮著重要的作用。因此，只要我們能夠在更快的時間內向客戶提供服務，並且我們能夠在這些功能方面滿足客戶的需求，就會發表評論。我們仍然可以從服務收入中獲得大量利潤。因此，憑藉我們今天的軟體服務和硬體產品組合，同時推動我們硬體的有效成本降低活動，我們對在來年實現平衡的獲利能力充滿信心。

Yes. Maybe I would just add to that. I think you also see that in our OpEx results, especially in 2023. We have had this very significant growth in the top line revenue. We continue to invest in technology and produce a lot of launches through our pipeline, and we do that under a very tight cost control from an OpEx perspective in '23. And I think we will get better at that as the business continues to scale at '24. So, I think we see a lot of the activities that Phil mentioned on the gross margin line, but we also see that in the engineering and technology efficiencies and investments that we are making.

是的。也許我會補充一點。我想您也在我們的營運支出結果中看到了這一點，尤其是 2023 年。我們的營收成長非常顯著。我們繼續投資技術並透過我們的管道推出大量產品，從 23 年營運支出的角度來看，我們是在非常嚴格的成本控制下做到這一點的。我認為隨著業務在 24 年繼續擴大規模，我們會在這方面做得更好。因此，我認為我們在毛利率方面看到了菲爾提到的許多活動，但我們也在工程和技術效率以及我們正在進行的投資中看到了這一點。

Yes. We drove lean operations in our business. And for operating expense, as Peter mentioned, it's a very effective control. And from a year-over-year perspective, it's a 17% decrease. And in parallel, we just redeployed our savings from the SG&A to our R&D and the global expansion. So, all those are the right approach to capture our future growth opportunity.

是的。我們在業務中推動了精益營運。正如彼得所提到的，對於營運費用來說，這是一個非常有效的控制。從年比來看，下降了 17%。同時，我們剛剛將節省的資金從SG&A 重新部署到我們的研發和全球擴張。因此，所有這些都是抓住我們未來成長機會的正確方法。

Got it. Thanks management. That's very helpful. Thank you.

知道了。感謝管理層。這非常有幫助。謝謝。

Thank you. There are no further questions at this time. And I would now like to hand the conference over to ECARX management team for any closing remarks.

謝謝。目前沒有其他問題。現在我想將會議交給 ECARX 管理團隊進行閉幕致詞。

All right. Well, first of all, thank you everyone for the time and the questions today. I think ECARX, we have continued to execute quite well in an ever competitive environment, but we have done that for many years and continue to anticipate that we are actually well and have the right focus on the growth mindset, but also making the right investments in the business to drive the right behavior in terms of profitability expansion. So, I think we are looking forward to a very exciting 2024 with a number of new activities as we go forward in terms of new launches, new product they would use as well as new customers. So, thank you again for the time you spent with us today.

好的。首先，感謝大家今天就抽空提問。我認為 ECARX 在競爭日益激烈的環境中繼續表現得很好，但我們已經這樣做了很多年，並繼續預計我們實際上表現良好，並且正確關注成長心態，但也做出了正確的投資在業務中推動獲利能力擴張方面的正確行為。因此，我認為我們期待著非常令人興奮的 2024 年，隨著我們在新產品發布、他們將使用的新產品以及新客戶方面向前邁進，我們將開展許多新活動。再次感謝您今天與我們一起度過的時光。

Thank you.

謝謝。

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.

我們今天的會議到此結束。感謝您的參與。你們現在可以斷開連結了。祝你今天過得愉快。