理想汽車 (LI) 2023 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by for Li Auto's second quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Janet Chang, Investor Relations Director of Li Auto. Please go ahead, Janet.

女士們、先生們，感謝大家出席理想汽車 2023 年第二季度財報電話會議。此時，所有參與者都處於只聽模式。今天的電話會議正在錄音。現在我將把電話轉給主持人，理想汽車投資者關係總監張珍妮。請繼續，珍妮特。

Thank you, Sarah. Good evening and good morning, everyone. Welcome to Li Auto's second quarter 2023 earnings conference call. The Company's financial and operating results were published in a press release earlier today and were posted on the Company's IR website.

謝謝你，莎拉。大家晚上好，早上好。歡迎參加理想汽車2023年第二季度財報電話會議。公司的財務和經營業績已在今天早些時候發布的新聞稿中發布，並發佈在公司的投資者關係網站上。

On today's call, we have our Chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tie Li, to begin with prepared remarks. Our President, Mr. Donghui Ma, and other senior management will join for the Q&A discussion.

在今天的電話會議上，我們的董事長兼首席執行官李翔先生和首席財務官李強尼先生首先發表準備好的講話。我們的總裁馬東輝先生和其他高級管理人員將參加問答討論。

Before I continue, please be reminded that this discussion will contain forward-looking statements made under the Safe Harbor provisions of the US 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 risk and uncertainties is included in certain filings with the US Securities and Exchange Commission and the Hong Kong Stock Exchange. The Company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

在我繼續之前，請注意，本討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，公司的實際結果可能與今天表達的觀點存在重大差異。有關風險和不確定性的更多信息包含在向美國證券交易委員會和香港證券交易所提交的某些文件中。除適用法律要求外，公司不承擔更新任何前瞻性陳述的義務。

Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial matters. Please refer to Li Auto's disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

另請注意，理想汽車的盈利新聞稿和本次電話會議包括對未經審計的 GAAP 財務信息以及未經審計的非 GAAP 財務事項的討論。請參閱理想汽車在我們網站的投資者關係部分的披露文件，其中包含未經審計的非公認會計原則措施與可比較的公認會計原則措施的調節表。

Our CEO will start his remarks in Chinese. There will be English translation after he has finished all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead.

我們的首席執行官將用中文開始講話。他發言完畢後將有英文翻譯。現在我將把電話轉給我們的首席執行官李翔先生。請繼續。

(Interpreted) In the second quarter of 2023, we reached multiple milestones in delivery. We delivered over 30,000 vehicles in June, taking our second quarter deliveries to 86,533 vehicles, tripling the volume from the same period last year.

（解讀）2023年第二季度，我們在交付方面實現了多個里程碑。 6 月份，我們交付了超過 30,000 輛汽車，第二季度交付量達到 86,533 輛，是去年同期的三倍。

We delivered more vehicles in the first half of this year than all of 2022. Furthermore, in early July we delivered our 400,000th Li Auto vehicle, taking just 42 months to reach this important milestone since we commenced deliveries in December 2019, setting a record for Chinese emerging NEV OEMS. Going from 300,000 cumulative deliveries to 400,000 took less than four months. Finally, our July deliveries hit a new high of 34,134 units, bringing our total cumulative vehicle deliveries to over 430,000.

我們今年上半年的交付量超過了2022 年全年的交付量。此外，7 月初，我們交付了第40 萬輛理想汽車，自2019 年12 月開始交付以來，僅用了42 個月就達到了這一重要里程碑，創下了紀錄面向中國新興新能源汽車整車廠。從累計交付30萬輛到40萬輛只用了不到四個月的時間。最後，我們7月份的交付​​量創下了34,134輛的新高，使我們的累計車輛交付總量超過43萬輛。

With our strong product lineup and comprehensively improving organizational processes and operating capabilities, our three models continue to lead in their respective market segments, with cumulative deliveries exceeding 200,000 units since their successive launches starting in June last year.

憑藉強大的產品陣容以及全面提升的組織流程和運營能力，三款車型自去年6月陸續上市以來，繼續在各自細分市場保持領先地位，累計交付量超過20萬輛。

According to the insurance registration data of China Automotive Technology and Research Center, in this past quarter, Li L7 consistently topped China's large SUV monthly sales chart. The L8 also remained customers' favorite six-seater SUV priced over RMB300,000. The L9 continued to dominate the full-size SUV sales chart in China.

據中國汽車技術研究中心保險登記數據顯示，近一個季度，勵L7連續穩居中國大型SUV月銷量榜首。 L8也依然是消費者最喜愛的30萬元以上六座SUV。 L9繼續佔據中國全尺寸SUV銷量榜的主導地位。

Li Auto has the highest sales among domestic premium automotive brands in China, and we remain one of the top three NEV brands priced over RMB200,000 in China, with market share increasing from approximately 11% in the first quarter to about 14% in the second quarter.

理想汽車是中國國產豪華汽車品牌中銷量最高的，我們仍然是中國20萬元以上新能源汽車品牌前三名之一，市場份額從一季度的約11%上升至今年一季度的約14%。第二季度。

Driven by our delivery growth and stronger operational capabilities, our financial performance continued to improve. In the second quarter, the Company achieved record-breaking results across revenue, net income and free cash flow. During the quarter, our revenue reached RMB28.65 billion, up 228.1% year over year, while net income and free cash flow increased from RMB2.31 billion and RMB9.6 billion, respectively.

在交付量增長和運營能力增強的推動下，我們的財務業績持續改善。第二季度，公司在營收、淨利潤和自由現金流方面均取得了創紀錄的業績。本季度，我們的收入達到人民幣286.5億元，同比增長228.1%，淨利潤和自由現金流分別從人民幣23.1億元和人民幣96億元增加。

We are confident that our outstanding cash generation capability and ample cash reserve will support our unwavering commitment to invest in R&D, business expansion, and building long-term competitive barriers.

我們相信，我們卓越的現金生成能力和充足的現金儲備將支持我們堅定不移地投資研發、業務擴張和建立長期競爭壁壘。

We expect our third-quarter deliveries to be between 100,000 to 103,000 units. For the full year 2023, we are confident to beat the internal delivery target we set at the beginning of this year by 10% to 20%, with annual revenue exceeding RMB100 billion. We aim to hit the 40,000 monthly delivery milestone by the end of this year. To achieve our delivery target, we will continue to foster coordination across production, supply chain and sales, while continuing to expand production capacity and enhance supply chain management processes and capabilities.

我們預計第三季度的交付量將在 100,000 至 103,000 輛之間。 2023年全年，我們有信心完成年初制定的內部交付目標10%至20%，年收入突破1000億元。我們的目標是在今年年底前達到每月 40,000 份交付的里程碑。為了實現我們的交付目標，我們將繼續促進生產、供應鍊和銷售之間的協調，同時繼續擴大產能並增強供應鏈管理流程和能力。

We made rapid progress in autonomous driving this year. In June 2023, we started test drives for China's first NOA and commute NOA, which do not rely on high-definition maps, in Longjing, known as one of the most of complicated traffic zones in Beijing. We also rolled out our city NOA to early-bird users in Beijing and Shanghai.

今年我們在自動駕駛方面取得了快速進展。 2023年6月，我們在北京交通最複雜的區域之一龍井開始試駕中國首個不依賴高清地圖的NOA和通勤NOA。我們還向北京和上海的早鳥用戶推出了城市 NOA。

On the perception front, we use BEV models enhanced by innovative NCM features and TIN network to perceive complex road structures in real time and comprehend traffic rules.

在感知方面，我們利用創新的NCM特徵和TIN網絡增強的BEV模型來實時感知複雜的道路結構並理解交通規則。

While utilizing occupancy network to identify common obstacles, we also utilized imitation learning in control algorithms to make judgments more akin to human drivers. Test drivers and media have spoken highly of driving safety, efficiency and comfort demonstrated by Li Auto AD Max.

在利用佔用網絡識別常見障礙物的同時，我們還利用控制算法中的模仿學習來做出更類似於人類駕駛員的判斷。試乘駕駛員和媒體對理想汽車AD Max所展現的駕駛安全性、高效性和舒適性給予了高度評價。

In the second half of 2023, we will continue to release city NOA and commute NOA to more early-bird users, bringing city-level autonomous driving to more families. Meanwhile, users are increasingly accustomed to the convenience and ease of highway NOA during their journey. As of today, we have provided highway NOA to over 380,000 families, covering more than 230 million kilometers.

2023年下半年，我們將繼續發布城市NOA，將NOA通勤帶給更多早鳥用戶，將城市級自動駕駛帶給更多家庭。同時，用戶在旅途中也越來越習慣NOA高速公路的便捷和輕鬆。截至目前，我們已為超過38萬個家庭提供高速公路NOA，覆蓋超過2.3億公里。

With respect to BEV models, we introduced our 800-volt high-power charging solution at our first ever Family Tech Day in June 2023. With optimized battery and thermal management systems, our BEVs can slowly leverage the battery's 5C charging rates with a peak charging power of over 500 kilowatts and 500 kilometers of driving range from a 12-minute charge. In conjunction with our own 5C charging network, our BEV can offer a very compatible energy replenishment experience to ICE vehicles.

對於 BEV 車型，我們在 2023 年 6 月的首屆家庭技術日上推出了 800 伏大功率充電解決方案。通過優化的電池和熱管理系統，我們的 BEV 可以緩慢利用電池的 5C 充電速率和峰值充電充電12分鐘可提供超過500千瓦的功率和500公里的續航里程。結合我們自己的5C充電網絡，我們的純電動汽車可以為內燃機汽車提供非常兼容的能量補充體驗。

We will unveil our super flagship 5C BEV, Li MEGA, by the end of this year, and we are confident that it will emerge as the new top seller among all vehicles priced over RMB500,000.

我們將在今年年底推出我們的超級旗艦5C純電動汽車Li MEGA，我們有信心它將成為50萬元以上售價的新銷量冠軍。

Meanwhile, we are actively deploying our 5C super charging network. As announced, we have built and commenced operation of 37 Li Auto 5C super charging stations. Going forward, we will accelerate the rollout, aiming to establish over 300 5C super charging stations by the end of this year and over 3,000 by the end of 2025, to offer our BEV users a fast and reliable charging experience.

同時，我們正在積極佈局5C超級充電網絡。據公告，我們已建成並運營37個理想汽車5C超級充電站。未來，我們將加快佈局，力爭今年年底建成超過300個5C超級充電站，到2025年底建成超過3000個，為純電動汽車用戶提供快速可靠的充電體驗。

We firmly believe our dual energy strategy is the best solution to replacing ICE vehicles at scale. The dual energy strategy composes of EREV technologies that center on high-capacity batteries and highly efficient range extenders, as well a high-voltage BEV technology that can truly address pain points in charging speed and charging on long trips.

我們堅信，我們的雙能源戰略是大規模替代內燃機汽車的最佳解決方案。雙能源戰略包括以大容量電池和高效增程器為核心的增程式電動汽車技術，以及真正解決充電速度和長途充電痛點的高壓純電動汽車技術。

To support the rapid sales growth, we accelerated the expansion and upgrade of our integrated online and offline direct sales and servicing network. While we continue to open retail stores in shopping malls, we have increased the proportion of our retail stores located in automotive retail parks to cater to different users' purchasing habits and needs, further improving user acquisition and sales conversion.

為支撐銷售快速增長，我們加快線上線下一體化直銷服務網絡的拓展和升級。在繼續開設購物中心零售店的同時，我們增加了位於汽車零售園區的零售店比例，以滿足不同用戶的購買習慣和需求，進一步提高用戶獲取和銷售轉化。

In the second quarter, we opened 32 new retail stores and upgraded 18 existing stores through relocation and expansion. As of July 31, 2023, we operated 337 retail stores in 128 cities, as well as 323 service centers and Li Auto-authorized body and paint shops operating in 222 cities.

第二季度，我們開設了32家新零售店，並通過搬遷和擴張昇級了18家現有門店。截至2023年7月31日，我們在128個城市經營337家零售店，並在222個城市經營323家服務中心和理想汽車授權車身及噴漆店。

Looking ahead, driven by our pursuit of continuous growth, we will relentlessly explore, train and learn to refine our two most critical products, namely, our smart electric vehicles for family users and organizational processes to serve our internal talent and teams better supporting our journey from one to 10.

展望未來，在我們追求持續增長的驅動下，我們將不斷探索、培訓和學習，完善我們最關鍵的兩個產品，即面向家庭用戶的智能電動汽車和組織流程，以服務我們的內部人才和團隊，更好地支持我們的旅程從 1 到 10。

With that, I will turn it over to our CFO, Johnny, for a closer look at our financial performance.

這樣，我會將其交給我們的首席財務官約翰尼，以更仔細地了解我們的財務業績。

Thank you, Li Xiang. Hello, everyone. I will now walk you through some of our 2023 second quarter financials. Due to time constraints, I will address our financial highlights here and encourage you to refer to our earnings press release for further details.

謝謝你，李翔。大家好。現在，我將向您介紹我們 2023 年第二季度的一些財務數據。由於時間有限，我將在此介紹我們的財務亮點，並鼓勵您參閱我們的收益新聞稿以了解更多詳細信息。

Total revenues in the second quarter of 2023 were RMB28.65 billion or $3.95 billion, increasing 228.1% year over year and 52.5% quarter over quarter. This included RMB27.97 billion, or $3.86 billion, from vehicle sales, which was at 229.7% year over year and 22.6% (sic -- see press release "52.6%") quarter over quarter.

2023年第二季度總收入為286.5億元人民幣（39.5億美元），同比增長228.1%，環比增長52.5%。其中包括汽車銷售 279.7 億元人民幣（38.6 億美元），同比增長 229.7%，環比增長 22.6%（原文如此——參見新聞稿“52.6%”）。

The year-over-year increase was mainly due to the increased vehicle deliveries. The quarter-over-quarter increase was mainly due the increase in vehicle deliveries, partially offset by the lower average selling price as a result of different product mix, between the two quarters.

同比增長主要是由於車輛交付量增加。環比增長主要是由於車輛交付量的增加，但部分被兩個季度之間因產品組合不同而導致的平均售價較低所抵消。

Revenues from other sales and services were RMB680.8 million, or $93.9 million in the second quarter of 2023, growing 173.4% year over year, and 48.1% quarter over quarter. The increase was mainly due to the increase of sales of accessories and provision of services, in line with higher accumulated vehicle sales, as well as increased sales of Chinese stalls, in line with higher vehicle deliveries.

2023年第二季度其他銷售和服務收入為人民幣6.808億元，即9,390萬美元，同比增長173.4%，環比增長48.1%。這一增長主要是由於隨著累計車輛銷量的增加，配件銷售和提供服務的增加，以及隨著車輛交付量的增加，中國攤位的銷售增加。

Cost of sales in the second quarter of this year was RMB22.42 billion, or $3.09 billion, up 227.1% year over year, and 49.9% quarter over quarter.

今年第二季度的銷售成本為人民幣224.2億元，即30.9億美元，同比增長227.1%，環比增長49.9%。

Gross profit in the second quarter of this year was RMB6.24 billion, or $859.9 million growing 232% and 62.8% compared with the second quarter of 2022 and the first quarter of this year.

今年第二季度的毛利潤為人民幣62.4億元，即8.599億美元，較2022年第二季度和今年第一季度增長232%和62.8%。

Vehicle margin in the second quarter of 2023 was 21%, compared with 21.2% in the second quarter of last year, and 19.8% in the first quarter of 2023. Excluding the impact of Li ONE, the vehicle margin of the Li series - Li L series remained stable over the first quarter of 2023.

2023年第二季度整車利潤率為21%，去年第二季度為21.2%，2023年第一季度為19.8%。排除Li ONE的影響，Li系列整車利潤率-Li L系列在2023年第一季度保持穩定。

Gross margin in the second quarter of 2023 was 21.8% compared with 21.5% in the second quarter of 2022 and 20.4% in the first quarter of 2023.

2023年第二季度的毛利率為21.8%，而2022年第二季度的毛利率為21.5%，2023年第一季度的毛利率為20.4%。

Operating expenses in the second quarter of 2023 were RMB4.61 billion, or $635.7 million, growing 61.4% year over year and 34.6% quarter over quarter.

2023年第二季度的運營費用為人民幣46.1億元，即6.357億美元，同比增長61.4%，環比增長34.6%。

Research and development expenses in the second quarter of 2023 were RMB2.43 billion or $334.5 million, up 58.4% year over year and 31% quarter over quarter. The increase was primarily driven by increased employee compensation as a result of our growing number of staff, as well as increased expenses to support our product portfolio expansion and technology advancement.

2023年第二季度的研發費用為24.3億元人民幣（3.345億美元），同比增長58.4%，環比增長31%。這一增長主要是由於我們員工數量的增加導致員工薪酬的增加，以及支持我們產品組合擴展和技術進步的費用增加。

Selling, general and administrative expenses in the second quarter of 2023 were RMB2.31 billion, or $318.5 million, up 74.3% year over year and 40.4% quarter over quarter. The increase was mainly driven by increased employee compensation as a result of our growing number of staff, as well as increased rental expenses associated with our sales and service network expansion.

2023年第二季度的銷售、一般和管理費用為人民幣23.1億元，即3.185億美元，同比增長74.3%，環比增長40.4%。這一增長主要是由於我們員工數量的增加導致員工薪酬的增加，以及與我們的銷售和服務網絡擴張相關的租金費用的增加。

Income from operations in the second quarter of 2023 was RMB1.63 billion, or $224.2 million, compared with RMB978.5 million loss from operations in the second quarter of last year, and growing 301.3% from RMB405.2 million income from operations in the first quarter of this year.

2023 年第二季度的運營收入為人民幣 16.3 億元，即 2.242 億美元，而去年第二季度的運營虧損為人民幣 9.785 億元，較 2023 年第二季度的運營收入人民幣 4.052 億元增長 301.3%今年第一季度。

Net income in the second quarter of 2023 was RMB2.31 billion, or $318.6 million, compared with RMB641 million net loss in the second quarter of last year, and more than double the RMB933.8 million net income in the first quarter of 2023.

2023年第二季度淨利潤為人民幣23.1億元，即3.186億美元，而去年第二季度淨虧損為人民幣6.41億元，是2023年第一季度淨利潤人民幣9.338億元的兩倍多。

Turning to our balance sheet and cash flow, our balance of cash and cash equivalents, restricted cash and deposits and short-term investments totalled RMB73.77 billion, or $10.17 billion as of 30 June 2023. Net cash provided by operating activities in the second quarter of 2023 was RMB11.11 billion, or $1.53 billion. Free cash flow was RMB9.62 billion, or $1.33 billion in the second quarter of 2023.

就我們的資產負債表和現金流量而言，截至2023 年6 月30 日，我們的現金及現金等價物、受限制現金和存款以及短期投資餘額總計為737.7 億元人民幣，即101.7 億美元。 第二季度經營活動提供的現金淨額2023 年季度為 111.1 億元人民幣（15.3 億美元）。 2023 年第二季度自由現金流為 96.2 億元人民幣，即 13.3 億美元。

Now for our business outlook. For the first quarter of 2023 the Company expects the deliveries to be between 100,000 and 103,000 vehicles representing an increase of 277% to 288.3% from the third quarter of 2022. The Company also expects the third quarter total revenues to be between RMB32.33 billion and RMB33.3 billion, or $4.46 billion, and $4.59 billion, representing an increase of 246% to 256.4% from the third quarter of last year.

現在談談我們的業務前景。公司預計2023年第一季度的交付量將在10萬至10.3萬輛之間，較2022年第三季度增長277%至288.3%。公司還預計第三季度總收入將在人民幣323.3億元之間333億元人民幣，即44.6億美元和45.9億美元，較去年第三季度增長246%至256.4%。

This business outlook reflects the Company's current and preliminary view on its business situation and market conditions, which is subject to change.

本業務展望反映了公司對其業務狀況和市場狀況的當前初步看法，可能會發生變化。

That concludes our prepared remarks. I will now turn the call over to the operator, to start our Q&A session. Thank you.

我們準備好的發言到此結束。我現在將把電話轉給接線員，開始我們的問答環節。謝謝。

Thank you. (Operator Instructions) For the benefit of all participants on today's call, please limit yourselves to two questions, and if you have additional questions, you can re-enter the queue. If you're a Mandarin speaker, please ask your question in Chinese first, and follow with English translation.

謝謝。 （操作員說明）為了今天電話會議所有參與者的利益，請限制自己提出兩個問題，如果您還有其他問題，可以重新進入隊列。如果您會說普通話，請先用中文提問，然後再用英文翻譯。

Our first question comes from the line of Tim Hsiao of Morgan Stanley. Please go ahead.

我們的第一個問題來自摩根士丹利的 Tim Hsiao。請繼續。

(Spoken in Chinese) My first question is about the vehicle delivery, because Li Auto's third quarter volume guidance of around 100,000 implies the vehicle supply constraint were persistent throughout the whole quarter, so, could you please elaborate a bit more about the key bottleneck to your production? Is that due to supply constraint of any specific component, or anything else? How confident are you in the Company's ability to remove the bottleneck, and deliver around 40,000 units a month in fourth quarter?

（中文）我的第一個問題是關於車輛交付的問題，因為理想汽車第三季度的銷量指導在10萬輛左右，這意味著車輛供應的限制在整個季度都持續存在，所以，請您詳細說明一下汽車交付的關鍵瓶頸。你的生產？這是由於任何特定組件的供應限制還是其他原因造成的？您對公司消除瓶頸並在第四季度每月交付約 40,000 台的能力有多大信心？

In the meantime, should we be concerned about a similar challenge might relapse in launching the BEV models on the new platform and at the new [price point]? That's my first question. Thank you.

與此同時，我們是否應該擔心在新平台和新的[價格點]上推出純電動車型時可能會再次遇到類似的挑戰？這是我的第一個問題。謝謝。

Xiang Li: (Interpreted) First, I'll take the question on production capacity. We currently operate two production lines in Changzhou for L8, L9 and L7. The total capacity, if we're running the two shifts is around 50,000 units per month. The current bottleneck is still with component supply, mostly because of a very strong demand for this year, which led us to increase our target, compared to what we said at the beginning of the year.

李翔：（翻譯）首先我問一下產能問題。目前，我們在常州運營著兩條L8、L9和L7生產線。如果我們實行兩班制，總產能約為每月 50,000 件。目前的瓶頸仍然是零部件供應，主要是因為今年的需求非常強勁，這導致我們比年初所說的目標有所提高。

To cope with the additional demand, we actually have a production expansion plan made in Q2, but it's taken some time for us to test the production lines and verify those, so, the new capacity will be released in due time.

為了應對額外的需求，我們實際上在第二季度就制定了擴產計劃，但是我們需要一些時間來測試生產線並驗證這些，因此，新的產能將在適當的時候釋放。

We're still confident that, on an annual basis, we will be able to reach our delivery target, and in addition, to prepare for our growth in '24 and '25, we have started early to make production and capacity plans to satisfy the needs for those two years.

我們仍然有信心，每年我們將能夠達到我們的交付目標，此外，為了為 24 和 25 年的增長做好準備，我們已經提前開始製定生產和產能計劃，以滿足這兩年的需求。

(Spoken in Chinese). My second question is about organization restructure, because we noticed that over the past 12 months quite a lot of EV industry peers have gone through organizational restructure or had a management reshuffle. We recall that Li Auto also announced organization upgrades last December to prepare for its future growth. So could you share with us the latest progress of the restructuring efforts and should we expect any changes to the management team in the next six to 12 months amid such upgrade?

（用中文說）。我的第二個問題是關於組織架構調整，因為我們注意到過去12個月裡，相當多的電動汽車行業同行都進行了組織架構調整或管理層調整。我們記得，理想汽車去年12月也宣布了組織升級，為未來的發展做好準備。那麼您能否與我們分享一下重組工作的最新進展？在此次升級中，我們是否預計未來6至12個月內管理團隊會發生任何變化？

In the meantime, the operational or financial metrics could be monitored more closely to quantify the improvement. For example, the lower cost, higher margin, or faster model upgrades in upcoming quarters, so that's my second question, thank you.

與此同時，可以更密切地監控運營或財務指標以量化改進。例如，未來幾個季度更低的成本、更高的利潤或更快的型號升級，這是我的第二個問題，謝謝。

(Technical difficulty)

（技術難度）

Our next question comes from Bin Wang with Credit Suisse. Please go ahead.

我們的下一個問題來自瑞士信貸銀行的王斌。請繼續。

Operator, can you hear us? So, we have some technical problems.

接線員，你能聽到我們說話嗎？所以，我們有一些技術問題。

Yes, you're coming through.

是的，你正在經歷。

(Interpreted) To translate the previous question - answer the previous question on the matrix organization upgrade, it's something we have and that's a significant amount of resources and manpower. Our business team at the beginning of the year had set an annual delivery target of 360,000 units, but considering two factors we had in fact earlier this year downgraded the target to 300,000 units.

（解釋）翻譯一下上一個問題——回答上一個關於矩陣組織升級的問題，這是我們擁有的東西，而且是大量的資源和人力。我們業務團隊年初定下的年度交付目標是36萬台，但考慮到兩個因素，我們其實在今年早些時候就把目標下調到了30萬台。

One is the overall economic environment and the other is considering many of the enterprises while they're carrying out organization upgrades, their growth in fact had stagnated for two to three years. However, in hindsight, the actual results from the first half of this year, our operating efficiency has not only not declined but actually we actually saw a very significant increase. We have beaten our target every single month and the overall coordination and cooperation efficiency is very high.

一是整體經濟環境，二是考慮到很多企業在進行組織升級時，增長實際上已經停滯了兩三年。但事後看來，從今年上半年的實際結果來看，我們的運營效率不但沒有下降，反而有非常明顯的提高。我們每個月都超額完成目標，整體協調合作效率非常高。

The benefit from an organizational upgrade has significantly exceeded our expectations. The organizational upgrade has really allowed us to fight trench wars as an army group in the smart electric vehicle industry, which is known for having very long product cycles and long value chains. Once we have achieved certain milestones in terms of market share, we are able to defend it very steadily and continue to be built on top of it. So we can see as a result we have displayed a very steady growth curve on this first half, but also the second half of this year and that is the real benefit of our organizational upgrade.

組織升級帶來的效益大大超出了我們的預期。這次組織升級，確實讓我們能夠在以產品週期長、價值鍊長著稱的智能電動汽車行業打陣地戰。一旦我們在市場份額方面實現了某些里程碑，我們就能夠非常穩定地捍衛它並繼續在此基礎上發展。所以我們可以看到，我們在上半年和下半年都表現出了非常穩定的增長曲線，這就是我們組織升級的真正好處。

In terms of the matrix organization, there are really three types of specific benefits. First of all, from our - where we described ourselves as a guerilla in our early days, to being an actual formal armed forces, the Company is really building highways for its core businesses so that every person on the value chain can run very efficiently. Even though there are more traffic rules on highways, overall efficiency of highways is much higher and there are much fewer accidents.

就矩陣組織而言，具體好處實際上分為三類。首先，從我們早期的游擊隊，到真正的正規武裝部隊，公司真正在為核心業務修建高速公路，讓價值鏈上的每個人都能非常高效地運轉。儘管高速公路上的交通規則更多了，但高速公路的整體效率要高得多，事故也少得多。

Secondly, the organizational upgrade has allowed us to build a very robust training structure for our employees and business practices. The working mechanism is very similar to artificial intelligence, from perception and observations to setting goals and planning its activities and finally, to execution and collaboration and after action reviews to really build it in as the Company's capability. So even for a fresh graduate, he or she doesn't need to start as a business assistant, but rather can really get into a real battle and grow quickly.

其次，組織升級使我們能夠為員工和業務實踐建立非常強大的培訓結構。工作機制與人工智能非常相似，從感知和觀察到設定目標和規劃活動，最後到執行和協作以及行動後審查，真正將其構建為公司的能力。所以即使是應屆畢業生，也不需要從業務助理做起，而是能夠真正投入實戰，快速成長。

Thirdly is what we call interlocking and it's really a contractual relationship between our different teams and talents. Compared to the [OPR] mechanism, our matrix organization changed what we used to call alignment to interlocking, which is essentially a contract between teams and our different individuals. So when people set their goals, they can challenge each other and when they execute, they can work very closely and collaborate to deliver the best results.

第三就是我們所說的環環相扣，它實際上是我們不同團隊和人才之間的一種契約關係。與[OPR]機制相比，我們的矩陣組織將我們以前所說的對齊改為環環相扣，這本質上是團隊和我們不同個人之間的契約。因此，當人們設定目標時，他們可以互相挑戰，而當他們執行目標時，他們可以密切合作並協作以取得最佳結果。

So by going from alignment to interlocking, we're really setting a contract between the different teams and the targets become more and more challenging, but we're able to achieve these targets with higher and higher confidence. So overall, we believe that the most critical ingredient to a successful organization upgrade is great culture, which includes putting customers' values first, taking the right path and not the easy path and building everything on collaboration which is our core value.

因此，通過從對齊到環環相扣，我們實際上是在不同團隊之間制定合同，目標變得越來越具有挑戰性，但我們能夠以越來越高的信心實現這些目標。因此，總的來說，我們認為成功的組織升級最關鍵的因素是良好的文化，其中包括將客戶價值放在首位，走正確的道路而不是容易的道路，以及將一切建立在協作之上，這是我們的核心價值。

The organization and process is really the best product that we can build for our employees. It's simple and yet sophisticated and it brings the best practices from each business area and builds them into products so that the organization can grow along the way. So without great culture, the business processes are going to be rigid and complicated. So this is the biggest learning from upgrading our matrix organization and processes, so basically product upgrades bring more margins or value for the Company and organizational upgrades bring more efficiency for the Company.

組織和流程確實是我們可以為員工打造的最佳產品。它既簡單又復雜，它帶來了每個業務領域的最佳實踐，並將其構建到產品中，以便組織能夠一路成長。因此，如果沒有優秀的文化，業務流程就會變得僵化和復雜。所以這是我們矩陣組織和流程升級最大的學習，所以基本上產品升級為公司帶來更多的利潤或價值，組織升級為公司帶來更高的效率。

(Spoken in Chinese).

（用中文說）。

The next question comes from Bin Wang with Credit Suisse. Please go ahead.

下一個問題來自瑞士信貸銀行的王斌。請繼續。

(Spoken in Chinese). I've got two questions, number 1 is about the margin. What's your outlook in the third quarter and the fourth quarter this year? Because previously you've highlighted that Li ONE has been (inaudible) about 2% gross margin, now you have a better [portfolio] in the second half of this year. Can I assume the second half margin will be above 23%, increased by 2 percentage? That's the number 1 question about the margin.

（用中文說）。我有兩個問題，第一個問題是關於保證金的。您對今年第三季度和第四季度的展望如何？因為之前您強調過 Li ONE 的毛利率（聽不清）約為 2%，現在您在今年下半年擁有了更好的[投資組合]。我是否可以假設下半年利潤率將高於 23%，增加 2 個百分點？這是關於利潤的第一個問題。

Secondly, about the self-driving technology, right now you're doing the early bird program for some customers. Can I know when the self-driving can go out to every single car buyer when they purchase [a car, they can enjoy it]? So do you have a timetable to share for 2024? Thank you.

其次，關於自動駕駛技術，目前你們正在為一些客戶做早鳥計劃。我能知道每個購車者買車的時候自動駕駛什麼時候可以走出去嗎？那麼您有 2024 年的時間表嗎？謝謝。

Hi Wang, this is Johnny from the Company. Our second quarter gross margin has reflected our sales and marketing team's effort, so you can see the improved SG&A percentage as a total revenue. Also some positive improvement on the [downside] from our supply chain here and we will continue to improve on that but for full year, because we've still got six months or five months to the end. So we still want to keep the whole year's gross margin guidance just above 20%. Thank you.

嗨，王，我是公司的約翰尼。我們第二季度的毛利率反映了我們銷售和營銷團隊的努力，因此您可以看到 SG&A 佔總收入的百分比有所提高。我們的供應鏈的[缺點]也得到了一些積極的改善，我們將在全年繼續改善這一點，因為我們還有六個月或五個月的時間。因此我們仍希望將全年毛利率指引維持在20%以上。謝謝。

(Interpreted) On city NOA and commute NOA, we will continue our original plan to roll them out in batches in different cities and the rollout plan is going to be largely based on the number of vehicles and owners in the specific cities. The more owners, the more mileage accumulated and more test data, the more likely the city will get city NOA and commute NOA early.

（解讀）城市NOA和通勤NOA方面，我們會按照原來的計劃，在不同的城市分批推出，具體的推出計劃主要是根據具體城市的車輛數量和車主數量來決定。車主越多，積累的里程越多，測試數據越多，城市就越有可能提前獲得城市NOA和通勤NOA。

In addition to that, we're also taking into consideration the [NTN] features of complex intersections in those cities and the amount of data coverage that we have. So as more and more early bird users join into our pilot program, we'll be opening up our NOA features in more cities.

除此之外，我們還考慮了這些城市復雜交叉路口的 [NTN] 特徵以及我們擁有的數據覆蓋量。因此，隨著越來越多的早鳥用戶加入我們的試點計劃，我們將在更多城市開放 NOA 功能。

Overall, the development and testing for NOA features are going on track and in June 2023 we've offered test drives of our city NOA in Wangjing, which is known as one of the most complicated traffic zones in Beijing, using the first - China's first NOA, city NOA solution that doesn't rely on high-definition maps, and media gave very nice reviews about the features.

總體而言，NOA 功能的開發和測試正在順利進行，並於 2023 年 6 月在望京（被稱為北京最複雜的交通區域之一）提供了我們城市 NOA 的試駕，使用了中國第一個NOA，不依賴高清地圖的城市NOA解決方案，媒體對這些功能給予了非常好的評價。

In July, in Beijing and Shanghai, we've opened up city NOA to early bird users and users spoke value highly of the comfort and safety of our solution. This year we will be releasing our city OA and commute NOA for largescale testing and the plan to release it in 100 cities remains unchanged. Internally we are continuing to accelerate the R&D and testing of our city solution.

7月，我們在北京和上海向早鳥用戶開放了城市NOA，用戶對我們解決方案的舒適性和安全性給予了高度評價。今年我們將發布城市OA和通勤NOA進行大規模測試，100個城市發布的計劃不變。在內部，我們正在繼續加快城市解決方案的研發和測試。

Thank you, thanks so much.

謝謝你，非常感謝。

Our next question comes from Yingbo Xu with CITIC. Please go ahead.

我們的下一個問題來自中信集團的徐英波。請繼續。

(Spoken in Chinese). I have two questions. The first one is about the quarters - the third quarter's sales. How do we see the sales elasticity for the third quarter expectation?

（用中文說）。我有兩個問題。第一個是關於季度的——第三季度的銷售額。我們如何看待第三季度的銷售彈性預期？

My second question is about Mind GPT. Could you give us more color about how Mind GPT is going? Thank you.

我的第二個問題是關於 Mind GPT 的。您能給我們更多關於 Mind GPT 進展的信息嗎？謝謝。

(Interpreted) First of all on guidance, the guidance we've given earlier today is really built around our production capacity, the maximum of our production boundaries for Q4. For Q4, with increased production capacity, we'll be able to reach or surpass the 40,000 per month mark. Another important point to note is we're very confident that we will be able to challenge the leadership position of Mercedes, BMW and Audi in China, meaning that we'll exceed their sales in China and become the top selling luxury brand in China.

（解釋）首先關於指導，我們今天早些時候給出的指導實際上是圍繞我們的生產能力，即第四季度的最大生產邊界建立的。第四季度，隨著產能的增加，我們將能夠達到或超過每月 40,000 個大關。另一個需要注意的重要點是，我們非常有信心能夠挑戰梅賽德斯、寶馬和奧迪在中國的領導地位，這意味著我們將超過他們在中國的銷量，成為中國最暢銷的豪華品牌。

Second question on Mind GPT, in terms of technology we released our internal big model Mind GPT and we have since built a full stack in-house development capability of large (inaudible) model. The R&D really falls into four areas. First is data and second is big model training algorithms and third is assessment and security and lastly, application delivery.

第二個問題關於Mind GPT，在技術方面我們發布了我們內部的大模型Mind GPT，並且我們已經建立了大（聽不清）模型的全棧內部開發能力。研發實際上分為四個領域。首先是數據，其次是大模型訓練算法，第三是評估和安全性，最後是應用程序交付。

On the training algorithm front, we've stayed in-line with mainstream algorithms in the industry, including the foundational model training which utilizes 1.3 billion tokens and to command fine-tuning and reinforced learning. In order to make sure that the Mind GPT model can have accurate knowledge and be able to personalize based on the users, we've also introduced search and recommendation algorithms, which are also built in-house.

在訓練算法方面，我們與業界主流算法保持一致，包括使用13億代幣進行基礎模型訓練，並進行微調和強化學習。為了確保Mind GPT模型能夠擁有準確的知識並能夠根據用戶進行個性化，我們還引入了搜索和推薦算法，這些算法也是內部構建的。

Mind GPT is out now in version 1, which uses 16 billion parameters and based on the foundational model we can better suit the user scenarios of our users and to make Lixiang Tongxue more interactive with our users.

Mind GPT現已推出第一版，使用了160億個參數，在基礎模型的基礎上我們可以更好的貼合用戶的使用場景，讓理想同學與用戶有更多的互動。

On the product front, the big model-based Mind GPT is going to power our first-generation multi-mobile human machine interface operating system and it can allow every single person of our user's family to use AI with ease and make Lixiang Tongxue a new member of the family. It can be an expert on the car, it can be a teacher, it can be a tour guide, it can be everything.

在產品方面，基於大模型的Mind GPT將搭載我們第一代多移動人機界面操作系統，讓我們用戶家庭的每一個人都能輕鬆使用AI，讓理想同學成為一個新的產品。家庭成員。它可以是汽車專家，可以是老師，可以是導遊，可以是一切。

In terms of progress, we'll be sharing more details about the progress of R&D and so far, we have already opened up Mind GPT for internal [doc building] and after these tests we'll be releasing the model to a small number of early bird users through (inaudible).

在進展方面，我們將分享更多有關研發進展的細節，到目前為止，我們已經開放了 Mind GPT 進行內部[文檔構建]，在這些測試之後，我們將向少數人發布該模型早鳥用戶通過（聽不清）。

(Spoken in Chinese).

（用中文說）。

Our next question comes from Paul Gong with UBS. Please go ahead.

我們的下一個問題來自瑞銀集團的龔保羅。請繼續。

(Spoken in Chinese) So my first question is regarding the MEGA, regarding its capacity preparation as well as sales expectation, as the Zeekr 009 are the only purely electric MPV currently in the market provides a benchmark and after MEGA, what is our latest thought on the product pipeline for the BEV?

（中文）所以我的第一個問題是關於MEGA，關於它的產能準備以及銷售預期，因為Zeekr 009是目前市場上唯一的純電動MPV提供了一個基準，在MEGA之後，我們最新的想法是什麼關於BEV 的產品線？

(Interpreted) First on MEGA's sales target, we're confident that MEGA will become the top seller in the market above RMB500,000 across all different energy forms and body types, just like we've seen from L7 and L8, which are respective market leaders in their segments, they've also won over market share from sedans and other segments.

（解讀）首先關於MEGA的銷售目標，我們有信心MEGA將成為50萬元以上市場上所有不同能量形式和體型的銷量第一，就像我們從L7和L8看到的那樣，它們分別是作為各自細分市場的市場領導者，他們還贏得了轎車和其他細分市場的市場份額。

Next year we're planning to release (inaudible) one range extender vehicle and three pure electric vehicles, not including MEGA, which we've just talked about. For specific product details we'll be sharing on our product release next year when the time is appropriate.

明年我們計劃推出（聽不清）一款增程車和三款純電動車，不包括我們剛才談到的MEGA。對於具體的產品細節，我們將在明年適當的時候在我們的產品發布中分享。

(Spoken in Chinese). So the second question is regarding the parallel exports, we realize that there are some informal trading of the Li Auto [Sport] into other countries, how big is this in terms of scale and do you have any plans to formalize it from guerilla into formal army and expand our sales volume as well as our global influence of the branding?

（用中文說）。所以第二個問題是關於平行出口，我們意識到Li Auto [Sport]有一些非正式的貿易到其他國家，這個規模有多大，你們有沒有計劃將其從游擊形式正式化為正式形式軍隊並擴大我們的銷量以及我們品牌的全球影響力？

Hi Paul, this is Johnny. I think we want to state again, we want to [I think] globalization after we've become dominant in China because China is a very big market, as we just mentioned. Yes, the answer is no, we want to -- and also, our product is [well-defined] and was available for sale only for China [and mainland], so that's basically. Thank you.

嗨，保羅，我是約翰尼。我想我們想再次聲明，我們希望在中國占據主導地位後實現全球化，因為正如我們剛才提到的，中國是一個非常大的市場。是的，答案是否定的，我們想要——而且，我們的產品是[明確的]並且僅在中國[和大陸]銷售，所以基本上就是這樣。謝謝。

Okay. Thank you very much. Thank you.

好的。非常感謝。謝謝。

Your next question comes from Jing Chang with CICC. Please go ahead.

你的下一個問題來自中金公司的常靜。請繼續。

(Spoken in Chinese). A follow-up question about gross margin, as Mr. Li just mentioned some [causal] factors on our gross profit margin in the second half of this year, we still maintain the guidance of 20% for the whole year guidance. Is there any potential negative impact you can see and what that might be?

（用中文說）。後續一個關於毛利率的問題，剛才李總提到了我們下半年毛利率的一些因素，所以我們全年指導還是維持20%的指導。您是否可以看到任何潛在的負面影響以及可能是什麼？

Looking through [plan 24] our BEV model on -- in the [tax rate] will start to put into operation, so because we can see the current BEV models relatively have a very low gross profit margin, so how can we achieve our BEV model through (inaudible) and higher gross profit margins compared to [the inventory].

翻看【方案24】我們的BEV車型在——在【稅率】上就要開始投入運營了，所以因為我們可以看到目前的BEV車型毛利率相對來說是非常低的，那麼我們怎樣才能實現我們的BEV呢？與[庫存]相比，模型通過（聽不清）和更高的毛利率。

I will take this question, it's Johnny. As I just mentioned in the earlier question, the current gross margin has reflect our effort of - from our supply chain team and we keep improving on the [downside] and to help us to improve our growth margin to the 25% [designed] gross margin continuously.

我來回答這個問題，我是約翰尼。正如我剛才在前面的問題中提到的，當前的毛利率反映了我們的供應鏈團隊的努力，我們不斷改進[下行]並幫助我們將增長率提高到[設計]毛利率的 25%保證金連續。

For the BEV, I think every time we launch a new product, we will have some question about the margin and because there are some [poor] product offerings in the market, but we still want to reinforce our (inaudible). The product gross margin was from the first day you define your customer, and you define your product. What we want to say is we overall, we want to keep 25% for the whole Company with different product offerings. Thank you.

對於純電動汽車，我認為每次我們推出新產品時，我們都會對利潤率產生一些疑問，因為市場上有一些[較差的]產品，但我們仍然想加強我們的（聽不清）。產品毛利率是從您定義客戶和定義產品的第一天開始計算的。我們想說的是，總的來說，我們希望為整個公司保留 25% 的份額，提供不同的產品。謝謝。

(Spoken in Chinese). My second question is about autonomous driving, so we intend to release [CTOP -- NOS+] function to 100 cities by the end of this year, which is a very aggressive target. Is there any great challenge as you can see at present? Can you share more about our outstanding capabilities in different aspects of our autonomous driving to support us in achieving such a challenging target?

（用中文說）。我的第二個問題是關於自動駕駛的，所以我們打算在今年年底之前向100個城市發布[CTOP-NOS+]功能，這是一個非常激進的目標。您認為目前有什麼巨大的挑戰嗎？您能否詳細介紹一下我們在自動駕駛各個方面的出色能力，以支持我們實現如此具有挑戰性的目標？

(Interpreted) As I mentioned earlier, we're still planning to release city NOA and commute NOA in batches, as opposed to releasing all the cities in one go. We're on track to delivering city NOA to 100 cities by the end of this year.

（解讀）正如我剛才提到的，我們仍然計劃分批釋放城市NOA和通勤NOA，而不是一次性釋放所有城市。我們有望在今年年底前向 100 個城市提供城市 NOA。

In terms of technical capabilities, we think we have advantages in both perception and planning. On the perception side we have this innovative Neural Prior Network and also Traffic [and] Network to predict traffic light intentions in the end-to-end model. All of this is going to enhance our BEV model, which can perceive or sense complex road structure information in real time and understand traffic rules. Also using occupancy network, we are able to recognize general obstacles on the driver's route.

從技術能力上來說，我們認為我們在感知和規劃上都有優勢。在感知方面，我們擁有這種創新的神經先驗網絡以及交通[和]網絡來預測端到端模型中的交通燈意圖。所有這些都將增強我們的 BEV 模型，該模型可以實時感知或感知複雜的道路結構信息並理解交通規則。此外，利用佔用網絡，我們能夠識別駕駛員路線上的一般障礙物。

On the planning side we're utilizing [impatient] learning algorithms, which learn from a lot of human driver behavior and decisions to make sure that our city NOA can stay safe, on track, and also follow traffic rules and at the same time drive very similar to human behavior.

在規劃方面，我們正在利用[不耐煩的]學習算法，該算法從大量人類駕駛員的行為和決策中學習，以確保我們的城市 NOA 能夠保持安全、正常行駛，並遵守交通規則，同時駕駛與人類行為非常相似。

We have the biggest autopilot or NOA training -- testing fleet in China and also have the most training mileage as well as a significant reserve of cloud assigned computing power, which we believe will be our path to competitive advantage.

我們擁有中國最大的自動駕駛或NOA訓練測試車隊，也擁有最多的訓練里程以及大量的雲分配計算能力儲備，我們相信這將是我們獲得競爭優勢的途徑。

The next question comes from Ming Hsun Lee with Bank of America. Please go ahead.

下一個問題來自美國銀行的 Ming Hsun Lee。請繼續。

(Spoken in Chinese) So my first question is regarding your sales channel. So right now, you have more than 330 retail stores that cover more than 120 cities. So in terms of your long-term goal, how many stores and how many cities do you want to cover? Besides that, could you also share what is the successful part of your sales channel management and also in what area do you want to improve, if there is any?

（中文）所以我的第一個問題是關於你們的銷售渠道。目前，您擁有 330 多家零售店，覆蓋 120 多個城市。那麼從您的長期目標來看，您希望覆蓋多少家門店、覆蓋多少個城市？除此之外，您能否分享一下您在銷售渠道管理方面的成功之處以及您希望在哪些方面進行改進（如果有的話）？

(Interpreted) On stores, we have a firm belief that good products and good channels work in tandem. We can't live without either of them. A metric we use internally is for a mature store which has been operating for six months, we think getting over 100 orders per month is a pretty healthy level of operating efficiency. But with that said, we'll still focus on not only short-term sales per store but also long term we'll be looking into investing in more stores and expanding our sales network. By 2025 we will by then have many models and much greater sales than today.

（解說）對於門店，我們堅信好的產品和好的渠道是相輔相成的。沒有他們我們就活不下去。我們內部使用的一個指標是一家已經運營六個月的成熟商店，我們認為每月獲得超過 100 個訂單是一個相當健康的運營效率水平。但話雖如此，我們仍然不僅關注每家商店的短期銷售額，而且從長遠來看，我們將考慮投資更多商店並擴大我們的銷售網絡。到 2025 年，我們將擁有比現在更多的車型和更大的銷量。

So we are still committed to opening more stores and covering more cities, covering more users. We really think there is some secret sauce in terms of where to open stores and how the stores should look like, because Mercedes, BMW and Audi, all of them have verified a very successful model in terms of user coverage and city coverage, so we don't really need to reinvent the wheels here. Our plan is really in the next few years to continue to expand to lower-tier cities and cover more users, just following their footsteps so that we can support our sales healthily by 2025.

所以我們還是致力於開更多的門店，覆蓋更多的城市，覆蓋更多的用戶。我們確實認為在哪裡開店以及店面應該是什麼樣子方面有一些秘密武器，因為奔馳、寶馬和奧迪他們都在用戶覆蓋和城市覆蓋方面驗證了非常成功的模式，所以我們真的不需要在這裡重新發明輪子。我們的計劃實際上是在未來幾年內繼續擴展到低線城市並覆蓋更多用戶，跟隨他們的腳步，以便我們能夠在 2025 年之前支持我們的銷售健康。

(Spoken in Chinese). My second question is regarding your charging network, so do you have any plan regarding your expansion target? What's your potential CapEx? Will you build the charging station by yourself or you [mainly] let the third party to build and operate? Will all of those charging station be 5C grade or some will be a lower grade? (Spoken in Chinese).

（用中文說）。我的第二個問題是關於你們的充電網絡，那麼你們對於擴張目標有什麼計劃嗎？您的潛在資本支出是多少？充電站是自己建設還是[主要]讓第三方建設和運營？所有這些充電站都是5C等級還是有些充電站等級較低？ （用中文說）。

(Interpreted) We're still on track to rolling out 300 super-charging stations by the end of this year. In 2023, our charging stations by the end of this year will cover mainly the four economic zones which include the Tianjin-Beijing-Hebie area, the Delta River Delta area and the Guangdong Bay]area as well as the Chengdu-Chongqing area.

（翻譯）我們仍有望在今年年底前推出 300 個超級充電站。到2023年年底，我們的充電站將主要覆蓋津京冀、長三角、粵港澳四大經濟區以及成渝地區。

By 2025, we will have built 3,000 HPC charging stations which will cover over 90% of all the highway mileage as well as the major cities in China. We will make sure to achieve that goal, of course, with operating efficiency as well as a healthy free cash flow in mind. So far, we believe the financial burden is totally manageable. All of our highway HPC stations will be built and operated in-house, and all of the city stations will be working with a franchise model to accelerate the expansion of our charging stations.

到2025年，我們將建成3000個HPC充電站，覆蓋90%以上的高速公路里程以及中國主要城市。當然，我們將確保實現這一目標，同時考慮到運營效率以及健康的自由現金流。到目前為止，我們認為財務負擔是完全可控的。我們所有的高速公路 HPC 充電站都將在內部建設和運營，所有城市充電站都將採用特許經營模式，以加速我們充電站的擴張。

(Spoken in Chinese).

（用中文說）。

Our next question will come from Yuchian Ding with HSBC. Please go ahead.

我們的下一個問題將由匯豐銀行的 Yuchian Ding 提出。請繼續。

(Spoken in Chinese). I got two questions. The first is on the OpEx management. The Company's OpEx management has been quite good, especially in the first half. The R&D run rate is roughly 30%, 40% of the full-year guidance. Can we structurally revising down the guidance on R&D and SG&A? Or does it suggest second half, when we roll out NOA in 100 cities, that would require more intensity in terms of R&D and SG&A?

（用中文說）。我有兩個問題。首先是運營支出管理。公司的OpEx管理相當不錯，尤其是上半年。研發運行率約為30%，全年指導值的40%。我們可以從結構上修改研發和銷售、一般管理費用（SG&A）的指導嗎？或者這是否表明下半年，當我們在 100 個城市推出 NOA 時，需要在研發和 SG&A 方面加大力度？

The second question is about breaking out into our current dominating zone. We're currently quite dominating in the big size, the family utility SUV at the pricing category above RMB300k. But in the future, we'll probably have model launch in a pricinmodelsegory pertaining to RMB200k to RMB300k. Currently we're seeing a very intense competition and many new model supply over there. How do we potentially differentiate over there and maximize the volume impact that we're currently seeing in our dominating zone?

第二個問題是關於突破我們目前的主導區域。目前我們在大尺寸、30萬元以上價位的家庭多功能SUV上佔據了主導地位。但未來我們可能會推出20萬元到30萬元價格區間的車型。目前，我們看到那裡的競爭非常激烈，並且有許多新型號供應。我們如何才能在那裡實現差異化，並最大限度地發揮我們目前在主導區域看到的銷量影響？

Hi. I will take the R&D question first. We will continue to invest in R&D, either for autonomous driving or other areas of the [BEV] if necessary. We still want to keep our full-year R&D expenses up above RMB10 billion. Thank you.

你好。我先回答研發問題。如有必要，我們將繼續投資於自動駕駛或 [BEV] 其他領域的研發。我們仍然希望全年研發費用保持在100億元以上。謝謝。

Yes.

是的。

(Interpreted) We're confident on the overall product leadership of the L6. We believe that L6 will become the best-selling product across the L lineup. We will continue to invest in its competitiveness and we believe it will be the product of choice in its price range for family users.

（解釋）我們對L6的整體產品領先地位充滿信心。我們相信L6將成為L系列中最暢銷的產品。我們將繼續投資於其競爭力，我們相信它將成為家庭用戶在其價格範圍內的首選產品。

(Spoken in Chinese).

（用中文說）。

As we are reaching the end of our conference call, now I'd like to turn the call back over to the Company for closing remarks. Ms. Janet Chang, please go ahead.

當我們的電話會議即將結束時，現在我想將電話轉回公司進行結束語。張珍妮女士，請講。

Thank you once again for joining us today. If you have any further questions, please feel free to contact Li Auto's investor relations team. You may disconnect your line. Thank you.

再次感謝您今天加入我們。如果您還有任何疑問，請隨時聯繫理想汽車投資者關係團隊。您可以斷開線路。謝謝。