Li Auto Inc.

Hello, ladies and gentlemen. Thank you for standing by for Lee Otto's first quarter of 2021 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 Zhang, Director of International Relations of the company. Please go ahead, Janet.

Thank you, Annie. Good evening and good morning, everyone. Welcome to Lee Otto's first quarter 2021 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. On today's call, we have our president, Mr. Kevin Yanan Shen, our CFO, Mr. Johnny Tie Li, and our CTO, Mr. Cai Wang, to begin with prepared remarks. Our founder and CEO, Mr. Xiang Li, will join for the Q&A discussion. Before I continue, please be reminded that today's 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 risks and uncertainties is included in certain failings of the company with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Lee Otto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to Lee Otto's price release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. With that, I will now turn the call over to our president. Please go ahead, Kevin.

Thank you, Janet. Hello, everyone, and thank you for joining our call today. I will review the key highlights of the first quarter as well as our newly released 2021 LIH1, which offers best in class safety, efficiency, comfort, and intelligence. In the first quarter, we delivered 12,579 LIH1, up 334.4% year over year. which brought about total revenue of RMB 3.58 billion, 319.8% higher than the first quarter of 2020, and exceeding the top end of our revenue guidance by 11.2%. In the first quarter, our Liwan was the second best-selling new energy SUV in China. As our compelling product offering and the superior user experience continues to delight customers and enhance brand awareness, while the unwavering support of our direct sales and servicing network underpins our growth. We were also the only domestic brand ranked in the top 10 best sellers among all premium SUVs in the first quarter. In April, V1 remained the first among all new energy SUVs in China. In the rankings, including ICE cars, BEV, EREV, and PHEV, V1 ranked the second in the large SUV segment and the fourth in the premium SUV segment. On the profitability side, our growth margin stayed robust at 17.3%. Amid our ongoing efforts to enhance investment in R&D as well as to expand our direct sales and servicing network. Our expanding operating expenses increased by 238.6% year-over-year and 27.5% quarter-over-quarter. Despite the deliberate increase on the expense side, we continued with a disciplined cash flow management strategy. Our free cash flow remained positive at 570.2 million RMB. We also raised over US dollar 840 million in net proceeds through our successful convertible senior note offering in April, strengthening our capital base for future growth as we increase our R&D investment in leading technologies, prepared for new model launches, and gear up for further increase in demand. We view our direct sales and servicing network as an integral component of our closed-loop system that allows us to iteratively improve product features and add new functions for our users. By accelerating the expansion of our direct sales and servicing network, we remain committed to proactively serving our users and anticipating future demands for our pipeline vehicles. As of April 30, 2021, we had 73 retail stores covering 53 cities and 143 servicing centers. and the authorized body and paint shops operating in 105 cities. We are on track to reach our year-end target of 200 retail stores. We have also started reconfiguring our state-of-the-art Changzhou factory for our new model pipeline, especially the full-size premium SUV based on the next generation EREV platform to be launched in 2022. As a user-driven automotive and technology enterprise, we deeply value the tremendous trust and support our users bestow on us. During the 19th International Automotive Industry Exhibition in April, a large team of V1 owners came to our exhibition to volunteer as brand ambassadors, sharing their experience with the vehicle, their passion for it, and their acknowledgement of value V1 brings to their families' everyday life. One of them, a V1 owner for 11 months, said, Li Auto is not only a carburetor, but also a spiritual partner. It is an integral part of our lives now. We are so grateful to see our mission and vision being recognized and echoed by our users. As of April 30, our cumulative Li-1 deliveries have exceeded 50,000 units. We took only 17 months to reach this milestone from the first delivery of Li-1 in December 2019, creating the fastest record among all new energy vehicle companies. Our users have driven over 500 million kilometers with more than 65 million kilometers assisted by our ADAS solution at the daily active rate of over 30%. self-safety, over 800 million early warnings were triggered, preventing more than 10,000 potential serious accidents. While V1's extended range powertrain and ADAS solution that are a standard configuration enable a more free and safe travel experience for our users. Its intelligence cockpit featuring a comprehensive infotainment system is another highlight of the vehicle. We pioneered the full-screen interactive in-car system that has been widely praised by our users for the smart space of mobility. It allows the users and each passenger offering private usage and voice-based interactive connections. users spend more than 40 minutes in our every day while the car itself is parked. Our in-car karaoke function, which was first released before the Chinese New Year holiday, provided on-demand karaoke for more than 30,000 times during the Chinese New Year holiday and more than 80,000 times during the May Day holiday, affirming our long-standing dream of creating extension of homes that bring happiness to the entire family. V1 is a proven success catering the needs of families in China. and has effectively addressed the current challenge to BEVs in terms of energy replenishment. The success of Li-1 demonstrates our extraordinary product defining capability, which lay a solid foundation for the development of our future models. We will continue to develop new NEV models with best in-class performance in parallel we are developing our next generation extended range platform and high power charging BEV platforms, both of which will be deployed with our proprietary autonomous driving technologies. We plan to introduce a next generation EREV platform in our new vehicles planned for 2022 and 2023. With next generation EREV technology, we aim to support longer range, higher energy efficiency, and better NVH performance of our EREVs. We are also investing in the research and the development of next generation electric vehicle technologies, including high C-rate battery, high voltage platform, and other ultra-fast charging technologies. Leveraging these technologies, we are developing two platforms, Whale and Shark, for our future HPC BEVs. Starting from 2023, we plan to launch at least two new HPC BEV models each year. Our development progress in these technologies has been on track, and we plan to unveil our milestone achievement in the 2022 Beijing Auto Show. We are very excited to officially release our 2021 V1 yesterday. The new V1 features comprehensive upgrades in areas such as the EREV powertrain, ADAS solution, intelligent cockpit, interior design for ride comfort, and exterior design for style. offering user premium features in a standard configuration at the flat retail price of RMB $338,000. Deliveries of the new Liwan will commence on June 1, 2021. We believe The new 2021 Li-1 is an outstanding product with advanced technologies and a very competitive feature for our target customer group. It has alleviated the extended range electric technology to a brand new level. It features an all-new three-in-one rear drive electric motor, offering high energy efficiency as its energy efficiency in fuel model is only 6.05 liter per 100 kilometers, based on the NEDC standard operational condition. Best in class among large size four wheel drive SUVs. With software and hardware optimization and its integrated powertrain system, the new V1 achieved an NEDC range of 1,080 kilometers and a WLTC range of 890 kilometers. We are very proud of our R&D team's successful effort to improve the range-extended technology. In keeping with the company's core belief that 50 should be standard, not optional. The new 2021-01 offers a full stack self-developed ADAS in a standard configuration. All existing Level 2 ADAS functionalities have been redesigned and optimized in-house by our own R&D team. We also launched the NOA system making the company the first OEM to implement full-stack self-developed NOA based on domestic application processors. The 2021 Li1 is also the first model in the world with NOA capability as a standard configuration. Li1 has been well loved been well loved by family users for its spacious six-seat interior layout. The new D1 enhanced its excellence in space, comfort, and intelligence by equipping the front and the second row seats with lumbar massage function. The legroom for its third row is increased by 41 millimeters. while its trunk can still hold a 28-inch suitcase or a large-size stroller. It also features a smarter in-car voice assistant, , providing a higher caliber and overall more spacious, more comfortable, and more intelligent space for family. We believe that 2021, newly won, is going to be a smart electric vehicle bringing happiness to all families it serves, with a powerful extended-range electric system that enables more pleasant road trips. ADAS in a standard configuration to ensure safety, safe travel for everyone, and the spacious smart interior layout that enhance comfort for every occupant in the car. We believe the new V1 will help us gain much higher market share than its predecessor. We have seen a very strong order intake just in the past 24 hours, taking into consideration of the production ramp and the ongoing global shortage of semiconductor. we expect our delivery for second quarter to be between 14,500 and 15,500. With that, I would like to turn it over to our CTO, Kai, for a closer view of our technology advancement and the new Rewind. Since Kai joined as CTO in September last year, we have made numerous breakthroughs in autonomous driving as well as intelligent cockpit technologies. Kai, please go ahead.