Li Auto Inc.

Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's third 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, Kobe Wong, the head of capital markets of Lee Auto. Please go ahead, Kobe.

Thank you, operator. Good evening and good morning, everyone. Welcome to the auto third quarter 2023 earnings conference call. The company's financial and operating results were published in a press release earlier today and are posted on the company's IR website. On today's call, we will have our chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tian Li, begin with prepared remarks. Our President, Mr. Donghui Ma, and Senior VP, Mr. James Liangjun Zhou, will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made at the Safe Harbor Provision of the U.S. Private Security Litigation Reform Act of 1995, forward-looking statements involve inherent risk and uncertainties. As such, the company's actual results may be different from the views expressed today. Further information regarding risk and uncertainties is included in certain company filings with the US SEC and the Hong Kong Stock Exchange. The company doesn't assume any obligation to update Any forward-looking statements except are required under applicable law. Please also note that the auto earnings price release price and this conference call include a discussion of an audit gap financial information as well as an audit non-gap financial measures. Please refer to the auto's disclosure, the comments on the IR section of our website. which contains a recommendation of an audit non-GAAP measurable, comparable GAAP measurement. Our CEO will start his remarks in Chinese. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiangli. Please go ahead.

Hello, everyone. I'm Li Xiang. Welcome to today's conference. In the third quarter of 2023, despite the fierce competition in the Chinese car market, Li Xiang still maintained a strong growth trend thanks to its powerful product power and outstanding execution. In the third quarter, the total turnover was more than 150,000. It increased by three times in the same period last year, creating a third quarter turnover record again. At the end of September, we completed the 50,000th delivery of Li Xiang. to become the fastest-growing Chinese car brand. In October, we surpassed 40,000 units delivered in a single month, which is an important milestone. According to the mid-term data, in the third quarter, the ideal R9 will be the champion in all-wheel drive SUV sales. The ideal R7 and R8 will be the top two in medium-sized SUV sales. The ideal car will remain the top three in the sales of more than 200,000 new energy car markets. The market share has continued to increase, from 10.9% in the first quarter of this year to 13.7% in the second quarter, and has increased to 15.4% in the third quarter of this year. I believe that the successful sales performance of the ideal 2 series and the delivery of a large number of pure electric vehicles next year will support ideal cars to replace traditional fuel cars on a larger scale in 2024. In terms of financial performance, the rapid growth of the scale promotes low-cost sustainability. The company's financial situation is healthy and stable. The income of the third quarter rose by 271.2% to 364.8 billion yuan. The net profit rose to 28.1 billion yuan. The free cash flow reached 132.2 billion yuan, which is a new high in history. By the end of the third quarter, our cash reserves have reached 885.2 billion yuan. Our health and business capabilities will support the long-term investment and development of ideal cars. Including the 5C pure electric vehicles that everyone has seen, the charging capacity is a reflection of the continuous research and development in the past years. In terms of production, in October, the ideal car manufacturing base in Changzhou completed the production and energy upgrade, and prepared for the further production climb in the fourth quarter. In terms of power chain management, we have optimized the management strategy, upgraded the management process, and strengthened the efficient coordination with the supplier. Continuously breaking the bottleneck of supply. It is expected that in the fourth quarter, our total supply will reach 12.5 million to 12.8 million. Next, let's talk about the important ideal microphone. Support charging 12 minutes of battery life of 500 kilometers. The ideal microphone with a design design that is ahead of the times has received more than expected market attention and recognition. The ideal mega ideal mega extreme large space is better to meet the needs of the whole family of the Chinese family It is in the form of a pure electric car with a harmonious and consistent attribute to make the mega achieve the lowest wind resistance coefficient of 0.15 in the world's MPV Perfect balance of energy consumption and space is obtained from the 800-volt high-pressure platform and 5C charging ratio The ideal mega wind power charging power is more than 520,000 watts and will become the fastest-charging mass-produced passenger car. The ideal MEGA will be officially released in December. In January of 2020, the show car will be launched. In February after the Spring Festival, the service will be opened. For more details about the ideal MEGA, you can look forward to our release in December. At the same time, we will continue to expand the construction of a 5C high-pressure charging network. So far, the ideal car has been on the national highway line to build and operate 130 ideal supercharging stations. At the end of this year, we will complete the construction of 300 high-speed supercharging stations, covering Jinjinji, Changsangjiao, Dawan District, Chanyu, and other four major economic areas. In the future, we will accelerate the deployment of ideal supercharging networks. At the same time as the encryption covers the national high-speed network, we will promote the layout of city supercharging stations, and improve the energy-saving enterprise of the entire user scene. In terms of smart driving, we hope that the development and development of ABMAX will go smoothly. At the end of the year, we plan to deliver the official version of ABMAX 3.0 to the users to provide the full scenario of NOA capabilities. At the same time, we will deliver the official software of AB PRO 3.0 to the users in the first half of next year. The partial computing capabilities of ABMAX will be released on AB PRO. We are confident that we will be the first team of smart drivers to be verified by the market in the first half of next year. In terms of direct marketing network, until October 31, 2023, there are already 372 retail centers in the country covering 133 cities. In the fourth quarter, we will continue to accelerate the expansion of stores. The goal is to have more than 400 stores at the end of this year, covering 140 cities nationwide, to further help ideal cars in China, in China, in the market. Finally, I would like to share with you the results we have obtained in ESG. At the end of September, the ideal car won the highest 3A rating of MSCI ESG. It is the first Chinese car to win the 3A rating. This time, the evaluation fully confirmed that we are in the management of the company, product quality and safety, product carbon dioxide, cleaning technology development, organization and talent, etc. Hello, everyone, and welcome to today's earnings conference call. In the third quarter of 2023, despite the intense competition in China's NEV market, we maintained strong growth momentum propelled by our compelling product lineup and strong execution.