Li Auto Inc.

Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's fourth quarter and full year 2025 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, Ms. Janet Zhang, Investor Relations Director of Lee Auto. Please go ahead, Janet.

Thank you, Operator. Good evening and good morning, everyone. Welcome to Lee Auto's fourth quarter and full year 2025 earnings conference call. The company's financial and operating results were published in a press release earlier today, and they were 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 T. Li, to begin with prepared remarks. Our President, Mr. Donghui Ma, and our CTO, Mr. Yan Xie, will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited. The company does not assume any obligation to update any forward-looking statements except as required in the applicable law. Please also note that Liauto'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 Liauto's disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP matters to comparable gap measures. 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. Xiang Li. Please go ahead.

Hello, everyone. I'm Li Xiang. Welcome to today's conference. The past few years have been an important turning point for Li Xiang. With the expansion of the company, we have re-examined many basic capabilities, one of which is very core, which is sales. The biggest problem we had in the past was to manage a direct management system using the management system of suppliers. And the most important thing to do in a direct management system is to manage the edge as the core. Without suppliers helping us manage the edge, this should become our own responsibility. Since the third quarter of last year, We have been exploring how to make higher-quality opening, how to manage the shop and encourage the manager, and how to effectively train the team. All of these starting points are summarized as a core mission, how to sell the car with a direct sound system. To do this, we use the results as a guide, and measure the standard of sales and manpower output to make a series of effective changes. First of all, it is the optimization of division of labor and the concentration of personnel. We solved the problem of poor selection through door-to-door exchange, and concentrated the sales power of the second-tier commercial supermarkets, which are scattered and declining, into a more potential market, including the first-tier malls and car central stores, which directly led to an increase in door-to-door efficiency and human resources production. At the same time, in order to really activate the positivity of first-tier sales, we are also making radical breakthroughs. In March this year, we officially launched a partner project for our store. Our store has become a basic business unit. The excellent store manager has the right to make decisions and share profits. From the traditional sales management role, he has turned into a real store manager. Today, in an environment where the car sales system generally does not make money, we hope to cultivate a store manager with a large amount of revenue of more than one million a year. to achieve three times the income of an outstanding manager, and to ensure that the company's order volume and delivery volume are stable in the first batch of high-end vehicles. In terms of products, in the second quarter of this year, we will officially release the ideal R9 series. With a fully upgraded power system, intelligent driving, and chassis technology, we will pull apart the obvious difference in experience from the products, and return to the leading position of flagship SUVs. The ideal R9 will be equipped with 800hp, and 5C supercharging technology. At the same time, it is equipped with our new generation of full-time self-sufficiency Zengcheng 3.0 system to achieve higher power generation efficiency and greater power generation capacity. With NVH optimization and our first EGR low-temperature start-up technology, we can provide a静謐性和价值体验,以及更好的冬季能耗表现。我们还将全球首发的AI智能机油保养 to achieve an ultra-long maintenance period of three years or 30,000 kilometers. The Ideal 29 Levis version with a price of 55.98 million yuan inherits and carries our deep thoughts on the giant smart flagship SUV. Ideal 29 Levis will be equipped with the world's first mass production full-line control chassis and 800V full active suspension system, providing top-level comfort and control and suspension texture. The shift to automatic and idle response speed and safety have also been greatly improved to provide the necessary execution basis for high-end carpenters and giants. It is also worth mentioning that the ideal R9 Levis will be equipped with two Maher 100 chips with 5nm of ideal self-reliance, which has an effective computing power of 6 times that of Sol-U, and through a better adaptation of the data flow structure and self-reliance carpenters, the soft hardware of the self-propelled model and the self-propelled algorithm. The successful replacement of the ideal R9 will directly determine the market line of the entire R series. If the competitiveness of the previous generation of ideal R9 comes mainly from the precise product definition, then the new generation of ideal R9 will build up the core competitiveness at the technical level. Our pure electric vehicles are also continuously increasing. First of all, through the continuous efforts of the suppliers, the supply problems of the ideal i6 will be gradually resolved. We will continue to improve production capacity and strive to make everyone's promotion cycle a step shorter. At the same time, we can see that with the increase in the journey of car owners using Li Cheng, the appreciation on the experience drives the ideal i8 NPS to grow by more than 20%. In the year-end year-end road release of the new car brand health research, the ideal i8 NPS was also tied by the Chinese-French ICV. With such an NPS performance, since March, the order of Ideal i8 will have more than three times the growth in January. Ideal i6 and Ideal i8 have co-opted the market base of Ideal pure electric products, and co-opted the market base of Ideal pure electric products. Our goal is to completely solve all the problems before, so that our pure electric products can truly occupy the market. In addition, Looking back at last year, after the release of Dream i6, there were many challenges facing the handover policy, production capacity improvement, and the decoupling of the acquisition tax subsidy policy. This made the interest rate of Dream i6 under pressure, but it also saved enough space for the improvement of the interest rate this year. In the second half of 2026, we will also launch a new pure electric flagship SUV, Dream i9, to further enrich our pure electric products, and meet the needs of many users. The year of 2026 is the key year for ideal cars to evolve into a giant smart enterprise. Facing a competitive new car market, we will strive to increase the number of high-tech cars, from smart electric vehicles to giant smart enterprises, to establish the competitive advantage of the next stage. In the year of 2025, the company's R&D investment reached 1.13 billion yuan, of which AI-related investment accounted for 50%. We will continue this investment strategy in 2026 and continue to leverage the core capabilities of the giant smart enterprise. For Ideal70, AI mainly involves two aspects. One is to create AI. The second is how to use AI. Creating AI is to give real life to the product. Using AI is to improve our work efficiency. In terms of creating AI, we have completely redeveloped the research and development organization. and run it in the way of a real IT company. Creating products is creating people. In terms of processing chips, machine models, software and hardware, we need to build the appropriate organizational capabilities and training staff. In terms of products, we are a car with vitality. AI is the key to the vitality of the product. I believe that if we rely on the new generation of technical platforms, we will see changes in our products. They are no longer a simple extension of traditional cars or electric vehicles, but have vitality and initiative, and are reflected in our daily high-frequency life experience. At the efficiency level, AI is turning the company over to expand its information flow and reduce the efficiency of decision-making. By introducing agent-based co-operation, our delay and evolution speed begin to reproduce the high efficiency of business companies. This change has been initially reflected in this year's daily operations. It can be said that AI has not only brought about the innovation of production tools, but also promoted a more active organizational model. Finally, I would like to emphasize that we will transform the complete technology system of cars and giant robots from the ideal R9 of 2022 to today into the real user experience and commercial value, and thus build the core of the second decade. So please pay attention and buy with confidence to experience our new generation of products. Now translating for Mr. Li Xiang.

Thank you for joining our earnings call today. Over the past year, Li Auto has been going through an important period of strategic adjustments. As we scaled, we've reassessed a number of core capabilities, especially how to sustain sales efficiency and organization vitality in a direct sales model. The problem that we've identified is that in the past we have used a dealership mindset to manage our storefront. However, for a direct sales model, the key is really managing each storefront. And therefore, without dealers, we need to figure out how to manage these storefronts effectively on our own. Therefore, since the third quarter of last year, we've been focused on improving store rollout quality. strengthening day-to-day store operations, and upgrading incentives, training, and enablement for our teams. Ultimately, it comes down to one question. How do we sell well? With sales volume and productivity per salesperson as our key metrics, we've implemented a series of targeted changes. First, we optimized division of labor and consolidated our sales force. By closing and replacing underperforming locations, we addressed site selection issues and moved sales teams from lower traffic, second tier malls to higher potential locations, such as prime tier one shopping districts and flagship stores in major auto hubs. This has directly improved store productivity and sales per head. To further enhance our frontline sales, we also upgraded our operating mechanisms. In March, we launched our store partner program making each store the basic operating unit. Top store managers now have real operating decision power and profit sharing, shifting from a pure management role to true store operators. At a time when profitability is challenging across the auto retail industry, we want to develop store managers who can earn over RMB 1 million per year and enable our top performers to make three times the industry average. Just as importantly, This strengthens our frontline capability and helps keep our orders and deliveries firmly in the top tier of the premium segment. Turning to products, we will officially launch the all-new L9 lineup in the second quarter. With comprehensive upgrades from powertrain, autonomous driving, to chassis technology, we aim to create a clear step change in user experience versus competing models and regain leadership in the flagship SUV segment. The new VL9 will come standard with 800-volt architecture and 5C ultra-fast charging. It would also feature our next generation full-stack in-house developed range extender 3.0 system, delivering higher generation efficiency and greater output. With further NVH improvements and our proprietary EGR low temperature start technology, the new LEED L9 offers a cabin quietness and driving experience comparable to best, along with improved winter energy consumption. We will also debut the world's first AI-powered engine oil maintenance system, enabling long service intervals of up to three years or 30,000 kilometers. Our top-of-the-line LEED L9 LIVIS prices, RMB $559,800, reflect our vision for a flagship SUV in an era of embodied AI. It will feature the world's first mass-produced fully drive-by-wire chassis, along with an 800-volt fully active suspension system, delivering best-in-class comfort and handling. Response speed and safety performance across steering, Braking and suspension are also significantly enhanced, providing the execution foundation for autonomous driving and embodied AI. In addition, the L9 Livis will be powered by two in-house developed 5-nanometer M100 chips, delivering six times the effective computing power of 4U. Together with our data flow architecture and in-house intelligent driving staff, It enables end-to-end integration of our algorithms and computing platforms. The success of the new VL9 will directly determine the market potential of the entire L series. If the previous L9's competitiveness was driven primarily by smart product definition, the new generation L9 will build its core advantage through technology. Our dev models are also continuing to ramp up. With sustained efforts alongside our suppliers, the supply constraints on the Li-I6 have been gradually easing. We will keep increasing capacity to further shorten delivery lead times. Meanwhile, as owners put more miles on their vehicles, positive real-world experiences have driven the Li-I8's MPS up by more than 20%. In the NEV Brand Health Study recently released, By land roads, the LEA I-8 also ranked number one in NPS among all large SUVs. Improved experience and satisfaction are now translating into a recovery in order and sales. Since March, LEA I-8 orders have increased 33% versus the same period in February and 179% versus January. Together, the LEA I-6 and I-8 are strengthening the market foundation of our BEV portfolio. Our priority is to fully resolve the issues we encountered earlier to ensure our BEV offerings establish a solid foothold in the market. Looking back at last year, the Li-I6 faced multiple timing-related headwinds after launch, including initial sales policies, the production ramp, and the phase-out of purchase tax subsidies. Which pressure grows large at the same time, these factors also set the stage for margin improvements this year. In the second half of 2026, we'll be launching the LEED i9, a new flagship BEV SUV, further expanding our BEV portfolio to meet a wider range of customer needs. 2026 will be a pivotal year in LEED Auto's evolution into an embodied AI company. As competition intensifies in the NEV market, we will continue to strengthen our technology mode and complete our transformation from a smart EV company to an embodied AI company, positioning us for the next phase of the competition. In 2025, our R&D spending totaled R&D $11.3 billion, which approximately 50% was allocated to AI-related initiatives. We will maintain this investment strategy in 2026 as we continue to build the core capabilities required of an embodied AI company. For Lee Auto, AI has two main dimensions, creating AI and applying AI, bringing our products to life while improving efficiency across the organization. On the create AI side, we have rebuilt our R&D organization from the ground up to operate the way an embodied AI company should. We're developing capabilities and attracting top talent across interface chips, foundation models, software, and hardware. At the product level, we see the vehicle as an intelligent agent with real vitality, and AI is what brings that vitality to life. Built on our next-generation technology platform, our products will evolve in ways you will see over time. They will not be mere extensions of traditional cars or EVs. Instead, they will be proactive and increasingly lifelike in how they learn and improve, and that will be reflected in our high-frequency experiences in daily lives. From an efficiency standpoint, AI is helping reverse the slowdown in information flow and decision-making that can come with scale. By integrating AI and work alongside agents, we're regaining the speed and agility of a startup in our iteration and evolution, and we are already seeing early results in day-to-day operations this year. In other words, AI is not only reshaping our tools, it also is enabling a more dynamic, high-velocity organization. In closing, I want to emphasize that we will convert the capabilities and systems we built from the DL9 launch in 2022 to today's broader automotive and embodied AI technology stack into real user experience and measurable business value. This will serve as the cornerstone of our long-term competitive positioning for the next decade. We look forward to your continued attention and welcoming you to experience our next generation of products. With that, we will turn it over to call to our CFO, Johnny, to walk you through our financial performance.

Thank you, Lisa. Hello, everyone. Given time constraints, my remarks today will be limited to fourth quarter financial highlights. All figures will be quoted in RMB unless otherwise stated. For further details, including the corresponding US dollar amount and the whole year financial results, we encourage you to refer to our earnings press release. Total revenues in the fourth quarter were RMB 28.8 billion, down 35% year-over-year, and up 5.2% quarter-over-quarter. This included RMB 27.3 billion from vehicle sales, down 36.1% year-over-year and up 5.4% quarter-over-quarter. The year-over-year decrease was mainly due to lower vehicle deliveries. The sequential increase was mainly due to the increase in vehicle deliveries, partially offset by lower average selling price due to the different mix following the commencement of the I-6 deliveries. Cost of sales in the fourth quarter was RMB 23.6 billion, down 33% year-over-year, and up 3.3% quarter-over-quarter. Gross profit in the fourth quarter was RMB 5.1 billion, down 42.8% year-over-year, and 14.8% cost over quarter. Vehicle margin in the fourth quarter was 16.8% versus 19.7% in the same period last year, and 15.5% in the prior quarter. The year-over-year decrease was mainly due to different product mix. The sequential increase was mainly due to the estimate estimated the mega recall cost booked in the prior quarter partially offset by lower average selling price due to different product mix following the commencement of the I6 delivery. Gross margin in the fourth quarter was 17.8% versus 20.3% in the same period last year. and 16.3% in the prior quarter. Operating expenses in the fourth quarter were RMB 5.6 billion, up 5.8% year over year, and down 1.3% quarter over quarter. R&D expenses in the fourth quarter were RMB 3 billion, up 25.3% year over year, and 1.4% quarter-over-quarter. The year-over-year increase was mainly due to the cost related to AI and other programs to support product portfolio expansion and technology advancements. SG&A expenses in the fourth quarter were RMB 2.6 billion, down 14% year-over-year, and 4.4% quarter-over-quarter. The year-over-year decrease was mainly due to decreased employee compensation. Loss from operations in the fourth quarter was RMB 442.6 million versus RMB 3.7 billion income from operations in the same period last year, and RMB 1.2 billion loss from operations in the prior quarter. Operating margin in the fourth quarter was negative 1.5% versus 8.4% in the same period last year and negative 4.3% in the third quarter. Net income in the fourth quarter was RMB 20.2 million versus RMB 3.5 billion net income in the same period last year and RMB 624.4 million net loss in the prior quarter. Diluted net earnings for ADS attributable to ordinary shareholders was RMB one cent in the fourth quarter versus RMB 3.31 diluted net earnings in the same period last year and RMB 0.8 6-2 diluted net loss in the prior quarter. Pending for our balance sheet and cash flow, our cash position remains solid with a year-end balance of RMB 101.2 billion. Net cash provided by operating activity in the fourth quarter was RMB 3.5 billion versus RMB 8.7 billion provided in the same period last year. And RMB 7.4 billion used in the third quarter. Free cash flow was RMB 2.5 billion in the fourth quarter versus RMB 6.1 billion in the same period last year. And negative RMB 8.9 billion in the prior quarter. At the end of 2025, we had a total of 30,728 employees. And now for our business outlook. For the first quarter of 2026, the company expects the delivery to be between 85,000 and 90,000 vehicles. and quarterly total revenues to be between RMB 20.4 billion and RMB 21.6 billion. This business outlook reflects the company's current and preliminary view on its business situation and market condition, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session. Thank you.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. For the benefit of all participants on today's call, please limit yourself to two questions. And if you have additional questions, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translation. Your first question comes from Tin Sao with Morgan Stanley.

Hello, I'm Morgan.

Thank you for answering my question. I have two questions. The first question is to follow up on what President Li Jiang mentioned in the briefing, which is channel reform. We saw some news from February 1st that Li Jiang is planning to deepen channel reform and close 100 stores. I would like to ask about the plan and progress before the channel optimization. So my first question is about the channel. I think the management just mentioned that the auto now plans to optimize the sales networks. and reportedly close up to 100 stores. What are the company's plans and progress regarding channel optimization? Separately, could you elaborate a bit more about the store partner mechanism? CEO just mentioned, in addition to the incentive program to the store manager, any further implementation details you can share with us? And when should we expect it to show positive results?

That's my first question. Hello, I'm Ma Donghui from Ideal Car. I'm here to answer this question.

Regarding the optimization of the company's sales channel, first of all, the rumor about 100 stores is not real information. In fact, we have always been dealing with a small number of low-end stores with no way to support the sales target. It's a normal situation. It's mainly to solve the problem of poor store selection in the past and the loss of business flow. This year, the core idea of our channel is to pay more attention to quality rather than quantity. This year, we will also add stores. If we add stores, we will prioritize choosing the top-notch malls and high-quality car cities to inherit the influence of the brand and high-quality customers. Then, in the layout of the city, the current low-end city is relatively good. With the increase in the sales of our pure electric vehicles, our focus will be on the city of high-end. At the same time, we are also constantly improving the experience of sales, including the reception of stores, market price, and the experience of sales, as well as the high-speed supercharge on the holiday. The satisfaction and good reviews of users are constantly improving. In addition, I would like to introduce a company that officially launched a partnership mechanism with stores in early March. The core is that we will turn the store into a basic business unit. We hope to find a model of car management with ideal characteristics. First of all, we will definitely stick to direct operation. Direct operation ensures that the service experience and the price and policy of the whole country are unified. At the same time, by releasing the decision-making right and the share of profits to the store manager to stimulate the team's business awareness and vitality. The decision-making power of management includes the autonomy of the customer, the autonomy of the management, and the autonomy of the management of the team. From the previous large-scale assessment and sales of the manager, the manager is really responsible for the results of the management of the store. We hope that the manager will take the electricity as his own business. We also hope that this mechanism can solve problems such as the blind opening of the past and the expansion of the store's exhibition from the root. And in the future, the selection of new stores will be determined by the participation of the store manager in the whole process. From the source to improve the financial quality of stores. The company will also use financial support and digitization tools to do its best to restore the energy line. We hope that in Q3, we can see a clear improvement and improvement in sales and management. Finally, we always believe that the health and efficiency of the sales system I need to first start with a clarification

channel optimization. The rumor about closing 100 stores is false. In reality, we've always conducted routine optimization of our stores, phasing out a small number of underperforming stores that cannot reach their sales targets. And this is simply part of normal operations to address past issues like poor store locations or declining foot traffic in certain shopping districts. Our core channel strategy this year is very clear, quality over quantity. We will add new stores this year. New stores will prioritize top-tier shopping malls and premium auto parks to strengthen brand presence and attract higher-quality traffic. As for city coverage, our footprint in lower-tier cities is already fairly complete, and going forward, we'll focus on increasing store density in higher-tier cities aligned with our ramp-up of BEV sales. Meanwhile, we continue to improve sales and service experience, covering in-store reception, test drives, delivery, highway supercharging stations, staff with attendance during holidays. As a result, we've been seeing user satisfaction and positive feedback keep climbing. While we're on the topic, let me also share a bit about our new store partner program, officially launched on March 1st. We're treating each store as a core business unit and building a direct sales model that's truly unique to Leo Auto. First, we remain fully committed to direct sales. This ensures consistent service quality and a unified national pricing strategy. Meanwhile, we're now delegating decision-making power and sharing profits with store managers to really motivate our frontline teams and enable them to think like real business operators. In terms of store operations, Store managers now have autonomy in three areas, customer acquisition, day-to-day operations, and managing their own teams. And we've changed how we evaluate them as well, no longer just on sales solving. Now the performance is measured on operating results of the stores. The goal is to make every store manager feel like they're running their own businesses and be fully accountable for the results. This new model also helps us solve past problems at the root, like opening stores without thinking through and without thinking through, and other issues on store expansion. Going forward, store managers will be involved from day-to-day site selection with clear ownership and accountability. This way, we raise store quality right from the start, and the company will back it up with financial support and digital tools to empower our frontline team. We aim to see significant sales and operational improvements from Q3. Ultimately, we believe a healthy, efficient sales and service system is the foundation of strong sales and market leadership. Since last August, we've spent seven months to systematically recalibrate our direct sales management framework. This includes high-quality store expansion, refined operations, and store manager incentives, as well as frontline training. All this to build a truly sustainable, competitive sales and service network for the long run.

Thank you. My second question is about the product, the new product. For the upcoming OU L9 and the L9 Levis, could you please shed light on the launch timeline? pricing strategy, product competitiveness, and crowd-raising and repo profitability.

Thank you. Hi, I'm Li Xiang.

The new generation of Li Xiang R9 will be officially released in the second quarter of the year. The reason why we call it a giant smart device is because the whole manufacturing system's perception, brain, and the three dimensions of the body, and then the restructuring of the whole technology. I think the first important thing is actually to talk about perception. Whether it's intelligent driving or non-intelligent driving, or today's artificial intelligence, basically, the biggest challenge is actually through watching videos, and then learning, and then doing training, and then watching videos, and then actually controlling the vehicle. In essence, this is a technical system that everyone is using. In fact, it is not really understanding the unknown world, but through a way of imitation learning. In terms of perception, we will break through today's 2D cameras and laser programs and upgrade to 3D VIP, which is really like human beings. to perceive and understand the world of physics, not just by watching videos. I think this is an important breakthrough. This requires us to from video coding to the development of the entire model, and then at the base level, to provide strong computing power to the computer and the model, as well as the chip industry, and then to make breakthroughs in joint design. I think this will be, no matter if it's automation or AI, I think this year will be the biggest and most important breakthrough in the world. In a nutshell, I think VLA will also become This is an important change. On the other hand, as a machine, the main body will also make a significant change. On the R9, we have a complete wireless system, including wireless cable, then the remote control, the four-wheel steering, and the eight-speed automatic transmission controlled by four independent motors. This means that the overall speed and safety of the car is far more than that of a traditional car. And another very important point is that it is no longer controlled by the traditional MCO and then to another controller MCO. Instead, it can be directly exported to the control system via a model. So first, to your question about products.

This year, we will be launching, Q2 will be launching our all-new VL9 Libis equipped with our in-house developed Mach 100 chips. And the reason we call it an embodied AI robot is really because we've completely revamped the technical stack from a sensing brain and body from all these three dimensions. So first of all, let me start with the autonomous driving front. In the past, the technical paradigm is really to drive, to have the machines to learn to drive through watching videos. They're not really understanding the physical world, but rather they're just watching videos and try to imitate human behavior from these videos. However, as we've conducted our R&D, we've identified that the most efficient way is really to understand the physical world. So when we say VLA model, we're really trying to use the language understand and behave and understand how the world works as opposed to just simply interpreting the video. So as we move from two-dimensional cameras to three-dimensional vision transformers, we can really understand the 3D world much better. And that requires a revamp of the full stack from video encoder to the chips to the algorithms. how we can enable compute directly from a large model to actually enable physical behavior. And I believe this will be a major technological shift across the world, across autonomous driving as well as physical robots happening this year. So as I mentioned earlier, this is going to be real VLA. The language models really understand and thinks about the physical world before it makes the decision to move So that's on the sensing side, perception side. And then next on the hardware itself, on the execution side, VL9, as we released earlier, will be equipped with a fully drive-by-wire system, which includes drive-by-wire steering, four-wheel steering, electrical mechanical brakes, 800 volt fully independent active suspension where we have pumps powering each suspension, each wheel independently. What that all combined will do is that it will provide us with the level of agility that's never achieved before in a vehicle. And beyond that, all the signals and the decision making doesn't happen through an MCU, which was the paradigm before, but rather We have large models to directly process these inputs, and the output goes directly to the actuators as opposed to going through a much less sophisticated MCU. So that's what we believe is the real smart car is going to be like, and we believe that L9 is going to be the beginning of all this. Thank you.

Your next question comes from Paul Gung with UBS.

So my first question is regarding the 2026 sales volume target. based on the current environment. And more importantly, is how should we balance the volume and market share target versus our own margins? How important the volume target is in our overall balance of the development?

Hello, I'm Li Xiang. Because 2026 is our third-generation platform, and it's a year of market delivery, so we're looking at And then this year's product and technology competitiveness is very confident. But in fact, the competition in the entire market is also intensifying. And then this year, more than 200,000 Chinese three markets, and then the number of new cars, and then more than the past few years. And this year, the increase in the big plate is relatively limited. So, in summary, these two factors, our goal for this year is to achieve, and then compared to last year, more than 20% of the same growth. I want to achieve such a growth. I think. We are a three plus two and a strategy. I think the first one is that we must manage the sales system well. And then we believe that the management of the operating system will become our long-term important energy. So this is the first point. I think the second point is the success of the replacement of the L series based on the L9 series. And then if you put And then the product and then the release. And then how to deliver the product well. And then these are all real-time. And then every link has to be done well. So I think the third key point is our pure power. And then you have to be stable. And then whether it's love six love eight or. We hope that our pure electricity sales will completely solve the supply problem, as well as the issue of various releases in the past. In the future, we will be able to recharge in the Chinese market and stand firmly. I think these are the three core strategies we talked about. In addition, on the one hand, In the past few years, we have experienced a completely different product experience in terms of smart investment, including chip models, and various research capabilities. And the most important product experience is a proactive one. It's active, it's high-quality, and it's something that users can receive every day. I think this is one of the characteristics of Fudu. Another strategy is that we are overseas, and there will be significant progress and opening up. Although we have officially been overseas for a year, I think this is also an important opportunity for us in the long term. So this is our real support. Compared to last year, we can achieve more than 2% of the growth rate in such an integrated environment. This is a set of strategies that must be done.

So 2026, as you all know, is going to be an important year from a product perspective as we release the third generation of products. While we're very confident about our products, we also noticed that this is going to be the most competitive year to date. This year you will be seeing more cars released, more new cars released in the 200,000 RMB and above market than all of the years previously combined. But at the same time, the overall growth of the market is very limited. So considering all this, our total goal is still to reach a 20% year-on-year growth for all 2026. And to support all of this, we have a 3 plus 2 strategy, first starting on the 3. The 3 pillars to support our sales, the first one is the sales system. We will continue to be committed to our direct sales model. And as we've implemented new mechanisms, we will start to see benefits this year of the direct sales model. And the second pillar is the L-series launch, starting with the L-9. This new generation of L-series will really be a key pillar to our sales this year. So we will make sure that we get every detail right from the product release to product to supply to delivery, to ensure the success of L9 and upcoming L-series models. And the third pillar is BEV ramp-up, which includes I6, I8, I9, and MEGA. In the past few months, we've addressed the supply constraints. We have also fixed issues around release, sales, and marketing. So this year, as the year goes on, we believe that the volume on our... products will be steadily ramping up, which is going to account for a very significant market in the premium market. Now, moving on to the two. The two, the first one is AI-related investments. In the past year, we spent billions on chips, on models, and this is going to be the year, I believe, that all these investments start to bear fruits. meaning that they will provide a very differentiated product experience to our users. And to summarize, these experiences will be proactive, will be high frequencies that every consumer can feel and benefit from in their everyday life. The second of the two is our overseas strategy. This is going to be the first full year where we officially run our overseas markets, but through the years of accumulation before and we believe that this year is going to start to see results and support a long-term growth and overseas remains what we see as a long-term growth opportunity. Thank you.

So my second question is regarding the impact of raw material cost inflation, including the metals, memories, and batteries. What would be the strategy for the company to face this challenge? Shall we absorb it within the supply chain, or shall we pass this part of the cost inflation to the downstream?

I'm Ma Donghui. Let me answer this question. Indeed, this round of batteries, including storage chips, and these core components are indeed has had a significant impact on the cost of the bike. In the face of this pressure, we have a few measures to respond to. The first is to strengthen the partnership with our partners. On the one hand, we want a stable price. On the other hand, we want to protect the supply. In terms of cost, we have signed a long-term LTA agreement with our core suppliers. and then the key raw materials, and then the price of the component is pre-locked to meet the short-term demand. And then on the supply side, especially in the recent pure storage, the smart part is more nervous. We also pre-locked the share with the core supplier to ensure the market and production of new products. In addition, there are contracts, there are pricing mechanisms, We will strictly follow the contract to execute Then there is no agreement We also insist on sharing the single cost with the employer Come together to carry out the cycle If it is realized, the benefits will be shared Here, I would also like to thank all the company partners for their long-term support of the ideal machine The second one is to strengthen the cost reduction from the end to the end Including from product research manufacturing logistics and even quality All of them . . . . including custom pipes, can help us better control costs. Another point is that the pricing of new models will be more reasonable and more stable. In this year's new model, we will consider the fluctuation of raw materials, technical investment, and user value, and then ensure the company's healthy and sustainable operating capacity, and return the profit rate of new products to the normal level of health. In general, we are confident We believe the current cost pressure is still largely concentrated on key components like batteries and memory chips, which has indeed had some impact on unit vehicle costs.

In response, we've already put in place the following measures. First, we are strengthening supply chain collaboration to stabilize pricing while securing supply. On the cost side, we've signed long-term agreements with our core suppliers to lock in both pricing and volume for key raw materials upfront. This helps us hedge against short-term market volatility. And on the supply side, especially for AI-related components like memory chips, we have been tight recently. continuing to work with key suppliers and to secure dedicated allocation, ensure priority support for production and new model launches. Where contracts include clear pricing terms and adjustment mechanisms, we strictly adhere to these terms. Where there is no such agreement, we work hand-in-hand with suppliers to share the cost pressure and navigate the cycle together, aiming for mutual benefits in the long term. We'd like to sincerely thank all of our supply chain partners for their ongoing support for Lee Auto. And secondly, we're driving end-to-end cost optimization in the meantime. We're identifying cost-saving opportunities across the entire value chain from products to R&D to manufacturing, logistics, and cost quality. At the same time, we're maximizing economies of scale through platform-based development and higher parts commonality across models. This allows us to absorb as much of the external cost pressure internally as possible. Our in-house developed and manufactured range extender, electric drive units, power modules, self-developed and contract manufactured domain controllers, silicon carbide power chips, and 100 autonomous driving chips and battery packs, all of this is helping us to better manage costs. Third, we're taking a more rational and steady approach to new vehicle pricing. For our 2026 models, pricing will reflect a balanced consideration of raw materials, volatility, R&D investments, and user value to ensure the healthy and sustainable profitability. Our goal is to bring gross margins of new products back to normal, to a healthy range. Overall, we're confident that by combining supply chain collaboration long-term agreements that lock in key costs, platformization, proprietary technologies, and rational pricing, we can effectively contain the impact of raw material price increases with a manageable range and maintain stable gross margins and operational quality. Thank you.

Thank you very much.

Your next question comes from Jing Cheng with CICC.

好的,感谢介绍我的提问。 我这边有两个问题。 那首先第一个是关于最近媒体有看到报道公司可能会有意向进行一些股权回购的考虑。 那想问一下是否有相关的安排。 So my first question is about in response to recently we have heard about some media reports about the company's consideration of shared buybacks. So could you please confirm if there are any related points?

Yes, this is Johnny. I think this is not a media report, it's about a media reporter at Weibo. As a dual role prime listing company, both in US and Hong Kong Stock Exchange, we recognize that share buybacks is one of the ways or tools we should consider for enhancing shareholder value. And with respect to share, Currently, we don't have additional information that needs to be disclosed.

Thank you. Thank you. My second question is about the development and investment plans. In 2025, So my second question is about R&D expense. So what will be our guidance for the R&D expense in 2026? And the Also, last year, we spent almost half of our R&D related to intelligence or AI-related areas. So, what is the proportion guidance for this year?

Okay. Thanks for our question. This is also Johnny. We expect the R&D expenses this year to remain around R&D of $12 billion, with a AI-related initiatives accounting for about half of the cost. This includes the investment in AI infrastructure such as in-house chip development and computing power, as well as R&D for AI products like autonomous driving systems and Li Xianghongxue. We invested in the last several years. Just to clarify, we don't see the automotive and the AI as different, as independent business. We invest on the R&D side to build the AI capability and put it in our company as a whole business model. We monetize all the R&D investment through our current business model. It's not a separate business model. Thank you.

Your next question comes from Fei Xingyao with Cytics.

谢谢管理层接受我的提问。 我这边有两个问题。 第一个是关于i系列的。 那管理层能不能给我们一些详细的信息, 具体包括i6,i8的订单,还有它的销售情况, 以及i6的产能踏坡。 同时的话,管理层如何考虑希望达到这个电池的安全性, So my first question is about i-Series. So could you give us some details about i8 and i6 to other sales and especially about the ramping up production of i6? And how do you evaluate same-world battery safety and its cost reduction contribution?

Thank you. I'm Ma Donggui. I'll answer this question.

Since the launch of the ideal i8 in July last year, as users use it, it has increased in terms of driving experience, and the reputation of intelligent experience is constantly improving. Now, the NPS is at the beginning of the market, with a growth of more than 20%. During the Spring Festival, our 5C supercharger and OTA 8.3 price upgrade have received high recognition from users. NPS has also reached the highest level in history. In the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, in the second half of the year, In terms of i6, we have already passed the most difficult production stage. We have officially entered a stable delivery stage. The productivity of i6 has also been fully verified. With the appearance, shape, space, power consumption, and control capability, we have accurately met the needs of young families. The orders are increasing after school. At the same time, the bottleneck of the supply chain has been completely resolved. Previously, the battery consumption of . . . . . More importantly, the success of i6 also proves the ideal brand performance. Not only is it a genuine product, but it has also successfully expanded to the mass market. Then about the battery policy, we always insist on an open cooperation strategy and cooperation with the head of the industry. But we have to master the initiative to start from the performance demand of the whole car to lead the battery design. I want to say that in 2026, all the models of ideal cars will be equipped with two brands of batteries. One is the ideal brand and the other is the brand of the age. This also means that our cooperation with core partners will enter a deeper stage of integration. Please believe that the ideal car itself, this brand, because the quality of the ideal has never been determined by a single engineer, but by our full-fledged natural technology, strict quality control system, and long-term adherence to the values, the common definition of choosing the ideal is to choose the most reliable guarantee.

Now let me start with Li i8. Since its launch in July last year, user satisfaction has continued to rise as owners accumulate miles on their vehicles, and they're satisfied particularly with driving, charging experience, and autonomous driving. The MPS of i8 has risen by over 20% compared to the early post-launch period. During the Chinese New Year holiday, our 5C ultra-fast charging and OTA 8.3 autonomous driving upgrade received strong user acclaim, pushing NPS to an all-time high. In Land Road's second half of the 2025 survey, VI8 ranked number one in NPS among all large SUVs. Fueled by the strong word of mouth, VI8 orders have steadily rebounded. Daily orders in early March were up threefold, over threefold, sorry, over nearly 180% versus January. This clearly upward trend reflects strengthening market demand. And now turning to Li-I6, we've successfully moved past the most challenging phase of production ramp-up. We are now in the stable delivery phase. Li-I6 product strength has been thoroughly validated with its distinctive exterior design, spacious interior, efficient energy consumption, and agile handling. It precisely meets the needs of young families. It experienced strong order momentum since launch. And at the same time, all the supply chain bottlenecks have now been fully resolved. We used to face short-term volatility in battery supply, but we worked closely with our core suppliers to scale production capacity. We also introduced a purchase tax subsidy and extended care policy. I'd like to thank all of our LEED L6 users for their understanding and patience. We expect Li L6 to sustain a steady monthly sales of around 20,000 units, and we're on track to efficiently deliver the current order backlog within the next one or two months. Most importantly, Li L6 success clearly shows that Li Auto's brand appeal has successfully extended from the ERAF segment into the BEST segment. Moving on to our battery strategy, we will We are committed to an open partnership approach. While working closely with industry leaders, we retain control in all these partnerships. When it comes to the vehicle performance, we let battery architecture design and rigorously control quality at every step. Regardless of which partner supplies the cells, all batteries must meet Lee Auto's unified Lee standard for performance, quality, and safety. To the user, the experience is identical. There are no differences whatsoever. Additionally, starting in 2026, all Lee Auto vehicles will be equipped with batteries from only two brands, Lee Auto brand and CATL. This marks a deeper level of integration with our core partners. We ask for your continued trust in the Lee Auto brand because Lee Auto's quality has never depended on any single supplier. It's defined by our full-stack in-house R&D, our rigorous quality control systems, and the core values we've upheld from day one. When people choose Li Auto, it means they're choosing the most reliable assurance.

Thank you. Okay, thank you, Mr. Guan. My second question is about the new chip, the Mahoe 100. Can you tell us about the future of this chip? So my next question is about the in-house chip Mark 100. So could you give us more details about this chip such as the mass production timeline and where can we see the cost savings and efficiency. In addition, how should we understand the company's software and hardware integration? And then we'll see the gap between different automakers because of this integration. That's all. Thank you.

Okay. This is Yan. Let me answer your question. And M100 will deliver with L9, a new series. and we already started mass production. And for M100 itself, with the same silicon area, M100 delivers significantly higher effective compute, giving our VRA algorithms much more design space. For example, we can run a VRA model with about six times the parameters and 10 times the compute of the previous generation while still achieving higher frame rates and faster inference. More importantly, as our in-house models, compiler stack, and operating system evolve together through co-design, we are beginning to unlock the real potential of a full self-developed autonomous driving stack. The performance gain we see today are important, but the bigger impact is that this system-level integration will significantly accelerate how fast our autonomous driving capabilities improve over time. Once the system is officially deployed, we expect the pace of capability improvement to increase substantially. M100 also works closely with Halo OS and vehicle-by-wire system, enabling tighter coordination between autonomous driving, compute, computation, pre- and post-processing, and vehicle control. This shortens the end-to-end latency from sensor photon input to vehicle activation to around 200 to 300 milliseconds, directly improving the driving experience. The higher local compute also allows us to deliver more intelligent capabilities beyond autonomous driving. Over time, the car will behave more and more like a robot. Some of these capabilities will first appear on the new L9, And we will continue to expand them in the future. And more, M100 also brings significant cost advantage. First, the bottom cost per chip is much lower than external solutions. And second, we removed the XCU controller used in the previous generation platform. By replacing it with M100 combined with the Halo OS virtualization, receive over 1,000 IMB per vehicle. Third, thanks to our data flow, architecture, and co-design of model and chips, we achieve higher runtime efficiency today and maintain much greater headroom for future performance improvement. When we started developing our own chip in 2022, we believed that around 2025, the industry would move into a new phase where models, chips, and operating system have to be designed together. That kind of vertical integration creates real differentiation in performance efficiency and user experience. Over time, the gap between components will start to look like the gap between Apple and Android in the cell phone world. Once you achieve full-stack hardware software integration, the advantage becomes structural, and it keeps widening. Thank you.

Your next question comes from Tina Ha with Goldman Sachs.

感谢管理层的时间。 我这边第一个问题是关于巨神智能的。 想要请问一下公司接下来的一到两年, 咱们巨神智能的一个战略规划是怎么样的, 以及产品的一个落地形态和节奏, 包括比如说在汽车,robotaxi和人行机器人之间, Thanks for taking my question. So my first question is regarding embodied AI. So for the next one to two years, wondering what's the strategic plan from Liato? What kind of products are we expect to see? And then also the progress or timeline of these products. Also, in terms of the strategic priority, how do you decide between EVs, RoboTaxi, as well as a humanoid robot?

Hello, I'm Li Jiang.

I think we can look at it from two different perspectives. The first one is that we will invest 100% into the entire technology of the giant. Because we believe that the entire technology of the giant and the whole system technology is already available, including the specific chip, including different models, including the operating system, and the whole data and training system behind it. I think this is something we will put our full effort into, and I think this is the most important foundation of all GSM. In addition, in terms of real business and product landing, we will be careful. We will continue to explore. In order to explore and expand in more fields, we will start in the way of startup companies, including our AI glasses, and our robot projects. We avoid big companies, big hands and big feet.

So in terms of the embodied AI strategy, first of all, on the technological and product front, we believe that there's a lot of commonality regardless of what kind of product, physical product we're talking about. So this is an area we will be investing heavily in because we believe that all the incentives investments will be shared across different product shapes and forms. This includes the device side inference chips, the foundation models and operating system as well as the entire data training workflow. In the meantime, on the commercial side, we will be very careful as we invest and explore. We will be adopting a startup model in areas like AI glasses and robots. Instead of using a traditional large company approach where we invest heavily in unverified direction, we will work more like a startup company to start these new initiatives and wade our way through

好的,我第二个问题是想请问一下,目前咱们对这个智能化研发的一个调整工作是否已经结束,然后在这个新的分工之下,咱们支架的进展目前怎么样? So my second question is regarding our R&D restructuring. So wondering if the restructuring has been completed, and then also under the new structure, how is the progress regarding our autonomous driving?

In January this year, our organization made a major adjustment. The most important thing is that the R&D team used the original definition of hardware and software functions, and then divided them into different functions, and then turned them into a way to create people, and then create digital people and micro-people.

We then divided them into different categories.

For example, a digital organ contains the heart, which is our chip. It also contains our data, which is like our lungs. It also contains our operating system, which is like our nerves. We put this kind of team under a big body for management. The second most important thing is the brain system. The brain system is connected to And then our pre-training, post-training, enhanced training, as well as basic infrastructure. And then the entire team of the brain system will be put together to manage. And the brain system team can only do this. They can't touch the real application. It should have turned into a very strong brain, but it didn't grow. And then when it was small. On the other hand, just like OpenAI and Astral Bigger, we have our own software application team. Because we have hardware and software, we call it the software itself. It needs to build a system-level agent, including the development of the software tools, such as MCP, and how to build agents, memory systems, and skills. And it needs to be combined with our operating system. That way, we can really to complete tasks and work, rather than just simply conversing or giving some results in text or pictures. I think this is the team of our software team. And the requirements of our software team is that you have to improve through the application. Use skills, use memory, and avoid tips. In the past, This is a traditional company. When I was in the hospital, every English-speaking person wanted to go to the hospital for a while, do some training, do some pull-ups, these useless things, right? Yes, and then avoid it. In fact, the body will have to grow some brain that is useless. Yes, and then the brain that is very inefficient will come out. Yes, I think this is the part of the software body. On the other hand, the hardware has also undergone a lot of changes. It has become a special one for the future giants to consider. and a complete hardware-based system, including a very important energy system, a driving system, and a control system. In other words, these systems are no longer managed by each individual controller. Instead, we are now using MCP, and then using this model directly, and then using MCP to control all the conductors in this way. So that we can let the team And then the real one is then joined together and then it's built and then This is different and then it's different from the traditional hardware and hardware of the past and then the different ones and then the people of the numbers and the people of the rules such an organizational model and the original model I think this is a very important change we made this year and then in January when we made this change and then a lot of teams didn't quite understand at the beginning But we can actually see that the efficiency is very high and then our The whole training efficiency of our frame model will be reduced from two weeks in the past to once in a day. On the other hand, the cooperation between teams is completely different. In the past, there were teams with strong departments. Today, everyone is completely together. We went through a major organization change in January, where we completely revamped our hardware and software functions.

All this has a shared goal, which is to build a silicon-based digital human being, or a smart human beings. That's our overall goal. And in order to achieve this reorganization, we basically reconnected across our businesses and regrouped the functions by the specific part of the human that they were responsible for, as opposed to previously dividing by the so-called business units or the product. This organization or the specialization happens in three areas. The first one is what we think of as brain. And this includes data sets, which is comparable to human lungs. Chips, which is comparable to the heart and operating system compared to the neural system. And then all of these are organized together so that we can work through pre-training and post-training and infrastructure together and think of these as the brain. And my rule for these teams is that they cannot touch applications because in many companies, the fundamental resource team are tempted to work on applications. But in our case, the brains should not have their own hands, but they should focus on building a very robust brain that can be used across different hardware and software applications. On top of the bring team, we have what we call the applications team, or in our language, we call it the core software team. This core software team includes software tools like MCP. They include teams that build agents, include teams that focuses on skills, and teams that focus on memories. And all of these different components are designed to work with a shared operating system. That's how we can organize all these different components of software to actually do things for us as opposed to just become a conversational robot. So it can actually strategize and execute tasks that are given by human beings. And then, so everything I mentioned above is software, which includes skills, memories, Again, here we avoid the team's temptation to want to build their own brains. We don't want the body to have its own little brain, but rather we want them to fully utilize the powerful brain that was built by the previous team that I mentioned. So this team focuses mostly on the body, the applications. And then finally, we have the hardware team. This is about building dedicated hardware for AI, for embodied AI, which includes an energy team and electric drive team and the controllers team. And when I say controller teams, we don't necessarily use actual controllers like the ones seen in automobiles in the past because we're now working with a model where we build MCPs for the different components so that the large model can directly talk to these MCPs and control these different components, which makes them a lot more intelligent and more efficient. And when I put these three teams together, the major benefit that I see is that they're able to work together across different products because they enable each other's work as opposed to the silos that you see with the traditional models. And that's how we can deliver products that are also differentiated from the traditional products. So after we've made this rework, And many people at the beginning didn't understand or understand why we were making this change. But over time, very quickly, they're starting to see the efficiency gain in the workflows. For example, for the autonomous driving team, they used to iterate their models every two weeks. But after the change, they're now able to turn out iteration every one day, which is a 14-time improvement. And again, as I mentioned earlier, this is partly thanks to of the collaboration across different teams. They all sit in one room and work together as opposed to having different departments talk between silos. That's how we believe we can really build an embodied AI that we will see very soon.

I think I would like to add one more thing. Because at the beginning of this year and at the end of last year, you all saw some changes. Then in the past five to ten years, some of our very excellent development managers, No. 1 and No. 2, because they followed the ideal car in the past and experienced a very important stage from scratch, they have a rich entrepreneurial experience. So we can see that in fact, There are some of our core components. And then we go out and start a business. It's also very good to get a recognition from the investment market. On the one hand, I'd like to congratulate these core stakeholders who have been welcomed by the market and become entrepreneurs. I hope that all the stakeholders who can start their own business can perform better and better and become the mainstay of the market. On the other hand, I'd like to congratulate some young technical managers and a very good opportunity for business managers. So, no matter it is a robot model, or a human-centered robot, or our product line, no matter it is the number one position in this business, or the core management team at the bottom, We had a lot of post-90s and post-95s who came to celebrate their 1st month. We also showed the whole team the future of the team and established a solid foundation of talents and a very strong motivation. I think this is a very good win-win situation for the ideal team. As a start to a new decade. So I also followed up with So I don't know. I don't know. I don't know. I don't know. I don't know. There's one important thing that I want to add.

Around the beginning of this year, we've seen many important managers, especially In the R&D field, we've seen several major departures. Many of them have been with the company for over five years, which is something I believe you've also noticed in the market. These leaders, in many cases, they're first in line of their business. They went through the entire zero to one cycle with V-Auto in a starter mode, and they've been very well received by the investment community, as many of them have had major funding as we've seen on the news already. So first of all, I wanted to congratulate these former colleagues for getting good reception in the market, not just funding, but also overall reception. And I really wish all of you good luck to compete in your respective markets and wish your business to develop well and for you to have a success in your new venture. At the same time, I also want to point out that this change has really given rise to a very exciting change within the company. It has enabled many of our young leaders across technology in business units, in foundation models, vehicle product lines, and embodied AI It has embodied new, enabled new leaders in these areas of many who were born after 1990 or 1995 to really take the spot and take the burden. And there's really, we're starting to see a full bench of very talented and motivated colleagues, which is prepping the company really for the next decade. I believe this overall is really a win-win situation for us and our employees and really ready us for the new decade of development. So I want all of you investors and those who care about the company to rest assured that this young generation is taking over very well and they're building on the solid foundation that's built by their predecessors and have yielded some really, really good results, especially in some key technical areas for including some of the thesis and key research problems. Our post-95 generation has made a major contribution. And even some newly fresh college graduates, many of them were born after the year 2000, they made some major contributions to our products, to our technology, and are at the forefront of our research. R&D. So this is a really exciting time, and I'm really excited to see all this, and also that makes me very confident about the next decade that's to come. Thank you.

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. Shannon Tsang, please go ahead.

Thank you once again for joining us today. If you have further questions, please feel free to contact Leodo's Investor Relations team through the contact information provided on our IR website. This concludes this conference call. You may now disconnect your line. Thank you.