Li Auto Inc.

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 Zeng, Investor Relations Director of Liado. Please go ahead, Janet.

Thank you, Operator. Good evening and good morning, everyone. Welcome to Liado's first quarter 2026 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. On today's call, we will have our Chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tierney, 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 Delegation 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 under applicable law. 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 measures. Please refer to Li Auto's disclosure documents on the IR section of our website, which contains a reconciliation of the un-audited non-GAAP measures to comparable GAAP 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. Xiangli. Please go ahead.

Hello, everyone. I'm Li Xiang. Welcome to today's conference. Since the first quarter of this year, our delivery amount has entered the growth track. In January to April, ideal cars are more than 200,000 yuan. China's new energy car market returns to the position of China's brand sales leader. The sales of the pure electric car ideal i6 is stable at the level of 20,000 units a month. It is the top 3 of pure electric SUV sales. On May 15, the new ideal 29 was officially released and started delivery on the 17th. The new R9 provides two versions of Levis and Acro, with a price of 50.98 million yuan and 45.98 million yuan respectively. The core goal of the new generation of Levis R9 is to achieve the market status of flagship SUVs. In shape design, full price chassis, improved power generation, improved power generation, and other important flagship product knowledge levels, it has achieved the leading position in the industry and defined the strength of the new generation of flagship SUV products. Two weeks before the start of sales, The sales price of the ideal 29 Lewis model of more than 500,000 yuan has reached more than 10,000. It is expected that the ideal 29 Lewis can maintain a market share of more than 20% in the new SUV market of more than 500,000 yuan. The core goal of the flagship SUV is gradually achieved. From the beginning of June, we will focus on spreading and promoting the ideal 29 Aqua model. We will try to obtain a market share of 20% in the new SUV market of 400,000 to 500,000 yuan. Li Xian R9 is the beginning of the whole generation of Li Xian R series We will release the new generation of Li Xian R8 at the end of June A very good five-seat flagship SUV Its powerful product power is a five-seat version of Li Xian R9 This is different from the previous generation of R8 to reduce the quality At the same time, the new Li Xian R8 is also the best size SUV in the world The comfort of the five seats is also the best experience of the same level With the release of Li Xian R9 The self-propelled chip Mahe M100 and Mahe VLA large model successfully integrated deployment on the car This is the landing of the mass production of software and hardware It is an important milestone in the development of ideal cars A brand new chip can be on the car for the first time Stabilize all functions In the first time in China Mahe M100 chip is a 5nm car wheel AI reasoning chip Based on the original dynamic data flow structure of AI This innovative deployment method and its stronger computing power have built up long-term technical barriers for us. Through the integrated design of software, the M100 chip has achieved three times the effective computing power improvement at the same cost. The Mahe M100 supports us to deploy the latest self-propelled Mahe VLA at the end of the car. The number of parameters of this model will be ten times better than the last one. The start of the Mahe M100 and Mahe VLA is just a steady start. Later on, with a larger model size And higher precision and higher precision training data This experience will have a huge rise Due to the release of May 15 Mainly focused on hardware and performance analysis And our software and intelligent ability to improve It takes about two to three hours to speak better At the same time, there must be users to withdraw After the real experience In June, which is next month We will also hold software and artificial intelligence releases Use enough time in-depth explanation of the real-life experience of machine learning, machine learning model, smart driving, system agents, and self-explanatory chips. We will show you directly what kind of user value and huge improvement software and G-SYNC intelligence bring. Please pay attention. With the steady landing of core technology and new product G-SYNC, we maintain 20% of the annual sales growth target. Next, let's welcome our CFO, Li Tie, to introduce the financial performance for us.

Hello, everyone. This is Vishen. Thank you for joining today's earnings conference call. In Q1 of this year, our deliveries entered a growth trajectory. From January to April, Li Auto returned to the top position in sales among Chinese brands in the Chinese new energy vehicle market, priced at RMB 200,000 and above. Monthly sales of our BEV model, the BL6, I6, has stabilized at 20,000 units per month, ranking top three among all BEV SUVs. On May 15th, we launched the all-new LE L9, with delivery starting on May 17th. The all-new L9 comes in two trims, Livis Ultra, priced at RMB $509,800 and RMB $459,800, respectively. The primary goal of our all-new generation LE L9 is to achieve the market position of a flagship SUV. In important aspects of flagship product perception, such as styling, suspension and chassis, range extender, and electric powertrain, as well as intelligence and computing power, it sets the standard for what the next generation of flagship SUEs must possess. Within just two weeks, the L9 LIVIS secured over 10,000 orders with transaction prices of over RMB 500,000. We expect that it will maintain a market share of over 20% in the RMB 500,000 and above NEV SUV markets. Starting in June, we will focus our communication and promotion efforts on Li-L9 Ultra, aiming to capture a 20% market share in the RMB 400,000 to 500,000 NEV SUV market. The all-new Li-L9 marks the beginning of a series of new product rollouts for the Li-L series. In late June, we will launch the all-new Li-L8, an exceptional five-seater flagship SUV. As the five-seater version of the all-new VL9, it is a complete overhaul from the previous generation, and it is no longer a downgrade from the L9. We believe the all-new VL8 might be the best handling large SUV globally while delivering the most comfortable five-seat experience in its class. With the launch of the all-new VL9, we have successfully and fully deployed our proprietary Mach M100 chip and the MindVLA model. This mass production of our full-stack hardware software solution was a key milestone for us. We're the first company in China to deliver full functionalities on a brand-new chip in its first-ever on-vehicle deployment. The MAHO M100 chip is a 5-nanometer automotive-grade AI inference chip built on an AI-native dynamic data flow architecture. This unique architecture and superior computing power establish a long-term technological mode for us. With an integrated hardware and software design, our chip delivers three times the effective computer power per unit cost. Furthermore, the Mazo M100 chip enables us to deploy our latest MIND VLA model on our vehicles. The number of parameters in this new model increased tenfold from the previous version. The rollout of MaHe M100 and the Mind VLA is just the starting point. Moving forward with larger models and data training at higher precision and higher frame rates, we expect a massive leap in the autonomous driving experience. The May 15th event focused primarily on hardware and vehicle performance. We believe it would require a dedicated two to three hour session to fully showcase the our advancements in software and intelligence. We're planning a separate launch event in June dedicated to software and AI. We'll take the time to provide an in-depth walkthrough of the real-world experience across in-cabin interaction, salvation model, autonomous driving, system agents, and our macrochip. We look forward to giving a deep dive into the many things we can bring to our lives through software and embodied AI. Please stay tuned. With a steady rollout of our core technologies and our updated product portfolio, we maintain our full-year sales growth target of 20%. With that, I'll turn the call over to our CFO, Johnny, to walk you through our financial performance. Thank you.

Thank you, Lisa. Hello, everyone. Given time constraints, my remarks will be limited to first quarter financial highlights. All favors will be quoted in RMB unless otherwise stated. For further details, including the corresponding U.S. dollar amount, we encourage you to refer to our earnings press release. Total revenues in the first quarter were $23 billion, some 11.4% year-over-year, and 20.1% quarter-over-quarter. This included $21.5 billion from vehicle sales, some 12.3% 7% year-over-year and 21% quarter-over-quarter. The year-over-year decrease was mainly driven by a lower average selling price due to different product mix. The sequential decrease was mainly attributable to reduced vehicle delivery due to seasonal factors related to the Chinese New Year holiday. and lower average selling price due to different product mix. Cost of sales in the first quarter was 21.2 billion, up 2.7% year-over-year, and down 10.4% quarter-over-quarter. Gross profit in the first quarter was 1.8 billion, down 66% year-over-year, and 64.8% quarter-over-quarter. Vehicle margin in the first quarter was 6.1%, versus 19.8% in the same period last year, and 16.8% in the prior quarter. The year-over-year and the sequential decrease was mainly due to the different product mix. Growth margin in the first quarter was 7.9% versus 20.5% in the same period last year, and 17.8% in the prior quarter. Operating expenses in the first quarter were 4.8 billion, down 4.8% year-over-year, and 13.8% quarter-over-quarter. RMB expenses in the first quarter were RMB 2.7 billion, up 8.3% year-over-year, and down 9.8% quarter-over-quarter. HC&A expenses in the first quarter were 2 billion, down 19% year-over-year, and 22.6% quarter-over-quarter. The year-over-year and sequential decrease was mainly due to the decrease employee compensation and reduced expenses related to marketing and promotion activities. Loss from operations in the first quarter was RMB 3 billion versus $271.7 million income from operations in the same period last year and $442.6 million loss from operations in the prior quarter. Operating margin in the first quarter was negative 13% versus 1% in the same period last year and negative 1.5% in the prior quarter. Net loss in the first quarter was RMB 2.3 billion versus 646.6 million net income in the same period last year and 20.2 million net income in the prior quarter. diluted net loss per ADS attributable to all three shareholders was 2.26 in the first quarter versus diluted net earnings of 0.62 in the same period last year and 1 cent in the prior quarter. Turning to our cash flow and balance sheet, net cash used in operating activities in the first quarter was RMB 6.1 billion versus 1.7 billion used in the same period last year and 3.5 billion provided in the prior quarter. Great cash flow was negative 7.4 billion in the first quarter versus negative 2.5 billion in the same period last year and 2.5 billion in the prior quarter. Our tax position remains solid with a quarter-end balance of $94.3 billion. With this strong tax position, we continue to return to shareholders through a U.S. dollar one billion share repurchase program announced in March. To date, we have repurchased a total of 17.5 million Class A ordinary shares, including 7.3 million ADS for a total consideration of US dollar 148.1 million. And now for our business outlook. For the second quarter of 2026, the company expect the delivery to be between 95,000 and 100,000 vehicles, and quarterly total revenues to be between 24.1 billion and 25.4 billion. This business outlook reflects the company's current and preliminary view on this 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 and start our Q&A. Okay. 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. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. 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're a Mandarin speaker, Please ask your questions in Chinese first, then follow with English translation. Your first question comes from Tim Sao with Morgan Stanley.

Hi, Tim. I'm Tim from Morgan Stanley. Thank you for answering my two questions. The first question is about our new car. I just heard from Li Xiang that there have been more than 10,000 orders in the last year. So my first question is about L9. So how's the order inflow for the Li Auto L9 currently? and the waiting period for the virus variant has stretched to 9 to 11 weeks. So could you share the company's production capacity arrangement for this model, and what is the targeted sales mix of the L9 in your second quarter delivery guidance? That's my first question. Thank you.

I'm Ma Donghui. Let me answer this question.

Compared to the new L9, In terms of order structure, the main Levis version has an order ratio of 90%, and the R version has an order ratio of 10%. This fully reflects the users' recognition of the high-end technology value of the car type and is willing to pay for the high-end configuration. It is also a sign that the ideal product is officially stable in the high-end market of more than 500,000 yuan, and it has achieved a breakthrough in the brand direction. In the future, we will also focus on strengthening the product power transmission of the ASUS version to further optimize the structure of orders. As for the production capacity, the new L9 is a long-term production base in Changzhou. It can contribute to the soft production of our new L8, and the long-term production guarantee capacity is stable. In May and June, the production capacity is about 4,000 to 5,000 units per month. At present, the Levis version of the dual-seater body and the exclusive innovative parts supply is very tight. At present, we have already linked the core supplier to complete the supply plan. The Acqua version, the capacity is sufficient. It can adjust the output flexibly according to the market order. Regarding the Q2 new L9 delivery volume, the impact of the production capacity climb at the beginning of the listing, it is expected to deliver First of all, the order pattern for the L9 is very clear.

The top-selling livid version accounts for over 90% of all orders, and the already fully loaded ultra version accounts for the other less than 10%. which reflects the customer recognition of our latest advanced technology and the willingness to pay for features and performance, and which also showcased our steady foothold in the market above RMB 500,000, which is a very positive trend for the brand. Later down the road, we're going to strengthen the promotion efforts on the Ultra version and continue to optimize the order mix. Secondly, on production capacity, all new L9 and L8 will both be manufactured in our Changzhou base, and the two cars can be adjusted flexibly between the production lines. So in the long term, we're confident of our ability to manufacture these two models. May and June will be the ramp-up period for these two cars, and the monthly production capacity will fall between 4,000 and 5,000 units per month. At the moment, the two-tone body color of LEVIS and also some of the unique parts on this model are on our supply constraints, slightly supply constraints. We're now working around the clock with core suppliers to come up with solutions to make sure that we can deliver these cars to our customers as soon as possible. In the meantime, we have ample production capacity for the ultra version, and we'll be able to adjust our production based on market demand. And finally, on L9 deliveries in Q2, considering the production ramp-up, we expect to deliver around 8,000 units between the middle of May and the end of June. After we fully ramp up in Q3, we're confident that the all-new generation L9 will reach a delivery level over the previous generation L9. Thank you.

Thank you for sharing. My second question is about profitability. First of all, what is the expectation of the company's profitability in the second quarter? And last year, what is the turning point of this profit? And under the backdrop of the increase in raw material costs this year, can we return to profit? The other one, we also see that I6 currently accounts for nearly 60% of the company's sales. Where is the bottom of the company's portfolio? My second question is about the profitability. What's your profitability outlook for the second quarter? And from a full-year perspective, when do we expect to see a clear inflection point for earnings? And given the rising raw material costs, is a return to profitability achievable this year? And separately, the other I-6 now account for nearly 60% of the total equal sales. What is the floor level of the overall gross profit margin? And lastly, could you also share the gross margin target for the L-9 and the other upcoming models scheduled to launch later this year? That's my follow-up question.

Thank you. Hi, Tim. This is John. I would take this question. Our first project cross-learning was impacted by several factors, including the model refresh cycle. We need to refresh our L series starting from the 9, and also a higher mix of I6 and also L6 delivery in the amount total. and also purchasing tax subsidy to the IFAs. However, with the launch and delivery for the all new L9, we expect our gross margin to recover about 10% in the second quarter. Looking at the full year, as we complete our model refresh cycle, and optimize our production line-up, we expect continued improvement in our growth margin. This year, our first priority is to successfully complete the refresh for the LEED L-series. We are pleased to see that the LEED L-9s are leaving, showing our flagship paper basis and technology leadership. It's gaining strong market recognition and has been in market share about half a million price range. The success of all of this, the IL-9 leverage in stabilizing solid food posts in this price segment marks step forward building upon the success of the original LEED i9. This year saw all new LEED i0 series as well as our DEV portfolio including the i9 to be launched with feature expensive in-house developed technologies and late a solid foundation for us over the next two years.

Thank you. Thank you.

Your next question comes from Len Zuzgao with Scitex.

Hello, I'm Qiao Wenzuo from Central Securities.

I have two questions for you. The first question is about intelligentization. Let me ask in English. What are the real-on-vehicle performance, user feedback, intelligent differentiation highlights, and actual cost reduction achieved by M100JS and Mach VLA large model? And what is the next development direction of the company's auto driving system? Thank you.

This is Yan. Let me answer your question. Compared to our ADAS 8.0 version, this 9.0 version powered by our in-house Marker M100 chip shows significant improvements. It mainly shows our in-house car make decisions in complex scenarios with more human-like control, both longitudinally and laterally, and a smoother, more comfortable driving and riding experience overall. 9.0 is our first AD version running on our in-house chip, which is already one of the best the highly competitive market, but it's really just the beginning. With the new platform, the sensor will collect data at higher precision and higher frame rates, which, while the powerful compute of M100 allows us to run larger and better algorithms. So this new platform let us improve data, compute, and algorithms all at the same time. And that's what will drive much faster leap in our autonomous driving capabilities. For the next step of autonomous driving, first we will further scale up our input data and precision models, enabling more driving-related semantic information to be fed into the neural network. This allows the model to see significantly more signals right from the sensors. Second, we will improve the model's cognitive capabilities, especially its ability to learn short-term cause and effect relationships. This empowers the model to go beyond the simple behavior fitting, allowing it to make human-like judgments in more complex urban traffic scenarios. Finally, we will make the system much better at the execution stage, with more compute latency optimizations from our in-house operating system and a fully drive-by-wire chassis, and the car will control motion more precisely and respond faster. That means the autonomous driving system will feel more confident and, more importantly, safer. Also, because we designed the software and hardware together, Our in-house M100 chip delivers triple the computing powers of the previous generation platform at half the cost. A similar cost brings six times higher effective computing power. Under the same model, our input frame rate has tripled with an even greater increase in inference frame rate. Our goal is to match the performance of Tesla's FSDV14 in the United States in the second half of this year. The higher performance AI inference system built around M100 chip gave us a strong foundation to make this happen. Thank you.

Thank you for your answer. My second question is about the sales end. Since the implementation of our door-to-door partner plan, we have seen a significant change compared to what happened before the reform of the door-to-door partner plan. Thank you. Let me ask in English. Since the implementation of the store partner program, what specific changes have been observed in key metrics such as sales per unit area, average monthly sales per story, output per employee, and the expense ratio in pilot stores are compared to before the reform. Has the program's current impact on sales volume met expectations? And how does the company quantitatively evaluate the program's effect on boosting sales in Q3 and beyond? Thank you.

I'm Ma Donghui. I'll answer this question. Since the development of our company, we have fully utilized the right to make decisions and share profits. We have activated the unity of the team. First of all, we can see that the thinking of the manager has changed a lot. From traditional execution to the real business owner, we can control the investment and output of each business. We can expand the management of business efficiency to the core. At the same time, it has also improved the stability and long-term business will of the core management team. Then the store partner can upgrade a store for a long time. The center of work can also simply pursue short-term sales performance. Gradually turn to upgrade the operation of local users, optimize the reputation of the area, and build the core competitiveness of the store for a long time. From the point of view of the stage, The first quarter is the beginning of the traditional business of the automotive industry, and the partner plan is still in its early stages. On a national average, the monthly order target of the door store is more than 10 million. And it also successfully completed the old L series of smooth rhythm, which also increased the satisfaction of the user service. The follow-up, with the continuous accumulation of managerial management experience,

Since we started to roll out the store partner program as we grant those store managers with genuine decision-making authority and profit sharing rights, it has really fully unlocked the potential of our frontline sales team. First of all, on the store manager level, we can see a fundamental shift in mindset. They've transitioned from previously store executors to actual business operators. They're able to independently view the ROIs of the different business activities and really focus on the operating efficiency. In the meantime, it has also increased the stability of core management teams and long-term commitment. Store management programs have led the store owner to invest in the store long-term. They've shifted their focus from chasing short-term sales targets to cultivating the local user base, spreading word of mouth, and building the competitiveness of their stores in the long term. From a tiny standpoint, Q1 is a typical low season in car sales, and we're in the early stage of rolling out the store manager program. On average, each of our stores have all beaten their monthly sales targets, we have also successfully cleared the inventory for the previous generation L series and also significantly increased user satisfaction. Going forward, as our store managers accumulate more operational experience and combined with our training system and support system, we believe that the operational efficiency and capability of our stores will continue to increase. Thank you.

Your next question comes from Tina with Goldman Sachs.

So my first question is regarding the upcoming Liato L8 facelift. So wondering if there is any information that management can share at this point.

I'm Ma Longhui. Let me answer this question. Our L series will be more clear with the launch of L8.

L9 will focus on the six flagships. The new L8 will focus on the five flagships. The two models will form an efficient complement. It will continue to consolidate the advantage of the brand in the high-end flagship market. L8 has completed the announcement of the new car in April. The plan is to be officially released at the end of June and the system will be delivered. Compared to the old model, the size and axis of the new car are improved. The interior is upgraded to five seats. The rear seat space is greatly optimized. The overall seating experience is fully improved. In terms of power, the new car will be equipped with 1.5T steam system. At the same time, it is equipped with a 12.7 degree 5C large capacity battery. The battery capacity is consistent with the new L9, and many technologies are shared on the same technical platform. It is very outstanding in terms of energy consumption and battery life. In addition, the car also provides a variety of individualized choice solutions, such as double-seater body, electric platform, and so on.

As we start to complete our L-series product lineup, it is becoming clear that L9 will be a flagship six-seater and the new L8 will be a flagship five-seater. The two cars will complement each other and continue to strengthen our foothold in the high-end flagship market. The L8 has already been registered with the MIT in April of 2026, and we're planning to launch and deliver it in June of 2026. Compared to the previous generation, the new car is larger in overall dimensions as well as wheelbase. The car will feature a five-seat configuration with a rear passenger space significantly improved and overall riding experience also much improved. On the powertrain front, the car will also feature our in-house developed 5.5 liter, 1.5 liter turbocharged range extender system. with a 72.7 kilowatt hour 5C large capacity battery, which is exactly the same as the one seen on the L9. The two cars will share the same technological platform and have great energy consumption and range performance. Apart from that, the L8 will also be featured in a two-tone body color as an option and also an electric running board as another option. For more information, please stay tuned for our launch event in June. Thank you.

My second question is regarding AI. So wondering how does management view the current competition and investment in the AI industry? Also, what is management's thought on the competition in the industry?

Hello, I'm Li Jiang.

We believe that in the next three to five years, the competition of high-end smart cars is essentially the competition of giant smart cars. And the highest level of expertise in the entire industry and the long-term competitiveness core of the company, we will focus on the deep co-design of chips and large models. According to the real case of our natural chip, In the past, our technology and information were all flowing. And then everyone was using it because of the chip. Although we have made a lot of innovations, But others can dig us away. You can do it at a level similar to ours. As we naturally establish a stronger chip and use completely different Then the way the model is attached and the scale of the model. By softening the vertical integration of the whole Then this makes the way of digging people completely ineffective. In the future, we will turn our systemized capabilities into core barriers. Our capabilities and output will no longer be simply taken away by others. In addition, time is also an important factor. Our self-propelled chip took four years to start and start. In the next ten years, we will also maintain the technical and innovative performance. We also need to maintain the technical barriers that are high enough and long enough.

In our view, the competition in the mid- to high-end smart vehicle segment over the next three to five years will really be a competition of embodied AI. The highest technical barrier and the core determinant of a company's long-term success and competitiveness will be a deeply integrated chip and large foundational model. Take our real-world experience with in-house developed chips as an example. As in the past, Technology and information really float freely in the industry because everybody used NVIDIA chips and others could easily approach our teams, our former employees, and reach a very close level of performance despite our many innovations. However, with our in-house-developed chips and much greater scale, much more computing power, much greater scale for models, we use a completely different architecture and making this traditional poaching approach ineffective because we're fully integrated vertically between hardware and software. So going forward, we will turn our systematic capabilities into our core mode. Our capabilities and outputs will no longer be easily replicated by others. Another critical factor is time. It took us four years to bring our in-house chips from starting the program to vehicle production. In the next decade, while maintaining our technological innovation edge, we'll also ensure the technological barriers that are sufficiently advanced and provide long enough time horizon as a competitive advantage. Thank you.

Your next question comes from Jing Jing with CICC.

Thank you for your question. My first question is about AI. Mr. Li mentioned that in June, we will hold a more detailed AI-based conference. We will talk about AI chips and other things. I would like to ask about the strategic and planning centers for humanoid robots and AI. So my first question is also about the intelligence. As just mentioned by Mr. Li Xiang, we will hold a more detailed intelligence technology launch event in June. So I would like to ask about, do we have any updates on our current strategy and also planning regarding to the human robotics?

Hello, I'm Li Xiang. I think from a long-term perspective, we can clearly see that whether it's our factories, stores, or our users, they all need human-made robots. From a market perspective, we believe that start-up companies, such as us, and medium-sized and large-scale factories that have early revenue, will all be part of the robot track. So robots don't belong to us and don't belong to start-ups. A robot is a standard labor force. It is a product that any company that wants to operate in this field will produce. It is not exclusive to any type of company. As long as the company's business needs people, it will definitely make robots. It is just that whether to use the way of outsourcing or the way of self-producing, this is the only difference. The last thing we see is that humanoid robots form a very large-scale commercialization and industrialization. For example, in the field of electric vehicles from 2010 to 2015, I think it will take at least three years or even longer to reach this level. So during this period, there is a lot of technology that needs to be studied. Because in every small part, the next technical route has not reached a consensus. This is our judgment.

In the long run, we can clearly see whether it's our factories, our stores, and our users all need humanoid robots. We believe that robots should not be limited to startups or medium-sized companies or large companies. It should not be limited to us. Robots will be a standardized labor. It's something that any company who's willing to make a difference in their field should and it is not limited to any specific type of companies. As long as a company needs human beings, it will use robots. It's only a difference between whether they purchase the robots from somebody else or they develop it in-house. That would be the only difference. So from a lot of times standpoint, my belief is that for humanoid robots to reach full-scale development, deployment, and commercialization to a point just like where we got to with electric vehicles between 2010 and 2015. To get to that point will still take more than three years, because in every specific area, the technological path has not converged, and there are many problems that remain to be solved. So in between this period, we still need to work on solving many hard problems. Thank you.

The second question is about the overseas market. Can you please update our latest overseas strategy? Of course, for medium- and high-end brands to break through the overseas market, are you facing a bigger challenge? Can you share with us your plans for 2026 or longer, including some actual rhythm and contribution to overseas expansion? So my second question is about the overseas market. So could you share more updates on our latest overseas strategy, including our plans for 2026 and also the following years? our pace and also the contribution of international expansion, such as the overseas market sales volume target, key region, and also our product appliance in the overseas market.

I am Ma Longfei. I will answer this question. The internationalization strategy of ideal cars is being promoted by the Ministry of Foreign Affairs. Regarding the overseas market, we are taking the idea of dividing and expanding. Combined with the local market scale and competitive pattern, we will flexibly choose to set up a subsidiary, develop a business, or sign an exclusive general loan model. We hope to rely on local heads and partners to quickly build a complete service system of sales, sales, and after-sales. The ideal brand and product have also continued to gain recognition in the overseas market. We also gained a lot of overseas media and users' attention in Beijing's April exhibition. We have also officially signed a deal with a commercial company like Alenqiu and Shatt. For the Middle East, East Asia, and other markets, we will focus on the L series. The first overseas exclusive version, the new L9, will combine local usage scenarios, charging performance, Air-conditioning, heat management, and other software layers will be optimized in China. Q3 will officially enter the market in China and Central Asia. In May, we will enter China, Macao, Myanmar, and Myanmar, and continue to upgrade the market in Southeast Asia. In the second half of the year, we will also launch the pure electric i6 model in the European market. And for the right-hand market, at the end of the year, Thank you.

We're steadfastly advancing our internationalization strategy and taking a phased approach to this. Based on the local market size, industry landscape, and competitiveness, we will have choose between a model including establishing local subsidiaries, working with local dealerships, or using a local sole distributor. In any case, we want to work with leading companies or partners locally and quickly build an integrated service system encompassing sales, delivery, and after sales. Our product and brand have continued to be recognized globally. In the Beijing Auto Show in April, we have received a lot of attention from overseas media and users and partners. We have also officially signed contracts with Saudi Arabia and UAE distributors. In the Middle East and Middle Asia market, Central Asia market, we will be taking our L series, the range extender product line, as the main product offer there. The first product will be an overseas dedicated all-new VL9, which is optimized based on local conditions in charging capability, UI, and software ecosystem, thermal management, including serious hardware and software optimizations. We will also be entering the Middle East and Central Asia market in Q3. Also, starting in May, we will be gradually entering markets like Macau, China, Cambodia, Laos, and Myanmar to further cultivate our Southeast Asia market. In the second half of this year, we will introduce the all-electric Li-I6 in Europe. And additionally, for right-hand drive markets, we will launch the right-hand drive version of our Li-Mega in key Asia-Pacific markets, including Hong Kong, China, and Singapore by the end of this year. Regarding products, we're implementing a precise regional customization approach. All of our upcoming models will incorporate compliance with overseas regulations right from the early stage of R&D to better support our ongoing global strategy. 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. Janet Zhang, please go ahead.

Thank you once again for joining us today. If you have further questions, please feel free to contact Leotto'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.