NIO Inc.

Hello, ladies and gentlemen. Thank you for standing by for NEO Incorporated's first quarter 2021 earnings conference call. At this time, all participants are in listening mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Eve Tang from Capital Markets and Investor Relations. Please go ahead, Eve.

Good morning and good evening, everyone. Welcome to News First Quarter 2021 Earnings Conference Call. The company's financial and operating results were published in the press release earlier today and are posted at the company's IOP website. On today's call, we have Mr. William Li, Founder, Chairman of the Board, and the Chief Executive Officer. Mr. Stephen Fung, Chief Financial Officer. Mr. Stanley Chu, VP of Finance, and Ms. Jade Wei, AVP of Capital Markets and Investor Relations. Before we continue, please be kindly reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain filings of the company with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that the news earnings press release under this conference poll include discussions of unordered gap financial information as well as unordered non-gap financial measures. Please refer to news press release which contains a reconciliation of the unordered non-gap measures to comparable gap measures. With that, I will now turn the poll over to our CEO, Mr. William Li. William, please go ahead.

Hello everyone, thank you for joining NEWS 2021 Q1 Earnings Call. In the first quarter of 2021, a total of 20,060 ES8, ES6, and EC6 were delivered in the future. The growth rate is 422.7%, while the growth rate is 15.6%. The three models have performed well in their respective segment markets. EC6, with its comprehensive performance, streamlined design, and technological intelligence experience, has been widely used by many users, especially young users.

In the first quarter of 2021, NIO delivered 20,060 ES6 and EC6, representing a strong year-over-year growth of 422.7% and a solid quarter-over-quarter growth of 15.6%. All three models have achieved outstanding results in their respective segments, especially EC6, With its comprehensive performance, streamlined silhouettes, and superior digital experience, EC6 has outperformed other peers in the coupe SUV segment and has been well-received among users, especially among the younger audience.

On April 7, 2021, the first 50,000 units of the next 100,000 mass production vehicles will be launched. On April 7, 2021, over 100,000 production vehicles were rolled off the line. It took NIO 26 months to roll off the first 50,000 vehicles, but only nine months for the second 50,000 vehicles.

Together with our users, NIO has set a new speed record from delivering the first vehicle to the 100,000th vehicle among the premium auto brands.

Driven by the growing brand awareness

competitive product portfolio, industry-leading technologies, outstanding services, and innovative business models. NIO has gained increasing recognition and support from our users. Our order momentum remains solid, while the risk of a global chip shortage still looms large in the second quarter. Despite the challenges, we expect to deliver In terms of a growth margin, benefited from higher deliveries and a solid average selling price, All the vehicle gross margin reached 21.2%, while the overall gross margin increased to 19.5% in the first quarter.

In the first quarter of 2021, we continued to achieve positive business activity cash flow. While continuing to steadily improve business efficiency and overall systematization efficiency, we will continue to firmly increase investment in the development field according to the plan, and accelerate the speed of service channel deployment on the power network and offline service channels.

On top of the positive operating cash flow for the full year of 2020, we have continued to realize positive cash flow from operating activities in the first quarter of 2021 while steadily improving operating efficiency and overall system efficiency. We remain committed to doubling down on our investments in research and development and stay determined to accelerate the deployment of our swapping and charging network and offline service channels. Next, I would like to share with you some recent key operational highlights of the company.

After the release of the future first-generation smart electric flagship car ET7 at NIO Day, it has received the warm attention of users and the industrial world. Currently, ET7's growth manufacturing and testing work is in full swing. On April 2, ET7's first production line vehicle was officially launched at Hefei Advanced Manufacturing Base. After the launch of ET7, our first flagship smart electric sedan at the New Day, it has attracted great attention from the market and the industry.

Our teams are fully focused on and devoted to the production and testing of ET7. On April 2nd, the first body in white of ET7 rolled off the production line in Hefei Manufacturing Center. On April 19th, the interior of ET7 was unveiled at the Shanghai Auto Show, showcasing its second living room design concept, which has been well received by the media and the public.

On April 15th, our second-generation power station began deployment. The second-generation power station's battery compartment can hold up to 13 batteries. The single station's daily service capacity can reach 312 times, which has further shortened the time of power change. In April, we tested the second-generation power station on the NIO OS 2.10. The second-generation power station did not need to get off the train in the whole journey. On April 15, we kicked off the deployment of the PowerSwap Station 2.0. The second-generation PowerSwap Station can significantly boost its service capacity.

to up to 312 swaps per day by shortening the battery swapping time and carrying up to 13 battery packs. To further improve the swapping experience, we upgraded and optimized our new palette based on the PowerSwap Station 2.0 in NeoOS 2.10, which was released to users in April to achieve an automatic one-click park and swap experience. without getting off the car throughout the whole swapping process. All new users can enjoy this feature once they have updated their vehicle operating system. As an organic part of a new holistic charging and swapping network, the PowerSwap Station 2.0 will be gradually deployed nationwide in China.

In the future, we will strive to create a innovative system that can be charged, replaced, and upgraded with batteries. As users learn more about BAS, the battery pack is more and more diverse, and BAS is being admired by more and more users. We believe that BAS and the continuous improvement of the charging service system in the future will continue to improve the user experience of electric vehicles users. Let more and more users choose electric vehicles. In addition, since the launch of the 100-degree battery pack, it has received the recognition of a wide number of users. The selection rate exceeded our expectations. As of April 16th, more than 10,000 users are using the 100-degree battery pack. On April 18th, we also officially opened the appointment to upgrade the 100-degree battery pack according to the year and will officially start service in June.

NIO has created an innovative battery subscription model based on vehicle battery separation and chargeable, swappable, and upgradable batteries. As more users get to know better about the benefits of battery as a service or bus, and more battery pack options become available, bus has gained increasing popularity. We believe bus and news growing charging and swapping network will further elevate the user experience of owning an electric vehicle and attract more users to choose electric vehicles. In addition, since its launch, the 100-kilowatt-hour battery pack has been widely welcomed by our users with a much higher take rate than we expected. As of April 16, More than 10,000 users have been using the 100-kilowatt-hour battery pack. On April 18, we have also officially made the flexible upgrade to 100-kilowatt-hour battery pack available for reservation and will offer this upgrade service to users starting from June.

产能方面,三月底四月初受芯片短缺影响, Jianghuai Future Factory has suspended production for five working days. This has had a negative impact on our production and delivery in April. In the second quarter, the overall production capacity of the entire supply chain will continue to face huge challenges. Together with our partners, we will do our best to ensure supply. During the shutdown and holiday period, together with our partners, we have modified the production line of the factory. For ET7 mass production,

In terms of production capacity, late March and early April, due to the semiconductor supply shortfall, JC New Factory halted the production for five working days, which has posed a certain negative impact on our production and delivery in April. In the second quarter, we expect the challenges to the overall supply chain production capacity will continue to linger. In spite of the volatile microenvironment, we are working closely and diligently with our partners to secure supply chain resources. During the production suspension period and holidays, Our partners and us have modified our production lines to prepare for the mass production of ET7.

此前,蔚来与合肥市签署了生化合作协议,并宣布共同在新桥建设智能电动汽车产业园区。 2021年的4月29日,也就是昨天,我们参加了新桥产业园区的开工仪式,并召开了合作伙伴大会。 In the future, we will work together with our partners to support the development of Hefei's smart electric vehicle industry in the field of human resources, research, industrial chain, and manufacturing.

Not long ago, NIO signed further collaboration framework agreements with the Hefei government and announced to jointly build the NIO Park, a smart electric vehicle industrial park in Xinqiao. On April 29, 2021, Niu participated in the kickoff ceremony of the Niu Park and organized the Niu Partner Conference 2021 in Hefei. Niu strives to collaborate with partners in talent attraction and cultivation, research and development, supply chain and manufacturing to facilitate the development of a smart electric vehicle in Hefei.

To further support the production of new future models, together with our partners, we will plan and build a new factory in New Park.

We are in discussion with our partners about the detailed execution plan and the cooperation model and will share more information at a appropriate time.

In terms of sales and service network, we have 23 future centers and 211 future spaces covering 123 cities in China. We will continue to strengthen the construction of future centers and future spaces, expand sales and network coverage, improve operating efficiency, and enhance brand influence.

With regards to the sales and service network, we now have 23 new houses and 211 new spaces covering 123 cities in China. We'll continue to strengthen the building of new houses and new spaces to further expand the sales network coverage, improve operational efficiency, and enhance brand influence.

In the future, the Huanlian Station has been built into 206 stations, covering 77 cities. We have already started to gradually deploy the second generation of Huanlian Station. The goal is to increase the total number of Huanlian Station stations to at least 500 this year. At the same time, we will expand the construction of super power networks and destination charging stations. As of now, we have already deployed more than 146 super power stations and 1,826 destination charging stations nationwide. NIO has built 206 swap stations in 77 cities. We have gradually started the deployment of PowerSwap Station 2.0.

We aim to have at least 500 battery swap stations in operation by the end of this year. At the same time, we will ramp up the availability of power chargers over supercharging piles and the destination chargers. Up until now, we have deployed over 146 power charger stations and 1,826 destination chargers and plan to increase it to 615,000 respectively by the end of 2021.

April 15th

Niels signed a strategic cooperation agreement with Sinopec to work together on building battery charging and swapping infrastructure. This strategic collaboration will enhance efficiency of site selection for Niels' charging and swapping facilities, better users' experience of owning an EV, and help convert small gasoline car users to EVs.

In order to make electric vehicles users in the north of China enjoy more convenient charging services, we launched the PowerNord project at the Shanghai Motor Show this year. In the next three years, we plan to deploy 100 charging stations in eight provinces in the north of China, 120 mobile chargers, 500 supercharging stations, more than 2,000 superchargers, and 10,000 destination chargers.

In the meantime, to provide users in the northern China region better and more convenient charging and swapping services, we announced the PowerNorth plan at this year's Shanghai Auto Show. In the next three years, in the eight northern provinces and autonomous regions. We plan to deploy 100 power swap stations, 120 power mobiles, 500 power charger stations with over 2,000 power chargers, and 10,000 destination chargers. We believe the Power North plan will significantly improve the electric vehicle usage experiences for users in the north. and further catalyze the adoption of smart electric vehicles in those areas.

Up to now, we have 33 new service centers.

and 162 authorized service operators in operation. Coupled with the continuously improving operational efficiency, we will keep expanding our after-sales service network and further improve the service operation system.

As a user company, the trust and support of users is the most precious resource, and it is also the source of our continuous improvement. At the just-finished Shanghai Motor Show, 180 car owners from different cities will present their ideas, products, technologies, and services to the audience in the future. As a user enterprise, the trust and support of our users has always been our most treasured resources.

and the driving force of our growth. At the just concluded Shanghai Auto Show, 180 user volunteers from different cities came to our booth to introduce the concept, product, technology and service of meal to others. 15 new users collaborated with experts from various industries to jointly host 14 sessions of this talk to discuss How to Shape a Joyful Lifestyle with Smart Technologies Many users displayed their original artworks at the New User Museum at our auto show booth, through which they shared the joyful lifestyle new advocates and shapes.

In 2021, with the support of users and the efforts of the team, the overall business of the future has stepped up and entered a phase of accelerated development. 2021 is an important year for future development. We will further enhance the construction of charging stations and sales service networks, expand the influence of future brands, and provide the best full-scale experience for future users. With the support from our users and the efforts of our teams in 2020, NIO has stepped onto the right track for the overall operations and has embarked onto the stage of accelerated development.

The year of 2021 is of key importance for news development. We will further improve the establishment of power, sales, and service networks to enhance news brand reputation and provide the best holistic experience to new users. More importantly, we'll continue our decisive and efficient investment in new product and technology research and development

to solidify the foundation for new long-term growth.

As always, thank you for your support. With that, I will now turn the call over to Stephen to provide the financial details for the quarter. Stephen, please go ahead.

Thank you, Vivian. I will now go over our key financial results for the first quarter of 2021. and to be mindful of the length of this call, I encourage listeners to refer to our early press release, which is posted online for additional details. Our total revenues in the first quarter were 7.98 billion RMB, or 1.22 billion US dollars, representing an increase of 481.8% over the year and an increase of 22.2% quarter-over-quarter. Our total revenues are made up of two parts. Vico sales and other sales. Vico sales in the first quarter was 7.41 billion RMB or 1.13 billion US dollars, accounting for 93% of total revenues in this quarter. It represented an increase of 489.8% year over year, an increase of 20% quarter over quarter. The increase in Vico sales year over year was mainly attributed to higher deliveries achieved from more product mix offered to our users. The expansion of our sales network since 2020 and the slowdown of vehicle sales in the first quarter of 2020 due to COVID-19 pandemic in China. The increase in vehicle sales quarter-by-quarter was mainly due to higher deliveries and higher average daily price. Other sales in the first quarter were 576.5 million RMB all 88 million US dollars, representing an increase of 395.3% year-over-year and increase of 23.4% quarter-over-quarter. The increase in other sales year-over-year was in line with the incremental vehicle sales in the first quarter of 2021. The increase in other sales quarter-over-quarter was mainly due to the increased revenues derived from 100 kilowatt-hour battery permanent upgrade service provided since December 2020, partially offset by sales of automotive registry credits in the fourth quarter of 2020. Cost of sales in the first quarter was 6.43 billion RMB, or $0.98 billion. represented an increase of 317.5% year-over-year, an increase of 16.9% quarter-to-quarter. The increase in cost of sales was in line with revenue growth, which was mainly driven by the increase of vehicle delivery volume in the first quarter of 2021. Gross profit in the first quarter was 1.55 billion RMB, or 0.24 billion US dollars. representing an increase of 1.72 billion RMB for a gross loss of 0.17 billion RMB in the same quarter of 2020, an increase of 36.2% from the fourth quarter of 2020. The increase in gross profit was mainly contributed by increased vehicle sales and increased vehicle margin. Gross margin in the first quarter was 19.5%. compared with negative 12.2% in the same quarter of 2020 and 17.2% in the fourth quarter of 2020. The increase of gross margin was mainly driven by the increase of vehicle margin in the first quarter of 2021. More specifically, vehicle margin in the first quarter was 21.2% compared with negative 7.4% in the same quarter of 2020 and 17.2% in the fourth quarter of 2020. The increase of the vehicle margin over the years was mainly driven by the increase of vehicle delivery volume at average selling price as well as lower material cost. The increase of vehicle margin cost over quarter was mainly attributed to higher take rate of new pilot and 100 to one hour battery package. Iron expenses in the first quarter were 686.5 million RMB or 104.8 million US dollars, representing an increase of 31.4% year-over-year and a decrease of 17.2% quarter-over-quarter. The increase of iron expenses year-over-year was mainly attributed to less iron research and development activities in the first quarter of 2020. due to COVID-19 pandemic in China. The decrease in R&D expenses quarter-by-quarter reflects fluctuations due to different design and development stages of new products and core technologies. SGN expenses in first quarter were 1.2 billion RMB or 0.18 billion US dollars, representing increase of 41.1% year-over-year and a decrease of 0.8% quarter-to-quarter. The increase in SGN expenses over the year was primarily due to the increased marketing activities as we have increased number of employees in sales and service functions in the first quarter of 2021. SGN expenses remained relatively stable compared to the fourth quarter of 2020. Last, for operations in first quarter was 295.9 million RMB or 45.2 million US dollars representing a decrease of 81.2% year-over-year and a decrease of 68.2% quarter-over-quarter Share-based compensation expenses in the first quarter were 96.1 million RMB or 14.7 million US dollars represented an increase of 1.981% year-over-year and an increase of 63% quarter-over-quarter. The increase in share-based compensation expenses was primarily attributed to incremental options granted to relatively higher-granted state fair values during that period. That lot in the first quarter was 451 million RMB. are all 68.8 million US dollars, representing a decrease of 73.3% year-over-year and a decrease of 67.5% quarter-to-quarter. Last, attributable to NIO's ordinary shareholders in the first quarter was 4.88 billion RMB, or 0.74 billion US dollars, representing an increase of 183% year-over-year, an increase of 226.7% quarter-per-quarter. In the first quarter of 2021, NIO purchased 3.305% equity interest in NIO China from the minority strategic investors and recorded an amount of 4.4 billion RMB or 0.67 billion U.S. dollars in accretion of redeemable long-controlled interest to redemption value. Excluding share-based compensation expenses and accretion of redeemable long-controlled interest to redemption value, long-gap adjusted loss attributable to ordinary shareholders was 354.5 million RMB. or 54.1 million US dollars in the first quarter of 2021. Basic and diluted debt loss per ADS in the first quarter were both 3.14 RMB or 48 cents per ADS, including share-based compensation expenses and accretion of redeemable non-controlled interest through inception value. Long gap adjusted basic and diluted debt loss per ADS were both 0.23 RMB or 4 cents per 80 years. Our balance of cash and cash equivalents, restricted cash and short-term investment was 47.5 billion RMB or 7.3 billion US dollars as of March 31st, 2021. Additionally, we achieved positive cash flow from operating activities for the first quarter of 2021. and now for our business outlook. As William mentioned, for the second quarter of 2021, the comp expects leverage to be between 21,000 and 22,000 vehicles, which is an increase of approximately 1.3% to 1.13% from the same quarter of 2020, an increase of approximately 5% to 10% from the first quarter of 2021. The company also expects the total revenues of the second quarter of 2021 to be between 8.15 and 8.50 billion RMB, or between 1.24 and 1.3 billion US dollars. This will represent increase of approximately 119% to 107% from the same quarter of 2020, an increase of approximately 2.1% to 6.5% from the first quarter of 2021. This speed outlook reflects the complex current and the preliminary view on the business situation and the market condition, which is subject to change. Now, this concludes our prepared remarks. I will now turn the call over to the operator to present our Q&A session.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. 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. Our first question comes from the line of Nick Lai. Please ask your question.

Yes, good morning, William and Steve, management team. Congratulations for a great result. My simple two questions, first one is on gross margin, and second one is really on chip shortage, common question raised by many investors. On gross margin, indeed, a very good improvement from last year to this year. The vehicle margin increased from roughly 17% to 21%. And of that four percentage point improvement, I wonder if you could help us quantify a little bit The underlying driver, how much percentage is driven by ASP, volume, and on the flip side, raw material price, battery, and so on. That's my first question. And second question on the chip shortage is a common issue. And I know this is very low, two to three months. And at the same time, we did revise down slightly our 2Q source volume guidance from previously. William mentioned 7,500 per month in 2Q. And right now, it's roughly about 21,000 to 22,000 in 2Q. On the chip shortage, do we have any visibility on the potential easing of supply? Would that happen, hopefully, in 3Q? Yeah, my second question is related to chip shortcomings. This is a more common phenomenon in the industry. This chip problem can be solved by 2022. I want to say that we are seeing from shortcomings to tension, when will this turning point appear? Thank you. These are two simple questions.

Thank you, Nick. Bin Li will answer the first question. I will answer the second question.

Hi, Nick. This is Stanley. Overall, our vehicle cost, including BOM and also manufacture cost, remains stable in Q1 2021. And the increase of vehicle margin are mainly driven by the increase of take rate of 100 kilowatts battery pack and also are the new pilots, of which 5,000 is for the 100 kilowatt battery pack, and 8,000 is for the new pilot tick rate. So the overall 100 battery pack tick rate in Q1 is 25, and we think this trend will keep in the following quarters So that's the general reason of why we achieved a higher gross profit margin in Q1. Okay, William.

Yeah, so in general, we think that Q1 is indeed higher than we expected. Of course, as Stanley said, it's mainly due to the increase in the proportion of high-end vehicles. Of course, the cost has also decreased. This is a conventional decrease. We believe that a profit of more than RMB20,000 is already a relatively healthy state for us. We are not lowering prices. and many more. But we do not expect to increase by a few hundred percent like we did last year. Of course, we think there is room for improvement, but we hope that everyone will not be afraid The growth margin in the first quarter of 2021 is higher than our expectation.

Just like Danny mentioned, this is mainly driven by the higher take rates of some options like the 100-kilowatt battery pack and the new pallet. At the same time, the cost has also reduced to some extent. We believe that the current growth margin, around 20%, is a very healthy situation for the company's operations. because we don't actually cut the price and we believe this is quite comfortable for us. But at the same time, I would like to urge everyone to manage your expectations because this kind of rapid improvement of the gross margin will be quite challenging for us. But I believe that there will still be room for improvement for the gross margin, but not at this big margin. So we should not be too optimistic about the growth margin improvement. Right now, it's quite good for us to reach 20% of the growth margin, and it's earlier than we expected. Still, our focus for the company is the product and the service.

Nick's second question is about the shortage of chips. To be honest, the market is still very volatile. We have to track the market every day. Thank you for watching. and many more will affect the global automotive industry in mid-May. From our point of view, similar to the current situation in the industry, the challenge is very big. As of now, we have stopped production for five days from the end of March to the end of April. This will definitely have an impact on JiaoFu in April. In terms of the whole quarter, we believe that the capacity of the entire supply chain, from 7,000 to 7,500, is already a big challenge for us. Of course, we will do our best. We are still confident, but the difficulty is still very high. In general, the industry thinks that the third quarter will be better than the fourth quarter. Of course, some are more pessimistic and think that there will be a lot of pressure next year. But in general, our supply chain partners are still very supportive of us. The second question is about the chip shortage.

The current situation in the market is quite volatile, and we have been tracking the chip supply every day. This has been a very severe issue for the whole industry supply chain. For example, the fire incident of one factory has caused several days delays for the chip shortage. We believe this negative impact is going to kick in around the middle of May. This is going to affect the whole industry supply chain. We believe this kind of incident will happen from time to time. That is why we believe the challenge for the whole industry will still be quite big for the following quarters or months. At the beginning of April and at the end of March, we suspended the production of our factory for five working days, which is going to impact our delivery and production in April. For the full quarter, we believe that it will be possible but still quite challenging for us to achieve 7,000 to 7,500 production units. We are trying our best to secure the supply and to maintain the production speed. Of course, we are quite confident, but the challenge is still quite daunting. This is a common situation for the whole industry. The common understanding in the industry is the turning point will happen around the third quarter, and the overall situation is going to improve around the fourth quarter, but some also believe that probably this situation is going to continue to next year. Our supply chain partners have shown very strong support to the production of NEO. Yesterday, we had our partner conference in Hefei, which was attended by hundreds of partners to show their support. of the new production. And we believe the situation is quite challenging, but of all speaking, of our operation is relatively okay.

Thank you, Ni.

Our next question comes from . Thank you. Our next question comes from the line of Bin Wang from Credit Suisse. Please ask your question.

Thank you so much. I actually got two questions. Number one is that I found that you have another announcement about ESG. Can you elaborate what is the detail and why you hosted another ESG maybe for the first time? That's number one question. The second question is about the margin outlook. Actually, I found that a few factors may be impacting the second quarter. One is the new pallet, a tax rate. Second is there was the penetration of about 100 kilowatt-hour pack. Number three is that I found that the operating free interest rate auto finance. Number four may be in the semiconductor pricing hike because not just the supply but also in the pricing also increased. Lastly, it's about the battery price. Can you provide guidance about the margin and other key parts movements? Thank you.

Thank you, Wang Bin. Yesterday, we had an announcement that we would like to make an opinion. This morning, One of the most important things in this is the structure of our board. We will increase the number of people. We hope to increase the diversity and flexibility of NIO's board. In the middle, what is more important is that we have given a message to the board of directors. Of course, the board's approval will still follow the board's decision. I am not saying that this is a mission. This is a nomination. As you all know, when we were listed, I established a future user trust with my one-third share of shares and 50 million shares. We have conducted a two-tier user trust election. The participation rate of the users is also very high. The focus of our user trust is to include users' concern for the social, social public and environmental protection of the industry community. We think it is the right time to give users a certain amount of participation in the strategic decision-making aspect of the company's longer-term strategy. So our board of directors is asking the shareholders to make such a recommendation. I believe this is very important for the long-term development of the company and the return of shareholders. This is also a future user enterprise to further deepen the operation of our user enterprise, which is to work with the user enterprise in a deeper way. Thank you for your question. This morning we

announced that we're going to organize an EGM. There are some important points in this EGM that we're going to discuss. The first one is we're going to increase the number of the directors in the board. Right now, our board member is five people, and we would like to increase this number because we want to improve the diversity and the flexibility of the board At the same time, another important matter is we would like to give the user trust the right to nominate directors to the board. But this is a nomination right, it's not an appointment right, so the board will still have the power to appoint the directors. IPO of the company, I have transferred one-third of my shares to establish this user trust. And the user trust focus is on environmental protection, the industry subcommittees, the social welfare, and the user care. We believe it's quite important for us to allow the user trust to participate in the decision-making process. We believe it's going to be quite beneficial for the long-term development of the company and it's going to serve the best interest of our shareholders. This also showcases our vision of building a user enterprise, which will also help us to deepen our relationship with users for the long run.

Okay.

Hi, Wang Ming. As explained by William in the prior questions, 20% gross profit margin is quite healthy at the current stage for us. So we don't expect the margin will dramatically improve in this year like quarter on quarter in 2020. But the 100kW battery pack and also the new power features are both well accepted by our users and we expect these two options will further bring the high profit margin for us. That's the general trend we want to explain to you.

Thank you.

Next question.

Our next question comes from the line of Dean Cell from Morgan Stanley. Please ask your question.

Thanks for taking my questions and congratulations on the results. So two questions from my side. The first question is about competition because as you may notice that a lot of traditional players launch their models during Auto Show this year. So if you look at their product pricing channel strategy, I think they are quick learners and catching up rapidly. Meanwhile, several tech names, they were smartphone makers, also announced their EV plans. So I think Reland has shared a lot of initiatives during the call just now. What will really make a NEO to be state differentiated in the following years? Are we going to change our pricing or product strategy in the long term? So that's my first question. And second question is about the launch of ET7 because as William just mentioned, I think the supply dynamics stay tight and might stay challenged throughout the whole year. Considering like the more back-loaded second half, do we see any risk that the launch of ET7 might be Thank you team.

Yes, we have seen the vitality of China's smart electric car industry at the Shanghai Motor Show. If you go to the Shanghai Motor Show, you will know that China's innovation, especially in the field of smart electric cars, is very active.

In this year's Shanghai Auto Show, we have witnessed the vitality of the China smart EV industry. If you have ever visited the Shanghai Auto Show this year, you should have seen this by yourself. That is, we have a lot of innovations in the smart electric vehicle industry in China.

From the perspective of overall competitiveness, we are very interested in the competition of NIO in the segment market. If we look at the high-end market, we still haven't seen a brand that can compete with NIO in a comprehensive way. When I say comprehensive, I mean products, service systems, technology, and user experience. In a comprehensive way, we still haven't seen a brand that can compete

In terms of all competitiveness, Niu is still quite confident in our specific market segment. In the premium market, we haven't seen any brand with this kind of competitiveness yet. In terms of the product, service, technology, user experience, and user community.

如果我们去看传统的这些汽车公司 推出的高端的品牌 推出的这些产品 当然他们有他们的一些 For the traditional brands, yes, there have been some highlights for their premium brands and premium products.

But still, I believe they're still lagging behind in terms of the digital experience and autonomous driving capabilities. So it will be quite important for them to be more decisive and determined to transform themselves into this new era of a smart electric vehicle.

Some of the Chinese companies, in terms of the application of some technologies, including the future of follow-up in the community of users, in terms of the construction of companies of users, including the mode of direct service users, some of the followers, they actually act very quickly. But to be honest, I think there is a relatively high threshold for making a high-end brand. In terms of pricing, I think this is a pressure for them. The pricing of RMB 200,000 is a challenge for the brand positioning in this market. We believe that the automotive industry is not a Windows console industry. What we are most concerned about now is our concerns about the high-end market. From the perspective of the ratio of electric vehicles and oil vehicles, the electric vehicle is still a Of course there have been many domestic players

following Neo in terms of the technology adoption, user community concept, and direct service to users. They have been moving very fast as followers, but I believe it will be quite challenging and difficult for them to build a premium brand, and they will face significant pressure in terms of their pricing. Of course, the auto market is not a winner-takes-all market, but over-focus at this moment is still in the premium market. In this market, we can see that the EV still accounts a small share compared with that of the gasoline cars. Although in March, the EV penetration has reached 10%, but the majority of the vehicles in the market are still gasoline cars. So it means that we still have a lot of room and opportunities for growth.

Yes, so from a long-term point of view, we still think that one of the characteristics of the automotive industry is that you can't have a short version. We think that NIO's We believe that the overall advantage of the product, technology, brand, service, user enterprise, user operation, and community can make us stronger in a long-term competition.

When it comes to the long-term differentiation, we believe in the auto industry, it's quite important that you should not have any very significant and obvious weaknesses. With our comprehensive competitiveness in product, technology, service, user operations, and the user community, we believe that we can solidify our position in the market with all those strengths and stood out in the competition. This differentiator and the competitiveness is going to continue to grow and stays strong in the long run.

This is a marathon. This is not a sprint. So we're quite confident in our long-term competition. The second question is about the production of the ET-7. Indeed, we believe that the ET-7 is the first car of our second-generation platform in the future. It is not just the production of this car. In fact, it also means the production of our second-generation platform. We are the first in the entire industry in terms of sensors, chip computing, and many new technical applications. Of course, some companies have also launched some first-generation products. We don't think it's worth doing. We think it's a breakthrough and directly to the next generation. So the challenge of mass production is very big. For example, LiDAR, which also includes our partner of Automatic Value Chips, Invitada's O-Ren mass production. In fact, we are asking them much earlier than they originally expected. The pressure is still very high, but so far we still believe that it is possible to hand over ET7 in the next Q1. Currently, we are pushing in this direction in all aspects. So in these aspects, We are very confident that we have achieved our target of mass production, and we have broken through the bottlenecks of production. We all know that the speed of product launch in the future proves that we have a very strong ability to launch a new product every year in the past few years. The quality of our products has also been ranked first in the industry. So we are very confident in the rise of mass production.

The second question is about the mass production of ET7. ET7 will be the first product of our second generation platform, Neo Technology Platform 2.0. So it means that this is not just about the production of ET7, it's actually about the mass production of the second generation platform. We are the first In many aspects, for example, the advanced sensors, the computing power, SOC, GIFTED and the other advanced technology applications. Some companies have launched their product with some kind of like a 1.5 generation technology or transitional technology, which is not going to be our strategy. We would like to just leap forward to the next generation technology and achieve significant technology breakthroughs. Of course, this kind of determination is going to raise a lot of challenges for us. For example, we have put ahead the production schedule of many advanced technologies like the LiDAR and the NVIDIA O-ring SOC. This has posed a lot of pressure on our teams and the partners. But we are still quite confident that we believe it's possible for us to launch ET7 according to schedule in the first quarter of next year. Our teams and our partners are fully focused on achieving this goal and pushing ahead despite all those challenges. Our objective is to make sure we can deliver the product according to our quality requirement and solve the production bottlenecks so we can gradually ramp up the production and the delivery of our vehicles to the users. So as the history tells us, that NIO has a very strong capability to deliver one new product every year. And our quality has already been proven that we are at the top. So that's why we're quite confident that we should be able to deliver ET7 according to the schedule with high quality.

Thank you, team.

Thank you very much, Guilin and Jade.

Next question.

Our next question comes from the line of Ming Sun Li from Bofa Securities. Please ask your question.

Thank you. Thank you William and the Benjamin team and congrats for the good result. So my first question is regarding the details of the new park. So from the announcement that we saw that new park ultimately it will reach one million units capacity. I want to understand that probably your near-term plan for this NIO Park is one million capacity all for NIO or probably will have other EV companies. And also for this NIO Park cooperation, will the current cooperation method continue? JAC build a plant and hire laborers. But NIO will purchase the equipment and the mold, etc. So that's my question. And the second question is regarding the battery form factor. So we are seeing more and more auto companies start to apply LFP battery to further control the cost, lower the selling price, and to increase the penetration rate. From the recent media, we also saw that NIO will probably consider to use the LFP battery by the end of the year. So could you give us more update regarding the potential plan? Thank you, William, and the management.

Thank you, Min. Yesterday, Hefei City launched the construction of Neo Park. I would like to remind you that it is NEO Park, not NIO Park. Thank you for your question, Ming.

Yesterday is quite important because Hefei government has kicked off the building of the new park. But over here, I would like to emphasize the spelling of this park is N-E-O, it's not N-I-O. The Chinese name of this industrial park is Xinqiao, or the literal translation is a new bridge. This bears the same name with the Hefei airport. This is a very big park occupies a huge area.

It is around 11.3 kilometers square meter. Yeah. This industrial park will be a massive project

including manufacturing facilities, R&D, and residential areas as well as culture areas. Niu is going to be a very important company in this park, but according to the planning of the Hefei government, they will also have probably hundreds of other companies joining this new park.

Of course, we are with Hebei City to plan this Neopark. We are involved in a lot of its planning. We will not invest in the construction of some basic facilities in the original area. There are a lot of basic facilities in the original area that need to be built. Of course, this will be built by Hefei. Of course, we will be a very important user. You just asked this question. If we say that the capacity of this one million, the capacity of the one million-kilowatt battery, the capacity of the one million-kilowatt battery, will it be given to NIO? I can only say that if we develop fast enough, if we can use so much, I don't think they will be able to solve this problem. We should be the one to use these factory infrastructure. Of course, this is different from planning and actual use. This must be built step by step. As I said before, we will undoubtedly be the most important company in the middle. What does it mean to us? If these talents of the automotive industry are gathered, it will increase our competitiveness. Thank you very much. For the planning of the Hefei government regarding the new park,

Niu is not going to invest on the infrastructure building of the park. Hefei government is going to make this investment, but Niu is going to be a very important company using this park. Just now you asked about the capacity of the 1 million units and the 100 gigawatt hours, whether this is only for Niu or whether this is going to be available for other companies. Of course, if NIO is going to develop in a very fast speed, then I believe that the Hebei government is not going to make this matter very complicated for NIO and themselves. Then it means that NIO should be able to use all the resources and the capacities and all the infrastructure built by the Hebei government in the NIO part. But this is the planning of the NIO part. which may be different from the actual execution in the future. We need to look at this step by step. NIO is going to be a very important player in this new park and this new park is also going to contribute to the long-term development of NIO because we believe if we can attract All the talents and consolidate all the resources in this new park. It will be beneficial for new development. Just like what happened in Anqing, in our Shanghai headquarters, new was the first We believe if we can consolidate all the resources together with our partners in this new park, this is also going to help us to improve. The operational efficiency, including our internal efficiency, because if you imagine that we have all the people working in the same place, including our manufacturing teams, R&D teams, and they are also living in the same place, this is going to help us to significantly improve the operational efficiency of the company.

In terms of external efficiency, let me give you an example. For example, we have a battery plant and a planned battery plant and a whole car plant together. After the battery is produced, it can be transferred directly to the whole car plant. The seat plant is also planned in this way. The fact that the battery plant is built together Then the next important factor which we consider is the external operational efficiency.

According to the current planning of the new park, we will have the battery factory together with the vehicle factory. That means that after we finish the production of the battery packs, we can ship directly to the vehicle factory in a very short distance. That's the same with the seat factory in the future. So it means that we can save a significant logistic cost. for example, the battery logistic cost is around 100 US dollars per battery pack. So imagine in the future the volume is going to be 100, is going to be 1 million units, then this is going to be a huge saving in terms of the logistic cost and this is also going to help us to improve the overall operational efficiency.

The new way of cooperation between the two factories in our plan is still a way of manufacturing cooperation. We will focus on the manufacturing process, supply chain, and quality control. We will also invest in some of the equipment, but we will not buy land or build factories. We will not recruit workers. We will work with JEC and NEO. We will still cooperate with JEC in the daily operation and function management of the factory.

When it comes to the operation model of the corporation model of the second factory, we will continue to focus on the manufacturing corporation. It means that we will still focus on the manufacturing processes, technologies, the quality, and the operations of all plants. And we will invest in some dedicated equipment for NIO, but we're not going to invest on building the actual factories. In terms of the operators in the second factory, this will be managed by the joint venture between JEC and NIO. The name is Jiang Lai, and this joint venture is going to be responsible for the overall operation and management of the operators in the plant.

Yes, the second question is LFP. Tesla and other companies are using LFP for their main products. LFP has its advantages, without a doubt, especially in terms of cost. But if it is low temperature, The next question is about the LFP

are all using the LFP battery pack. Yes, many companies including Tesla are using the LFP battery pack. Of course, there are some inherent advantages of the LFP battery pack. A very important one is the cost. But there are also some weaknesses and shortcomings with this technology or form factor. For example, the performance of the battery pack in low temperature. This is going to significantly affect the user experience, especially during the winter. If we can solve the performance bottleneck under low temperature, I believe it should be the right timing and the right choice for us to use LFP battery pack and foam factor.

Thank you, Min. Next question.

Our next question comes from the line of Lei Wang from CICC. Please ask your question.

Good morning. This is Wang Wei speaking. I would say it is beyond our expectation to see the vehicle margin above 20%, so definitely congratulations to the team. I think most of my questions have been properly answered. I only have one follow-up question regarding the collaborations with Sinopec Group on the SWAP stations. So will Sinopec burden some of the CapEx investments in the second generation of the stations? or will SinoPAC share some of the revenues as well? So I'll translate my question. 主要是想问一下和中石化的战略合作, 因为我们的二代化电站是建在他们的加油站里面, 所以这种开Tax投入他们会分担一部分, 然后以后的收入我们是只给一个租金, 还是说我们会按照车辆计费的revenue给他们去分一部分? 主要是这个问题,谢谢。

Thank you, Wang Lei. Our cooperation with Zhongchihua will gradually deepen, but our current cooperation is relatively simple. We mainly use its resources. Of course, each gas station also has operational personnel. In the long term, their operational personnel Thank you for your question. Of course, in the future, we're going to deepen our cooperation with SinoPAC. But for now, our cooperation is quite simple. Basically, we utilize their site and the location resources

In the gas stations, of course, they will need to have a service personnel. So we believe this is also an opportunity for us to work together to share the service resources. But at this moment, we do not have any revenue sharing mechanisms between NIO and Sinopec.

Thank you. Next question.

Our next question comes from the line of Edison Yu from Deutsche Bank. Please ask your question.

Thank you and congratulations on the quarter. Two questions from the competitive angle sort of. First, coming out of the Shanghai Auto Show, you know, obviously we saw a lot of product, a lot of developments. Has this influenced or sped up your target about bringing in a mass market brand into the market? So a non-Neo brand. Is that effort kind of been accelerated or any sort of change to those kind of plans for going forward? And then second question, it seems like a lot of automakers now are also potentially considering doing chips themselves. I think it's reported that Neo has have all considered doing that as well. What's your latest thinking on kind of moving away from NVIDIA and doing the chips yourself as well, or designing the chips yourself? Thank you.

Thank you. Thank you, Edison. From a competitive point of view, I've seen all the models. For me, For me, the most impressive model is the Kivy E-V from Wuling Hongguang. It costs more than US$10,000. I think it's very impressive. So we can see from this point of view that in the magic market, there are indeed a lot of companies that have launched some very good products. As I mentioned earlier, the innovation ability of the private electric vehicle industry in China is very strong. We are very confident in the general speed of the electric vehicle. But to be honest, in the premium market,

So thank you for your question, Edison. From the competition perspective, I checked out all the and their new models. To be honest, the most impressive one is from Wuming Hongguang. Their sub-brand, Bao Jun, they have a model called TVEV. For the mass market, we believe there are many new companies launching their new products. Just like I mentioned, in the China smart EV industry, the innovation capability has been quite strong, so we are quite confident about the popularization and the adoption of the smart EVs in the future. But in the premium sector right now, we don't actually see any strong competitors.

and so on. In other words, from the perspective of the value of the smart electric car industry chain, it must be transferred to software, chips, and smart hardware. From a long-term perspective, I believe that if it is a leading company, it will continue to invest in smart hardware. Of course, we do not have a plan yet, but everyone should know that we are very determined to invest in R&D.

The second question is about the research and development of the chipset. In the smart electric vehicle industry, we believe the industry chain is going to move towards chipset software and other smart technologies. For the long term, the top leaders are going to deepen their investments in research and development of the smart hardware. I believe this is the common understanding of the industry. At this moment, we do not have any specific plans that we can disclose to the public or share with the public. But I believe it is quite obvious to everyone that NIO has always been very decisive in investing in the research and development of new technologies. We are determined to build our full stack capabilities surrounding the smart electric vehicle technologies including autonomous driving and we believe that this is going to build the long-term competitiveness of the company.

Thank you.

Thank you. Next question.

Our next question comes from the line of Paul Gong from UBS. Please ask your question.

Yeah, thanks, Wade, and thanks, everyone. Two questions. The first one is on the R&D, and the second one is a little bit follow-up on the gross margin. On the R&D, I see in this quarter, it's actually pretty moderate, even sequentially declined from the 4Q at less than $700 million. I recall last time you said you were going to doubled down on the R&D activity in 2021 and significantly increased the R&D budget. So can you give us a little bit like update on this strategy? And more importantly, which key areas is going to be the focus for the R&D? Any rough breakdown? How much percentage goes to the vehicle development? What percentage goes to the maybe autonomous driving, et cetera? This is my first question. My second question is a little bit follow-up on the gross margin. Obviously, this is a pretty decent gross margin for a relatively young company like NIO. But in between of this margin versus market share, is it a little bit like overly focused on the margin and a little bit like under-focused on the market share, do you think? Will you strategically choose to either adding higher specs or kind of making the vehicle more competitive in the market to balance in between of this margin versus market share? And also, how do you think about the rising material cost impacts in the next few quarters? Because some battery makers have indeed mentioned that it's possible for the battery price to go up. I think I caught your comment just now that the 100 kilowatt hours of the battery take about 25% in Q1. What was the new PINAL take rate in Q1, please? Thank you.

Thank you, Pao. This is the case with ANDI. If we just look at it from a number perspective, We know that the investment of Q1 is not very high. But we know that the development of this car still follows the product. Our ET7 production work is in the process. So we started from Q2, with ET7 production related, including testing, including some external partner EDB fees, these will come up. So just ET7, its own development fees, from a financial point of view, is also over to production. and many more. As a matter of fact, the number of products that we are currently developing is still very large, because we want to apply our NT2 technology to the new system as soon as possible. So from Q2, you can see and many more. This is mostly related to the subsequent mass production of vehicles. On the other hand, we focus on autonomous driving, software, and many more. and many more. We will continue to increase the number of R&D personnel. So, in terms of basic technology, platform-based technology, including EDS, we are actually increasing very rapidly. So, this year, if we really want to spend 5 billion R&D, if we want to spend it efficiently, it will be challenging. But, simply put, from this figure, we can see that our R&D is definitely increasing.

Thank you for your question, Paul. Regarding the R&D expenses, yes, the R&D expenses in the first quarter is not that high, but this follows the normal pace and the development stages of a vehicle. For example, right now, our ET7 is still under research and development. Then it means that starting from the second quarter, we're going to see and many more. We are also developing multiple products We are going to see some ramp-up for the R&D expenses. This will be mainly driven by the research and development of other products in the pipeline. Just like I mentioned, we are determined to develop the autonomous driving full stack capabilities, the software capabilities, and the smart electric vehicle technologies. We will accelerate the development of the new technology platform 2.0 and new technology platform 3.0. At the same time, we're also ramping up our R&D personnel. In the past first quarter, the R&D personnel in the company has significantly increased, and we believe it will continue to increase in the following quarters. We have also increased our investment in terms of the R&D resources in the platform technologies including EDS or the electric powertrain. In this year, it will be quite challenging for us to efficiently and effectively spend the RMB5 billion for the R&D expenses, but we're quite confident that we can achieve our objective and improve our R&D capabilities at a very efficient manner.

The second question is about GM or market share. Of course, from the perspective of an enterprise operation, a reasonable GM, a reasonable gross margin is needed. We think that the current market share is better than we expected. Of course, as we said before, we are not going to lower the price. We are willing to use these margins better in the field of service, including our charging facilities, including our community-related user transmission. In this regard, we will definitely have more funds to invest in. We don't think that Markshare... I hope everyone has a... must be placed at different levels. For example, Ferrari's Markshell and Porsche's Markshell are different from 50 Red Light. This is the characteristic of the automotive industry. NIO, KEN, CAD are the market share we have in the premium market. This is very important. I think some brands will continue to lower prices. In fact, they mixed up a brand that has a gap in the automotive industry. This is why Porsche, although it sells less than 300,000 cars, But the overall profit is very high. More than 40% comes from this company. I think we have a more long-term view on this matter. A very long-term view. The brand community is a very... We need to maintain them well. So I don't think it's a good idea to increase the market share by lowering the price. In fact, we may not be able to achieve this goal. So we think that after reaching a certain margin, a better way is to make the product better. If you have margin space, you can make the product better. You can make the infrastructure and service better. This is our long-term strategy. From the perspective of the global premium market, it is not much different from a market of nearly 10 million taels. Today, we only have a few thousand shares. So we still have a lot of room for growth. So this is our long-term strategy. and Mark Shea. Of course, how to enter the mass market is another strategic issue. How to enter the massive market. But we will definitely not enter the mass market with the brand NIO. This is one of the most certain things.

The second question is about the balance between gross margin and market share. Of course, for any company, if we want to have a sustainable operation and development, we need to maintain a reasonable gross margin. For the current gross margin, yes, it's better than our expectation, but we have emphasized again and again that we're not going to cut the price and we would like to leverage our margin to invest more on user service, including the power infrastructures and also the user community. For the market share, I believe that we need to look at the market share in different market segments. For example, it's not possible for us to compare the market share of a Ferrari and a Porsche in their market segment with the market share of Linfengguang in the mass market segment. So for NIO, our focus is the market share of the premium market. We don't want to have the same strategy like other brands that just cut their price from time to time because we believe this is going to hurt the brand image and the users. For example, Porsche probably only sells around 300,000 units, but they contribute 40% of the gross margin of the Volkswagen net profit of the Volkswagen group. So we believe if we want to build our market share in the premium segment, We need to devote more resources and energy to manage the brand and the user community. Our focus is not going to cut the price of our product and then to increase the market share. Because even if you cut the price of the product, In the end, you still cannot improve the market share. So we believe after we reach a reasonable margin, then we can use this margin to improve our product, our services, and the infrastructure for our users. This will be our long-term strategy. In the global premium market right now, the market volume is around 10 million, and we only account for a very small share. So it means that there's still a huge room for us to grow in the future. For the mass market, this will be a different story, and the entry of the mass market will require a different strategy. But what I can say right now with 100% certainty is we're not going to use a new brand to enter the mass market.

Thank you.

Thank you, Paul.

Next question.

Thank you very much.

Our next question comes from the line of Evelyn Zhang from Daiwa. Please ask your question.

Hello. Actually, it's Kelvin from Daiwa. So I have a few questions about company. So first of all, I want to know, I noticed that you have a kind of Norway launching in Norway conference next week. So I want to know, would there be any other overseas expansion plan that you can share with us? This is the first question. The second question is that, can I know how, because what we know is that the raw material costs and also auto chip costs are all increasing. Do we expect like a month-for-month or even week-on-week increase affecting your component price? What's the trend, or how fast is this accelerating? Thank you.

Kevin, this is Steven. Sure, first, LoWin is the first stop for our long-term globalization strategy. But for the May 6th conference call, we will still focus on the low-wage market. Just for information, actually, in March, we already set up our national sales company in Norway, and we also have already built up a local team who will take charge of our local operation and service. And in the end, actually, we already selected the location for our new house in Oslo. and for more details about about the knowledge market please do join our May 6th media conference to get more details.

There will be some increase in the coming quarters. But compared with the overall selling price, I think the cost can be well controlled and almost have a big impact to our gross profit margin.

On the one hand, we have some non-standard stocks, but we also have some general stocks. On one hand, we have some routine cost reductions. On the other hand, there are some cost increases, especially in terms of the chipsets.

Thank you. Thank you. Next question. Our next question comes from the line of Vijay Rakesh from Mizuho. Please ask your question. Hi, William and Stephen. Good quarter and guide here.

I just had a question on the longer term. When you look on your partnership with Sinopec, how do you expect them to roll out their stations? I know you have a 500 battery swap station target, but any thoughts on how Sinopec would be rolling out their 5,000 battery swap stations?

Thanks.

Simon Pegg announced that they will build 5,000 charging stations in their gas stations. Of course, they are not only working with our company, they are also building some charging stations. Thank you, Vijay, for your question.

Yes, Sinopec announced that they will build 5,000 swap and charging facilities in their gas stations. But Mule is not the only partner working together with Sinopec, and they are not just only going to build the swap stations in the gas stations. They will also build the charging facilities. Of course, we hope to deploy more charging and swapping facilities from NIO in the gas stations. But at the same time, we also have many other partners, both locally and nationally. So we believe the site resources will not be a big issue for us.

Thank you.

And also on the On your own solid-state battery roadmap, can you give us an update? When do you see that in production or test? That's it. Thank you.

About speaking the current

and the testing and the production of the solid state battery is on track.

Thank you. Thank you. Thanks.

Okay.

Monitor, we need to conclude our conference call today. It has been candid and it stands for all the great questions asked by the panelists. Operator, we would like to conclude today's conference call.

Certainly. As there are no further questions now, I'd like to turn the call back over to the company for closing remarks. Thank you.

Thank you once again for joining us today. If you have further questions, please feel free to contact the news investor relations team through the contact information provided on our website. This concludes the conference call. You may now disconnect to your line. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.