XPeng Inc.

Ladies and gentlemen, thank you for standing by for the first quarter 2022 earnings conference call for Xpeng Inc. At this time, all participants are in listen-only mode. After the management's remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex C., Head of Investor Relations of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to Xpeng's first quarter 2022 earnings conference call. Our financial and operating results were issued by our Newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaopeng.com. Participants on today's call from our management will include co-founder, chairman, and CEO, Mr. He Xiaopeng, vice chairman and president, Dr. Brian Gu, Vice President of Finance, Mr. Dennis Liu, Vice President of Corporate Finance and Investments, Mr. Charles Chang, and myself. Management will begin with prepared remarks and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions. of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed 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 EXPOM's earnings press release and this conference call included disclosure of unaudited financial measures as well as unaudited non-GAAP financial measures. EXPOM's earnings press release contains a reconciliation of the unaudited non-GAAP financial measures to the unaudited GAAP measures. I will now turn the call over to our co-founder, showman, and CEO, Mr. He Xiaopeng. Please go ahead.

Thank you. Hello, everyone. In the first quarter of 2022, Xiaopeng's delivery volume reached 34,561 units, which is 159% of the total growth. The upload volume continues to be the first in the middle of Zhao Zixin's strength. In March, our delivery volume once again exceeded 15,000 units. Under the impact of the epidemic, we still managed to reach the monthly delivery level that we forgot last year.

Hi, everyone. In the first quarter of 2022, Xpeng delivered 34,561 vehicles, representing 159% year-over-year growth. We continue to rank number one among emerging EV makers in China, as measured by vehicle insurance registration volume. Notably, our monthly deliveries once again exceeded 15,000 units in March, demonstrating a return to the same robust level as the peak season last year, despite the impact of the COVID-19.

This year, the impact of our products and technology's competitiveness and brand is still very high. The demand for users is strong. In March, Xiaopeng's new orders reached a record high in three months. In addition, orders are also at a record high. From March 21st, the price of our full-line models went up to $1,000 to $2,000, increasing the cost of batteries, raw materials, and chips. After the rise, we see that our demand for the high-end pure electric market is still very strong. We expect that in May, if our order volume eliminates those areas affected by the epidemic, we will be back to the same level as before the rise.

Heading into 2022, our products and technologies' competitive edge as well as our brand awareness continue to improve. The demand for our products was strong. In March, our monthly volume of new orders reached a new high, Meanwhile, our order backlog also hit historically high levels. From March 21st, we raised the price across our models by 10,000 to 20,000 RMB in order to cover the cost increase of batteries and raw materials and chips. Following the price increase, consumer demand for the mid- to high-end BEV segment has remained resilient. We expect our new orders in May, excluding some cities impacted by COVID-19, will return to the levels before the rise in price.

According to the data of the number of used cars in China, the penetration of pure electricity in March has exceeded 24%, of which more than 30% in Shenzhen and Shanghai. We see that the short-term impact of the epidemic and the cost of raw materials does not hinder the rapid growth of pure electricity penetration technology and sales. We are very confident that through the constant improvement of brand influence by small and medium-sized companies, as well as our unwavering efforts for product technology, intelligentization and quality,

According to the data released on Chinese passenger vehicle insurance registrations, the BEV penetration rate in March reached over 24%, and in particular, exceeded 30% in Shenzhen and Shanghai. While the industry is strained under the current impact of COVID-19-related restrictions and raw material price surges, the long-term trend of increasing BEV adoption and the strong growth trajectory will continue. I believe our relentless efforts to advance our product's competitiveness, technological advancement, intelligent capabilities, and quality, in addition to the ever-growing brand awareness, position us well as we work to gain market share in the mid- to high-end BEV market segment and pursue our strong growth strategies.

Now, turn to supply chain management given the COVID-19 resurgence. Starting in early April, COVID-19 infections

spiked in certain cities and related lockdown policies have led to serious challenges to the auto supply chain. Based on our earlier judgment of the supply chain risk in 2022, we have stepped up our preparation for our supply chain and built inventory for some key components.

At the same time, during the pandemic, we continue to improve the industry's labor and use better supply chain systems and R&D capabilities to deal with the shortcomings in the industry. and cost-efficient challenges. For example, since 2021, we have started to connect with more excellent battery partner companies. In the second quarter of this year, we have basically completed the layout of battery supply diversification. This will effectively reduce the risk that we bring from the concentration of specific areas and supply centers. This will have a direct and long-term positive effect on Xiaopeng from the second quarter, including the delivery efficiency within the second quarter, and the cost of optimization of the department.

During such challenging periods, we heightened our focus on strengthening our core capabilities. We worked to reinforce our supply chain system and R&D capability, advancing our core competencies to better position our company amid the ongoing challenges of industry-wide auto parts shortage and cost inflation. For example, we have established partnerships with a number of industry-leading battery suppliers since 2021 in order to diversify our battery supply. which we are on track to accomplish such diversification in the second quarter of 2022. This will help reduce the risk of supply location and supplier concentration, serving to directly boost our future delivery efficiency, including from the second quarter of 2022 on, and the BOM cost optimization in the long run.

The supply chain challenges brought by the chip may be longer than you thought. In terms of supply chain management related to chip, Xiaopeng has been creating powerful chip system hardware in different steps since 2015, including the depth control of the underlying software. We are very happy to see that in 2022, this part of the support will begin to enter the stage of scale efficiency. The depth control allows us to quickly respond to the needs of chip protection and control, and more efficiently complete the verification, layer and switching of the chip. This will be the next step for us.

The chip supply challenge may persist longer. In terms of our chip-related supply chain management, we have started to gradually develop our in-house R&D capabilities for our powerful embedded systems hardware and underlying software platform since 2015. and we expect to deploy such advanced platform in a broader scale across our new models from this year. Our pursuit of developing such technologies in-house enables us to quickly address chip supply shortage and enhance verification, integration, and implementation of alternative chips much more efficiently. It also provides a highly flexible infrastructure technology platform for us to tackle the semiconductor chip shortage challenges and strengthen our cost control capability. Xiaopeng's manufacturing is mainly based in Guangdong. Thanks to the successful containment of the resurging COVID-19 outbreaks in the Guangdong province and government support from central and local authorities, the supply chain in key areas is gradually recovering. We have resumed double-shift production at our Zhaojin plant since mid-May and are making every endeavor to accelerate vehicle delivery to better serve our customers.

Xiaopeng is currently in the automation industry. Long-term investment for us to accumulate a good user reputation and unique intelligent brand knowledge in the first quarter of the high-speed NGP of the return rate is close to 70% After the first quarter of the break, the return of the built-in high-speed auxiliary driving has exceeded 24 million kilometers. This is the basis for our next step to popularize the whole scene of intelligent auxiliary driving.

I would also like to highlight that our long-term investment in smart EV technology supports our ability to build up customer trust and loyalty, as well as distinctive smart technology brand equity. Our highway NGP mileage penetration rate in the first quarter was nearly 70%, and by the end of the first quarter, our highway NGP had assisted our customers in driving for more than 24 million kilometers. These achievements will allow us to pave the way to make our next-generation full-scenario advanced driver assistance system available to a broader customer base.

In February, we, OTA, used the cross-street stop-and-go system of G-ONADAR. This is the first cross-street stop-and-go system in the industry. Next, we plan to In the next step, the OTA industry's first mass-produced self-adapted navigation and vehicle-to-vehicle support function with the application of mechanical radar sensing power. So this function is based on visual and integrated mechanical radar sensing power to better identify vehicle driving areas and surrounding traffic participants. The most optimized decision is to make the entire driving experience safer and more comfortable.

In February, we OTA released our LIDAR-enabled valet parking assist function that offers automated parking across different floors in multi-story parking lots, marking the industry's first mass-produced solution ever. In the near future, we plan to OTA release the industry's first mass-produced LIDAR-enabled adaptive cruise control and lane centering control function. It is built on augmented perception capabilities by adopting camera and LiDAR fusion, which enables better detection of drivable areas and surrounding traffic participants, making optimal decisions to ensure a safer and more comfortable driving experience.

In mid-May, we successfully conducted a city NGP engineering version test in Guangzhou. In the face of complex and diverse road conditions in the center of Guangzhou, the city NGP has entered into large-scale use from the point of use to safety. In mid-May, we successfully completed tests of the latest engineering version of our city NGP in Guangzhou, navigating through the very complex driving scenarios across a broader area of downtown Guangzhou,

our city NGP demonstrated a smooth driving experience with high safety standards. We will continue to improve the customer experience of our city NGP through fast iteration of the software. As soon as we obtain the related approval for high-definition maps of city roads, we plan to launch the city NGP and progressively roll out to more cities.

我们认为只有当城市的NGP到达完善的阶段形成智能辅助驾驶的能力, to the point of a B ring, which will fundamentally change the user's driving experience and enter the real energy supply and price era. Then the small and medium-sized vehicles will be based on high-speed GP, heavy-duty GP, UPA-L, LCC-L, and many other technologies. It will be integrated together to accumulate and stack. Then we will plan to start from the G9 model and launch the next generation of smart service driving systems. In terms of safety, performance, cost, and use scenarios, it will obviously surpass all products in the current industry.

Once the CityMGP is capable of handling end-to-end driving scenarios, we believe there will be fundamental change to customers' driving experience, bringing it to a man-machine co-pilot stage. Leveraging our proprietary technologies of HighwayMGP, VPA-L, LCC-L, and CityMGP, along with our unique closed loop of data capabilities, I'm confident that our next-generation advanced driving assistance system from G9 will be superior to solutions offered by our peers in terms of safety, performance, cost, and generalization.

We will not only pursue the stack of self-made hardware, our goal is to achieve the best possible performance Our vision is to make the advanced driving assistance system available to our much broader customers, ultimately transitioning to full autonomous driving. We'll never simply stack up smart hardware components

We resolve to develop robust full-scenario autonomous driving system with strong performance and a high level of safety at affordable cost, therefore creating greater value for our customers and our company.

Because in terms of software, we carry out full-time software development. In terms of hardware, we are in charge of design and deepening. So the next step will be based on the smart service value of the software. We will deeply develop the smart window, the smart chassis, With our in-house developed full-stack software and core hardware at event level, our next step is to deeply integrate ADAS

smart cockpit, smart chassis, next-generation electronic and electric architecture, and power chain systems, lifting comprehensive capabilities of our future smart EV products while allowing us to provide brand-new smart product experience with lower cost.

This will further promote the generalization of our leading AI value system in the industry and provide comprehensive integration capabilities. At the same time, while improving user experience, it can also effectively scale up. Following our large-scale generalization of AI value software and the transition of automated value technology under L4 in 2026, we believe that in the future, there will be more business models under the new software or new ecosystem in this system.

On May 9th, we made our XPilot software at standard configuration on mid- and high-end versions of our existing EV models. This will allow us to accelerate the penetration of XPilot software, strengthen our capabilities to provide innovative functions through cross-domain integration, and make our XPilot more affordable through economies of scale. With the upcoming mass adoption of our X-PILOT, as well as our advancement towards level 4 autonomous driving technology in 2026, we believe more business models to monetize new software and new ecosystem will emerge. 车型研发方面,广东受到疫情影响较小,我们的所有车型研发进展顺利。

In March, the P7 was the first to break through the 100,000-pound down-line pure electric model in the new market. It also created a volume of over 9,000 units. The next step is the G9, which is the flagship SUV model that we have carefully built. We plan to officially launch and launch in the third quarter and start delivering in the fourth quarter. The G9 is equipped with an industry-leading 800V high-pressure power platform as well as the next-generation smart sub-carburetor platform and electric engine architecture. We hope that the comfort and good feeling of G9 can become the benchmark and flagship of the same-level products. We hope that G9 can become the exposure of the smart power-saving medium-sized SUV market.

Moving on to our product pipeline, given the fact that the COVID situation is well contained in the Guangdong province where our headquarter is located, the R&D of all new models is progressing well. In March, the P7 become the first BEV model among emerging Chinese EV makers to reach the benchmark production volume of 100,000 units. Meanwhile, its monthly delivery exceeded 9,000 units. The G9 is our flagship SUV model. We plan to officially launch G9 in the third quarter, followed by mass deliveries in the fourth quarter. The G9 is powered by industry-leading 800-volt high-voltage powertrain platform. next-generation advanced driver assistance platform, and electronic and electric architecture. We hope the G9 will become a benchmark model in its segment, boasting comfort and luxury, in addition to those industry-leading technologies. We also expect G9 to become a blockbuster model in the medium- to large-size smart electric SUV market.

In 2023, we plan to introduce B-class car platform and C-class car platform to launch a new car. We see that these two new cars can achieve many of the world's first technical innovations. At the same time, we also hope that these two cars will become the beauty partners in the same level of models. Then these two cars, plus the existing models of our current small and medium-sized companies, we will cover products with a price range of 150,000 to 400,000 yuan, which will be even more complete, and will further enhance our leading advantage in the market.

In 2023, we plan to introduce two new models. One is based on our new B-Class platform, and the other is built on our new C-Class platform. We expect these two new models to feature several industry-first technology innovations, in addition to their superior design. In combination with the existing models, our product portfolio will strengthen our presence and leadership in each of the subsegments of 150,000 to 400,000 RMB price range.

In addition, we are involved in the development and progress of the flight car of the Shenzhen company Xiaohong Huitian. In its latest product series, the core of our two-person flight car is a car. In most scenarios, it will travel, and users can choose to take off and land safely under the conditions of road clearance and compliance. We believe that in 2026 and even further in the future,

In addition, the development of our flying vehicle is well on track with Xpeng Aero HT, a portfolio company in our ecosystem. According to its latest product design, the two-seat flying vehicle's core is still a car that mainly drives on the road. while users may conduct safe flights with vertical takeoff and landing when role conditions are open and appropriate. It will deliver a brand new mobility experience for our customers from 2026 or in the near future in suburban areas of cities where people can actually experiment a new combination of mobility experience.

In the future, we will pay more attention to platforming We'll focus on the platform-based architecture and apply modular design and next-gen manufacturing processes

when designing our new models to allow more models to share the same powertrain platform, ADAS, and electronic and electric architecture, etc. I believe drawing on the success of the P7, we'll be able to achieve structural growth margin improvement from the G9 and subsequent new models to be unveiled. Our medium and long-term goal is to increase our company-level growth margin to above 25%.

In terms of charging the network layout, Covering more and experiencing better Xiaopeng Zhiyin Super Charge has become one of the important advantages of Xiaopeng. So as of April 30, 2022, Xiaopeng Zhiyin Charging Station has reached 954 stations, including 774 Zhiyin Super Charge stations and 180 MWD charging stations. With the arrival of the large-scale delivery, we plan to start from April 5 this year. Large-scale deployment of the next generation of 480,000 watts of supercharging stations. So this will achieve a charge of 200 kilometers per hour in 5 minutes.

Now, on the supercharging network front, XPeng's self-operated charging stations featuring a wide geographic coverage and a better user experience have already become one of XPeng's core competitive advantages. As of April 30, 2022, the number of XPeng's self-operated charging stations increased to 954, including 774 self-operated supercharging stations and 180 destination charging stations. With the G9's mass delivery, we'll deploy next-generation 480-kilowatt supercharging piles in the fourth quarter to provide a superior charging experience, enabling 200 kilometers range after a five-minute charge.

To be frank, this year's red-light environment is full of challenges. But we can also see that these challenges have not changed the long-term development and high-speed development of smart electric vehicles. The productivity of pure electricity is constantly improving. Domestic independent brands occupy the minds of consumers and begin to rapidly advance to the medium and high-end markets. Intellectualization and related technological innovations are impossible. In this case, the competitive pattern of the industry will accelerate the formation and formation, and it will be beneficial to the leading companies in our competition to expand the advantages of the future. Xiao Feng is going to use the advantages of product technology and more powerful organizational power and consulting power. We will seize the opportunity to rebuild the market.

Frankly, the macro environment this year is fraught with challenges, but it is clear that these challenges do not change the long-term fast-growth trends in the smart EV market. As the EV penetration rate continues to ramp up, independent domestic EV brands are gaining consumers' mindshare and making their foray in the mid- to high-end market segments. Smart technology and innovation are here to stay, accelerating the pace of the disruption of those incumbents and presenting an opportunity for industry leaders armed with outstanding competitive edges to shine. Leveraging our leading-edge R&D technology and strong organization and execution capabilities, Xpeng is well-poised to capitalize on the opportunities to reshape the market, cementing our leadership position with growing market share.

For the rest of the second quarter, we'll continue to work hard to overcome the negative impact of the ongoing COVID-19 outbreaks and the supply chain pressures.

For the second quarter of 2022, deliveries of vehicles are expected to be between $31,000 and $34,000, and the total revenues in the second quarter is expected to be between $6.8 billion and $7.5 billion RMB. Thank you, everyone.

Next, let's have our Finance VP, Dennis, introduce the company's first quarter of financial performance.

Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, Mr. Dennis Liu, to discuss our financial performance for the first quarter of 2022.

Thank you, Mr. He, and hello, everyone. Now, I would like to provide a brief overview of our financial results for the first quarter of 2022. I will reference to RMB only in my discussion today unless otherwise stated. Our total revenues were $7.5 billion for the first quarter of 2022, an increase of 153% year-over-year, and a decrease of 13% quarter-over-quarter. Revenues from vehicle sales were $7 billion for the first quarter of 2022, an increase of 149% year-over-year, and a decrease of 14.5% from the last quarter. The year-over-year increase was mainly attributable to higher vehicle deliveries especially for the P7 and P5, while the quarter-over-quarter decrease was associated with the less vehicle deliveries affected by the seasonal factors relating to the Chinese New Year holiday. Gross margin was 12.2 percent for the first quarter of 2022, compared with 11.2 percent for the same period of 2021, and 12 percent for the last quarter. Vehicle margin reached 10.4% for the first quarter of 2022 compared with 10.1% for the same period of 2021 and 10.9% for the last quarter. The quarter-over-quarter decrease was primarily attributable to increase in raw material costs. R&D expenses were $1.2 billion for the first quarter of 2022, an increase of 128% year-over-year, and a decrease of 15.9% quarter-over-quarter. The year-over-year increase was mainly due to, number one, the increase in employee compensation as a result of expanded research and development steps, and number two, high expenses relating to the development of new vehicle models to support future growth. The quarter-over-quarter decrease was mainly explained by less design and development expenses, which were affected by the seasonal factor relating to the Chinese New Year holiday. SG&A expenses were $1.6 billion for the first quarter of 2022, an increase of 128% year-over-year, and a decrease of 18.5% quarter-over-quarter. The year-over-year increase was mainly due to, number one, higher marketing, promotional, and advertising expenses to support vehicle sales, and number two, the expansion of our sales network and associated personnel costs and commission paid to the franchise store sales. The quarter-over-quarter decrease was mainly associated with the seasonal factors mentioned above. As a result of the foregoing, lost farm operations were $1.9 billion for the first quarter of 2022 compared with $0.1 billion for the same period of 2021 and $2.4 billion for the last quarter. Net loss was $1.7 billion for the first quarter, compared with $0.8 billion for the same period a year ago, and $1.3 billion for the last quarter. So March 31, 2022, our company had cash and cash equivalent, restricted cash, short-term deposit, short-term investment, and long-term deposit in total of $41.7 billion. To be mindful of the length of the earnings call, I will encourage listeners to refer to our earnings press release for more details on our first quarter financial results. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.

Thank you. And as a reminder, to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press the pound key. For the benefit of all participants on today's call, if you wish to ask your question to the management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. Your first question comes from Tim Hsiao from Morgan Stanley.

Hello, Mr. Guan. Thank you for accepting my question. Congratulations to EG2 for its very good performance. I have two very quick questions. The first question is, as Mr. Peng mentioned in the briefing, the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models for the new P5 and P7 models When will we recover the cost of autonomous driving or other software? If most smart car brands follow the standard or non-cost model, will we worry that it will be more difficult to return to the software cost model? This is the first question. The second question still wants to go back to the overall profit and loss video. Because at the annual trade fair, we mentioned that the orders we have submitted so far may have contributed from the second quarter. Due to the break-in of the entire supply chain in Jiangzhou and Hubei in April, has the time we currently expect changed? In addition, have we had enough of these digital components and batteries in the second quarter to deal with a major uptrend since April? Or, as I mentioned just now, can a more diverse battery supplier like Xiaopeng be able to help maintain our 1st quarter's labor market? So I've got two questions. So the first question, I just want to quickly follow up on X-Pen's previous spec change. I think the company now makes the X-Pilot standard features for some P5 and P7 models, which will surely blow out the user experience adoption rate. But could you share a little bit about the company's new software strategy and when we plan to restart charging users with Xpilot software in the future? Would it be from like Xpilot point zero? And is that going to be a bit challenging to resume the fee collection if most appears to follow us to launch free software ecosystem business model? And my second question is about the margin trajectory. Could you please update when the contribution from the owners with new prices will kick in? I recall Madge mentioned it might be late June. I'm not sure if there's any further changes amid rest and supply chain disruption. As battery costs would likely be further climbing in the second quarter, do we have enough low-cost inventory for component and battery to cover the low-price orders delivered in both April and May, or we can leverage our more diversified battery supply chain? So those are my two questions. Thank you.

Thank you. This is a very good question. In China, in the smart electric vehicles, the software will be independently charged. I believe we are the first one to do it, and the result is the best. Compared to our other friends, in fact, their software charging in China, whether it is from the penetration rate or the price of charging, I think we all did very well. But we also saw some changes. What we saw is that If we charge a fee for the hardware first, then charge a fee for the software, then charge a fee for the software, from a sales perspective, it is not comparable to packing hardware and software together to charge a fee. This is our current consideration. At the same time, as I just said, if we pack hardware and software together to charge a fee, it means that the software capability has been integrated into it, and it can be expanded to be able to work with the AI server, with the AI warehouse, with the AI disk, as well as the improvement of safety, functionality, and performance capabilities. After this integration, it is more likely to be achieved. We believe that from the current medium-level self-employment system to the next high-level self-employment system, which is the era when we talk about the supply and demand of people, we believe that hardware and software services related to hardware support and OTA capabilities are put together to make a one-time payment. We think that both for the enterprise and for the customer experience, including the profit for the enterprise, it has a more direct and positive value. We believe that in the future, we will extend a lot of new software-based service payment methods. For example, when the high-level digital service value goes further, because there is enough data to improve it, OK.

So thank you. Very good questions. Currently speaking, in terms of our pricing on top of our ADAS technology as well as our software, I believe that amongst all of the emerging EV makers in China, we are doing the best in terms of our penetration rate, adoption rate, as well as the final results. However, we did notice a trend in the market which is that if you separate the charging for the software as well as the hardware, from the perspective of the customers or the consumers, it is actually better to do a combined or a bulk charging package that combines the usage or the adoption of the hardware together with the software rather than doing it separately. So if we can do this kind of integrated pricing model for both the software and the hardware, it would be actually very beneficial for our future upgrade of the software in terms of the adoption of the ADAS technology, the upgrading of our smart carpet, smart chassis, as well as the overall software performance together combined with the hardware performance. Right now, we are in the mid-level of ADAS technology application. And in the near future, when we are able to really move towards a higher level of ADAS technology application, we internally call the man-machine co-driving experience. We believe at that point in time, we should be able to do a lot more OTA upgrades of our software with this kind of integrated pricing model that combines both the hardware and software so that we can increase and enhance the overall experience for our products, for our overall use experience, as well as be very beneficial for the overall company level growth margin as well. And so we believe this kind of integrated pricing model for both the hardware and software together will be more beneficial and sustainable for the long run. And in the future, we believe that more monetization or capitalization based on the software usage or adoption will emerge as we continue to accumulate more data and more user experience based on the launch of our software and hardware together. For example, there are different kinds of monetization that can be based on the time spent or the use time spent with our software, or based on the mileage that our consumers or our customers use on our products or services. Overall speaking, we believe that this kind of integrated pricing model will actually be more beneficial and sustainable in the long run that allow us to further optimize our user experience.

Hey, Tim. This is Brian. Let me just add a couple of comments. First of all, we have been witnessing the various software monetization has been implemented by various companies in China. And so far, I think it is quite clear that the separate charging and also subscription-based models have not been very prevalent in the China market. In some ways, I think it's limited the broader penetration of the utilization of such technologies. We believe that at this stage of the market, our core focus is to make sure that we provide an optimal service package that can be widely used, that increasing the penetration and coverage and witnessing the stickiness of our technology is probably the first priority before we actually implement various different monetization strategies. So that's why I think we are adopting the current standardized charging model. But I think in the long run, when we actually see advanced main technology, see more broader utilization and also stickiness and dependence of this technology, I'm sure we'll be able to have much more robust modernization and variations that we can use for this Chinese market. And I'll hand over to Dennis for the second question.

Kim, this is Dennis. In the previous earnings call, we mentioned we will be able to deliver most of the new price orders probably sometime in June, maybe in the second half of June. Because of the coffee impact, especially in the Shanghai area, Now we are looking to deliver the lowest price protected orders until June. So most of the new price order will be delivered probably starting in very late June and some starting in July. That's the present assessment of the delivery.

Next question, please.

Thank you. Your next question comes from Nick Clive from JPMorgan.

Hello, everyone. I'm Nick from JPMorgan. I'd like to ask two simple questions. I'll ask them in Chinese first, and then I'll translate them into English. The first question is, Mr. Xiaofeng, you just mentioned that the sales volume of the second quarter is about 31,000 to 34,000 units per month, and the monthly turnover is 11,000 to 12,500 units per month. This can be understood with our production capacity. Now, due to chip sanctions and other reasons, the loss of production in May and June, the impact of sanctions is about 20% to 30%. Is that right? This is 20% to 30% of the production loss. It can be gradually replenished in three seasons. I just mentioned that the impact of chip sanctions seems to be longer than expected. Now, in the chip This is the first question. The second question is about the price of batteries. Because the price of batteries was also mentioned last time in the press conference. And then the price of batteries is actually the current upper grassland, whether it's this CET or the US. My two single questions. First is on monthly production. Yeah, major guiding second quarter production of 41 to 44,000 units. And that translates into roughly about 11 to 12.5 thousand units per month. And that means potentially we have production loss somewhere about top of 5% in the rest of 2Q. And is it possible that this production loss can be recovered in third quarter and latest update on chip supply? And second question is really battery supply, pricing mechanism with the supplier. Thank you.

Hey, Nick. It's Brian. Let me answer your first question. First of all, you're correct. quarterly guidance for the delivery this quarter reflect of bottleneck in the supply chain which has been impacted in April as well as May and likely in June as well. So this is actually a number that reflected that we cannot obviously have the full output even with the capacity of the factory running at the full capacity. It's still limited by the supply chain constraints. We envision that if the supply chain resumes normally, we'll be able to catch up with the volume in the third quarter because we have sufficient capacity to ramp up production at a time. So I think we're confident that as soon as the impact in Shanghai area and some other area that resumes normally, we'll be able to produce enough output to accelerate the delivery and to meet the customer demand, which we're seeing is very robust.

OK, let me add to answer the first question about the capacity of this chip. I believe that without the impact of the epidemic, basically most of the new energy, the production of autonomous vehicles, its main production capacity, I believe, will be limited to chips. Our latest statistics, this is a chip of an autonomous vehicle, The absolute number has even reached 5,000. Of course, it is often used in the same place with 10 or more of the same chip. So from now on, a main chip, there are about a few chips, three to a few chips like this, we find that the problem of its output is not too big. But many times, some of the output problems are due to some particularly small and cheap chips. These chips are very uncertain right now in the entire Chinese market. We can see that they are very uncertain. Basically, if we can see it in the month of April, it will be very good. Many times, we can only see it in the next week. So the challenge of chips, I believe, from the beginning of 2020, we started to pay attention to it, and we think that by the end of 2021, it may be able to relieve Last year, we thought that by the end of 2022, we could resolve it. We still think that the challenge of the chip will continue until this year, or even until next year, or even later. We think there are many reasons. But I think there is a very important point, that is, who is in the chip field. First, through some long-term and even long-term strategic cooperation, I believe we can solve part of it. But the other part, the most important part, is what I just said. Thank you.

Yeah, let me just address the question regarding the chip's visibility. So if there was any COVID resurgence in China right now, I think the majority of our peers or all of the new EV makers in China right now will be actually restricted by the capacity or the supply of the chip in general. According to our latest calculation, every single unit or every single product of ours will need on average of 5,000 chips And for some parts of the car, that will require about a dozen or several dozens of the same chips for just one part of the car. And for some of the main chips, actually, for example, three kinds to five kinds of the main chips, their capacity is actually okay and their supply is actually okay. But the main shortage actually comes from some of the smallest and the cheapest ones, the chips, and their capacity is very, very limited. And the visibility is also very limited in China as well. April, I would say, was performing actually quite well in terms of the capacity and the supply of the chips in this regard. However, we believe that in China, the visibility to chips in general going forward is still very, very limited, and how its impact on our capacity is also going to last for a while. Now, from 2020 on, we begin to notice the crisis in shortage of chip supplies in general. And by 2021, we thought that, well, maybe the crisis can be resolved or at least alleviated to some extent by the end of 2022. But now our latest judgment is that the situation is going to, I mean, the crisis is going to still last for a while, maybe ahead into 2023 or even longer. Now there are several resolutions there. For example, signing long-term contracts with our chip supplier can be one of them. And the other is really, as I mentioned in my previous remarks, that we need to build a very capable team, technological teams that have very strong capability in building embedded architecture that allow our platform to be very, very flexible in adapting to the supply shortage of chips. For example, we should be able to adapt to, for example, the shortage in chips in some part of the platform or some part of our product and we can change flexibly according to the supply of different chips and different parts of the unit. And as I mentioned earlier, in April we did actually quite okay in terms of the visibility of the chips. And sometimes we only have one week's visibility into the future in terms of our chip and how it affects our capacity. So overall, I would say the situation is still not very positive at the moment. Thank you.

Okay, let me describe your second question about batteries. Since last year, Xiao Feng has been very concerned about battery production and battery price fluctuation. So we all know that in 2021, the hardest thing about batteries is that there is no supply. So the production capacity is seriously insufficient. We believe that by the end of 2022 or the first half of 2023, In the industry, the entire capacity of battery supply will be greatly improved. So in this case, in the fourth quarter of last year and the previous five months of this year, we saw that the battery was limited to some raw materials, especially the large-scale growth price of aluminum mines, which caused a great fluctuation in the price of batteries. But we also saw some changes. The first one is that China's aluminum We are very happy to say that Xiaopeng Since the second half of last year, we have been attracting more battery partners. We hope that more battery partners will be able to solve the problem that Xiaopeng encountered before, which is that we can sell it, but we don't have enough batteries, which leads to insufficient production. We have started to make progress in this year's second quarter, and we believe that we will make complete progress in the future. This is something we are very happy about. Secondly, we will see such a new and important batteries, we can have a better price than the previous one. Although it is in the same system, from the mid-term point of view, I think the price of this battery will have a considerable drop than the current peak, but it may not be reduced to such a low point that was able to continue to drop in the past few years. But on the other hand, we are very confident in the new electronic platform technology, including C2P, including our new supercharging capabilities, including our new solution of carbon monoxide, including the better situation of our new car's wind and weight reduction, as well as the improvement of new electrical materials and electrical technology. In fact, starting from the second half of this year, we will think that Alright, let me address the second half of your question which regards the capacity and the pricing of our battery supplies.

now in 2021 our battery supply was greatly restrained and that resulted in a lot of issues for us in terms of our deliveries as well as our overall capacity of production uh from 2020 on um and also from uh i think from this year and all the way to the first half of 2023 i think the battery supply situation will actually become better And since from last quarter, well, from Q4 last year all the way to the first month into 2022, we begin to notice that there are a lot of pricing increase in terms of the supply of battery, mainly due to the increase of raw materials of making those new energy batteries, which include a lot of price increase in lithium materials. And we noticed that kind of price increase in China, domestically speaking, but not so much in the overseas market. We believe that the pricing of lithium as a raw material overall remained the same as the situation back in the first half of 2021. And because of the current COVID resurgence as well as the price increase in lithium material, I think overall the situation remains very hard for the whole industry, not just for ourselves. But then the situation can begin to result or the pricing of batteries will continue to reduce slightly from the second quarter of this year on. Now for the second quarter of this, I mean for the second half of 2022, we should be able to see some adjustment or some optimization of our battery supply because we are able to adopt multi-suppliers of our batteries, which really can be beneficial in resolving some of the issues that resulted from lack of battery supply from previous quarters. And from Q2 on, we believe that we would begin to actually see a lot of progress in this regard. And the second thing is with multiple suppliers of batteries, we can do better cost optimization of our products as well. I think in the mid-term, the battery pricing will continue to actually reduce from the current high level, but probably they won't be able to reduce to the low level as we saw in previous years. However, we are very confident that XBank benefiting from our supercharging technology as our SIC charging materials adoption, also some of the optimization in our technology advancement in reducing the wind resistance, in reducing the overall weight of our products as well as to overall have a higher efficiency of utilizing the batteries as well as adopting multiple supply of batteries can benefit us in the long run and can allow us to continue to serve our customers with enough actually production of our products going into the second half of this year. And we believe that from the second half of 2022 on, we should be able to continue to boost ourselves with new products benefiting from the above factors that I just mentioned. Thank you.

Next question, please.

Thank you. Your next question comes from Bin Wang from Credit Suisse.

Okay, thank you, leaders. I have two questions. The first is the interest rate. Can I understand that the interest rate of the second quarter led by the company will go back a little bit because the new high-price products have not been reflected. In addition, in the third quarter, the interest rate will return to a new high level. Can I get such an assumption? And how will the change in our software fees affect the interest rate in the coming few quarters? This is the first question about the interest rate in the second quarter and the second half. My question is about the margin outlook in the second quarter or the second half of this year, because we see some different factors. It seems that the higher price products can only kick in in the third quarter, That's why second quarter may be some decline compared to first quarter in the gross margin. And the number three quarter, second half, can I assume the gross margin can reach all that high when the high pricing products start to help? And the second part is that you will definitely change the software pricing. What's the impact for the gross margin in the second quarter and third quarter? That's the number one question. Number two is about the new products. You mentioned there will be a large size products and ultra-large products in 2023. And so what's the pricing range? What's the margin? Can they above the 20% gross margin? Because you're getting that target 25% margin in 2025 or mid-term.

Thank you. Wang Bin, this is Dennis. Let me address your first question. Yes, you're right. Because of the COVID impact, our second quarter volume was impacted. compared with the original projection. So our second quarter gross margin will be impacted as well. We will further investigate the impact and also take some action to recover the margin in the second quarter. And going to the third quarter, yes, we will deliver new price orders. So our margin in the third quarter will rebound, will improve. However, we are seeing we will have further margin improvement in the quarter four when we have new model delivery to the market. So our margin in second quarter will be slightly impacted by the delivery, the new price order, and then third quarter will improve, and then first quarter will further improve. That's our present projection.

Yeah, and Bain, do you want to say a second question? To answer your second question, yes, the products that we're going to introduce next year, which will include a product coming from a C-class platform, will be at a premium to the current portfolio products that we have, including the G9. So you can expect that will be close to or even exceeding the 400,000 RMB price range. And for such a product, we certainly hope it will have high gross margin. So 20% will be a very important benchmark for us to target our product design. But for that product, I think assuming a 20% or above product margin is actually reasonable.

Okay. Can I ask... Okay.

And also, internally speaking, our expectation for these two new products is that their capability or their overall performance combined will be actually more superior than two P7s combined.

Right now, we're not giving guidance, given the lack of visibility of the, I would say, material prices as well as the overall environment. But we are hopeful that the rebound will be pretty robust from 10 quarter levels. Thank you. Okay, next question.

Thank you. Your next question comes from Jeff Chung from CDMA.

Thank you. This is the first question. This is basically the first question. This is the second question. The third question is about the margin of the first quarter. Because I know here, the first one is, after I throw out the software, what should the margin be? Because the software is included in the margin. Then I also want to ask, if it doesn't include these I have three questions. One is due to the very low backlog rolling from the first quarter, how will the volume be sold in the second quarter will be without the SRP price hike? This is number one. Number two is the newly generated auto backlog since the first of May. Could you tell us on the trend on the newly generated auto backlog? And the final question is about the first quarter vehicle margins. Could you break down the vehicle margins without the software? And also separately, could you tell us the first quarter software margin? And for an Apple to Apple comparison, if we strip off the raw material price height, what should be the first quarter vehicle module would have been? Thank you.

So, Jeff, this is Brian. Let me answer your second question first, which is the new order trend, and then I'll leave the number question to Dennis. First of all, as we said in our CEO presentation, that we actually saw the new order recovery in May in areas that's not affected by COVID lockdown in certain cities is already near the pre-price increase levels, which is a very encouraging sign because obviously we see that demand is genuine and also it's actually rebounding pretty nicely. It took us probably a little bit over a month to build up that demand pool. Obviously saw the month of April, we saw slow demand recovery, but in May, actually, the order level is actually quite robust. And I would think with the increasing relaxation of COVID measures in large markets that we target, which are important markets to us, we see the overall order momentum will be quite strong. And I'll hand over to Dennis on the other two.

Yeah, hi, Jeff. Let me address your first question. We don't provide very precise, for example, the new price order deliveries, the old price order deliveries. But in Apple, majority of deliveries were the old price price protected. And also in May, the GM majority would be the old price. Especially for the P7, majority of P7 would be the price protection because the backlog is we need some time to deliver those orders. For your third question, yes, the first quarter, the reason why we can maintain the same gross margin level as quarter four last year. was because, number one, we had mixed improvement. Our P7, the product mix in the first quarter was about 56%. In the quarter for last year, it was about 50%, so that's a mixed improvement. The next one is the variable marketing kind of rationalization. We technically reduce our variable marketing spending to increase the overall margin. Having said that, we were also impacted by two key factors. Number one is the NEV reduction, the New Energy Vehicle Reduction, which is about 20 percent subsidy level, about 20 percent compared with the The other one, the big challenge would be the battery cost. I cannot provide the detailed number, but that is a big offset of our, like, the mixed improvement and also the variable marking reduction. So all in all, we were able to maintain the quarter-full margin level for the moment.

Next question, please.

Thank you. Your next question comes from Ming Li from Bank of America.

As for the future X-PILOT 4.0, it will still be in the frame, in the mid-high configuration frame. It's just a standard. It's still possible to consider using this current selling price or even this kind of month-to-month value. There is also another question about this, because this time we put this After X-PILOT 3.0 or 3.5 became standard, we also canceled the free charging and installation charging kits. So can you understand that such a policy does not actually affect our horsepower? This is my first question. The second question is about battery and charging technology. I want to know Mr. Peng mentioned that the 480,000-watt charging station will start to be built in the second half of the year. It can also charge up to 200 kilometers in 5 minutes. In the previous phone conference, we also mentioned that we also have this 800-watt battery, and it can charge up to 80% in 10 minutes. I would like to know if this is the highest spec of the battery or charging station, or will it be faster in the future? So regarding your autonomous driving software, so in the future, will the sales of the software be included in the car price, or you will still consider to charge the consumer on a one-off or a monthly installment basis? And also, because this time you give the software a standard configure, But in the meantime, you also cancel free charging and also cancel the subsidy for installing the charging pile. So is it a marginal nature event for your business? And second question regarding the supercharging technology. So is the 480 kilowatt hour charging pile and also the 100 voltage battery the ultimate battery technology, charging technology, or in the future you expect even further advanced charging technology? Thank you.

Jaime, let me address your first question. Yes, when we build those software into the vehicle together with the price, and at the same time we get rid of the supercharging, free supercharging, and also the the kind of the destination charge, the home charge, and including the installation. And at the same time, we also adjust the price a little bit to cover some of the cost. So all the margin impact will be neutral. And more importantly, with more customers using the software, we will be able to increase the scale and also to dilute the same kind of R&D expense. So overall, that's a good strategy for us. In terms of the next product, G9, and also the future product, we haven't really decided yet. That was subject to further internal discussion. Whether we will continue such practice or we will have another arrangement that is subject to our internal discussion. And when we introduce a product, we will also mention that. Your second question.

Yes. Okay.

Let me answer the second question.

This year, because of the change in the entire environment, our original plan was to introduce two types of superchargers. The first type is 3,600 watts and the second type is 4,800 watts. After the technical evaluation, we plan to transfer all the data to the 480-watt network, which is a 200-kilometer charge of 5 minutes. In fact, it can charge a lot of LiPo in 10 or 15 minutes. But we don't have the final test result, so we haven't announced it to the outside world. Please translate the first paragraph for me. Thank you.

All right, let me address the second question of yours. Actually, this year, we have made this plan to launch the 480 kilowatt charging facility by the fourth quarter. And originally, you know, before heading into 2022, we had planned to actually launch two kinds of charging facilitation. One is 260 kilowatts, the other is 480. But after evaluating the macro environment of this year, we make the final decision of launching 480 kilowatts by Q4 this year that allows for charging for five minutes that last for 200 kilometers of driving experience. However, if you actually charge for 10 to 15 minutes, it can give you even a longer driving range, but we haven't had the final testing result yet. That's why we are not releasing the number.

In other words, when the 4.8 billion watts supercharger and the 7.4 billion watts power plant are quickly recharged, we will carry out a greater scope of deployment. We believe that in the second half of next year, the transformation and automation will form a prominent turning point. First of all, let's talk about the transformation of this turning point. The transformation of the transformation of the transformation of the transformation of the transformation of the transformation of the After efficiency and scale-up, the advantage of electric cars compared to current gasoline or hybrid cars will be significantly increased. This will greatly promote the growth of sales and conversion of new generation electric cars. In other words, for customers, using less money and lower battery capacity can form a better battery life and a better supply and energy system.

And so for the upcoming year, we believe that with our building of the 480 kilowatt supercharging facility as well as our 70 kilowatt destination charging, we should be able to actually launch quite a powerful charging network that's going to cover a wider geographical area in China. And in the coming year, we believe that we are going to welcome in a new kind of era of optimization as well as electrification. Now, in terms of the improvement of electrification, we believe that as our technology continues to develop in terms of reducing wind resistance, including enhancing the efficiency of the electric system, the power chain, as well as our battery, with also the further enhancement of the supercharging infrastructure, we will be able to welcome in an era where we actually have a higher charging efficiency efficiency or effectiveness compared to the traditional gas stations for ICE vehicles, which means that in the future, the market adoption rate for a new EV will actually be higher because consumers will begin to actually see a great enhancement in using every single dollar for charging their electric vehicles with less usage of power consumption.

The second is that we also believe that in the second half of 2023, it will form a smart turning point. Because of the high-level autonomous driving of this car, it will allow the experience of the whole scene to achieve a very good, very comfortable and comprehensive user experience and safety ability. And when this function once realizes the standard hardware and software packaging sales and pre-production, We have seen a lot of interesting features in the previous presentation, including the great improvement in the safety of the main body, and all the functions related to automation or security are all similar in the same hardware system, which is equivalent to saving more hardware. Therefore, we are very confident that automation and electrification will form new platforms next year. There was another question just now. And so the second part of my answer is actually by the second half of 2023, we expect to see a new development

that is revolutionary for optimization of our technology, which means that by that time we should be able to cover the full scenarios of driving and overall we can enhance the user experience and also the safety standards for using our products as well. And by that time, which means that we should be able to integrate the installation of our latest technology in the hardware as well as our software together with our combined installation or prefiguration of both the hardware and software together as a standard configuration of our products. When we reach the stage of consistent sales of those kinds of pre-install configurations, we should be able to actually optimize the overall standards for safety as well as our driving experience because we will be able to put in a lot of the embedded functions that we want to install in our products to optimize the user experience. Overall, that can save a lot of the usage of our hardware and overall to increase the usage efficiency and effectiveness of our hardware in general. Just to summarize, by the end of this year or by the second half of next year, we should be able to welcome in a lot of revolutionary changes in terms of the electrification as well as optimization in our industry. And the second part of your question is also about the next generation of our charging facility. Yes, we are still in the R&D process. We are constantly developing our technology in order to develop the next generation of supercharging facility that can allow for fast charging of five minutes and that support an even longer range of driving. Yes, that's also my answer. Thank you.

Hi, operator. We received the last question. Thank you.

Your next question comes from Jing Chang from CICC.

Hello, everyone. I'm Chang Jing from CICC. The previous questions basically covered most of my questions. I might have asked two simple questions. The first one is based on our rights and software payment. I would like to ask, based on the pricing strategy of the new model of the new model, we have to deal with the current model, with the P5 as an example. Different versions, such as the P version and the E version, the low-end G version, the pricing may be higher, maybe 32,000 yuan and 18,000 yuan. Maybe the price difference is more due to the increase in the cost of the hardware. In the new model, for example, the G9 or the new model next year, whether we will consider software integration based on software-related revenue or margin. That is to say, the price difference between related and different configuration models will increase. This is the first question. The second question is, we have seen that this year, especially in the price range of 200,000 to 250,000, the price of new models has increased significantly. Some brand models also emphasized the application of new technologies in electrification. For example, some technologies like C2B and C2C. We also heard from President Peng, including the leaders, that we will use a more advanced electrified technology on G9 or other new models. This may also be a turning point. In the short term, especially in the first half of this year and next year, are you worried that more new models will have a bigger impact and impact on the existing P5 and P7 models, which are relatively older in technology, such as our existing P5 and P7 models? This is the main problem. Let me translate it. So I have some follow-up questions regarding to companies' adjustment to charging and the software activation targets. The first is regarding to the pricing strategy of new model after the integration of software and hardware. We have sought out the price difference of different versions of our Current model taking P5 as an example, the price of P version and E version is 32,000 RMB and 18,000 RMB higher than the G version. So now about to cover the increase in hardware cost. On our new model such as G9, we take the benefits of software into account into the pricing strategy. That is the price difference between different versions of the model will be widened. My second question about this year, we can see a supply of new models that 200 to 250,000 RMB has been increased significantly. And some models have been emphasized their new electrification technologies such as C2C and C2B. And we have also heard that more advanced technology will be applied to our new model such as G9 and next year's new models. In the short term, especially in this year and the first half of next year, do you worry about that competing products will have a great impact on our sales of P5 and P7? Thank you. Thank you.

Regarding the first question, I think it can be explained very simply. In the P9 and the new P9 and the new P9 and the new P9 and the new P9 The ability of high-end self-employed people to use the hardware price will increase and increase. But there are other ways in this. There are some ways. For example, with our technology, we can use a lower hardware price with the same ability. We have the ability to accumulate it better. In fact, we are also doing a lot of work in this. And these works are beneficial to customers and businesses. So from what we see now, I can share with you the data. After we adjusted the software configuration in May, we have greatly increased the proportion of high-pair and medium-high-pair choices in P5. From what we can see from the current data, we are quite confident in the ability, in the strength, and in the final, for example, we will be able to do it on the expansion of the value of the AI service. This is the value of the three-way integration. This is about your first question.

About the first question of yours, yes, in the future upcoming models of ours including P9 and other new models, we plan to enhance the price gap between different configurations. For example, for higher end products or higher end configurations, the price will be aimed higher because they embed or incorporate a lot of ADAS function as well as the high or advanced software. But on the other side of the coin is that for lower configuration products, we are actually able to sort of lower the pricing because we will use better BOM, cost optimization, for the adoption of lesser events hardware for those low configurations which can be very beneficial for individual consumers as well as for us as a company. Now, in May, after the adjustment of our pricing that include both the software and hardware, we actually have seen a spike in orders for mid to higher-end configurations for P5. That gives us a lot of confidence in going forward because in the future, with this kind of new pricing strategy or incorporation of both hardware and software into the one configuration, we should be able to further enhance our overall capacity, I mean, capability in optimizing the user experience, the driving experience, as well as optimizing our growth margin and in adopting more high-level ADAS technologies into our future products.

For your second question, I'm not worried about PCP5. For example, I believe that PCP5 will be the best car in the self-driving market among the 200,000-level cars. Even in the years to come, we believe that most of the people who want to achieve this kind of capability will have to pay more than the price of a two-cylinder car. So in this line, after P7, we will also have some new thoughts about automation. At that time, we will share with you some of our new movements on P7. We do not think that we can see a data in P7 in 2020. After the launch in July, we saw that in March 2021, we launched the high-performance GP and the number of PT in the high-performance GP. The whole sales volume went up directly. Until this year, we have created a maximum number of more than 9,000 in a month. On the third day, we and our other friendly products, we saw And regarding P7 or P5, actually ever since the launch of CDNGP on P5, we've been able to actually recognize our leadership position of this model in the market because

If our peers were to develop similar products with the same sort of performance configuration in the coming several years, the pricing of their products will be much higher than ours for P5. And also, we are going to release more information regarding our automation and smart design for the upcoming products and the current product portfolio in the future when we have them ready. Actually, reviewing the sales performance of P7 when we first launched it in July back in 2020 all the way to March 2021 when we launched the highway NGP for P7, we were able to see a strong growth in the total sales or the order number of this particular model with the adoption of NGP. And also for Q1 this year, we were able to record a historically high level of 9,000 units of monthly sales for this particular product. So I would say that overall, we are very confident about our judgment of the positioning of these kind of products in the market in terms of its own positioning, in terms of the product quality, our market share, as well as for the OTA release in the future that will strengthen our leadership position of these products. Thank you.

Thank you.

Operator, we are ready to conclude this call.

Thank you. And this is the Q&A session. I would now like to turn the call over back to the management for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Expanse Investor Relations through the contact information provided on our website or the Pearson Group Investor Relations.

Thank you. And this concludes today's conference call. You may now disconnect your line.