XPeng Inc.

Ladies and gentlemen, thank you for standing by for the first quarter 2025 earnings conference call for XPeng Inc. At this time, all participants are in listen-only mode. After 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. Alexi, Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to Xpeng's first quarter 2025 earnings conference call. Our financial and operating results were issued via Newswire services early today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xpeng.com. Participants on today's call from our management will include our co-founder, chairman, and CEO, Mr. He Xiaopeng, vice chairman and president, Dr. Brian Gu, Vice President of Corporate Finance and BW Projects, Mr. Charles Chang, Vice President of Finance Accounting, Mr. James Wu, 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 our website on IR. 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. Four looking statements involve inherent risks and certainties. As such, the company's results may be materially different from views expressed today. Further information regarding these and other risks and certainties 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 forelooking statements except as required under applicable law. Please also note that EXPON's earnings press release and this conference call will include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. EXPON's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.

I will now turn the call over to our co-founder, chairman and CEO, Mr. He Xiaoping. Hello, everyone.

The first quarter of 2025 marked a promising start for Xpeng as the company successfully navigated the traditional off-season in the automotive market. Our Q1 deliveries totaled 94,008 units, marking a 331% year-over-year increase and establishing a new historical record for quarterly deliveries. We secured the top position in sales among emerging EV brands, both domestically and internationally during this quarter. Our vehicle gross margin has improved for seven consecutive quarters, propelling the company's overall gross margin to a record high of 15.6% in Q1 2025, with net loss narrowing significantly compared to the previous quarter. Free cash flow exceeded 3 billion RMB in Q1.

很多人好奇我们为何在一季度有不错的业绩表现 我认为核心还是我们在组织 We are constantly improving our product, marketing, and technical and business system. This is also the initial result of Xiaopeng's commitment to AI drive in technology and stable support in business. Among them, Mora M03, which has been listed for eight months, has accumulated over 100,000 shares and has become the sales champion of A-level pure electricity teaching. And PGJIA, which has been listed for five months, has completed the 50,000th official launch. Many are curious about our impressive performance in Q1.

I believe it stems from XPeng's systemic enhancement across our capabilities in organization, product development, marketing, technology, and operations. Along with a consistent commitment to AI-driven tech innovation and steady and long-term sustainable growth, the Mona M03, introduced eight months ago, has surpassed 100,000 deliveries, securing its place as the best-selling A-class pure electric sedan. The P7 Plus achieved its 50,000th unit production just five months after its launch. And the 2025 G6 and G9 models delivered over 7,500 units in total in their April debut. Our monthly deliveries have exceeded 30,000 units for six consecutive months.

我倍感振奋的是,我们的增长潜力才刚刚开始释放。 当前小鹏正在将AI底盘、图灵、AI辅助架子、新一代智能座舱、图灵芯片、 巨声智能机器人以及和企业生产力相关的工具、 through AI-driven integrated innovation. In the second quarter, we have seen breakthroughs in many areas. I believe that Xiaopeng's full-scale transformation to AI by the whole company has begun to succeed. Some key AI capabilities, such as the auxiliary driver, will lead in the industry in 2026. I'm most excited by the fact that our growth potential is just starting to emerge.

We're spearheading integrated innovations powered by AI in various fields, including AI chassis, Turing AI-assisted driving, smart cabins, Turing chips, embodied intelligent robots, and enterprise productivity tools. In Q2, we achieved significant progress in several areas, reinforcing our conviction that Xpeng's comprehensive transformation toward AI has begun to achieve initial success across the full technology stack. Some of our key AI capabilities are poised to create generational leadership within the industry in 2026. I'm confident that through the extensive application of our physical world foundation model and Turing chips and vehicles, the global deployment of AI power vehicles and related policies, along with the innovative advancement of humanoid robots, Xpeng will lead three growth curves and attain sustainable long-term high growth.

So the core curve of Xiaohong is AI vehicles. As you all know, Xiaofeng has always insisted on the strategy of technology equality. Through innovative research and development, we can reduce the threshold of advanced technology and create the products that users love, in order to achieve high-end technology and universal sharing. We hope to bring universal AI technology at the widest price range. On May 28, we will hold the MOLA M03 MAX full-blood version of the launch conference, and will be the first time for Turing AI service to reach 150,000 products. so that more young people who love technology can enjoy a smart top-up like luxury cars without compromise, and achieve both safe and smooth AI support driving. I believe this will be a new milestone in the automotive industry, such as AI equality. So it has subdued the industry. Currently, only the high-end models of high-end vehicles are equipped with urban and high-speed all-in-one support driving styles.

Xpeng has actively embraced a strategy of democratizing technology aimed at reducing barriers to advanced technology through innovative R&D and crafting products that resonate with users. This effort makes premium technology accessible to all. On May the 20th, we will launch the Mona M03 MEX, The full performance edition will debut touring AI-assisted driving in the 150,000 RMB price sector for the first time. This innovation enables tech-savvy young consumers to experience top-tier intelligent features, once exclusive to luxury vehicles without compromise, ensuring safe and smooth AI-assisted driving. This launch represents a pivotal moment for AI democratization. Within the automotive sector, shaking up the current landscape where smart urban driving and highway driving is limited to high-end models at premium price points and showcasing Chinese automakers' groundbreaking innovations in physical world AI.

In June, our G7 will meet you all. I believe that G7 will be a very competitive new product in the 245,000-level SUV market. Then in the third quarter, we will also launch a luxury sports car with a level of 300,000, which is also a new generation of PQ. In the fourth quarter, we will also have Kunpeng super electric vehicles gradually mass production, and thus realize a car double. I believe the launch of Kunpeng Super Electric will help Xiaohong to reach a broader customer base in the domestic and overseas markets, and also bring us more significant sales growth.

In June, the G7 will make its debut to the public, and I'm confident that it will stand out as a highly competitive new product in the 250,000 RMB class SUV market. In Q3, we'll launch the new generation P7, a luxury sports coupe in the 300,000 RMB segment. In Q4, our Kunpeng super electric models will gradually begin mass production, realizing the one vehicle dual energy options approach. The Kunfeng series aims to expand our reach to a wider consumer base, both domestically and internationally, unlocking substantial sales growth potential.

从中国走向全球市场是小红旗子的第二阵段曲线。 我们预计海外业务在未来三年将会持续高速扩张, 成为我们在销量、利润增长的重要驱动力。 那么在2025年第一季度,我们的海外销量同比增长了, more than 370%, and continue to rank first in China's high-end new energy exports. We have added more than 40 overseas stores and opened several key markets, including European representative markets, the UK, as well as the largest market in Southeast Asia. We expect Xiaofeng to enter the world as a high-tech company. In many areas, we will develop, manufacture, and provide more in-depth localization services. we will create a high-end global brand that is positioned in the technology field.

Xpeng's global expansion represents our second growth curve. We anticipate that our overseas business will experience rapid growth over the next three years, becoming a significant contributor to our sales and profit increase. In Q1 2025, overseas deliveries soared by more than 370,700 year-over-year, solidifying our status as China's leading exporter of mid- to high-end new energy vehicles. During Q1, we opened over 40 new stores abroad, entering key markets such as the UK in Europe and Indonesia in Southeast Asia. As a global technology company, we strive to enhance localized R&D, manufacturing, and services globally, establishing a unique mid- to high-end brand rooted in technological innovation.

Let me introduce Xiaopeng's progress in the field of AI. In 2025, Xiaopeng will be fully applied in the field of AI in the world of physics and mechanical models. I believe it will be the starting point for expanding the advantage of the generation. We have built the most comprehensive and also the highest-ranking full-time self-development system in the industry. It covers a wide range of pure visual solutions, such as Turing, Dachuanli, self-development chip, a super-large-scale wing model, a local VLA model, and a whole new generation of EEA architecture and physical imaging systems. I believe that all of these will help us achieve a high-level development route in the field of automatic auxiliary driving, and will build up competitors' fun competition. In the next step, we will develop from the L2 plus auxiliary driving, Let me now give you an update on XPeng's AI development.

2025 signifies the launch of XPeng's full-scale implementation of the Physical World Foundation model in AI-powered vehicles. Further extending our generational advantage, we have developed the most comprehensive and sophisticated full-stack in-house R&D system with the highest potential in the industry, which includes the Hawkeye PureVision ADAS solution, self-developed high-performance Turing chips, ultra-large-scale cloud-based foundation model, fully localized VLE models, vehicle EEA architecture, and physical simulation systems. This strengthens our strategy for advanced autonomous driving, establishing formidable competitive barriers. Moving forward, we'll expedite R&D efforts from L2 plus assisted driving to L3 and L4 autonomous driving technologies, widening our generational lead.

我们在中国汽车行业率先实现了不依赖激光雷达的程序智能辅助价值。 那么小鹏的鹰眼纯视觉方案研发难度高, 但是它在安全跟体验的上限 will also be greatly improved. We have upgraded the capacity of the visual perception model, the number of parameters, and the frequency of reasoning. We have reduced the distance from end to end to a greater extent, making the entire range of service more sensitive and safer. We have improved the ability of 360-degree visual and comprehensive perception of the environment, which will especially lead to the fact that in complex roads in cities, in scenes such as turning around, head-turning, rain, snow and fog, Xpeng is the pioneer in China's automotive sector for implementing urban smart driving without depending on LiDAR.

Our Hawkeye PureVision 8S solution although difficult to develop, greatly enhances the upper limit of safety and user experience. We improved the capacity, parameters, and inference frequency of our visual perception models, significantly reducing end-to-end latency for quicker and safer assisted driving. Our enhanced 260-degree environmental perception performs exceptionally well in intricate urban environments, including turns, U-turns, and under adverse weather conditions, such as rain, snow, or fog. enhancing both safety and driving experience. Furthermore, Xpeng Hawkeye PureVision ADAS solution is ideally positioned for the global rollout of high-end autonomous driving and the shift from AI cars to advanced intelligent robots.

物理世界AI技术的皇冠在于芯片、模型、数据、infrastructure等。 And the pearl on this crown is no doubt a chip. Xiaopeng has been firmly on the path of chip development since 2021. So in 2024, our chip will become successful once. The effective AI algorithm of Turing chips is equivalent to the current three to seven times of the mainstream AI chip algorithm in the industry. And we Through the internal transformation of hardware, software, programming, big model structure, and joint design and development of full-fledged software and software, we can play a greater role in the same effect of the model and chip. I believe that Xiaopeng's persistence in the development of chip hardware technology will bring the biggest car model success to the users in the industry. The biggest car model will make the efficiency, experience, and safety of Xiaopeng's car on the edge of the AI model come true.

In my view, the crown of physical world AI lies in chips, models, data, and infrastructure, with chips as the dual. Xpeng has been committed to in-house chip development since 2021. In 2024, our self-developed chip succeeded in its first takeout. The Turing chip delivers three to seven times the effective confused power of mainstream automotive chips. Through full-stack in-house development and closed-loop integration of hardware, software, compilers, and model architecture. We maximize synergy between chips and AI models. Our dedication to chip R&D will not only deliver industry-leading in-vehicle computing power and models, but also elevate the efficiency and overall experience of XPeng's edge-side AI models.

In the current AI model in the physical world, we have already seen the advantages of Scan-N-Raw. Xiaofeng is currently developing a larger-scale cloud In order to train this new model, we built the first 10,000-card group in the domestic automotive industry. The current group's operating efficiency has been maintained at more than 90% for a long time. In terms of high-quality training data, we will achieve 200 million videos by the end of this year. It includes a wide range of driving scenarios across the country. By using a powerful algorithm and a large amount of data to train the machine, it can better understand the real world and perform complex reasoning and action like humans. Through enhanced learning and training, Xiaohong's machine will continue to evolve beyond the old world of humans, and eventually become the foundation of Xiaohong's automation that truly leads to Level 3 and Level 4. 我相信这也是未来小鹏所有物理AA终端的通用模型。 我们会通过蒸馏减资等方式开发匹配车端算力部署的端侧大模型, 让车端模型尽量承吸这个机座模型的能力, 实现在行业里面领先的本地的推理能力。 In the ecosystem of the physical world AI model, the benefits of the scaling law are becoming clearer.

Xpeng is working on larger-scale cloud-based foundation models and edge sign models. A physical world foundation model in the cloud has achieved 72 billion parameters. To facilitate its training, we established the first 10,000 GPU AI computing cluster in the Chinese automotive industry, maintaining an operational efficiency of over 90% throughout the year. By the end of the year, our high-quality training data will expand to 200 million video clips that depict various driving scenarios across the country. Powered by large computing resources and extensive data, our foundation model can understand the real world and execute complex reasoning similar to human capabilities. It will evolve through reinforcement learning to outperform seasoned human drivers, laying the groundwork for L3-L4 autonomy and autonomous driving, and eventually acting as a universal model for all Xpeng's physical AI terminals. We create edge models via knowledge distillation and pruning to align with in-vehicle computing power, leveraging the foundation model's capabilities as much as possible to enable industry-leading inference on devices.

只有AI汽车如果具备更聪明的大脑,会是最终的体验。 We hope to create a fusion of the three abilities of the big, the small, and the big. We are very happy that Xiaopeng is developing a multi-modal large model on Turing chips. It not only makes the language interaction smarter and more personalized, but it can be run smoothly under the condition of no network and low network. It greatly improves safety and can carry out global deployment. 我相信这会是中国首个具备全本地端的多元交互能力和本地VIA能力的座舱大模型。 那么为将来小鹏的整车大佬能力的快速升级扑平了道路。 To truly outperform traditional vehicles, AI-powered cars must possess true intelligence, integrated three core capabilities of the brain, cerebrum, and the spinal cord.

For Xpeng's smart cockpit, we're currently developing a multimodal large model that entirely functions locally on Turing chips. This advancement facilitates smarter voice interactions and a more personalized user experience and ensures smooth operation even in office conditions, significantly enhancing safety and global scalability. This will be China's first large model capable of fully localized multilingual interaction and VLA features in a cockpit. paving the way for rapid improvement in the vehicle's intelligence.

We are investing in AI vehicles. We are investing in AI vehicles. We are investing in AI vehicles. We are investing in AI vehicles. We are investing in AI vehicles. We are investing in AI vehicles. We are investing in AI vehicles. The model system will also cross over the previous technical routes that are commonly used in the current industry, such as small models that are easy to learn, or division and division models, and will directly synchronize and use the VLA architecture of small and medium-sized physical models in the physical world, and fully use our cloud-based AI infrastructure. This will significantly improve the self-sufficiency of our brain and brain cells in the energy process. Our investments in AI vehicles also provide distinct advantages in humanoid robot R&D in China's robotics industry.

The IRON, our fourth-generation robot, celebrated at the Shanghai Auto Show will soon be followed by a fifth-generation model powered by Turing chips, significantly enhancing on-device computing capabilities. Xpeng's robot models will surpass traditional industry technological approaches, such as small reinforcement learning models and fragmented systems, by utilizing the VLA architecture of our Physical World Foundation model and taking advantage of our existing cloud AI infrastructure to improve robotic intelligence. as a type of embodied intelligence, humanoid robots will represent Xpeng's third growth curve. We aim to launch industry-leading humanoid robots for industrial and commercial applications in 2026 and evolve rapidly through data from mass production scenarios.

I believe that the strong growth trend will continue in 2025. In the second quarter of 2025, we will complete the five-type chain upgrade or pairing. Then in the third quarter, we will have two new heavy-duty models to start delivering and releasing. I expect the total delivery amount of the second quarter to be about 102,000 to 108,000. The same increase is 237.7% to 257.5%. The income is expected to be about RMB 17.5 billion to RMB 18.7 billion. The same increase is 115.7% to 130.5%. I am confident that this year will not only achieve a growth target of more than half the sales volume, but the company will also move to profit in the fourth quarter to achieve a full-scale free flow. We hope to use more powerful self-discipline to support the continuous investment and innovation breakthroughs in future AI technology and product research.

I'm optimistic that the robust growth momentum will carry on in 2025. In the second quarter, we'll finalize annual upgrades or configuration improvements for five models, with two brand-new major models set to begin deliveries in the third quarter. For the second quarter, we estimate total vehicle deliveries to range from 102,000 to 108,000 units, reflecting a year-over-year increase of 237.7% to 257.5%. Revenue is expected to be between 17.5 billion RMB to 18.7 billion RMB, representing a year-over-year growth of 115.7% to 130.5%. I believe we'll not only meet our goal of more than doubling sales growth this year, but we'll also achieve profitability in Q4 and generate substantial free cash flow for the entire year. With enhanced self-sustaining capabilities, we'll drive ongoing breakthroughs in AI technology and product development.

Thank you, everyone.

I'll now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the first quarter of 2025.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the first quarter of 2025. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were $15.81 billion for the first quarter of 2025, an increase of 141.5% year over year and a decrease of 1.8% quarter over quarter. Revenues from vehicle sales were $14.37 billion for the first quarter of 2025, an increase of 159.2% year over year and a decrease of 2.1% quarter over quarter. The year-over-year increase was mainly attributable to higher deliveries. Revenues from services and others were 1.44 billion for the first quarter of 2025, representing an increase of 43.6% year-over-year and an increase of 0.5% quarter-over-quarter. The year-over-year increase was mainly attributable to the increased revenues from technical R&D services related to the Volkswagen Group, repair and maintenance services, and auto financing services. Gross margin was 15.6% for the first quarter of 2025, compared with 12.9% for the same period of 2024 and 14.4% for the fourth quarter of 2024. Vehicle margin was 10.5% for the first quarter of 2025, compared with 5.5% for the same period of 2024 and 10% for the fourth quarter of 2024. The year-over-year and quarter-over-quarter increases were primarily attributable to the ongoing cost reduction and economies of scale driven by the increase in sales volume, partially offset by the inventory provision and losses on purchase commitment related to the upgrade of certain vehicle models. R&D expenses were $1.98 billion for the first quarter of 2025, representing an increase of 46.7% year-over-year and a decrease of 1.3% quarter over quarter. The year-over-year increase was mainly due to higher expenses related to the development of new vehicle models and technologies as the company expanded its product portfolio to support future growth. SG&A expenses were $1.95 billion for the first quarter of 2025, representing an increase of 40.2% year-over-year and a decrease of 14.5% quarter over quarter. The year over year increase was primarily attributable to the higher commissions paid to the franchise stores, driven by higher sales volume. The quarter over quarter decrease was mainly due to lower marketing and advertising expenses. As a result of the foregoing, loss from operations was $1.04 billion for the first quarter of 2025, compared with $1.65 billion year-over-year and $1.56 billion quarter-over-quarter. That loss was $0.66 billion for the first quarter of 2025, compared with $1.37 billion year-over-year and $1.33 billion quarter-over-quarter. As of March 31, 2025, our company had cash and cash equivalents, restricted cash, short-term investments, and time deposits in total of $45.28 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our first quarter 2025 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time and management will respond. Then feel free to follow up with your next question. Your first question comes from Tim Sal with Morgan Stanley.

Hello, Mr. Guo. Thank you for your question.

I'm Tim Morgan Stanley. I have two questions. The first question is about sales. As we can see, Xiaopeng has been selling more than 30,000 units for six months in a row. Especially in the short term, it has won a lot of new sales forces. So it shows that the company's strategic support is very effective. I would like to ask, because Mr. Xiaopeng just mentioned that our new car production is particularly strong, So my first question is about the volume sales. Because Expan has successfully kept monthly run rate above 30,000 units for six months in a row, outperforming EV startup peers during the low season. Given the strong model pipelines that the CEO just mentioned, Should we expect more significant sales jump in the following quarters? So I just want to get more clarity on the following upside. That's my first question. Thank you.

Thank you. The overall strategy of Xiaopeng's goal in 2025 is to stabilize resources. We hope to build a foundation on multiple comprehensive capabilities. In the second quarter, you will see that we are The second quarter completed five annual revisions. In the revisions, it will definitely be affected in the short term, but it will also be very good for the medium-term. In the later period, I think there will be several trends. The first one will start from the third quarter and see that the new products will continue from the second half of 2025 to 2026. The second point I think is a very important point, which is the further improvement of Xiaotong's AI system capabilities, and from the first stage to the Thank you so much for your question.

First of all, I think it is our performance in the past quarter definitely aligns with our overall strategy of long-term and steady development. And we are doing everything we can to lay good foundations very comprehensively for our future long-term development. For Q2, we expect to actually have five upgraded versions or improvement Facebook versions, which may cause some changes in the market in the mid-term or short-term, but it will be very beneficial for the long-term development of the company. But I would like to actually highlight three things. First of all, starting from Q3, you're going to see our momentum of launching new models even more aggressively going into 2026, and it's going to generate more deliveries. The second aspect is our AI capability and our R&D efforts being translated into AI performance on our cars and also our robots, which will allow us to maintain a leader in the industry and really widening our generational difference between ourselves and our competitors. The last aspect, something that I want everyone to pay attention to, is our quantum electric drive system, which also is going to power our future lineup. Thank you.

Yeah, Tim, it's Brian. Let me just add to what Xiaofeng mentioned. First of all, the steady performance we saw in the previous many months actually also reflects improved performance. operation quality. For example, the first quarter usually are the low seasons for Chinese auto sales, and we maintain still steady growth. And also the second quarter, despite many transitions we need to handle for our refreshments of products, we still see very stable and steady delivery numbers. So those actually, I would say, representative the operation quality that we have. Looking forward, we actually have very strong confidence that with now the many new launches, for example, the Mona Max by the end of this month, and also the next couple months with G7 and P7 launches, all of them we think will be catalysts for further growth. So we believe that in the third quarter, we'll see continued growth in our delivery numbers and hitting historical highs again. And another thing I think I want to also highlight is that also you can look at the new models that we're introducing. Those will represent products in the higher price categories as well as with better gross profit margins. So this also introduced a very, I would say, favorable mix towards our overall product mix. And I'll have James comment on the

Okay, just next question then.

Your next question comes from Ming Li with Bank of America.

各位领导还有小总总,您好。 那我这边也是两个问题。 那第一个问题还是想要请教这个 uh uh uh So for your export business, could you give us the latest guidance for your growth in 2025? And among all the different regions, which area do you see a higher growth? and for the EU zone because they increased the tariff for the EBITDA in China since last year. So right now, what is your current strategy in this market? Thank you.

Hey, Ming, it's Brian. Let me address your question. Yes, indeed, we have seen a very strong international growth and also contribution to our results. both on the top line as well as on the bottom line. It is actually an area we actually are increasing our efforts with investments as well as our team focuses. I would say that this year, our continued focus will be on the European, Middle East, and Southeast Asia, those three core regions. And also, some of the regions we also have launched recently, for example, the UK, Indonesia, as well as, I think, continue the growth we are seeing across a number of the markets that we entered later last year. So I would say these actually are showing pretty balanced overall growth, all reaching triple-digit growth, I would say, in the last quarter, year over year. Going forward, I think we are continuing to expand to additional markets. We're looking at also some of the Other regions that we currently don't have a focus yet, for example, Latin America, as well as some other countries in the Asian region. The issue on the tariff, I think, is something that we are very, very focused on. Clearly, it's having an impact on the profitability of our business, for example, in Europe. However, I think we are committed to build for the longer term We are also looking at ways to reduce the impact of these tariffs through more collaboration with our partners, a change of product mix on the ground, as well as potentially local investments that give us ability to navigate some of these tariff hits. So these are things that we're focusing on at the moment, and I think if there's any further progress, we'll be definitely sharing with you as well as the community.

Thank you, Brian. My second question is related to chips. Because we have been looking forward to Turing chips for a long time, I would like to know if G7, which will be released in June, is the first chip with Turing chips. 那也想了解就是未来我们是否小鹏品牌的这个车系都会搭载这个我们的图灵芯片 那我记得小鹏总之前也提过图灵芯片跟我们自己全能自研的这个软件算法等等会有更好的适配性 那是不是也可以透过图灵芯片降本然后并且就是达到这个百万公里更低的接管率 那至于另外降本的话是不是我们也会考虑就是 So my second question is related to your touring trip. So will G7 be the first model to use the a Turing chip in your product portfolio. And going forward, will all of your XPOM branded EV models use Turing chips? And by using these chips, I believe you can reduce your costs. Will you share the cost reduction benefit with your customers? Yeah, so that's my question. Thank you.

Thank you. My name is Xiao Peng. The progress of the Turing chip is very smooth. Not only in the automotive sector, but also in the automotive service sector, in the warehouse sector, and in the mechanical sector, the progress is very smooth. In the second quarter, some of the cars have already entered the production phase. In the third quarter, the Turing chip will start to increase in size. Then the effective AI computing power of Turing chip, let's compare with the mainstream chip computing power of the current industry, we are now about 3 to 7 times. This is a very strong change. So Turing chip with our physical world infrastructure model and our new model at the local level, we still very much believe in the ability of the entire auxiliary driver. We hope that in the future, I think that's the most important thing. I've always thought that if you want to do L3-level software on a car, that is, the ability of automatic driving software software, is the most important thing in the combination of car and AI. This is a huge innovation change for users. So in 2025 and 2026, we will firmly rely on Turing chips as the basis, including the ability of automatic driving, the ability of automatic driving, and the ability of our self-driving cabin to build all-in-one VLA capabilities. This is what I want to say. So Xiaohong has always been aiming to do high-tech well and then be able to do it in a fair way. This is something we must do. But we also believe Thank you. This is Xiaopeng.

Thank you for the question. Now, when it comes to our touring chip, the development of it has been going really, really well, not only when it comes to the application on our cars, but also in upgrading our autonomous driving capability in our cockpit and across a lot of our models. Currently, everything's going really well. We have already begun our production in second quarter this year, and we expect to mass produce some more models supported or with the touring chip in the third quarter of the year. Now, when it comes to the mass production in a wider scale, we believe that it's going to happen very, very soon because with the development of our chip, we not only will be able to have a stronger and more competitive autonomous driving capability, but also stronger capabilities to support our other products. When it comes to the Turing chip itself, it's AI computing power. Right now, the effective computing power is we are leading the industry because it's about three to seven times the chip computing power in mainstream edge side AI chips, which is very, very competitive, and it's a huge step up of the game. So when it comes to the Turing chip and how it helps us to go into the next level or next stage of the AI world, especially the physical AI world, We are going to leverage our physical world foundation model and also our edge side AI or in-vehicle AI model, which will be very, very capable and powerful to allow us to go into higher level or more advanced level of autonomous driving. We believe that in a very, very near future, we will be able to really showcase our generational potential. lead in this regard. By that time, we're not going to be talking about the human interference within the current, you know, how many miles. We're going to enter the next stage of autonomous driving. And that's when I believe we can really generate benefits and optimize our use experience for our consumers because by that time, we not only will launch our new models with higher and advanced autonomous driving capability, but also leveraging our Smart Cockpit and also localized VLA capability, Xpeng cars will definitely bring to you a completely new experience because our target of the company has always been democratizing high-end technology. we will bring benefits to all of the people and hope that everyone can get access to this fancy technology one day and as soon as possible. And we believe that this new touring chip can help us to do that. Thank you.

Thank you. That's all my question.

Your next question comes from Pingyu Wu with SciTech Securities. Hi, everyone. Thank you for your questions.

I'm Wu Pingyue from China. I have two questions for you. The first one is about Mona. Because Mona Max will be released on 28th, I'm looking forward to it. So my first question is, because Mona has a population of 10 to 15 million people, Thank you for taking my question. and my first question is about MONA. I'm looking forward to the release of MONA-MX, and what is the role of the MONA series in our strategy, and what percentage share of MONA-MX is our target?

Thank you.

This is also a question for us to explore. I believe At the level of 150,000, at present, there is no car that has really been on a broken big model. There is also no car that has gone over 500 horsepower. So at present, the other whole car manufacturers we have seen at this level are basically high-speed or layer memory drivers. We think it's not the full snow version. So the full snow version of this auxiliary driver is at this level. will have a large user base. We are also exploring. We hope that very soon, in fact, in the near future, we can get the real data. What I expect is that the data ratio will be relatively high. Let's take a look at some industry data. There are many companies at the level of 200,000, or between 150,000 and 200,000. Their actual full-blood value of the full-blood version is very low, but Xiaopeng is very high. How high is it at this level? Can it reach 50%, 70%, Thank you for the question.

Now, this is definitely a question that we're going to explore. We're also curious about that as well because when you look at the current market, when it comes to the market segment of 150,000 RMB, there's no real implementation of end-to-end large models or computing power of 500 tops and above. So these available cars are not the so-called full performance models. So we are very excited about MONA and we are very curious about its penetration rate in the market. I definitely have very high hopes for it because of our capability. And when you look across the industry, even for cars between $150,000 to $200,000, currently there's very, very rare so-called full performance version available in the market. So what is the penetration rate going to be, 50%, 70%? We don't know, but we are curious, and we'll try our best to achieve the maximum amount. Thank you.

So you just asked about the Mora series. I think it's easy to say that the Mora M03 is the first car in the Mora series. In 2026, you will see other and more models of the Mora series. The Mora series is aimed at young users who want to be cool and high-quality. The whole self-development is very good. The whole emotional value is high. Thank you.

And also regarding the part of your question that is about our M03 and the MONA series, obviously M03 was our first model of the whole MONA series. And in 2026, we can expect to see more models from this series. And Mona, as a series, it really caters for young people's taste. It needs to look cool and beautiful, provide this emotional value and connection with younger consumers. So we definitely can cater to that. We believe that after next year, you will be able to see the full potential of this series, and it's going to be very impactful across the industry. Thank you.

Thank you very much. And my second question is about the distribution of investment in research. 就是在我们2025年的研发投入里面 或者是这个2025年研发投入的 比如说增量的这个部分 可能多少会投入到AIA的相关的方面 And my second question is about the resurgent development investment And for 2025, to what percentage of the R&D expense will be allocated to AI related areas or to what or how much to the increase of the R&D expense will be allocated to AI related areas? Thank you.

Thank you. This is James. So I'll answer your question regarding the overall R&D expenses for this year. So if you look at our total R&D expenses in 2024. It's around $6.5 billion. In 2025, we have guided around $8.5 billion of full-year R&D expense, and this remains unchanged. I would say the increased R&D expenses, a good amount of that will be spent on AI-related activities, and that would primarily help us to improve our computational capability on a cloud basis. that will both, as Xiaopeng mentioned earlier, be applied on the AI vehicle autonomous driving training as well as humanoid robot line as well. Obviously, there are other areas that we will continue to invest, include smart cockpit equipped with local VLA features that will allow us to increase our capability on multi-language voice command interaction function as well. And we should be able to also personalize our customer experience with more enhanced capability. Other than AI, obviously, we will continue to invest on the vehicle basis. As you know, we will have additional vehicle models that will be launched this year and into 2026 as well to enhance our product portfolio that will help us to complete our portfolio in the long term.

好的,感谢管理层。 Your next question comes from Bin Wang with Deutsche Bank.

谢谢领导,我有两个财务的问题。 第一个问题是关于我们在一季度中有很多的政府补贴,什么是政府补贴的来源? 第二个就是不是有一个万分损益,这个万分损益的来源。 First of all, I've got two financial questions. The first one is about your government subsidy in the first quarter. What's the reason Java is such a big government subsidy? Meanwhile, you actually used the bookings of the FX Games. Can you elaborate what Java's FX impact? Thank you.

Hi, Ben. This is James. So let me clarify. So in the first quarter, we did receive... some level of, let's say, regulatory subsidies, as well as tax rebates, tax handling fees, refunds, things like that. The recognition of those revenues is based on the actual receipt of the cash proceeds which occurred in the first quarter. Now, this is in the nature of, I would say, cash collections into the next couple of quarters. I'm not sure will continue to be benefited from this type of revenue recognitions. So that is on the other income side. You also asked a question about the FX movement in the first quarter. This is primarily driven by our business in Europe. We have a pretty sizable, I would say, deliveries. We actually delivered more than 10,000 units in Europe over the course of last year. and we are exposed to Euro from a revenue perspective. The strength in Euro in the first quarter resulted in a portion of FX gain in the first quarter, but we've seen that to circle back a little bit in the recent months in April and May, but we'll continue to monitor that exposure and be able to control our exposure to Euro and not to ensure that FX impact through our exposure is not a surprise going forward.

Thank you. The second question is about the second quarter AST and margin guidance. It seems that you have a better product mix in the second quarter because you have a smaller proportion than for molar M03. Can you provide guidance for the second quarter AST and gross margin? Thank you.

Sure. This is James again. From a gross margin perspective, so first of all, I think we've observed we have achieved a seven consecutive months vehicle margin improvement. This is primarily due to our cost reduction efforts as well as achievement of certain levels of economies of scale. And then looking into Q2 and beyond, what I would say is there are still several areas we see that can help us further improve our vehicle margin. The first is continuing the product mix, as you mentioned, as we introduce new models Even with the model year changes on G6 and G9, we've seen healthier margin compared to the old models. And this in line will also help us to further higher our average sales price. What I would say is the ASP you've seen in first quarter is probably the lowest throughout the year. We will continue to sell better product mix to help us increase average sales price. in the following quarters into 2025. The other thing that we continue to see is the material cost reduction through our supply chain optimization. Lastly, based on the volume projection and higher volume potentials in the third and fourth quarter, we should be able to achieve higher scale, which will help us to lower allocations and improve vehicle margins as well. With all of that, we are pretty confident at this point that going into second half and into Q4, we believe that our total company gross margin should be able to get close to the high 10s level to support us eventually achieve profitability in Q4 as we communicated earlier. Thank you.

Thank you very much. Thank you.

Your next question comes from Zhao Yimei with Jefferies.

Thank you for accepting my question. I have a question about robots. We can see that IRON has a high level of attention at Shanghai Expo. I would like to ask the management team what advantages do we have in terms of cooperation between robots and car manufacturers? And do we have a specific goal in terms of mass production? My question is regarding the humanoid robots. We noticed that IRON has received a lot of attention at the Shanghai Auto Show. How are we going to leverage our existing know-how from autonomous driving to robotics? What are the advantages of our products? And also, do we have a specific goal for the mass production of humanoid robot products? Thank you.

Thank you. I'm Xiao Peng. Yes, the robot is actually operating in a completely independent center inside of us. So, it has to do with Xiao Peng's overall ability. For example, the whole EEA structure that you just asked about is done by our robot EEA structure, which is responsible for the EEA structure of our equipment. The joints of the entire robot are done by our entire Xiao Peng's three power teams. The entire machine, including the spine, the small brain, and the big brain, are made by Xiaopeng's machine team, the automated price team, and our team. The chip is also made by Xiaopeng's self-proclaimed chip team. So from the organization, to the infrastructure, to the cloud, in fact, we think there are nearly 70% of the same source. Of course, the machine and the car, because they are not the same on the whole body, this will lead to a difference in part of the ability. So those are certain personalization. Help me translate this part first. Thank you.

Thank you. So basically robots or robotics, robots development, they are operating as an independent center within the company, but it will leverage our overall in-house full stack R&D capability. For example, the EEA of our robots are being developed by the EEA team of autonomous driving of our car department. And also the joints within the humanoid robots are being developed by our power chain team at Xpeng Motors. And also the other parts, for example, the spinal cord of the humanoid robot, the cerebellum, the cerebrum, which is the larger brain of the humanoid robot. I mean, everything combined is being developed by both the robotic team and also our autonomous driving, intelligent driving team. So I would say, well, in addition to that, also our chips. We leverage the turning chip capability when it comes to developing our iron or humanoid robots. So I would say 70% of the development among our humanoid robots are coming from the same source as autonomous driving, our cars. Now, obviously, overall, these are two different products. They have different metrics, and so they do have different differences when it comes to their capabilities and features and form factors. So there are differences.

我觉得小鹏跟其他基层公司有很多非常大的差异。 例如我们是以数据为导向去重新 to build a mechanical structure system. For example, in hardware, software, and in the underlying chip and operating system, we use super-strength to do things. This will make the logic of the development of small and medium-sized machines different from the one seen in the industry. We expect to enter part of the production scene in 2026, I think XPeng is very different from other humanoid robots or robotics companies.

First of all, we are data-driven. We redefine how we should build a humanoid robot. Also, we have chips that we are developing in-house. The operating system we can develop in-house. And we also have full-tech self-development capability of our hardware and software. From that point of view, we are really guided by a super strong coupling capability to do things, especially when it comes to developing new products such as humanoid robots. So we expect to actually by 2026 going into a certain percentage of mass production capacity and can quickly enter a stage of OTA iteration. We also expect to actually bring forth some very surprising and brand new innovative products to the market, which will look very different from what we can see right now available in the market.

Thank you. Thank you. That's very helpful.

So our next question comes from Lujia with BOCI. Hi. My first question is regarding the vehicle margin in Q1. As we see that vehicle margin is negatively impacted by some inventory provision and the loss on purchase commitment related to some old models. Wondering if excluding these, what our core vehicle margin comes in? In future, if this impact will persist? So we will answer your first question first.

Thank you. This is James. So yes, we do recognize some level of purchase commitments. As we change some of our models, one of the things you probably have seen from the media is that we have reviewed the very next generation of P7, which the Outlook design has received very well feedback from the market. So that's part of the recognition that we have done in the first quarter around the current generation of P7. We also have recently launched changes in GNI. These have been included in the purchase commitments as well. Overall, I would say the impact of these in the scheme of things is relatively small. It doesn't change the overall trend of our margin improvement for the past seven consecutive months. What I would say is looking into the next couple quarters in 2025, I wouldn't expect the purchase commitments related to our model changes is going to be significant, so you can take that in your consideration. What I would focus is, as mentioned earlier, our vehicle margin, given our continued cost reduction, continued climbing of higher economy of scale, as well as the product mix improvement, we forecast vehicle margin to steady growth in the following quarters in 2025. Thank you.

Thank you. So my second question is that looking forward into second half of year, we will go upscale again by launching more high-priced models. how measurements get prepared for our premierization? Thank you.

谢谢,我是小鹏啊。 在小鹏的在整个的体系里面的话呢, 我们看到我们现在汽车是在十万到四十几万之间, 我们都有车型的整个的规划。 那么其中波罗系列的主要在十到二十万之间。 那么在... About 180,000 to nearly 500,000 This range is in Xiaopeng The range in the entire system So from this year's third quarter to 2026 We will see including Xiaopeng including Mola There will be constantly new cars in this system I think in the back of the car I think there are a few characteristics yesterday I think we hope its appearance Including the internal and external shapes will be much better Everyone will see us in the third quarter The new PG is one of them 我们也非常相信小鹏会在整体车、动力、自驾、座舱、工艺里面,我觉得这个是小鹏在最近的三年里面我们会在做非常多的研发,把细节、框架、功能、性能、质量、成本、服务、然后用户对客户的看法, Our customer's view, our user's view, and our company's view will be integrated into it. I am still very confident. You see, from the beginning of last year, we launched the X9 to the P7 Plus in the second half of last year, to this year's Q3, to this year's Q4 series of products. I am very confident that we will be able to reach the top 3 or even the top 1 in every section. And there are quite a few models here that we will later turn into dual power, that is to say, there is pure power. Thank you for the question.

This is Xiaopeng. When it comes to our targeted market segment, I would say our current lineup basically feature around 100,000 RMB to 400,000 RMB, in which Mona is around 100,000 to 200,000 RMB. But basically across 180,000 to 200,000. 500,000 RMB will all be our target market segment. So starting from Q3 going into 2026, you can expect to actually see a lot of our new product launch that actually have brand new capabilities across not only the exterior, the design of the car, but also the smart cockpit, overall autonomous driving capability. And people will be surprised. And I think a lot of people are going to really love our new launches. And so, for example, as you can see from our brand new P7 and also going, you know, which will be launching to three, we are going to actually integrate new capabilities when it comes to the whole vehicle, the powertrain, the architecture, the smart cockpit, and also the craftsmanship. I think all of these areas are something that we're going to focus on in the coming three years. And we believe such an improvement and overall of our capability being reflected in our lineup will showcase how great a company Xpeng really is. Also, you know, from our past performance in recent months and quarters, you can also see that these improvements have been well accepted by the market. And we believe that no matter what market price segments that we're targeting in, we are very confident of going into at least the top three, if not the top one, about selling models. In the future, we also are going to launch not only BEV models, but also super electric or dual energy vehicles as well. So we're very confident going into a premium market segment.

Thank you. Our next question comes from Nick Lay with JP Morgan.

Hello, everyone. China for China. My first question is pretty simple. We saw quite a few foreign brands, in particular from Japan, launching what they call in China for China, which localize, supply local calls, and very competitive price. And we spoke to Total Honda in the past few days, and they indicated that in China in the next few years, they are going to launch a few more such products. So I'm curious to understand from Xiaopeng's standpoint, how should we see the competition dynamic moving from here?

Thank you. Yes. We also see the same changes. I think this is a change of competition that starts from China itself and enters the world. I think it is an inevitable trend. But I am very firm. I think the technology attribute of a car company will be higher and higher. So compared to the original manufacturing attribute, the relative proportion will decrease. So the car company will definitely experience from high-level research to single-phase comprehensive research to multi-phase integrated research process. In the end, no matter how well the marketing is done, how well the sales are done, The most important thing is that the product is suitable for the customer, the user, and the market needs. So I am very happy that we have seen a lot of changes in the company. We are learning from them, their advantages. I think they are also learning from us and other people, some of our characteristics. I think this is a process of mutual integration. But I still want to say that Xiaopeng is entering from a multi-layer comprehensive, this comprehensive research and development into a comprehensive research and development of governance. Thank you.

Yes, we also observe the same trends from the market. I think competition are getting more and more aggressive from not only domestically, but also internationally as well. I think this is something that we will continue to see, and it's something that is destined to happen. But we're very firm on our position, which is that car makers will need to have their technological capability in order to win in such a competition. And there will be be more and more impact on the market when you have more powerful technological element, whereas your manufacturing capability or capacity will matter less and less. And also another trend that I want to highlight here is that automakers are going to sort of convert from an integrated R&D format to a model of maybe a single direction full-stack R&D of all resources to multi-aspect fusion integrated R&D capability. And I think it will take time to happen, but we are pretty sure that it's going to take place. So ultimately, no matter how good your sales and marketing teams are doing, you need to be able to deliver the products that are popular and that resonates with the customers and fulfill user demands. So we're very happy to see that a lot of companies are changing their traditional way of doing things. We are learning from them. We believe that they are learning something from us as well. And I think during this process, we also are able to change ourselves into, you know, from the full-stack R&D kind of way of doing research and development to a fusion integrated R&D ecosystem. entering a matrix of different R&D aspects. We believe that it will allow us to become even stronger technologically. And by that time, integrated companies with only integrated R&D capability are going to struggle, especially in the mid- to long-term competition. Thank you.

OK, thank you, Mr. Peng. My second simple question is that I am very excited to see the public display a few new models at the car show. I think this should be the platform that I have been working with for a long time, and it will be released in the first quarter of this year. There will also be the cooperation of the EEO platform in the future. We can quickly update the cooperation with the public. In the future, are there any more important milestones that you can share with us? My second question is a really quick update on our partnership with VW. We saw a major model from VW at China Auto Show. And any very quick update on the new milestone that Chairman can share with us? Thanks.

Hi, Nick. It's Charles. I think the collaboration with Volkswagen has progressed at a very fast speed. And so far, we meet every milestone. And we are currently probably less than one year to SOP of some of our products. And as you rightly pointed out, I think that our partner Volkswagen unveiled some of the models. For example, one model based on our G9 platform, and also there are multiple models that will be based on the EE architecture that we are jointly developing. So I think that all these models will start to come to market starting from early next year. So, so far, I think that we are meeting all the milestones. And I think looking forward, I think that we continue, we'll work with our partner to jointly develop more products. And also, we're also exploring potential new opportunities that can bring win-win value to our partnership.

Thank you. That does conclude our question and answer session. Now I'd like to turn over the call to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Exxon's investor relations through the contact information provided on our website or the Pearson Financial Communications.

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