XPeng Inc.

Hello, ladies and gentlemen. Thank you for standing by for the first quarter 2026 earnings conference call for Explan 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. Alex E., Head of Investor Relations and Capital Markets at the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to EXPON's first quarter of 2026 earnings conference call. Our financial and operating results were issued via news file services early 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 our co-founder, chairman, and CEO, Nick He Chang-heng, vice chairman and president, Dr. Brian Gu, Vice President, Mr. Charles Chang, Vice President of Finance and 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 call will be available in the IR section of our website. Before we continue, please know 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, Forelooking statements involve inherent risks and certainties. As such, the company's results may be materially different from the views expected today. Certain 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 EXPO's earnings press release and this conference call include the disclosure of unaudited gap financials as well as unaudited non-gap financial measures. EXPO's earnings press release contains a reconciliation of the unaudited non-gap measures to the unaudited gap measures. I will now turn the call over to our co-founder, chairman, and CEO, Mr. He Xiaopeng.

Please go ahead. Hello, everyone. In the first quarter of 2026, we will change the company's Chinese name from Xiaopeng Car to Xiaopeng Group. This marks our withdrawal from a smart electric car to a physical AI company. In the system of Xiaopeng Group, the business of smart electric cars will grow rapidly, continue to contribute to the positive profits and strong progress, and support our research and development discussion towards physical AI. Today, I believe that the physical AI application is on the verge of breaking down from mass production to scale. We have already verified that Scaling.org is also applicable in the physical AI, as well as in the automation and infrastructure fields. Now, we have become extremely clear on the path of breaking through through major engineering and research, so at this time, we will choose to firmly increase AI-related research and develop physical AI. I believe that physical AI applications will be a global strategic opportunity in the next 10 years. I will lead the team to complete RoboTaxi and energy generation production this year, and find a left-hander for commercial production, and transform leading physical AI technology and applications, including automatic driving, energy generation, into new income and profit-making devices. Hello, everyone.

In the first quarter of 2026, we formally changed our official Chinese name from Xpeng Motor to Xpeng Group, reflecting Xpeng's transformation from a smart EV company to a physical AI company. Within the Xpeng Group ecosystem, our smart EV business will drive rapid growth, consistently contributing substantial profitability and robust cash flows. Today, physical AI applications stand on the cusp of transforming from mass production deployment to explosive growth at scale. We have proven that scaling law holds true in both autonomous driving and robotics, making the path to breaking technological ceilings through accelerated R&D investment undeniably clear. That is why, at this pivotal moment, we choose to bet firmly on physical AI with increasing R&D on AI. I believe physical AI applications represent one of the most significant global strategic opportunities of the next decade. This year, I'll lead the team to bring robotaxis and humanoid robots into mass production while also building the commercial ecosystem around them. Our goal is to turn our leadership in physical AI technologies, including our next-gen intelligent-assisted driving system, into a powerful new engine for revenue and profit growth and ultimately create substantial commercial value.

First, let's talk about the first quarter. Due to the huge fluctuation of the domestic car market, our delivery volume is 62,682 units. But what I want to share with you is that we are not only concerned about the scale when there are challenges in the market, but we are more concerned about the balance of sales and operating quality and how to develop for the long term. I am very confident that every quarter of sales in the coming year will be compared We have four new SUV models that will be released and delivered in the next six months. The origin of these models from the definition of product is the global model. I believe that Xiaopeng will be the most powerful

In the first quarter, amid broad market volatility in China's domestic new energy vehicle market, we delivered a total of 62,682 vehicles. Even in a market downturn, our focus extends beyond scale. We also placed greater emphasis on balancing delivery volume with operating quality, maintaining a long-term perspective. I'm very confident that deliveries will grow substantially quarter over quarter in each of the remaining quarter this year. I expect Q2 deliveries to reach between 100,000 and 106,000 units, reflecting quarter over quarter growth of over 60%. Starting with the GX, we plan to launch and begin deliveries of four all-new SUV models within the next six months. These models have been defined and designed from day one as global vehicles, I believe XPeng is entering the strongest delivery growth trajectory in our history.

今年4月份,2026款小鹏的Mola M03上市, 我们推出来搭载图灵芯片的全新的Max版本, 以及支持第二代VIA的OCR-SE版本。 这标志着我们完成了所有车型向图灵芯片的申请。 So we have achieved a strategic equality and a technological equality through hardware and software in the entire field from chips to AI. Even on the M03, we have more than 85% of users who chose Max and Ultra S1. Similarly, the M03 of Mora has been stable for 20 months in the A-level pure electric car market. So in the A-level car market, our scarce extreme technology

In April 2026, we launched the 2026 Xpeng Mona M03, including a new max version powered by our Turing AI SoC and an Ultra SE version supporting VLA 2.0. This also marks the completion of the Turing AI SOC upgrade across our entire model lineup. Through our full-step in-house R&D capabilities from SOC to AI, we have made advanced computing power and technology more accessible. As a result, more than 85% of Mona M03's customers chose the Max or Ultra SE versions. The Mona M03 has remained China's top-selling A-class pure electric sedan for 19 consecutive months. With its leading technology and stylish design rarely seen in the A-class segment, Mona has become the brand of choice for young users. We're confident that the Mona lineup will continue to achieve sustained success not only in China but also in overseas markets.

在5月20号上市的GX It is a flagship model built in the L4 era. It is also the first Chinese prototype with hardware, software, and all-in-one. It will be a new flagship model that will continue to expand in the SVUV market. It is a flagship version with a price of more than 350,000 yuan in GX's first-hand land. It is over 80% of the price, and it is one of the most popular products in the high-end luxury car market. The luxury of GS is not only in design, but also in leading technology and extreme safety. It redefines the luxury and standard of technology. In the future, I will do my best to improve the production capacity of GS with our supply chain partners, so that users can improve it earlier. At the same time, in the second half of this year, the three models that we will launch will all be equipped with the second VLA of Turing chips, and will have a dual-cooled car, and will be launched and sold globally. With the size of GS and the subsequent three new cars, I believe that Xiaopeng Group's quarter delivery volume will grow significantly. I am particularly happy that GS has succeeded in the key part of Xiaopeng Group's brand promotion. In the second half of the year, we will continue to launch a series of cooler technology products, including energy-saving cars and flying cars, and continue to improve our brand power and profit.

On May 20th, we launched the GX, a selection model built for the L4 era. It is also China's first pre-installed mass-produced robot taxi model with full hardware redundancy, representing a new starting point for us to continuously expand our share in the SUV market. Among the initial firm orders for the GX, the ultra-flagship trim priced above 350,000 RMB accounted for over 80%. making the GX one of the most sought-after products in the premium luxury vehicle market. The GX's luxury is defined not only by its design, but more importantly, by its leading technology and ultimate safety standards, setting a new benchmark for tech-defined luxury. I'll spare no effort to work with our supplying chain partners to ramp up GX production capacity and deliver vehicles to customers sooner. The three new models launching in the second half of this year will all be equipped with Turing SoC Power VLA 2.0, featuring one vehicle, dual energy capabilities, and will be launched for global markets. With deliveries of the GX and the upcoming three new models ramping up, I'm confident that X-Lane Group's quarterly delivery volume will grow significantly quarter over quarter. The success of the GX must be a key step in elevating the X-Lane Group brands In the second half of this year, we'll build on this momentum by launching a series of technology products at high price points, including humanoid robots and flying cars, further strengthening our brand equity and profitability.

In 2026, we will greatly accelerate the investment and development of our international business through more high-tech products and continued in-depth localization. In April, the P7 plus model launched overseas delivery. Our first overseas monthly sales broke through 6,000 units. Starting from the second quarter, Xiaopeng's international business income contribution is expected to exceed 20%. In the second half of this year, with the delivery of our four global new models, and all the new models behind Xiaopeng are global models, our goal is to achieve overseas monthly sales in the fourth quarter and continue to exceed 10,000. the overseas sales will increase by more than a third. Because we have already considered the international market from the beginning of this year, we will greatly slow down the time gap between overseas and domestic market. We will speed up overseas sales and delivery. We hope that the overseas market will be regarded as a long-term localized enterprise. In 2026, we're accelerating international expansion on the back of a growing lineup of high-quality technology-led products and deepening localized operations.

The P7 Plus's overseas delivery launch in April pushed our monthly international deliveries above 6,000 units for the first time. Starting in Q2, international revenue is expected to exceed 20% of total revenue. In the second half of this year, we plan to introduce four models for global markets. Starting with the GX, every upcoming X-ray model will be built as a global vehicle. Our target is to achieve sustained monthly overseas deliveries of over 10,000 units in the fourth quarter and to more than double full-year overseas deliveries. Starting this year, by embedding international market needs and certification requirements early in the vehicle deployment process, we will significantly shorten the time gap between domestic and overseas launches and accelerate our overseas sales momentum. Our goal is to be recognized as a company committed to long-term localized operations in every market we operate in, building stronger ties with customers and partners across each region. To that end, we have established three localized production bases overseas since last year, and our Munich R&D Center has become our fastest-growing research hub.

This year, in April,

The second-generation VLA car-type auxiliary driving system led by Xiaofeng broke through 50% for the first time. They made the high-end self-driving car gradually become a product of high-end and high-end users. The cross-generation VLA 2.0 became one of the most important reasons for choosing Xiaofeng, and it also established a new customer base in the market. The second-generation VLA made us see two huge changes. The first is to enter from the original end-to-end mode The second point is that users can become a new change that can be used and used well in the future. So, the success of the first version of the second generation of VIA has verified the ability of the entire ability to expand data and expand the number of parameters of the model. We also saw that the physical world We will continue to add and invest in SkyUp in the future. In the third quarter of this year, we plan to launch a new version that will greatly improve the top-of-the-line model capability and accelerate our leading advantage in autonomous driving. I believe that the top-of-the-line technology of the second generation of VIA is high, and the high-definition map is very strong. We started by considering how to deploy it to the overseas market and support the前庄量产的robotizing,

In April, ADAS mileage penetration on VLA 2.0 equipment to expand vehicles surpassed 50% for the first time, signaling that advanced intelligent driving is becoming a core must-have feature for users. VLA 2.0, with its generational leap in intelligent driving, has become a key reason customers choose Xpeng, creating a strong and lasting user mindshare mode in the market. The success of VLA 2.0's first version also reinforces our belief that scaling data and model parameters can drive meaningful breakthroughs in real-world AI capabilities, strengthening our conviction in the scaling law for physical AI. we're set to accelerate our investment in scaling up. With the upcoming release scheduled for Q3 this year, we'll substantially elevate our upper limit of our model's performance, further widening our lead in industry. BLA 2.0 features a high-capability ceiling, operates without HD maps, offers exceptional ability to generalize, enabling rapid deployment across overseas markets. while supporting pre-installed mass-produced RoboTaxis at scale. Our goal is to become the understated number one in the domestic market and take a critical step towards true global leadership in L4 autonomous driving, including RoboTaxis.

我很欣喜地看到, 联合国正在牵头制定有关全球自动驾驶法规, 也就是DCAS监管框架正在加速落地。 Our most important international market, Europe, has launched a high-end self-driving technology certification. At the same time, our second-generation VR is being tested in Europe. I hope that the second-generation VR will be able to start in more countries next year to get supervision and permission, and to be able to fully promote it to our customers. After our recent research on global customers, we found a very big change, which is the global users' high-level self-driving system. I'm pleased to see

the accelerated rollout of the UN-led DCAS regulatory framework, with Europe, our most important international market, now beginning to open certification pathways for high-level ADAS. Our VLA 2.0 is currently being tested in Europe, and we hope to receive regulatory approval in multiple countries next year, allowing us to deliver the technology to overseas customers and begin the global generalization of our VLA 2.0. Recent research shows that global users' demands for assisted smart driving system, VLA, and full-scenario multilingual conversational system, VLM, are far stronger than we had anticipated. In the second half of 2026, XPeng will lead and accelerate the intelligent transformation of China's automotive exports. In the process, I see substantial commercial opportunities emerging on both the B2B and B2C fronts.

我们配备的全龙鱼的GX车队,当前已经在广州进行公开道路的L4测试。 我们的目标是在今年三季度在广州启动载客的Nobo Taxi示范运营服务。 GX车型的L4及全龙鱼的硬件以及软件,它是由车型结合的,因此在之后会下放到我们其他的任何一款车型上,包括Mola系列。 我相信我们的RoboTaxi 无论从泛化能力到成本的scale的能力 都是传统RoboTaxi 公式难以企及的 那么基于这些优势 我们希望在未来 打造一个多方共赢的RoboTaxi生产 我们希望与运营合作伙伴 共同创造和分享产业家在第二代VA 海外落地之后 我们同时会积极探索 将小鹏之后的经济型的RoboTaxi 部署到海外和国内的市场

Our fully redundant GX fleet is already undergoing L4 testing on public roads in Guangzhou. We aim to launch pilot passenger operations for our robotaxi service in the city in Q3. The GX's L4 full redundancy hardware and software are decoupled from the vehicle platform, making them deployable across our entire lineup, including the Mona series. I believe our RoboTaxi offering has a clear edge over incumbent RoboTaxi companies in terms of ability to generalize, cost efficiency, and scalability. These advantages position us to build a multi-stakeholder ecosystem where operating partners and Xtank work together to create and share commercial value. Following the overseas rollout of the LA 2.0, we'll also actively pursue bringing Xtank's cost-effective RoboTaxi solutions to overseas and domestic markets.

At the same time, the small and medium-sized Elon, facing the mass production version of the software and hardware development, is currently going smoothly. It is about to enter the ETR stage of software and hardware integration. As for the mass production version of Elon, we are developing and designing it according to the safety and reliability of the vehicle class. We have a large number of excellent car components to assist our partners. We have recently completed the development of the self-proclaimed Linqiaosou. The new generation of Linqiaosou is not only very flexible, but also the cost has dropped significantly. We have built a multi-dimensional data system and model for the older and younger generation of training machines. The current data volume is increasing rapidly, and the training skills of the model are significantly improved. the only mobile company in China that can produce all-in-one hardware. From chips to physical models, from data production to model pre-training and post-training, from joints to handrails, from the new generation of operation control to VLA, VLM, VLT, in-depth hardware development, and cross-reference integration and innovation. This is the ability of iLand to have higher performance, high quality, and all-in-one production. 我期待在三季度 会让大家看到新一代 爱朗的机器人的相关的演示 它不仅能够多元沟通 具有理人的全运动姿态 还可以逐步开始执行专业的工作 我们目标是在今年年底前 实现爱朗的量产 并且首先我们在小鹏的门店 进行私商用 在明年我们会对中国和海外的 商业客户进行交付 The software and hardware development for our mass production humanoid robot, IRON,

is progressing smoothly and it's about to enter the ETQ software hardware integration stage. The mass production version of IRON will be built to automotive grade safety and reliability standards and many of our existing automotive supply chain partners have also become component partners or suppliers for IRON. We have also recently completed development of our proprietary next generation dexterous hands which is significantly more agile and substantially lower in cost. We have built in multi-dimensional data systems to train our own brain and cerebellum models with our training data and scaling rapidly and outcomes improving significantly. XPeng is the only robotics company in China with full-stack in-house R&D capabilities of both hard and software. spanning SLC, statistical AI, foundation models, data generation, to pre-training and post-training, joints to desk storage hands, and next-generation motion control to VLA and VLN. Through deep in-house software and hardware R&D and cross-domain innovation, IRON will deliver a more refined design, higher quality, and more comprehensive capabilities. I look forward to showcasing the next-generation IRON in the third quarter. featuring multilingual communication, human-like full-body motion, and gradually autonomous execution of professional tasks. We are targeting to achieve mass production of RM by year-end, with its initial trial commercial deployment in expansion rooms, followed by commercial customer deliveries in China and overseas next year. I believe that once human or robots reach mass production, the data flywheel will drive technology iteration and cell growth at a pace that outstrips what we saw in EVs. Starting next year, revenues from humanoid robot hardware and AI models are expected to emerge as a key driver for revenue and growth for XN Group.

At present, Xiao Peng is fully promoting VLA2.0 models plus Turing chips and Robotastic, and the global expansion of the application of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and the global expansion of the three major physics AI applications and

Xpeng is now fully committed to advancing the mass production and global expansion of three physical AI applications, DLA 2.0, RoboTaxi, and humanoid robots. We firmly believe these three areas present enormous potential in terms of both commercial scale and investment returns. Looking at our roadmap, the B2B market will be the first to take off, while international markets will generate greater commercial returns than domestic markets. Backed by the deep experience we've gained through our partnership with Volkswagen, along with a business model already proven through mass production, Xpeng is well-positioned to execute this next phase of growth. We are making the large-scale commercialization of physical AI a company-wide strategic priority and will move decisively towards large-scale deployment.

预计2016年二季度小铜的交付量约为10万到10万6千台, 环比增长59.5%到69.1%, 收入预计约为人民币196亿元至208亿元, 环比增长50.4%至59.6%, 我相信我们的销量已经走出了行业淡季的底部, 并且随着四款全球车型的交付, 以及产能的爬升,以及国际业务的快速过仓, 在三季度,四季度,小宏将会不断冲击更高的销量目标。 与此同时,我们的经营质量也正在显著改善, 我们的付款账期在新造车市里处于领先水平, Our margin rate will continue to increase due to the pressure of cost and the scale effect of automotive business. I look forward to Xiaohong Group's decisive lead through physical AI technology to build a new business model with scale, networkization, and群 effect. In the future, automotive, robotics, and machine learning will all be a huge difference in the physical AI system, whether it is hardware sales scale or AI model.

For the second quarter of 2026, we expect deliveries of 100,000 to 106,000 units of 59.5% to 69.1% quarter over quarter, with revenue of 19.6 billion RMB to 20.8 billion RMB. up 50.4% to 59.6% quarter over quarter. Having passed the seasonal trial, we are entering a period of strong growth driven by four new models, increasing production capacity and expanding international business. In the third and fourth quarters, we'll continuously strive for higher sales targets. Concurrently, our operational quality will improve significantly. Our supplier payment terms remain at an industry-leading level. Gross margins demonstrate strong resilience against cost pressures, and economies of scale in our EV business continue to strengthen. I expect that the Xpeng Group to build an entirely new business model anchored by our absolute leadership in physical AI technology with scale and network effects. Both Xpeng vehicles Robotexis and humanoids will become highly differentiated physical AI agents. Moving forward, both the hardware sales scale and recurring AI model revenue are poised for high-speed expansion, unlocking immense returns on our AI R&D capital.

Thank you, everyone. Next, we have our financial VP, James, to introduce to you. We are the first financial group in 2021.

Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, James, who will walk you through our financial performance for the first quarter of 2026.

Thank you, Xiaofeng. Now, let me provide a brief overview of our financial results for the first quarter of 2026. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were $13.03 billion for the first quarter of 2026, a decrease of 17.6% year over year, and a decrease of 41.4% quarter over quarter. Revenues from vehicle sales were 11 billion for the first quarter of 2026, a decrease of 23.5% year over year, and a decrease of 42.3% quarter over quarter. The year over year and quarter over quarter decreases were mainly attributable to lower vehicle deliveries. Revenues from services and others were $2.03 billion for the first quarter of 2026, representing an increase of 41.2% year-over-year and a decrease of 36.1% quarter-over-quarter. The year-over-year increase was primarily attributable to the increased revenues from technical R&D services and parts and accessory sales. The quarter-over-quarter decrease was primarily due to the reduction of technical R&D services revenues following a significant milestone catch-up in the prior quarter, as well as no revenue contribution from carbon credit trading in the current quarter. Gross margin was 20.6% for the first quarter of 2026. compared with 15.6% for the same period of 2025 and 21.3% for the first quarter of 2025. Vehicle margin was 12.1% for the first quarter of 2026, compared with 10.5% for the same period of 2025 and 13% for the fourth quarter of 2025. The year-over-year increase was primarily attributable to the cost reduction and improvement in product mix of models. The quarter-over-quarter decrease was due to higher unit vehicle costs resulting from increased memory chip and battery related costs. R&D expenses were $2.91 billion for the first quarter of 2026. representing an increase of 46.8% year-over-year and an increase of 1.1% quarter-over-quarter. The year-over-year increase was mainly due to higher expenses related to the development of new vehicle models and AI-related technologies as the company expanded its product portfolio to support the future growth. SG&A expenses were $1.88 billion for the first quarter of 2026, representing a decrease of 3.2% year over year and a decrease of 32.5% quarter over quarter. The year over year and quarter over quarter decreases were primarily due to the lower commission to the franchise stores. As a result of the foregoing, loss from operations was $1.87 billion for the first quarter of 2026, compared with $1.04 billion year over year and $0.04 billion quarter-over-quarter. Net loss was $1.78 billion for the first quarter of 2026, compared with net loss of $0.66 billion year-over-year and net profit of $0.38 billion quarter-over-quarter. As of March 31, 2026, our cash position was $42.09 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 first quarter 2026 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 cancel your request, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, 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. Management will respond, then feel free to follow up with your next question. Your first question comes from Tim Hiziao with Morgan Stanley. Please go ahead.

Hello, I'm Tim from Morgan Stanley. Thank you for accepting my question and congratulations to the company's new GX or market hotline. I have two questions. The first question is about the new GX. We saw the GX that was listed a week ago, which is a new hot sale. So I would like to ask Guan Yicheng, how much is our overall sales order? And what is our goal for this stable sales? What is the level? And what do you think of the model rate of this single car? My first question is about GX, because we noticed the new model has been selling very well since its launch on May 20th. Could management team share the current order book, your steady-state sales volume target, and how we should think about the vehicle gross margin?

Thank you.

To be honest, Jason has exceeded our expectations and performed very well. We have seen some interesting data. For example, the flagship version of our pure electricity has been waiting for more than 30 weeks. And we are still in a hurry to move to the Ultra. So, in other words, at the beginning, our flagship version's orders exceeded 80% to this day. The flagship version is our highest proportion of small size models. But I also saw some very interesting data, including, for example, the Max version. The Max version is less than 5% on the GS, which is smaller than we thought. The true data is less than the power supply at the beginning, but it is gradually getting closer to the power supply, especially as we have recently strengthened the power supply in the areas that we are not good at in the north and west. we saw a very interesting phenomenon. We expected JS to become the top three in the high-end, large-scale, and mass-sales market, and hit the top 300,000 mark. To be honest, we are trying our best to promote supply chain support and potential growth, but we also hope to launch high-quality services and quality. to stabilize GS's long-term delivery data. So, in other words, I am very concerned about GS's sustainability. So, GS is a flagship as a small company. In fact, its horsepower is very good. When I talked to my media friends before, I said that only one SKU's horsepower is worse than we expected. In fact, it is better than our overall horsepower. Sorry, I have to translate.

Thank you for the question. Now, honestly, the performance of GX cells is above our expectation. It's been performing really well. We also observed some interesting data regarding the cells numbers of GX as well. Currently, if you look at the BV structured version, right now the lead time has surpassed 30 weeks. Even under the expectation of converting more to the ultraversion, it's still growing very, very fast. On the other hand, our flagship model with initial orders over 80% of the total orders continue to grow in the mix as well. We also observed something very interesting. For example, the max version is right now less than 5% of the mix, which is a little bit lower than our expectation. An extended range version initially actually was performing less popular than our BEV version, but right now it's approaching the level of BEV popularity, especially with our increased promotion and marketing campaigns in the western and northern part of China, which is very, very promising. We definitely have high hopes for GX, for it to be one of the top-selling vehicle models. It would be above $300,000 on the price range market for NDVs. high end luxury big six seater. And to be honest, we are working very closely with our supply chain partners to support the capacity ramp up. And we definitely want our top quality products to come with top quality service and after sales services as well to support this sustainable GX deliveries. Our priority right now not only is about the deliveries of the product, but also the sustainability for GX being a selection model of X size group. Now, being an reflection model, obviously, the GP margin of GX is quite good. As I mentioned earlier with the media, this GX, only one SKU under the GX series is performing with a lower GP margin than our expectation. But the majority of SKUs of GX is actually having a higher than expectation kind of GP margin performance. Thank you.

I would like to add that starting from this year, all of our new vehicles will focus on two new points. The first is how to customize the business, determine the price of the business, and pursue the right commercial quality. This is what we started to do this year. The second thing is that we do not pursue high sales in the early stage, but lower sales in the later stage. We pursue more stable sales. So we have to manage the whole supply chain, We have a new system for public safety. So I believe that from GS, we all hope to have a better business area and a balanced scale, as well as longer-term stable sales.

I also would like to add that starting this new year, all of our new vehicles, when it comes to their configuration and also their pricing, it will be under the consideration of their commercial value. So commercial consideration will be one of our key priorities starting this year. And the second thing is that we are looking for long-term sustainable sales performance. rather than having a big beginning and subsequent diminishing sales. So we're looking for a better quality in terms of supply chain management and the modular management quality of the whole supply chain system to secure our supply and also production capacity ramp up to support our vehicle delivery. So starting with GX, We are expecting to achieve a better balance between commercial value and also scale, as well as long-term stable sales.

Thank you. Thank you for your answer.

My second question is about Robotaxi. My second question is about Robotaxi. could you please update us on your domestic operations and overseas expansion plans? Has the recent regulatory tightening in China had any adverse impact to the progress? And how do you view the impact of that to be mobile taxi business to the groups to see passenger vehicle sales? That's my second question. Thank you.

Thank you. We have seen the recent tightening of self-management in China and China, but it has no effect on our overall rhythm. Because from our point of view, from my point of view, NovoTaxi will be a huge new business opportunity in 2028 and later. So now Xiaopeng is trying to run it in China and around the world. So our whole rhythm is to put VA 2.0 in China and overseas and do it well. We in China will go through the current car for rapid research and development. And in 2027, Xiaopeng will launch an economic car to do a good demonstration and commercial verification of Robotastic. Xiaopeng's Robotastic, I believe, has two points. I think the first point is that we only make products and draw money. We are not willing to do direct operation. So we will have a lot of cooperative partners. The second point is that Thank you for the question.

And thank you for mentioning the recent tightening of the autonomous vehicle regulation in China. However, it hasn't faced any adversity to our rhythm of development yet, because from our perspective, After 2028, we're going to expect a huge commercial opportunity for Robotexy. And right now we are doing step by step to prepare for that opportunity, both in and out of China. And so our current plan is that we are going to do a lot of deployment and trial within China, as well as the international market with VLA 2.0. And we are confident that we can achieve success. In China, we are going to conduct and we are actually in the midst of conducting rapid research and development experimentation using our current vehicle models. And in 2027, we're going to launch an economy car model to demonstrate and validate how to start the global taxi business model in this area in China. and we are sure that we have the capability to achieve a high-level success. And we want to clarify that with exchange, first of all, we want to focus on the products, and we can take a commission from working with our operational partners. We are not going to directly involve ourselves in the operation. Hence, we expect to have many, many domestic and international partners partners in the operation for RoboTaxi. And the second thing is that we are going to work not only in China, but also globally. We believe that global RoboTaxi has lots and lots of commercial potential and value to tap into. Thank you.

关于您刚才问的 是否担心做B端对C端的影响 我想补充几个我们的想法吧 我觉得第一个 我觉得当前做RoboTaxi的测试跟研发试验 will actually have a positive impact on the C-end. Because in the future, the child's VIA will provide many different strategies of self-support values, such as the extreme speed model, such as this kind of less-managed model like RoboTaxi. I think RoboTaxi will gradually enter into a policy reform, gradually release and economicize commercialization operation. At that time, RoboTaxi will gradually, I think, Now, regarding the second question that you asked about the impact of our B2B business to the B2C business,

Let me just add a few of our thoughts. First of all, we believe that the current testing in R&D and experimentation actually on RoboTaxi has a positive impact on our B2C side of the business because our VLA model is going to offer all kinds of intelligent driving system strategies, for example, the speed mode, for example, the less human intervention mode, etc., that we can borrow from RoboTaxi. And I believe that for the future, the market is going to digress and actually transition into a period where policies and regulations and market situation is going to be more open with the B2B side versus B2C side being two different market segments. So that is our expectation for the future. Thank you.

Thank you for your sharing. Thank you. Thank you. Your next question comes from Nick Lai with J.P.

Morgan. Please go ahead.

好的,谢谢小冯总跟华严生。 我是J.P. Morgan的Nick。 有两个比较重要中长期战略的问题。 刚在电话会中,小冯总花了很多时间在讲这个VLA 2.0跟OTA的这个中长期的这个战略。 那我想就请教一下今年下半年,未来的一年左右。 這個VOA2.0的幾個OTA 會有什麼比較重要的趨勢跟變化 還有剛剛小鵬怎麼提到 以後物理AI的應用跟商業化 My first question is Chairman He talked repeatedly about the VOA 2.0 and medium and lower-term strategy, including potassium roadmap and the VOTA. And I wonder if Chairman can also share with us the major change and advantage that we can anticipate from here.

Thanks.

Yes. I think this year, in the year, children's VLA or VLA plus VLM capabilities, we will have two important stages. I think the first stage is this year's August. This is the third quarter of this year. We think that in the past, the first version of children's VLA was actually mainly in the process of engineering, doing security, doing basic customer experience. But we didn't improve the upper limit. So in the third quarter of this year, the most important thing for Xiaohong's VLA is to improve the upper limit to a great extent. So in the end, the feeling of the user is that it is smarter, more sophisticated, and greatly reduces the efficiency of MPI. So at the end of this year, we also hope that the first time we can show VLA and VLM through organizational merger, in addition to the value of the system, Thank you. This is the first paragraph.

Thank you. I believe that within this year of 2026, ASPEN's VLA or VLA plus VRM capability is going to have two key milestones or experience two key development phases. The first phase will actually happen in Q3 August this year. During this period of time, VLA is going to have our second version, which will appear as smarter, more communicative, and also have better generalization capability with less MPI or human takeover or intervention penetration. Whereas in the past, with our VLA 1.0 version, It mainly focused on the basic capabilities of safety, engineering, and also basic experience. We didn't or we were not able to increase the ceiling of the capability significantly. However, by August and Q3 this year, we're expecting a lot of significant performance improvement on that point. On the other hand, with the combination of VLA and VLM, we're expecting not just ADAS capability, but also language communication capability and something that approach the capability of the so-called butler-like kind of experience in her. And so we are going to achieve gradual implementation through the OTA or three OTA releases in August this year and also at the end of this year. Thank you.

I think gradually, when autonomous driving can really achieve a perfect L4 software capability on an L2-level hardware, the entire business model and business model will make huge changes. I think this is what we will do in the future. I will not explain in detail today.

I think that with gradual R&D and development, we will be able to achieve L4 capability with L4 software capability on an L2 hardware in the future. And by that time, we expect to see tremendous changes in terms of the business model and all shape or form of the whole business. This is something that we are in the work of. We are not going to discuss the detail about it today. Thank you.

Okay, thank you, Mr. Peng. My first question is about the humanoid robot. You just mentioned that we have a lot of costs in Linqiaosuo. Can you help us to expand on the hardware and cost of the robot? My second question is related to humanoid robot in terms of cost advantage compared with competitors. And in 2027, Xiaopeng plans to export humanoid robot to overseas market. Can we also share more about that long-term strategy? Thanks.

Yes, we have encountered a lot of different logic in the process of mass production of our machines. In fact, it is not the same as the mass production of non-machine vehicles. For example, the hardware of modern machines does not consider the safety, the safety of the machine, the safety of the machine interaction, and how it can coexist with the safety of the machine in the world. For example, most of the current machines do not consider reliability, stability, and repairability. It's all sales rules. It's not a car rule. And then many energy companies have not considered how to scale it up, how to solve the problem of quality of two frequencies. And they haven't considered, for example, these hardware. In fact, the bottom layer of software, for example, our chip, our EADM architecture, it's in the local cloud. If it's in the cloud, how to solve data privacy, traffic, algorithm, latency, etc. So, in other words, this is why we have been working on hardware and software since the beginning of last year. In addition to Dengxin, we are basically the only hardware company in the war. So this is what makes us super-compatible. I think the cost structure of hardware at the beginning of the robot will be similar to a car. Thank you.

Thank you. We actually encounter all kinds of differences during the mass production of humanoid robots between, you know, the structure of a robot versus an EV, especially, you know, when it comes to different aspects of consideration. Currently, there's a lot of areas where we need to address when it comes to the mass production of humanoid robots. For example, the safety, the hardware of humanoid robots are quite different from cars. And currently, the available robots in the market do not concurrently consider safety and security of the simulation and also of the humanoid robots and how humanoid robots will interact with humans across all kinds of scenarios. At the same time, the vast majority of the existing products out there do not consider reliability, stability, and maintainability of the robots as well. If you look at the level of mass-scale structural production of the humanoid robots, A lot of it is actually consumer product grade versus our expectation of being car grade safety and production quality. At the same time, a lot of our competitors do not consider the supply chain capability development when human or robots achieve a certain level of mass production. how do you secure supply chain capability and safety. At the same time, if you deploy your SOC using a chip in the human or robot, is the data stored locally or are they on the cloud? If they're on the cloud, if we consider privacy, safety, and security, etc., etc. That's why since the beginning of last year, 2025, we had already started a series of overhaul of our design and also a preparation of human or robot having the full-stack hardware and software capability of a humanoid robot allow us to actually have a more comprehensive skill set and capability cooperation for humanoid robots to release its potential and commercial value in the future. So I would say that from now except for batteries, all the other parts of humanoid robots that we produce are in-house, full-stack, self-developed. So in the future, for sure, we believe that we can come up with a more scalable and economical solution to humanoid robots. However, today, the cost structure of humanoid robots is actually very similar to that of a car. Thank you.

Okay, thank you. Very clear.

Okay. Regarding overseas issues, I would like to add something. Just like our cars, our current cars are considered to be globalized. Our first product, So, in fact, the logic of the sales of robots in the world may be better than that of China, because from the perspective of auxiliary and even replacement jobs, it is more suitable for robots overseas. Second, in how hardware fits overseas policies and how software and data fit overseas policies, we have done a lot of things. For example, let me give an example. Xiaopeng's current VAR token usage per hour is about 200 million. So if you put the model of the robot into the cloud, I think the token per hour may be 5 to 10 billion. The flow rate of the cloud per hour may be more than 100 GB. So it is impossible to completely solve its algorithm by using the cloud. So how to match the hardware Thank you.

And the second point that I would like to make is about the overseas market. I think just like EV, all of our models developed nowadays are considered as global vehicles, and our robots are considered as global robots as well. Potentially, if you look at the overseas market, there's actually a bigger commercial value to replace human workers with humanoid robots. There's lots of commercial potential to tap into, globally speaking. At the same time, when you look at the regulatory side of things, in terms of the hardware and software and also data privacy, we also have to prepare sufficiently in our humanoid robot design as well. When you look at our current VLE, 2.0 usage. We're looking at 200 million uses per hour that are, you know, for the VLA models outside of the cloud. And if you were to consume everything or do the computing on the cloud, you're looking at the consumption of data 100 gigabytes per hour, which is enormous. And so we have to start from day one how we incorporate that kind of data consumption or model usage in our humanoid robots that are maybe etched, designed, or locally deployed as well. And so the entire system for our humanoid robots has been designed for the global market since day one, and we expect to actually see more potential progresses internationally as our domestic R&D system continues to evolve going forward. Thank you.

好的,谢谢,非常期待海外的进展,谢谢。 Thank you. Your next question comes from Tina Hao with Goldman Sachs. Please go ahead.

感谢关于曾经是我的提问,我是高盛的Tina。 My first question is about our Robotaxi. Recently, the market has been paying attention to some of our next expansion plans, such as some expansion plans and time points outside of Guangzhou, as well as some progress in our application for corresponding photos. So my first question is regarding our Robotaxi business. So wondering what is our plan in terms of expanding to more cities outside Guangzhou and the timing of that. Also, accordingly, what has been the progress of our licensing approval? Thank you.

Thank you, Kina. Our local taxi is actually in Guangzhou at the moment. We have already got it in Guangzhou. We hope that in Guangzhou, we will be able to integrate the entire technology, product, and business model, and we will have more partners in China and overseas, and they will operate locally. From the past, we have announced that we have received a large number of overseas and some Chinese partners' needs. They are very interested in observing our overall progress in the next year. Thank you, Tina, for your question.

Our RoboTaxi deployment for experimentation right now is limited only in Guangzhou, where we already got the license off. Our plan for Rebel Taxi is that we are going to test the water here in Guangzhou, and after we successfully develop the technology, the product, and the business model here in Guangzhou, we then can expand our business partnership in the whole of China and also outside of China, and we expect to work with multiple partners for their own localized operations. And since we made the announcement to right now, we have received lots of inquiries and lots of interest both in and out of China from our potential business partners. And so they are keeping a close eye on our future progress in the upcoming year. And I believe that after 2027, when we were able to launch our new economy car model for RoboTaxi, after we are able to announce maybe a better total solution for RoboTaxi in the future, we believe that we can actually increase our commercialization capability for RoboTaxi in and out of China in the future. Thank you.

好 非常感谢 然后我第二个问题是关于咱们二季度的一个毛利率情况 因为一方面我们这个销量提升 然后包括可能Model Mix GX这种高毛利的车型占比也提升 但是另外方面可能也有一些原材料成本上升的 My second question is regarding our second quarter growth margin. So on the one hand, we have higher volume as well as a better model mix with GX. On the other hand, we have some headwind from higher raw material and some component costs. So just wondering what would be the guidance for vehicle gross margin as well as the company blended gross margin. Thank you.

Hi, Tina. This is James. Yeah, so as you can see, first of all, in the first quarter, our total gross profit is pretty close to the prior quarter Q4 of last year. In that, we did see some level of cost increase, as mentioned in the earlier script, around the membership cost increase as well as the battery raw material cost. That is partially included in Q1, and we continue to expect that to be included in the following quarters in the year. You did mention that we have launched the GX, the full-size SUV, in 2020. second quarter and we will start to deliver that in the following quarters as well. The GX gross profit is among the highest in our portfolio. So from a product mix perspective, we'll start to see better mix in Q2 as well as in the second half of the year. So all of that considered, we expect the Q2 total gross margin to be around the same level as Q1. So hopefully that answers your question.

好的,非常感谢。Thank you. Thank you. Your next question comes from Ming Sunli with Bank of America.

Please go ahead.

喂,小风总,还有关于您好,我是美女的Ming。 这边就有一个问题。 I still want to ask more about our overseas market, including if you look at the longer term, including its growth catalyst, and then also the future three years may bring us what kind of profit or sales contribution. And then the other thing, can you also talk a little bit about, for example, we now have some cars that are export, and then if it becomes this Magna, and then local production, we may have some lower tariffs, but this So management, could you elaborate more about your long-term overseas market growth driver, especially for your overseas production profitability? versus your export business model.

Yes, thank you. So you asked two questions. The first question, I will answer a part of it. I think overseas, for Xiao Feng, is one of the four most important strategies for us. I hope that in these five years, our overseas sales will be half, that is, income and profit will be more than half. I think with the introduction of four globalized cars in the second half of this year, the speed of globalization in 2017 and 2018 will be greatly improved. This is what I am very confident about, because our previous models were mainly two models. So the entire overseas market, whether from hardware or from our AI software, or from our channels, or from our services, including local charging capabilities, or our profits, we will, whether in the car or in the infrastructure, we will make a huge investment overseas. So, in fact, this year, our development investment in cars is mainly focused on overseas. So, I am very confident that overseas, in Xiaopeng's future three years, there will be an increase in acceleration.

First of all, since you asked your question, I'm going to address the first one first. Regarding our overseas market expansion or development, first of all, it's one of our most important four strategies. And in the coming five years, we expect to have maybe 50% of our revenue and profit coming from the overseas markets. And as we approach into the second half of the year, with the launch of our four new models upcoming, we believe that we are going to be able to tap into the overseas market even more following 2027 and 2028. Because in the past, we mainly had two models serving the international market. And when it comes to our EV future and also robotics future, we have always considered overseas market as one important component or important market for us. So when it comes to our capability development, it doesn't matter if it's hardware, software, distribution channels, our servicing network, including localized charging capabilities, supercharging capabilities, as well as our profitability consideration. Overseas has always been in the roadmap of development. And with our dedicated and committed R&D spending, starting, you know, many, many years ago, we believe that we are, you know, well-pointed to tapping to the overseas market development future, especially in the coming three years. Thank you.

Hey, Ming. This is Brian. Let me just add here.

So, yeah, Ming, let me just add here. First of all, if you look at the international sales volume contribution, In the latest months, I think we already see it represent close to 20% of our volume. As you saw in last year, international sales is roughly 10% of our global volume. So you can see a significant increase in the proportion that international sales is now represented in our global sales. Second point is on the probability of our international vehicle sales is significantly better, even with, obviously, some of the tariff issues we faced, some of the cost increases we saw this year. Still, I think that the international business generates significant better gross profit as well as net profit contributions to our bottom line. And also, you probably saw that the new models that Xiaopeng mentioned for the global markets has yet to be launched. So we anticipate that momentum will carry on throughout the year. So I think the contribution at the 20 percent levels will be, you know, consistent throughout the year, because obviously China, we saw significant growth expectation as well. And then in terms of really dealing with sort of tariff and other challenges, we are increasing our investment locally. I'm actually currently in our partner, Austria, right now to make sure that we have capacity to tackle the unexpected growth for our Europe as well as global markets. So I think it is going to be, I would say, a very exciting contributing to our overall momentum as well as profitability.

Thank you. Your next question comes from Pinyu. We're with CITIC Securities.

Please go ahead.

Thank you for introducing my question. I'm Wu Pingyue, representative of Central Stock Exchange and Central Stock Exchange International. I have two questions. The first one is about overseas issues. This year, we saw that Xiaopeng's production in overseas has a lot of movement. Thank you for taking my question. I'm Pingyue Wu, representing Physics Security and also CSI. And my first question is regarding the overseas production. And we've seen significant progress on X-Point's overseas production localization this year. And could you share more color on what percentage of vehicles for overseas market will be produced at local plants in this year and next year? And does the localization rate vary materially by region?

Thank you. Yeah, so this is Brian. Let me address that question again.

On the localization production, Right now, we have two plants in Southeast Asia, in Indonesia and Malaysia, mostly addressing local demand. And also, we have a partnership with Magna in Austria, where we manufacture vehicles for the European market. All three of these manufacturing layouts will see increased capacity this year, as well as new models being produced in those local markets. I would say that for the Southeast Asian countries, it's mostly for the local market, and then obviously Austria is for Europe. So I would say the Austrian operation will be a very important capacity contributing to our European sales. I expect the majority of our European sales will have local manufacturing at this production. And elsewhere where I think we don't have manufacturing facilities yet, so I think it will continue to maintain the current business model. But I think as we increase our volume as well as market share in some of these large markets, we are actively looking at ways to increase our production capacity. as well as localization efforts to make sure we satisfy the localization content rules as we move into a more deepened local production model.

Okay, thank you.

And then my second question is about robots, because the management team just mentioned the time point, when it was launched at the end of the year, when QE was introduced in 2017. And then I would like to ask if we can give a few small examples to help us understand the functions of robots in our store and the store of our customers, and then whether we can, especially in the case of external customers, introduce the application scenarios of small robots. And my second question is about humanoid robots. And the management team just mentioned that Expron is aiming for mass production of humanoid robots by year-end and store development in first quarter of 2017. And could you share a few specific examples of what functions the robot will perform in AvePoint's retail store and also in the client application? And additionally, could you elaborate on what specific application scenario can we see in the internal corporate customers and what are pricing strategies?

Thank you. Yes.

Our infrastructure is actually different from most of the infrastructure. We want to use it in an environment that can interact with people. Therefore, we have considered many environments, especially commercial environments. The first thing we thought about was in island shopping, whether it is in China or overseas. It can introduce, for example, in our store, introduce our car. But the price of this car is cheap. There may still be a person to be responsible for, but the introduction of the company, the introduction of the product, the introduction of the trust, etc. I think it can be achieved by the help of the robot. So when the guide is the guide, there are already a lot of jobs and scenarios in the world. In a good situation, we actually hope to be able to think from the perspective of sales and sales. For example, a cashier, you can see that in the global The number of sales and sales positions in the world is very large. So from a different perspective, Xiaopeng will focus on the depth from the perspective of the island purchase system. But we will open up a lot of our cooperation with our partners. They may have different needs for positions. They may generate data with us to carry out pre-training and post-training to generate different models. Then we will put these models in our Sorry, let's start with the first part.

Thank you for the question. Our humanoid robots are actually different from the existing or available robots out there because we want to place them in an environment where they can actually interact with humans. So when we consider the business model or the potential application scenario for our humanoid robots, the first responsibilities that they can carry could be tour guides or assisted shoppers. For example, in our offline stores or dealerships, we can have these human or robots to introduce the cars and introduce our products for you. And then there will be our human salesperson that come along and do the test drive with you and sign the order or sales order for the car. But I think robots can really help with the basic information introduction and do some performance of the product introduction, et cetera, to achieve a higher efficiency. In addition to that, once that capability is more sophisticated, we then can open up more opportunities or collaboration with our partners in the ecosystem who may have different kind of various job requirements that we can work with, you know, to place on the shoulders of our humanoid robots And we also can work with the ecosystem partners to generate data for pre-training and post-training to create different models for different humanoid robots for different scenarios. For example, in the retail space, there are opportunities for them to be a cashier person, for example, or assist the shopper with a more sophisticated level of capabilities. That's our plan. Thank you.

Talking about the future commercialization of Jichen, we are also discussing this. But we see that Jichen is very similar to a car. So the price of Jichen's sales must be more expensive than a normal car. So Jichen will have better horsepower on hardware. At the same time, I believe that although we have many Turing chips on our Jichen, with a few thousandT of hash power, but we also think that the token amount used in the cloud is also necessary. So we also hope that the money will be spent faster in software payment. So from another perspective, I think for a businessman or a small coin, when he is buying a machine, he will consider how many months he can earn this money back. So we believe that overseas, we can even give this thing to a businessman in a few months. In China, it may take a little longer. So we have been considering how to use customers, why to buy, and why it gains value.

Now, when it comes to the commercialization of our humanoid robots, we're still in the discussion phase of it. Even though the bomb structure of a humanoid robot is very similar to that of a car, the RASP, the retail price of a humanoid robot is more expensive than a car, naturally. And so the GP margin, in terms of the hardware of a humanoid robot, it will be more superior than that of a car. We have incorporated multiple chewing chips in our humanoid robot with thousands of computing power, even though we have that in the hardware, we believe that there's still a lot of commercial value for the software usage in terms of the cloud usage of their humanoid robots computing power. So for the software commercialization set or the software licensing fee revenue, I think humanoid robots have a better potential than cars. Now, on the other hand, if you look at things from our potential customers, for example, business owners' perspective, if they are a small business owner, when they make the human decision of buying a human or a robot, what they prioritize is the payback period, right? And so I think in the overseas market, the payback period can be much shorter than that of what you would achieve in China. And so it would make more sense economically for overseas business owners to buy humanoid robots. And so we have always been thinking the rationale on how customers use the humanoid robot, why they would purchase it, and how our humanoid robots can add value to them. Thank you.

Thank you. I have no more questions. Thank you. Your next question comes from Yujian Ding with HSBC.

Please go ahead.

Hello, everyone. I'm Yujian from Huifeng. I have two questions. One is about the long-term strategy, and the other is about the short-term finance. 那第一个问题 第一个战略方向的问题想请教 看到公司最近有改名成这个小鹏集团 看起来像是走向一个 Physical AI Platform Company的这个趋势 那管理层能不能分享一下 对于长期的商业模式的这个演进的思考 然后我们如何去看待各个战略板块 产生收入的时间点和 就整个中长期在收入中的这个结构的变化 I've got two questions. One on the mid to long-term strategy and second is financial in the near term. So the first question, as we noticed, the company changed the name to Xpon Inc. And it's shaping like a physical AI platform company. So can management share a bit more discussion and strategic thinking about the business model involvement into mid to long-run? And how do we compartment, the strategic divisions commercialization timeline, and how does into the mid-to-long term the revenue structure change?

Thank you.

Thank you. I think this question is very simple to share with you a little bit of our simple thoughts.

I think

At present, in fact, the main income must come from the scale effect, mainly from hardware, and if we look at it from an ecological point of view, it is the effect of the system. But I think there are very few car manufacturers around the world that can build a software platform on the scale effect of hardware to form the next network effect, with software fees, and the entire multidirectional network effect. Then, in the future, I think the entire smart agent will rise, Thank you.

Thank you for the question. This is a broad question, and I'm trying to share with you my brief answer. First of all, right now, our main revenue stream definitely comes from the economy, the scale economy, basically. It comes from our hardware and comes from our ecosystem. And I think, globally speaking, very few car manufacturers can actually build a software platform and form the next network effect based on the economies of scale of their hardware. So network effects include both, for example, the software fee, software revenue, and the entire multilateral network effect, which we actually have the potential to achieve. Going forward, we'll believe that the whole entire intelligent agent emergence will produce the so-called ant cluster effect. So basically, it's like the interaction between ant colonies where you have network effects in the decentralized and centralized clusters. What we're trying to say is that these three effects is going to have their impact on our business model. And with these three effects playing together, interacting together within XMH, we are going to actually enhance our competitive modes. And so with this system, we actually have a very optimistic expectation for our future business strategy and our value creation. Thank you.

I would like to add that in the short term, we are more concerned about the efficiency of the brand's scale and the efficiency of the global scale. I think we need enough efficiency in the new era.

Let me just add that in the short to medium term, we will prioritize more on the scale of effects of our brand equity and also gross profit. With the scale of globalization, you know, and enhanced GP margin, we will be able to have a positive effect on our overall profitability. And also with sufficient profitability, we will be able to support adequate R&D investment, which will also bring about new, you know, technological competitiveness and competitive modes to the company.

Thank you, Ms.

Peng. My second question is about the service revenue. Can management share the trend about this year, especially in terms of the scope? Is that possible? We can expand our partnership from China to outside of China.

So I think that we continue to maintain the guidance that the total revenue generated from the technology and the services and IP licensing revenue in 2026 is comparable to that of 2025. As you may be also aware of, starting from Q2, we will start a delivery of the Turing SoC to our partner Volkswagen at scale. And I think that we continue to believe that the monetization of technology commercialization through such type of collaboration, it is a very attractive business to us. So I think that given all the proprietary technology we have in-house, I think that we are quite open-minded to such business. on expanding such commercialization opportunities of our technologies.

Got it. Thank you, Dean. Thank you.

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

Okay.

So, thank you once again for joining us today. If you have Further questions, please feel free to contact Excellence Investor Relations through the contact information provided on our website or the PSN Financial Communications.

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