ZEEKR Intelligent Technology Holding Limited American Depositary Shares (each representing ten (10) Ordinary Shares)

Hello, ladies and gentlemen. Thank you for standing by for Zika Group's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I would now like to turn the call over to your host, Mr. Yuan Jing, the CFO of Zika Group. Please go ahead, sir.

Thank you very much. And thank you all for joining Zika Technology's annual results conference call. First, may I have Mr. An Conghui, CEO of the company, to start the meeting.

Thank you. Hello, everyone.

I'm Andy.

Thank you all for joining Zika Group's fourth quarter and full year 2024 earnings call.

First and foremost, I would like to express my gratitude to our users, suppliers, and employees for their unwavering support. Thanks to everyone's effort, Zika Group has delivered its first stellar four-year result to the capital market just a few months after our IPO in May 2024.

It is said that the sales of Jiao Fu has increased significantly. It is said that the sales of Jiao Fu has increased significantly. It is said that the sales of Jiao Fu has increased significantly. It is said that the sales of Jiao Fu has increased significantly. It is said that the sales of Jiao Fu has increased significantly. The total revenue of the entire vehicle this year is almost 5.53 billion yuan. There are three more. The total total revenue of the entire year is 75.9 billion yuan. The total cost of the four-seater is 22.7 billion yuan. The single-seater is a new high. The company's revenue capacity is also continuously improving. From this report, we can see that the policy margin of the four-seater has reached 17.3%. This year, it is 15.6%. So this group has achieved a total sales of over 500,000 vehicles in 2024.

Of the total, the Lincoln Co. brand delivered 280,000 units, nearly 30% year-over-year increase, achieving the highest sales in its history. So the annual deliveries for the Zika brand surpassed 222,000 vehicles for the full year, a remarkable 87% year-over-year increase, making Zika brand the best-selling premium battery electric vehicle brand in China. And thanks to the rapid growth of our sales volume, in the full year 2024, we achieved a vehicle revenue of 55.5 billion RMB and the whole revenue of 75.9 billion RMB. And also, our gross margin considerably grows. And in the fourth quarter, our vehicle gross margin achieved 17.3%, while the full-year vehicle margin achieved 15.6%. So we saw our growth margin for the vehicles also grow quite good.

At the time of our three-month period, we completed the stock exchange in February, and officially established the Jike Technology Group. It should be said that After the merger of GEC and Link, we have more than 1.82 million users. Our goal in 2025 is to challenge the sales target of 710,000 taels. Our two-year goal plan is to work hard over two years to become a world-leading high-end luxury car group. At the same time, through the merger of Link and Geek, we have developed a system through the product, innovated the manufacturing system, and upgraded the user operation, as well as the system of in-house channels, etc. We want to adopt a series of measures to further improve the efficiency of our entire operation to play the advantage of money-making. Under the strategic guidance of Julie Holdings' Taizhou Declaration, Zika and Lincoln Co.

successfully complete our equity transaction in just three months. officially Zika Group on February the 14th, 2025. Building on a global user base of over 1.82 million across both the Zika and the Linkenco brands, we aim to deliver 710,000 vehicles in 2025. Within two years, we aspire to become the world's leading premium new energy vehicle group with annual sales of over 1 million units. Meanwhile, we are leveraging synchronized product R&D, improved manufacturing system, enhanced user engagement, and integrated domestic and international distribution to drive greater operational efficiency, maximize economies of scale, and strengthen Zika groups' resilience against market uncertainties. With these efforts, we are confident in our ability to continuously improve our profitability and enhance

Our shareholder values. Our shareholder values. Next, let me outline our three key strategies for driving sustained growth.

First, we will continue to strengthen the Zika brand in the premium market to go more upmarket while broadening the Lincoln Co. brand's customer base and further expand our product portfolio and enhance the product competitiveness.

Uh, uh, uh, uh, uh, In 2025, we will launch three new models to further expand the luxury car market. In the second quarter, around April 10, we will launch the second model, the 007 GT. In the third quarter and the fourth quarter, there will be a luxury SUV. The Zika brand with an average selling price of close to 300,000 RMB continues to solidify its market position in the premium segment.

The Zika 009 emerged as the best-selling MPV in China, priced above 400,000 RMB in 2024, and has gained significant popularity among business leaders. In 2025, the Zika brand will launch three new models to further expand its reach in the premium market, and we will release the Zika 007 GT, our second shooting brake model, in Q2, followed by the Zika 9X, our full-size flagship SUV, in Q3. Furthermore, we are introducing a large-size premium SUV in Q4. Both premium SUVs will feature advanced super-electric hybrid technology, and notably, the Zika 9 X Grand will make its debut with Level 3 Chen Li-Hao Han autonomous driving system H9 and make its first appearance at the Shanghai Auto Show in April.

On the other hand, Linke is moving to Guangzhou. In 2024, Linke will be Also achieved a relatively good result The number of new drivers has increased rapidly, the number of new drivers has exceeded 58% The average price in the past year, the price of Linke has exceeded 200,000 So in 2025, Linke will launch two new models One is the SUV, Linke's 900, I think now Everyone should have a certain understanding Because the car is now on sale at the store We can expect it to be released in April or May It should be said that it is also a few models in Linke The other model will be equipped with this The other is a medium-sized sedan Meanwhile, the Lincoln Co.

brand is broadening its customer reach. In 2024, its new energy vehicle segment showed rapid growth with over 58% penetration rate, and the average selling price for the Lincoln Co. brand reached over 200,000 RMB. The Lincoln Co. EMP ranked among the top three in the high-end plug-in hybrid segment. with an average selling price exceeding 220,000 RMB. As the Lincoln Co. brand achieves both price and sales volume growth, its range of powertrain and customer reach continue to expand. In 2025, the Lincoln Co. brand will launch two new models. The first one is the Lincoln Co. 900, its flagship large six-seater SUV. and we will officially launch this product in late April or early May, and many of these show cars have already arrived at our showrooms, and it will be the world's first mass-produced vehicle with a very advanced AIDA system, and will feature the Qianli Haohan H7. Additionally, the brand-first EMP mid- to large-size sedan will be released in the second half of this year.

On the other hand, we are now in the era of artificial intelligence. We will take a step forward in artificial intelligence to improve the competitiveness of our enterprise through the full-fledged AI. At the moment, the core technology of the industry chain such as whole vehicle structure, electrical structure, 3D, frame, and frame, etc. can be seen in the industry. Secondly, we will strategically leverage our full-stack AI capabilities to further enhance our competitive edge.

The Zika Group is the only company in the industry with full-stack in-house development capability that spans vehicle architecture, electronic and electrical architecture systems, the battery and power trains, autonomous driving, and the intelligent cockpit, along with superior innovations through the seamless hardware and software integration. And with this unique technological advantage, we are well-positioned to quickly expand our technological melted through AI empowerment.

In terms of the quality of life, we are indeed a little late in terms of quality of life for Jike and other leading companies. But through our efforts, we also released on March 18th, the ability of our end-to-end, car-to-car ability, In the field of terms driving, we have firmly established ourselves as another leading player in the industry.

Admitting that in the first, we were late compared to our peers. And the last, in March, on March 18th, we hold a product launch event, technology launch event to showcase our end-to-end and door-to-door technologies. Last year, our self-developed end-to-end AI-powered launch model became the first of its kind to be mass-produced and deployed in vehicles. And by the end of this year, we have completed the nationwide rollout of MAP3 and ZP. ensuring a seamless driving experience on every road across the country. And in February, we also launched a large-scale better for the door-to-door navigation. And we recently unveiled the industry-first full-stack door-to-door navigation system featuring GS and automatic invasive maneuvering and a level three autonomous driving technology architecture.

And for the infotainment, we have, based on our full stack, in-house developed the AI, occur AI, large language model.

We have launched our Zika AI OS. and we hope to deliver very good technology offering to our customers this year.

当然除此以外,AI我们也会即刻的IDD部门成立, 所以整个AI将会赋能极客集团的各个业务板块, 无论是它也可以应用于覆盖整个研发供应链质量,

And in addition, we have recently established our IDD department for AI development, and AI serves as a powerful engine for the Zika group, preparing progress across various business segments. In 2024, we deployed the AI-driven solutions across a wide range of scenarios, including the R&D supply chain, quality control cells, and the operational support.

Thirdly, we want to accelerate global continuous sales growth in 2025. In 2025, our goal is to take the full advantage of the overseas market. After the merger of the two brands, we will also maximize the joint effect. We will establish a unified sales service in the new market outside of Europe. Use a team to open up two international market brands. And launch new products that are suitable for the international mainstream market. For example, this year, we will launch the 2008 EMP and the 7X. These two models should be very popular. This year, we will quickly launch them into the market.

And thirdly, we will drive our sustained sales growth through the continued global expansion. In 2025, we aim around 10% of our annual sales targets will come from the international market. And to maximize the synergies, we will establish a unified sales company after we integrate the two brands in the global market outside of Europe. And with a single team focusing on expanding the both brands' international presence, And we will also introduce a new product tailored for the mainstream global market, including the Lincoln Code 08 EMP and the Zika 7X. These two products are left by the global customers.

2025年是极客科技集团成立的元年。我们以建立统一的管理体系为目标,已开启了新一轮的内部管理变革。我相信通过这个管理变革会 And 2025 marks Zika Group's inaugural year since its formation.

To establish a unified organizational structure, we have embarked on a new phase of internal management transformation and we aim to unlock greater organizational synergies while driving platform-based technology sharing and the economics of a scale for the cost reduction, ultimately maximize the shareholder returns.

好的,那接下来我把电话交给我们的CFO袁景吧,请他来提供一些2014年度的一些财务细节。 我想也尽量留更多时间给大家提问。

I wish that I will hand over our call to our CFO and hopefully we have a decent time for the QA. Thank you, everyone.

Thank you, Andy. Before I start, our lawyer reminded me to read the disclaimer. So I will read. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainty. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission. The company does not take any obligation to update any forward-looking statements except as required under the applicable law. With that said, now I will go over our key financial results for the fourth quarter and full year of 2024. Due to time constraints, I will address our financial highlights here, and I encourage you to refer to our earning press release and 20-hour forms for further details. As you can see, we ended the year on a strong note, delivering record high across several key financial metrics in the fourth quarter. Propelled by the ongoing expansion of our product lineup and the continuous enhancements of intelligent features, we delivered over 222,000 vehicles in 2024, resulting in impressive year-on-year growth of 87%, further reinvents our position as the best-selling pure electric luxury brand in China. Our record-breaking vehicle deliveries led to a remarkable 46.9% year-over-year increase in total revenue, reaching RMB 75 billion in 2024. Notably, Vehicle revenue grew substantially by 63% year-over-year, totaling RMB 55 billion. Thanks to our strong product competitiveness, rigorous cost discipline in supply chain management and economic scale, we also continued to enhance profitability, achieving sequential improvement in vehicle margin to 17.3% in the fourth quarter and 15.6% for the full year. we believe this is better than all our listed pure-play BEVPs globally. Driven by our unwavering commitment to electrification and intelligentization, we continue to increase our R&D investments while enhancing efficiency. In 2024, our R&D expense reached RMB 9.7 billion, representing a 16.1 year-over-year increase. At the same time, our R&D expense ratio decreased from 16.2% in 2023 to 12.8% in 2024, demonstrating improved operational efficiency. Our R&D expense for 4Q2024 is around RMB 3.2 billion roughly in line year over year with 4Q2023, which stood at around 3.16 billion RMB. The quarter-over-quarter increase of R&D expense mostly due to year-end employee bonus and booking schedule for finished projects. We also booked an investment gain of RMB 727 million. It is related to a partial disposal of investments in Guangzhou, Xinyuanan by our subsidy in Bull Variety as we received cash gain during the disposal. We did not book any non-cash investment gain as the rest of the variety's shareholding are not deemed as available for sale. We also made notable progress in reducing our total net loss, which decreased from RMB 82.6 billion in 2023 to RMB 57.9 billion in 2024, marking a year-over-year decline of 30%. This improvement was attributable to stronger profitability and operation efficiency, despite substantial share-based compensation expense related to the company's initial public offering in May 2024. Last year, our capital expenditure amounted to RMB 1.7 billion, primarily allocated to PPE for Verizon, production tooling, and leasehold improvements for our retail stores. Our free cash flow for 2024 reached RMB 1.5 billion, setting another record high. In February of this year, we successfully completed the acquisition of Link&Co, and we have disclosed the pro forma condensed combined financial data for Zico Group for the year 2023 and 2024. As shown in the combined pro forma financial results in 2024, the combined vehicle group achieved a remarkable revenue milestone of RMB 130.9 billion, backed by vehicle deliveries of more than 507,000 cars. Looking ahead to 2025, we're working towards a significant growth trajectory of 40% delivery growth to 710,000 vehicles across two brands. The pro forma vehicle margin for Zika Group stood at 12.5%, and with the realization of transaction-related synergies, we're working very hard to implement bond costs and manufacturing synergies, and we expect Zika Group's vehicle margin to further improve to around 15% in fourth quarter 2025, if we can realize a few one-off synergies. Having said that, we will continue to aim for around 15% vehicle margin for full year 2025 in light of potential market conditions. Performer R&D expense stood at around 13 billion RMB, and we are seeking to realize 20% quarter-over-quarter R&D expense saving in fourth quarter 2025. We then will work to reduce R&D expense ratio to around 6% in two years' time. Performa SG&A ratio stood at around 12.5% and were aiming at reducing it to around 8% in the same timeframe. Link&Co recorded a free cash outflow of around RMB 400 million, which means Performa Zika Group free cash flow for full year 2024 is around RMB 1.1 billion inflow. Again, we would like to reiterate our target of quarterly US GAAP break-even in 2025. Our key work to achieve this milestone are quite clear. Most importantly, it is Link&Co integration. We're targeting to fully integrate Link&Co and Zika brands together and realize, if not surpassing, the aforementioned guidance as soon as possible. In the first half of 2025, you can see we are focused on improving our ADAS experience. As evidenced by our March 18th event, We believe we are on the right track to be among the leading players in the Chinese e-marketing in terms of ADA software and globally. For the new models, our two brand new models to be launched in the first half of 2025 will have targeted improvements over where we received most customer feedback. 007 GT will show improvements over Zika 007 and Linkenco 900 over Linkenco 09. with the latest NVIDIA thought-chip site on Link&Co 900. We hope we will be able to further solidify our leadership in the ADAS area. We believe this targeted improvement and the improved smart software experience will support Link&Co and Zika sales growth. In the second half of 2025, we will introduce Zika 7x and Link&Co 08 EMP to international markets to further boost our international sales. We'll also launch our startup Star product for the year, Zika 9X, which will feature our latest and industry-leading P-HAVE drivetrain technology and smart data capability, including a L3-capable variant of the model. Two additional models, a middle-to-large plug-in sedan for Lincoln Co. and a large plug-in luxury SUV on the Zika brand will also be launched, and we expect these new models to further boost our sales delivery. Looking ahead, we will stay focused on accelerating resource integration and unleashing greater synergies to enhance shareholder returns and create sustainable long-term value. So this concludes our prepared remarks. I will now turn the call over to the operator to begin the Q&A session.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. And for the benefit of all participants on the call, if you raise your question in Chinese, please immediately repeat your question in English. And at this time, we'll pause momentarily to assume our roster. And the first question will come from Tina Howe with Goldman Sachs. Please go ahead.

Thank you for your time, Manager. I have two questions. The first question is, just now the Manager mentioned that in a certain quarter of 2025, we will achieve profit. I would like to ask, if we achieve profit in a certain quarter, what kind of conditions will be required? Can we start from sales So my first question is regarding our breakeven timeline. So we mentioned that it's going to be sometime in 2025. So just wondering, what will be the conditions in order for us to break even in terms of the sales volume, vehicle growth margin, as well as operating expenses. And also in terms of the Zeker and Lincoln Co. consolidation, what kind of cost reduction can be seen in the specific quarter. So that's the first one. 然后我第二个问题是想要问一下管理层对2026年的一个展望。 So my second question is regarding management outlook for 2026. What kind of product pipeline volume as well as market competition expectation do you have? And then also your CapEx guidance for 2026 as well. Thank you.

Thank you, Tina. Yeah, so obviously, as you can see, there are things and there's conditions that we can control, and there are things that we cannot control. So for the things that we can and we're currently controlling and implementing changes, obviously we are working very, very hard, as mentioned earlier, on the link and code integration. Say, for example, most of the mid and back office functionalities, including HR, legal, compliance, and finance, and admin team, we are all now sitting together as one team. And at the same time, you know, we are also working very hard to integrating the R&D team not only in China but also globally. So those are the things that we believe we can control. And as I mentioned earlier, we do have this midterm target of lowering the R&D expense ratio towards something around 6%. And, you know, our targeted SG&A ratio is around 8%. And, you know, those two numbers, if you look at our pro forma financial statement, stood at around 11% for R&D and 12.5% for SG&A last year for year 2024. So we do think, you know, we are implementing these changes and working very, very hard towards what we are able to control. But on the other hand, obviously, you can see we have left some room for the market conditions that at this moment we see, you know, an intense competition in the Chinese new energy vehicle market and a more increased competition in the global market as well. So it's very unfortunate at this moment we won't be able to pinpoint an exact date where we can turn around. But as I mentioned earlier, we are very confident backing up by the consolidation of Linkenco and Zika, backing up on a positive 40% vehicle delivery increase and back up by improved manufacturing and manufacturing efficiencies and improved gross margin targets to achieve this kind of result. On your second question with regard to our guidance for 2026, you can probably see, you know, when we started this Lincoln Co. integration project, our aim for full year 2026 is that we will create a luxury brand group that sells, you know, close to more than 1 million cars globally. in the luxury new energy vehicle sector. And we stood by this target, and we think we are on the right track to realize this target. That means, you know, we are not only, you know, expanding in China, but we're expanding into global markets. And we are not only, you know, selling BEVs on the Zika brand, but also plug-in hybrids and potentially hybrid vehicles on the Lincoln Co. brands. So we do think if you look at 2024 Zika brands we had a CAPEX of around 20 something capital expenditure and for 2025 and 2026 we looked at a slightly increase in capital expenditure for the combined Zika and Lincoln Co. brands. But, you know, as you can see from my previous guidance, we're looking at, you know, improved synergy. We're looking at improved efficiency. So we do not see, you know, a proportional increase in KTACs, but, you know, an increase in KTACs in a more constrained and restrained way.

Okay. After the merger of Linke and Jike, we can reduce the number of development vehicles to 20%. This is because these two brands will not have any competition. Reducing the number of vehicles will be of great help to us. The second point is that as long as the Linke brand and Jike brand are highly platformed, So I would like to add a few remarks.

First of all, after we integrate Lincoln Co-brand and Zika brand, we have already made decisions to cut the models in the R&D pipeline by 20% and to avoid the unnecessary internal competition between the two brands. And accordingly, the R&D expense was also lowered because of this decision. And secondly, I would like to say that the Zika brand products and the Lincoln Co. brand products are all developed based on the platform strategy, so they share a lot in common.

第三个呢,从去年的整个四个季度看来,我们毛利率都在比较好的变化。 实际上今年一季度吧,我们预计吧,应该也还是不错的。 比如说我们预计我们在研发费用的投入方面,

And certainly, I would like to say that if we look at our performance in the last year, our gross margin showed a very healthy growth. And as far as we can see for this quarter, the margin in the Q1 is also quite good. And also, we can see our R&D expense would be lowered by over 20%.

I believe we are confident.

And for the further details of our performance in the Q1, we will release in May in our earnings results. But I can say here that with the organization optimization and the personal optimization as well as the cost reduction on the manufacturing and the BOM costs, we are confident that we can achieve a very good performance in the first quarter.

And I would like to add one point that Zika brand would go further up market.

and this year we plan to launch two large SUVs, and they will both use the super electric hybrid technology, and as we know that the super electric hybrid technology powered products will have a higher gross margin than the battery electric vehicles, and will contribute to better performance of our gross margin.

This industry situation, As we can see in this industry, the products with an agent are always profitable.

So as we plan to, as we launch the two vehicles models with a super electric hybrid technology, we will enjoy, we will see our vehicle margin grow as well as we will further strengthen our brand and further strengthen our sales volume performance. Thank you.

Thank you.

The next question will come from Tim Sayo with Morgan Stanley. Please go ahead.

Hello, Mr. Guan. I'm Tim from Morgan Stanley. Thank you for accepting my question. I have two questions. The first question is probably more basic, which is about the next target of the company. Actually, as Mr. Yuan mentioned, this year, we have seen that since the beginning of the year, the market is very competitive. According to the current market situation, 那也想听听管理层对于我们今年这个2025年71万的这个销量目标这个达成难度是如何去看待。 这是我的第一个问题。 So my first question is about the sales target, because the competition has been incredibly strong this year. So if such competition persists, would it risk a four-year sales target of 710,000 units in 2025? That's my first question.

Thank you, Tim. This is Tim, and you are right. You know, we have set a 710,000 vehicle sales target. You know, among them, sorry, 390,000 will be Lincoln Co. vehicles, and 320,000 will be Zika vehicles. And you can see, you know, we are very confident about the profitability and the integration of Linkango brand that can lead us to a very, very strong financial position starting from fourth quarter 2025. And with regarding to our financial positions, with regarding to our new models, with regarding to, as Ms. Tan mentioned, some of the high margin plug-in hybrid vehicles, we are continuing to guide a full year vehicle business cost margin that is on par with what we were able to achieve on the first quarter of this year. So I think that gives you an indication of, I would call it, our animal spirit. Our ability and our willingness to remain competitive in this very highly competitive market And with the strong, you know, support of our earning ability and our profitability and our financial strength, we think, you know, we are in a much better position than most, if not all, of our competitors to remain competitive and to remain relevant when our customers are looking at, you know, their choices, they're looking at the price tags of the vehicles they're looking to buy. Again, you know, we reiterate our sales target, and we are fully confident we are able to achieve that.

好的,感谢袁总。 我的第二个问题是关于... Tim,稍等一下,安老师。 补充一点啊。 好,谢谢。 全年71万台确实是有很大的挑战, 但是我们还是充满信心,这一句话。 The second sentence, I know everyone is worried about the sales volume of the first quarter. The sales volume of the first quarter may be relatively low for the whole year. I believe, let's look at last year. Last year, it was like 1, 2, 3, 4. This year, in fact, in terms of the first quarter, I think our overall growth, although growth, for the management, it is not... So I believe that through the improvement of driving ability, entering the first team is a basis on this aspect. So I would like to add one point that, of course, it's not easy to achieve the 710,000 annual sales unit target, but we are still confident.

We understand that the sales volume achieved in the first quarter was, according to our management perspective, it's not that satisfactory, but it is also still in line with our expectation. Because if we look at our sales performance in the last year, quarter by quarter, we saw our sales growth very healthily quarter by quarter. And this year, we see that with our new product offering in the second quarter, in the third quarter, as well as in the fourth quarter by Lincoln Co-brand and Zika brand, as well as the further improvement and enhancement of ADAS offerings, we have the confidence that we can achieve the four-year sales volume target.

And in the future, we will launch a new product, as well as launch our facelifted version of our existing popular product.

and our goal is to make every new product very popular among our customers. Next month, in April, we will launch the new Lincoln Core 900 as well as the Zika 007GT. We hope they can be the hit product in the market.

Our product not only needs good technology, but also we will have very good cost-effectiveness.

So our products will have a very competitive technologies and they would also be very competitive in pricing as well.

感謝安董補充。 第二問題是有關於新的車型。 因為剛才其實安董也提到了就是我們今年就是四月份的話有007 GT跟領克H00。 下半年兩款SUV跟領克一款新車型。 My second question is about the new models because The management just updated the model pipeline. Are we going to fight to the launch schedule in response to the intense competition? And secondly, what kind of strategy Zika would take to make sure that all these new models can stand out in such a crowded market? That's my second question. Thank you.

For the launch of the product, I think this year, This product has actually been developed a few years ago. The time has been very clear. In the second quarter, we will have 900 and 007 GTs. In the third quarter, we will have a Lynk and a Geek. In the fourth quarter, we will have a Geek and a SUV.

So regarding the cadence of launch of the new product, because this product has been happening in our product development pipeline for years, and so for the second quarter this year, we will launch the Lincoln Core 900 as well as the Zika 007GT. For the Q3, we will have one Lincoln Co. new product and one Zika new product. And for the Q4, we will have a Zika new product, a SUV. We don't want to launch the product too frequently in a short period of time. So I think the cadence in our plan is healthy.

那对于我们产品如何形成有竞争力脱颖而出? I think we still need to get back to our leading technology. The 9X has been out of the picture and has received a lot of good reviews. The 900 has now arrived at the store and has started to be displayed. It should be said that it has also received a very good user review. I think first of all, from a technical point of view, . . .

So for the product competitiveness, we want our products to stand out in the market with very advanced technologies. So we already released the spy pictures of Zeek 9X, which won the recognition by the customers. And the Lincoln Kona 00, also we have delivered and showed them in the showrooms already, and the customers gave very positive feedback. We hope we have a very advanced technology, so the ZK9X will be the first product to be equipped with ZK's Super Energy Hybrid technologies, and it will have a 900-volt technology to support ultra-fast charging, and it will be equipped with a very advanced ADAS offering.

. . . . .

And also, we will release some more details about the Xeco9X in our product launch event. But nevertheless, our principle is that to equip you with the most advanced leading technologies in the industry to make it very luxurious and comfortable for the customers. At the same time, we still have competitive pricing as far as I can see in the industry. 9X will be very unique and stand out in the market, and I don't see a direct competitor to this model.

For example, 9000, because this information has been mastered by more and more people, it should be said that it has also gained a good reputation in the market. Of course, we will start at the end of next month. At the end of next month, it is expected that it will be launched at the end of April or early May. So, We have already released a lot of details about the product.

and it is well received by the customers, and we aim to launch it either at the end of April or the beginning of May. Currently, we receive a very positive feedback on the product, and people love its product and its technologies, and we would still offer very competitive pricing for the product as well.

在这里我也再讲一下就是这个无论是超级电魂, So I would like to highlight again on one point that the super electric hybrid technology as well as the EMP technology used by the Lincoln Co.

brand are very competitive. And for the GLE holding group, we have been making cars for around three decades. So we have our very unique edge on the powertrain system, including the engines and the gearbox, compared to many of our competitors.

Thank you.

The next question will come from Ming Sun Li with Bank of America. Please go ahead.

安总好,袁总好,那我这边也是两个问题。 那第一个问题呢,还是想先请管理层这边能够梳理一下, 就是未来一年两年之后,这个极客跟领克品牌在自驾策略上会有什么不同? 比如说不同的车型会配怎么样的自驾? I also want to ask, because Mr. Yuan mentioned that we currently, including some finance departments, and He Gui, etc., these colleagues, this merger is going relatively smoothly. But I also want to understand, that is, if it is already developed and designed, if this 100-meter race is running, I don't know how many meters it has run now. I also want to understand, because after all, the value of automation is getting more and more important. My first question is regarding your autonomous driving product strategy. for your Zika brand and also Lincoln Co-brand? And also, right now, what is the progress of your R&D team in the product design integration? Especially in the future, when can we expect the Lincoln Co-brand car can start to use Zika's autonomous driving technology and also smart cabin technology? Thank you.

. . . . . . . . . . . . . S7 and H9, which are thousands of miles away. They are fully equipped with laser radars. Later, they also released the Linker 900, which will also use the H7 system. It is also the industry's first to install a solar chip. So this After the merger, Pique and Link must be the same set of support systems, and the same set of warehouse systems. Of course, because the two brands are different, the warehouse is still a bit different in the entire HMI, but it can be consistent in hardware, software, and middleware.

This is a very good question. Also, as we integrate the Lincoln Co. and the Zika brand, it is, you know, we plan that the DeVos brand will share the unified ADAS solution. On March the 18th, we at the Zika's Chenyi Haohan ADAS technology launch event, we already explained that the Zika brand in the future will use the H7 and H9 ADAS geopilot solutions. all would be equipped with the LiDAR as in our sensor suite. And for the Lincoln Core 900, it would also use the H7 system, and it will be the first product in the market to be equipped with NVIDIA's DriveSource, a very powerful SOC. After we integrated both brands, they will share the same solution of ADAS, and they will share the same solution of infotainment, But of course, we understand that Link&Co and Zika are two different brands. So when it comes to the human-machine interaction in HMI, we would have a different design. But when it comes to the baseware, the middleware, and the hardware, they would share the same solution.

当然对于领克品牌已有的和已经在开发的, 这个我们可能需要一个时间的过渡。 Of course, for those Lincoln Co.

products in the brand product development pipeline, it might take some time for us to have a very unified solution for the ADAS and infotainment, but we aim to achieve the shared platform ADAS and infotainment solution as soon as possible.

And by utilizing the platform strategy, we can enjoy the economies of scale and lower the cost.

and we will speed up in the iterations of the software upgrade.

Very clear. I have a second question here. My second question is about the future of the Linker brand. Because now there is actually an EMP product that is very popular. However, the super electric soul of GECKER may be newer than EMP in terms of soul movement technology. I also want to know if there will be a chance in the future to use such technology on the Linker brand. Or is it that in order to make a distinction between the brands, the power generation technology will also be differentiated? I also want to know, because this afternoon at the GECKER event, The management actually mentioned that in fact, diesel cars are still a major contribution to the whole of 175. I want to know because Link is actually a relatively high-end brand. If you compare it with the whole of Gini, so we will still follow the original, which is the faster speed, will put the diesel car. So my next second question is regarding your powertrain strategy. So currently, Lincoln Co. brand, the technology is the EMP platform, but your Zeker, the super hybrid technology should be more advanced compared to EMV system. So in the future, can we expect that your Lincoln Co. brand will also use the super hybrid technology? And currently, you still sell some ICEV in your Lincoln Co. brand. So do you think that you will retire those ICEV sales faster or gradually? Thank you.

. . . . . . . . . . . . . .

First of all, because the Zika brand and the Lincoln Co-brand are two different brands, so they are different positions. So currently, our planning, the Zika brand will use a super-electric hybrid technology, while the Lincoln Co-brand currently has no plan to use this technology. However, I still would like to say that a lot of components between the super-electric hybrid technology and EMPs are in common. especially on the engines and the gearbox, so we can still have a very good synergy.

I think for the oil truck, as long as we invest in this area, it's not big. We consider that There are still certain needs in China, for example, 0.3, and international markets. So we try to invest very little in oil and gas, to meet some market needs. We still have to quickly invest in our EMP supermarkets and spring stores.

Regarding the ICE vehicles, currently we do not spend much on the R&D of pure ICE vehicles, but still there is some customer demand. For example, in the domestic market, there is some customer demand for the 03 products, and for the international market, still many customers appreciate ICE vehicles. So we would keep limited investment from the R&D for the ICE vehicles to meet these customer demands in the global market. But more importantly, we would further accelerate our R&D investment in the new energy vehicles, such as EMP, super-electric hybrids, and pure battery-electric vehicles.

Thank you, Mr. An. Thank you.

The next question will come from Ting Wenjun with CICC. Please go ahead.

Hello, Mr. An. Hello, Mr. Yuan. I'm Ting Wenjun from Zhongjing. I have two questions. In order to save time, I may ask two questions together. The first is about the export. I would like to ask the two leaders. We are currently in the export area. The overall progress of the business, including what was mentioned earlier, may use the door of the customer's store to carry out some more in-depth layout. And then the second question is that I would like to ask, because the overall positioning of the customer is completely wide, then we also see that it may be like the Geely brand. I have two questions. The first is, what is the current progress of our export business? Does the layout of LinkedIn co-stores help make the business go smoothly. The second question is about how do we view the impact of the position of Galaxy Twin Star models as high-end new energies again on Link and Co.?

老师,这两个问题,谢谢。 好的,首先呢,这个领克和极客, The goal of this year's export is to account for more than 10% of our total sales. This is our overall plan for the year. As for the export, this is the first point. The second point is that within our group, the Group Control Group, we have, in fact, for the customers, . . . . .

So first of all, I would like to say again that for the Lincoln Co., for the Zika Group, this year our target is that the global overseas sales volume make up over 10% of our full-year global sales performance. And secondly, to answer your second question, so inside the GD Holding Group, we have a very clear brand positioning and differentiation between the brands of Lincoln Co., the Zika and the GD Galaxy. So they respectively have their each very clear brand positioning, and they would not conflict with each other. And we have really established a very good mechanism to avoid those unnecessary internal competition.

Thank you.

The next question will come from Ben Wang with Deutsche Bank. Please go ahead.

Thank you. My question is more about financial. You actually elaborate that next year first quarter gross margin will be 15%. Can I confirm this is the vehicle margin or overall gross margin? So what's the comparable number four quarter last year gross margin? If you just mention that there will be one-off positive, can you elaborate what's the one-off positive mean margin looks quite decent? Thank you.

Thank you. This is Jin. As we mentioned earlier, we are targeting or we are aiming to achieve 15% vehicle business growth margin on a consolidated level, which means both Lincoln Co. and Zika combined together for the fourth quarter of 2025 if we were able to achieve a number of one-off synergies we identified when we're doing this Link&Co and Zika consolidation. Unfortunately, there's no public available quarterly data for Link&Co available, but if you look at the 6K, pro forma 6K that we published on our website, you can see that the overall pro forma Zika group consolidated the vehicle business cost margin for the full year 2024, is around 12%, so we're looking at somewhere around 3% improvement on a consolidated level for the fourth quarter of 2025. At this moment, it may take too long for me to elaborate on each of these 1-0 synergies that we identified. you know, due to supply chain, you know, further examination of supply chain and closer examination of, if you remember, Lincoln Co. has their own manufacturing facility, so we're able to, you know, stop or find some leakages over there as well. And, you know, in addition to that, you know, we were able to talk to our suppliers since we were, you know, Zika and Lincoln Co., we are coming together, the whole group, And there's further consolidations with regarding to the R&D. So the future components and parts, you know, that is something we can level down when we're talking to existing suppliers. So, yeah, so I hope that satisfies you.

Because you've mentioned around 3%, bone cost reduction on the coal in the afternoon. Do you consider this 3% deduction in the bone cost in this guidance?

I would argue that this is more than just bone cost, but I think the essence is that we were able to demonstrate within the first quarter of Lincoln Coal and this consolidation, we were able to achieve this kind of cost margin growth.

Okay. And my second question is about your battery sales business. We see a sharp decline in the number four quarter last year. Can you explain why side? So what's the key customer? What change did you decline in the battery sales? Thank you.

Yes. If you look at the battery and other component sales, it is mostly the business on Ningbo V-Ray, Ningbo V-Ray. If you recall, Ningbo V-Ray's price, to a certain extent, Geely Group's EVs and NEVs regarding to battery packs and EV powertrains. A note is that, you know, not all of Geely Group's NEVs are supplied by Nimble Variety. You know, some of Geely Group's products are purchased from their respective suppliers directly. On the other hand, you know, one of the key customers of Nimble Variety Volvo, you know, we continue to supply them battery packs for Volvo's EX30 models. So that contributes to the margin increase in the first quarter of 2024.

Thank you very much. Thank you. Thank you.

The next question will come from Eugene Sile with Macquarie Capital. Please go ahead.

So my first question is on if there's any update on the vehicles that you sold to Waymo and on the in general way the US government had a ban on Chinese software will that have any impact?

So the way that we work with Waymo is a very delicate process so we actually manufacture the bare bone car, the hardware, in China. And then we ship it to Waymo in California. Over there, they will put on the ADAS hardware, and at the same time, they will install all the related software. So when the vehicle clears the US customs, it does not contain any so-called vehicle communication modules. So we make this kind of arrangement to making sure that we are in full compliance with relevant laws and regulations and to minimize any potential risks with regarding to our cooperation with Waymo.

So the vehicle sale this year will be on track as expected before, is that correct?

Yes, so far it's still on track.

Okay, great. My second question is on the self-developed autonomous domain controllers that you showcased at CES. Are those only going to be used on VitaBrand, and will they only be using NVIDIA chips?

You mean the star chips?

The domain controller that was...

The domain controller that we showcase, yes, that domain controller will be equipped not only on Linkenco vehicles but also on Zika vehicles. So it's basically all of our SOAR enabled models in the future are gonna use that ADCU.

But only Zika brand or will Link use it as well?

Both Link and Zika brands, so long as they use SOAR chipset.

Okay. And maybe this is a similar question. Will we still plan to use Mobileye chips going forward? Because I think all the new models are using video chips.

So Mobileye continues to be a very, very important partner with us. And as we mentioned earlier, so for most, if not all, international market-targeted vehicles, we will continue working very closely with Mobileye.

Okay. All right.

Thank you.

Thank you.

The next question will come from Paul Gong with UBS. Please go ahead.

感谢接受我的提问。 第一个问题是关于车款数的。 应该说现在两个品牌合并了过后, 大约有可能15款车左右的车款吧。 然后今年在发布了过后, 就进行了20款车的车款了。 就我们之后追求的这么一个策略, 到底应该是用一种叫车海战术, So my first question is regarding the number of models. I think with the two brands, Right now you have about 15 models, and after this year's new launch, you will have about 20 models in total. Do you think there is any room to eliminate sometimes less popular models, and what do you think is the optimal number of the models?

这个首先可以明确的说肯定是一个爆款战略。 This is our product development strategy. The second is the merger of Link and Geek. After the merger, we are reducing the planning and quantity of our models. We have now achieved more than 20% reduction in quantity.

So first of all, we can make very clear that we hold a hit product strategy, meaning that all the new products we launch to the market, our goal is to make them the respective benchmark and the leaders in their respective segments. So this is our strategy. And after we integrate the Zika brand and the Lincoln Co. brand, as I explained earlier, that we already cut the products in our pipeline by 20%. So this is already explained.

Thank you. So my second question is regarding the R&D budget for this year, and they break down roughly between the models development versus the intelligence and AI, etc.

Yes, thank you, Paul. So if you look at the unauthentic performer combined financial statement, you can see Zika and LinkedIn Co. combined together. Last year, we spent around 1.2, 1.3 billion RMB on a U.S. GAAP accounting standard for R&D. And we are looking at similar or slightly single-digit percentage increase with regard to the guidance we put out for R&D this year. Given that we're introducing quite a few new models, as well as refreshments of all our existing models, as well as improvements in data, smart carpets, et cetera, et cetera, we do believe that is an indication of our overall R&D, improvement of our R&D efficiencies. For 2024, in each of the smart cockpits, as well as ADAS sector, we spend around 1 billion RMB. And as I mentioned, in 2025 and beyond, we are looking to platformize our smart cockpits and ADAS technology between Lincoln Co. and Zika Brands. So we are looking at a similar level of expenditure for both smart comp gates and ADAS in 2025.

Okay, thank you very much.

That's quite helpful. 我再稍微补充一点,就从2023、24包括今年的部分吧, 我们更多在平台化上面花的钱投入相对多一些, 尤其在去年、前年,因为我们在 I would like to add one point that since the year 2022,

to this year, we invest mostly for the platform technology. For example, the mechanical architecture, the electrical and the electronic architecture, infotainment, and ADAS. And these investments in these platforms technologies will bring us benefits this year. And I think in the future, the investment in many areas will be platformized and will not be as high as before.

For example, take a super electric hybrid as an example.

We have already completed, almost completed the development of these technologies. and we will enjoy the benefits of the completion of this product technology development in the coming years.

Yeah, also, sorry to add that if you remember, we continue to reiterate our guidance of around 6% on the expense ratio after the full integration of Zika and Linkenco.

Okay, thank you very much. That's quite helpful. Thank you.

Officer, can we have one last question, please? Thank you.

The last question will come from Juntao Dong with Citrix Security. Please go ahead.

Hello, Mr. An. Hello, Mr. Yuan. I'm Dong Jintao from Zhongxin. I would like to ask a question about intelligentization. From the perspective of the future, what kind of relationship will our intelligent driving team and千里科技 have, including, for example, So my question is about the self-driving. What would be the relation with our self-driving team and the Qianli technology?

The goal is to combine the advantages of the two aspects. Geo-technology has a very good 3D processor. It also has certain advantages in terms of artificial intelligence and large-module models. Geek uses some algorithms, user experience, engineering capabilities, etc. After the two are coordinated, I think this will actually help Geek's branch better. Because this can help our branch in the field of algorithms, uh uh uh uh uh

So as we integrate the Tian Li technology and the ZCAS ZID, we can very well combine the advantage of both sides. So for Tian Li technologies, they have a very good computing power computing centers with very high power computing capabilities, and they are cultivated in the areas in AI and the large language model. For the Zika ZID, we have a very good reserve in the ADAS algorithm, and we also have our engineering capabilities, and we understand how to further improve the customer's experience. So after we integrate the two brands, we can enjoy very good synergy to benefit our ADAS offering to the customers and lower the costs. So for the Zika's ADAS, the development work would be led by Chenqi or Baymax, but this has been no change, and we would further enhance the platform strategy among the Zika brands and the Lincoln Co. brands' ADAS solution offerings.

And in addition to that, I think one key important factor I would like to mention is that for Zika, we will continue to make sure that the engineer team, i.e. the team who actually put the technology on board of both Zika and Lincoln Co vehicle, continue work very closely with the vehicles R&D team. With regard to , as mentioned earlier, as you probably watched the events on the 3rd of March, You know, they are providing with lots of computing power. They are providing with lots of infrastructure. They are providing the backbones for the VLM and MLM models. But the actual implementations of putting those models, those general infrastructures into use, into an actual ADAS system that our customers can reliably and safely use on cars That is 100% in the hands of Zico's team. So thank you all for joining today's call, and hopefully we addressed most, if not all, of your questions. Ms. Tan and us will continue to be able to talk to you in the next few days to come. Meanwhile, if you have any further questions, please feel free to reach out to the VCS IR team. That's all for today. Thank you very much for your time, and have a nice day.

Bye-bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.