Category: Earnings Call

NIO Q1 earnings call: Live text updates

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is holding a first-quarter earnings analyst call and this article will provide key highlights from the call, with the latest being at the top.

NIO is confident that the gross margin will return to double digits in the third quarter and to 15 percent in the fourth quarter.

NIO ES6's locked-in orders have met expectations and the test drive conversion rate is the highest of any model.

NIO is targeting 10,000 units of the new ES6 for both production and delivery in July.

The other models besides ES6 still have a chance to achieve the target of 20,000 units delivered per month, except that the ET5 faces a greater challenge after the withdrawal of national subsidies.

NIO will launch ET5 Touring on June 15.

The sub-brand ALPS is still on track and will start delivering products in the second half of next year. NIO will be managed more carefully in terms of pace and efficiency.

The development of models for NIO's second-generation platform has been completed, and now we need to think about how the marketing team can better sell the cars.

NIO's goal is to obtain a fair share of the current eight vehicles in their segments.

NIO Q1 earnings miss expectations, gross margin drops to 1.5%

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XPeng Q1 earnings call: Key takeaways

aims to reach 15,000 monthly deliveries in the third quarter and 20,000 monthly deliveries in the fourth quarter, its management said.  |  XPeng US | XPeng HK

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XPeng (NYSE: XPEV) reported first-quarter earnings on May 24 and held a conference call with analysts afterward.

Below are the key points compiled by CnEVPost based on the call.

XPeng management presentation

Over the past four months, XPeng orders have grown in each month compared to the previous month, despite macroeconomic challenges and fiercer industry competition.

The high-end version of the P7i, the ternary lithium battery version, has exceeded expectations to the extent that the originally prepared capacity could not meet consumer demand.

Compared to previous versions, the P7i has a more streamlined SKU and a tighter rhythm of launch.

Starting in June, XPeng will work with its supplier partners to increase the capacity of P7i components and accelerate its delivery.

XPeng's first new model based on SEPA 2.0 architecture, the G6, is equipped with the industry's most advanced 800-volt high-voltage system and 3C fast-charging battery with a range of up to 755 km.

The G6 will be delivered with industry-leading XNGP technology, and media test drives of the model began last week, with feedback that the model is significantly different from other electric vehicles on the market in terms of smart driving and energy consumption with 800-volt high-voltage fast charging.

The G6 will be officially launched in June, with volume deliveries starting in July, and production capacity will climb rapidly.

The G6 will be a hot seller in the Chinese new energy SUV market in the price range of RMB 200,000 ($28,325) to 300,000.

Deliveries of the G6 will enable XPeng's total deliveries to grow well above the industry's pace in the third quarter, and the company will see the first sales inflection point following its strategic and organizational realignment.

XPeng will launch a 7-seat all-electric MPV, internally codenamed X9, in the fourth quarter of this year.

XPeng will introduce more clearly defined and better equipped versions of its existing models this year, allowing sales to rise another notch.

XPeng is confident that 2023 will be the inflection point for its smart technology, with the majority of potential customers recognizing its value in 2024 to 2025.

At the end of March, XPeng pushed out City NGP and XNGP features to Max versions of several models in Guangzhou, Shenzhen and Shanghai.

Customer feedback on these assisted driving features has been positive, with mileage penetration exceeding 60 percent in the first month of rollout.

Following XPeng's test drives of XNGP in Guangzhou, Shenzhen and Shanghai, orders for the Max versions of the P7i and G9 in those cities increased significantly in April, by more than 50 percent.

The company plans to officially launch Highway NGP 2.0 in June, and XPeng has rewritten the system based on the XNGP framework with five times more code than the original.

XPeng expects to make Highway NGP 2.0 a near-L4 autonomous driving experience, with virtually zero takeover.

This year, XPeng expects to achieve less than 1 takeover per 1,000 km in highway scenarios.

By the end of the third quarter of this year, XPeng will roll out XNGP without relying on high precision maps in cities in China that do not have high precision maps.

In terms of the difficulty of mass production, XNGP without relying on high precision maps is nearly 100 times more than highway NGP with high precision maps, which is an important watershed to test the team's technical and data capabilities.

The actual user experience will be greatly improved after this feature is implemented. Currently XNGP has reached the driving level of novice drivers.

XPeng hopes to release an OTA update every quarter thereafter to improve the XNGP experience.

As the XNGP continues to break through in experience and cost, XPeng's Max version vehicles with XNGP are expected to see a big increase in sales in the fourth quarter of this year.

XPeng has recently brought in several new designers and will also bring in outside teams to compete creatively with in-house in the design process of new models.

These adjustments will bring XPeng's future new models and facelifts to the top of the industry in terms of interior and exterior styling.

Since the first quarter, XPeng's marketing and service system has changed significantly thanks to the efforts of new president Wang Fengying and the team. The user experience throughout the sales and service process has improved, speeding up the response time to user needs.

One of the core indicators XPeng focuses on, NPS, has been steadily improving every month from the beginning of this year to April, and has returned to the top level in the industry in April.

In the coming quarters, XPeng's primary goal will be to rapidly expand sales to capture a larger share of the electric vehicle market.

XPeng has completed the flattening of the channel management and will optimize the current sales network to improve the overall capacity of the channel.

While improving the efficiency of the sales network in Tier 1 and Tier 2 cities, XPeng will also bring in more dealer partners in Tier 3 and Tier 4 cities to support its product layout and sales targets in the RMB 150,000 to 350,000 price range in the coming years.

Technological changes and fierce competition will reshape the landscape of China's auto industry in the next three years. In addition to excellent product definition and technological innovation, extreme cost reduction and high efficiency will be the key to win.

XPeng's SEPA 2.0 architecture is highly competitive in R&D efficiency innovation, and the mass production of G6 marks that the architecture and XPeng's intense technology development over the past five years have allowed it to build up its technology platform capability.

This will keep XPeng at the forefront of technology for the next three years, while the company is launching more new models based on the SEPA 2.0 architecture that are more cost competitive and have a consistent usage and operating experience.

XPeng is working on several new models that will cover the RMB 150,000 to 350,000 price range, sharing power, electronics, smart cabin and smart driving platforms.

XPeng expects to further reduce the development cycle of new models by 20 percent, and expects to achieve a component sharing rate of up to 80 percent for the architecture part, thus allowing the development cost and BOM cost of future models to be significantly reduced.

XPeng is working on a clear and feasible technical solution to reduce the cost of the Max version by 25 percent by the end of next year.

Competition currently revolves around volume, but after 2025, the focus will be on a combination of innovation at scale, design cost, efficiency, quality, and globalization.

XPeng had over RMB 34 billion in cash at the end of the first quarter, and will allow R&D investment to focus on customer-approved areas in the future.

XPeng will optimize the organization and process management to further improve the efficiency of company-wide operations.

Starting in July, the delivery of G6 and other new products will allow XPeng sales to grow rapidly, and monthly deliveries in the third quarter are expected to be substantially higher than in the second quarter.

XPeng's target for monthly deliveries in the fourth quarter is above 20,000 units, at which time operating cash flow is expected to turn positive.

XPeng expects total deliveries in the second quarter to be about 21,000 to 22,000 units, up 15 percent to 21 percent from the first quarter, and revenue is expected to be RMB 4.5 to 4.7 billion.

Below are the key points of the Q&A session.

Q1: What pricing strategy will XPeng use for the G6 and future models?

A: Currently, XPeng's overall strategy is a balanced pricing approach with scale first.

Pricing for the XPeng G6 and subsequent models will take into account the cost fluctuations of raw materials, including lithium carbonate, and will allow for relatively manageable costs. Ultimately, we expect to achieve competitive pricing and maintain it over time, while prioritizing scale.

Q2: Has the supply chain bottleneck of P7i been solved and how long will the capacity creep time of G6 be?

A: The G6 has been set aside for about two months from SOP to delivery. The model will be released in June and deliveries will start in July. With a two-month cushion, monthly deliveries of the G6 are expected to climb much faster than the G9 and P7i in the third quarter.

Compared to the P7i, the G6 has a well-prepared supply chain and we expect the model to achieve a rapid sales creep.

For the problem of low yield rate of integrated die casting, we have been experimenting for more than a year and it is progressing smoothly and the yield rate is as expected, which will not be a problem for G6.

Q3: What impact do you think the drop in battery raw material prices will have on battery costs, and on gross profit in the second quarter?

A: In the first quarter, XPeng's battery cost decreased by 5 percent compared with the fourth quarter of last year, benefiting from the decrease in the price of battery raw materials, and the battery cost in the second quarter is expected to decrease by 10 to 12 percent compared with the fourth quarter of last year.

Battery costs account for about 40 percent of total costs, so a 7 percent drop in battery costs in the second quarter would mean about a 3-4 percent improvement in gross margin.

This is just a judgment from the raw material perspective, the revenue side also has a very important impact on the gross margin.

Q4: Will you adjust your full-year delivery forecast?

A: G6 will start volume delivery in July, XPeng delivery growth in the third and fourth quarters will be expected to be higher than the market growth rate.

XPeng is expected to reach the target of 15,000 monthly deliveries in the third quarter and 20,000 monthly deliveries in the fourth quarter.

Q5: What is the order and capacity situation of P7i? How do you anticipate the demand for new models?

A: The supply chain bottleneck of P7i is mainly the lack of preparation of battery and battery-related parts. The production capacity of the ternary lithium battery will be improved in May and June, which will be able to meet the delivery demand of P7i ternary lithium battery version.

Regarding the estimation of industry demand and new model demand, the industry is not very stable recently, XPeng's estimation of demand will remain robust and work with suppliers based on this.

Q6: What is the positioning of your MPV model? Does it differ more from the more youthful image of previous products, and how do you make the model relate to XPeng's youthful and technological positioning?

A: XPeng's current main user group is between 25 and 35 years old, and the unemployment rate of young people has no significant impact on sales.

XPeng is thinking about how young people can be associated with MPV when defining 7-seater MPV, and will introduce the logic of young people buying MPV in detail at the end of the year launch.

Q7: What are your expectations for gross margin in 2023?

A: XPeng still has some sales volume pressure in the second quarter, but continued cost reduction will have a positive impact.

In the second half of the year, gross margin levels will improve steadily throughout the year with the delivery of the G6, P7i and MPV.

Significant improvement in XPeng gross margin will come after cost reduction measures start to be implemented and sales volumes improve, which will be reflected in 2024.

Q8: What are your expectations for lithium prices? What is the proportion of lithium iron phosphate and lithium ternary batteries used in the vehicle models? How does this affect costs?

The current short-term lithium price rebound is temporary, and prices will go down in the second half of the year and are expected to fall to within RMB 200,000.

Today XPeng and its peers are pricing batteries flexibly based on market prices.

XPeng's most important innovation goal is to achieve the longest range with the fewest batteries, so the use of lithium iron phosphate or lithium iron phosphate-like batteries will increase significantly in proportion.

This will bring down the cost of the vehicle, safety will be improved, and the range will satisfy the customer.

Q9: What is the contribution of XNGP to orders after its launch?

XPeng launched XNGP in Shenzhen, Shanghai and Guangzhou in March, and customers in these three cities can experience the XNGP features. In April, there was a 50 percent increase in sales of P7i and G9 in these three cities.

XPeng believes that as more cities see XNGP available in the second half of the year, and as the XNGP user experience continues to be optimized, it will help further improve orders.

XNGP will be free of its reliance on high-precision maps by the end of the third quarter when the launch of the feature will not require approval, and it will cover more cities this year and next.

Q10: How does XPeng compare to its peers in terms of assisted driving? Will the short-term decline in sales affect data collection to the extent that it will limit the progress of assisted driving development?

Currently, no other company has reached XPeng's level in cities without high-precision maps, and the company is 12 months ahead of its peers in terms of volume production for autonomous driving.

Current volumes are sufficient for the generalization of vision or language models. It needs to be seen in the future whether more vehicles on the road can improve the accuracy and reliability of assisted driving.

Q11: What are XPeng's breakdown sales targets for different models for the second half of the year?

XPeng wants the G6 to reach more than twice the sales of the P7i, and wants G9 sales to increase from current levels, but cannot provide a breakdown at this time.

Q12: What is XPeng's product plan for 2023-2025? Will a lower-priced model be launched?

XPeng will launch about 10 models on the same platform while controlling costs.

The company's main price range will remain RMB 200,000 to 300,000, while it will also offer products in the sub-RMB 200,000 and over RMB 300,000 price ranges, but not as a primary target.

($1 = RMB7.0609)

XPeng Q1 earnings miss expectations, gross margin falls to 1.7%

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Full text: Li Auto Q1 earnings call transcript

Li Auto aims to reach 30,000 units delivered in a single month in June, the company's management said.  |  Li Auto US | Li Auto HK

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Li Auto (NASDAQ: LI) reported first-quarter earnings that beat expectations on May 10, and held a conference call with analysts afterward.

The following is the text of the call, as compiled and translated by CnEVPost.

Management statement

The Chinese new energy vehicle (NEV) market continued to grow at a high rate in the first quarter, but increased competition triggered a wait-and-see mood among consumers.

Nevertheless, we believe the real strongest players will be born out of the competition. Li Auto achieved the best delivery result in a single quarter in the first quarter.

Continued customer acceptance of the Li L8 and Li L9, strong order intake for Li Auto, and rapid capacity climbing led to 52,584 Li Auto deliveries, up 65.8 percent year-on-year.

This achievement puts us among the top three NEV brands selling above RMB 200,000 in China, with a market share of 11 percent, far ahead of other new car-making brands.

This is another testament to our ability to design and build hot-selling models and the strength of our supply chain, manufacturing, sales and service network.

We will continue to do all we can to grow quickly and expand our leadership position with our strengths.

In April, our deliveries reached another record high of 25,681 units, and cumulative deliveries surpassed 335,000 units, with the Li L7, L8, and L9 all achieving bright performances in their segments.

According to insurance registrations, the Li L7 became the top mid to large-size SUV sales in China after deliveries began in early March.

The L7 exceeded 10,000 units in its first full month of delivery in April, becoming our fourth model to exceed 10,000 deliveries in a single month.

Li L8 maintained its sales leadership in the 6-seater segment. In the full-size SUV market in China, the Li L9 has been the monthly sales leader in every month since it was delivered at the end of August last year.

Led by strong deliveries and thanks to our continuous pursuit of efficiency excellence, financial metrics improved on all fronts.

Li Auto's total revenue for the first quarter reached RMB 18.79 billion, up 96.5 percent year-on-year, and achieved net operating profit and net income.

At the same time, our free cash flow reached another record high of RMB 6.7 billion.

Healthy profitability levels and cash flow will provide strong support for the development of our product platforms and systems, laying a solid foundation for our long-term growth.

The Li L7 and Li L8 opened for delivery in April, further expanding our product pricing and household customer reach.

In the second quarter, Li Auto's market share in the NEV market priced at RMB 200,000 and above will further increase, with deliveries expected to reach 76,000-81,000 units.

Product delivery is only the starting point, and we continue to enhance our product experience through OTA in order to continuously improve the car experience for our family customers.

So far this year, we have completed two major OTA upgrades for the L series, version 4.3 and 4.4, with over 100 updated features and experiences. Li ONE's OTA version 3.3 will also be officially pushed out in mid-2023.

For family users, safety always comes first.

Every model of Li Auto is developed with the strictest standards and undergoes comprehensive safety testing.

In April 2023, the China Insurance Auto Safety Index released its latest batch of reviews, and Li L8 received the highest scores of G for in-vehicle passenger safety, pedestrian safety and vehicle assistance safety.

We will continue to strengthen our commercial capabilities, including upgrading and expanding our integrated online and offline direct sales and service network to support the development of multiple models and provide more convenient and efficient services to our customers.

We are also exporting our brand vision and enhancing our brand influence.

In terms of our retail store network, with the launch of multiple models, we are continuing to add new retail centers and rapidly working on store upgrades, replacing stores that used to be small in size with larger stores that support multiple models.

Since the launch of Li L9 in late June last year, we have optimized a total of nearly 50 existing stores and added more than 50 new stores through location changes and space expansions.

As of April 30, 2023, Li Auto has 300 retail centers in China, covering 123 cities, and 318 after-sales repair centers and authorized sheet metal spray centers, covering 222 cities.

While accelerating our business development, we always integrate sustainable development and deepen our products and services into our corporate governance.

On April 21, we released our 2022 ESG report, which details our continued exploration and progress in the ESG space.

For the second year in a row, we have been awarded double A rating by MSCI ESG. In the future, we will continue to improve our ESE management system, promote the harmonious development of our brand with the environment and society, and create value for the benefit of our users, employees, partners and other parties.

For the next stage of development, Li Auto will advance according to the dual energy strategy released on April 18.

On the one hand, we will enter the smart driving 3.0 era represented by urban NOA. On the other hand, we will open a new chapter of parallel development of extended-range and high-voltage pure electric power.

In terms of intelligence, as of now, we have provided highway NOA function to over 280,000 households, with a cumulative mileage of over 140 million kilometers.

This quarter we will extend smart driving from highway scenarios to city scenarios, pushing the city NOA function of Li Auto AD Max 3.0 to internal test users, and aiming to push it to users in more than 100 cities by the end of 2023.

Li Auto will be the biggest beneficiary of the transformer big model for smart driving because we have the largest number of training samples in China.

In terms of extended range electric vehicle (EREV) and high voltage battery electric vehicle (BEV) models, we will stick to both routes in parallel.

We will optimize the efficiency of the range extender so that users can use electricity in the city and generate power from the range extender on long-distance trips, providing a better experience than fuel vehicles.

We will make pure electric technology better, so that the travel radius of families is not only limited to the city, to achieve a battery travel replenishment experience comparable to refueling.

By 2025, our product matrix will include one super flagship model, five EREVs and five BEVs, further broadening our user base and developing incremental markets.

This year we will invest heavily in the construction of our supercharger network, with our 4C supercharger piles capable of 480 kW peak power, enabling our pure electric models to get 400 km range in 10 minutes.

We plan to build 300 charging stations along highways by the end of 2023, covering the four economic zones of Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area and Chengdu-Chongqing.

By the end of 2025, we will increase the number of charging stations to 3,000, covering 90 percent of the country's highway mileage and major Tier 1, Tier 2 and Tier 3 cities.

In the future, we will continue to strengthen our refined operational capabilities, build organizational capacity to support larger scale, and maintain healthy sales growth.

As we continue to strengthen our smart driving and smart cockpit capabilities and execute our dual product strategy of EREVs and BEVs, we believe Li Auto's leadership position in the NEV market will continue to grow and we believe we will bring more and better choices to a wider range of customers.

Analyst Q&A

Q1: What do you think the gross margin trend of Li Auto in the next few quarters?

Li Auto's volume size increased in the second quarter, with lower parts and battery costs, but at the same time, the cheaper Li L7 and Air versions continue to contribute to sales. What is the combined impact of this?

Do you expect gross margins to rebound to 20 percent or more in the next few quarters?

A: We are confident that gross margins will improve.

In the first quarter, Li One contributed 1.6 percent to gross profit, and in the first half of the year, Li One will be fully sold out.

With the new Li L7 model and the growth in deliveries of the Air version models, we still have room for gross margin growth and maintain our full-year gross margin guidance at 20 percent.

Q2: Li Auto plans to open up the city navigation assisted driving feature during the year, especially for early bird users for internal testing. Could you please share the initial size of the test users and the exact timeline for pushing it out to all car owners.

Based on your analysis of users, how will Li Auto's target household users' habits for city assisted driving differ from those of the average car owner? How much of an impact will this have on consumer purchase decisions, as well as the home user experience?

A: The city NOA testing is progressing well, both system level testing and road testing.

We will start testing for early bird users in June, and the rules are currently being developed. We will first select users based on how often they use the highway NOA function and their driving habits in the early days.

At the same time, we also hope that these users will be willing to use the smart driving function and that early bird users will have a higher tolerance and understanding of this set of functions and system.

According to the set target, we will push the city NOA function in 100 cities in China by the end of this year, and the pushing order and logic are related to the local vehicle ownership.

Since the whole technical architecture does not rely on high-precision maps, theoretically, the city NOA assisted driving function can be used anywhere there is a navigation map.

If a city has high ownership of the Li L9 and Max versions and more vehicle miles driven, it may get the function earlier.

Coverage of complex intersections is also very important in the evaluation process. We will gradually advance the opening of the feature in 100 cities based on the training of complex intersections.

Li Auto targets home users, who require more safety for smart driving, want a driving experience more like a human driver, and need more comfort.

During the testing process, we will do more like shadow testing, real car testing, and testing for extreme working conditions, so that users can use the city NOA function with confidence under safe and reliable conditions.

Q3: When do you expect monthly sales to reach 30,000 units? Will the release of the pure electric flagship model, which was planned for this year, be delayed until next year?

A: Our deliveries are expected to grow gradually in the second quarter, and we aim to reach our goal of 30,000 units delivered in a single month in June.

Our BEV flagship will be launched in the fourth quarter of this year, and show cars and test drives will be available soon after the launch, similar to the pace of the Li L9, Li L8 and Li L7.

Q4: Li Auto's R&D expenses in the first quarter were lower than last year's fourth quarter, and sales and administration expenses did not increase compared to last year's fourth quarter.

In the next few quarters, will you maintain the same R&D budget or tend to be more frugal?

Can you update your guidance on sales and administration expenses?

A: Our full-year R&D expense guidance is maintained at RMB 10-12 billion, and SG&A expense ratio will continue to be optimized.

Q5: During the Shanghai auto show, we saw another car company from northern China launch a model about the same size as the Li L8, but priced lower than the Li L8.

How do you see more car companies launching similar models and how will this affect Li Auto's existing models?

A: In terms of our actual orders, the Li L8 orders are continuing to grow.

And more and more brands are competing, which can bring a lot of benefits for relatively leading products like ours.

Many users are looking at the various marketing, which in turn has increased the number of orders for the Li L8, which is actually very beneficial for us.

In terms of the specific model, the one you mentioned is not in the top 20 in terms of competitor sales, and the Li L8's biggest competitor is still the Model Y.

Q6: Based on Li Auto's current size and market share, are you currently looking more at profitability and cash flow, or more at market share and sales?

In this competitive environment, is there a chance for the entire NEV industry to see improvement this year?

How do you see your pricing as battery prices drop? Will you consider offering discounts in exchange for greater market share?

A: For us, market share is the most important thing right now, so our core goal in Q2 is to increase our share of the market priced above RMB 200,000 from 11 percent in Q1 to 13 percent.

We are not considering price reductions at this time because we have set each of our models at the most competitive price point in their class, size and price range when we do detailed long term planning and pricing.

Q7: When Li Auto announced its dual energy strategy in April, it mentioned that the goal is to have a product matrix consisting of one super flagship model, five EREVs and five BEVs by 2025.

Will your future capital expenditure related to BEVs be mainly on charging stations: what will be the approximate capital expenditure in the next few years?

A: Our capital expenditure in the past 3 years is at RMB 10 billion, and in the 3 years after starting from this year, including the construction of charging stations, it is expected to be at RMB 18 billion.

Q8: Will Li Auto's pure electric MPV be offered in a version with extended-range technology? At present, among large MPVs, BYD Denza D9 has the best sales, of which 70 percent of sales are for D9 PHEV.

What is your product strategy in the RMB 200,000 - 30,000 range? Is there a timeline for product launches?

How does Li Auto plan to differentiate and challenge the mid-size or compact models in the more intense but roomier market?

A: In order to create a high-voltage pure electric model, Li Auto has been working on research and development for a long time, and has done a lot of advance preparation in terms of supply chain qualification.

Li Auto's core objective is to make the high-voltage EVs priced close to the EREVs and to get similar gross margins.

Whether Li Auto's EREVs or BEVs, we have one core goal, which is to be able to replace traditional fuel vehicles on a large scale.

One of the two most important things involved here is the ability for users to use the vehicle without obstruction. That's why Li Auto is building supercharging piles along the highway on a large scale, so that the real user experience and safety and convenience can be comparable to driving a fuel car.

On the other hand, we can't pass on the cost to the consumers. Li Auto is trying to reduce the cost through effective R&D and supply chain layout, so that users can buy the most competitive products in the same class at a more suitable price.

Q9: Li Auto will launch more models. So, what are your plans for the sales and service network in the next 2 to 3 years, especially in the third and fourth tier cities?

A: Due to the increase of our models, we will upgrade our past stores that can only show 1-2 models.

In cities where we have a good market share, we will open a large number of open integrated stores, because the conversion rate and user test drive experience will be better in such stores.

We will cover almost all the fourth-tier cities in the future, and in those cities, the effective way is to open integrated stores in large-scale auto cities.

So our overall strategy and coverage will be similar to that of Mercedes-Benz, BMW and Audi, as these established brands have proven that such an approach works.

Q10: What is the trend of new orders for Li Auto since the Labor Day holiday, and how are sales of the Air version models going? What are your expectations for this version?

How are Li Auto's sales in cities outside of Tier 1 and Tier 2 cities? Are these smaller cities contributing more sales than before?

After reaching 30,000 deliveries in a single month, is there any room for the three models of Li Auto to further increase sales in the third and fourth quarters? Will higher deliveries be expected?

A: In the past, May was usually a slow month for car sales.

However, in May this year, both the number of orders and deliveries for Li Auto were significantly better than the performance in April.

With the availability of the Air version test cars, there was a significant increase in orders. The Air versions of the Li L7 and L8 are currently bringing in roughly 20 percent of incremental orders.

The current Li Auto sales growth is best in the new Tier 1 cities, which are the real main consumers of SUVs priced above RMB 300,000.

The overall distribution of Li Auto users is still relatively healthy.

In the long run, Tier 3 and Tier 4 cities are the core areas where Li Auto will focus on expanding to gain more market share in the future.

Q11: What are the main difficulties Li Auto will face when expanding to lower tier cities? How do you plan to deal with them?

A: Li Auto initiated an organizational process upgrade in the first quarter. The significant change is that we are now managing by province instead of by region.

In the fourth quarter of last year, the number of Li Auto stores did not increase much, but the output of single store, as well as the output of single person per product specialist, has increased significantly, and the conversion rate of leads and orders has also gained a very significant improvement.

As for how to expand in third and fourth tier cities, Li Auto will trust more in the judgment and ability from store personnel after the new process management upgrade, and they will manage according to what they think is the most effective way.

Q12: Does Li Auto have any plans for capacity expansion this year and next year? You faced some parts shortages last year, are there any bottlenecks in this area this year?

A: At present, Li Auto has two production lines in Changzhou, Jiangsu province, one of which is used to produce the Li L9 and Li L8, with a capacity of 20,000 to 25,000 cars per month in double shifts.

The other production line, which produces Li L7 and Li L8, is currently operating on a single-shift basis and has a capacity of 10,000 to 12,000 vehicles per month. The production capacity can be further increased later depending on the demand for deliveries.

The production of L8 can be balanced on these two lines.

As of now, these two production lines in Changzhou can meet the delivery demand this year.

The Beijing plant is designed to produce pure electric models, with an annual capacity of 100,000 units. In the future, we will optimize the production lines and production work based on the release of more models and demand.

Li Auto sees Q1 revenue beat expectations, net income up 252% from Q4

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BYD expects its Q1 NEV sales to grow over 80% YoY, aims to be largest automaker in China by year-end

Based on January-February retail sales, is already the largest automaker in China with an 11.8 percent share.  |  BYDDY.US | BYD HK

BYD's new energy vehicle (NEV) sales are expected to maintain strong growth in the first quarter, despite the overall weak performance of China's passenger vehicle market.

In January and February, year-on-year growth in Chinese vehicle demand was slightly weaker, but BYD still maintained strong growth, the company's chairman and president, Wang Chuanfu, said at a conference today.

BYD's sales in January and February were much higher than a year ago, and in a few days, March figures will be released, and first-quarter sales are still expected to grow by more than 80 percent from a year ago, Wang said.

BYD yesterday announced its full-year 2022 and four-quarter results, showing a more than 10-fold year-on-year increase in net profit in the fourth quarter. The company held an investor meeting today that was not public, but the main points are being covered by local media.

BYD sold 151,341 and 193,655 NEVs in January and February, respectively, for a two-month total of 344,996 vehicles, up 90 percent year-on-year, according to data monitored by CnEVPost.

The company sold 286,329 vehicles in the first quarter of last year, and the more than 80 percent increase would mean sales of more than 515,400 vehicles in the first quarter, or more than 170,000 vehicles in March.

Wang also mentioned that BYD aims to be the largest automaker in China by the end of this year.

It is worth noting that BYD is already the largest automaker in China based on January-February sales.

BYD's retail sales of 316,417 units in January-February were the highest of all car companies in China, with an 11.8 percent share, according to a list published earlier this month by the China Passenger Car Association (CPCA).

FAW-Volkswagen was second with 221,946 retail sales in January-February, with an 8.3 percent share, and Changan Automobile was third with 209,825 units, or 7.8 percent share.

Wang, referring to the recent price war in China's auto industry, said today that the reason behind this is that supply is outstripping demand and some car companies will be phased out while others will gain greater market share.

China's home appliance and mobile phone industries have been through this, and the NEV industry will be no exception, he said.

If the supply in the auto industry is still greater than the demand, the price war will continue, he said.

The price war has had a certain psychological impact on consumers, but these effects are expected to be reduced by the end of April and market confidence will gradually return as several local auto shows take place in May, according to Wang.

He also mentioned that BYD has no plans to enter the US passenger car market for the time being.

BYD's Q4 net profit up over 10 times year-on-year to $1.06 billion

The post BYD expects its Q1 NEV sales to grow over 80% YoY, aims to be largest automaker in China by year-end appeared first on CnEVPost.

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XPeng Q4 earnings call: Key points of transcript

announced its fourth-quarter earnings today and held a conference call with analysts.

Below are the key points mentioned by XPeng chairman and CEO, He Xiaopeng, during the call.

Inflection point

XPeng is approaching an inflection point, as we have clearly identified what our goals are, and what our strengths and weaknesses are.

Our overarching goal is to make XPeng a leader in the Chinese EV market, and ultimately win the global EV race.

Senior hire & org changes

The organizational restructure started with changes and upgrades in our top leadership. Ms. Fengying Wang brought us more than 30 years' experience in the automotive industry.

Fengying is taking full responsibility for our product planning and sales operations, and is also in charge of our product platform management scheme.

Her extensive industry experience, in-depth market insight and strong execution capabilities will help our products capture customer demand more accurately, while greatly improving efficiency in our sales and services divisions.

At the same time, the adaptations to our managements' organization are geared toward a flatter and more concentrated structure.

Since February, all design, R&D, production, supply chain and organizational management functions directly report to me.

I believe that these shifts will significantly improve our planning capabilities and lift the efficiency of our decision-making and execution in the coming months.

More importantly, these adjustments have effectively refreshed our execution and competitiveness. For the foreseeable future, I will remain focused on lifting the labor efficiency across our organization by multiple times so as to generate increased customer value with the same headcount, and greatly reduce costs across a full range of processes through technology innovation.

Product planning and design

With regard to our product planning and design, we concentrate on customer-perceived value and product differentiation in our innovation. We will make substantial changes to future products' model configuration mix, whole-vehicle modularized design and consistency in smart features.

In terms of interior and exterior styling and design, to meet XPeng customers' high standards for aesthetics, I am directly running the styling design division and building three teams that compete with each other to generate creative ideas.

These initiatives will continuously improve our interior and exterior styling and space design capabilities.

Customer-centric

We incorporated the Net Promoter Score, or NPS, into the core performance indicators for a variety of business functions and require feedback collection on a monthly basis.

The NPS performance evaluation will anchor the transformation of our product planning, design and development toward a customer-centric pathway. I believe our new products, new OTAs and new services-to-come will demonstrate substantial progress.

New P7i launch

Our in-store traffic and test-driving volume both hit new heights in recent months following the P7i's launch. This new product's smart features, styling design and performance, among other clear advantages in rivalry with similar products were well received among customers.

Amid the market's prevailing weakness in new order intake, our results outperformed the market. Our new order intake in February increased 100% over the previous month.

With the strong momentum of P7i orders following its official launch, we expect to see a considerable month-on-month growth of total new order intake in our March. This marks an initial success following our comprehensive transformation, which has also boosted our company morale.

New SUV G6

Our second new product model coming up this year – the G6 – will make its debut at the Shanghai auto show. Its official launch and vehicle deliveries will occur around the middle of this year.

The G6 will bring the most advanced electrification and smart mobility technologies to the 200,000 to 300,000 yuan-priced NEV SUV market. With unrivaled interior space, range, styling and interior decoration, we believe the G6 will become the top-selling model in its market segment.

Following the ramp-up of G6's mass production, we expect G6's monthly sales target to be 2 to 3 times that of its P7 predecessor's sales.

In addition, in the second half of 2023, we will launch a brand-new BEV 7-seat MPV.

This new MPV model is designed to cater to customer cohorts that demand larger interior room, while serving the needs of our family customers for a human-machine co-pilot.

Chat GPT

Recently, Chat GPT4.0 and other AI-based applications have created a buzz among hundreds of millions of users on the massive potential of generative AI models.

Given this development, there is an even higher possibility that autonomy technology further advances from Level 4 to Level 5.

We expect to incorporate GPT technology deeply into XPeng's business across the board to create groundbreaking user experiences and exceptional improvements to our operational efficiency.

XNGP

In March, we began to accelerate the OTA rollout of City NGP, compatible with multiple models, in several cities including Guangzhou, Shenzhen and Shanghai.

Through City NGP's OTA, we took the lead in mass producing the Transformer-based BEV time-series network, XNET, in China, which achieved a milestone in deep learning algorithm development and application.

In the second half of this year, XNGP, powered by XNET's deep learning algorithms, will no longer depend on a high-definition map. That said, XNGP will be supporting drivers on more urban roads, and across even broader geographic coverage nationwide.

Results from our testing showed the new version of XNGP outperformed peer's actual on-road performance in the United States. This leads us to believe XPeng's autonomous technology and its customer adoption is approaching a pivotal turning point.

While keeping high safety standards remains a top priority of our technology advancements, we will also be focused on rapid development to improve scenario coverage, user experience and software and hardware cost optimization.

In terms of scenario coverage, we have expanded the usage of the advanced technology from highway scenarios into city scenarios, where ADASs are used at high frequency and even become an essential driving tool.

Going forward, we will strive to further broaden ADAS usage to more end-to-end driving scenarios, such as internal compound ways and non-public roads, and expand our geographic coverage from three cities to more major cities nationwide beginning in the third quarter.

In terms of user experience, we have achieved an important psychological barrier for customers to use autonomous driving to "relieve" drivers, that is, drivers can let the machine safely take the wheel, resting assured that they are acting only as a supervisor.

Looking ahead, we expect that through continuous OTA upgrades, XNGP's driving skills will escalate every year and in 2-3 years reach a level that is equivalent to a human driver with 3 years of driving experience. We also expect that the number of manual takeovers per 100 km will be reduced to one or fewer.

Cost cut

Regarding cost efficiency, we plan to cut XNGP's BOM cost significantly next year and adjust our sales model from one that bundles sales of software and hardware, to one that splits the sales of software and hardware, which is going to enable autonomous driving on all of our new vehicles, and allow more customers to use the latest autonomous driving capabilities.

In pursuit of breakthroughs in the aforementioned three realms, we will bring great value to our customers and build out competitive edge in technologies, delivering long-term, sustainable revenue growth at scale and with improved margin contribution.

It has been said that the past five-year period was the golden age for new energy vehicles. I believe the next five-year period will be the golden age for autonomous driving.

During the five years to come, XPeng's highly advanced autonomous driving technology will help XPeng accelerate our ability to gain top market share.

More powerful cost control will be the core competitive edge that will enable XPeng to secure its leadership in the EV market. We will advance the platform-based approach and technology innovation to propel our cost reduction strategy.

Platform approach

Entering 2023, we are applying a full platform engineering approach for our BEV vehicle platform, electrical and electronic architecture, powertrain system and ADAS software and hardware development.

This signals that we are entering a new phase of car-making in a unified system. In this way, we are able to develop products with superior customer experience at a faster pace and a lower cost.

In the past, our R&D strengths were primarily manifested by our leading product performance. In the future, our R&D strengths will be underlined by maintaining the leading performance while achieving remarkable cost reductions.

We have mapped out our strategic execution roadmap with associated cost reductions include an over 50% decrease for autonomous driving costs and an about 25% decrease for vehicle hardware costs (including powertrain) over the 2023-2024 period by means such as technology innovation and optimized configurations.

I am pleased to see the design, technology R&D, supply chain and manufacturing teams are now working in a synergetic way to make our products more competitive through innovation.

Cash resources

In terms of cash liquidity, our cash on hand at the end of 2022 amounted to over RMB38 billion. As we have nearly completed our investments in our two manufacturing bases over the past few years, our Capex will decline substantially. We have also established three powerful vehicle platforms that can support a serial of new model launches over the next three years.

Our R&D will further concentrate on initiatives that best correspond with long-term trends and further differentiate our product in terms of customer experience and cost. We will also pursue improvements in our operating efficiency throughout the entire process.

For example, within our sales operations, we strive to improve same-store efficiency by optimizing our store network. We believe these cost optimization efforts will start to deliver material results beginning in the second half of this year.

Expanding scale

Expanding our scale and market share to achieve economy of scale in both software and hardware is the primary goal in our long-term strategy.

Although the product and management adjustment cycle in the automotive industry is more difficult than other industries and takes a longer period of time, we are still willing to sacrifice short-term sales and more patiently pursue greater victories in the medium- and long-term.

Looking ahead

Excitingly, as we rapidly implement adjustments and changes to our management, in addition to instituting a host of upgrades and iterations in our product portfolio and marketing capabilities, we have seen encouraging changes and positive results.

I am firmly convinced that beginning in the third quarter of this year, XPeng's monthly sales number will achieve significant growth, both sequentially and year-over-year, as well as be much higher than the industry's average growth rate.

I would reiterate that our current focus is on building and improving our capabilities in organization, product design, marketing and cost control. Continuous efforts in refining management and accelerated new product launches in the era of autonomous driving will lead us to the next level of exponential growth. We will continue to strive for this goal.

Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between RMB4 and RMB4.2 billion.

XPeng Q4 revenue misses estimates, gross margin falls to single digit

The post XPeng Q4 earnings call: Key points of transcript appeared first on CnEVPost.

For more articles, please visit CnEVPost.

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