Li Auto Inc

HKEX:2015

Earnings Call Transcript 2020-Q4

[Operator]

Hello, ladies and gentlemen, thank you for standing by for Li Auto's Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded.

I will now turn the call over to your host, [ Janet Chang, ] Director of Investor Relations of the company. Please go ahead, Janet.

[Unknown Executive]

Thank you, Annie. Good evening, and good morning, everyone. Welcome to Li Auto's Fourth Quarter and Full Year 2020 Earnings Conference Call. The company's financial and operating results were published in the press release earlier today and were posted on the company's IR website.

On today's call, we have our President, Mr. Kevin Yanan Shen; our CFO, Mr. Johnny Tie Li; and our CTO, Mr. Kai Wang, to begin with prepared remarks. Our Founder and CEO, Mr. Xiang Li, will join for the Q&A discussion.

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 Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. 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 filings of the company with the U.S. Securities and Exchange Commission.

The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Li Auto's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to Li Auto's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.

With that, I will now turn the call over to our President. Please go ahead, Kevin.

[Yanan Shen, executive]

Thank you, Janet. Hello, everyone, and thank you for joining our call today. The fourth quarter capped off a year of significant growth and robust financial results for our company. Our team's strong execution yielded record fourth quarter results that comfortably beat our outlook. We delivered 14,464 Li ONEs in the fourth quarter, up 67% quarter-over-quarter.

Our robust deliveries drove revenue growth of 65.2% compared with the third quarter, reaching RMB 4.15 billion. With 32,624 vehicles delivered to our users in 2020, Li ONE was the best-selling new energy SUV of the year in China, a testament to its highly competitive product features. This outstanding performance was fueled by strong demand driven by our distinctive product offering and superior user experience, and made possible by our focused product strategy and our ability to rapidly scale up a consistent and high-quality manufacturing process to meet demand.

We believe that evolving consumer preferences for smart electric vehicles together with advancing technologies will continue to be tailwinds for our long-term sales growth. Taking into consideration of seasonality and the impact of COVID-19 in Northern China, we expect our first quarter deliveries to be between 10,500 to 11,500 units.

On the profitability side, our gross margin remained robust at 17.5% in the fourth quarter, reflecting our manufacturing efficiency and disciplined cost management approach. Most notably, we achieved a record-high operating cash flow of RMB 1.82 billion, nearly doubled from the third quarter and raised USD 1.53 billion in proceeds through our successful follow-on offering, setting a solid financial foundation as we increase investment for autonomous driving technology and a BEV platform to drive our future growth.

We remain committed to proactively serving our users by anticipating their needs. And as a response to the increased demand for our vehicles, we have steadily expanded our direct sales and servicing network. As of January 31, 2021, we had 60 retail stores covering 47 cities and 121 servicing centers and also authorized the body and the paint shops operating in 89 cities. We will continue to broaden and deepen city coverage to address increasing demand from prospective users across China and prepare ourselves for the new model launches in 2022 and beyond.

At the same time, we strive to continue strengthening our digital systems to integrate and connect all the stages of the sales and servicing processes to maintain a high level of sales efficiency. As the user-driven automotive and technology company, we always prioritize our users' comfort and safety. We are very proud of the outstanding safety rating results of our Li ONE achieved. Li ONE was awarded the highest safety rating in 3 out of the 4 China Insurance Automotive Safety Index evaluation categories in January; 5-star ratings in China Automobile Health Index assessment; and a 5-star China New Car Assessment Program safety ratings in February, make it the only large premium SUV model that has received top scores in all 3 indexed programs.

We aim to make Li ONE best-in-class and believe that iteration is necessary for groundbreaking innovation. We constantly collect feedbacks and the suggestions from our users through our app and also our customer service centers to provide update through FOTA. By doing so, not only we delivered more value-added products and services, but also nurture a long-term relationship with our users, which will be very helpful to enhance the value in the long run.

Since the start of the delivery in December 2019, we have released the 13 major vehicle over-the-air upgrades. On demand -- on December 26, 2020, our delivered software Version 2.0 through OTA updates bringing 12 new features such as front vehicle smart alert, adaptive cruise speed, dashboard camera playback, multiple user setting and also updating the copilot entertainment system. Plus another 12 enhanced functions, including new interfaces for the dashboard, touch screen control panel and also updated applications such as navigation map. As of February 18, we had users in 328 cities across China, with cumulative mileage exceeding 330 million kilometers. 97.1% of users expressed satisfaction with Li ONE in the survey we conducted in January 2021, and were willing to recommend Li ONE to their friends. As always, we are grateful for the consistent support and trust from our users.

Looking forward, we will accelerate the development of second-generation extended-range platform and also the high-voltage BEV technologies in order to enrich our model mix to cater to the needs of a wider range of users, while adhering to our brand positioning of premium smart electric vehicle. All of these efforts are aiming at maximizing the value proposition for our users. We are planning on the reconfiguration of our state-of-the-art Changzhou factory for our new model pipeline, especially the full-size premium SUV based on brand-new architecture to be launched in 2022. With the establishment of our Shanghai R&D center, we are also expediting our R&D effort across the board. Having successfully completed the first phase of our strategic cycle and entered the second stage this year, we will continue racing ahead towards our mission, creating homes on the move that bring happiness to the entire family.

With that, I would like to turn it over to our CTO, Mr. Kai Wang, for a closer review of our R&D efforts. Please go ahead, Kai.

[Kai Wang, executive]

Thank you, Kevin. Hello, everyone. Let me share with you the progress we have made on R&D since the last earnings call. We are on course with our brand-new architectures for the full-size premium electric SUV to be launched in 2022. It features a scalable and [indiscernible] upgradeable ECU and sensor set enabling more use cases via OTA. In particular, we are collaborating closely with NVIDIA and Desay SV to equip our next model with the powerful NVIDIA Orin SoC chipset. With scalable setup, we could expand our vehicles' overall computing power up to 2,000 TOPS. Along with our complete in-house algorithm and closed-loop data environment, we can progressively reach level-4 autonomous driving. The projects goes well and everything is on track.

One of the priorities for me as CTO is to attract brilliant scientists, researchers and engineers to join our team to developing cutting-edge smart electrical vehicle technologies as we aim to bring world changing innovations to people's everyday lives. We are excited to kick off 2021 with announcement of our new R&D center in Shanghai, dedicated to the development of cutting-edge electric vehicle technologies such as high-voltage platforms and ultra-fast charging technologies. This R&D center will have end-to-end development capabilities for new models. We chose Shanghai as the location due to the abundant availability of topnotch talents with expertise in smart vehicles in and around the city alongside a rich supply chain. As establishment, we are not only accelerate our new model launches and development of smart vehicle technologies, but also our recruiting efforts.

Recruiting at R&D center has already started. We will ultimately build a team of over 2,000 staffs. In meanwhile, we are establishing collaborations with top universities and research institutes in China. More updates will be released in future.

Now I will turn this call over to our CFO, Mr. Tie Li, to review our financial performance in the fourth quarter.

[Tie Li, executive]

Thank you, Kai. Hello, everyone. I will now go over some of our financial results for the fourth quarter of 2020. To be mindful of the length of this call, I will address financial highlights here and encourage you to refer to our earnings press release, which is posted online for additional details. Please note that currencies mentioned below are RMB.

Total revenue in the fourth quarter of 2020 were CNY 4.15 billion, representing an increase of 65.2% from CNY 2.51 billion in the third quarter of 2020. This included CNY 4.06 billion of vehicle sales in the fourth quarter of 2020, representing an increase of 64.6% from the third quarter. The increase in vehicle sales was mainly due to 67% increase in vehicle deliveries to 14,464 vehicles in the fourth quarter of 2020 from 8,660 vehicles in the third quarter of 2020.

Revenues from other sales and services were CNY 89.2 million in the fourth quarter of 2020, representing an increase of 93.5% from the third quarter. The increase in revenues from other sales and services was in line with the increased vehicle sales and the increased number of vehicles using our services. Cost of sales in the fourth quarter was CNY 3.42 billion, representing an increase of 70.1% from the third quarter. Vehicle margin in the fourth quarter was 17.1% comparing to 19.8% in the third quarter of 2020. The decrease was primarily due to the decreased onetime rebate from suppliers compared with the third quarter of 2020. Gross margin in the fourth quarter was 17.5% compared to 19.8% in the third quarter which was mainly driven by the change in vehicle margin.

Total operating expenses in the fourth quarter were CNY 803.5 million, representing an increase of 18.7% from CNY 676.7 million in the third quarter of 2020. Research and development expenses in the fourth quarter of 2020 were CNY 374.2 million representing an increase of 11.9% from CNY 334.5 million in the third quarter of 2020. Excluding share-based compensation expenses, non-GAAP research and development expenses were CNY 369.1 million, representing a quarter-over-quarter increase of 32.4%. The increase in research and development expenses was primarily attributable to increased research and development activities for the company's next vehicle model and increased headcount, offset by the significant decrease in share-based compensation expenses over the third quarter, in which period higher cumulative share-based compensation expenses were recognized related to the stock option granted to employees with service conditions and performance conditions related to the IPO.

Selling, general and administrative expenses in the fourth quarter of 2020 were CNY 429.3 million, excluding share-based compensation expenses. Non-GAAP selling, general and administrative expenses were CNY 426.8 million, representing an increase of 61.5%. The increase in selling, general and administrative expenses was primarily driven by the increased marketing and promotional activities and increased headcount, offset by the significant decrease in share-based compensation expenses over the third quarter of 2020, in which period higher cumulative share-based compensation expenses were recognized related to the stock options granted to employees with service conditions and performance conditions related to the IPO.

Losses from operations in the fourth quarter of 2020 was CNY 78.9 million, decreasing by 56.2% compared to a loss of CNY 180 million in the third quarter. Excluding share-based compensation expenses, the non-GAAP loss from operations was CNY 71.1 million, increasing by 58% from the third quarter of 2020.

Net income was CNY 107.5 million in the fourth quarter of 2020 compared to CNY 106.9 million net loss in the third quarter of 2020. Non-GAAP net income was CNY 115.4 million in the fourth quarter, representing an increase of 621.3% from CNY 16 million in the third quarter of 2020.

Now turning to our balance sheet and cash flow. Our cash and cash equivalents, restricted cash, time deposits and short-term investments totaled CNY 29.87 billion as of December 31, 2020. Operating cash flow in the fourth quarter of 2020 was CNY 1.82 billion, nearly doubled from CNY 929.8 million in the third quarter of 2020. Free cash flow was CNY 1.6 billion in the fourth quarter of 2020, representing an increase of 113.2% from CNY 749.9 million in the third quarter of 2020. As of December 31, 2020, we had a total of 4,181 employees. For more of our 2020 full year financial results, please refer to our earnings press release for further detail.

And now for our business outlook. For the first quarter of 2021, the company expects deliveries to be between 10,500 and 11,500 vehicles, representing an increase of 262.6% to 277.1% (sic) [ 297.1% ] from the first quarter of 2020. The company also expects the first quarter's total revenues to be between CNY 2.94 billion to CNY 3.22 billion, representing an increase of 245.9% to 278.8% from the first quarter of 2020.

I will now turn the call over to the operator to facilitate our Q&A session. Thank you.

[Operator]

[Operator Instructions] First question comes from the line of Fei Fang of Goldman Sachs.

[Fei Fang, analyst]

[Foreign Language] Let me just translate for myself very quickly. My first question is about the sequential decline of the first quarter volume guidance. Can management elaborate on the decline, what drives it on the demand or supply side? Second question is about the recent car plate policy from the Shanghai government. The city obviously announced it will no longer provide green plate to plug-in vehicles effective in 2023. Can you talk about your view on this and your projected impact on forward performance?

[Yanan Shen, executive]

Thank you, Fei Fang. This is Kevin. I'll answer your questions. Your first question, we think that a modest month-over-month decline does not mean that our sales are encountering bottleneck. Single model sales of over 5,000 per month still demonstrate that our Li ONE is very competitive. Deliveries in January 2021 were 5,379 and in December was 6,126, an average for these 2 months were 5,753. These numbers are in line with our prior growth expectations.

We think that during the Chinese Spring festival in February and also the upcoming Chinese Lantern Festival, our sales will be affected by the seasonality for sure. In addition, considering the impact of COVID-19 in Northern China, we are putting out a relatively conservative delivery guidance for the first quarter of 2021. We are confident that with the expansion of our retail store and the effective control of the pandemic, our sales will gradually increase.

About the -- your second question about Shanghai. The policy change in Shanghai was within our expectation, with an implementation time that is even later than we expected. Also, we believe the details of this policy and this implementation may change in the coming 2 years. We keep a constant communication with Shanghai local authorities. The implementation of this policy in 2023 will actually encourage users to purchase EV and PHEV and also EREVs in advance. We expect the demand for EREV and PHEV will, in fact, reach a peak in 2022.

On the other side, Shanghai only account for 9% of our total deliveries in 2020. And this policy change will have a relatively small impact on our company as a whole. Cities without license restrictions account for more than 55% of our accumulated deliveries by the end of 2022. So the distribution is very healthy. We are also accelerating the R&D of our BEV platform, and the launch of the BEV model, which is expected in 2023.

[Operator]

Our next question is from the line of [ Jerry Su ] of Morgan Stanley.

[Unknown Analyst]

[Foreign Language]. So let me quickly translate my questions. My first question, can management team share the official guidance regarding the numbers of stores we plan to open in 2021. With the broader sales network [indiscernible] operating efficiency and give average monthly sales per store at around 100 units? My second question is about the competitive landscape. We saw a lot of tech companies step into EV market, like 5G, Apple, Xiaomi. So what kind of impact or disruption, do you think these new entrants could bring to the EV and the autonomous driving market? And what would be the implication to Li Auto?

[Yanan Shen, executive]

Thanks, Tim. This is Kevin. I will try to answer your first question about the sales efficiency. I think the company has already -- our company has already entered the second strategic cycle, in which we will launch more models in the coming years. Therefore, we will not take the sales efficiency of 100 vehicles per store as the single target. Considering to keep the store sales efficiency in a relatively healthy level, we will more aggressively increase our retail stores this year -- starting from this year and beyond to prepare for the launch of our multiple models starting from 2022. Xiang Li, do you want to comment on the second question?

[Xiang Li, executive]

[Foreign Language]

[Yanan Shen, executive]

Okay. For the benefit of those who do not speak Mandarin, this is Kevin, let me try to translate what Xiang Li just described. So first of all, Xiang Li believes that it will take about 3 years for any company to develop a car from scratch, from setting up the team, project initiation, R&D, testing and product launch. It also will take another actual 1 year to test the car in the market. So right now, we have already Xiang Li -- Li Auto has already completed all these 3 and entered the third phase of strategic cycle.

So in the coming 3, 4 years, which we are ahead of those new entry companies, we will accelerate the speed of our development to build out our competitive advantage. We think, by 2024, we will have the 3 major competitive advantages compared to those newcomers. First is the market share and the user base, we already gained by then. It will be nearly 0.5 million to 1 million. Second advantage we'll have is our sales and service channel. By then, we should already have -- our target is to have more than 1,000 retail stores.

And also our factory capacity, our supply chain capacity and also our charging infrastructure will all become a competitive advantage for us. Last thing, it's also very important that our -- by then, our product portfolio will be much bigger, and we'll have both EREV portfolio and high-voltage BEV portfolio, which will give, I say, a big advantage over the new entry companies. So we respect those who want to enter this industry very much. But we think the timing is on our side. We already passed the 0 to 1 phase, and we are already in the 1 to 10 phase, and we are accelerating our new product R&D and launch.

[Operator]

Our next question is from the line of Paul Gong of UBS.

[Paul Gong, analyst]

Basically, I have 2 questions. First one is related to the pure electric vehicle or the BEV technology. You have already changed your strategy. You have accelerated your BEV development during the past several months, I can see. And you have announced the Whale and Shark platform for it. And you are focused on the high-voltage and the fast charging.

Can you share with us more details, especially on the technology and road map and the time line of this BEV? And what does Whale and Shark mean? Does Whale means bigger space, bigger room and Shark means faster acceleration and higher speed? How should we understand these 2 platforms?

My second question is regarding to the margin guidance for 2021. Obviously, at this moment, you have been achieving pretty decent high teens of the gross margin and highly close to breakeven on the op margin. But given, you already have enough financial resources, and you probably get higher market share, higher volumes to build up the branding as well as accumulative user base. Will you strategically choose to focus on lower margin for 2021 in exchange of a higher market share?

[Foreign Language]

[Xiang Li, executive]

[Foreign Language]

[Yanan Shen, executive]

Okay. Yes. This is Kevin. I'll translate. I will try to translate, a lot of content. So first of all, we have been developing our high-voltage BEV platform for some time. And our focus is to be able to enable our customer to replenish the energy with very high speed. This is the mission we give to us starting from the beginning of this company. And now we believe with the technology and also with the standard that the Chinese government and all authorities are planned. Right now, it's in the right timing to start to develop this product and try to introduce it into the market very soon.

So to achieve this high-voltage ultra-faster speed charging platform, there are 4 fundamental technologies we have to develop. The first, of course, is the high C-rate battery. We are working with our partners on the 4x charge of C-rate battery. This is not a product we direct buy from our supplier, we developed it together with our partners.

Second is, of course, the very high-efficiency e-powertrain system. I think at the core of this solution is the SiC technology, yes. The third thing is about the thermal system. As you can imagine, we are facing 2 issues. One is when we charge this car with very high speed, the heat we need to manage. That require a very sophisticated thermal system. On the other hand, to make sure the user experience is very good in even very low temperature. We also have -- need to have our thermal system can cater the need when they're using low temperature. And 1 example is, for example, our R&D team is working on the CO2 thermostat as the cold medium solution for the thermal system.

The last technology, of course, is the high-power charging network. Our target is to enable 300 to 500 kilometers range within 10 to 15 minutes, yes. That's what we call also the 400 kilowatt high-power charging network. Because of the ultra-fast charging speed, the business model starts to become viable for real commercial charging station, which means the charging business to become profitable. So therefore, we also have a plan to start to build our own HPC, high-power charging networks, yes.

So from the product launch plan, starting from 2022, we will launch at least 2 new products each year onward. And the first BEV product will be launched in 2023. On the other hand, we'll cover a wider price range with our portfolio. Now we -- our plan is to cover a price range from RMB 150,000 to RMB 500,000. So overall, our target is to accelerate the replacement of ICE cars, yes. And we have 2 solutions. Both are very good, EREV solution and the BEV solution.

Lastly, to answer Paul's question about the Whale and Shark. The Whale platform is a car form that with more space in the car, and for shark as you can imagine from its name, the performance of this platform will be higher. All right?

[Tie Li, executive]

Paul, this is Johnny. I will answer the GPM question. You can see, 2020, the full year gross margin is around 16%. So for this year, 2021, we expect gross margin between 19% to 20% due to the increased volume with lower BOM and also the manufacturing overhead improvement. But for the net profit side, we don't want to -- because we are still increased the investment in R&D and also the expansion of our network, as Kevin mentioned, we will accelerate that. So we don't want to give any guidance on that. And also, you should realize the net profit in the fourth quarter is due to the short-term investment income, which is [indiscernible] in China. So it's -- yes.

[Operator]

Next question is from Bin Wang of Crédit Suisse.

[Bin Wang, analyst]

[Foreign Language] My question is about smart car issues because this year, any milestone event will happen for the smart car technology for Li Auto. Meanwhile, how can you prove you can be -- catch up even -- or even better compare your key competitors such as Tesla, NIO and Xpeng? That's the first one. The second one is about the dealer network. You just mentioned you're expansion the dealer network. Previously, that maybe go to 120 shops this year compared to -- or this year should be double. Can we assume [indiscernible] as well?

[Kai Wang, executive]

So I would like to take over the first question. This is Kai speaking. Regarding the plan in 2021. So we will spend more money on R&D. It is the year for preparation of our in-house brand new scalable and upgradeable system architecture, covering next-generation intelligent [indiscernible] autonomous driving, car computing platform and our own operating -- car operating system, which we'll be releasing in 2022.

Of course, in meanwhile, similar features offered by our competitors, plus some brand-new features will be provided to our customers for sure. From engineering resource point of view, we will double size of our total R&D staff as we mentioned. So building Shanghai R&D center is part of this expansion.

So regarding competition, we have confidence to prove ourselves efficiency again as we did financially last year. So we believe with fast expansion of our R&D, exciting news regarding our in-house technology like autonomous driving can be unveiled soon. Thank you.

[Yanan Shen, executive]

Yes, this is Kevin. Thank you, Bin Wang. For the sales network, our company has already entered the second phase, as just now I mentioned, that with the Li Auto brand increasingly accepted by users. In fact, we are changing gears. We are adjusting our store expansion strategy accordingly. So this year, our goal is to reach 200 retail stores in this year, covering 100 cities. This is our plan. As you can see, this is a relatively aggressive plan. The expansion of our sales network will need to increase the sales for sure and also the brand enhancement. I think behind this plan is that we are preparing us for the new model launches in 2022 and beyond.

[Operator]

We have Lei Wang of CICC for the next question.

[Lei Wang, analyst]

[Foreign Language] Real quickly translate my questions. So I want to raise the first question regarding the overseas strategies. And another one to Kai Wang regarding the battery [indiscernible] if that's okay. So it was reported that several competitors either have started deliveries in Norway or has the plan for European market as well. I believe the overseas expansion was not part of our plan, but I was not sure whether you have changed it more or less considering the high penetration rates of the new electric vehicles in Europe

And the second is battery question which wants to go to Mr. Kai Wang, the CTO. We have noticed that Tesla Motors and also BYD Han has been already using the LFP lithium ion batteries for cost saving. Have you also considered using LFP instead of the NCM (sic) [ NMC ] batteries? And if we got some time for retrograding, whether you can share what's the expectation or target for the [indiscernible] over this year?

[Yanan Shen, executive]

Yes. Thank you, Lei. This is Kevin. Let me take your questions. First of all, of course, we are committed to become a global leader of smart electric vehicle, ultimately. So definitely, we'll continue the overseas market. In the past several years, our strategy is to focus on China market only. But at the same time, we are continuously monitoring the progress of the global market. And this year, particularly, we are -- we will continue to increase our focus on research on the overseas market and initiate planning for the product and the sales channels for the overseas market, including establishing overseas offices, definitely we'll go to overseas.

For your second question about LFP. In fact, for our EREV platform, we have no plan to launch with lithium phosphate batteries for 2 reasons. First of all, right now, all the LFP on the market cannot meet our performance requirement because EREV has a different performance requirement compared with the BEV. Second is because EREV use less kilowatt hour battery. So therefore, even we use LFP, the cost benefit will be not significant for us.

And for the next step for our BEVs, definitely, we are in the process of researching development -- and developing both kind of batteries. For sure, we'll consider LFP for our future BEV car models.

[Lei Wang, analyst]

Okay. And the last question for the expectations for the deliveries over this year?

[Kai Wang, executive]

Yes. I think it's too early to give the full year guidance, but we will expand our network, as Kevin mentioned -- and -- to reach 10,000 to 12,000 as soon as possible, per month. Thank you.

[Operator]

The new question is from [indiscernible]

[Unknown Analyst]

[Foreign Language] The first question comes from Shanghai Research Center. It is mentioned that there will be 2,000 staff there. And could you give us more detail on that? And the second question is about recent R&D expense. We noticed that R&D expenses keep increasing. So what will be next 1 year or 2, or maybe 5 years as to time range expectation for R&D expense?

[Kai Wang, executive]

This is Kai speaking. Regarding the question about R&D activity, so the definition of Shanghai R&D center it will be mirrored configuration as Beijing R&D Center for more car models and also advanced R&D activities. Regarding the team of our, let's say, others, so altogether, right now, we have more than 300 engineers working for that. And we would like to reach to, yes, up to 600 in total end of this year.

[Tie Li, executive]

Yes. And this is Johnny. For the R&D, for 2020, is the early stage of our 2022's new model. So this year, we will -- the R&D investment will increase to at least CNY 3 billion. And with increasing investment in autonomous driving and new models, we expect R&D expense will reach USD 1 billion in 3 years. And among that, we believe half of the investment will -- over half of the investments will be for the autonomous driving expenses. Thank you.

[Operator]

And as we are reaching the end of our conference call, I'd like to turn the call over to the company for closing remarks. [ Ms. Janet Chang, ] please go ahead.

[Unknown Executive]

Sure. Thank you once again for joining with us today. If you have further questions, please feel free to contact Li Auto's Investor Relations team. Then that's all for today. Thank you, and have a good one.

[Operator]

Thank you, ladies and gentlemen, that concludes the conference for today. And thank you for participating. You may now all disconnect.