Li Auto Inc. (NASDAQ:LI) Q2 2023 Earnings Call Transcript

Bin Wang: [Foreign Language] I got two questions. Number one, about the margin. What’s your outlook in the third quarter and the fourth quarter this year? Because previously you’ve highlighted the Li ONE has been checked out about 2% gross margin. Now you have a better volume in the second half of this year. Can we assume the second half margin will be above 23%, increased by 2 percentage? That’s the number one question about the margin. And secondly about self-driving technology. Right now, you’re doing the early bird program for some customers. Right now, when will self-driving can move out to every single car buyer when they purchase a car they can enjoy? So, do you have a timetable to share for 2024? Thank you.

Johnny Tie Li: Hi, Wang Bin. This is Johnny from the company. Our second quarter gross margin reflect our sales and marketing teams’ effort. So you can see the improved SG&A percentage as the total revenue. And also some positive improvement on the [indiscernible] from our supply chain team. And we will continue to improve on that, but for the whole year because we still got six months — five months to the end, so we still want to keep the whole year gross margin guidance just above 20%. Yes. Thank you.

Xiang Li: [Foreign Language] [Interpreted] On the city NOA and commute NOA, we will continue our original plan to roll them out in batches in different cities. And the rollout plan is going to be largely based on the number of vehicles or owners in the specific cities. The more owners, the more mileage is [regulated] (ph), more test data, the more likely the cities will get city NOA and community NOA early. In addition to that, we’re also taking into consideration the NPN features of complex intersections in those cities and the amount of data coverage that we have. So as more and more early bird users join into our pilot program, we’ll be opening up our NOA features in more cities. Overall, the development and testing for NOA features are going on track.

And in June 2023, we’ve offer test drive of our city NOA in Wangjing, which is known as one of the most complicated traffic zones in Beijing, using the first — China’s first NOA and city NOA solution that doesn’t rely on a high-definition maps. And media gave very nice reviews about the features. In July, in Beijing and Shanghai, we’ve opened up city NOA to early bird users and users feel very highly of the comfort and safety of our solution. And this year, we will be releasing our city NOA and commute NOA for large scale testing. And the plan to release it in 100 cities remains unchanged. Internally, we’re continuing to accelerate the R&D testing of our city NOA solution.

Bin Wang: Thank you. Thank you so much.

Operator: Our next question comes from [indiscernible]. Please go ahead.

Unidentified Analyst: [Foreign Language] I have two questions. The first one is about the quarter’s — the third quarter’s sales. How do we see the sales elasticity for the third quarter expectation? My second question is about Mind GPT. Could you give us more color about how Mind GPT going? Thank you.

Xiang Li: [Foreign Language] [Interpreted] First of all, on guidance, the guidance we’ve given earlier today is really built around our production capacity, the maximum of our production boundaries for Q3. For Q4, with increased production capacity, we’ll be able to reach or surpass the 40,000 per month mark. And another important point to note is we’re very confident that we will be able to challenge the leadership position of Mercedes, BMW and Audi in China, meaning that we’ll exceed their sales in China and become the top selling luxury brand in China. Second question on Mind GPT, in terms of technology, we released our internal big model Mind GPT. And we have built — since built a full stack in-house development capability of large language models.