Li Auto Inc. (LI) Q4 2025 Earnings Call Transcript

Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Janet Zhang, Investor Relations Director of Lee Auto. Please go ahead, Janet.

Thank you, operator. Good evening and good morning, everyone. Welcome to Lee Auto's fourth quarter and full year 2025 earnings conference call. The company's financial and operating results were published in a press release earlier today and were posted on the company's IR website. On today's call, we will have our chairman and CEO, Mr. Xiang Li, and our CFO, Mr. Johnny Tie Li, to begin with prepared remarks. Our president, Mr. Donghui Ma, and our CTO, Mr. Yan Xie, will join for the Q&A discussion. Before I 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 company failings with the U.S. securities and Exchange Commission, and the Stock Exchange of Hong Kong Limited. 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 in this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to Li Auto's disclosure documents on the IR section of our website. which contain a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Our CEO will start his remarks in Chinese. There will be English translation after he finishes all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiangli. Please go ahead.

Hello, my name is Li Zhang. Welcome to today's business conference. In the past few years, it is a very important strategy. 随着公司规模的扩大,我们也重新审视很多基础能力,其中一个非常核心的就是销售。 我们过去最大的问题是在用经销商的管理方式来管理一个职用的体系,而职用体系最应该做的是应该以边面为核心进行运营管理。 没有经销商帮我们管理店面 而这应该变成我们自己的责任 自去年三季度以来 我们一直在探索如何更高质量的开店 如何管理好店面和激励好店长 如何对团队进行有效的赋能和培训 这一切的出发点都归结为一个核心 命题 怎么用直营的体系把车卖好 为此我们以结构为导向 以销量和人均产出为衡量标准 进行了一系列有效的改变 首先是分工的优化以人员的集中 我们通过门店派换解决选址不好的问题 将分散在人流下滑的二线商超的销售力量集中到更有潜力的市场 包含一线商圈和汽车的中心链 直接带来了门店效率和人金产出的提升 同时为了真正激活一件销售的积极性 我们也在进行机制上的突破 今年3月我们正式推出了门店合伙人计划 门店成为基本经营单元 优秀店长拥有了真正的经营决策权和利润分享权 从传统的销售管理角色 转变成了店面真正的经营者 在今天汽车销售体系普遍不赚钱的大环境下 我们希望培养出来每年大量的收入超过百万的店长 让优秀店长的收入达到行业的三倍 也从销售能力层面确保公司订单量和交付量稳定在高端车第一梯队 产品方面 今年二季度我们将正式发布理想R9系列 凭借全面升级的动力系统 智能驾驶和底盘技术 我们要与竞品拉开显著的体验差 重回旗舰SUV的领先地位 理想R9将标配800伏和5C超充技术 同时搭载我们新一代全占自然的增程3.0系统 实现更高的发电效率和更大的发电量 凭借NHU化和我们首创的EPR低温启动技术,理想R9可以提供V美纯电车的静静性与价值体验,以及更好的冬季能耗表现。 同时,我们还将全球首发的AI智能机油保养系统实现3年或3万公里的超长保养周期 售价55.98万元的理想R9 Lewis版本则继承了我们对聚身智能旗舰SUV的深度思考 理想R9 Lewis将配备全球首个量产全线控底盘和800V的全主动悬架系统 提供顶级的舒适性和操控性以及悬架质感 转向制动与闲架讲应速度和安全性也大幅提升 为高级自驾和聚身智能提供必要的执行基础 另外值得一提的是理想29 Levis将搭载两颗车轨级5nm 理想自研的马赫100芯片 有效算力达到了索尔U的6倍 并通过数据流架构和自研自驾的模型更好地适配 实现真正的自研模型和自研算力的软硬一体 理想R9的换代成功将直接决定了整个R系列的市场上线 如果说上一代理想R9的竞争力主要来自于精准的产品定义 那么新一代理想R9将在技术层面构建起核心竞争的壁垒 我们的纯电车型也在持续上量 首先通过与供应商的持续努力 理想i6的供应问题逐步得到解决 我们会继续提升产能 争取让大家的提车周期更短一步 与此同时我们也会看到 随着车主使用里程的增加 体验上的赏愧驱动了理想i8 NPS增长超过20% 在年初杰兰路发布的新年汽车品牌健康度研究中 理想i8的NPS也位居中发型SUV的榜首 按随这样的NPS的表现 然后三月份以来理想i8的订单 然后就要一月份有了三倍以上的增长 理想i6与理想i8共同务实了理想纯电产品的市场根基 共同夯实了理想纯电产品的市场根基 我们的目标是彻底解决之前的各类问题 让我们的存电产品真正站在市场 此外 回顾去年理想i6在发布后面临的首销政策产能提升和购置税补贴政策 最多周期代表的多重挑战 让理想i6的毛利率承受压力 但也为今年毛利率的改善预留了足够的空间 2026年下半年 我们还将推出一款全新的存电旗舰CV理想i9 进一步丰富我们的纯电产品矩阵 满足多元用户的需求 2026年是理想汽车进化为巨身智能企业的关键一年 面对竞争加剧的新联汽车市场 我们将致力于拉高技术护车河 返程从智能电动车向巨身智能企业的跃迁 以确立下一个阶段的竞争优势 2025年公司研发投入达到113亿元 其中AI相关的投入占50% 我们将在2026年延续这一投入战略 继续航实聚身智能企业的核心能力 对理想其中而言 AI主要涉及两个方面 一个是创造AI 第二个是如何使用AI 创造AI就是为产品赋予真正的生命 使用AI是提升我们的工作效率 在创造AI方面 We all have converted to the management of production, and to implement the new技巧 for the systems. The design of a product is the design. For gaming, we use the cars as a és of life-changing generation. On the AI, AI 是赋予产品活力的关键 详细一座新一代的技术平台 大家将陆续看到我们的产品的变化 它们不再是传统汽车或者电动车的简单延伸 而是具有生命力主动性 并体现在我们日常的高频生活体验上 在效率层面 AI正在逆转公司规模夸大 带来的信息流转 以角色效率的下滑 通过引入Agent的接通工作 想起一座新一代的技术平台,大家将陆续看到我们的产品的变化 它们不再是传统汽车或者电动车的简单延伸 而是具有生命力主动性,并体现在我们日常的高频生活体验上 在效率层面,AI正在逆转公司规模夸大带来的信息流转 以角色效率的下滑 通过引入agent的协同工作 我们的迭代与进化速度 开始重现创业公司的高效迷迭 这一变化在今年的日常运营中 已初步体现 可以说AI不仅带来了生产工具的革新 更催生了更具活力的组织形态 最后我想强调 我们将把从2022年理想R9到今天

从而构建第二个十年的核心地雷 所以请大家关注并放心的购买 体验我们新一代的产品 下面有请我们的CFO李铁 为大家介绍我们的财务表现

Now translating for Mr. Li Xiang Thank you for joining our earnings call today Over the past year Lee Auto has been going through an important period of strategic adjustments. As we scaled, we've reassessed a number of core capabilities, especially how to sustain sales efficiency and organizational vitality in a direct sales model. The problem that we've identified is that in the past, we have used a dealership mindset to manage our storefront. However, for a direct sales model, the key is really managing each storefront. And therefore, without dealers, we need to figure out how to manage these storefronts effectively on our own. Therefore, since the third quarter of last year, we've been focused on improving store rollout quality, strengthening day-to-day store operations, and upgrading incentives, training, and enablement for our teams. Ultimately, it comes down to one question. How do we sell well? With sales volume and productivity per salesperson as our key metrics, we've implemented a series of targeted changes. First, we optimized division of labor and consolidated our sales force. By closing and replacing underperforming locations, we addressed site selection issues and moved sales teams from lower traffic, second-tier malls to higher potential locations, such as prime tier one shopping districts and flash this flagship stores in major auto hubs this has directly improved store productivity and sales for head to further enhance our frontline sales we also upgraded our operating mechanisms in March we launched our store partner program making each store the basic operating unit top store managers now have real operating decision power and profit sharing shifting from a pure management role to true store operators at a time when profitability is challenging across the auto retail industry we want to develop store managers who can earn over RMB 1 million per year and enable our top performers to make three times the industry in the industry average just as importantly this strengthens our frontline capability and helps keep our orders and deliveries firmly in the top tier of the premium segment turning to products we will officially launch the all-new l9 lineup in the second quarter with comprehensive upgrades from powertrain autonomous driving to shaft technology and we aim to create a clear step change in user experience versus competing models and regain leadership in the flagship SUV segments the new vl9 will come standard with 800 volt architecture and five ultra fast charging it would also feature our next generation full-stack in-house developed range extender 3.0 system delivering higher generation efficiency and greater output with further NDH improvements and our proprietary EGR low temperature start technology the new Li L9 offers a cabin quietness and driving experience comparable to best along with improved winter energy consumption. We will also debut the world's first AI-powered engine oil maintenance system, enabling long service intervals of up to three years or 30,000 kilometers. Our top-of-the-line lead L9 Livis, priced at RMB 559,800, reflects our vision for a flagship SUV in an era of embodied AI. It will feature the world's first mass-produced, fully drive-by-wire chassis along with an 800 volt fully active suspension system delivering best-in-class comfort and handling response speed and safety performance across steering braking and suspension are also significantly enhanced providing the execution foundation for autonomous driving and embodied AI in addition the L9 the L9 livis will be powered by two in-house developed five nanometer M100 chips delivering six times the effective computing power of for you together with our data flow architecture in an in-house intelligent driving stack it enables end-to-end integration of our algorithms and computing platform the success of the new vl9 will directly determine the market potential of the entire L series if the previous L9 competitiveness was driven primarily by smart product definition the new generation L9 will build its core advantage through technology our bed models are also continuing continuing to ramp up with sustained efforts alongside our suppliers the supply constraints on the on the Lee I six has been gradually easing we will keep increasing capacity to further shorten delivery lead times. Meanwhile, as owners put more miles on their vehicles, positive real-world experiences have driven the LEA-I8's NPS up by more than 20%. In the NEV Brent Health Study recently released by Land Roads, the LEA-I8 also ranked number one in NPS among all large SUVs. Improved experience and satisfaction are now translating into a recovery in order and sales. Since March, LEA-I8 orders have increased 33% versus the same period in February and 179% versus January. Together, the LEA-I6 and IA8 are strengthening the market foundation of our BEV portfolio. Our priority is to fully resolve the issues we encountered earlier to ensure our FEP offerings establish a solid foothold in the market. Looking back at that last year, the LEA-I6 faced multiple timing-related headwinds after launch, including initial sales policies, the production ramp, and the phase-out of purchase tax subsidies, which pressure gross margin. At the same time, these factors also set the stage for margin improvements this year. In the second half of 2026, we'll be launching the Lee i9, a new flagship BEV SUV, further expanding our BEV portfolio to meet a wider range of customer needs. 2026 will be a pivotal year in Lee Auto's evolution into an embodied AI company. As competition intensifies in the NEV market, we'll continue to strengthen our technology mode and complete our transformation from a smart EV company to an embodied AI company, positioning us for the next phase of the competition. In 2025, our R&D spending totaled R&B $11.3 billion, which approximately 50% was allocated to AI-related initiatives. We will maintain this investment strategy in 2026 as we continue to build the core capabilities required of an embodied AI company. For Lee Auto, AI has two main dimensions, creating AI and applying AI, bringing our products to life while improving efficiency across the organization. On the create AI side, we have rebuilt our R&D organization from the ground up to operate the way an embodied AI company should. We're developing capabilities and attracting top talents across interface chips, foundation models, software, and hardware. at the product level we see the vehicle as an intelligent agent with real vitality and AI is what brings that vitality to life building built on our next-generation technology platform our products will evolve in ways you will see over time there will not be mere extensions of traditional cars or EVs instead they will be proactive and increasingly lifelike and how they learn and improve and that will be reflective in our high frequency experiences in daily lives from an efficiency standpoint AI is helping reverse the slowdown in information flow and decision-making that can come with scale by integrating AI and work alongside agents we're regaining the speed and agility of a startup in our iteration and evolution and we are already seeing early results in day-to-day operations this year in other words AI is not only reshaping our tools it also is enabling a more dynamic high-velocity organization in closing I want to emphasize that we will convert the capabilities and systems we built from the vl9 launch in 2022 to today's broader automotive and embodied AI technology stack into real user experience and measurable business value this will serve as the cornerstone of our long-term competitive positioning for the next decade we We look forward to your continued attention and welcoming you to experience our next generation of products. With that, we will turn it over to call to our CFO, Johnny, to walk you through our financial performance.

Sili的完整的汽车和巨神智能的技术系统 变成真正的应付体验和商业价值

Thank you, Lisa. Hello, everyone. Given time has changed, my remarks today will be limited to fourth quarter financial highlights. All figures will be quoted in RMB unless otherwise stated. For further details, including the corresponding US dollar amount and full year financial results, we encourage you to refer to our earnings price relief. Total revenues in the fourth quarter were RMB $28.8 billion, down 35% year-over-year, and up 5.2 percent quarter-over-quarter. This included RMB 27.3 billion from vehicle sales, down 36.1 percent year-over-year, and up 5.4 percent quarter-over-quarter. The year-over-year decrease was mainly due to lower vehicle deliveries. The sequential increase was mainly due to the increase in vehicle delivery partially offset by lower average selling price due to the different mix following the commencement of the I6 deliveries cost of sales in the fourth quarter was R&B 23.6 billion down 33% year-over-year and and up 3.3% cost over quarter. Gross profit in the fourth quarter was R&B 5.1 billion, down 42.8% year-over-year, and up 14.8% cost over quarter. Vehicle margin in the fourth quarter was 16.8% versus 19.7% in the same period last year, and 15.5 percent in the prior quarter. The year-over-year decrease was mainly due to different product mix. The sequential increase was mainly due to the estimated the MAGA recall cost booked in the prior quarter, partially offset by lower average selling price due to different product mix following the commencement of the i6 delivery gross margin in the fourth quarter was 17.8 percent versus 20.3 percent in the same period last year and 16.3 percent in the prior quarter operating expenses in the fourth quarter were R&B $5.6 billion at 5.8% year-over-year, and down 1.3% quarter-over-counter. R&D expenses in the fourth quarter were R&B $3 billion at 25.3% year-over-year, and 1.4% quarter-over-counter. The year-over-year increase was mainly due to the cost related to AI and other programs to support product portfolio expansion and technology advancements. SG&A expenses in the first quarter were R&B 2.6 billion, down 14% year-over-year, and 4.4% cost-over-quarter. The year-over-year decrease was mainly due to decreased employee compensation. Loss from operations in the fourth quarter was R&B 442.6 million versus R&B 3.7 billion income from operations in the same period last year and R&B 1.2 billion loss from operations in the prior quarter. Operating margin in the fourth quarter was negative 1.5% versus 8.4% in the same period last year and negative 4.3% in the third quarter. Net income in the fourth quarter was R&B 20.2 versus R&B 3.5 billion net income in the same period last year, and R&B 624.4 million net loss in the prior quarter. Diluted net earnings for ADF attributable to ordinary shareholders was R&B 1 cent in the fourth quarter, versus R&B 3.31 diluted net earnings in the same period last year, and R&B 0.62 diluted net loss in the prior quarter. Tending to our balance sheet and cash flow, our cash position remains solid with a year-end balance of R&B 101.2 billion. Net cash provided by operating activities in the fourth quarter was R&B 3.5 billion, versus R&B 8.7 billion provided in the same period last year, and and R&B 7.4 billion used in the third quarter. Free cash flow was R&B 2.5 billion in the fourth quarter, versus R&B 6.1 billion in the same period last year, and negative R&B 8.9 billion in the prior quarter. At the end of 2025, we had a total of 30,728 employees. And now for our business outlook, for the first quarter of 2026, the company expects the delivery to be between 85,000 and 90,000 vehicles. And the quarterly total revenue to be between R&B 20.4 billion and R&B 21.6 billion. This business outlook reflects the company's current and preliminary view on its business situation and market condition, which is subject to change. That concludes our prepared remarks. I will now turn the call over to the operator to start our Q&A session.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. For the benefit of all participants on today's call, please limit yourself to two questions. And if you have additional questions, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translation. Your first question comes from Tim Sa with Morgan Stanley.

So my first question is about the channel. I think the management just mentioned that the auto now plans to optimize the sales networks and reportedly close up to 100 stores. what a company's plans and progress regarding channel optimization. Separately, could you elaborate a bit more about the store partner mechanism CEO just mentioned, in addition to the incentive program, to the store manager, any further implementation details you can share with us, and when should we expect it to show positive results?

That's my first question.

I'll just answer this question. 然后关于公司销售渠道的优化,首先网传的关于100家门店不是真实的信息,其实我们一直以来都是对于少量没有办法支撑销量目标的低效门店进行正常的一个态患,主要是解决过去门店选址不佳,商圈流量下滑的问题是属于正常的经营优化。 今年呢我们取到的核心思路是更看重的话质量而不是数量 今年我们还会新增门店 新增门店的话将会优先去选取的话 头部的商场优质的汽车城来提升品牌的影响力和优质的客流 然后在城市的布局上目前低线的城市已经相对的完善 后续伴随我们纯电车型销量的提升 我们重点会加密高线的城市 同时我们也是在不断去提升消负的体验 包含稳定的接待 试驾和消负的体验 以及在节假日高速的超充专员职守 用户的满意度和好评在持续的提升 另外借此机会我也想介绍一下公司 正式推出的门店合伙的机制 核心的话是我们将门店作为基本的经营单元 是希望走出一条具有理想特色的汽车直营的模式 首先我们肯定会坚持直营 直营的话来保证服务体验以及全国的价格政策是统一的 同时呢通过下放经营的决策权和利润的分享权到店长 来激发团队的经营意识和活力 那经营决策权呢包含货客的自主权 经营的自主权和团队的管理自主权 那从以往对店长的单一考核销量 变成店长真正要对于本店的经营结果负责 却希望店长把店当成自己的事业的话来做 那我们也是希望这套机制能从根源上去解决过去盲目开店 扩门店外展等问题 并且未来的话新店选址 会由店长全程参与的话评估 全折反应到人 从源头去提升门店的金融质量 公司也会通过财务的支持和数字化工具 全力去赋能一线 我们是希望力争在Q3能够看到明显的销售经营的改善和提升 最后我们始终认为消毒体系的健康和效率 是保证销量的和市场地位的核心 从去年8月份开始 我们用了将近7个月的时间 系统里顺了直营模式的管理体系 包括高质量开店 清晰化的话运营 以及对于店长的激励

I need to first start with a clarification on channel optimization. The rumor about closing 100 stores is false. In reality, we've always conducted routine optimization of our stores, facing out a small number of underperforming stores that cannot reach their sales targets. and this is simply part of normal operations to address past issues like poor store locations or declining foot traffic in certain shopping districts our course handle strategy this year is very clear quality over quantity we will add new stores this year new stores will prioritize top tier shopping malls and premium auto parks to strengthen brand presence and attract higher quality traffic as our city coverage our footprint and lower city tier cities is already fairly complete complete and going forward we'll focus on increasing store density and higher tier cities aligned with our ramp up of sales meanwhile we continue to improve sales and services experience service experience covering in-store reception test drive delivery highway super charging stations staff with attendance during holidays as a result we've been seeing user satisfaction and positive feedback keep climbing well we're on the topic let me also share a bit about our new store partner program officially launched on March 1st we're treating each store as a core business unit and building a direct sales model that's truly unique to leave auto first we remain fully committed to direct sales. This ensures consistent service quality and a unified national pricing strategy. Meanwhile, we're now delegating decision-making power and sharing profits with store managers to really motivate our front-line teams and enable them to think like real business operators. In terms of store operations, store managers now have autonomy in three areas customer acquisition day-to-day operations and managing their own teams and we've changed how we evaluate them as well no longer just on sales solving now the form is measured on operating results of the stores the goal is to make every store manager feel like they're running their own businesses and be fully accountable for the results this new model also helps us solve past problems at the root like opening stores without thinking through and without thinking through, and other issues on store expansion. Going forward, store managers will be involved from day-to-day on-site selection with clear ownership and accountability. This way, we raise store quality right from the start, and the company will back it up with financial support and digital tools to empower our frontline team. We aim to see significant sales and operational improvements from Q3. Ultimately, we believe a healthy, efficient sales and service system is the foundation of strong sales and market leadership. Since last August, we've spent seven months to systematically recalibrate our direct sales management framework. This includes high-quality store expansion, refined operations, and store manager incentives, as well as frontline training. That all is to build a truly sustainable, competitive sales and service network for the long run. Thank you.

Thank you. My second question is related to products. Can you please share with us our new L9 L9 L9's latest product management and ability? My sixth question is about the product, the new product. for the upcoming OU-L9 and the L9 letters. Could you please shed light on the launch timeline, pricing strategy, product competitiveness, and the crowded raise and repo profitability? Thank you.

The core is that we are from the entire system of the system of the system, the brain, and the brain, and the body of the system, and to the whole system. The first thing is to talk about the system of the system. It's not just the transmission of the system, but it's still the power of the system. It's a big challenge for our viewers to see the video, and to teach the video, and to watch the video, 然后来进行其实对车辆的控制 那本质上然后这个已经大家都在用的一个技术体系 其实并不真正的理解物理的世界 而是通过一种模仿学习的这个方式 那在感知方面然后我们将突破 然后今天的摄像头 2D摄像头和激光雷达的方案 对然后升级到3D VIP 然后真正的像人一样的 然后去感知和理解这个理解物理事件 而不是只是通过开始别人的方式 那我觉得这是一个重要的突破 那这就要求我们然后从视频编码器 然后到整个模型的然后研发 然后再以及然后为编码器和模型提供强耗力的计算 也就是芯片层面 然后联合进行设计进行突破 这个将是无论是自动驾驶还是居身智能 我认为今年会发生一次全球范围的最大的一个重要的一个突破 半岁而来 我觉得VLA也会变成真正的VLA 然后LAN的位置并不是只是为了识别到底是什么东西 而是LAN的位置真正像是人一样最有理实际的理解和思考 我觉得这是一个重要的变化 I think the other side is that as a device, it will also be a big change. At R9, we have a complete complete system, including the engine, the engine, and the engine, and the four-wheel drive, and the four-wheel drive, and the four-wheel drive. This is the whole of the engine. It's the safety of the engine. It's far too far from the old car. And there's also a very important thing. It's not to go through the old MCU or to the other one. It's not to be able to control the engine. It's to be able to go through the model. I think, this kind of system, we think actually is the future of the car.

So first, to your question about products, this year in Q2 we will be launching our all-new Li-L9 Livis equipped with our in-house developed Mach 100 chips. And the reason we call it an embodied AI robot is really because we've completely revamped to the technical stack from a sensing brain and body from all these three dimensions. So, first of all, let me start with the autonomous driving front. In the past, the technical paradigm is really to drive, to have the machines to learn to drive through watching videos. They're not really understanding the physical world, but rather they're just watching videos and try to imitate human behavior from these videos. However, as we've conducted our R&D, we've identified that the most efficient way is really to understand the physical world. So when we say VLA model, we're really trying to use the language to understand how the world works as opposed to just simply interpreting the video. So as we move from two-dimensional cameras to three-dimensional vision transformers, we can really understand the 3D world much better. And that requires a revamp of the full stack from video encoder to the chips to the algorithms. How we can enable compute directly from a large model to actually enable physical behavior. And I believe this will be a major technological shift across the world, across autonomous driving, as well as physical robots, happening this year. So as I mentioned earlier, this is going to be real VLA. The language models really understand and thinks about the physical world before it makes the decision to move. So that's on the sensing side, perception side. And then next on the hardware itself on the execution side, VL9 as we released earlier will be equipped with a fully drive-by-wire system which includes drive-by-wire steering, four-wheel steering, electrical mechanical brake, 800 volt fully independent active suspension where we have pumps powering each suspension, each wheel up independently, what that all combined will do is that it will provide us with the level of agility that's never achieved before in a vehicle. And beyond that, all the signals and the decision-making doesn't happen through an MCU, which was the paradigm before, but rather we have large models to directly process these inputs and the output goes directly to the actuators as opposed to going through a much less sophisticated MCU. So that's what we believe is the real smart car is going to be like and we believe that L9 is going to be the beginning of all this. Thank you.

Your next question comes from Paul Vong with UBS. 一个市场的情况之下 对我们26年的销量目标是怎么制定的 更加重要的是就是说 我们怎么看待这个目标 在量和利的一个平衡之上 我们把这个销量的目标看得多么的重要 So my first question is regarding the 2026 sales volume target Based on the current environment And the more importantly is How shall we balance the volume and market share target versus our own margins, how important the volume target is in our overall balance of the development. 加起来还要多 而今年大盘的增量比较有限 所以综合这两个因素

我们对今年的目标是实现 相比去年20%以上的同比增长 要想实现这样的一个增长 我觉得我们是一个三加二的策略 我觉得第一个是一定要把销售体系管理好 我们坚信直营体系 然后有效的管理将会成成我们长期的重要进行力 所以这是第一点 我觉得第二点呢 然后是L系列以L9为主的L系列的换代的成功 那然后如果把然后产品然后发布好 然后如何把产品交付好 那这也都是要实打实的 然后每一个环节都要做好的 那我觉得第三个重点 然后是我们的纯电 然后要稳定的上量 无论是i6,i8,还是mega,还有在下半年推出的i9 我们希望我们的纯电的销量再彻底解决了供应的问题 还有过去的时候遇到的各种的发布的问题 以后我们能够让我们的纯电在中国端市场稳稳地站住 这是我们讲的三个核心的策略 加二的一方面其实是我们过去几年在整个智能化的投资 包含芯片模型以及各种的研究方面的能力 我觉得会在近年会体验出来完全不同的产品体验 而且最重要的产品体验是priority的 是主动的 然后是高频的 是用户每天无时不合同能收到的 I think this is a wide range of people in the world. There is another range of people in the world. There is also a wide range of people in the world. This is a wide range of people in the world. But I think this is a long-term opportunity. So this is our team. This is our team.

So 2026, as you all know, is going to be an important year from a product perspective as we release the third generation of products. While we're very confident about our products, we also noticed that this is going to be the most competitive year to date. This year, you will be seeing more cars released, more new cars released in the 200,000 RMD and above market than all of the years previously combined. But at the same time, the overall growth of the market is very limited. So considering all this, our total goal is still to reach a 20% year-on-year growth for all 2026 and to support all of this we have a 3 plus 2 strategy first starting on the three the three pillars to support our sales the first one is the sales system we will continue to be committed to our direct sales model and as we've implemented new mechanisms we will start to see benefits this year of the direct sales model and the second pillar is the L series launch starting with the L9 this new generation of L series will really be a key pillar to our sales this year so we will make sure that we get every detail right from the product release to product to supply delivery to sustain to ensure the success of L9 and upcoming L series models and the third pillar is that ramp up, which includes I6, I8, I9, and mega. In the past few months, we've addressed the supply constraints. We've also fixed issues around release, sales, and marketing. So this year, as the year goes on, we believe that the volume on our best products will be steadily ramping up, which is going to account for a very significant market in the premium market. Now moving on to the two. The first one is AI-related investments. In the past year, we've spent billions on chips, on models, and this is going to be the year, I believe, that all these investments start to bear fruit, meaning that they will provide a very differentiated product experience to our users. And to summarize, these experiences will be proactive, will be high frequencies that every consumer can feel and benefit from in their everyday life. The second of the two is our overseas strategy. This is going to be the first full year where we officially run our overseas markets, But through the years of accumulation before, and we believe that this year is going to start to see results and support a long-term growth, and overseas remains what we see as a long-term growth opportunity. Thank you.

So my second question is regarding the impact of raw material cost inflation, including the metals, memories, and batteries. What would be the strategy for the company to face this challenge?

Shall we absorb it within the supply chain, or should we pass this part of the cost inflation to the downstream? 一个协同,一方面是稳价格,另外一方面的话还是要保供应,然后在成本上的话,我们和相关的核心供应商都签了长期的LTA的协议,然后把关键的原材料,然后零部件的价格提前锁定,来对冲的话短期的播放,然后在供应上,尤其是说最近存储之类的话,智能化的话不仅比较紧张。 我们也提前和核心慶 brow商鎖定了份额 来保障新车的上市和生产 另外的话有合同有调价机制的 我们会严格按照合同来执行 然后没有约定的我们也坚持和 coaching商共担成的一起来扛周期 实现的话 互利共赢 这里呢也非常感谢哈所有御营链伙伴长期以来对于理想其实的一个支持 那第二个的话呢就是强化这个端到端的降成本 包括从产品研发制造物流啊甚至质量 全量条的话去挖降本的空间 然后同时通过平台化的研发来提高零部件的复用率 把规模效应的话做出来 尽量把内部啊尽量在内部然后把外部涨价的压力啊这个消化掉 像我们通过自研自制的振动器电驱动功率模块 还有的话这个自研代工的预控制器啊 攀化硅功率芯片以及马克M100的支架芯片包含啊 定制派特都能够帮助我们更好的话去控制成本 那还有一点就是说新车型定价 会更加的合理 更加的稳健 那今年的新推行 我们会综合考虑原材料的波动 技术投入以及用户价值 然后保证公司到他健康可持续的盈利能力 让新品的毛利率回到健康正常的水平 就总体来说的话 我们是有信心 通过雇用链的协同 长期协议的索价平台化 We believe the current cost pressure is still largely concentrated on key components

like batteries and memory chips, which has indeed had some impact on unit vehicle costs. In response, we've already put in place the following measures. First, we are strengthening supply chain collaboration to stabilize pricing while securing supply. On the cost side, we've signed long-term agreements with our core suppliers to lock in both pricing and volumes from key raw materials up front. This helps us hedge against short-term market volatility. And on the supply side, especially for AI-related components like memory chips, we have been tight recently. We're continuing to work with key suppliers and to secure dedicated allocation, ensure priority support for production and new model launches. Where contracts include clear pricing terms and adjustment mechanism, we strictly adhere to these terms. Where there is no such agreement, we work hand-in-hand with suppliers to share the cost pressure and navigate the cycle together, aiming for mutual benefits in the long term. We'd like to sincerely thank all of our supply chain partners for their ongoing support for Lee Auto. And secondly, we're driving end-to-end cost optimization in the meantime. We're identifying cost-saving opportunities across the entire value chain, from products to R&D, to manufacturing, logistics, and cost quality. At the same time, we're maximizing economies of scale through platform-based development and higher parts commonality across models. This allows us to absorb as much of the external cost pressure internally as possible. Our in-house developed and manufactured range of fenders, electric drive units, power modules, self-developed and contract manufacturers, the main controllers, silicon carbide power chips and 100 autonomous driving chips and battery packs, all of this is helping us to better manage costs. Third, we're taking a more rational and steady approach to new vehicle pricing. For our 2026 models, pricing will reflect a balanced consideration of raw materials, volatility, R&D investments, and user value to ensure the healthy and sustainable profitability. Our goal is to bring gross margins of new products back to normal, to a healthy range. Overall, we're confident that by combining supply chain collaboration, long-term agreements that lock in key costs, platformization, proprietary technologies, and rational pricing, we can effectively contain the impact of raw material price increases with a manageable range and maintain stable growth margins and operational quality.

Thank you very much.

Your next question comes from Jing Cheng with CICC.

So my first question is about, in response to, recently, we have heard about some media reports about the company's consideration of shared buybacks, so could you please confirm if there are any related clients?

Yes, Tony, this is Tony. I think this is not a media report about a media reporter at Weibo. As a dual role primary listing company, both in U.S. and Hong Kong Stock Exchange, we recognize that share by fact is one of the ways or tools we should consider for enhancing shareholder And with respect to share repurchase, currently we don't have any, we don't have additional information need to be disclosed.

Thank you. 感谢 我的第二个问题是关于这个研发投入的一些规划 我们看到2025年的话公司整体研发投入 刚刚介绍有50%投向在AI相关的一个领域 那想问一下2026年的话我们整体研发费用的指引 然后以及其中关于AI或者是寄存智能相关的战略占比 大概有多少 So my second question is about R&D expense. So what will be our guidance for the R&D expense in 2026? And also last year, we spent almost half of our R&D related to intelligence or AI-related areas. So what is the proportion guidance for this year?

Okay. Thanks for our question. This is also joining. We expect the R&D expenses this year to remain around R&B of 12 billion with AI-related initiatives accounting for about half of the cost. This includes the investment in AI infrastructure such as in-house chip development and computing power, as well as as R&D for AI products like Automation System and Li Xiang Hongxue in the last several years. Just to clarify, we don't see the automotive and the AI as different, as independent. We invest on the R&D side to build the AI capability and put it in our company as a whole business model. We monetize all the R&D investment through our current business model. It's not a separate business model.

Your next question comes from Fei Xingao with SciTex.

So my first question is about iSeries. So could you give us some details about IA and I6, other sales, and especially about the ramping up production of I6? And how do you evaluate thin water battery safety and its cost reduction contribution?

Thank you. 享受体验,武能,还有智能化体验方面的口碑是在持续的提升。 现在的话,NPS较上市初期增长超过了20%, 像春节期间我们的5C超充,还有OTA8.3支架的升级都获得了用户高度的认可。 然后在捷栏路2025年下半年调研当中, 理想i8也是在中大型SUV当中NPS是排在第一 然后凭借良好的口碑 i8的订单呢也在稳步的这个回升 那3月份订单相比1月份的同期提升了180% 市场的需求啊持续的向好 那关于理想i6的话我们已经跨过了最艰难的产能爬坡期 正式进入了稳定的交付阶段 IDO的产品力也得到了充分的验证 凭借外观造型 空间 能耗 还有操控能力 精准的满足了年轻家庭的需求 上升之后订单强劲 同时供应链的瓶颈已经彻底的解决 此前电池供应的短期波动带来挑战 通过我们和核心的供应商协同 提升了供应的产能 那另外呢 我们也及时推出 购置税补贴以及延期的交付关怀政策 那这里呢 也特别感谢理想i6用户的理解 和等待过程当中的坚爽 那后续我们i6的月交付能力 会达到两万台水平 那在手的订单也会在未来一到两个月内 高效的交付 那更重要的是i6的成功 也证明了理想的品牌势能 不仅仅是正常产品 也成功延伸到群电的市场 然后关于电池的政策 我们始终是坚持开放合作的战略 与行业头部的合作广泛合作 但是我们要掌握主动权 从整车的性能需求出发 去主导电池的方案设计 然后层层去把关动化品质 就不管电池是哪一家 它的性能质量安全都必须要达到我们统一的理想标准 用户实际使用起来体验完全一样不会有任何的差别 那另外呢也想说一下2026年理想汽车所有的车型都将搭载两种品牌的电池 一个是理想品牌一个是那么多时代的品牌 这也意味着我们和核心伙伴的合作会进入更加深层次的融合阶段 那也请大家相信理想汽车本身这个品牌 因为理想的品质从来不是靠单一公共商决定的 而是由我们全战自然的技术 严苛的品控体系 还有长期坚持的价值观共同定义的

选择理想就选择了最可靠的保障 谢谢 now let me start with me I hate since its launch in July last year user satisfaction has continued to rise as owners accumulate miles on their vehicles and they're satisfied particularly with driving charging experience and autonomous driving the MPS of I 8 has risen by over 20% compared to the early post-launch period during the Chinese New Year holiday our 5C ultra fast charging and OTA 8.3 autonomous driving upgrade received strong user acclaim pushing NPS to an all-time high in Land Road second half of the 2025 survey VI8 ranked number one in NPS among all large SUVs filled by the strong word of mouth VI8 orders have steadily rebounded daily orders in early March were up threefold over threefold sorry over a nearly 180 percent versus January this code clearly upward trends reflects strengthening market demand and now turning to Lee i6 we've successfully moved past the most challenging phase of production ramp up we are now in the stable delivery phase the i6 product strength has been thoroughly validated with its distinctive exterior design spacious interior efficient energy consumption, and agile handling. It precisely meets the needs of young families. It experienced strong order momentum since launch, and at the same time all the supply chain bottlenecks have now been fully resolved. We used to face short-term volatility in battery supply, but we worked closely with our core suppliers to scale production capacity. We also introduced a purchase tax subsidy and an extended care policy. I'd like to thank all of our the L6 users for their understanding and patience we expect the L6 to sustain a steadily a steady monthly sales of around 20,000 units and we're on track to efficiently deliver the current order backlog within the next one or two months most importantly the L6 success clearly shows that Lee Auto's brand appeal has excessively extended from the era segment into the best segment moving on to our battery strategy we will commit we are committed to an open partnership approach while working closely with industry leaders we retain control in all these partnerships when it comes to the vehicle performance we let battery architecture design and rigorously control quality at every step regardless of which partner supplies the cell all batteries must mean Lee autos unified lead standard for performance quality and safety to the user the experience is identical there are no differences whatsoever additionally starting in 2026 all the auto vehicles will be equipped with batteries from only two brands the auto brand and CATL this marks a deeper level of integration with our core partners we ask for your continued trust in the the Li Auto brand, because Li Auto's quality has never depended on any single supplier. It's defined by our full-stack in-house R&D, our rigorous quality control systems, and the core values we've upheld from day one. When people choose Li Auto, it means they're choosing the most reliable assurance.

Thank you. 在哪些方面能够实现一个向本生效的目的 除外的话我们是应该如何理解公司的一个软件一体 以及在什么时候能够看到车企之间的一个差异 与软件一体的一个布局 So my second question is about the in-house chip Mark 100 So could you give us more colors about this chip Such as the mass production timeline and where can we see the cost savings and the efficiency is in addition how should we understand the company's software and the hardware integration and then we will see the gap between different automakers because of this integration that's all thank you okay this is yeah let me answer your question and M100 will deliver with L9 a new series and we already started mass production and for M100 itself with the same silicon area M100 delivers

significantly higher effective compute giving our VRA algorithms much more design space for example we can run a VRA model with about six times the parameters and sometimes the compute of the previous generation while still achieving higher frame rates and faster inference. More importantly, as our in-house models, compiler stack, and the operating system evolve together through co-design, we are beginning to unlock the real potential of a full self-developed autonomous drawing stack. The performance gains we see today are important, but the The bigger impact is that this system level integration will significantly accelerate how fast our autonomous driving capabilities improve over time. Once the system is officially deployed, we expect the pace of capability improvement to increase substantially. M100 also works closely with Halo OS and vehicle by wire system, enabling tighter coordination between autonomous driving and compute, cavitation, pre- and post-processing, and vehicle control. This shortens the end-to-end latency from sensor photon input to vehicle actuation to around 200 to 300 milliseconds, directly improving the driving experience. The higher local compute also allows us to deliver more intelligent capabilities beyond autonomous driving over time the car will behave more and more like a robot some of these capabilities will first appear on the new L9 and we will continue expand them in the future and and more M100 also brings significant cost advantage first the bottom cost per chip is much lower than external solutions. Second, we removed the XCU controller using the previous generation platform. By replacing it with M100 combined with the Halo OS virtualization, we save over 1,000 IMB per vehicle. Third, thanks to our data flow, architecture, and code design of model and chips, we achieve higher runtime efficiency today and maintain much greater headroom for future performance improvement. When we started developing our own chip in 2022, we believe that around 2025 the industry would move into a new phase where models, chips, and operating system have to be designed together. That kind of vertical integration creates real differentiation in performance efficiency and user experience. Over time, the gap between companies will start to look like the gap between Apple and Android in the cell phone world. Once you achieve full-stack hardware software integration, the advantage becomes structural, and it keeps widening. Thank you.

Your next question comes from Tina Ha with Goldman Sachs.

Thank you for taking my question. So my first question is regarding embodied AI. So for the next one to two years, wondering what's the strategic plan from Liato? What kind of products are we expected to see? And then also the progress or timeline of these products. Also, in terms of the strategic priority, How do you decide between EVs, Robotaxi, as well as Humanoid Robot?

It includes the two-story software and the two-story software. It includes the two-story software and the two-story software. This is what we will put in all of the new systems and the key. We will be careful about the real business and business. We will be careful about the real business and the real business. In more than two areas, we will be able to use the company's business. We will be able to use our AI and our machine.

So in terms of the embodied AI strategy, first of all, on the technological and product front, we believe that there's a lot of commonality regardless of what kind of product physical product we're talking about so this is an area we will be investing heavily in because we believe that all these investments will be shared across different product shapes and forms this includes the device side inference chips foundation models and operating system as well as the entire data training workflow. In the meantime, on the commercial side, we will be very careful as we invest and explore. We will be adopting a startup model in areas like AI glasses and robots instead of using a traditional large company approach where we invest heavily in a verified direction. we will work more like a startup company to start these new initiatives and wait our way through. 我第二个问题是想请问一下 目前咱们对这个智能化研发的一个调整 工作是否已经结束 然后在这个新的分工之下

咱们支架的进展目前怎么样 So my second question is regarding our R&D restructuring. So wondering if the restructuring has been completed. And then also under the new structure, how is the progress regarding our autonomous driving?

I think in this year, we have a bigger change. And the most important thing is the development team. And from the original way of the hardware and hardware will change the function of function. It will change the function of the channel of the channel, and will change the function of the channel. Let's talk about the function of different functions. For example, the type of muscle-bonkid navigator contains the brain. It contains the function of the code. It contains the function of the team, like our brain. We put this group in a large group to manage. The second important thing is the brain system. The brain system is connected to the感知, the pre-training, the pre-training, the pre-training, and the infra. The entire brain system will be managed to manage. The brain system can only do these, and you can't touch the real use of the real use. It should be a very strong brainer, but it should be a small child. The other part is with OpenAI and Astrobiton. There is a network of our own devices and our own network. We call it the network of our own network. It is to build a system of agents. It includes the entire network of the software. and how to create a project, and the memory system, and skills. So we can really do the work. We can do the work. We can do the work. We can do the work. We can do some results. This is our platform. We have to do the request. is you need to improve the software, and improve the skills, and memory, and to prevent the practice. In the past, many traditional companies at the time, all of the software in the world, they want to use a tool to train, and to learn more about the software. There are no use of tools. And we can't prevent the body from getting some of the brain and getting some of the brain and getting some of the brain and getting some of the brain I think this is the material part. On the other hand, the hardware also has a lot of changes. It's been created for a long time and for the future, and for a long time. It's a very important component. It's also a very important component. It's also a very important component. These systems are not just for every single-time control system. We are now using MCP, and using this kind of and directly through MCP and through the use of the machine to control this kind of way. In other words, we can allow the team to really bring together to create a different and with the traditional and different and different such a kind of 和研发模式上来 我觉得这是我们今年 1月份做的很重要的一个变化 我们在做这个变化的时候 很多团队最开始不太明白 但是我们实际能看到 效率非常之高 我们的支架的模型 整个的训练的效率 会从过去的时候基本上两周

到迭代一次 现在基本上变成了一天迭代一次 我也另外一方面 We went through a major organization change in January, where we've completely revamped our hardware and software. software functions and all this has a shared goal which is to build a silicon based digital human being or a smart human being that's our overall goal and in order to achieve this in reorganization we've basically reconnected across of our businesses and group regroup the functions by the specific part of the human that they were responsible for as opposed to previously dividing by the so-called business units or the product so this organization or the specialization happens in three areas the first one is what we think of as brain and this includes like data sets which is comparable to human lungs at the chips which is comparable to the the heart and operating system compared to the newer system and then all of these are organized together so that we can work through pre-training and post-training and infrastructure together and think of these as the brink and my rule for these teams is that they cannot touch applications because in many companies the fundamental research team are tempted to work on applications but in our case the brinks should not have their own hands, but they should focus on building a very robust brain that can be used across different hardware and software applications. And then on top of the brain team, we have what we call the applications team, or in our language, we call it the core software team. This core software team includes software tools like MCP, they include teams that build of agents, includes teams that focuses on skills and teams that focus on memories. And all of these different components are designed to work with a shared operating system. That's how we can organize all these different components of software to actually do things for us as opposed to just become a conversational robot. So it can actually strategize and execute tasks that are given by human beings and then so everything I mentioned above is software which includes skills memories and again here we avoid the team set to the temptation to act to want to build their own brains we don't want the body to have its own little brain but rather we want them to fully utilize the the powerful brain that was built by the previous team that I mentioned so this team focuses mostly on the body the applications and then finally we have a hardware team this is about building dedicated hardware for AI for embodied AI which includes an energy team and electric drive team and the controllers team and when I say controller teams we don't necessarily use actual controllers like the one seen in automobiles in the past because we've now worked we're now working with a model where we build MCPs for the different components so that the large model can directly talk to these MCPs and control these different components, which makes them a lot more intelligent and more efficient. And when I put these three teams together, the major benefit that I see is that they're able to work together across different products because they enable each other's work as opposed to the files that you see with the traditional models and that's how we can deliver products that are also differentiated from the traditional products. So after we've made this rework and many people at the beginning didn't understand or understand why we were making this change but over time very quickly they're starting to see the efficiency gain in the workflow. For example, for the autonomous driving team, they used to iterate their models every two weeks, but after the change, they're now able to turn out an iteration every one day, which is a 14-time improvement. Again, as I mentioned earlier, this is partly thanks to the collaboration across different teams. They all sit in one room and work together as opposed to having different departments talk between silos.

That's how we believe we can really build an embodied AI that will be received ourselves. 研发方面的然后管理者一号位二号位 然后由于他们过去然后在跟着理想机车 然后经历了一个非常重要的 从零开始的这样一个阶段 有了一个丰富的创业公司的经验 所以我们也可以看到其实然后有一些 我们的这些核心的这个核心的骨干 出去创业也非常好的获得 然后这个投资市场的一个认可 对那我觉得这个一方面我们 恭喜 and these companies and these companies became the marketer and became the marketer and I hope everyone can be able to make the marketer and the marketer can be more better and become the marketer and the marketer I think in the other part I also have a new and the new technology and the new business So, it's a design model, or a new machine, or a new machine. It's a design model, or a new team. It's a design model, or a new team. We've seen a lot of this year in the 90s and 95s. We've seen a new team in the 90s. We've seen a lot of the team in the 90s. 然后构定了一个坚实的、人才的基本 和一个非常强劲的动力 这次对理想技术而言是一个非常好的一个双赢的局面 等等已经开始 所以我也跟这个所有的朋友说一下 可以放心 我们新一代的年轻的管理团队 然后能够非常好的接任他们上一任 所构建的这样一个良好的基础 并在未来的十年去迎接更大的挑战 尤其是一些最关键的技术和最核心的能力方面 我们能看到在我们的技术研究团队里边 除了95后已经开始升任以外 然后我们过去三年培养了交召声 大量的零零后也成为了我们的新的论文 There's one important thing that I want to add.

Around the beginning of this year, we've seen many important managers, especially in the R&D field. We've seen several major departures, many of them have been with the company for over or five years which is something I believe you've also noticed in the market these these leaders in many cases they're first in line of their business they went through the entire zero to one cycle with V auto in a starter mode and they've been very well received by the investment community as many of them have had major funding and we've seen on the news already so first of all I wanted to congratulate these former colleagues for getting good reception in the market not just funding but also overall reception and we I really wish all of you good luck in to compete in your respective markets and wish your business to develop well and for you to have a success in your new venture. At the same time, I also want to point out that this change has really given rise to a very exciting change within the company. It has enabled many of our young leaders across technology, in business units, in foundation models, vehicle product lines, and embodied AI, it has embodied new, enabled new leaders in these areas of many were born after 1990 or 1995 to really take the spot and take the burden. And they're really, we're starting to see a full bench of very talented and motivated colleagues, which is prepping the companies really for the next decade I believe this overall is really a win-win situation for us and our employees and really ready us for the new decade of development so I want all of you investors and those who care about the companies who rest assured that this young generation is taking over very well and they're building on the solid foundation that's built by their predecessors and have turned up and yielded some really really good results especially in some key technical areas for including some of the thesis and key research problems our post 95 generation has made a major contribution and even some newly fresh graduate college graduates many of them were born after the year 2000, they made some major contributions to our products, to our technology, and are at the forefront of our research R&D. So this is a really exciting time, and I'm really excited to see all this, and also makes me very confident about the next decade that's to come. Thank you.

As we are reaching the end of our conference call now, I'd like to turn the call back over to the company for closing remarks. Ms. Shannon Tseng, please go ahead.

Thank you once again for joining us today. If you have further questions, please feel free to contact Liotto's Investor Relations Team through the contact information provided on our IR website.

This concludes this conference call.

You may now disconnect your line.