Li Auto Inc. (LI) Q2 2026 Earnings Call Transcript

Hello, ladies and gentlemen. Thank you for standing by for Lee Auto's second quarter 2026 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 second quarter 2026 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 Tier Li to begin with prepared remarks. Our president Mr. Dong Hui Ma and CTO Mr. Yuan Hie 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 provision 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 filings with the SEC 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 and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. Please refer to Li Auto's disclosure document on the IR section of our website, which contains 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. Xiang Li. Please go ahead.

Hello, I'm Lydia. Welcome to today's E&D. 面对激烈的市场竞争和车型携带期,今年上半年,理想汽车在20万元以上的新能源汽车市场,一旦未及中国品牌项量第一,随着我们双能战略的持续推进,理想汽车增程与纯电车型目前定三结构均衡,已经接近对半,二季度以来,理想R系列已经完成了全面换新, 我们的一系列核心技术成果顺利上车 从自研马赫M100芯件 马赫VLU模型到800V主动悬架 全性控底盘 再到第三代自研针转器 以5C超充电池 全方位软件的升级 重新定义的技术和体验的新标准 纯电方面,理显i6已经连续6个月位居20万元以上所有车型销量前端,它将以理显i6分别成为所在新闻市场的头部产品,进一步巩固我们在20-30万元SUV市场的领导地位。 纯电产品的接待升级也在设立存进 7月末,理想i8新增后驱长续航版本 并围绕用户反馈的问题和需求 增加了电动前备箱 前排烧铭动力座椅等配置 补强的产品力也带来了销量的提升 9月2日,新一代理想Mega即将上市 我们对其先锋造型做得进一步打磨 并带来了新一代的内饰设计 空间体验 智能平台和驾驶质的 全新纯电机械SUV理想i9 也将于9月中旬上市 进一步完赏理想汽车的纯电产品居震 预计后续纯电车型的订单占比会持续提升 随着下半年几款车的上市及爬坡 我们有信心在20万元以上中国乘用车市场 进入所有品牌消量前单 通过核心技术的资源 We will continue to build more of the WTsong machine, which will significantly change the value of the WTsong machine. We will now be the option of the client's ideal feature. The Isto of the LED is the main thing that does colorless. In the LED part, we will have operating more of the LED, and in a very nice mode. In the LED and security level, we have the final quality of the Xbox-sweat. 通过和整车系统的一体化设计 以及对于5C超充的技术的经验积累 理想汽车自然电池 可以在质量安全寿命等方面 有行业领先的表现 目前理想汽车自然电池 已经在全新理想R8 新一代理想R6和理想R8正式上车 未来几个月 我们将所有的车型 我们在所有的车型上 都将会搭载自然电池 我们坚定地认为 长期来看电池和芯片会是巨身智能行业最重要的技术壁壁和互装盒 5月我们开始交付基于理想汽车自研马赫M100芯片的整套支架体系 目前马赫M100芯片交付已经超过了5万颗并保持了良好的体量表现 芯片之外我们在模型控制器软件系统等研发层面也在不断触破 并逐渐将转化为产品体验 7月底,通过OTA 9.1,马克VLA的性能整体到之前提升了20% 用户里程伸透率相较上一代算力平台也接近三倍的提升 9月,马克VLA也将推送至索尔和敖润平台的用户 后续,我们会基于理想汽车的数据积累 针对马克M100芯片加速模型训练与能力的提升 进一步发挥自研芯片的算力优势 7月的OTA 9.1版本 让VLV在反应速度上 看齐和超越能源下水源 10月的OTA 9.2版本 VLV将全面采用3D VIT的感知 看得更远更精准 年底的OTA 9.3版本 VLV的模型参数会成倍提升 在辅达场景的任务理解 和推理能力上显著提升 反应更快看得更准 推理更强 是今年马赫M100和马赫VLV

最重要的三个提升 未来我们将继续以打造巨神智能的汽车为核心战略 通过转型一体的全占资源与持续迭代 让汽车真正成为保护人类安全 独立完成任务 与人类更高效的智能体机器 下面有请我们的CFO理解 为大家介绍我们的财务表现 Hi everyone, this is Vizem Thank you for joining our conference call today In the first half of this year, in the midst of intense market competition and a complete product refresh, Lee Auto has remained the top-selling Chinese automotive brand in the RMB 200,000 and above NEV market. The continued rollout of our dual energy strategy has resulted in a healthy product mix, with E-Refs and ZipMaps each accounting for 50% of total sales. Since Q2, we have updated the entire DL series showcasing our latest technologies. Key updates include our in-health Mach 100 M100 chip running Mach VLA model, 800-volt active suspension and drive-by-wire chassis, and our third-generation range extender with 5C supercharging battery. The hardware and software upgrades set new standards for the technology and user experience once again. Turning over to our BAB lineup, the Lee I6 has been one of our top three selling models priced over RMB 200,000 for six consecutive months. Lee I6 and the L6 are the top sellers in their respective segments, further solidifying our leadership in the RMB 200 to 300,000 SUV market. Upgrades to our bed lineup is also underway. In late July, we launched the rear-wheel drive long-range version of the I8. Based on user feedback, we added features such as power front and zero-gravity driver and passenger seats. These updates bolstered our product competitiveness and translated to a notable sales uplift. The new generation Lee Mega is scheduled for launch on September 2nd. We further polished its pioneering design and completely revamped the interior, the cabin experience, intelligent platform, and bike quality. Additionally, the all-new flagship BEP SUV, Lee i9, will also be launched in mid-September, further enriching Lee Auto's BEP product lineup. We anticipate BEP models to account for an even larger share of total sales over time. With new models launching and ramping up in the second half of this year, we're confident in maintaining a top three position among all brands in China's passenger vehicle market, priced above R&B 200,000. By developing core technologies in-house, we're continuously deepening our competitive mode, steadily translating these technological advancements into tangible user value and commercial efficiency. 5C supercharging has become a prerequisite in user purchase decisions, and the proprietary supercharging network stands as one of our key competitive advantages. On batteries, we're able to develop cell, BMS, and pack fully in-house, completing the final piece of the electric powertrain puzzle following electric motors and control units. Through integrated design with the overall vehicle system, combined with the technology and experience we have accumulated in 5C supercharging, we're confident that Lee Auto's in-house battery will deliver industry-leading performance.

Pardon me, this is the operator. Please hold, and the conference will recommence shortly. The conference is reconnected. Please go ahead.

Apologies for the breakup. To continue with the CEO's remarks, through integrated design with the overall vehicle system, combined with the technology and experience we have accumulated in 5C supercharging, We're confident that Lee Auto's in-house battery will deliver industry-leading performance in quality, safety, and service life. Our in-house batteries are already deployed on our all-new Lee L8, the new Lee L6, and the Lee I8. Within the next few months, all of our models will be equipped with our proprietary batteries. We firmly believe that batteries and chips are going to be the most critical technological barriers in the embodied AI industry. In May, we started shipping our full-stack ADAP solution based on the M100 chip. To date, shipments of the M100 chips have exceeded 50,000 units, maintaining excellent quality track record. Beyond chips, we're also making R&D breakthroughs across models, controllers, and software. These achievements have steadily translated into product experience. In late July, with OTA 9.1, overall mock VLA performance improved by 20 percent and user mileage penetration nearly doubled compared to the previous generation computing platform. In September, we will also roll out mock VLA to cars with NVIDIA, Thor, and ORNX chips. Building on the data we have accumulated, we will accelerate model training and iterations to fully leverage the compute advantage on our chips. The July OTA 9.1 update allows VLA to match and surpass human drivers in reaction stages. The October OTA 9.2 update will enable VLA to fully adopt 3D vision transformers, providing long range and better precision. and the year-end OTA 9.3 update will see VLA model parameters scale exponentially, significantly enhancing task comprehension and reasoning capabilities in complex scenarios. Faster reactions, sharper vision, and stronger reasoning are the three most crucial upgrades for the Mach M100 and Mach VLA this year. Going forward, building and body AI vehicles will remain at the core of our strategy through full-stack in-house development across hardware and software with continuous continuous iteration our vision is that vehicles will become true intelligent agents that can not only look after human beings but also complete tasks in the independently more efficiently than human beings with that I'll turn the call over to our CFO Johnny to walk you through our financial performance thank you hello Hello everyone.

Given the strength, my remarks today will be limited to our second quarter financial highlights. All figures will be quoted in RMB, unless otherwise stated. For further details, including the corresponding US dollar amount, we encourage you to refer to our earnings price relief. Total revenues in the second quarter were R&B 25.7 billion, down 15.1% year-over-year, and up 11.7% quarter-over-quarter. This included 24.1 billion from vehicle sales, down 15.7% year-over-year, and up 11.8% quarter-over-quarter. The year-over-year decrease was mainly driven by reduced vehicle delivery and a lower average selling price due to different product mix. The sequential increase was mainly attributable to a higher average selling price due to different product mix and increased vehicle delivery. Cost of sales in the second quarter was R&B 22.8 billion, down 5.6% year-over-year, and up 7.8% quarter-over-quarter. Gross profit in the second quarter was R&B 2.8 billion, down 53.3% year-over-year, and up 56.9% cultural culture. Vehicle margin in the second quarter was 9.4% versus 19.4% in the same period last year and 6.1% in the prior quarter. The year-over-year and sequential changes were mainly due to different product mix. Growth margin in the second quarter was 11% versus 20.1% in the same period last year and 7.9% in the prior quarter. Operating expenses in the second quarter was RMB's 5.1 billion, down 2% year-over-year and up 6.9% quarter-over-quarter. R&D expenses in the second quarter were R&B 2.8 billion, down 1.2% year-over-year, and up 2% quarter-over-quarter. S&D expenses in the second quarter were R&B 2.3 billion, down 16.2% year-over-year, mainly mainly on lower employee compensation and up 11.2% cost over cost, mainly on higher marketing and promotion spending. Loss from operations in the second quarter was R&B 2.3 billion, versus 827 million income from operations in the same period last year, and 3 billion loss from operations in the prior quarter. Operating margin in the second quarter was negative 9% versus 2.7% in the same period last year and negative 13% in the prior quarter. Net loss in the second quarter was R&B 1.7 billion versus 1.1 billion net income in the same period last year and 2.3 billion net loss in the prior quarter. Diluted net loss per ADS attributed to ordinary shareholders was R&B 1.69 in the second quarter versus diluted net earning of 1.03 in the same period last year and diluted net loss of 2.26 in the prior quarter. And now turning to our cash flow and balance sheet. Net cash provided by operating activity in the second quarter was R&B 15 million, versus 3 billion used in the same period last year, and 6.1 billion used in the prior quarter. Free cash flow was negative R&B 1.3 billion in the second quarter, versus negative 3.8 billion in the same period last year and negative 7.4 billion in the prior quarter. Our quarter-end cash position remained robust as R&B 87.5 billion. these solid cash positions give us the flexibility to invest in product and technology innovation while also returning value to our shareholders through share repurchase. To date, we have repurchased a total of 91.7 million Class A ordinary shares, including 23.7 million ADS for total consideration of about U.S. dollar 631.5 million. And now for our business outlook, for a third total of 2026, the company has to deliver The delivery would be between 95,000 and 100,000 vehicles, and costly total revenue would be between 26.6 billion and 28 billion. This business outlook reflects the company's current and preliminary view on its business situation and market conditions, which is subject to change. That concludes our prepared remarks. I will now turn the power over to the operator to start our Q&A session. Thank you.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can reenter the queue. If you are Mandarin speaker, please ask your questions in Chinese first, then follow with English translation.

Your first question comes from Tim Hezio with Morgan Stanley. 管理层你好,我是 Morgan Stanley的Tim. 我有两个简短的问题. 第一个问题是有关于2022年这个L系列,因为我们今年这个理想L系列的换代已经完成,那不请管理层更新理想L系列的一个上市表现。 I have two questions. the first question is about l series how is the model year updates for the l uh lead l series now completed uh could the management provide an update on this market performance so far since launch uh that's my first question thank you

Thank you very much. 以为4的版本 订单占比 大约是85% 大量用户愿意为全线控底盘 高阶支架 这些硬核的技术买单 也巩固了我们在40到50万家庭SUV当中的市场地位 L8上市以来的话 Azure版本是走量的主力 门店市价转化率 表现良好 关于新一代的话 L6 承接了上代产品的用户基本盘 上一代的话 L6我们累计交付 已经接近了40万台 也定了良好的市场基础 在新一代 L6上面 我们补齐了用户 此前反馈的 纯电续航里程短 充电速度慢 支架能力的短板 并且零重力座椅和29英寸的陈景平 均一步提升了乘坐的体验 那上市之后啊 订单热度是较好的 有望形成稳定的月销一万台的规模 这也是我们20到30万 价位区间最重要的基本盘车型 那同时我们也看到换代切换器 带来阶段性的咬动 像换代切换阶段受老款的清库 新品的上市以及政策衔接等因素影响 那在进行端存在阶段性的压力 我们正在优化相关的环节 那接下来的话我们会关注两件事 第一站的话是软件迭代来持续提升我们产品的价值 我们这代IO系列的产品 拥有扎实的硬件基础和性能 后续我们将通过OTA迭代 持续释放制价能力 逐步落地 巨神智能等相关的功能 第二点的话 我们会持续加密和覆盖 自建5C的超充网络 截止到7月末 已经投入运营了理想超充站 达到了4141座 充电桩超过了22,800多根 完成了9纵9横18条国家级的高速贯通 覆盖全国近300多城市 那我们自建的超充5C网络既可以服务存电 也可以服务新一代的5C征程车型 并且已经成为用户购车的重要考量因素 I believe that after the L-Series, the L-Series will be made with the I-Series. They will be made with the I-Series, to support the entire business. The L-Series and the L-Series are close to the L-Series. After the L-Series, the L-Series will be added to the L-Series. The L-Series will be expanded to the L-Series.

Thank you.

This year, we have completed the full refresh of the L series from L9, L8, L6 have all transitioned to the latest platform, which includes the Mach M100 chip, 5C range extension, and other core technologies. And on latest models, we also carry our latest fully drive-by-wire chassis. With these, we have completed coverage of the 200,000 to 500,000 RMB range extended SUV market. Since we started delivery, we have seen a few trends. First of all, our high-end models have exceeded users and our expectations. Since launch, the L9 Libis accounts – the Libis version of the L9 accounts for over 85% of all sales. many users willing to pay for this fully drive-by-wire chassis as well as high end in-app systems as well as other core technologies this also select solidified our leadership in the RMB 400 500,000 home and family SUV market and since the launch of the L8 ultra version has been the key sales driver and the conversion ratios in our storefront has been performing very well secondly the new generation L6 has successfully retained the user base from the previous generation with the previous generation laying a very good foundation by delivering almost 400,000 units and the new generation have addressed key user feedback such as EV range charging speed key intelligent platforms and also completed the offering with two zero-gravity seats in the front row and a 29-inch panoramic screen, which also enhanced user experience. So since launch, we have seen very good reception on ALG 6, and we're hopeful that there will be a 10,000 units per month demand level steadily going forward so this is a poor pillar for our sales in the 200 200 300,000 market in the meantime we have honestly seen some temporary disruptions caused by the model refresh cycle including clear old inventory ramping up new models and sales policy transitions have all created short-term operational We're currently working very hard to optimize our processes and address these challenges. Going forward, we will focus on two things. The first is to further enhance product value through OTAs. The all-new L series have a very robust and industry-leading hardware as a basis, so moving forward, we'll continue to unlock these hardware capabilities and AI features through OTA updates. Secondly, we will continue to build out our 5C supercharging network, increasing both density and coverage. As of the end of July, we have already 4,141 charging stations in operations and over 22,800 charging stalls. We have now a nine-by-nine grid covering 18 national-level highways and covering more than 300 cities. So our in-house charging network as well as 5C charging capability have become a prerequisite for many of our users in their car purchase decisions. So with the L-Series refresh completed, it will now complement our I-Series to jointly drive overall business growth. Currently, ERAV and BEV each account for half of our total sales, and we expect BEV's share to rise further as we launch more BEV models later this year. Thank you.

Thank you. My second question is about Mega. Today's company also has a video of the Preview video for the new VMEGA. Can you share the key highlights of this refresh and to your sales expectations? Thank you.

Thank you. 搏车不够灵活的用途反馈 那在改款MEGA上面我们将搭载后轮转向 线控转向以及主动防轻感等配置 大幅来缩小转弯半径 改善过弯的车轻 兼顾大车的空间和灵活的架控 那第二个的话是智能硬件会全面升级 升级全套的支架感知硬件 会搭载我们自研M100指甲芯片 补权侧向后向的感知能力 强化程式的NA 在复杂路口自动驳车的表现 坐舱也将升级高通的高性能 坐舱芯片带来更好的交互和娱乐体验 第三个方面的话是家庭的坐舱 和细节体验的优化 我们会延续Mega家庭MPV的定位 升级二排和三排座椅的乘坐体验 内饰氛围 交互细节 更好的话去满足多成员家庭出行的使用需求 Mega作为我们50万以上价位的纯电家庭旗舰的MPV 它的定位非常清晰 这次改款补齐了用户集中反馈的短板 产品力也得到系统的提升

As many of you have noted, we have today officially released the first batch of teaser information on our new generation MEGA. this new generation is really based on user feedback real user feedback from the previous generation mega and to address the important feedback and product for companies of the previous generation and they mainly fall into three categories the first is improvement in the chassis and handle experience many view MPVs as very large and cumbersome in cities so the new generation mega we all have will be quick with rear wheel steering drive by wire system and as well as active anti roll bar which will greatly reduce the turning radius and reduce will reduce body roll in cornering and also make the car more flexible and agile in cities and second is upgrade to the intelligent platform. We improved the entire autonomous driving system with our in-house Mach M100 chips. We've also completed the lateral and rear sensors to improve city and LA and handling complex intersections and auto parking. On the cabin side, we'll also be upgrading to the latest Qualcomm chips to bring better interactive and entertainment experience and thirdly is improvements in the cabin and details to further drive the positioning as a family on TV we've made significant upgrades the second that third row including the interior atmosphere interactions to better serve the needs of large families mega's very clearly positioned as the slack chip SUV over 500,000 RMB. So this new generation has really addressed user feedback and have completely remamped the product and improved the product. Obviously, the sales performance will depend on many things, including sales conversion, including product ramp-up, as well as changes in the market. But we will make sure to focus on delivery, store experience, as well as user operations, and we'll keep updating everyone on the sales performance as we launch the product. Thank you.

Your next question comes from Paul Gong with UBS.

So my first question is regarding the impact of commodity cost inflation. How much can you quantify in terms of the impact in Q2 and moving towards Q3? And what would be your strategy to counter for such cost inflation challenge and the margin pressure?

Thank you very much. 也出现了涨价,那我们依托前期锁量和长期的采购框架协议,受到的价格波动影响小于行业平均水平,还有电池,今年碳酸里的价格也出现了较为明显的周期性的波动,所以说为了应对周期性的成本波动,我们有两个举措,一方面我们会持续推进精细化的运营。 来实现的话降成本 那另外一方面我们要依托全占的技术自研和自主的供应链体系 来构建长期的结构性降本能力 首先我们持续会建设高度自研自控的三电体系 方式我们的技术和成本两方面的竞争基础 那在电驱动领域的话 我们已经实现了像电机电控 它划归芯片的模组自研自制 那对于关键部件深度掌握 那依托一体化的集成架构 我们会不断的话去优化能耗 迭代的话技术方案 来摊薄单车的硬件成本 那另外在电池系统方面的话 我们将电池PAC和整车的架构 同步开发深度偶合 这样的话可以实现像能耗 温控 安全以及空间的最优解 兼顾多化产品的体验和成本的控制 那目前我们已经构建了像电芯体系的设计 泰克的结构设计 热管理 BMS算法等核心的自主研发能力 我们会推动自研电池系统在更多车型上面落地应用 在质量性能和成本纬度形成的化竞争力 另外我们通过自研的自驾芯片会打造核心技术和成本的竞争优势 我们自研马克100的芯片通过创新的数据流架构和软硬件的一体化设计 在算力表现和成本控制上具备显著的结构性的优势 总结来说的话 短期我们会通过长单的锁量经济化的运营 This year we've seen cyclical fluctuations in upstream raw materials and core components,

which has created temporary cost pressures for both the industry and our company, which has been further impacted our gross margin. To look at this in more detail, on the AI side, because of the AI sector, this has driven demand for chips and PCBs pushing prices up. On the memory side, memory chips price have also risen, but with our early volume commitments and long-term procurement agreements, the price impact on us is less than the industry average. And on the battery front, lithium carbonate prices also experienced cyclical fluctuations this year. And to navigate these cyclical cost fluctuations, we're taking a two-pronged approach. On the one hand, we're continuously driving cost reductions through more efficient operations, and on the other hand, we're leveraging our full-stack in-house technology and proprietary supply chain to build for long-term structural cost advantages. So specifically, first on the electric drive train front, we will continue to be committed to owning and driving the R&D and supply chain of the three key electric systems to solidify our dual modes in technology and cost. On the electric drive side, we have achieved in-house development and manufacturing of motors controllers and silicon carbide chip modules which ensures our control over the critical components by leveraging our integrated architecture we're continuously optimizing energy consumption and iterating on our technological solutions which has steadily amortized the hardware cost per vehicle and in terms of battery system we develop in tandem and deeply integrate our battery packs with the overall vehicle architecture, which allows us to achieve the best possible balance between energy consumption, thermal management, safety, and packaging efficiency, which further delivers an exceptional user experience while maintaining strict cost control. We have established the in-house R&D capabilities in core areas, which include cell pack thermal management and BMS algorithms. We're accelerating the deployment of our proprietary battery systems across a broader range of models establishing a strong competitive action quality performance and cost. Secondly is in-house developed chips. We're building a strong competitive advantage across technology and cost. Again, the proprietary Mach M100 chip is built on an innovative data flow structure which would integrate a hardware and software customization and delivers a structural advantage in computer performance and also cost. So overall, in short term, we're trying to smooth out the temporary cost fluctuations and pressures on our business through volume commitments and refined operations. And in the medium to long term, we're relying on scale deployment of our in-house technologies to stabilize the growth margin and support the company's high-quality sustainable growth.

Thank you. That's how we're considering the raw material costs as well as the commoditized competition. What would be our latest growth margin target? Thank you.

Thank you. 和供应 然后通过更好的成本管理能力 也包含通过我们的整个销售体系的费用的然后效率提升 然后成本降低 然后再改善 从而将整个的这个将降本的这个金额然后为用户可以实际享受到的实惠 那长期来看我认为公司健康的毛利率会建议15%到20之间 对然后跟20的差异的主要的影响因素 就是未来然后各种原材料 然后仍然可能会存在着

I'll be no as they can observe this year we have seen a very big increase in the cost of batteries and memory chips this which is a common challenge for everyone in the industry and because Lee Auto's products are more intelligent which makes them consume more memory and semiconductor so we're more impacted and apart from the impact on Bob we're also experiencing amortization and depreciation on our tooling and production equipment, we have followed more strict rules as well as the treatment to end-of-production items. As we launch new products this year over time, we already are seeing improvements in gross margin, but we must also face the increase in chip and PCB as well as the other semiconductor, the cost increase. We must face this as well. we have made a decision not to pass these price increase over to our customers but instead we will continue to leverage our integrated design and supply chain such as deepening our in-house R&D and deployment of our batteries to make our system more self-sufficient and secondly we will build a better cost control cost management capabilities and thirdly on the sales front we have through our sales partner program we have we we have benefit from lower sales costs better operational mindset and increase in efficiency so all of these lower prices at low cost will be transformed to actual benefits that our users can receive in the long term my view is that the company and healthy margin for the company will be somewhere between 15 to 20 percent gross margin, with the main driver here being the raw material cost. Thank you.

Thank you very much.

Your next question comes from Wen Zhuhua with SciTex.

What information could you please share about the upcoming Liato i9?

i9和mida会形成精准的互补 一个是旗舰的SUV 一个是旗舰的MPV 共同覆盖高端多成员家庭 存电的出行市场 在产品正式落地之后 i6 i9也将进一步 壮大我们的存电产品阵营 和L系列形成 征程存电的双能协同 进一步完下 20万到50万 高端行动员市场的产品布局 第二个的话是核心技术的底座 i9呢也会搭载800V 5C的高压平台 会采用我们新一代自演的电驱系统 依托我们全国自建的5C超出网络 为用户带来优异的极数不能体验 那在智能方面的话 我们将搭载自演的马克100的支架芯片 为高级支架以及后续的巨神智能功能的迭代 提供充足的算力 那座舱呢 也将会搭载我们新一代的高通高性能的座舱芯片 来支撑多任务并行 AI智能交互等复杂的场景 那最后的话是用户的核心价值

因为i9的话会聚焦多成员家庭的全员出行场景 我们重点优化超大空间的布局 全员舒适的乘坐体验以及痊愈的智能交互能力 致力为车内每位乘客都带来旗舰级的综合体验 在发布节奏上的话 i9计划是在9月中旬正式发布 具体的价格配置 进行大家关注我们的正式发布会 欢迎大家持续关注 谢谢 There are three things about the i9 that I would like to share First of all, product positioning I-9 is designed for large families as a flagship six-seater SUV, which continues our core DNA to build products for large families. In terms of product matrix, I-9 will complement Omega, one being a flagship SUV, the other being the flagship MPV. It will both together satisfy the needs of large families who want to buy an electric vehicle. As I-9 lands, I-9 will also be an important addition to our EV flagship EV product line as well as it will also complement the L-series with our independent range-extended and VAT product lines. So these all will complete our coverage of the RMV200 to 500,000 high-end new energy vehicle market. Second thing I'd like to share is the technological foundation. I-9 will be equipped with 800-volt 5C high-voltage charging platform, powered by our latest generation in-house developed electric motors, which also relies on our overall national 5C charging network to provide a very good charging experience for our users. On the intelligence front, I9 will carry the Mach M100 8S chip to power not only Anton's driving but also embodied AI capabilities going forward. On the cabin front, we'll also carry the latest Qualcomm high-performance cabin chip as well to support multitask parallel processing as well as AI intelligent agents. And thirdly, in terms of users, i9 will be focusing on large families traveling together. So our focus will be on the interior experience, comfort for each family member, as well as a spatial interactive experience in order to provide a flagship level experience for every member of the family. In terms of release timeline, the VI9 will be launched in mid-September. Unfortunately, due to disclosure regulations, I can't say too much about pricing and specific trim levels. We will be releasing the complete information in the product official launch event. Please stay tuned.

Thank you. 感谢管理层的回答 我的第二个问题是关于自动驾驶的 我想请公司介绍一下当前马赫M100芯片和这个自驾模型协同优化的一个进展 以及下半年在这个自驾算法方面有哪些关键的这种里程碑和量化的指标 So my next question is about the autonomous driving. So could you please update us on the progress of the co-optimization between M100 chip and autonomous driving models, and what are the key milestones and quantitative metrics for autonomous driving algorithm upgrades in the second half of the year?

This is Yan, and let me answer your question. Our in-house Mach M100 chip began mass production with the all-new L9 in Q2 and is now deployed across the all-new L9, L8, and L6. Currently, the chip production capacity is sufficient to meet market demand. Our ADA system powered by our in-house Mach M100 chip has been delivered to customers with the all-new L9 since May, leveraging the strong capabilities of Mach platform. We expected to continue making significant improvements to our models. OTA 9.1 began rolling out at the end of July, further reducing end-to-end latency. We also introduced the two new speed preference modes for our MAG VRA model, efficient and the comfort, improving responsiveness across a broad range of driving scenarios. The upcoming OTA 9.1, we represent a major architectural upgrade. On the model side, we are evolving toward a full 3D vision transformer architecture with three times the parameter count and 4.6 times the compute. This upgrade will deliver systematic improvements across key dimensions of ADAS, including safety, comfort, efficiency, and navigation. In Q4, our goal is to further enhance perception and decision-making capabilities of MAC VRA. Specifically, firstly, longer range perception. The effective perception range will exceed 250 meters, enabling early speed adjustment and path planning. We expect this to reduce undesirable behaviors such as heartbreaking, hesitation, and unnecessary lane change by more than 30%. Secondly, higher perception accuracy, 3D spatial perception accuracy for key objects will improve to within five centimeters, increasing success rate in challenging scenarios such as never road driving, passing through gates, and other tight clearance maneuvers by 50%. Thirdly, a stronger seeing understanding rather than simply recognizing individual objects, the system will be able to infer intent based on the broader traffic context. In scenarios such as yielding on narrow roads and navigating around the construction zones and making unprotected turns, it will make more decisive yield or proceed decisions, reducing unnecessary stand-stills and hesitations by more than 20%. Additionally, MUC VRA 2.0 for NVIDIA O-RING and Thor platforms will launch in early September. The share of driving mileage completed with ADAS Engaged is a key metric for us at this stage. On the MAG platform, ADAS mileage penetration in urban scenarios has nearly doubled from previous levels. As deliveries of MAG-powered vehicles continue to ramp up, our all scenarios MPI has increased by 25% in recent months. Thank you.

Your next question comes from Jing Chang with CICC.

Okay, thank you for your question. cash flow we see the operating cash flow nearly turned positive in the second quarter but free cash flow remained negative and also we see some cash position declined so could you

share your outlook on the second half whether our free cash flow will turn positive and our overview of the cash position thank you johnny and this is johnny i will take this question From the third quarter with the delivery of our new models, we expected to maintain a stable operating cash flow on a quarterly basis. At present, we have which provides strong support for our product innovation, technology breakthroughs, and global expansion. This year, we remain committed to R&B investment and the CapEx, including our supercharging network. We expect our full year CapEx to be around R&B 6 billion. For the full year, achieving positive operating cash flow and free cash flow will likely depend on our post-quarter deliveries. One thing is certain that our overall cash flow performance this year will be stronger than last year. Thank you.

Thank you. So my following question is about the intelligent driving.

What are key contributions do you think is our self-developed chips and also software and hardware integrated integration can deliver to advancing our intelligent driving capabilities thank you this is Yan let me answer this question and the rapid progress we have made in challenging driving both in terms of performance and speed of delivery is driven by the close integration of our in-house chip and full stack system capabilities Firstly, we have streamlined our organizational structure so that the chip and model teams can work much more closely together, jointly designing model architectures that can fully leverage the computing capabilities of Mach M100. From a hardware interface perspective, Mach M100 gives our model algorithm and operating system significant design flexibility, allowing the chip algorithm and system software to be optimized together for the best overall performance. And secondly, optimization of data and training. With our in-house chip as the foundation, we're able to explore and optimize the training process at much deeper level. In particular, our reinforcement learning approach built around the MAG platform has significantly enhanced the model capabilities within our world model framework. In addition, the data management and the shadow data system built on the MAG platform enable the faster model iteration and improvement. Thirdly, system-level optimization through our in-house Halo OS. Halo OS enables deep integration between uplayer applications and the underlying chip, improving both resource utilization and overall system performance. At the system level, this also helps improving engineering quality and accelerates development cycles. Together, the chip model and OS form a tightly integrated full-stack architecture, creating a complete technology loop for our intelligence driving system. The value of our in-house chip is now extending beyond intelligent driving into embodied intelligence. A vehicle equipped with dual M-100 chips, we are able to run a fully multimodal foundation model entirely on device, supporting inputs across voice, language, and video. The model is capable of general purpose problem understanding, environmental understanding, and task planning. and this means the vehicle is no longer limited to executing predefined functions. It can increasingly understand user intention and the physical world, then plan and execute tasks toward a given object. We believe this will significantly expand the capability boundary of the vehicle as an embodied intelligent agent, and it represents an important new direction enabled by our integrated hardware software architecture. Thank you.

Your next question comes from Ming Sun Li with B of A. So my first question, could you update your overseas market development strategy and also the progress? And the second question is to develop your embodied humanoid robot product, will you continue to invest high R&D amid the current competition background? Thank you.

Thank you very much. 已经正式登陆了哈萨克斯坦,乌兹别克斯坦,9月份我们计划在迪拜举办新产品的上市活动,陆续会开启中东市场的销售,同时我们也和哈萨克斯坦头部的汽车集团达成了战略合作,推进当地本地化的组装合作落地,依托现有车型的海外本地化适配,以及本土的组装项目。 说明我们也正在逐渐去搭建研发产品生产销售和服务的全球化业务的能力框架 那在欧洲市场的话我们会优先导入存电的产品 理想i6计划借助10月份巴黎车展完成首次海外的公开领像 并计划在今年Q4开启欧洲市场的布局 针对右舵市场除了计划在年内推进MEGA在中国香港新加坡等右舵区的落地 我们还会推出右舵的i6持续来完善右舵市场的产品矩阵 当然海外的业务的拓展也会有很多客观的挑战 包含地缘环境市场的法规等不确定的因素

理想在海外会去坚持高端品牌的定位 我们会结合自身的能力 以及各个区域市场的差异化特点 打碰发展的节奏 同步做好产品会合规 以及售后服务网络的搭建和品牌建设 谢谢 Oversea expansion has been our long-term strategy And we have made some steady progress in market expansion and product deployment Overall, the progress has been on track and within our expectations. In terms of regional strategy, for Middle East and Central Asia, we will be focusing on our L series range extended models as the key offering. In July, we have launched the all-new Li-L9 in Kazakhstan and Uzbekistan. In September, we're planning to launch in Dubai and to kick off our sales in the Middle eastern market in the meantime we have already formed a strategic partnership with allured a leading local car group in Kazakhstan to drive our the local assembly of our vehicles by pushing forward the local adaptation and the local assembly of our current models we're steadily building out a complete global presence across R&D products manufacturing sales and service in Europe we will be prioritizing back models so the i6 will be launching at the October Paris Motor Show and officially start selling in the European market in Q4 for right-hand drive markets in addition to launching lead mega in Hong Kong SAR and Singapore by the end of this year will also be rolling out the right-hand drive version of the i6 to complete our model lineup in the right-hand drive markets with all that being said expanding overseas comes with its own set of challenges particularly uncertainties around the geopolitical environment and market regulations we aim to position the auto as a premium brand in overseas markets as well and we will carefully manage our pace, tailoring our approach to our strengths and the unique dynamics of each market. And at the same time, ensure the products are compliant, build after-sales service networks and continue to build our brands. Thank you.

Thank you very much. In addition, we will also be able to continue to work with电池 for example. With电池 for example, we will also include电芯,PEG, BMS, and热门链链的完整系统, including this kind of system and车型搭配, and through one-体化研究, and with our 5C超充 over the past few years of技术 and experience, We are very proud to see the quality of the product. From the beginning of the year, the product of the product of the product will continue to the entire vehicle. I want to emphasize that the product of the product doesn't mean that the product of the product is not good. The product of the product of the product will not affect the product of the product of the product.

Thank you. if you look at the history of the autumn the first 10 years is really our startup face and going forward the next stage is going to be continued investment in R&D to build our competitive barrier and among all of this developing chips in house is a strategy core strategy long-term strategies that we have established from a very long time ago and we will remain committed to keep investing and to improve and iterate on our in-house chips over time so So if we look at chips as a core competitive advantage, AI is going to be – the model is going to be the competitiveness. Other than chips or AI, we have also been investing in the core components of the electric powertrain. Taking batteries as an example, we have in-house developed our cells, pack, BMS, and even including thermal management systems, this entire offering, including its pairing and adaptation to our actual vehicle products. With an integrated R&D approach, we have accumulated a ton of experience around 5C charging and technologies, which makes us confident in terms of our in-house batteries' quality, safety, and life expectancy. So starting from the second half this year we will be rolling out Lee Auto branded batteries across all of our vehicles and I need to emphasize by choosing to develop these components in-house doesn't mean that our suppliers products aren't great we develop our in-house Mach 100 chips that doesn't make Nvidia any less respectable as the best chip company in the world as we develop our in-house batteries, that doesn't make CATL any less respectable as the best battery companies, well CATL as well as many other brands which all great battery brands, that doesn't make them any less respectable. We believe that in the era of embodied AI, chips and batteries are going to be the most important competitive advantage and electric powertrain and great products will be the key to our competitiveness, our product competitiveness. So choosing to develop these technologies in-house only shows that we want to be like companies like Apple and Huawei to really hold the key components of our competitiveness in our own hands. 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. Jenazeng, please go ahead.

Thank you once again for joining us today. If you have further questions, please feel free to contact Liado's investor relations team. This concludes this conference call. You may now disconnect your line. Thank you.