Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2024 Earnings Conference Call for XPeng Inc. At this time, all participants are in listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex Xie, Head of Investor Relations, Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's fourth quarter and fiscal year 2024 earnings conference call. Our financial and operating results were issued via Newswire Services earlier today and are available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaopeng.com. Participants on today's call from our management will include Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu, and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note 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 results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that XPeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to our Co-Founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead.

Hello, everyone. I'm He Xiaopeng. In the fourth quarter of 2024, we achieved significant milestones, including a record 91,507 vehicle deliveries in a single quarter, six consecutive quarters of improving vehicle margins, and over RMB4 billion in free cash flow in the second half of the year. These results highlight our significant progress in scaling, organizational improvement, and strategic execution. As we move into 2025, XPeng has topped monthly deliveries among China's emerging EV companies for two consecutive months, demonstrating our robust momentum. I believe that the key to achieving long-term goals lies in steady progress. This year, I'll dedicate myself to further enhancing XPeng's organizational capacity, user-centric product development, AI and automotive technology, commercialization, and globalization. In our last earnings call and AI Tech Day, I emphasized that the next decade in the automaking industry will be the era of AI. By 2025, advanced AI models will revolutionize autonomous driving. The AI advancement led by China in the first quarter of this year has only strengthened my conviction. I'm now more confident than ever in XPeng's strategy and technology roadmap for AI large models in the physical world. We've developed a cloud-based foundational model that boasts tens of billions of parameters, leveraging over 100 million kilometers of real driving data for pre-training. This marks an unprecedented scale of model parameters and data volume in the field of autonomous driving in China. To further enhance the model's generalization capabilities and its ability to manage long tail scenarios, we employ reinforcement learning techniques. We then implement the model in vehicles, applying distillation, pruning, and quantization techniques and have successfully boosted the model's accuracy by over 100%. In January 2025, DeepSeek R1 made significant strides in large language models, advancing AI capabilities in the digital realm. Much of its technology roadmap resonates with ours. I'm thrilled to see that large models are integrating in various industries, and XPeng is exploring the frontier of technology together with leading AI tech companies from different fields. I truly believe AI will transform the automotive industry in a few years' time, speeding up the development of L3 and L4 autonomous driving. Additionally, I see a growing trend of smart vehicles and embodied AI evolving together, and smart vehicles may pave the way for humanoid robots. I'm confident that all future smart cars will be embodied AI vehicles. My goal for this decade is to build XPeng into an AI-empowered global automotive company and a smart technology brand cherished by users worldwide. We're currently undergoing a transformational shift from the era of vehicle electrification to the era of AI. If 2025 marks the beginning of AI application, then XPeng's in-house developed AI vehicles and humanoid robots will be two of the most significant applications of AI in the physical world. I believe that a top AI company should possess cutting-edge full-stack software and hardware capabilities and be able to iterate closed-loop data effectively across large cloud-based AI models, vehicle models, vehicle electronic architecture, and system on chips. We expect to begin mass production of our self-developed Turing chip, which, by the way, is progressing really well for vehicles, flying cars, and humanoid robots this year. This chip is also designed for swift deployment across global markets and diverse scenarios. The Turing chip, combined with our full-stack, in-house developed software and hardware, will enable XPeng to fully leverage the scaling laws of our vehicles. Our model architecture will not only remain a generation ahead of the industry, but the effective parameters used in our vehicles will also be dozens of times larger than those of our competitors, creating a significant gap between us and them. I believe that in the second half of this year, XPeng will be the first in China to offer a smart driving experience that boasts software capabilities and user experiences equivalent to L3 autonomous driving. L3 autonomy will generate strong user demand and exceptional user loyalty, marking an iPhone 4 moment for AI-defined cars. Additionally, in 2026, we plan to mass-produce vehicle models that will support L4 autonomous driving in low-speed scenarios. True success will be achieved when smart driving earns the trust of a broad range of family users, so even those from my parents' generation can use it competently and frequently. An interesting figure to share with you is that, starting from 2025, the penetration rate of advanced urban smart driving among new car buyers in China will exceed 10% for the first time, marking a turning point in the demand for smart driving. This growth trend is expected to be nonlinear, presenting a significant opportunity for us. We're well prepared in terms of technology, cost, and model lineup to rapidly ramp up the sales of AI vehicles and promote the global adoption of AI-powered smart driving. From a technology standpoint, XPeng and Tesla are the only two companies worldwide capable of providing a globally reliable AI smart driving experience without relying on high-definition maps or LiDAR and using a single software suite across the vehicle models. Going forward, we look forward to competing alongside the world's leading AI autonomous driving companies in both the Chinese and global markets, jointly accelerating the penetration and adoption of AI-driven autonomous driving technologies. Starting from the P7+, all new X9 models, including the recently launched 2025 G6 and G9, will come with industry-leading pure vision-based AI smart driving as a standard feature across all trims, with no extra costs or add-ons. Our upcoming Mona M03 Max, set to launch in May, will lower the entry barrier for urban AI smart driving to the RMB150,000 range for the first time, making advanced vehicle technology more accessible to younger consumers. By integrating cutting-edge AI technology with a well-developed and highly efficient platform-based approach, XPeng is democratizing AI technology across the widest price range, making it affordable and reliable for a broad base of ordinary users. As the AI boom accelerates over the next three years, we'll focus on refining, differentiating, and globalizing our well-defined product portfolio. This will enable us to achieve rapid sales growth and scale leadership through our three-year product cycle while also ensuring sustainable profitability. Starting in 2025, we plan to launch new models or updated versions every quarter, all equipped with XPeng's latest next-gen AI technologies. On March 13, we launched a new 2025 G6 and G9. Their comprehensive upgrades and top-tier product capabilities have been widely recognized and appreciated by our users. Orders continue to pile up and have exceeded our expectations. Additionally, the surge in store visits following the new model launches has driven an increase in demand for our entire lineup. We plan to begin deliveries of the new G6 on March 21 and we're currently working closely with our supply chain to ramp up production capacity, ensuring that more customers can receive their vehicles as soon as possible. Next, our Mona M03, G7, and X9 will introduce new Max streams and launch new models for our facelift. I'm confident that our strong product offerings represented by the M03, G6, G7, P7+, G9, and X9 will respectively cater to the diverse needs of young consumers, families, and those seeking premium upgrades, ultimately helping us increase our market share across diverse market segments. With the deliveries of our new models and updated versions ramping up, I expect ourselves to steadily navigate a transitional period of product generational change, continue to grow, and reach new highs in the second quarter. In the second half of the year, we plan to deliver several new products, including battery electric vehicles or BEVs and Kunpeng Super Electric Vehicles. Most of our models will feature dual energy, significantly broadening our addressable market through super electric models. By the end of 2026, we'll have a comprehensive product lineup across the RMB100,000 to RMB500,000 price range, covering all mainstream segments from compact to large models. We are also thrilled to report that our design center in Shanghai is now operational and the team is growing rapidly. The integration of art and technology is gradually unleashing its full potential. I believe our new models will impress users with their aesthetics and refined perception. Additionally, the development of our new models will adhere to a thorough platform-based approach, sharing a unified set of underlying technologies including AI-driven smart driving, AI cockpit, EEA, and AI-powered powertrain. This will enable efficient R&D advancement and strong economies of scale. Our growth momentum in overseas markets is also strong, and there is still significant potential for both electrification and smart technologies. In 2024, XPeng's overseas vehicle sales exceeded 20,000 units, ranking first in export volume among China's emerging EV brands and also leading in the export of China's mid to high-end BEV. I want to express my heartfelt gratitude to all XPeng owners around the world for their unwavering support and passion for our brand. Looking ahead to 2025, our overseas business milestones include doubling our sales and establishing over 300 sales and service stores worldwide, double the number we had at the end of 2024. Beyond expanding our vehicle sales globally, we're committed to establishing ourselves as a leader in advanced technology and high quality. In 2025, we'll set up new overseas R&D centers and commence our overseas research and testing for our Turing AI-powered smart driving. Our goal is to bring XPeng's AI smart driving capabilities to more countries and users around the world in 2026 and beyond, also ensuring compliance with local regulations. With the launch of more competitive products and ongoing global expansion, I'm confident that XPeng's total sales in 2025 will more than double that of 2024. This will significantly increase our market share in both the Chinese and global smart EV sectors and establish us as a leading AI automotive brand widely recognized by consumers. Alongside our growth, ongoing technology-driven cost reductions and economies of scale will help further improve our vehicle margins in 2025. This allows us to continue our investment in AI research and development, while moving towards profitability in the fourth quarter. In the long run, I believe AI will evolve from being just an assistant to becoming a crucial part of our social infrastructure, woven into the fabric of our daily lives. When I think about the future of an AI-driven mobility ecosystem, I envision driverless vehicles cruising through cities, flying cars for intercity travel, and humanoid robots integrated into our factories and communities. Regarding my strategic plan for XPeng, I have identified three primary growth trajectories. First, we're working on AI-powered vehicles, equipping our cars with cutting-edge AI technology. Second, we're focusing on global market expansion, actively broadening our presence beyond China and into international markets. Lastly, we're dedicated to the development of humanoid robots that can seamlessly integrate with the automotive industry. Our amazing team is committed to excelling in each of these areas, putting in the hard work to deliver the best AI-driven products to consumers around the world and to provide greater value overall. We anticipate that our total deliveries for the first quarter of 2025 will be between 91,000 and 93,000 units, reflecting a year-over-year increase of 317% to 326.2%. At the same time, we forecast our total revenue to fall between RMB15 billion and RMB15.7 billion, which represents a year-over-year growth of 129% to 139%. Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the fourth quarter of 2024.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the fourth quarter of 2024. I'll reference RMB only in my discussion today unless otherwise stated. Our total revenues were RMB16.11 billion for the fourth quarter of 2024, an increase of 23.4% year-over-year and an increase of 59.4% quarter-over-quarter. Revenues from vehicle sales were RMB14.67 billion for the fourth quarter of 2024, an increase of 20% year-over-year and an increase of 66.8% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly attributable to our higher deliveries. Revenues from services and others were RMB1.43 billion for the fourth quarter of 2024, representing an increase of 74.4% year-over-year and an increase of 9.7% quarter-over-quarter. The year-over-year increase was mainly attributable to the increased revenue from technical R&D services related to the Volkswagen Group. The quarter-over-quarter increase was mainly attributable to the increased revenues of maintenance services and auto financing services. Gross margin was 14.4% for the fourth quarter of 2024 compared with 6.2% for the same period of 2023 and 15.3% for the third quarter of 2024. Vehicle margin was 10% for the fourth quarter of 2024 compared with 4.1% for the same period of 2023 and 8.6% for the third quarter of 2024. The year-over-year and quarter-over-quarter increases were mainly attributable to cost reduction. R&D expenses were RMB2.01 billion for the fourth quarter of 2024, representing an increase of 53.4% year-over-year and an increase of 22.9% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly due to higher expenses related to the development of new vehicle models as the company expanded its product portfolio to support future growth. SG&A expenses were RMB2.28 billion for the fourth quarter of 2024, representing an increase of 17.5% year-over-year and an increase of 39.3% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly attributable to higher commissions paid to the franchise stores, driven by our higher sales volume. As a result of the foregoing, the loss from operations was RMB1.56 billion for the fourth quarter of 2024 compared with RMB2.05 billion year-over-year and RMB1.85 billion quarter-over-quarter. Net loss was RMB1.33 billion for the fourth quarter of 2024 compared with RMB1.35 billion year-over-year and RMB1.81 billion quarter-over-quarter. As of December 31, 2024, our company had cash and cash equivalents, restricted cash, short-term investments, and time deposits in total of RMB42 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our fourth quarter and full year 2024 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

Your first question comes from Tim Hsiao with Morgan Stanley.

My first question is about autonomous driving. With the 80 autonomous driving or autopilot functions and the upcoming upgrade to Level 3 autonomous driving system, do you think this will broaden the gap between the leaders and the laggers, or will it continue to be a close competition? That's my first question. Thank you.

First of all, thank you for your question. Over the past several months, all OEMs in China have announced significant initiatives in smart driving, which is very exciting. Looking back to 2020 and 2021, discussions were primarily about new energy vehicles as the future, rather than traditional internal combustion engines. We are now witnessing a new era of technological progress that I believe will encourage broader acceptance of smart driving in society. Consumers are becoming increasingly interested in understanding smart driving and advanced driver-assistance systems and the experiences they will offer. Previously, many smart driving capabilities were restricted to high-speed and highway driving, as well as auto parking, where we have already seen considerable advancements. However, since our launch of AI-enabled vehicles last year, we have integrated AI capabilities into our vehicles as standard features, providing high-level advanced ADAS both in software and hardware. This evolution will allow AI vehicles to function as autonomous agents, offering unique capabilities that people have either long sought after or previously could not have imagined. Regarding your second question about Level 3 capability being a turning point, it signifies a leap in technology, including both software and hardware integration. The capabilities we are seeing now in large models will far exceed those of the current advanced Level 2 technologies, potentially by tenfold or even more. I also want to emphasize that when the market penetration of high-level autonomous driving hits 10%, it will significantly enhance user awareness and understanding of advanced smart driving capabilities. As consumers make purchasing decisions, they will prioritize vehicles with these advanced ADAS features. I believe that in the foreseeable future, XPeng will increasingly differentiate itself from competitors across various facets. Our full-stack self-development capability enables us to utilize resources across diverse domains and scenarios effectively. In terms of development capacity, we’ve moved from a scale of 100 points to about 30,000 points by leveraging vast amounts of data and large models. Achieving our smart driving goals requires a comprehensive closed-loop approach that encompasses everything from cloud computing to in-vehicle technology, data, chipsets, and hardware engineering. Due to our early vision and significant investment ahead of competitors, we have established a compelling first-mover advantage. Furthermore, our smart driving capabilities coupled with our smart cockpit, platform, powertrains, and our integrated approach—both vertically and horizontally—will drive substantial value, necessitating extensive cross-domain self-development capabilities. In regard to AI-enabled vehicles, we leverage a single platform to maximize the benefits previously outlined, ensuring greater efficiency in data handling and capabilities as data volumes grow. Our AI-plus-vehicle vision encompasses not just China but also the global market. We expect to achieve a considerable first-mover advantage in terms of globalization as well. In summary, I want to stress that our advanced ADAS capabilities will create a significant gap between us and our competitors.

My second question is about non-vehicle applications. Are we going to see any significant synergy from our extensive investments in AI and applications like autonomous vehicles, humanoid robots, and EVOLT? When can we expect to see value generated from non-vehicle products? Additionally, will these non-vehicle projects result in a notable increase in R&D and operating expenses in the upcoming quarters? That's my second question. Thank you.

Thank you. As we stated, our long-term vision for the company is to become a pioneer in future mobility. We are exploring the future ecosystem of mobility, aiming to integrate new energy with AI to create new travel methods that encompass not only traditional vehicles but also flying vehicles and humanoid robots. Over the past ten years, we have invested in both smart driving vehicles and humanoid robots. In the next decade or two, we anticipate that a true intelligent AI-powered vehicle manufacturer will also be a producer of embodied intelligent new mobility solutions. This includes vehicles, flying cars, and humanoid robots. If we prepare early, we can develop significant synergies across various domains. For example, we are advancing our L3 capabilities for autonomous driving vehicles, and this AI model is compatible with the L3 capabilities of humanoid robots, differing only in the data used to train the model. Many other capabilities can be shared across different areas, including end-to-end AI development, global sales, distribution networks, manufacturing capacity, and various mobility types. By 2026, we expect to see outstanding results from our synergies. We believe we can begin mass production of our flying cars by then, making XPeng a leader in China, and potentially globally, in the mass production of flying cars.

Thank you.

Your next question comes from Ming Hsun Lee with Bank of America.

So my first question is still related to autonomous driving, especially as we see more auto companies using end-to-end models or traditional models to train their autonomous driving systems. Is there a possibility for the leading autonomous driving companies, as well as those that are lagging, to bridge the technology gap? Also for XPeng, since you will begin using your Turing chip this year, in addition to cost control, how will this chip enhance your AI autonomous driving capabilities? Thank you.

Thank you. Your first question touches on themes we've addressed before, and I'll answer both your questions together. With the advent of advanced autonomous driving technologies, it's essential for any automotive player to have a robust full-stack development capability. This means it's not enough to have just software; you also need hardware and supply chain capabilities to collaborate effectively with top-tier suppliers and have access to more resources. Such comprehensive capabilities provide a significant competitive edge and widen the gap between us and our competitors. Furthermore, we possess a powerful data closed-loop iteration ability that enhances efficiency and profitability, coupled with economies of scale that boost our competitiveness. Additionally, our self-developed chip can be utilized across various scenarios in different markets. This gives us confidence in our leadership position, as new entrants or existing companies find it challenging to surpass us, even if they excel in one or two areas, unlike in the digital landscape with companies like DeepSeek and other AI software firms. Regarding your second question about our self-developed Turing chip and its impact on our future development, it's noteworthy that many companies, including OEMs and smartphone manufacturers, pursue in-house chip development for cost savings and product customization, which opens up further development opportunities. Our ability to create the Turing chip allows us to sustain our leadership. By managing everything within our own systems, we achieve greater energy efficiency and significantly enhance our product performance. It also facilitates better collaboration with other industry players and suppliers, empowering us with exceptional self-development capabilities to leverage data for rapid and effective iterations. That's why we are making substantial investments in our self-developed Turing chip. Thank you.

My second question is about the humanoid robot product development. Since you mentioned plans to mass-produce your humanoid robot in 2026, will you also begin selling the product next year? Given your current development progress, which areas are you satisfied with, and which areas do you believe need more improvement before the official launch?

Thank you for your question. This is a complex issue as it pertains to our next generation of technology and products. When we mentioned the mass production of humanoid robots by 2026, we are indeed referring to the commercial market and large-scale production. However, manufacturing humanoid robots is actually more difficult than producing AI vehicles. This is because it requires fully integrated capabilities; a true humanoid robot needs both hardware and real data from human activities, as well as simulated data. Achieving this level of comprehensive integration is quite challenging. Many of our competitors focus mainly on the lower body motion capabilities of humanoid robots, which I believe is limiting as it restricts them to Level 2 capabilities, which are insufficient. For instance, an AI vehicle can still operate as a car, but a humanoid robot lacking AI capability is essentially ineffective. A basic humanoid robot model needs a lot of components, including all joints for the arms and agile motion capabilities, which is difficult to attain with a target of Level 3 AI capability. I can share that our humanoid robot research and development is progressing very well. Currently, we can achieve not just basic lower body capabilities but also movement for legs, arms, mouth, and some essential brain capabilities. We refer to this as agent capability, which combines humanoid or semi-human-like intelligence that we have integrated into our humanoid robot. However, this remains very challenging, and I hope to provide more updates in the near future as we gather more information. Thank you.

That's all my question.

Your next question comes from Bin Wang with Deutsche Bank.

My two questions are related to financial matters. The first is whether you can provide guidance on first-quarter gross margin. The second question concerns your financial improvements in long-term investments, which might be connected to the DiDi acquisition. Thank you.

Hey, Wang, this is James. I'll answer your question. First of all, in Q4, our vehicle margin improved versus the prior quarter. This was primarily due to our cost reduction efforts as well as higher scale. I continue to forecast that our vehicle margin will remain solidly in double digits. As for your second question on the DiDi-related transaction, there was an adjustment made. As we closed the transaction with DiDi, there was an earn-out mechanism linked to the delivery of vehicles registered on the DiDi platform for ride-hailing purposes. Now, as we introduce our Mona product, we have made decisions internally and aligned with DiDi that we would focus on the 2C customer rather than the 2B customer. Therefore, based on our assessment, the first milestone is unlikely to be met, and we have released that liability. That is what you've seen in our financials.

Another was long-term investment.

We've conducted some long-term investment revaluations based on our invested companies, and the impact in the fourth quarter is relatively minor. Some changes will arise from our equity order investment and other investments. However, the overall change in the fourth quarter has not been as significant as what you've observed with the DiDi transaction release.

Your next question comes from Tingyu Wu with CITIC Securities.

Thank you for the opportunity to ask a question. My first question is about the overseas market. The overseas market is one of the pillars for our long-term development. Are we considering building a factory or some kind of cooperation in terms of capacity overseas? Thank you.

Hi. It's Brian. Let me address this question. Yes, it's correct that I think international expansion is a key pillar of our growth curve, as Xiaopeng articulated in earlier remarks. We see tremendous demand for our high-quality technology products in several overseas markets. Last year, we saw very encouraging robust reception for our market entries into a number of new markets. By the end of last year, we were selling in over 30 countries globally, and in several of those countries, our product has been positioned as the top three EV models in their respective categories. So far, we are very encouraged by the response to our product and technology. In terms of going forward contribution, this year, we continue to see increased expansion of our global platform. Our number of stores internationally will double from roughly 150 to over 300 this year. The number of countries we sell our product in will also close to double. We anticipate close to doubling our international sales as a consequence of these expansions. We also are investing in teams and international infrastructure. We mentioned that we're going to be building overseas R&D centers this year, which will help us to recruit local talent to focus on international technology development. We're also looking into several local potential production solutions. We announced with our partner in Indonesia to explore local manufacturing production solutions and will be spending time in other regions. We'll share more once we finalize those decisions. We have a detailed and aggressive plan to position ourselves well for entering international markets with our products, brand, and local capabilities.

Let me translate the question. My second question is about autonomous driving. As we are going to expand the MPI to 100 kilometers by the end of this year, do we consider this our ultimate goal or do we have higher aspirations? Additionally, how do we perceive the opportunities for OEMs or insurance companies to assume some responsibility for the driving systems? Thank you.

Thank you for your question. Regarding human intervention per 100 kilometers, it's an interesting paradox that we are navigating. This varies based on scenarios and the application of ADAS capabilities. For instance, in neighborhoods or parking lots, there's a higher chance of needing to take over compared to highway driving. Additionally, the approach differs depending on the individual’s purpose for testing. Media members may test the limits of ADAS and take over only when absolutely necessary, while ordinary drivers might take over more frequently during their daily commutes. As an OEM, we need to gather extensive data before we can claim to have achieved L2 or L3 ADAS capability. Many of our competitors with L2++ or L3 and L4 capabilities still report high human intervention rates over 100 kilometers. This is something we are striving toward. While achieving L3 capability is challenging, I believe it is attainable with the next generation of models, computing power, capability, and data. With these advancements, we could potentially drive hundreds or thousands of kilometers before needing to take over, enhancing high-level intelligent driving adoption in society. This is our objective. When we talk about achieving one takeover per 100 kilometers, we refer to our milestone measurement for the expected L3 capability, which we are confident we can reach. We believe we are ahead of the competition and have a more advanced capability than the industry average. It's important to note that this is just the beginning of our L3 capability; in the future, we may only need to take over every 1,000 kilometers or even tens of thousands. Regarding your second question about safety, regulations, and accountability in traffic accidents, we have been proactive from the start. We proposed initiatives during the two sessions of the MPC to advocate for the next generation of regulations aimed at creating a safer driving environment. We believe that through this process, China will lead globally in establishing a safer regulatory framework. Thank you.

In response to your question about safety issues, regulations, and accountability for traffic accidents, we have been looking into these matters from the beginning. This includes our proposal during the two sessions of the MPC. We aim to advocate for the next generation of regulations that can help us foster a safer driving environment. We believe that through this initiative, China will set a global example in enhancing safety through increased regulations. Thank you.

Your next question comes from Nick Lai with J.P. Morgan.

Let me briefly rephrase my question. The chairman mentioned that in the long term, we have three key business drivers: AI cars, overseas markets, and humanoid robots. Looking ahead to 2030, how should we evaluate the potential of each of these products? Thank you.

Thank you. It's quite challenging to respond to your question. For now, what I can share is that by 2034, we aim for half of our sales to come from China and the other half from international markets. We have an internal plan and target for 2030, but I must keep that information private. Regarding your question about humanoid robots, it's difficult to determine when we will see a significant technological and commercial turning point for mass production. We might gain clearer insights by the end of 2026 or 2027 when mass-produced humanoid robots begin to emerge. Currently, the situation is still unclear, and we are at a stage comparable to 2010 or 2011 in the development of new energy vehicles in relation to humanoid robots.

My second question is about the new policy announced by the European government regarding increased overseas investment in the European car market, particularly in AI autonomous driving vehicles. Considering our partnership with Volkswagen, are there any new opportunities we could explore? Thank you.

Hi, Nick. As we laid out our autonomous driving strategy before, we're setting up our overseas R&D center, and we're in the process of bringing our autonomous driving technology to global customers. Our engineering teams are working hard to push for the SOP of the G9 platform collaboration as well as the EEA collaboration. We believe there are potential opportunities to collaborate in the potential overseas market.

That does conclude our question-and-answer session. I'd like to turn the call back over to the company for closing remarks.

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

That does conclude our conference for today. Thank you for participating. You may disconnect your line.