Hello, ladies and gentlemen, and thank you for standing by for the Third Quarter 2021 Earnings Conference Call for XPeng Inc. At this time, all participants are in a listen-only mode. After the 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 He, [ph] Head of Investor Relations of the company. Please go ahead, Alex..

Thank you. Hello, everyone, and welcome to XPeng’s third quarter 2021 earnings conference call. Our financial and operating results were issued by our Newswire Services earlier today and are available online. You can also review 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 Finance, Mr. Dennis Lu; Vice President of Corporate Finance and Investments; Mr. Charles Zhang 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 financial measures, unaudited GAAP financial measures.

We will now turn the call over to our Co-Founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead..

[Foreign Language] In the third quarter of 2021, XPeng achieved another record with deliveries reaching 25,666 units, representing a year-on-year increase of 199%. Our total deliveries for the first three months of 2021 exceeded 56,400 units, more than doubled last year’s full year delivery.

Furthermore, our monthly deliveries surpassed 10,000 units consecutively in both September and October, and we’ll strive to reach the target of 15,000 units of delivery per month.

As rapid growth in deliveries continued to drive our economies of scale and P7’s mix in our deliveries grew substantially to around 77%, our gross margin in the third quarter increased to 14.4%, up 250 basis points from last quarter.

Our unwavering commitment to in-house developed full-stack autonomous driving software and core hardware underpins XPeng’s ability to continuously strengthen our technology leadership.

At our annual Tech Day event, we showcased a P5 equipped with our City NGP development version, which was able to navigate through the complex driving scenarios in downtown Guangzhou. This highlights logical breakthroughs and rising popularity of advanced driver-assistance systems are transforming users’ mobility experience at an unprecedented speed.

As our mission, XPeng is accelerating technology innovation and disruption in this field.

In our view, our competitive advantages, advanced driver-assistance systems, stem from our capabilities, including passenger safety to vertically integrate hardware, software and massive data set in-house, overall cost efficiency and rapid product iterations globally.

Our ability to accumulate corner cases from complex and real-life driving scenarios across China is XPeng’s core competitive edge, and we’ll continue to strengthen our technology leadership over peers. The attach rate of XPILOT 3.0 software reached close to 20% in P7s in the third quarter and revenue from software increased quarter-over-quarter.

Among the more than 50,000 P7s that we have delivered as of September 30, over 11,000 units were equipped with XPILOT 3.0. During the third quarter of 2021, the average monthly utilization rate of our NGP for highway and the highway NGP mileage penetration rate each exceeded 60%.

And the NGP assisted our customers in driving approximately 5.51 million kilometers or 3.42 million miles on highways. As we launch XPILOT 3.0 in the second half of 2022, we’ll begin to explore the robotaxi business. Our strategic goal in the near term is to improve the robustness and safety of our autonomous driving algorithms through generalization.

I believe our ability to mass produce turnkey solutions, including vehicles and software to potential mobility service operators will bring a revolutionary mobility experience to users, and create significant business value.

XPeng not only develops full-stack software in-house, but also designs and integrates core hardware in-house to achieve a rapid iteration of technologies.

For instance, we’ll be one of the first in China to mass produce 800-volt high-voltage silicon carbide cut platform and 480-kilowatt high-voltage supercharging piles, which will allow 200 kilometers of driving range through only 5 minutes of charging.

The domain controller and the electric and electronic architecture equipped in our fourth EV model, G9 were also developed in-house. We believe our ability to design these core hardware in-house will compound our competitive advantage in software, which will further cement our technology leadership.

We are accelerating our product rollout in order to increase our product penetration in our target market with price ranges between RMB 150,000 to RMB 400,000. In the third quarter of 2022, we’ll begin the deliveries of our fourth EV model, the G9, which supports XPILOT 4.0.

In our view, XPILOT 4.0 is going to fundamentally transform mobility experiences into the next stage. Our mission is to make Smart EV accessible to a broader user group in largest passenger vehicle market segments, delivering revolutionary Smart EV experience across our target market segment.

Officially launched on September 15, our third mass-produced model, the P5 began deliveries in October as planned. The launch of P5 marked for the first time that an industry-leading advanced driver-assistance system and smart cockpit system in China can be deployed to smart EV models with price at around RMB 200,000.

We believe that P5 has achieved a purchase cost parity with its equivalent internal [Technical Difficulty] vehicles. I believe P5 will disrupt the family sedan market, which has been dominated by traditional ICE models that have been made largely unchanged in terms of technology over the past decade.

Despite the recent challenges from semiconductor shortages, the orders for P5 have exceeded our expectation and the delivery of P5 has been scheduled until after Chinese New Year already. Last Friday, we unveiled G9, our flagship SUV at the 2021 Guangzhou International Automobile Exhibition.

The G9 will be our first mass produced Smart EV that supports XPILOT 4.0.

Meanwhile, the G9 will be equipped with an 800 voltage high-voltage silicon carbide platform and XPeng’s new proprietary X-EEA 3.0 electric and electronic architecture that adopts a domain controller, deeply integrating hardware, software and communication architecture to achieve powerful performance and high flexibility in OTA upgrades.

Also, I would like to highlight that G9 is our first model to be conceived and developed from the ground up for the international as well as the Chinese market. Next, I would like to walk you through our strategic initiatives.

Accelerating our research and development for new models and core technology innovations, we continue to build out our R&D team. As of the end of third quarter 2021, XPeng’s R&D staff comprised of over 4,000 employees, more than twofold our staffing at the end of 2020.

Over the next couple of years, you’ll continue to see our technology breakthrough in uncharted areas. Our sales and services network sustained rapid expansion. As of September 30, XPeng’s physical sales network consisted of 271 sales centers across 95 cities in China.

Of these sales stores, 167 were directly operated by us and 104 were franchise stores. We expect the number of sales stores to reach more than 350 by the end of 2021. Meanwhile, the average monthly store sales volume witnessed a sequential increase in the third quarter, reflecting enhancements to our store productivity and efficiency.

We also continue to rapidly build out our supercharging network. As of September 30, the number of XPeng branded supercharging stations increased to 439 across 121 cities and the total number of free supercharging stations reached 1,648, covering 221 cities.

We are the industry pioneer deploying supercharging capabilities across the entire Beijing, Shanghai and Beijing, Hong Kong, Macau expressways. The 30 XPeng branded supercharging stations deployed alongside the expressways allow XPeng’s customers to access our supercharging facilities every 170 kilometers on average.

We expect XPeng’s branded supercharging stations to be more than 600 by the end of the year, accelerating our supercharging network expansion across lower-tier cities. We expect to accomplish the construction of infrastructure supporting XPeng’s supercharging network, spanning all prefecture-level cities in China this year.

Furthermore, we will build on our well-established charging facilities in main areas to expand our network to cover a majority of country-level cities and highways in 2022 and 2023. On the overseas business front, XPeng’s P7 was launched in Norway on October 25.

We will explore opportunities to expand in Norway and other European markets such as Sweden, Denmark and the Netherlands, and improve our sales, delivery and service network continuously.

With respect to manufacturing capabilities, our first plant Zhaoqing plant is currently running on double shift with production lines working up to 20 hours per day and production is ramping up rapidly. Total defined production capacity of Zhaoqing plant and the plants being built in Guangzhou and Wuhan will be more than 400,000 units per year.

By adopting a double-shift production at these plants, annual production can reach up to 600,000 units, laying a strong foundation for our high growth in the next two years.

On October 19, XPeng’s urban air mobility affiliate, HT Aero, announced that it has entered into a definitive agreement with the consortium of investors to raise over US$500 million for its Series A capital funding. This marks the largest single-tranche fundraising to date in Asia’s low-altitude flying vehicle sector.

XPeng is always committed to upholding the highest standards in ESG practices and is driving contributions to China’s carbon neutrality goal by advancing our green, eco-friendly smart mobility offering. On October 15, XPeng released its inaugural ESG report.

And notably, for two consecutive years, XPeng received an AA rating from MSCI ESG Research, topping its global auto peers. In the near future, we expect to make greater contributions to carbon neutrality through technological innovation, utilizing our in-house developed full-stack technologies.

In conclusion, we’ll make every endeavor to overcome the challenges stemming from chip shortages and the COVID-19 pandemic, which is still prevalent in some parts of the world.

In the fourth quarter of 2021, we expect our smart EV deliveries to be approximately 34,500 to 36,500 units, and our total revenue to be approximately RMB 7.1 billion to RMB 7.5 billion. Thank you, everyone. With that, I will now turn the call over to our VP of Finance, Mr. Dennis Lu to discuss our financial performance for the third quarter of 2021..

Thank you, Mr. He, and hello, everyone. Now, I would like to provide a brief overview of our financial results for the third quarter of 2021. I will only reference RMB in my discussion today, unless otherwise stated.

Our total revenues were RMB 5.7 billion for the third quarter of 2021, an increase of 187% year-over-year and an increase of 52% quarter-over-quarter. Revenues from vehicle sales were RMB 5.5 billion for the third quarter of 2021, an increase of 188% year-over-year and an increase of 52% from last quarter.

The revenue increase was mainly attributable to higher vehicle deliveries, especially of the P7, resulting from channel expansion and brand equity improvement.

Revenues from service and others were RMB 0.3 billion for the third quarter of 2021, an increase of 182% year-over-year and an increase of 47% quarter-over-quarter, mainly attributed to more income from service, parts and accessory sales, in line with higher accumulated vehicle sales.

Gross margin was 14.4% for the third quarter of 2021 compared with 4.6% for the same period of 2020 and 11.9% last quarter. Vehicle margin reached 13.6% for the third quarter of 2021 compared with 3.2% for the same period of 2020 and 11% last quarter.

The vehicle margin improvement was primarily attributable to better product mix and manufacturing efficiency enhancement, driven by economies of scale.

R&D expenses were RMB 1.3 billion for the third quarter of 2021, an increase of 99% year-over-year and an increase of 46% quarter-over-quarter, mainly due to one, increase in employee compensation as a result of expanded research and development staff; and two, higher expense relating to the development of the G9, the P5 and related software technologies to support future growth.

SG&A expenses were RMB 1.5 billion for the third quarter of 2021, an increase of 28% year-over-year and an increase of 49% quarter-over-quarter, mainly due to one, higher marketing, promotional and advertising expenses to support vehicle sales; and two, expansion in our sales network and associated personnel costs, and commission for franchised store sales.

Other income was RMB 0.2 billion for the third quarter of 2021, including government subsidies of approximately RMB 0.3 billion, partially offset by the relocation and disposal cost about RMB 0.1 billion related to the Haima plant.

Loss from operations was RMB 1.8 billion for the third quarter of 2021 compared with [RMB 1.7 billion] for the same period of 2020 and RMB 1.4 billion last quarter.

Excluding share-based compensation expense, the non-GAAP loss from operations was RMB 1.7 billion for the third quarter of 2021 compared with RMB 0.2 billion for the same period of 2020 and RMB 1.3 billion last quarter.

Net loss was RMB 1.6 billion for the third quarter compared with RMB 1.1 billion for the same period a year ago, RMB 1.2 billion last quarter. Non-GAAP net loss was RMB 1.5 billion for the third quarter of 2021 compared with RMB 0.9 billion for the same period of 2020 and RMB 1.1 billion last quarter.

In July, we completed dual primary listing in Hong Kong. As of September 30, 2021, our Company had cash, cash equivalents, restricted cash, short-term and long-term investments and deposits in total of RMB 45 billion. To be mindful of length of our earnings call, I will encourage listeners to refer to our earnings press release for further details.

This concludes our prepared remarks. I will now open the call to questions. Operator, please go ahead..

[Operator Instructions] Our first question comes from Tim Hsiao from Morgan Stanley. Your line is open..

Congratulations on the great results. I have two questions. The first question is just want to quickly follow up about development taxi plans we just mentioned during the presentation.

Could you share more details in terms of the scale, business model and more? Is it more like a demonstration of the capability of XPILOT 4.0? And are we going to have any different or separate model for the robotaxi fleet operation next year, or simply leverage P5 for the fleet operation in Guangzhou? And are you going to do that in other places or other province? So that’s my first question.

[Foreign Language].

[Foreign Language] Thanks for your first question. Now, in regards to robotaxi and its development plan, we are still in the process of doing internal discussions. So, I can only share with you some of the basic and initial frameworks and some thoughts.

So basically, we are going to adopt the current models that we have, and we are going to use XPILOT 3.5 to 4.0 or even further future OTA versions on these fleets.

And motive or target is to test and train our closed loop capability of integrating software, hardware and also our data capability in urban road so that we can serve the future development of XPILOT 4.0, 5.0 or even further more advanced versions of our XPILOT software upgrades. And so, we are also not looking into doing mass services in the future.

We are looking to partner with the current operators, so that we can together contribute to the development of this industry..

Great. My second question is about P5. I think we already touched on the topics a little bit during the presentation, but if we have more updates on P5’s order intake and backlog at the moment, probably just some rough quantitative guidance would be great.

And roughly how many percentage of the consumers are willing to take the cars first without radar? And in the meantime, could we have a rough idea about the order mix of 550P and the 600P, are the two models with LiDARs integrated? [Foreign Language].

Hi Tim, it’s Brian. Let me just, first of all, respond. We never give guidance or forecast on our specific orders and backlog. So, that has been our policy since our listing. But just to give you some color on P5, we actually saw a very robust demand as Mr. He stated in the opening speech.

We actually saw the backlog now stands to post the Chinese New Year. So on average, in some models, up to 4 months of backlog, wait time. So, that’s also a very robust demand. In terms of the mix, the only thing I can tell you just a few facts.

One is that, more than 50% of the orders that we received are for software subscribing models, which incorporate XPILOT 3.0 or 3.5 hardware architect.

And also regarding to your question whether -- what’s the percentage of orders actually choose to take delivery and have future installation of the radar, actually, more than 80% of people actually have chosen that option. So, we actually see very strong favorable sort of reception to our P5..

Our next question comes from Jeff Chung from Citi. Your line is open..

[Foreign Language] Okay. So, let me translate that. So, question one is about the robotaxi. So, can we quantify our solution on robotaxi? How much cheaper than Baidu and other competitors? And secondly, it’s about our autopilot penetration rate into the first half next year. Given that our autopilot 3.5 urban version OTA will be activated soon.

And also for P5, the 3 out of 5 model we offer this function, and this is much higher than the P7, 1 model out of 3. And my last question is about November and December monthly sales run rate guidance. Thank you..

[Foreign Language] Thank you. Let me take the first question. Now, in regards to robotaxi, basically, we’re going to adopt all of our mass produced models. So technically speaking, their cost would be a lot cheaper to our competitors.

And on average, every month, we expect see 8,000 to 10,000 kilometers of driving mileage that we can accumulate from our fleet.

And so, the purpose for using those kind of fleet as robotaxi is to gain further ability and capability of getting more knowledge in the mass and also accumulated corner cases in our database so that we can further explore and enhance our overall capability of integrating the software, data capability, hardware and also to build up a higher level of safety and reduce costs further.

Thank you..

And Tim, this is Brian. Let me address your next two questions. First of all, on the question of P5 software subscription, again, I don’t want to offer any guidance and forecast, but I want to point to a few facts. First of all, right now, we’re seeing more than 50% of the orders for P5 for the software subscription-ready hardware model.

So definitely, you can see the mix is higher than the P7 that we actually see in terms of the software capable models. Secondly is that the delivery of the software subscribing model is also subject to some supply chain bottleneck. As you saw earlier, we actually need to install some of the radars post the delivery.

So, as a result, we also offered software free for some of these customers. So, I think in the short term, you will see the impact due to a number of these factors. But in the long run, we are confident that P5 will see higher software subscription rates for both, XPILOT 3.0 or XPILOT 3.5 software.

And as you know, XPILOT 3.5 software is priced higher than XPILOT 3.0. Your third question on the guidance. Again, I don’t want to give additional color specific month delivery, but I want to reiterate two things. The one is that we are still striving for hitting a monthly peak delivery of 15,000 per month in the next two months. So, that’s our goal.

And I think we have a good chance of hitting that. Second thing I want to mention is that the supply chain constraint is still very severe. So, the visibility to the chip shortage as well as some other constraining factors is -- the forecast is very short and not very reliable in the coming months or so.

So, that’s why I think we provided the guidance with the best knowledge that we see today. But, I think this is where we see and also how we feel about the monthly delivery peak will arrive..

Our next question comes from Ming Lee from Bank of America. Your line is open..

[Foreign Language] My first question is regarding G3 because in the third quarter, you started G3 in your own plant.

And how do you see the margin improvement after you make the car in your own plant? And also, in the future, when do you expect to launch a fast lift or a new generation of G3 to improve the margin of the product? And my second question is regarding the different functions between XPILOT 3.5 and 4.0..

Ming, this is Dennis. Let me address the first question. We actually -- we moved our G3 to our Zhaoqing home plant in August to commence with the first model G7i. [Ph] As you rightly pointed, we actually -- we can see the scale improvement.

So we see better labor and overhead efficiency compared with old days we have Haima to do the contract manufacturing. So, we are seeing the margin improvement on G7i [ph] already, which we have launched, and we are selling the vehicle already. That’s number one.

And number two?.

[Foreign Language] Thank you. For your second question, actually, we are not going to disclose any more details between the different -- of the difference between XPILOT 3.5 and XPILOT 4.0 because we’re going to launch and talk more about XPILOT 4.0 next year. But right now, I can give you a general idea about the differences.

Basically, for XPILOT 3.5, we are able to cover the urban NGP function that supports quite a number of CDs and some urban roads. But that is comparatively smaller number compared to XPILOT 4.0 because we expect XPILOT 4.0 to be able to support the majority number of roads and cities in not just China, but also Europe as well.

And on top of that, XPILOT 4.0 is also equipped with a higher level of sensing capability, electric and electronic architecture and also more stronger sort of algorithm calculation computing power as well..

Our next question comes from Bin Wang from Credit Suisse. Your line is open..

Thank you. I got two questions. Number one is the about margin improving. Can you break down the different factors about the gross margin increase? For example, how much came from the higher lift of XPILOT? How much came from the efficiency and how much came from the product mix? Thank you. That’s number one.

Number two, more technology question, because you actually have migrated to the 800 voltage system. Does that mean for current supercharge network to have a dramatic rebuild, what’s the cost from rebuild from current maybe 350 voltage to the 800? Thank you..

[Foreign Language] Hey Bin, this is Dennis. Let me address your first question. Regarding the quarter-over-quarter margin improvement, majority of improvement came from the mix improvement. In the quarter two, our total P7 accounting for about 66% of the sales in quarter two. But in third quarter, because of the P3 migration, we actually saw more P7.

P7 accounted for about 77% of total sales in quarter three. So, that’s the major reason for the margin improvement. And the other improvement would be for the labor and overhead efficiency due to the scales, the economic improvement, because now we are producing all the vehicles in our Zhaoqing plant. So, we see the kind of efficiency improvement.

However, we also had some cost increase to offset partially the equipment, for example, the raw material increase and also the chip shortage that also partially upped I mentioned briefly. So, I hope I addressed your first question..

[Foreign Language] Let me take the second question. Now, for G9 and other future models, we are going to adopt the 800-volt high-voltage charging. And so for our current charging piles, we are going to upgrade them to -- I mean, in the future 260[] kilowatt and also in the future, 480 kilowatts.

And so, as we lay out our deployment of supercharging stations, we are going -- I mean, the newer ones we’re going to take the high-voltage charging facilities such as 380 kilowatts and 480 kilowatts for sure.

So, there won’t be any waste because we will gradually roll out our plant and network building for -- construction for the charging facilities..

[Foreign Language].

[Foreign Language] Yes. Because each station -- each charging station consists of different piles of different voltage. And so, we are going to be able to diversify the kind of piles in each single station..

Our next question comes from Nick Lai from JP Morgan. Your line is open..

[Foreign Language].

Nick, we lost you.

Are you still there? Nick?.

Our next question will be from Edison Yu from Deutsche Bank. Your line is open..

I actually just have one. Could you maybe go over long term, what kind of opportunity you see in Europe? Obviously, don’t expect anything too concrete. But, what kind of potential volume or what kind of percentage of market you can maybe target or expect to see there in the longer term? [Foreign Language].

Hi Edison, this is Brian. First of all, I mean, to answer your question, I want to emphasize that our current plan in Europe is mainly focused on building our presence, capabilities and also make sure we have the right network and brand awareness build up. So, we are not emphasizing delivery numbers in the near term.

And in the long run, I would say that multiyear, we actually see ourselves as a global company with around half of the volume ultimately will come from outside of China and half of the volume inside China. That’s our goal. That’s -- again, it’s a multiyear goal, but that’s what we’re striving for..

Our next question comes from Paul Gong from UBS. Your line is open..

I have two questions. The first one is still regarding the autonomous driving. My understanding is from the XPILOT 3.0 to XPILOT 3.5, hardware-wise, you cannot migrate to the newer version because of the different configuration of the hardware.

How about from 3.5 to 4.0 will support upgrades on the hardware for the previous buyers of the system? [Foreign Language].

[Foreign Language] Actually, the hardware cannot be migrated to XPILOT 4.0 because of the fundamental upgrade in computing power and sensing capability. We also upgrade the whole electronic and electric system as well. So basically, these two XPILOT systems are built on top of two very different infrastructures.

Also, we are laying the foundation for the future development of L4 level of autonomous driving. So, you will see fundamental changes in terms of ACC, LCC and also APA programs..

Okay. My second question is regarding the lower operation. I think Q3 has been available there for over 1 year and P7 was available since last month.

So far, how have you been trading the learning process in Norway, like what lessons you have learned? And what has been preventing you selling more vehicles over there given the cost advantage and some of the smart features of the XPeng’s cars are pretty competitive in that market? [Foreign Language].

[Foreign Language] Our international strategy determines that our target between 2020 to 2022 is to lay a good foundation for our international expansion in the following aspects, which are the software and hardware, R&D development, our safety and data protection and also our team and organization structure revamp.

So basically, in Norway and other international markets, you would see us doing more restructuring and exploration in terms of our product, technology and also our organization. So, sales right now is not our priority in the international market.

But in the future from 2021 to 2025, we are going to conceive and develop models that are suitable for not just the Chinese market, but for the international market in a sense that we are going to comply with all the safety regulations and environmental regulations to the highest standards in the European market as well as the global market in general.

So, by that time, I think we’ll be more prepared to hit the sales target or further expand into the overseas market..

Hi, operator. We are ready for the closing remarks..

Okay..

Operator, Nick, you still have one more question left for the -- for JP Morgan..

Okay. Our next question again is from Nick Lai. Your line is open..

Okay.

Can you hear me?.

Yes..

Okay. Now, let me ask questions very briefly. I know I’m running out of time. But maybe two questions quickly. One is on the profit margin outlook; and second is on G9 sales outlook. I’ll ask quickly in English and then translate in Chinese. On the profit margin, indeed great results in third quarter.

As we move to first half next year, how should we think about the profitability considering positive and potential industry headwind. On the positive side, P5 should be sort of meaningful bonus, and P5 shift, large part of component is G3 served by [indiscernible].

But at the same time, we have incremental material price hike and also P5 carry lower profit margin that could be margin dilutive as we sell more P5 into first half of next year. And that’s the first question on margins.

And the second on G9 sales, considering addressable [ph] market, how should we think about the monthly run rate when G9 is fully ramped up? Is it fair to compare China with comparable peers, like [indiscernible] or maybe other product?.

Hey Nick, this is Dennis. Let me address the first question regarding the margin. As I mentioned previously, our quarter 3 margin improvement compared with quarter 2 is primarily due to the product mix improvement, more P7. You’re right, going to the first quarter, we will deliver P5 and then the G3i volume will be better than the old model.

So, the mix will have the impact. I mean, the P7 percentage in terms of total sales will reduce. But having said that, we are actually, in our future products, including G9 and for the future model, we will have better margin, for example, bigger car, we have seen better margin for future models -- see the near term the impact due to the mix change.

But going to next year, we actually will see more good news from the better product mix, including the new product introduction..

So Nick, it’s Brian. Again, no forecast on G9, unfortunately. But I just want to tell you that we are very confident that G9 will be flagship product that will deliver I think results similar to our top selling models for a number of reasons. First of all, the G9 is positioned and the size more similar to ES6 than ES8.

So, the addressable market is actually much bigger.

Secondly is that upon the launch of G9 at the time, it will offer superior capability in a number of areas in terms of autonomous -- highly capable autonomous driving capabilities as well as fast charging capabilities and leading electric architecture components for -- much faster upgrades, et cetera.

So, we think it will be probably one of the most technologically superior product coupled with the attractive design and also by the leading infrastructure of XPeng network. So, we’re very actually confident that we will achieve strong debut. And also you know that G9 is designed for the global market. So that product only will be sold in China.

It’ll also be designed and sold in international markets with Europe specifically in mind. So, I think -- we think this it’s going to be a very important product for XPeng going forward..

There is no further question at this time. You may continue..

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 or The Piacente Group Investor Relations..

This concludes today’s conference call. You may now disconnect your lines. Thank you..