Hello, ladies and gentlemen, thank you for standing by for the Fourth Quarter and Fiscal Year 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 Xie, Head of Investor Relations of the Company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's fourth quarter and fiscal year 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 Investment, 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 and 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 includes 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.

Hi, everyone. We closed 2021 with another record quarter of deliveries. We delivered 41,751 units in the fourth quarter alone, growing 222% year-over-year. And our total deliveries for the full year of 2021 increased by 263% compared with 2020 and reached 98,155 units, making us the top-ranked emerging EV maker in China. Our 2021 full year revenue exceeded RMB20 billion. Heading into 2022, we are experiencing even higher demand for our products, which continues to outpace our production. To expedite delivery of large volume of order backlog carried over from 2021 and our newly acquired orders earlier this year, we completed technology upgrades of our Zhaoqing plant during scheduled downtime over the Chinese New Year Holiday. By adjusting our sales and delivery schedules, new orders that came in late February and the first half of March picked up quickly and have returned to same robust level as the peak season in last December. Starting from March 21, we raised the prices across our product lineup by RMB10,000 to RMB20,000, each in order to pass through the rise in cost of batteries and raw materials. Against a backdrop of higher oil prices, driving electric vehicles typically brings increasing cost advantages over ICE vehicles, allowing for greater growth opportunities in the mid- to high-end BEV market, which is the target segment for our Smart EVs. This market also features a very evasive ray of consumers, who attach more importance to EV quality and technologies. Therefore, 2022 will be a crucial year for each EV maker to validate their products' competitiveness. Looking ahead, as we pursue rapid technology and product iterations, we'll continue to strengthen the overall competitiveness of our products. I'm confident that our sales performance will continue to lead the industry. Even though we experienced some hiccups in terms of our sales deliveries in certain areas of China, but because of our technology upgrade in our Zhaoqing plant as well as our newly acquired large volume of orders, we expect to welcome in a new level of large orders in March, which will be similar to our peak level last year and that will help us definitely to enhance our market share and maintain our leadership position. Our confidence about the sales volume potential of our core EV products has extended into 2022. We delivered over 60,000 P7s in 321, placing it in the Top 3 Class B, these and above sales volume, making it an indisputable blockbuster model and setting P7 as a new benchmark Smart EV in China. With the buildup of P7's production capacity and reputation, one of our goals in 2022 is to exceed 10,000 P7 deliveries in a single month. We officially commenced mass deliveries of our P5 families sedan model in the fourth quarter of 2021, delivering close to 8,000 units in its initial quarter debut. With supply chain improvement in our City NGP launch, we can expect a more consistent ramp-up in sales volume of the P5. As supply chain constraints ease off in the coming months, I'm confident that P5 monthly sales volume will begin to approach that of the P7 in the second half of the year. Next, EV model in line for us is our flagship SUV model, the nine. Its PT production vehicle has successfully rolled off the production line, and we are on track to officially launch the G9 in the third quarter. The G9 represents the most advanced technology XPeng has ever developed building on years of in-house developed software and core hardware. Consequently, the performance of our G9 is head and shoulders above popular SUV models in the same category. I firmly believe that G9 will become a blockbuster model in the medium- to large-sized smart electric SUV market. Furthermore, we plan to launch the first production model built on our two newly established Smart EV platforms respectively in 2023. These two new platforms comprising a platform tailored for C-class vehicles and the other for B-Class vehicles will inherit and further advance XPeng's robust capabilities in aesthetic design, electrification and smart technology, thus strengthening our product portfolio's competitive advantages. In addition, as we strive to make our platforms more scalable by employing more highly integrated design and state-of-the-art manufacturing processes such as ultra-large integrated die casting technology, the new platforms will also enact powerful cost control abilities as well as help us address a broader customer base in the mid- to high-end market segments, which have tremendous growth potential. Next, I would like to share some updates on R&D of our Smart EV technologies. For P7 and P5 models delivered in the fourth quarter, the attach rate of the XPILOT 3.0 software was close to 20%. Currently, the progress on the R&D of our CD NGP, the key function of XPILOT 3.0, which is mainly deployed on P5, is well advanced. Its beta version is undergoing a fast iteration process, making continuous improvement in safety and user experience. We also plan to complete the development of our CD NGP in second quarter of this year and plan to roll out in cities by batches once we receive the approval of the CDHD map. The XPILOT 3.5 that is built on our next-generation technology architecture has presented much higher-than-expected performance in the city driving scenarios. We are extremely proud of this. Notably, among our mass produced P5, the number of driver interventions per 100 kilometers for City NGP is approaching that of highway NGP and the level of its overall user experience can be benchmarked against domestic top robotaxi players. And in some respect, we already have caught up and even exceeded those companies' performances. Given the underlying next-generation technology architecture of our XPILOT 3.5 and our closed loop of data, we plan to officially launch the XPILOT 4.0 in 2023 to deliver advanced driving assistance experiences spanning full scenarios of both highways and city roads. Simultaneously, we plan to progressively converge our autonomous driving hardware and software platform that enables advanced driving assistance systems for our future vehicle models. There will be at least four models, including both new models and facelift versions of existing models to support the XPILOT 4.0 in 2023. With that, our XPILOT 4.0 will boast a clear next-generation leap against other mass-produced advanced driver assistance systems. Simply put, under the premise of offering superior safety, the XPILOT 4.0 will feature a more comprehensive set of use scenarios, even wider geographical coverage and a better Q1 vehicle interface and in-vehicle experience for both drivers and passengers. In addition to that, we will control the cost of that production. We believe that our XPILOT 4.0 has the potential to spread high-level advanced driver assistance system to an even broader customer base, accelerating the transformation from human driving to the era of advanced driver assisted driving. With this becomes -- when this becomes a reality in the future, the attach rate of the XPILOT software will naturally be significantly higher than its current level. We will continue to advance and improve product performance. Also, we will continue to be committed to our in-house full set software development and a platform architecture approach to develop and upgrade our intelligence systems and powertrain systems for Smart EVs. Applying a platform architecture approach to our system management will propel innovations in our power chain manufacturing techniques and processes as well as a BOM cost structure. I have confidence in our ability to achieve structural improvement of gross margin for our new models, including G9 and ultimately improve overall gross margin. Our medium- and long-term goal is to increase the level of our overall gross margin above 25%. At the same time, we'll remain dedicated to our vision and execute on our sounding strategy and operational literacy to continuously -- to continually boost operational efficiency. Going forward, as we achieve economies of scale, while improving operating leverage, I believe our operating expense ratio will continue to trend downward. With that overview, I would like -- now I would like to walk you through a few of our strategic initiatives and expectations moving forward. We've rapidly expanded our sales and services network. As of the end of 2021, XPeng's physical sales network comprised 357 stores across 129 cities, of which 209 were directly operated by us and 148 were franchise stores. In particular, during 2021, we strategically increased our investment in sales channels in lower-tier areas in order to tap into pent-up demand and capture the great growth potential we see in non-Tier 1 cities. As a result, we closed the year with our non-Tier 1 cell stores accounting for close to 80% of total XPeng stores, and most of those performance and sales were achieved during the second half of the year. While we drove rapid network expansion, throughout 2021, our monthly single store sales increased substantially on a sequential order basis, reflecting our sales model capability to make systemic enhancement as well as sustained efficiency improvements. For 2022, we'll continue to strengthen our sales network expansion and enhance same-store performance. Regarding our supercharging network, XPeng branded supercharging facilities featuring wide coverage and a better user experience has already become a critical factor in XPeng's competitive edge. As of January 17, 2022, the number of XPeng branded supercharging stations increased to 813, covering 337 cities nationwide. Beginning in the second half of 2022, we will deploy next-generation high-capacity supercharging to further shorten users' charging sessions significantly. We also plan to accentuate efforts in deploying supercharging stations alongside high-speed express ways to bring users better, more secure, long distance traveling experiences with XPeng's vehicles. Along with these upgrades, we are actively progressing our overseas expansion initiatives. To this end, we announced in February 2022, we had established partnerships with top-tier European dealers. By leveraging the well-established market presence of respected overseas dealers, we strive to build our international business development capabilities and have established the first branded European retail experience stores for our Smart EVs in Stockholm, Sweden. We also plan to adopt a novel direct plus franchise retail model, which is what we are doing right now in China to expand our sales and service network in Europe. On February 9 of this year, XPeng were included in the Shenzhen and Shanghai-Hong Kong Stock Connect programs. We officially became the first emerging EV maker stock to be accessible for direct investment by qualified investors in Mainland, China. We're delighted to share the growth opportunities in the Smart EV industry with broader investor base from our home country. Shortly thereafter, on March 7, XPeng was added to the Hang Seng TECH Index among 30 constitute stocks as one of representative stocks for the autonomous tech team. Looking back on 2021, we have faced challenges stemming from industry-wide semiconductor and battery cell shortages. We would like to express our sincerest gratitude to our excellent supply partners for their great effort of XPeng - for their great support for XPeng. Amid the challenges, we developed and qualified hundreds of alternative supply solutions to safeguard and stabilize our supply chain. Entering 2022, the ongoing cheap shortage and search in price for raw battery materials continues to present a challenge for the whole industry. Nevertheless, these near-term obstacles cannot stop the long-term journey we are on, where Smart EVs are accelerating the disruption of ICE vehicles at an unprecedented speed. And I believe this is going to be a good experience for us to continue to enhance our capabilities. I believe our ability to swiftly develop alternative supply solutions, coupled with concerted efforts with our suppliers, will help us overcome these challenges. As we have been striving to navigate market dynamics amid obstacles in the supply chain, the impact of COVID-19's recurrence and the seasonality factors, we expect our Smart EV deliveries to reach approximately 33,500 to 34,000 in the first quarter of 2022, and our total revenue to be between approximately RMB7.2 billion to RMB7.3 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 fourth quarter of 2021.

Thank you, Xiaopeng, and hello, everyone. Now I would like to provide a brief overview of our financial results for the fourth quarter of 2021. I will reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB8.6 billion for the first quarter of 2021, an increase of 200% year-over-year and an increase of 50% quarter-over-quarter. Revenue from vehicle sales were RMB8.2 billion for the first quarter of 2021, an increase 199% year-over-year and an increase of 50% from the last quarter, mainly attributable to higher vehicle deliveries, especially for the P7 and P5. Our gross margin was 12% for the first quarter of 2021 compared with 17% for the same period of 2020 and 14.4% for the last quarter. Full year gross margin reached 12.5%, an increase of 7.9 percentage points year-over-year. Vehicle margin reached to 10.9% for the first quarter of 2021 compared with 6.8% for the same period of 2020 and 13.6% for the last quarter. The quarter-over-quarter margin reduction was primarily attributable to product mix changes. R&D expenses were RMB1.5 billion for the fourth quarter of 2021, an increase 216% year-over-year and an increase of 14.8% quarter-over-quarter, mainly due to: one, the increase in employee compensation as expanded research and development staff; and two, higher expenses relating to the development of new vehicles to support future goals. SG&A expenses were RMB2 billion for the fourth quarter of 2021, an increase of 120% year-over-year and an increase of 31% quarter-over-quarter. The year-over-year increase was mainly due to; one, higher marketing and advertising expenses to support vehicle sales; and two, the expansion of our sales network and associated personnel costs and commission for franchise store sales. The quarter-over-quarter increase was mainly driven by the expansion of our sales network and more sales commission in line with the higher vehicle sales. As a result of the foregoing, loss from operation was RMB2.4 billion for the fourth quarter of 2021 compared with RMB1.1 billion for the same period of 2020 and RMB1.8 billion for the last quarter. Fair value gain on long-term investments was RMB0.6 billion for the fourth quarter of 2021, reflecting the fair value assessment on our assessment on HT Flying Car Incorporation or Huitian after its Series A capital funding. As of December 31, 2021, we invested approximately RMB0.6 billion and own approximately 18.8% of the equity interest in Huitian. Net loss was RMB1.3 billion for the fourth quarter compared with RMB0.8 billion for the same period a year ago and RMB1.6 billion for the last quarter. As of December 31, 2021, our company had cash and cash equivalents, restricted cash, short-term deposits, short-term investment and long-term deposits in total of RMB43.5 billion. We achieved a positive operating cash flow in the second half of 2021. And in the first quarter of 2021, our operating cash inflow was RMB1.3 billion. To be mindful of the length of our earnings call, I will encourage listeners to refer to our earnings press release for the 2021 full-year financial results and further details. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Tim Hsiao.

So my first question is about the price hike because XPeng is one of the early movers and now seeing to reach the prices. Could we get a sense about how did the Company laid the foundation of 10,000 to 20,000 or 5% to 9% price hikes? What kind of cost inflation in batteries, raw material chips and have been pricing? So if the price increased just the right amount to cover the contracts or also reflect XPeng's adjustment of more price hikes in the supply chain later this year?

Tim, this is Dennis. Let me respond to your questions regarding the price realignment. Actually, we increased our price at about 10,000 to 20,000 for the old car lines in March 21 -- starting from March 20. This reflects the projected components, especially on the battery cost increase. We haven't finalized the battery price negotiation with our suppliers. But according to Chairman and also the components, we anticipate we will have a cost increase in the raw material as well as the battery. So, we tactically price -- increased the price to carbon the cost increase the main driver of the price increase to basically to cover the potential cost increase for the component costs.

So my second question is about XPILOT take rate because I think that during the presentation, the Chairman has mentioned -- just mentioned about 20% take rate of XPILOT. It seems still relatively low. Obviously, this is just due mainly to more low spec models we saw during the past quarter. But when do we expect more increase in the adoption rate of XPILOT? And what would be more ideal cap rate in your view in the next one to two years? Is it likely to up 50%?

On my end, the connection is not perfect, but I get the gist of your question. So here is my response. Now in regards the attach rate of XPILOT 3.0 actually, it all depends on the chip supply. So when the chip supply recovers to the normal level, we believe that the attach rate will increase as well. I actually have more confidence in the tax rate improvement of XPILOT 4.0 because according to our data, our users have it and their satisfaction rate of using our XPILOT is actually very high as they get used to actually having the navigation systems, according to our -- I mean, with the help of our City NGP function in their daily life from one destination to another, for example, from their home to their offices or from their offices to a shopping mall, et cetera, that definitely will give them the trend of keeping the habit of using this sort of assistance from the XPILOT. So by that time, the attach rate of our XPILOT will be even higher the current level. And in my own understanding, actually, the XPILOT 4.0 attach rate will exceed 50%. But again, that actually will depend on the future market statistics and we'll see.

And your next question comes from the line of Jeff Chung with Citi.

So my first question is about the worst case scenario of this year's full year sales volume and production capacity, if we assume further disruptions in the chip shortages. Second question is about the G9 and P7 G3 margins. And is it necessary for us to also set a monthly sales target for G9 going forward? Dr. Brian Gu: Jeff, this is Brian. Let me answer the question for you. Can you hear me? So first of all, we obviously -- as our policy, don't give guidance on the sales number as well as individual model numbers. But I would say that, obviously, this quarter represents a quarter that's being a low season as well as face disruption from COVID measures in China. So I would probably consider appropriate base for extrapolating for the full year. We're confident with our new model launch as well as further market momentum. The sales number should be higher than the first quarter. So that's the first answer to your question. Second question is that, on G9, we do have high hopes. This will be a blockbuster in its class, with the premium SUV class and you could also find benchmark models in that class. And we think it should be one of the top players in that category. And then I think in that being, I think, the short approach shift might see the P7 level. The third question is whether the P7 and G9 is interchangeable from a supply chain perspective, I think we hope by the time that G9 has started volume delivery towards the second half or the fourth quarter, the supply chain issue will get alleviated. But I think right now, both models are representing high gross margin products for us in the high teens. So I think for us, those are models that we will obviously make sure that has adequate chip suppliers for production.

So it is about the order backlog. After we raised the MSRP price, we saw a significant surge in new orders. So, roughly speaking, right now, the waiting time to get a car from 16 months to 20 months, which implies around four to five before the order backlog, so I just want to clarify on these numbers.

I think there is a mix of good and bad news with what's happening right now. Obviously, the bad news is the resurgence and recurrence of the pandemic, which really affects our supply chain, especially in cities such as Shanghai because this is really the headquarter of all of the key suppliers of our company. And the good side of the story is that we are actually improving our overall capability in enhancing our battery cell supply. And so, obviously, there's a lot of disruption in the -- interruption in the market. And also, there's a lot of risk, but we will do our best and be fully committed to speed up the delivery time -- lead time. Overall, I believe that the actual outcome would be better than expected.

And your next question comes from the line of Ming Lee with Bank of America.

So my first question is regarding the battery supply situation. Currently, you have three suppliers but you are still looking of the LFP battery supply. So you also delayed some vehicle delivery. So what is the current situation? Yes. So my second question is regarding the new platform and your capacity breakdown for your three plants in the future. That's my question.

In response to your first question, first of all, we are very different from other new energy vehicle makers in a sense that we actually collaborated with multiple suppliers of batteries. And so in the past what we experienced is that there has been a lot of demand for our ST batteries. This really [Technical Difficulty]. So in the past, what we experienced that the market demand for LFP demand actually has surpassed our suppliers' capacity for batteries supply. So that's why we experienced a lot of challenges in the supply chain. But going forward, we actually have been able to gradually alleviate this problem, and we are very confident that we can continue to improve the situation. And for the second half of this year and for the coming year, we are very confident that the overall supply chain shortages can be relieved to a certain extent. And then in response to your second question, basically we differentiate the concept of planned capacity and the actual deliveries of our -- or the actual carried out or executed capacity. And so, we do have planned capacity for each single plant of ours and through multiple shifts of working, we can actually maximize those capacity. And so, what we are doing right now is that we are trying to coordinate different plans in producing different models on different platforms because we haven't been able to -- we are not in a position to announce the exact number in terms of the capacity of each single plant yet. I can just give you a rough idea that the single plant capacity will surpass 0.5 million.

Your next question comes from the line of Nick Lai with JPMorgan.

My question is really about the cash. By the end of last year, we had about RMB43 billion cash on balance sheet. And how should we think about the use of cash in terms of CapEx on the expense, on the spending and the sales marketing? That's the first question.

Nick, this is Dennis. Let me respond to your first question. Yes, you're right. We actually -- we have about RMB43 billion cash in hands of the end of last year. And our plan, actually, as I mentioned, we actually achieve operating cash flow breakeven or positive cash inflow in the second half of the last year. So our plan is to continue to improve the efficiency and also to improve the capital spending. So, we are projecting -- we are trying very hard to continue positive even operating cash flow this year. And other than that, we also have some spending on the CapEx. For example, we continue to have new products. We will have the facility and equipment for the new product. And we also have the investment in terms of the capacity -- the new plant capacity. So that's our plan for the usage of our cash in hand. Operating-wise, we will try to be breakeven positive and capital expenditure will continue to include efficiency of spending while supporting the product development and also to support the capacity development for this year.

My second question really about a quick update on box initiative that management mentioned in the previous conference call.

Now we actually plan to test the robotaxi sort of capability and performance by Q4 this year on P9. We didn't actually announce or make any statement regarding achieving Level 4 by 2024. Our estimate is that we can actually achieve or work towards the goal of autonomous driving by 2026. Now in terms of the exploration in the robotaxi model, right now we are -- we need to do a lot more testing to be able to find out the business logic behind robotaxi and to gather more data from the actual execution of the capability and also to understand better the regulatory environment in this regard. But currently, with our observations in the expo development as well as the gathering of the data, we are very confident and very, very excited about the future of robotaxi, and we estimate that we can actually achieve a high level of autonomous driving sooner than expected.

And your next question comes from the line of Bin Wang with Credit Suisse.

Okay. My question is about new products for 2023 because we you actually said that we have some products from the new technology platform. So it does mean one product from each platform or actually one product from two platform? Meanwhile, just mentioned the four plus will be available for the city and G3. That means that you can upgrade can and P5 and P7 upcoming for the upcoming City NGP with the hardware upgrade?

This is He Xiaopeng. Next year, we plan to launch two new products on two platforms, and both of them will support the deployment of XPILOT 4.0.

And your next question comes from the line of Xinchi Yin with CITIC Securities.

My two questions is about G9 and CapEx. So the first question is, could you please provide more details about G9 and what's the well base of G9? And will there be a six-feet version or seven-feet version? And my second question is about CapEx. So what's the CapEx budget on Guangzhou and Wuhan factory, respectively? What's the progress of these two factories?

This is Xiaopeng. Let me respond to your first question. In terms of G9, what I can be -- what I can announce right now is going -- G9 is going to be a five-seat medium to large size SUV. It won't be a six-seater or seven-seater. And in terms of the details such as wheelbase, et cetera, we will actually launch -- we will give you more details in our official announcement when we have the information. Thank you.

Okay. The second question, this is Dennis. So let me handle this. In our Guangzhou plant, our total capital expenditure is somewhere around RMB2.5 billion to RMB3 billion. And among that, the construction and the land actually is funded by the government. And the government provided a loan to us, to a free interest. And in terms of facility, actually, the government is funding 50% of the interest cost. So we will pay 50% of the interest cost in terms of the bank loan. The plan is the -- in terms of construction has been completed and now we are doing the equipment and facility for the new plant, new production. So this is to support the new vehicle production. In terms of Wuhan plant, Wuhan plant, the plant is bigger than the Guangzhou plant. So the total capital expenditure, the original project was about RMB4 billion, about slightly higher than RMB4 billion. And among that, the government will fund the interest of the around RMB3 billion. That will be -- the interest will be funded by the government and the rest will be funded by XPeng itself. The plant is under construction including the building and also the facility and that actually is to support the new production, as we mentioned for next year. So, that's the status of the plant construction and also the capital spending of our plant.

And your final question comes from the line of Jing Chang with CICC.

So my first question is about our debt rate or the supplier massive this year? And what are the positive or some negative effects of multiple supplier method, especially on our time maintaining and also our purchase costs? And my second question about the gross profit margin and also expect the expense ratio guidance this year. And considering the current cost and our price -- product price increase, how can you expect our gross cost margin this year and also about the expense ratio? Will our expectation of our R&D and SG&A ratios reflect a stronger scale effect?

This is Xiaopeng. Let me respond to your first question. Having multiple suppliers for our battery sales definitely gives us a lot of values, mainly in two aspects. The first one is to definitely make sure that we have enough supply, and the second is, help us to optimize or enhance our cost control capability. Now for the first benefit, because we have multiple models that definitely are really popular in the market and we received a lot of orders last year. But due to the supply shortage in batteries, especially in LFP batteries, we were not able to actually fulfill or deliver those orders last year and the actual sales of our models or our products LFP batteries was actually a lot smaller than the actual orders that we received. And this year, with our concerted effort with our supplier partners, we hope that and we are very confident that we can alleviate the situation this year. And the second benefit, which I mentioned earlier, is the cost control capability enhancement. As the raw materials for batteries and for a lot of the core components continue to increase, the whole industry experienced a lot of cost increase risk. But because of our multiple supplier partner network and this model, we are able to actually relieve this sort of stress within, I think, one quarters to three quarters time. And this year, we will continue to suppliers to better consult our cost. Thank you.

For the second one, the margin, firstly, we don't provide the margin guidance for the future. But according to the information we have on hand, actually in the first quarter, we use a majority of the battery stock, which we acquired or we purchased. So the cost increase did not really hit us on a full quarter basis. So we anticipate some material good news on the battery. And also we have better product mix. The P7, actually, the mix is higher than quarter four last year. And for the second half, because we have increased the price and then after we delivered those price protection orders, probably starting in late May or June, we will have capability to cover the cost. So all in all, we anticipate quarter one and quarter two margin would be equivalent or even slightly better in the quarter four, the margin level. And for starting from June, we -- actually, the price would affect be a new price, which we will be able to cover the cost. And more importantly, we have G9, which will be sold in the second half. So, we anticipate the second half margin will be better than the first half. That's kind of a general assessment for the margin thus far. Thank you.

As there are no further questions, I'd like to turn the call back over to the Company for closing remarks.

So, thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's Investor Relations through contact information provided on our IR website or The Piacente Group Investor Relations.

This concludes today's conference call. You may now disconnect your line. Thank you for your participation.