Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2022 Earnings Conference Call for XPeng, Inc. At this time, all participants are in a listen-only mode. [Operator Instructions] 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 2022 earnings conference call. Our financial and operating results were issued via our Newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xpeng.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 includes the disclosure of the 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. In 2022, XPeng delivered more than 120,000 electric vehicles, a year-over-year increase of 23% and ranking number 10 among emerging EV makers in China as measured by vehicle insurance registration volume. Throughout the year, a challenging macro environment and increasingly intense competition in the NEV market placed pressure on our performance. Amidst this pressure, we saw an opportunity to become a first mover in tackling the challenges faced by industry and examine inhibitors to our business growth at the same time. At the end of last year, I rapidly and decisively conducted a review of our strategies and implemented a series of significant adjustments to our organizational structure with a focus on improving areas of weakness. We have decided to start the change with ourselves and revamp XPeng’s business with a startup mindset on an elevated platform with new angles. I believe XPeng is approaching an inflection point, as we have clearly identified what our goals are, and what our strengths and weaknesses are. We're now building recovery momentum in our sales and market share expansion. As we do this, we're placing a high premium on improving our organization and cost efficiency to fortify our strong foundation and better position our company for sustainable growth over the long term. Our overarching goal is to make XPeng a leader in the Chinese EV market and ultimately win the global EV race. What excites me is that our strategic adjustment has induced meaningful results in the first quarter of this year, which gives me confidence that we will achieve sustainable and greater breakthroughs in the next few quarters. My first step to the organizational restructure started with changes and upgrades in our top leadership. Ms. Fengying Wang has joined our team as President of the company, bringing us more than 30 years of experience in the automotive industry. Fengying is taking full responsibility for our product planning and sales operations and is also in-charge of our product platform management scheme. Our extensive industry experience, in-depth market insight and strong execution capabilities will help our product capture customer demand more accurately, while greatly improving efficiency in our sales and services division. At the same time, the adaptations to our management's organization are geared toward a flatter and more concentrated structure. In February, all design, R&D, production, supply chain and organizational management functions directly report to me. I believe that these shifts will significantly improve our planning capabilities and lift the efficiency of our decision making and execution in the coming months. More importantly, these adjustments have effectively refreshed our execution and competitiveness. For the foreseeable future, I will remain focused on lifting the labor efficiency across our organization by multiple times, though as to generate increased customer value with the same headcount, and greatly reduce costs across a full range of processes through technology and management innovation. With regard to our product planning and design, we concentrate on customer perceived value and product differentiation in our innovation. We will make substantial changes to future product model configuration mix, whole vehicle modulized design and consistency in smart features. In terms of interior and exterior styling and design to meet XPeng customers' high standards for aesthetics, I am directly running the style and design division and building three teams that compete with each other to generate creative ideas. These initiatives will continuously improve our interior and exterior styling and space design capabilities. At the same time, I incorporated the net promoter score or NPS into the core performance indicators for a variety of business functions and required feedback collection on a monthly basis. The NPS performance evaluation will anchor the transformation of our product planning, design, and development toward a customer-centric pathway. I believe our new products, our OTAs, and new services to come, will demonstrate substantial progress. In terms of branding and marketing, we'll harness our core differentiation in autonomous driving to the full extent and enhance customer perception. We are broadening our addressable market, expanding our penetration from Tier 1 and Tier 2 cities to Tier 3, Tier 4 cities. So far, we have completed a preliminary merge between our branding and marketing teams and refreshed our overall strategy. This will help us improve the quality, effectiveness and flexibility of marketing activities in an effective way going forward. While significantly reducing marketing expenses, we have already flattened out the management hierarchy in our sales network. Furthermore, we are enhancing our network coverage, increasing competitive capabilities in our frontline sales staff, and developing XPeng's powerful data-driven sales touchpoint in order to achieve significant strides in sales growth. On March 10, we officially launched the new P7i sports sedan, which is an upgraded version of our highly successful P7 model. Deliveries to customers also commenced in this month. I'm pleased to see our in-store traffic and test driving volume both hit new heights in recent months following the P7i launch. This new products, smart features, dialing design and performance among other clear advantages in livery with similar products were well received among customers. Amid the market's prevailing weakness in new order intake, our results outperformed the market. Our new order intake in February increased 100% over the previous month. With the strong momentum of P7i orders, following its official launch, we expect to see a considerable month-on-month growth of total new order intake in March. This marks an initial success following our comprehensive transformation, which has also boosted our company morale. Our second new product model coming up this year, the G6 will make its debut at the Shanghai Auto Show. Its official launch and vehicle deliveries will occur around the end of the second quarter. The G6 will bring the most advanced electrification and smart mobility technologies to the 200,000 to 300,000 yuan priced NEV SUV markets. With unrivaled interior space, range, styling and interior decoration, we believe the G6 will become the top-selling model in its market segment. Following the ramp-up of G6 mass production, we expect G6 monthly sales target to be 2x to 3x that of its P7 predecessor sales. In addition, in the second half of 2023, we'll launch a brand-new BEV 7-seat MPV. This new MPV model is designed to cater to customer cohorts that demand a larger interior room while serving the needs of our family customers for a human machine co-pilot. Recently, ChatGPT 4.0 and other AI-based applications have created a buzz among hundreds of millions of users on the massive potential of generative AI models. I am also very excited about this. It represents a brand-new phase of artificial general intelligence, which on premise -- with on-premise deployment that does not rely on cloud end, which not only redefines the pathway to realize autonomous driving, but also increases its efficiency. Given this development, there is an even higher possibility that autonomous technology further advances from L4 to L5. We expect to incorporate GPT technology deeply into XPeng's business across the board to create ground-breaking user experiences and exceptional improvements to our operational efficiency. In late March, we began accelerating the OTA rollout of City NGP compatible with multiple models in several cities, including Guangzhou, Shenzhen and Shanghai. Through City NGP's OTA, we took the lead in mass producing the transformer-based BEV time-series network or XNet in China, which achieved a milestone in deep learning algorithm development and application. In the second half of this year, XNGP powered by XNet's deep learning algorithms will no longer depend on a high-definition map. That said, XNGP will be supporting drivers on more urban roads across over 10 cities in China. Results from our testing showed the new version of XNGP outperformed peers' actual on-road performance in the United States. This leads us to believe XPeng's autonomous technology and its customer adoption is approaching a pivotal turning point. We have built notable leadership in smart technologies as well as customer adoption of smart technologies compared with peers. We're driving our technology road map and commercialization pathway to cross over the inflection point and reach an accelerated growth curve. While keeping high safety standards remains a top priority of our technology advancements, will also be focused on the development to improve scenario coverage, user experience and software and hardware cost optimization. In terms of scenario coverage, we have expanded the usage of the advanced technology from highway scenarios into city scenarios where ADAS are used at high frequency and even become an essential driving tool. Going forward, we'll strive to further broaden ADAS usage to more end-to-end driving scenarios such as internal compound ways and non-public roads and expand our geographical coverage from three cities to more major cities nationwide beginning in the third quarter. In terms of user experience, we have achieved an important psychological barrier for customers to use autonomous driving to relieve drivers, that is, drivers can let the machine safely take the wheel, resting assured that they are acting only as a supervisor. Looking ahead, we expect that through continuous OTA upgrades, XNGP's driving skills will escalate every year and in two, three years reach a level that is equivalent to a human driver with three years of driving experience. We also expect that the number of manual takeovers per 100 kilometers will be reduced to 1 or fewer. Regarding cost efficiency, we plan to cut XNGP's BOM costs significantly next year and adjust our sales model from one that bundles sales of software and hardware, to one that splits the sales of software and hardware, which is going to enable autonomous driving on all of our new vehicles, and allow more customers to use the latest autonomous driving capabilities. In pursuit of breakthroughs in the aforementioned three realms, we will bring great value to our customers and build out competitive edge in technologies, delivering long-term, sustainable revenue growth at scale and with improved margin contribution. It has been said that the past five-year period was the golden age for new energy vehicles. I believe the next five-year period will be the golden age for autonomous driving. During the five years to come, XPeng's highly advanced autonomous driving technology will help XPeng accelerate our ability to gain top market share. More powerful cost control will be the core competitive edge that will enable XPeng to secure its leadership in the EV market. We will advance the platform-based approach and technology innovation to propel our cost reduction strategy. Entering 2023, we are applying a full platform engineering approach for our BEV vehicle platform, electrical and electronic architecture, powertrain system and ADAS software and hardware development. This signals that we are entering a new phase of car-making in a unified system. In this way, we are able to develop products with superior customer experience at a faster pace and a lower cost. In the past, our R&D strengths were primarily manifested by our leading product performance. In the future, our R&D strengths will be underlined by maintaining the leading performance while achieving remarkable cost reductions. We have mapped out our strategic execution roadmap with associated cost reductions include an over 50% decrease for autonomous driving costs and an about 25% decrease for vehicle hardware costs, including powertrain, over the 2023-2024 period by means such as technology innovation and optimized configurations. I am pleased to see the design, technology R&D, supply chain and manufacturing teams are now working in a synergetic way to make our products more competitive through innovation. In terms of cash liquidity, our cash on hand at the end of 2022 amounted to over RMB38 billion. As we have nearly completed our investments in our two manufacturing bases over the past few years, our CapEx will decline substantially. We have also established three powerful vehicle platforms that can support a serial of new model launches over the next three years. Our R&D will further concentrate on initiatives that best correspond with long-term trends and further differentiate our product in terms of customer experience and cost. We will also pursue improvements in our operating efficiency throughout the entire process. For example, within our sales operations, we strive to improve same-store efficiency by optimizing our store network. We believe these cost optimization efforts will start to deliver material results beginning in the coming several months, including in the second half of this year. It has always been my intention to build a successful company that can grow in scale instead of a small company in a niche market or just any generic company out there. Expanding our scale and market share to achieve economy of scale in both software and hardware is the primary goal in our long-term strategy. Although the product and management adjustment cycle in the automotive industry is more difficult than other industries and takes a longer period of time, we are still willing to sacrifice short-term sales and more patiently pursue greater victories in the medium- and long-term. Excitingly, as we rapidly implement adjustments and changes to our management, in addition to instituting a host of upgrades and iterations in our product portfolio and marketing capabilities, we have seen encouraging changes and positive results. I am firmly convinced that beginning in the third quarter of this year, XPeng's monthly sales number will achieve significant growth, both sequentially and year-over-year, as well as be much higher than the industry's average growth rate. I would reiterate that our current focus is on building and improving our capabilities in organization, product design, marketing and cost control. Continuous efforts in refining management and accelerated new product launches in the era of autonomous driving will lead us to the next level of exponential growth. We will continue to strive for this goal. Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between RMB4 and RMB4.2 billion. Thank you, everyone. I will now hand over to our Finance VP, Dennis Lu.

Thank you, Mr. He, and hello, everyone. Now I would like to provide a brief overview of our financial results for the fourth quarter of 2022. I will reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB5.1 billion for the fourth quarter 2022, a decrease of 39.9% year-over-year and a decrease of 24.7% quarter-over-quarter. Revenues from vehicle sales were RMB4.7 billion for the fourth quarter of 2022, a decrease of 43.1% year-over-year and a decrease of 25.3% from the last quarter. The year-over-year decrease was mainly attributable to lower vehicle deliveries for G3 and P7, while the quarter-over-quarter decrease was mainly due to lower vehicle deliveries for the P5 and P7 with partially offset by the newly launched G9. Gross margin was 8.7% for the fourth quarter of 2022 compared with 12% for the same period of 2021 and 13.5% for the last quarter. Vehicle margin was 5.7% for the fourth quarter of 2022 compared with 10.9% for the same period of 2021 and 11.6% for the last quarter. The year-over-year and quarter-over-quarter decreases were mainly explained by the increased sales promotion. R&D expenses were RMB1.2 billion for the fourth quarter of 2022, a decrease of 15.3% year-over-year and a decrease of 17.9% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases are mainly in line with timing and progress on new vehicle programs. SG&A expenses were RMB1.8 billion for the fourth quarter of 2022, a decrease of 12.9% year-over-year and an increase of 8% quarter-over-quarter. The year-over-year decrease was mainly due to the decrease of the commission paid to the franchise stores associated with the lower vehicle deliveries. The quarter-over-quarter increase was mainly attributable to higher marketing, promotional and advertising expense to support vehicle sales. As a result, the foregoing loss from operations was RMB2.5 billion for the fourth quarter of 2022 compared with RMB2.4 billion for the same period of 2021 and RMB2.2 billion for the last quarter. Net loss was RMB2.4 billion for the fourth quarter compared with RMB1.3 billion for the same period a year ago and RMB2.4 billion for the last quarter. As of December 31, 2022, our company had cash, cash equivalents, restricted cash, short-term deposits, short-term investment and time deposits in total RMB38.3 billion. To be mindful for the length of our earnings call, I will encourage listeners to refer to our earnings press release for further details of our financial results for the fourth quarter and full year 2022. This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.

[Operator Instructions] Our first question will come from Tim Hsiao of Morgan Stanley.

So my first question is about the competition because the market with pricing -- price segment of RMB200,000 to RMB350,000 or USD30,000 to USD50,000 has XPeng on the strong hold and a key volume driver. However, if you look at what happened over the past few quarters, I think Tesla, EV startup, even traditional carmakers, EV brands are getting more aggressive in this pricing segment. And I think yesterday, you already just upgraded is Han, EV and time DMi to focus on the 200,000-plus market and Tesla, Micro on -- [Cdr Cad] having another round the price cards. So how do you think about the competitive landscape in this pricing segment? And how could XPeng make sure that its upcoming models, including G6 and model next year could stand out in the crowd of competitors where we'd be more pricing aggressive with more meaningful cost down in the following quarters? So that's my first question.

Thank you for your question. It's a very good one. Basically, we expect the market to experience a series of price cuts by different OEMs in the coming couple years because of the very intensified competition or competitive landscape in the current market, especially for traditional OCE carmakers because we expect to see a lot of oversupply to the capacity in the market as well as some reduction in the raw material pricing, which will be a good foundation for a different price cut to be expected in the near future. And as a result, different brands and different players in the market will launch a series of price cuts in order to expand their market share. Now as I mentioned in the prepared remarks that the current first priority for XPeng is to optimize our organization as well as to expand our scale and in addition to that, we also will continue to improve our autonomous driving capabilities as well as optimizing our design language. Now next to it, we also will prioritize the cost optimization. In the past, we mainly focused on the development of the functionalities and the overall performance of our products. Now when we expand our price -- targeted price range to cover more than RMB250,000 and RMB300,000 to actually a little bit lower to RMB200,000, we realized there is actually a lot of room for improvement in terms of cost reduction, for example, just to reduce our overall BOM cost in the R&D sector and also to integrate our software -- in aspects of our software and hardware design as well. That is why in the coming future, we will, first of all, prioritize the scale development as well as improving our autonomous technology and overall product quality and performance, while improving our cost structure in many new areas, especially to be reflected in our newly launched products to be expected. And also we will expect some strategic price reduction in the near future as well, so as to expand our market share and promote deliveries. Looking back in 2017, there were about 300 car making start-ups and 70 passenger vehicle makers in the market. By now, there's only 50 players left. And in five years' time, maybe there will be less than 25; and in 10 years' time, less than 10, which means that by that time, the annual deliveries of each single carmakers will not be 100,000 -- 0.5 million or 700,000, it needs to be at least 7 million in order to survive, which means that we need to have a solid foundation in terms of our hardware and software capabilities as well as our cost control capabilities as well in order to just survive in the market in the fierce and intensified competition, not letting alone becoming the winner in the competition. And that is why in the coming five to 10 years, our priority will be to solidify our leadership in our technological R&D capability as well as our cost control.

So my second question is about the sales network. Could you please help to update us XPeng’s channel strategy this year? While Tier 1, 2 cities that we'll see that’s strategically critical, the growth in the lower-tier cities in China was on outpace than higher-tier cities and be kind of a key growth driver. So quite a few EV makers are targeting to pantry into the lower-tier cities. So how is XPeng going to grow its presence in the lower-tier cities? And in the meantime, we had the company change its hybrid business model, consisting of the direct sales and the dealership. Will be there any material changes in upcoming quarters? That's my second question.

Our newly recruited senior management member, Ms. Wang Fengying actually is way more experienced than me in terms of channel distribution. And since one month after her enrollment, she’s already had numerous discussions regarding our distribution channel and our network development. So for this year, we have several strategies in place already. First of all, we will maintain our current model of having directly run franchise stores in order to promote our sales and distribution. However, the mix from franchise stores will increase. And the second point is that we have and will continue to flatten out our management structure so as to improve the overall service quality as well as to improve the profitability and efficiency of our distribution channels. And the third point is that we will actually expand the functionality of those kind of channels to not only sales purposes or functionality but also to increase force function as well, so as to provide a more comprehensive set of services to our customers. Now one of our upcoming next steps, which I can review right now is that we don't believe that it would be very effective to have a large number of small distributors or small channels. Rather, we prefer to prioritize the development of quality channels to improve our overall service and distribution efficiency. Regarding the second part of your question, which is the channel network in Tier 3, Tier 4 cities. First of all, we will work with our partners to expand the channel and network. In addition to that, we also design and curate appropriate products suitable for Tier 3, tier 4 cities and we do have some facelifted products upcoming to be expected.

The next question comes from Paul Gong of UBS.

My first question is regarding the -- on the arrival of Ms. Wang Fengying in new role as President, what has been her biggest criticism on the XPeng Motor for the current situation and what is her plan to change it?

Now, this is a very interesting question. Ms. Wang has been with us -- has arrived for more than 1.5 months. Her biggest criticism for the company is twofold. First one is on the planning side and the other is on sales and marketing. I mean, this is definitely a very positive time because it is better to see the problems and have solutions rather than being fully complacent without seeing the root cause of the problems. And so right now, we are in full force to correct some of the mistakes that we previously had. And personally, I feel a lot of pressure from Ms. Wang because she is working seven days a week. And right now, we are all following this trend of being very, very diligent at work. So that is a lot of pressure on me.

So my second question is regarding your interesting comment on the GPT application into the smart vehicles. Can you give us kind of some example of how do you imagine such kind of technologies to be used in the long term in the smart vehicles? And if so, shall we pay for some kind of technology royalty or kind of technology servicing fee on that?

Thank you for your question. Now definitely, ChatGPT and related AI technologies will provide a lot of values for our midterm and long-term development. Now when we look at autonomous driving technology or capabilities, the lower level or medium level kind of autonomous driving technology always face the conundrum of being not smart enough as human drivers because cars definitely can be very capable as a driving vehicle; but in terms of decision making, a lot of it comes down to the intelligence level. So the fact that the ChatGPT AI technology allows on-premise deployment as well as cloud and connection will actually be a catalyst in terms of the development of autonomous driving technology all the way from Level 4 to Level 5. Now in terms of the potential fee or cost of dropping the technology, first of all, we will look at the near-term application in the software side, which will be much sooner than its application on the hardware side because it's application in the hardware, we're talking about integrating the software together with the hardware, which is quite a different story from just applying it on the software side. And we mainly will look at some of the key areas, for example, education and also document processing, language processing, et cetera. And definitely, we expect to see a lot of variations of related ChatGPT technology in China, and we will select the right partners for XPeng in the future according to our developmental pathway. And right now, we are in conversation actually with a lot of potential partners. And the -- in regards to the potential cost, we believe it's quite minimal.

Next question comes from Bin Wang of Credit Suisse.

I have actually got two questions. Number one is about your cost reduction. You mentioned about 25% cut in the vehicle component cost, which is very amazing. Can you give me more detail about how you can achieve that? For example, will you use -- integrate die-casting to the cost cutting? It is very important. The second question is about G9. G9 actually has been doing not good recently, but previously, you were seeing G9 volume be even higher than P7. How you can maintain G9 sales momentum and what's your maintenance status for G9?

Yes. Specifically speaking, the cost restructuring target of 25% is not amazing per se, but it definitely indicates that in the past, we definitely -- still we're not doing good enough. There's still a lot of room improvement in terms of cost reduction. And right now, we are seeing multiple ways to actually reduce our cost of manufacturing and overall production. For example, as you mentioned, we have some new technologies in our hardware, the integrated stamping techniques that can help us to reduce the cost of manufacturing. And also in terms of pack of the whole vehicle as well, we have some viable methodology that can help us to reduce the cost by about 50% to 60%. In addition to that, in terms of the overall chip and battery, we are now employing or adopting the whole vehicle platform engineering technique that can also help us to drive down costs. So as a result, there is a mix of methods and ways for us to reduce cost in terms of our powertrain, overall whole vehicle platform, engineering, architecture, scale and also different configuration as well. So overall in the coming period, in the second half of the year, first half of next year and also the second half of next year, we have set of different developmental stages goals in terms of our cost reduction and the effects can be expected. Now in regards to the deliveries of G9, definitely in the price range of RMB300,000 among all the BEV rivals, there has been a lot of challenges in pushing itself. However, in the near future, we do have several moves in place to boost sales deliveries. The first one is that we're ramping up several configurations and the second one is by implementing the XNGP functions on G9 as well as on P7i, which we believe will greatly enhance the attractiveness of G9 as a product. In addition to that, we are now gathering a lot of positive feedback from our customers who have received their G9 in terms of the product quality and overall performance. In addition to that, we believe that the launches of P7i as well as G6 will boost foot traffic in our stores as well as a encourage interest in G9 as well as part of the product line. In addition to that, we are now already seeing reinvigorated sales or deliveries in March compared to the months before, which was February in the market. And so we are still very confident that we can -- we are on the right trajectory to meet our delivery target for G9 for the year.

The next question comes from Nick Lai of JPMorgan.

[Foreign language]

I think what you mentioned in your questions, might be viable 15 years ago, which was that you can basically sell anything as long as they are cheap enough. However, it might not work today. We still believe that product quality speaks volume. So for this year in terms of our overall marketing and pricing strategy, we have set up different aggressive goals for, for example, the second half of the first quarter as well as for the upcoming several quarters of the year. So we definitely expect a lot of reinvigorated deliveries or sales outcome for the rest of the year.

[Foreign language]

Now in regards to battery supply. First of all, in January last year, we saw this pricing inflation happen in the industry, which really encouraged the development of hybrid vehicles in the market, but rather much -- but hurt a lot of development in the EV sector. However, this year, we are happy to see that the pricing of batteries have come down. And this newly launched price war in the industry, led by a lot of battery makers, especially the leaders, it's definitely a very good sign or very beneficial for the development of BEV and can help us to improve our pricing competitiveness as well. Now so far, based on our conversation with our battery suppliers, we are confident that the price reduction -- the degree of the price reduction by XPeng supplied by our supplier partners will be more aggressive than the industry average. And that's just from the outside. Looking internally, we also have discovered different ways to optimize our cost structure to reduce our costs in terms of the powertrain, batteries as well as parts by for example, integration as well -- integrating some of the parts as well as replacing traditional NCM or NCA batteries with LFP batteries, also by extending the usage or the driving range that it can support per battery by about 10% to 20%. All of these ways can help us to further drive down our battery cost and you can actually see the effectiveness or outcome in the coming 12 months.

The next question comes from Ming Lee of Bank of America. Ming-Hsun Lee: So my first question is regarding product competitiveness of G6. Because management team just mentioned they expect G6 in the future, the stabilized monthly sales could be 2x to 3x of P7 but because of G6 is in a similar price segment of P7, so what is the product competitiveness to give you the confidence?

I'm -- apologies. I really cannot review too many details regarding our yet-to-launch models, but you can expect to learn more about G6 in mid to low April this year in Shanghai Auto Show. But something that I can mention about some highlights of G6 is, first of all, it has a longer driving range supported by our optimized weight of the whole vehicle, driven by our integrated stamping technology as well as better heat management and wind resistance management technology as well. In addition to that, the interior space of G6 is amazing, especially if you are looking at the second road of the car, the seating area is pretty spacious. And another characteristic of G6 to highlight is its aesthetic, the design language follow the XPeng style, which is going to be very appealing to our customers. Ming-Hsun Lee: So my second question is related to the battery technology. So in the future, will you consider to use different type of battery, for example, like a cylindrical type of battery? And besides that, regarding your current orders backlog, G9, you already provided the high-voltage fast-charging battery. Is that ratio high enough? Or if it is not high enough, is this because the charging infrastructure is still not enough or consumers feel comfortable based on the current -- the normalized battery pack sizes?

Regarding G9 and all of our upcoming new models and facelift versions, all of them will be equipped with the fast-charging capabilities suitable for 800 voltage and also silicon carbide, fast charging technology. And we will also expand construction of this fast-charging infrastructure as well. Now what I would like to mention is that this fast charging technology will not only work on the dedicated charging pile, but also in the original charging pile as well. So you can actually speed up the charging by using the technology on both charging piles. In addition to that, we also have put in place our modulized optimization technology to optimize the batteries as well as chip in the design of those new vehicles. So we are open to the possibility of adopting cylindrical batteries in the future.

Due to time constraints for this call, 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 or the [Pearson’s Financial Communications].

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