Ideal conference call transcript: Adhere to more than 200,000 home user groups; this year will invest 3.3 billion yuan in research and development costs

Highlights:

1. In the case of the delivery volume announcement, the volume increase is stable.

2. Under the pressure of chip impact delivery volume and industrial chain cost, the company's gross profit margin is still increasing against the trend, which is a bright spot.

3, increase the size of research and development, sales and management expenses are still relatively restrained.

4. The ideal car that relies on a single model to hit the world, in the third quarter of 21, it took the lead in realizing the profit of the quarterly NON-GAAP caliber to be positive, and the profit of the fourth quarter continued, and then realized the profit of the non-GAAP caliber for the whole year, and became the car company with the best profit performance in the new car-making force without question.

Ideal Auto (LI.O) on the evening of February 25, Beijing time, the U.S. stock market before the market released the fourth quarter of 2021 financial report, Longbridge Dolphin Jun made the first time to interpret, interested can refer to the "pull enough "banknote" ability, Li xiang's ideal into reality", the following is the meeting minutes of the content collation, covering the company's new product planning, gross profit margin, expense outlook, production capacity, strategy and other aspects.

First, new products

Q: When the X01 product is launched, will we consider the difference between it and the original product definition?

Li xiang: to create a new demand on the market, which other electric vehicles can not provide, so that the potential needs of users are stimulated

Q: From EREV (Extended Range Electric Vehicle) to BEV, how to prepare for the product side, infrastructure side, and supply chain side?

Pure electricity, our high-voltage pure electricity is composed of three elements: 4K battery, charging rate is higher, we and suppliers have carried out in-depth research and development, but also invested in a large number of R & D personnel, so that the battery and system charging, thermal management is closely related, we want to infiltrate the battery cell to do in-depth research and development; 850V voltage platform system, this is self-developed mainly, including three-in-one motor, can provide functions that electric vehicles can not provide before, including auxiliary boost and buck, battery heating, etc.; self-developed 400KW The charging pile and the charging station operated by itself make the experience close-loop, make the user experience more comfortable, open up the battery pack - voltage platform - charging pile closed-loop, and provide the experience of fast charging of the 4C voltage platform to consumers. This is what we are doing and expecting to actually implement to users.

Q: In terms of customer base, is it ideal to focus on home users, and plan product positioning in other customer groups? Is BEV also focused on the home user group? Can this support the company's development in the long run?

Li thought: We will continue to pay attention to the market, because we have only verified the small price range in this market, in 2016 our product planning is more than 200,000 yuan in the household market of 2 million units, in the past year this market is close to 6 million vehicles, 2025 will exceed 10 million vehicles. We think this market is very healthy, can maintain a healthy gross profit, fast growth, more return on investment, we will continue to do this market. Now we only have a little market share in the market, and we hope to be able to occupy more than 20 points in the market, so that we can complete the 1 to 10 conversion. [Adhere to more than 200,000 family user groups, not looking for other groups at present, this market segment is enough to support the company to achieve 1-10 growth]

Second, the gross profit margin

Q: The cost of building a car has increased significantly this year, how to measure the impact of the cost increase of key components this year? How does the company control this cost?

Shen Yanan: This year's financial project has taken into account the possible cost increase, especially the increase in battery prices will lead to cost growth. In addition, sales are also growing this year, so economies of scale will also be considered. Despite the many challenges we face, we still have the goal of achieving higher gross margins.

3. Costs

Channel: Target 400 stores by the end of 2022 [double compared to the end of 2021]

R&D: We expect to have 3.3 billion yuan in R&D expenses in 2022, and the current R&D team has 3,400 employees by the end of 2021, and we will maintain R&D expenses at more than 10% in the future.

Fourth, supply chain issues

Q: Since last year, the industry has been greatly affected by chips, but in the past year, the ideal car delivery is relatively good compared to the same industry, and last week's Suzhou Bosch shutdown incident has any impact on the company's production and supply? How to see the current situation of tight supply this year, and how to ensure that the production chain is not continuous?

Shen Yanan: We have also been affected by Bosch's supply, which was affected last month and this month, and the situation will improve in the coming months, but it will still be very tense. What we're doing is hoping to have more supply channels, work more aggressively with supply partners, and increase our own capacity, which means that as long as the supplier has the parts ready, we can quickly put into production and delivery.

Fifth, production capacity

We are constantly improving the production capacity of Changzhou and building a new base in Beijing, and once completed, production will begin, and the production capacity of the two factories in Changzhou and Beijing is planned to be 500,000 vehicles, which can reach 750,000 vehicles in double shifts. We have reached a consensus with the Chongqing Municipal Government to establish a strategic cooperation framework and hope to establish a new construction base in the Liangjiang New Area

6. Other sales and service businesses

Q: Points have some revenue in 21 years, will there be more in 22 years?

Shen Yanan: In terms of NEV points, compared with 2022, there are 2-3 times points in 2021, and everyone may realize that the sales price may be low, but we are still negotiating, and we are expected to show the problem of points in the third quarter.

Seventh, intelligent

In terms of product strength, last year NOA gave a new way, standing in the perspective of product force, what functions will NOA and smart cockpit have in the next step to make the user experience better?

Li Xiang: At the end of last year, a complete NOA product was delivered to users, and the NOA experience included the adaptation of maps, etc., and we continued to improve the experience. The most important thing is that we hope to improve the safety of the entire mileage of a car, which is also an important reason for our self-research, we hope that in the ideal ONE in 2021, the accidents generated by the whole life cycle of the whole vehicle will be reduced by 80% compared with traditional cars, we hope to make these functions standard, and we are also trying to get closer to the goal. Next deliverY S01, sensors, vehicle computing power, safety capabilities have a different dimension of improvement, we will achieve a higher level of safety performance, so that users in a variety of scenarios can continue to improve the safety of driving vehicles. 【Highlight safety】

Q: At present, in addition to the industry, the new forces of car manufacturing are hoping to expand the product ecosystem of non-car products, and how to expand the ecosystem of intelligent electric vehicles?

Li thought: Our characteristics are focused, ideal in the field of intelligent electric vehicles to complete from 0 to 1, we still have a lot of things to do, from products to applications, technologies, systems have not yet been done, are worth our insistence on doing, we will still insist on doing these in the field of intelligent electric vehicles to do these thoroughly, 10 years later to see their own capabilities, hope to be able to do Apple's level, hope to deepen in this field. We hope to make a lot of space performance technology, applications, capabilities to the car here more controllable, higher product level, so that home users get a better experience, this effort has just begun.

8. Internationalization

Q: Many friends are selling cars to Europe and overseas, how do we think about international sales?

Shen Yanan: Our long-term strategy is to compete in the global market, but in the short term, we will focus on the Chinese market. We already have a very professional team working on the internationalization strategy: finding possible marketing products; finding the demand for these products; developing business models to gain meaningful market share, and now this team is working on the process of internationalization.

Strategy

Q: At present, the new car-making forces are developing non-automotive products outside the industry to expand the product ecosystem, how are they ideally prepared to expand the ecosystem of smart electric vehicles?

The ideal car is characterized by focus, the company believes that it has just completed the process from 0 to 1 in the field of intelligent electric vehicles, the next 5-10 years the company will take the strategy of deep ploughing automotive products, applications, technologies to system-level research and development, focusing on expanding and improving the content of the car space and the experience of individual users and home users on hardware, and will strive to achieve the achievements of Apple in the mobile phone industry in 10 years.

Q: What are the main points of competition between us? More innovation or efficiency?

From 1 to 10, the first important thing is still to give full play to the advantages, do a good job of the group of home users, and refine to cover more products in each range; the second is to adhere to high efficiency, although our R & D investment and the same industry may not be different, but still can ensure the company's good operating conditions, so there is no need to reduce the advantages [cost expenses will still be more restrained];

At the same time, we must also make up for our own shortcomings, we have carried out self-research and voice AI teams for self-driving, domain controllers, additional purchases, etc., we will improve the technical level of the ability, and make up for the supply capacity. It is true that all enterprises will do intelligence, but this has no know-how, intelligence has three characteristics: no feeling when buying, bad performance will be directly destroyed, performance is particularly outstanding will make users can no longer be inseparable. This also requires a comprehensive competition of three capabilities: product capabilities, knowing what users want; software and AI capabilities to build, forming a good talent pool; system capabilities, that is, the ability to build operating systems. These three capabilities are the comprehensive embodiment of intelligent cockpit, intelligent driving, and even long-term user attractiveness, which is our core positioning and the work we should strive to do

Q: In the past year, the release status of various products in China's new energy industry has been uneven, what conditions does Ideal Auto think need to be successful in product launch?

A: At the user level, the first is to understand the user's needs, including superficial needs and potential needs, and the demand should be comprehensive; secondly, it is set at a price that the user is willing to buy. On the other hand, the product should be the greatest fit with the user's needs, there are five important indicators: product strength (size, space, performance, etc.), product safety, product quality, product pricing, product supply capacity, the comprehensive performance of the five indicators to match the user's positioning, price demand, and then firmly get good product performance.

10. Miscellaneous

Q: Does the inclusion of the Hang Seng Technology Index on March 7 mean that we have entered shenzhen-Hong Kong stock connect?

Shen Yanan: According to the latest official news of the Hang Seng Index, we have been included in the Hang Seng Technology Index constituent stocks and will be included in the Hong Kong Stock Connect, which needs to meet the relevant sales volume and market supervision requirements, and is expected to enter in mid-March, around 20 trading days.