00:00So I know you guys are reporting results quite soon, so you can't get into the detail of things,
00:04but just give us a sense of how you think the company's performed so far this year.
00:12Yes, good morning, David.
00:13Yes, Leaf Motor has been performed as we planned in the beginning of the year.
00:18Everything has been executed on a steady pace.
00:21Our sales volume has been growing.
00:23In the first quarter, we delivered more than 87,000 vehicles, which is more than 100% from the previous quarter in 2024.
00:34And our sales network has been expanding according to our plan.
00:39Our service has been improving to satisfy our customers.
00:44Our international business is being planned according to our plan.
00:50So everything seems to be going according to the plan, despite there's a very fierce competition going on right now in the industry.
00:58It is. It is very fierce competition.
01:01And, you know, I want to get your thoughts on, you know, how quickly your innovation cycle is getting shorter and shorter.
01:06I just ask you as well.
01:07Your chairman at the Shanghai Auto Show last month outlined the company's plans to to build local production in Europe.
01:15So I think Spain was brought up, Slovakia was the other consideration there.
01:20Is the company any closer to making a decision on that?
01:26Yes, we're working on it.
01:27We believe pretty soon we should be able to have the final decision and final setup.
01:33You know, obviously we studied and considered together with our partner Stellantis to look at some of their existing facilities in Europe in multiple countries.
01:44Right. The factors being considered would include local supply chain, cost, you know, overall government, you know, you know, support policies and labor market, etc.
01:58So ultimately we're going to work with the Stellantis to utilize their existing facilities to to localize our productions in Europe.
02:07Okay. And just very I want to just to just to touch on the Malaysia side of the story, too, because I understand that the company is planning to start production.
02:18I think it's a C10 in Malaysia this year.
02:20If you could get us give us an update there and you know how big in terms of capacity is that plant?
02:25The Malaysia production is also based on the Stellantis facilities.
02:35Also, the target is to localize our, you know, production in different regions.
02:41We just talked about Europe, but in other regions of the world, you know, Asia Pacific, South America and other regions.
02:49Ultimately, ultimately, at some point, we will map out local production plan to better integrate with the local communities and local markets.
02:59For the Malaysia plan, we just started now, you know, hopefully by the end of the year, we'll get it to a more advanced stage.
03:06The initial capacity won't be that significant.
03:09It will be driven by the gradual pace of sales and market development.
03:15So we'll, you know, deploy the production accordingly.
03:21There have been, Michael, just to get your reaction, there have been tightened restrictions and regulations around smart driving because of some, let's just call it unfortunate incidents recently involving some in the industry.
03:34Has that in any way affected your plans and strategy?
03:37No, David, actually, that is a good reminder of the companies that safety is always important and the autonomous driving technology has to be developed as such.
03:53So, but it will not alter fundamentally the strategy of our company or other companies' deployment.
04:00So what that means is we'll just have to continue to work on the technology development, keeping in mind all the different factors, like government regulation, safety, consumer, you know, reception and the cultural issues.
04:17So the whole autonomous driving is evolving, is nowhere near the end.
04:25So we're in the middle, we're on the road, we're in the process.
04:28So if we can keep that in mind, we know in the coming several years, we will work hard to develop further and the industry will evolve along that line.
04:37That's an important big picture reminder that, I mean, certainly we are still in the middle of this process, still in the beginning, if you think about it.
04:47And we will get these sort of setbacks every now and then.
04:51I mean, just very short term, I understand that you will be giving the markets an upgrade of your C, of your C-series cars.
04:58I think it's June or July.
05:00In terms of autonomous driving, what can we expect from that overhaul?
05:03Yes, what we call the so-called annual facelift, our three major C models, C-10 already announced May 15th, you know, C-16 will be June, C-11 in July.
05:20But for C-11, it will be mostly kind of an intermediate upgrade.
05:25And also surrounding the autonomous driving will deploy the so-called LEAP 3.5 version of electronic architecture as a standard equipped for all the C-series.
05:40So from there, you know, we'll have the, you know, standard 800 voltage fast charging infrastructure in the car, as well as some other, you know, upgraded functions and features in the models.
05:53Yeah, it's, you know, Michael, when you say upgraded, it's, you know, someone who attempts to cover the developments in your sector.
06:01It's very difficult given everything that's changing at such a rapid phase.
06:05I mean, I know to some rough degree the company follows Moore's law, you know, the doubling of capacity every two years.
06:12As I guess, one of the, let's call it the benchmark for your innovation cycle, right?
06:18Something new every year, every year and a half.
06:21How do you guys do it?
06:22And do you think that shortened innovation cycle is also shortening the replacement cycle among consumers?
06:29Yes, okay, you know, LEAP motor, we actually self-developed most of the key electronic components, e-motors, battery packs, and the electronic autonomous driving and also the smart infotainment systems.
06:49All of this makes us the tier one suppliers to ourselves.
06:53So that allows us to upgrade and iterate models quicker and with more control over how we want to define the vehicles.
07:03So from this, so we're among the most vertically integrated EV makers in the industry in China.
07:09So what this allowed us is to give us tremendous fast pace in rolling out models in different segments.
07:18And also it allows us to achieve very strong cost advantages because we are the tier one suppliers with respect to e-motors, battery packs, and electronics, you know, key systems in the car.
07:33So we have a much more streamlined development process which, you know, saves us costs.
07:39So we continue to do that, you know, cost reduction, product innovation, and fast pace of innovation.
07:46And also another thing you probably remember, LEAP motor, the founding team, came from electronics products 10 years ago.
07:55That's right.
07:56What that means is our team is much more familiar with the cycle of electronics, right, you know, cycles of mobile phones and those other electronic products.
08:06So we are much more adaptive in doing this.
08:09So that's allowed us to achieve not only the fast product rollout, but also the volume growth, gaining market share in the field's competitive environment.
08:22And also at the same time to improve our margins, you know, for the past six or eight quarters, we have steadily improved our gross margins as well as sales volume, gaining market share.
08:35So we have been demonstrating this unique capability.
08:39I think the market and investor community have started to notice our, you know, development, you know, in recent time.
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