00:00David, strong set of results that the share, of course, is under pressure this morning.
00:03But let's just get to the main takeaways for you.
00:05What stood out in the numbers?
00:08Yeah, it's a super exciting quarter.
00:11I'll give you a few numbers.
00:12First, the first three quarters, we shipped more than a million units already.
00:17And that's like the Q3, 47% year over year on revenue.
00:21And this is also interesting.
00:23We tell the market that we already achieved the full year profitability goal by Q3, which is probably one of the surprises to the market.
00:34And I'm super proud because everyone is talking about the involution.
00:38And now we're actually achieving the goals ahead of the time.
00:42And now we have on the long-range ladder, on the entire market, we have 46% market share.
00:48Hosai, shares are down some 9% on the back of your optimism, David.
00:54I'm just wondering, why do you think investors are seemingly a bit disappointed in these results?
01:01First of all, this is the first thing I do in the morning.
01:04I haven't called them.
01:05I don't really know.
01:06I have a few guesses.
01:08I actually think one of the reasons is that people seem too worried about the involution in the China automotive, as well as the decline of the ASP of the LIDAR.
01:20But I do want to point out a very simple fact that even though it's true, it's always a case that the ASP will slowly decline.
01:27But if you look at the history, like we've reduced the price by 99.5%, and we maintain our gross margin.
01:36What you should look at is whether this company is able to reduce the cost and greatly expand the volume, and then keeping the gross margin.
01:47The answer is yes, yes, and yes.
01:49I'll give you one interesting number, right?
01:51Obviously, the first three quarters are very good, and we're expecting the best quarter yet to come by Q4.
01:58And the first time we'll be shipping more than a billion RMB worth of product.
02:02That's like a record.
02:03And the other record I would like to indicate is that we're expecting more than 600,000 units in one quarter.
02:12Just to give you some perspective, five years ago, we're shipping about 1,000 LIDARs per quarter.
02:19So this is a 600 times increase in our capacity to expand the volume while keeping the gross margin.
02:28That's what I think is important.
02:30I feel like it's actually a good thing that we're able to reduce the cost while keeping the gross margin.
02:37Yeah, let's talk about that ASP then.
02:40What's your expectation for going into next year, and what's the pressure or conversations you're having with some of your major customers as well?
02:46How much are they asking you to reduce prices?
02:48What they always ask me is cheaper, cheaper, and cheaper.
02:54But you have to look at it at a different angle.
02:58So for the level two system, when we call that the invisible airbag and seatbelt, it's true that people always want your ASP to slowly decline as this is becoming virtually the standard for every vehicle.
03:11Because everyone knows that it could save up to 90% of the fatal accident.
03:16But having said that, what we do see is that a lot of customers are already making the decision to take it at this standard.
03:24We're working with really almost everyone.
03:26BYD, Xiaomi, Li Auto, Cherry, Li Motor, Great Wall, China, and Z-Curk, and all that.
03:31And the JVs of China, in China, the GM, Cadillac, the Ford, the Audi, the Smart, the Toyota.
03:38On top of this, what's interesting now is the ASP going up, which is when you just hear the statement, it sounds like a suicide.
03:48But hear me out.
03:49What's really happening is that for level two system, you're assisting the driver.
03:53You're creating value, but people think it's maybe limited.
03:56But now we're talking about level three and level four, especially level three.
04:01We already have projects with multiple car makers, and level three is a completely different game in the sense that people are wanting more than just one sensors.
04:11They actually want one looking forward, and they want blind spot to wrap this vehicle around with one plus two or sometimes one plus five.
04:22Which means that now we're looking at from one sensor to up to six sensors.
04:27And the ASP is going from $200 to sometimes up to $500 to $1,000 as the entire content of LiDAR on the vehicle.
04:37Which is super exciting because now the time calculation should be redone from level two to level three and four.
04:44And David, you know, when you guys had this listing, obviously one of the key sort of use of proceeds was going to be expanding production.
04:55I remember David, my co-anker, asked you last time on any updates when it comes to some of your overseas factories.
05:01You're putting mum on the details.
05:03Can you give us any sort of update this time around?
05:05Sure, sure, sure.
05:08So last time we left at the statement that the new factory in Southeast Asia will be starting to operate by late 2026, early 2027 from a country with great food.
05:25I feel like I have to be a little more specific about it.
05:28So now I can comfortably tell you it's a country with great tom yum soup.
05:35Hopefully that's sufficient.
05:37Oh, Southeast Asia, Thailand.
05:42Yes, yes.
05:43Can you confirm it?
05:44Oh, great.
05:46Can you give us a timeline?
05:47I don't think there's any ambiguity about tom yum soup.
05:50Late 2026 operation and early 2027.
05:55Great.
05:56Yeah, I mean, obviously, Southeast Asia, I know, has been your key focus as well.
06:02Maybe I want to get more on maybe the domestic side of things as well.
06:06Just given the fact that it seems like humanoid robots, I mean, Xpeng certainly made the news the last week as well.
06:13It's just been getting so much attention.
06:16How do you think Hesai and the LIDAR industry can really benefit from this sort of surge in the sector?
06:23Definitely.
06:23At first, I wanted to cite something from one of my favorite entrepreneurs, probably also one of your favorite CEOs, Jensen Huang.
06:31He said that eventually anything that moves will be autonomous, which is very interesting because to me, anything that's autonomous moving is likely to have a 3D sensor or multiple on it.
06:45So we're talking about many industries, right?
06:47We call them robotics.
06:48Robotics include robotaxis, including different applications like robot trucks, last mile deliveries, lawnmowers, service robots, cleaning robots, AGVs, factory automation, agriculture, et cetera.
06:59And we're actually on all of those industries.
07:01But this quarter, the most exciting one is actually the robotaxis.
07:07For robotics, we're shipping 14 times year over year this quarter.
07:12So it's completely exploding the volume.
07:15But then if you look at robotaxis, this is the key focus for this quarter because we're seeing, let's call that the light at the end of the tunnel.
07:24And everyone is seeing this possibility that we'll eventually have cars without drivers.
07:30And let me remind you the significance of it.
07:32Again, this is from another entrepreneur I do like, but he probably doesn't like me, Elon Musk.
07:38He said that the entire significance of such a industry is that you're going from the utilization of a car for two hours per day to probably 20.
07:50So you're increasing the value of such a product by 10x, which is crazy because anybody who could do that, you're looking at a lot of money to be made.
07:59And now we're looking at almost all the major robotaxi players starting to take off.
08:06Like we're talking about WeRide, Pony AI, Hello, JD, and in the U.S., Emotional, and a few more.
08:13I won't be able to mention names.
08:14But they're using our sensors.
08:16They're using up to eight lidars per vehicle.
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