XPeng ADR Stock

Hello, ladies and gentlemen, thank you for standing by for the Second Quarter 2026 Earnings Conference Call for XPeng Inc. [Operator Instructions] Today's conference call is being recorded.

I will now turn the call over to your host, Mr. Alex Xie, Head of Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's Second Quarter 2026 Earnings Conference Call. Our financial and operating results were issued via 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.xiaopeng.com.

Participants on today's call from our management team will include Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Finance and Accounting, Mr. James Wu; 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. Certain 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.

This also note that XPeng's earnings press release and this conference call includes the disposal 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. Xiaopeng, please go ahead.

[Interpreted] Good evening, everyone. I am pleased to share with our shareholders and investors that we have just announced the first round of financing for XPeng Robotics business. The business raised over USD 900 million at over USD 6.2 billion post-money valuation. This round was initiated by leading global investors led by IDG Capital, with participation from Gaorong Ventures can support from Tencent and Alibaba as strategic investors.

Both the size and valuation of the first round of financing have set a new private financing record in China's humanoid robotic industry, underscoring the capital markets a strong endorsement of Expo's leadership in physical AI technology road map ability to manufacture at scale and long-term commercial value. The financing will provide ample capital to support the mass production and continued the development of our advanced general purpose humanoid robot, IRON. We will accelerate our progress towards the ChatGPT moment for physical AI whilst bringing additional strategic resources to strengthen the robotics ecosystem and expand real-world applications. As a global leader in physical AI, XPeng will not only lead the large-scale deployment and commercialization of autonomous driving worldwide but also build the world's most valuable humanoid robot company. Today, we're very happy to see that. We have taken another important step towards that goal.

Since June, alongside my responsibilities as CEO of XPeng. I have also taken up on the role of the CEO of our robotics business. Over the past 12 years, XPeng has remained committed to full stack in-house R&D across both software and hardware, building a solid technological and commercial foundation for the physical AI era. We are able to bring together and integrate the strengths and resources of the entire group. These include the supply chain, automotive grade manufacturing capabilities and global footprint developed through our automobile business as well as the touring AI chips, AI infrastructure and world foundation models developed through our other business.

By applying these capabilities to our robotics business, I believe that we can accelerate the mass production and commercialization of expense humanoid robots. We have been conducting our research and development in the area of robotics for more than 8 years, and I have always alluded that technological challenges and level of innovation required for advanced general purpose of humanoid robots are far greater than those for smart EVs by at least 20 times. To accomplish something that is this difficult. We need to have a broad and deep R&D and system integration capabilities across design and signing, hardware and chips, software and AI, data and control systems and quality and manufacturing. Only then can we succeed.

XPeng is the only robot company in China with such comprehensive in-house R&D capabilities across the entire technological stack. This is why XPeng IRON fundamentally stands apart from other humanoid robots country on the market with differentiated capabilities across multiple areas. Currently, our full in-house technology stack covers the IRON's body, brain, cerebellum, data and infrastructure. On the hardware front, XPeng IRON features the industry's most human-like form and design. XPeng pioneered the industry's first fully enclosed flexible electric structure for IRON, combining aesthetic appeal with enhanced safety, with the 76 degrees of freedom across the body and the 21 degrees of freedom in each and both are at industry-leading levels.

XPeng has independently designed and developed an AI-native hardware platform and all core components specifically for embodied intelligence, including chips controllers, motion modules and [indiscernible] hands. Leveraging our established margin EV R&D and manufacturing capabilities, we can achieve automotive great quality and build the capability to manufacture and deliver at scale.

In terms of intelligence, exon iron is powered by 3 touring AI chips, delivering effective computing power of up to 2,250 tops. With the industry the highest level of edge computing power, XPeng's physical AI foundation model runs directly on IRON, enabling it to autonomously perform complex work tasks without tally operation whilst ensuring low latency experience and data security. IRON's highly human-like hardware platform provides a natural advantage in scaling data. It allows us to maximize the reviews of the behavioral data generated in people's everyday lives and rapidly adapted to a broad range of environments designed fulfilment.

As XPeng moves ahead to mass production in real-world deployment, we will gain access to vast amounts of real-world and human demonstration data. accelerating the training and iteration of our AI models. In turn, continued improvement in model capabilities will allow IRON to enter more scenarios and generate more high-quality data, creating a flywheel across data models and applications that will accelerate IRON's evolution in the real world.

XPeng IRON combines an exceptionally human-like design. The most intelligent AI brain and the highest standards of safety and quality. Only by doing so can IRON become a trusted companion to people and truly become a part of everyday working life. We have recently achieved several major milestones in the development of the mass production version. Starting from September, we will unveil and demonstrate a series of distinctive capabilities. We plan to enter scale production by year-end with initial commercial deployments in XPeng stores and campuses.

In 2027, XPeng IRON will officially launch and begin large-scale deliveries in China and overseas to external customers in the retail and service sectors. Next year, monthly production capacities can rapidly ramp up to several thousand units in return to market demand. I believe the technological barriers to advance the general purpose of humanoid robot are exceptionally high, while the supply of high-quality humanoid robots remain limited. As a result, the lifetime revenue and gross profit contribution of each IRON, including hardware sales and recurring revenue from upgrades to its AI model capabilities will be substantially higher than the current average selling price and gross profit per vehicle of our automotive business. I expect the commercialization of humanoid robots to scale rapidly in China and overseas following mass production, generating meaningful gross profit growth supporting our investment in physical AI R&D and further widening our technological lead.

Now I would like to come back to our automotive business. In the second quarter, our vehicle deliveries reached 103,295 units, up 65% quarter-over-quarter, and we achieved a year-over-year growth ahead of the broader industry. despite industry-wide cost pressures, our operations remained resilient, supported by our progress in the premium segment in international markets. Company's gross margin remained above 20% in the second quarter. Our tech defined luxury flagship model, GX, stood out among a wave of large 6 seat SUVs launched this year. Domestic deliveries exceeded 7,000 units in July, making it one of the top 3 models in China's MPV SUV segment priced above RMB 300,000. MONA L03, the first SUV in the Mona series, became a breakout hit immediately after its launch with orders setting a new record for any export model.

In the third quarter, new uncancelable orders increased by 50% quarter-over-quarter to a record high. Extreme weather and supply chain disruptions affected our pace of ramping up in the delivery. Here, I would like to especially express my sincere appreciation to our customers for their patients. We have started 2 shift production for the MONA L03 and are working closely with our supply chain partners to accelerate the capacity ramp. I expect that L03 deliveries will increase substantially over the coming months and continue to trend upward.

The success of the GX and the MONA L03 gives us more confidence in our upcoming models. We are translating our competitive strengths in the best-in-class intelligence and standout design into higher sales targets and stronger brand momentum. Our flagship five-seat SUV, the G9L, will officially launch and began delivery in September. The MONA L05 will also launch in China in the fourth quarter with the launch of 4 brand new SUV models. We will cover all major SUV segments. We believe XPeng deliveries to increase significantly in the fourth quarter with monthly deliveries targeting more than 60,000 units.

Our international business is the second growth engine for XPeng's Automotive business and also an important driver of improving profitability. Overseas quarterly deliveries exceeded 20,000 units for the first time in the second quarter, up 81% year-over-year. In the first half of the year, our international business accounted for more than 25% of total revenues. Furthermore, our overseas operations are both exceptional quality with an average selling price of our exports exceeding EUR 40,000, placing our per value revenue and gross profit at the forefront of Chinese automakers expanding globally. Since its global launch in Munich in July, the MONA L03 has attracted significant attention and earned a high praise from overseas consumers for its intelligent technology distinctive styling and spacious interior. I believe that MONA L03 will become XPeng's first major model to achieve the leading sales across multiple international markets.

Overseas delivery of the MONA L03 are expected to begin in the fourth quarter, driving firm-wide quarterly overseas deliveries to exceed 40,000 units. In 2027, we will also introduce multiple star models, including extended range EV models in overseas markets and further expanding our geographic coverage and market share.

Starting from end of August, we will roll out a major upgrade to VLA 2.0. Once again, validating the stating law in autos and delivering substantial improvements in both the user experience and safety. With new 6.3.0 major version, the number of parameters in the VLA 2.0 undeviced model will increase by 3.5x, putting its parameter accounts in order of magnitude above that of small models commonly used in the industry. The new version delivers a 300% improvement in perception sensitivity, introduces the ultra-long horizon reasoning and predictive capabilities and operate at an industry-leading frame rate. This enables the AI driver to see accurately, think ahead can respond quickly. The new version will also integrate others in the smart cockpit capabilities powered by VLA and VLM, bringing selected 4 level capabilities developed for export robotaxi to our passenger vehicles. One example is a voice-activated poor parking, users simply give a voice command, and VLA 2.0 will autonomously find a suitable roadside parking space and park the vehicle without exiting Others mode.

Recently, together with my colleagues, we test drove XPeng's VLA 2.0 and the latest orders from a leading global peer in China Europe and North America, respectively. In my view, VLA 2.0 is already on par with the world's leading others on major roles. A narrow roads when negotiating as well as in campuses and parking facilities, the user experience delivered by VLA 2.0 is even better. It can navigate directly to a parking space with both efficiency and safety. I believe now as we upgrade the computing power and model capabilities, VLA 2.0 will develop even more powerful capabilities over the next several version upgrades. Delivering an L4 level others experience in mass-produced vehicles surpassing peers and establishing a generational lead.

We continue to enhance the VLA 2.0 model capabilities once the accelerating its global deployment. Recently, my team and I completed on-road validation of VLA 2.0 in Germany and which was particularly encouraging with the model primarily trained on data from China, performed nearly as well on the European urban roads as it did in China with almost no additional local training data. We aim to obtain regulatory approval for VLA 2.0 in Europe in the first half of next year and roll out VLA 2.0, bringing a safer, more comfortable and more convenient driving experience to users worldwide. After deploying in overseas market, VLA 2.0 will compete directly with the world's leading others and become defining competitive advantage for our global products. At the same time, we will actively explore new software-based business models, creating a positive cycle in which commercialization and technology developments reinforce each other.

As of now, our pre-installed must produce a Robotaxi powered by VLA 2.0 has completed more than 2,000 internal test orders in Guangzhou and validated the end-to-end process for trial passenger operations, mainly the groundwork for commercial operations. Recently, we have completed the development of our cloud remote takeover platform, and our goal is to begin passenger operations without a safety operator in the car next year. In 2027, XPeng will continue strengthening the technology and cost competitiveness of our Robotaxi while partnering with a leading domestic and international mobility platforms expand our Robotaxi business across key cities in China and around the world. This will create a greater commercial value through vehicle sales technological services and revenue sharing from operations.

In the meantime, we believe that the large-scale application of the physical AI requires more than technological breakthroughs an open and collaborative technology and business ecosystem that creates value for multiple participants is equally important. To accelerate the commercialization of physical AI, we recently established a group-level business development team within the group and are actively engaging with the partners in China and overseas to bring our industry-leading curing AI chips, VLA 2.0, Robotaxi and humanoid robots technologies to global markets more quickly.

For the third quarter of 2026, we expect deliveries to be approximately 115,000 to up 121,000 units, representing quarter-over-quarter growth of 11.3% to 17.1%. Revenue is expected to be approximately RMB 21.7 billion to RMB 23.4 billion, representing quarter-over-quarter growth of 9.9% to 18.5%. I believe XPeng is entering a period of accelerating momentum across multiple businesses in the second half of the year. Both the domestic and overseas vehicle deliveries are expected to reach [indiscernible]. We also expected to be among the first globally to achieve scale mass production and the commercialization of advanced general purpose humanoid robots. We also expected to be among the first to deploy advanced data technologies in overseas markets, and we will establish new business models around the physical AI ecosystem, creating greater value for customers and shareholders worldwide.

Thank you, everyone. With that, I will now turn over the call to our VP of Finance, James, who will walk you through our financial performance for the second quarter of 2026.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the second quarter of 2026. I will reference RMB only in my discussion today, unless otherwise stated.

Our total revenues were RMB 19.74 billion for the second quarter of 2026, an increase of 8% year-over-year and an increase of 51.5% quarter-over-quarter. Revenues from vehicle sales were RMB 17.05 billion for the second quarter of 2026, an increase of 1% year-over-year and an increase of 55% quarter-over-quarter. The quarter-over-quarter increase was mainly attributable to higher vehicle deliveries. Revenues from services and others were RMB 2.7 billion for the second quarter of 2026, representing an increase of 93.9% year-over-year and an increase of 32.6% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily attributable to the increased revenues from, first, technical R&D services rendered to the Volkswagen Group due to the successful achievements of certain key milestones. And secondly, parts and accessory sales.

Gross margin was 20.7% for the second quarter of 2026 compared with 17.3% for the same period of 2025 and 20.6% for the first quarter of 2026. Vehicle margin was 12.1% for the second quarter of 2026 compared with 14.3% for the same period of 2025 and 12.1% for the first quarter of 2026. The year-over-year decrease was primarily due to the production generation transition. R&D expenses were RMB 2.91 billion for the second quarter of 2026 representing an increase of 32.1% year-over-year and an increase of 0.3% quarter-over-quarter. The year-over-year increase was mainly due to higher expenses related to the development of new vehicle models and AI-related technologies as the company expanded its product portfolio to support the future growth.

SG&A expenses were RMB 2.5 billion for the second quarter of 2026, representing an increase of 15.2% year-over-year and an increase of 32.5% quarter-over-quarter. The year-over-year increase was primarily due to higher marketing and advertising expenses. The quarter-over-quarter increase was primarily due to the higher commission to the franchise stores and higher marketing and advertising expenses. As a result of the foregoing, loss of operations was RMB 1.14 billion for the second quarter of 2026 compared with RMB 0.93 billion year-over-year and RMB 1.87 billion quarter-over-quarter. Net loss was RMB 1.34 billion for the second quarter of 2026 compared with net loss of RMB 0.48 billion year-over-year and net loss of RMB 1.7 billion quarter-over-quarter. As of June 30, 2026, our cash position was RMB 40.48 billion.

To be mindful of the last of the earnings call, I would encourage listeners to refer to our earnings press release for more details on our second quarter 2026 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question today comes from Tim Hsiao with Morgan Stanley.

[Foreign Language] So my first question is about volume and production target. So what is the projected production capacity for expense humanoid robot, IRON upon entering commercial mass production by late 2026. And what is the target delivery volume for fiscal year 2027?

[Interpreted] Thank you for your question. This is Xiaopeng speaking. In terms of robots capacity hands versus automobile capacity. From our perspective, we do think that there is quite a large difference between those 2. I think when it comes to the capacities of the supply chain of robots. It is rather broad and deep. But in our company, we emphasize on multiple areas of full stack research and development. And I think when it comes to about the challenges of capacity in the early stage, it is about quality. And in a later stage, it is about sales.

In terms of mass production for 2026, and we expect that by year end of 2026, so we will see mass production kicking in. For iron this product and we believe that we will see the commercialization of the robot itself, first starting with our stores and in 2027, we will see that the commercialization will take place in the different areas of our own self-operated scenarios and rolling out as well as picking up the speed to external commercialization and the user case scenarios. In terms of R&D, and I think that we are looking at starting from the mid and the second half of next year. In 2027, we will pick up the R&D development and the mass production units will be a multiple of several thousand units per month and further picking up the speed.

One final part that I would like to supplement, which is that for the IRON robot deliveries and this will mainly be rolled out in the areas of retail and services, both in China and abroad. And same as our automotive business. The delivery of our robots and sales will be authentic and genuine data in the figures that we will share. In terms of the quality of our robots services that it can provide. I believe that versus the other peers out there in the market when it comes to either the shopping assistance perspectives. With the intelligence level, we will definitely be better and stronger than the others as well as to be able to be used in a more wider and broader -- more adaptive environment.

[Foreign Language] My second question is about the unit economics and margin profile. So what is the estimated unit cost for the mass production [ driven ] of IRON? And what go-to-market pricing strategy does management intend to deploy? And what is the anticipated gross profit margin trajectory, especially after the full-scale ramp? That's my second question.

[Interpreted] Thank you for your question. With respect to the mass produce robots and I think that we are looking at from the perspective of innovation, quality, capacity and all of these for both our hardware and software, we're looking at doing the R&D research or in-house. And when it comes to the supply chain of these parts, actually, over 85% of the supply chain partners that we work with actually overlap with the existing supply chain partners for our automotive business.

I believe the cost of our robots, the IRON robots, the competitiveness will definitely be leading in this area. At the moment, in terms of the pricing for robots in the market, generally speaking, it's about 2.5 to 3x of the [indiscernible] material. For IRON, given that this is a general-purpose robot and there is a very limited supply in the market, and I do believe that our gross margins of the hardware will definitely be better than the existing automotive business. In the meantime, not only that we are relying on the sales of the hardware, there will also be sales of our different models and the software services, subscriptions, et cetera, These, we believe, will all bring in profit for our business.

Your next question comes from Ming-Hsun Lee with Bank of America.

[Foreign Language] Which part of your robot information fomation model can be highly synergistic with automotive driving? Which modules are shared and which are developed relatively independently?

[Interpreted] Thank you for your question. And in order to answer this question, in our industry, for instance, many people will say that in robots, generally, all they need is one bring and one large model that will be enough. Perhaps this is possible many years and later, but I don't think that is viable as of now.

In terms of the different large models and there are different times. So for instance, we have superfast models, and those are operating at 100 frames per second or even several hundred frames per second. There are these medium speed models, large models, which are operating 10 frames to 20 frames per second. And there are also the slow ones and the slow large models we call them the thinking large models. They operate at 1 frame per second. When it comes to the VLA and the VLM and for instance, those are the ones adopted in our automotive business. I believe that there are similarities. And for instance, the currency adopted in the automotive business when it comes to the roaming in nonplanned road, that will be quite similar to the roaming or moving around of the robots.

For robots, on the other hand, I also believe that some of the thinking capabilities of robots, such as on the open platform next year can also be put into use for our XPeng automotive business. So you can see that there are definitely some synergistic commonalities there. In the meantime, there are also some unique and the point of the robots and such as the different mode for safety and for instance, there are the models of safety such as data privacy and safety about prevention of folding and data safety about the lack of running out of the electricity, et cetera. So as you can see, there are commonalities and all of these we are developing under the large XPeng system altogether. And even so and if we look at the further underlying system and there are many other areas that are quite dissimilar, for instance, the generation of the model -- generative models and as well as the mimicking and the simulation models, et cetera. So those are the similarities.

Sorry, before you move on to your second question, and I would also like to supplement that. Apart from the model in hand, whether it is about the AI applications where the applications of the overall architecture and structure and these are also the ones that we do across the 2 different parts of the business.

[Foreign Language] What dented advantages does XPeng has in robot data collection trending in a close [indiscernible]?

[Interpreted] Thank you. That is a great question. And I do believe that in terms of the physical AI and in the future. And data is, of course, many people say that as long as you have enough data, and that will help with the integration of the services. It is a necessary condition.

However, it is not yet the full condition. And what we would see is that for XPeng and what we are good at is that we have a much better data and the training of the data, we also have a higher quality of the data. For XPeng, for instance, we have been in the area of autonomous driving for over 10 years within not only our R&D for the past over a decade of experience as well as the data that we have collected, we are absolutely leading in the industry among our peers. In terms of the robot, it is the same for the robot management the robots data management, the data training and data quality, all of these are being developed under the same ecosystem at our company. And I believe that apart from the hardware being different in terms of the collection of the data and to all the way to the application of the data at our company for our 2 different lines of business, it would be the same.

For IRON again, once this product become a mass produced and launched into the market, not only that we will be further continuing to collect the real-world data as well as the human demonstrated data and which are both sets of high-quality data, and this will further drive the development in R&D of our product and this is different from the low-quality data and which are not helpful at all. So I believe that by having all of these would actually be able to create a flywheel of the high-quality data and R&D that we are conducting and continue to contribute to the development of our products. That's all my answer for your question.

Next question comes from Jeff Chung with Citi.

[Foreign Language] My first question is about the why did XPeng robotech select the salesperson. The tour guide scenario has an initial real-world deployment who are the target customers why would customers buy in and most importantly, are their follow-up plans to expand into industrial and home use cases?

[Interpreted] Thank you very much for your question. For XPeng's robots, yes, indeed, when it comes to commercialization, we have gone down a different route versus other competitors. Many other competitors, they are focusing on breaking into the market by ways of entering into factories, home usage and mainly for 2B business.

What we are looking at is that we are focusing on the large-scale Cs as well as the small and medium Bs. And that is, so to speak, we start entering into the market with business commercialization cases followed by industries and home users at a later stage with the smaller SKUs. The reason we have picked the salespersons and tour guide, et cetera. It is a person. So we believe both in China and abroad and there are 4 major comprehensive capabilities of our robots that are very helpful and would be able to be reflected very well in these sectors.

And the 4 comprehensive capabilities are as follows: number one, is the main body and the main hardware of the robot itself; and number two, environment; number three, the business that it provides; and number four, the emotional value that it brings. Therefore, starting from commercial use cases and starting from the smaller type of business and the smaller and medium type of business industries that we go in. And later on, with IRON, of course, when starts opening up the market, and we will also open up SDKs to enable secondary development as well as further expand its user cases. With these commercial use scenario for collaboration, and we believe that this will also open up more channels for XPeng robots business, not only for off-line sales, but as well as for online sales, so that our customers would be able to see the use cases for our robots and not only for the big customers, but as well as for the small and medium business. So this is our thinking in regard and which is different from our peers.

[Foreign Language] The second question is about the latest progress on the company's self-developed that stress hand. What overall design approach has adopted? And how does it compare with peers in terms of performance and cost?

[Interpreted] Thank you very much for your question. And yes, indeed, dexterous hand is an extremely important part for robots and therefore our robots and we have one set of hardware, one set software as well as 3 sets of different perspective systems.

In terms of the specific master production plans, we will be communicating with the analysts by year-end. We are not only just conducting the R&D of dexterous hand, and we have also invested greatly into the manufacturing of the processing of dexterous hands as well as the equipment in this regard. -- decor hands for our robots, and we have 21 degrees of freedom, as mentioned earlier. In terms of the size of the product of dexterous hands, it's not the same size as the hand of an adult. And when it comes to the load-bearing capabilities as well as grafting and grouping, we believe that our dexterous hands is in the leading position versus the other peers.

I know that in the industry that people often talk about another type of hands and do not think that is the smart choice to go for. We are not focusing on the fourth or the accuracy itself of dexterous hands and what we are focusing on rather is on striking a good balance of safety, reliability easy to maintain and cost. And for instance, our dexterous hands also has a very nice set of skin that is very similar to the human time.

Your next question comes from Nick Lai with JPMorgan.

[Foreign Language] First question is really about the [indiscernible] technology. Chairman mentioned that in the first half '27 will start to deploy model in all this market partially starting from Germany with VLA 2.0 technology. I wonder how many more will be equipment such technology the overseas market? And also can we deliberate a bit more about our business models, including prescription and onetime payment strategy that is long term in overseas market?

[Interpreted] Thank you very much for your question. Given to the signal wasn't coming through very clearly, and I could only hear some keywords of your questions. So I'll try my best to answer your question based on what I have heard.

Number one, with respect to the curing AI chips, and this has already been deployed to our L03 vehicles for the one starts, which are launched to the overseas market as well. And all of these will have the ultra version. For VLA, this will be deployed in L03 models across all different markets. And in the meantime, we're also catching up and working with the compliance and local laws and regulations and localization work testing, all of these are being done at the same time in tandem. And in the meantime, we are looking at for instance, about the subscription service of the software for our customers and such updates will be announced and shared with you in due course. We have also established another BD team, and this team is actively discussing with our partners and with respect to the VLA usage or even further expanded into other areas.

Your next question comes from Tina Hou with Goldman Sachs.

[Foreign Language] So my first question is regarding -- so with the volume production of our humanoid robot product and also congratulations on the announced equity raising today. Just wondering what would be the expected time line of profitability for humanoid robot business? Or in other words, what level of our sales volume should be achieved in order to become profitable? Also related to that, do we have any plans to report our profit level separately for the humanoid robot as well as the auto business. So that I think the market investors could have a better understanding of the profitability of these 2 separate businesses.

Tina, it's Brian. Let me address your question. With regard to the financial outlook of the robotics business, I think it's a bit too early for us to comment. I would say we are now focused on the milestones that Xiaopeng shared which has reached SOP for our robots for volume production capability by the end of this year and also start deploying first in our internal scenarios and gradually offer to external customers starting, I would say, the first half of next year and gradually ramp up from that. So that's our goal.

I would say it's too early for us to provide a volume prediction guidance. On the stability, we anticipate the product of human robot will achieve much higher gross profit potential compared to the automotive business. In fact, I would say it's -- the hardware is already much higher than the automotive business. In addition to that, we think there will be significant opportunities to add on future AI model, training, upgrade, software capability related revenues, which is much higher margin as well. So given the high profitability as the expectation as well as, I would say, much smaller investment and CapEx requirement for robotics business. I would say, with volume ramp-up is achieved, I would say, probability can become reality much faster than the auto business. So that's our projection.

And also to answer your question regarding the potential separation of the businesses. At the moment, actually, the business are operating together. In fact, we have not started in a separation of the business. We obviously, according to the announcement you saw we actually have a period of 18 months that gradually allow us to achieve a separation. But in the meantime, what we can be focused on still achieving high degrees of synergy because we talked about leveraging the capabilities in AI, the capability on sort of advanced manufacturing, powertrain supply chain so forth. So actually, the 2 businesses can both achieve high efficiency and greater capabilities.

So with that, I think the near-term expectation is it will still be mostly viewed as together as a business. And also as the volume production and also as the commercialization scenarios become more clear, we'll probably think about more likely separations. But in any event, given the ownership structure, this business will be 100% consolidated, it will not impact our financials going forward, even though the business may start to separate based on the plan. So I think in short, we still see the group consolidating all the financials of the robotics business. At the same time, we'll really think about the most efficient and also most synergistic way to run the business.

That concludes the question-and-answer session. Now 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 IR team through the contact information provided on our website or the Piacente Financial Communications.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello, ladies and gentlemen, thank you for standing by for the First Quarter 2026 Earnings Conference Call for XPeng Inc. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex , Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's First Quarter 2026 Earnings Conference Call. Our financial and operating results were issued by 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.iapen.com. Participants on today's call from our management will include Co-Founder, Chairman and CEO, Mr. Hao Pang; Vice Chairman and President, Dr. Brian Gu; Vice President, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu; and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this 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 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 news expected day. Certain 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 unaudited GAAP financials and 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. Xiaopeng He. Please go ahead.

[Interpreted] Hello, everyone. In the first quarter of 2026, we formally changed our official Chinese name from Xplan Motor to Xen Group. -- reflecting Xin's transformation from a smart TV company to a physical AI company. With Indian Group ecosystem, our Smart TV business will drive rapid growth consistently contributing substantial profitability and robust cash flow. Today, fiscal AI applications stand on the cusp of transform from mass production deployment, explosive Grove scale. -- we have proven that scaling law holds true in both autonomous driving and robotics making the path to breaking technological ceilings through accelerated R&D investment and deniable clear.

That is why at this pivotal moment, we choose to be firmly on fiscal AI with increase in R&D on AI. And I believe Cisco applications represent 1 of the most significant global strategic opportunities of the next decade. This year, I'll lead the team to bring robotaxis and human robots into mass production while also building the commercial ecosystem around them. Our goal is to turn our leadership in physical AI technologies, including our next-gen intelligent assisted driving systems into a powerful new engine for revenue and profit growth and ultimately create substantial commercial value.

In the first quarter, amid broad market volatility in China's domestic new energy vehicle market, we delivered a total of 62,680 vehicles. Even in a market downturn, our focus extends beyond scale. We also placed greater emphasis on balancing delivery volume with operating quality, maintaining a long-term perspective. I'm very confident that deliveries will grow substantially quarter-over-quarter in each of the remaining quarters this year.

And I expect Q2 deliveries to reach between 100,000 and 106,000 units reflecting quarter-over-quarter growth of over 60%. Starting with the GX, we plan to launch and begin deliveries of all new SUV models within the next 6 months. These models have been defined and designed from day 1 as global vehicles. I believe XPeng is entering the strongest delivery growth trajectory in our history.

In April 2026, we launched the 2026 XPeng LAM03, including a new MAX version powered by our during AI SoC and an ultra SV version supporting BLA. This also marks the completion of the Turing AI SoC upgrade across our entire model lineup. Through our 4 in-house R&D capabilities from a C to a Life we have made advanced computing power and technology more accessible.

As a result, more than 85% of Mona M3's customers chose the MAX or Ultra SE versions. The Mona M3 has remained China's top-selling A-class pure electric sedan for 19 consecutive months. with its leading technology and stylish design rarely seen in the A-class segment, Mona has become the broad -- the brand of choice for young users. We're confident that the mono lineup will continue to achieve sustained success not only in China but also in overseas markets.

On May 20, we launched the GX, a flagship model built for the L4 era. It is also China's first preinstalled, mass-produced global taxi model with full hardware redundancy, representing a new starting point for us to continuously expand our share in the SUV market. among the initial firm orders from -- for the GX, but the ultra flagship train priced above RMB 350,000 accounted for over 80% and making the GX 1 of the most so after products in the premium luxury vehicle market.

The GX gives us luxury is defined not only by its decide, but more importantly, by its leading technology and ultimate safety standards setting a new benchmark for tech defined luxury. As there no effort to work with our supplying team partners to ramp up GX production capacity and deliver vehicles to customers sooner. The 3 new models launching in the second half of this year will all be equipped with during SoC power BLA 2.0, featuring 1 vehicle deal energy capabilities and will be launched for global markets with deliveries of the GX and the upcoming 3 new models ramping up, I'm confident that XPeng Group's quarterly delivery volume will grow significantly quarter-over-quarter.

The success of the a key step in elevating the clan group brands. In the second half of this year, we'll build in will build on this momentum by launching a series of technology products at high price points, including humanoid robots and flying costs further strengthening our brand equity and profitability.

In 2026, we're accelerating international expansion on the back of a growing lineup of high-quality technology-led products and deepening localized operations. The 7 uses overseas delivery launch in April pushed our monthly international deliveries above 6,000 units for the first time. Stocking in Q2, international revenue is expected to exceed 20% of total revenue. In the second half of this year, we plan to introduce 4 models for global markets, starting with the GX every upcoming XPeng model will be built as a global vehicle.

Our target is to achieve sustained monthly overseas deliveries of over 10,000 units in the fourth quarter and to more than double full year overseas deliveries. Starting this year by embedding international market net and certification requirements early in the vehicle deployment process, we will significantly shorten the time gap between domestic and overseas launches and accelerate our overseas sales -- overseas sales momentum.

Our goal is to be recognized as a company committed to long-term localized operations in every market we operate in, building stronger ties with customers and partners across each region. To that end, we have established 3 localized production bases overseas since last year, and our Munich R&D center has become our fastest-growing research hub.

In April, ADAS mileage penetration on VLA 2.0 equip exon vehicles surpassed 50% for the first time, signaling that advanced intelligence driving is becoming a cool, you must have features we use it. 2.0 with its generational in intelligent driving has become a key reason customers choose a pen, creating a strong and lasting user mine channels in the market. the success of VLA 201st person also reinforces our belief that scaling data and model parameters can drive meaningful breakthroughs in real-world AI capabilities. strengthening our conviction in the scaling law for fiscal AI.

We're set to accelerate our investment in scaling up with the upcoming release scheduled for Q3 this year will substantially elevate our up limit of our model performance, further widening our lead in the industry. LA 2.0 features a high capability ceiling operates with our HD Map offers exceptional ability to generalize, enabling rapid deployment across overseas markets. while supporting pre-store mass-produce robotaxis at scale. Our goal is to become the understated #1 in the domestic market and take a critical step towards true global leadership in L4 autonomous driving, including robotaxis .

I'm pleased to see the accelerated rollout of the unlet DCAS regulatory framework with Europe our most important international market now beginning to open certification pathways for high-level ADAS. RBLA 2.0 is currently being tested in Europe, and we hope to receive regulatory approval in multiple countries next year allowing us to deliver the technology to overseas customers and became the global generalization of our BLA 2.0.

Our recent research shows that global users demand for assisted smart driving system, BLA and full scenario multilingual conversational system, DLM, are far stronger than we had anticipated. In the second half of 2026, XPeng will lead and accelerate the intelligent transformation of China's automotive exports. In the process, I see substantial commercial opportunities emerging on both the B2B and B2C fund.

The GX 4 full redundancy hardware and software are decoupled from the vehicle platform, making them deployable across our entire lineup, including the mono series. I believe our robotaxi offering has a clear edge over incumbent global taxi companies in terms of ability to generalize cost efficiency and scalability. These advantages position us to build a multi-stakeholder ecosystem where operating partners and expand work together to create and share commercial value. .

Following the overseas rollout of VLA 2.0 will also actively pursue bringing XPeng's cost-effective global test evolutions to overseas and domestic markets.

The software and hardware development for our mass production human robot is progressing smoothly, and it's about to enter the ETG software hardware integration stage. The mass production version of Ron will be built to automotive-grade safety and reliability standards. And many of our existing automotive supply chain partners have also become a component partners or suppliers for Aram.

We have also recently completed development of our proprietary next-generation dexterous and which is significantly more agile and substantially lowering costs. We have built in multidimensional data system to train iron rain and sellable models with our training data and scaling rapidly and outcomes improving significantly. XPeng is the only robotics company in China with full set in-house R&D to tabulate of both hot and software spanning SoCs to fiscal AI foundation models, data generation to pre-training and post-train joints to the store's hands and next-generation motion control to FDA and BL .

Through deep in-house software and hardware R&D and cross-domain innovation, Ron will deliver a more refined design, higher quality and more comprehensive capabilities. I look forward to showcasing the next-generation arm in the third quarter, featuring most lingual communication, human like full bot motion and gradually autonomous execution of professional tasks. .

We are targeting to achieve mass production of RM by year-end with this initial trial commercial deployment in expense rooms, followed by commercial customer deliveries in China and overseas next year. I believe that 1 Humana robots reach mass production, the data flywheel will drive technology iteration and sell growth at a pace back to outstrip what we saw in EVs. Starting next year, revenues from humanoid robot hardware and AI models are expected to emerge as a key driver for revenue and growth -- the growth of XPeng Group.

XPeng is now fully committed to advancing the mass production and global expansion of 3 fiscal AI applications, the LA 2.0, robotaxi and human or robots. We firmly believe these 3 areas present enormous potential in terms of both commercial scale and investment returns. Looking at our road map, the B2B market will be the first to take off, while international markets will generate greater commercial returns than domestic markets backed by the deep experience we've gained through our partnership with Volkswagen, along with a business model are proven through mass production, XPeng is well positioned to execute this next phase of growth. We are making the large-scale commercialization of fiscal AI, a company-wide strategic priority and will move decisively towards large-scale deployment .

For the second quarter of 2026, we expect deliveries of 100,000 to 106,000 units, up 59.5% to 69.1% quarter-over-quarter with revenue of RMB 19.6 billion to RMB 20.8 billion, up 50.4% to 59.6% quarter-over-quarter. Having past the seasonal draw, we are entering a period of strong growth driven by 4 new models, increasing production capacity and expanding international business. .

In the third and fourth quarters, we'll continuously strive for higher sales target. And currently, our operational quality will improve significantly. Our supplier payment terms remain at an industry-leading level gross margins demonstrate strong resilience against cost pressures and economies of scale in our EV business continues to strengthen.

I expect that the XPeng Group to build an entirely new business model anchored by our absolute leadership in fiscal AI technology with scale and network CapEx. Both XPeng vehicles robotaxis and humanoids will become highly differentiated fiscal AI agents. Moving forward, both the hardware sales scale and recurring AI model revenue are poised for high-speed expansion, unlocking immense returns on our AI R&D capital.

Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, James, who will walk you through our financial performance for the first quarter of 2026 .

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the first quarter of 2026. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB 13.03 billion for the first quarter of 2026, a decrease of 17.6% year-over-year and a decrease of 41.4% quarter-over-quarter. Revenues from vehicle sales were $11 billion for the first quarter of 2026, a decrease of 23.5% year-over-year and a decrease of 42.3% quarter-over-quarter. .

The year-over-year and quarter-over-quarter decreases were mainly attributable to lower vehicle deliveries. Revenues from services and others were $2.03 billion, for the first quarter of 2026, representing an increase of 41.2% year-over-year and a decrease of 36.1% quarter-over-quarter. The year-over-year increase was primarily attributable due to increased revenues from technical R&D services and parts and accessories sales. The quarter-over-quarter decrease was primarily due to the reduction of technical R&D services revenues following a significant milestone catch-up in the prior quarter as well as no revenue contribution from carbon credit trading in the current quarter.

Gross margin was 20.6% for the first quarter of 2026 compared with 15.6% for the same period of 2025 and 21.3% for the fourth quarter of 2025. The Vehicle margin was 12.1% for the first quarter of 2026 compared with 10.5% for the same period of 2025 and 13% for the fourth quarter of 2025. The year-over-year increase was primarily attributable to the cost reduction and improvement in product mix of malls. The quarter-over-quarter decrease was due to higher unit vehicle costs resulting from increased memory chip and battery-related costs.

R&D expenses were RMB 2.91 billion for the first quarter of 2026, representing an increase of 46.8% year-over-year and an increase of 1.1% quarter-over-quarter. The year-over-year increase was mainly due to higher expenses related to the development of new vehicle models and AI-related technologies as the company expanded its product portfolio to support the future growth. SG&A expenses were $1.88 billion for the first quarter of 2026, representing a decrease of 3.2% year-over-year and a decrease of 32.5% quarter-over-quarter.

The year-over-year and quarter-over-quarter decreases were primarily due to the lower commission to the franchise stores. As a result of the foregoing loss from operations was RMB 1.87 billion for the first quarter of 2026 compared with RMB 1.04 billion year-over-year and RMB 0.04 billion quarter-over-quarter. Net loss was RMB 1.78 billion for the first quarter of 2026 compared with net loss of RMB 0.66 billion year-over-year and net profit of RMB 0.38 billion quarter-over-quarter. As of March 31, 2026, our cash position was CNY 42.09 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on first quarter 2026 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from Tim Hsiao with Morgan Stanley. .

[Foreign Language] My first question is about GX because we noticed the new model has been selling very well since its launch on May '20s. Could management share the current order book, your steady-state sales volume target and how we should think about the vehicle gross margin.

[Interpreted] Thank you for the question. Now honestly, the performance of GX is above our expectation. It's been performing really well. We also observed some interesting data regarding the sales numbers of GX as well. Currently, if you look at the BB flagship version right now, the lead time has the past 30 weeks, even under the expectation of converting more to the auto version, it's still growing very, very fast.

On the other hand, our flagship model with initial orders over 80% of the total orders, continue to grow in the mix as well. We also observed something very interesting. For example, the MAX version is right now less than 5% of the mix, which is a little bit lower than our expectation. And the extended range version initially actually was performing less popular than our BE button the Vila is approaching the level of BEV popularity, especially with our increased promotion and a marketing competes in the western and northern part of China, which is very, very promising. We definitely have had hopes for GX for it to be 1 of the top-selling vehicle more, it would be above RUB 300,000 the price range market for N high-end luxury set.

And to be honest, we are working very closely with our supply chain partners to support the capacity ramp up, and we definitely won our top quality products to come with top quality service and aftersales services as well to support this sustainable GX deliveries. Our priority right now, not only is about the deliveries of the product, but also the sustainability with GX being a flection model of Xpeng Group -- now being a fraction model, obviously, the GP margin of GX is quite good. As I mentioned earlier, with the media, this GX only 1 SKU under the GX series is performing with a lower GP margin than our expectation. But the majority of SKUs of GX is actually having a higher than expectation kind of deep margin performance.

I also would like to add that starting in this new year, all of our new vehicles when it comes to their configuration and also their pricing it will be under the consideration of their commercial value. The commercial consideration will be 1 of our key priorities starting this year. And the second thing is that we are looking for long-term sustainable sales performance. rather than having a big beginning and subsequent diminishing cells.

So we're looking for a better quality in terms of plot management and the modular management quality of the whole supply chain system to secure our supply and also production capacity ramp up to support our vehicle delivery. So starting with GX we are expecting to achieve a better balance between commercial value and also sales as well as long-term stable sales. Thank you.

[Foreign Language] My second question is about robo taxi. Could you please update us on your domestic operations and overseas expansion plans. Has the recent regulatory tightening in China had any adverse impact to the progress? And how do you view the impact of that to be Vobotaxi business to the group to see passenger vehicle sales? That's my second question.

[Interpreted] Thank you for the question. And thank you for mentioning the recent tightening of the autonomous vehicle regulation in China. However, it hasn't placed any adversity to our rhythm of development yet. Because from our perspective, after 2028, we're going to expect a huge commercial opportunity for robotaxi. And right now, we are doing step by step to prepare for the opportunity, both in and out of China -- and so our current plan is that we are going to do a lot of deployment and trial within China as well as the international market with BLA 2.0.

We are confident that we can achieve success. In China, we are going to conduct, and we are actually in the midst of conducting rapid research and development retaining our current vehicle models.

And in 2027, we're going to launch an economy car model to demonstrate and validate how to start the robotaxi business model in this area in China. And we are sure that we have the capability to achieve a high-level success -- and we want to clarify that with XPeng, first of all, we want to focus on the products, and we can take a commission from working with our operational partners. We are not going to directly involve ourselves in the operation. Hence, we expect to have many, many domestic and international partners in the operation for robotaxi. And the second thing is that we are going to work not only in China but also globally. We believe that global robotaxi has lots and lots of commercial potential and value to tap into.

Now regarding the second question that you asked about the impact of our B2B business to the B2C business. Let me just add a few of our thoughts. First of all, we believe that the current testing and R&D and experimentation actually on robotaxi has a positive impact on our B2C side of the business because our BLA model is going to offer all kinds of intelligent driving assistance strategies, for example, the speed mode, for example, the less human intervention mode, et cetera, that we can borrow from robotaxi. And our belief that for the future, the market is going to diverse and actually transition into a period where policies and regulations and market situation is going to be more open with the B2B side versus B2C side being a different market segment. So that is our expectation for the future.

Your next question comes from Y.C. Lai with JPMorgan.

[Foreign Language] My first question is about the VA 2.0 and medium and long-term strategy, including production road map and VTA. And I wonder if Chairman can also share with us the major change and advantage that we can anticipate from here.

[Interpreted] Thank you. I believe that within this year of 2026, XPeng's VLA or VLA plus VRM capability is going to have 2 key milestones or experience 2 key development phases. The first phase will actually happen in Q3, August this year. During this period of time, VLA is going to have our second version, which will appear as smarter, more comm and also have better generalization capability with less MDI or human takeover or intervention penetration. Whereas in the past, with our VLA 1.0 version, it mainly focused on the basic capabilities of safety, engineering and also basic experience. We didn't -- or we were not able to increase the feeling of the capability significantly.

However, by August and Q3 this year, we're expecting a lot significant performance improvement on that front. On the other hand, with the combination of VLA and VM, we're expecting not just ADAS capability, but also language communication capability and something that approach the capability of the so-called Butler like kind of experience in. And so we are going to achieve gradual implementation through the OTA or 3 OTA releases in August this year and also at the end of this year. I think that with gradual R&D development, we will be able to achieve L4 capability with L4 software capability on an L2 hardware in the future. And by that time, we expect to see tremendous changes in terms of the business model in all shape or form of the whole business. This is something that we are in the work. We are not going to discuss the detail about it today.

[Foreign Language] My second question is related to Robot in terms of cost advantage compared with our competitors. And in 2027, plans to export Robot overseas market. Can we also share more about that long-term strategy?

[Interpreted] Thank you. We actually encounter all kinds of differences during the mass production of tumor robots between the structure of a robot versus an EV, especially when it comes to different aspects of consideration. Currently, there's a lot of areas where we need to address when it comes to the mass production of humanoid robot. For example, the safety, hardware of humanoid robots are quite different from cars and currently do not concurrently consider the safety and security of the simulation and also human robots and how men across all kinds of scenarios, -- at the same time, the vast majority of the existing products out there do not consider reliability, stability and maintainability of the robots as well.

If you look at the level of structure production of the human art robot. A lot of data is actually consumer product grade versus our expectation of being car grade and production quality. At the same time, a lot of our competitors do not consider the supply chain, the capability development when Premion robots achieved a certain level of mass production, how do you secure supply chain capability and safety -- at the same time, if you deploy you as you see, you ship in the human online they to so locally or are they on the cloud? Is there on the cloud, if we consider privacy, safety and security, et cetera, et cetera.

That's why since the beginning of last year 2025, we have already started a series of overall of our design and also preparation of humanoid robots, having the full stack hardware and software capability of whole robot allow us to actually have a more comprehensive capability preparation for human neurorobot to release its potential and converging value in the future. So I would say that for now acceptable batteries all other parts of humanoid robot that we produce our in-house full-stack self-developed -- so in the future, for sure, we believe that we can come up with a more scalable and economical solution to gain our robot, However, today, the cost structure of human robot is actually very similar to that of a car.

And the second point that I would like to make is about the overseas market. I think just like EV, all of our models developed and how these are considered as global vehicles and our robots are considered as global robots as well. potentially, if you look at the overseas market, there's actually a bigger commercial value to replace human workers with humanoid robot there's lots of commercial perpetual to tap into globally speaking.

At the same time, when you look at the regulatory side of things in terms of the hardware, in software and also data privacy, we also have prepared sufficiently in our humanoid robot design as well. When you look at our current BLA portage, -- we're looking at 200 million uses per hour that are for the BLA models after of the cloud. And if you were to consume everything or do the completion on the cloud, looking at the consumption of data of 100 gigabytes per hour, which is enormous.

And so we have to start from day 1 how we incorporate that kind of data consumption or model usage in our iminorobots that are may be defined or locally deployment as well. And so the entire system for our luminal robots has been decided for the global market since day 1. And we expect to actually see more potential progresses internationally as our domestic R&D system continue to evolve or going forward. Thank you.

Your next question comes from Tina Houl with Goldman Sachs.

[Foreign Language] So my first question is regarding our robotaxi business. So wondering what is our plan in terms of into more cities outside Guangzhou and the timing of that? Also accordingly, what has been the progress of our licensing approval. .

[Interpreted] Thank you, Tina, for your question. Our robo taxi deployment for exploration and experimentation on now is limited only in Guangzhou, where we already got the license of. Our plan for robotaxi is that we are going to test the water here in Guangzhou and after we successfully developed the technology, the product and the business model here in Guangzhou, we then can and our business partnership in the whole of China and also outside of China, and we expect to work with multiple partners for their own localized operations.

And since we made the announcement, right now, we have received a lot of inquiries and lots of interest both in and out of China from our potential business partners. And so they are keeping a close eye on our future progress in the upcoming year. And I believe that after 2027, when we were able to launch our new economy to model for robotaxes we -- after we are able to announce maybe a better total solutions for robotaxi future, we believe that we can actually increase our commercialization capability for robotaxi in and out of China in the future.

[Foreign Language] My second question is regarding our second quarter gross margin. So on the 1 hand, we have higher volume as well as better model mix with GX. On the other hand, we have some headwind from higher raw material and some component costs. So just wondering what would be the guidance for vehicle gross margin as well as the company planted gross margin?

Yes. Tina, this is James. Yes. So as you can see, first of all, in the first quarter, our total gross profit is pretty close to the prior quarter Q4 of last year. So in that, we did see some level of cost increase, as mentioned in the earlier script, around the membership cost increase as well as the battery raw material cost. That is partially included in Q1, and we continue to expect that to be included in the following quarters in the year. You did mention that we have launched the GX, the Fuse SUV in the second quarter, and we will start to deliver that in the following quarters as well.

The GX gross profit is the highest in our portfolio. So from a product mix perspective, we'll start to see a better mix in Q2 as well as in the second half of the year. So all of that considered, we expect the Q2 total gross margin to be around the same level as Q1. So hopefully, that answers your question.

Your next question comes from Ming-Hsun Lee with Bank of America. .

[Foreign Language] So management, could you elaborate more about your long-term overseas markets growth driver, especially for your overseas production profitability versus your export business model. .

[Interpreted] First of all, since you asked your question, I'm going to address the first 1 first. Regarding our overseas market expansion or development. First of all, it's 1 of our most important 4 strategies. And in the coming 5 years, we expect to have maybe 50% of our revenue and profit coming from the overseas markets. And as we approach into the second half of the year with the launch of our 4 new models are coming, we believe that we are going to be able to tap into the overseas market even more following 2027 and 2028 because in the past, we mainly had 2 models serving the international market.

And when it comes to our EV future and also robotic future, we have always considered overseas market as 1 important component or an important market for us. When it comes to our capability development, it doesn't matter if it's hardware, software or distribution channels, outservicing network, including localized charting capabilities, super charging capabilities as well as our profitability consideration, overseas has always been in the the road map of development and with our dedicated and committed R&D spending taking many, many years ago. We believe that we are well poised to tapping to the overseas market development future especially in the coming few years.

So yes, I mean, let me just add here. First of all, if you look at the international sales volume contribution, -- in the latest month, I think we already see it represents close to 20% of our volume. As you saw in last year, international sales is roughly 10% of our global volumes. You can see a significant increase in terms of the proportion that international sales is now represented in our global sales. .

Second point is on the profitability of our international vehicle sales is significantly better, even with obviously some of the tariff issues were faced some of the cost increases we saw this year. Still, I think that the international business generates significant better gross profit as well as net profit contribution to our bottom line. And also you probably saw that the new models that mentioned for the global markets has yet to be launched. So we anticipate that momentum will carry out throughout the year.

So I think the contribution at the 30% levels will be consistent throughout the year because, obviously, China, we saw significant growth expectations as well. And then in terms of really dealing with sort of tariffs and other challenges. We are increasing our investment locally. I'm actually currently in our partner in Austria right now to make sure that we have capacity to tackle the expected growth for our Europe as well as global markets. So I think it is going to be, I would say, very exciting contributor to our overall momentum as well as profitability.

Your next question comes from Ping Le Wu with Citic Securities. .

[Foreign Language] And my first question is regarding the over production. And we've seen significant progress on export overseas production localization this year. And could you share more color on what percentage of cost for overseas market will be to produce local plans in this year and next year? And does the localization rate vary materially by region -- thank you.

Yes. So this is Brian. Let me address that question again. On the localization production, -- right now, we have 2 plants in Southeast Asia, in Indonesia and Malaysia, mostly addressing local demand. And also, we have the partnership with Magna in Austria, where we manufacture vehicles for the European market. All 3 of these manufacturing layout will see increased capacity this year as well as the new models being produced in those local markets. .

I would say that for the Southeastern Asian countries, it's mostly for the local market. And obviously, Austria is for Europe. So I would say the Austrian sort of operation will be very important capacity contributing to our European sales. I expect the majority of our European sales will have local manufacturing sort of this production. And else where I think we don't have manufacturing facilities yet.

So I think it will continue to maintain the current business model. But I think as we increase our volume as well as market share in some of these large markets. We are actively looking at ways to increase our production capacity as well as localization sort of efforts to make sure we satisfy the localization content rules as we move into a more deepened local production model.

[Foreign Language] And my second question is about humanoid robot. And management team just mentioned that Expanse for mass production of similar report by year-end and store development in first quarter 2027. And a few specific examples of what functions the robot will perform in sports retail store and also in the clients client application. And additionally, could you elaborate on what the specific application scenario, can we see in the external corporate customers and what's our pricing strategy.

[Interpreted] Thank you for the question. Our humanoid robots are actually different from the existing or available robots out there because we want to place them in an environment where they can actually interact with humans. So when we consider the business model or the potential application scenario for our humanoid robots, the first responsibility that they can carry could be turbines or assisted shoppers. For example, in our offline stores or dealers we can have with labor we introduced with cars and introduce our products for you.

And then there will be our human salesperson that come along and do the tepid with you and find the order seller for the car. But I think robots can really help with the basic information introduction and do some performance of the product introduction, et cetera, to achieve a high efficiency. In addition to that, once the capability is more sophisticated, we then can open up more opportunities for collaboration with our partners in the ecosystem who may have different kind of barriers, dropped requirements that we can work to place on the service of our humanoid robots and we also can work with the ecosystem partners to generate data for pre-training and post-training to create different models. -- for different human or robots for different scenarios.

For example in the retail space, there's opportunities for them to be Cachia person, for example, or if it is shopper with a more sophisticated level of capabilities. That's our plan.

Now when it comes to the commercialization of our humanoid robot, we're still in the discussion phase of it. Even though the bone structure of a human or robot is very similar to that of a car, the ASP, the retail price of open robot is more expensive than a car naturally. And so the TC margin, in terms of the hardware of a Humana, it will be more superior than that of a cost, we have incorporated multiple corn chips in our inorobot with part top of computing power even though we have that in the hardware, we believe that there's still a lot of commercial value for the software usage in terms of the cloud usage of their humanoid robot computing power.

And so with the software commercialization set or the software licensing fee revenue, I think humorous have a better metal than cost. Now on the other hand, if you look at things our potential customers or travel business owners perspective. If they are small business owners, when they make human decision of buying a human robot. What they prioritize is the payback period, right? And so I think in the overseas market, the payback period can be much shorter than that of what you would achieve in China so it would make more sense economically for overseas business owners by Humana robots.

And so we have always been thinking the rationale of how customers use the Humana robots and why they would purchase it and how I think Lumacan add value to them.

Your next question comes from Yuqian Ding with HSBC.

[Foreign Language] I've got 2 questions. One on the mid- to long-term strategy and second is the financial in the near term. So the first question is we noticed the company changed the name to XPeng Inc, and it's shaping like a physical AI platform company. So can management share a bit of more discussion and a strategic thinking about the business model evolvement into mid- to long run. And how do we compartment, the strategic divisions commercialization time line and how does into the mid- to long term, the revenue structure change? .

[Interpreted] Thank you for the question. This is a broad question, and I'm trying to share with you my brief answer. First of all, right now, our main revenue stream definitely comes from the economy, the discount economy. Basically, it comes from our hardware and comes from our ecosystem. And I think globally speaking, there are a few car manufacturers can actually build a software platform and form the next network effect based on the economies of sales of their hardware. The network effects include both, for example, the software fees, software revenue and the entire of lateral network effect. -- which we actually have the potential to achieve.

Going forward, we believe that the whole entire intelligent agent emergents will produce the so-called and cost effect basically, it's like the interaction between and colony where you have network effects in the decentralized and centralized clusters. What we're trying to say is that these 3 effects is going to have their impact on our business model. And with these 3 effects playing together, interacting together within Xpeng, we are going to actually enhance our competitive mode and so with this system, we actually have a very optimistic expectation for our future business strategy and our value creation.

Let me just add that in the short to medium term, we will prioritize more on the scale of effect of our brand equity and also gross profit. with the scale of globalization and enhanced GP margin, we will be able to have a positive effect on our overall profitability. Also with sufficient profitability, we will be able to support adequate RD investment, which will also bring about new technological competitiveness and converting mode to the company.

[Foreign Language] My second question is about the service revenue. Can management share the trend above this year, especially in terms of the scope. Is that possible? We can expand our partnership from China to outside of China?

Then, this is Charles. So I think that we continue to maintain the guidance that the total revenue generated from the technology and services and IP licensing revenue in 2026 is comparable to that of 2025. As you may be also aware of that starting from Q2, we will start the delivery of the Turing SoC to our partner of Volkswagen at scale. And I think that we continue to believe that the monetization of technology commercialization through such tough type of collaboration, it is a very attractive business to us.

So I think that given all the proprietary technology we have in-house. I think that we are quite open mind to such on expanding such commercialization opportunities of our technologies.

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

Okay. So 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 Financial Communications. .

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2025 Earnings Conference Call for XPeng Inc. [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 and Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Our financial and opportune results were issued by us earlier today and available online. You can also view the earnings press release by listing the IR section of our website at ir.xpeng.com. Participants on today's call from our management team will include Co-Founder, Chairman and CEO, Mr. Xiaopeng He; Vice Chairman and President, Mr. Brian Gu; Vice President, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu 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 in 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 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.

Certain 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 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. Xiaopeng He. Please go ahead.

[Interpreted] Hello, everyone. Reflecting on 2025, XPeng deliver a series of milestone breakthroughs across multiple fronts. Our Andean delivery reached 429,449, up 126% year-over-year. Mona M03 became the best-selling battery electric sedan in the RMB 100,000 to RMB 200,000 segment. B7+ ranks #1 among pure electric events in the RMB 150,000 to RMB 200,000 segment. The Quinton Super Extended Range EV X9 entered mass production and started our 1 vehicle dual energy era. Our quality management system and customer satisfaction as measured by NPS improved rapidly. Overseas deliveries nearly doubled to 45,000 units with revenue from overseas markets contributing over 15% of total revenue. In addition, benefiting from enhanced organizational capabilities center on physical AI, we successfully brought our touring AI SoC into mass production and began deliveries to Volkswagen. .

Our VLA 2.0 saw an Emergent and the debut of our humanoid robot iron Gonin significant attention globally. In 2025, we achieved not only high growth in scale but also significant improvement of operational capabilities. Our gross margin for fiscal year 2025 reached 18.9%, an increase of 4.6 percentage points year-over-year. In response to national initiatives, we substantially reduced the turnover data of accounts payable to suppliers by 60 days. We had a free cash flow inflow of approximately RMB 5 billion in 2025 and ended the year with RMB 47.7 billion cash on hand, providing robust financial support for unwavering investment in fiscal R&D.

In Q4, Xpeng achieved its first ever quarterly profit with net profit exceeding RMB 380 million. This marks the emergence of the business model, driven by technology leadership, which is a path to profitability distinct from that of traditional automakers. I'm glad to see that with years of hardware investment and physical AI transformation, XPeng is at a pivotal inflection point in the application of physical AI. After years of sustained and significant R&D investment, we have built a full sec in-house developed technology systems, including SoC, foundation model, data EE architecture and AI infrastructure. We're now driving upward integration across autonomous driving and smart corporate systems while enabling cross-domain integration downward into power chain and Chuck systems.

Looking ahead, we'll continue to push the technological frontier, accelerate the development of AI, XPI deployment and commercialization of our product technology innovations. In early March 2026, our VLA 2.0 successfully passed the physical touring test for autonomous driving and passengers can hardly distinguish if it's a human or AI who's driving the car, the vehicle has effectively evolved into a physical AI agent. XPeng's VLA 2.0 was soon crossed the inflection point of both technology and large-scale deployment. Fully autonomous driving can be expected to come in the next 1 to 3 years.

AI power vehicle and human robots will soon fundamentally reshape how everyone travels, works and lives. 2026 marks a major year of product portfolio expansion and upgrade in our product capabilities. We plan to launch 4 new models expanding into both large and compact sized vehicles. defined by our newly restructured and design team, these models are crafted for global markets and build on dual energy platforms, supporting the evolution of autonomous driving capabilities from L2+ to L4 as deliveries of new models ramp up will achieve strong quarter-over-quarter growth in volume.

In Q3 2026, we'll start preorders of our first flagship seed full-size EV, the XPeng GX bringing in a truly uncompromised best-in-class experience model to family users. GX delivers empty class comfort and spaciousness and share by wire and rear wheel steering. It will be our first model designed to support L4-level hardware and software capabilities. Starting from this year, we'll further expand our AI vehicles global market share and bring our VLA 2.0 model to global markets. At the same time, our lead teams to bring both robotaxi and advanced humanoid robot into mass production.

With global product sales increasing, in 2026, we'll further solidify our global scale-up capabilities across production, supply, sales and service. Our supply chain, manufacturing, logistics, spare parts, sales and service systems are moving towards greater global synergies, underpinning sustained improvement in quality and brand perception in international markets. Well, our overseas deliveries, the goal is set to double in 2026 year-over-year with international business contributing over 20% of total revenue. We plan to introduce 4 new models to global market. In the key SUV segment, we aim to launch more global flagship models. We target to have 680 overseas stores for sales and service, doubling the number of stores from the end of 2025.

XPeng's self-operated ultrafast charging network will also expand beyond China to 10 key international markets. This will bring our industry-leading 5C ultra fast charging experience to users globally. We then enhanced overseas competencies, our global expansion will further accelerate significantly through 2027 and 2028 and revenue from overseas markets will become one of the core drivers of the company's profitability.

To make the leap -- to make the leap from L2+ to L4 and enable global deployment, we have fundamentally redesigned the architecture of our autonomous driving technology. Starting yesterday, we began the gradual rollout of our VLA 2.02 users. This is our first release design for the autonomous driving era, delivering a safe and smooth experience with driving performance comparable to experience human drivers and representing a generational gap ahead of the industry. The VLA 2.0 is transforming advanced autonomous driving from an early adopter feature into a truly mainstream mass market feature that even everyday drivers can trust, rely on and enjoy with confidence. .

All of our 732 stores nationwide now offer VLA 2.0 test drives. So far in March, a number of our daily tax drives had several month-over-month and the percentage of the Ultra and ultra SE trims among all trends has also more than doubled. Over the next 3 to 6 months, VLA 2.0 will notably improve test drives conversion rate and substantially increase user engagement and retention for XPeng.

The VLA 2.0 has broken down traditional rules and validated the applicability of scaling laws in the physical world. Next, we will continue to scale up to aggressively widen our lead. By the end of the year, we target to increase the number of parameters on the edge from [ several billion ] to 20 billion level. This will increase average miles per takeover by 25x and the safety-critical miles per takeover by 50x. At this pace of improvement, the era of fully autonomous driving is on track to emerge within the next 1 to 3 years.

Autonomous driving will become part of everyday mobility. Our GX robotaxi powered by VLA 2.0 has received official road testing approval in Guangzhou and is now conducting ongoing L4 corporate road tests. In the second half of the year, we plan to launch pilot passenger operations for our mobile taxi service to validate the technology use experience and the business model will also begin overseas road testing of the VLA 2.0 as technology advances and regulatory frameworks evolve, XPeng will be 1 of the few companies globally that is capable of scaling autonomous driving efficiently across multiple global markets.

The strong performance of our VLA 3.0 is underpinned by the joint optimization of our in-house storing proprietary large foundational -- our foundational large model and compiler, delivering a 10x improvement in effective compute even though the plan was only to achieve 3x improvement. Since entering mass production and being deployed in vehicles in Q3 last year, the XPeng touring SoC has actually shipped over 200,000 units starting from the second quarter of this year, all XPeng models, including the MAX streams, which will fully transition to our in-house strong SoC shipment at SoC. Shipments of touring SoC are targeted to reach nearly 1 million units this year. SoC is positioned to become the leading high compute AIS deployed on the edge by shipment volume. Volkswagen is our first external customer for both our Turing SoC and VLA 2.0.

Our deep collaboration with leading global automakers together with our ability to mass-produce efficiently demonstrates that our technology is scalable, replicable and globally competitive. We welcome more automakers in both AI companies and Tier 1 suppliers to adopt our touring SoC and integrate intelligent solutions for their customers.

In my view, the ultimate competition in physical AI will be determined by foundational -- by fundamental organizational capabilities and AI infrastructure. Recently, we completed a critical organizational upgrade, integrating our autonomous driving center and smart cabin center into general Intelligence Center. This is more than a structural change. It represents a paradigm shift in building intelligent systems, driving physicians and human vehicle interactions will no longer exist in isolation. How the vehicle drives on road and how humans interact with it now share the same fiscal AI foundation model and infrastructure.

R&D efficiency and effectiveness have improved substantially. XPeng has established a full integrated AI infrastructure stack, including computing power on the cloud and on the edge data compilation, quantization, deployment, simulation and real load testing in Grayscale. Our fiscal AI foundation model will evolve at an exponential speed. It will power vehicles, robotaxis and humanoid robots and become a unified super foundation model for all of our physical AI agents.

Our next-generation humanoid robot iron is targeted to enter mass production by the end of 2026, powered by 3 tiring AI SoCs RMs computing power on the Edge far outpaces both robots in the industry. Our technology focuses on the robot's brain and cerebellum. The brain enables independent thinking and decision-making, while the cerebellum controls emotions. At the same time, we continuously accumulate data for embodied intelligence models. Our VLA 2.0 technology stack is now running successfully on our robots. Paired with the full generation motion control system, RN will deliver industry-leading agility and motion control in the second half of the year, establishing a clear generational lead in intelligence capabilities. RN will focus on 3 key application scenarios, commercial, industrial and households.

Initial deployment will support reception, guidance and retail assistance across XPeng's stores and campuses in China and overseas. In the first quarter of the year, we began construction of our humanoid robot mass production based in Guangzhou, RN aims for a monthly production target of over 1,000 units by the end of this year, leveraging our advanced intelligence and our strength in mass production with quality and supply chain management, XPeng will become 1 of the world's largest and most valuable humanoid robot companies.

Because we already saw the tremendous disruption that the fiscal AI world has brought to the original software development paradigm in 2025, reinvested RMB 9.5 billion in R&D, including CNY 4.5 billion in AI. Our sustained and efficient investment in AI R&D over the past few years has enabled us to build an industry-leading fully in-house physical AI technology stacks, including SoCs, foundation models and our infrastructure. powered by this technology stack, the pace of advancement in fiscal AI will accelerate significantly starting 2026. We'll see the mass production and application of fiscal AI agents of their scale poised to enter a steep growth curve.

Over the next 5 to 10 years, the market for physical AI is expected to surpass that of the automotive industry. Both robotaxi and humanoid robots represent CNY 1 trillion to CNY 10 trillion level global market opportunities in the future. The sales rankings of physical AI agents may matter even more than the ICE vehicle volume chart a decade ago or any volume chart today, and they will change very, very fast. We're confident that XPeng will become the global leader of physical AI agents.

Pushing the boundaries of physical AI is very exciting for my team and me. We're more committed than ever to intensifying our R&D investments. This year, in addition to vehicle development, investments in physical AI-related R&D will increase to RMB 7 billion. In my view, this investment will not only help us increase our competitive advantage and deliver substantial long-term returns. Scale allows us to survive in competition, but it is sustained leadership in physical AI technology and commercialization that will define our core competitive advantage.

For the first quarter of 2026, we expect deliveries to be between 61,000 and 66,000 units. Revenue is expected to be between RMB 12.2 billion and RMB 13.2 billion. March deliveries are expected to grow sequentially by 69% to 101% month-over-month as the VLA 2.0 and 4 new models enter mass production, we expect quarterly sales to continuously trend upward and achieve year-over-year growth in the second half of the year to significantly outpace the industry. We are on the cusp of large-scale mass production, our full physical AI agent. Going forward, I will dedicate all of my efforts to develop strategies establishing organization and operational capabilities for XPeng's globalization and commercialization, with a focus on transiting our technological leadership into commercial success.

The innovative business models of physical AI will add network effects and agent effect on top of the traditional automotive economies of scale, meaningfully raising market entry barriers and industry concentration. As a leader in fiscal AI, we'll possess a long-term sustainable advantage, securing a higher share in a vastly expanded market and achieving greater corporate value.

Thank you, everyone. With that, I will now turn the call over to our VP of Finance, James, who will walk you through our financial performance for the fourth quarter of 2025.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the fourth quarter of 2025. I will reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB 22.25 billion for the fourth quarter of 2025, an increase of 38.2% year-over-year and an increase of 9.2% quarter-over-quarter. Revenues from vehicle sales were RMB 19.07 billion for the fourth quarter of 2025, an increase of 30% year-over-year and an increase of 5.6% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly attributable to higher deliveries. Revenues from services and others were RMB 3.18 billion for the fourth quarter of representing an increase of 121.9% year-over-year and an increase of 36.7% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily attributable to the increased revenues from.

Firstly, the technical R&D services rendered to the Volkswagen Group due to the successful achievement of certain key milestones in the current quarter. Secondly, parts and accessories sales in line with higher accumulated vehicle sales; and lastly, carbon credit trading. Gross margin was 21.3% for the fourth quarter of 2025, compared with 14.4% for the same period of 2024 and 20.1% for the third quarter of 2025. Vehicle margin was 13% for the fourth quarter of 2025 compared with 10% for the same period of 2024 and 13.1% for the third quarter of 2025.

The year-over-year increase was primarily attributable to ongoing cost reduction and improvement in product mix of models. R&D expenses were RMB 2.87 billion for the fourth quarter of 2025. representing an increase of 43.2% year-over-year and an increase of 18.3% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly due to higher expenses related to the development of new vehicle models and technologies as the company expanded its product portfolio to support the future growth. expenses were $2.79 billion for the fourth quarter of 2025, representing an increase of 22.7% year-over-year and an increase of 12% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily due to higher commission to the franchise stores related to the sales volume and the launch of new models.

The year-over-year increase was further due to higher marketing and advertising expenses. As a result of the foregoing, loss from operations was RMB 0.04 billion for the fourth quarter of 2025 compared with RMB 1.56 billion year-over-year, RMB 0.75 billion quarter-over-quarter. Net profit was RMB 0.38 billion for the fourth quarter of 2025 compared with net loss of RMB 1.33 billion year-over-year and net loss of RMB 0.38 billion quarter-over-quarter. The company recorded positive net profit for a single quarter for the first time in Q4 of 2025. As of December 31, 2025, our cash position was RMB 47.66 billion. To be mindful of the length of the earnings call, I would encourage listeners to refer to our press release -- earnings press release for more details on our fourth quarter full year 2025 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

[Operator Instructions] Your first question today comes from Tim Hsiao from Morgan Stanley.

[Foreign Language] I have 2 questions both are related to smart driving. The first one, what type of major upgrade should we expect for XPeng's VLA 2.0 in the coming months? How do you anticipate VLA 2.0 will impact order conversion and the user retention in the following quarters? That's my first question.

[Interpreted] Thank you for your question. Let me answer your first question first. So basically, going forward, each quarter, we are expecting at least 1 major version of OTA. And I think we can share some of it, just to give you some examples. In our Q2 OTA, for example, the autonomous driving is -- we'll be able to actually cover more road whereas currently or traditionally, it was only able to cover the major high rate and in the future for Q2 OTA, we'll be able to cover a small or parking lot and campuses or communities in different parts is actually a very critical change, meaning that our capability is evolving from navigation enable public growth to cover more areas.

In addition to that, we would like to also highlight that autonomous driving in the future, we will also become more AI agent oriented. Actually, if you look at all of the scenarios of applications for robot systems is essentially very similar to that, also the 4 levels of autonomous driving and navigation also follow the same logic as well. This year, we also expect to do a lot more upgrades in terms of our capabilities. For example, if you look at our model of the vehicle or the as side, we are increasing the parameters from billion level to actually up to 20 billion level. We also hope that we can increase our mileage takeover by about 5 to 10 times. In addition to that, at some autonomous capability driving I mean, upgrade, we also have added some multi-language support capabilities as well. So that's another level of upgrade for localization support which will allow us to combine smart pocket with autonomous driving. Thank you.

Now because our VLA 2.0 only started to be officially pushed our users yesterday. And I mentioned in the prepared remarks that we started promoting it in early March and as a result, we could actually see that the market will exit very positively. For example, our test drives actually more than doubled sequentially across our stores and also Ultra and Ultra TF1 cells are also more than double as well. And I believe when we fully launched our VLA 2.0 to the market and to our users, and continue to upgrade it, we are expecting actually a higher sales volume and also a higher level of conversion rate, which will also eventually raise the average selling price of our vehicles.

Now when it comes to user retention or engagement, I would like to share my own Kate and experience as well. after trying out the VLA 2.0, there's no going back for me, honestly, because I travel a lot. And a lot of the times, I actually rely on professional drivers who drive me around. And after trying VLA 2.0, I realize when I now use other types of autonomous driving versions or when I ride our professional drivers cars, they are not really as good as the VLA 2.0 because VLA 2.0 now gives me the smoothness of driving and also on top of that piece of mind as well, that kind of experience that I've got offered is unparalleled. And it's been what only 2, 3 months, and I'm no longer the same person. I mean there's no going back really.

So I believe that in the future, autonomous driving will definitely be part of everyone's daily effectively. -- user rate potentially will reach basically 100%. And I feel this very, very strongly -- and recently, my professional drivers have been asking me a couple of times that from my perspective, when will our profession you talking about being a professional driver, be eventually spaced out.

Now I would like to just add 1 brief last point, which is that this is really representing a completely new paradigm, which, from my perspective, that our current priority is to really address a lot of safety issues and many of our witnesses first. However, since the launch of our second-generation VLA, the rules have completely changed. It's never the same again. So I believe that with making up of our weaknesses or the witnesses being compensated for, now we can actually spend a great deal of our time on enhancing our overall strength and deployment globally. Thank you.

[Foreign Language] My second question is also related to smart driving. So what is the deployment road map for XPeng ultra model and VLA 2.0 in the office market? And how are the overseas expansion of smart driving affect XPeng's global sales and the Smart Driving software have the potential to be monetized along? That's my second question.

[Interpreted] Let me briefly address this question. First of all, we have already launched the preparation for texting our VLA 2.0. So by end of this year or beginning of next year, we are going to gradually roll out the VLA second generation testing in Grayscale and also its delivery of deployment across different regions. And I believe that VLA 2.0 has a significant advantage overseas. First of all, we found that it's actually very generalizable in our testing across multiple markets, we realized that even without any overseas actual data, VLA alone performed really well and achieved excellent results.

And the second point is that compared to some of our competition, for example, FSC out there, our VLA has a particular advantage over them in the capabilities across small roads and also country roads or into territories. And we expect -- we've seen that in some overseas markets such as Southeast Asia and Europe, so that made me, again, having a stronger conviction that our VLA 2.0 can actually provide high-quality, favor autonomous driving for our users overseas at a higher quality and also lower costs. So with that, we now have done all the preparation in the hardware. And so by second half of this year, we definitely are ready for a bigger test and also for the future launch as well. And I believe that we are also considering some business model upgrade or transition for our smart driving software in the overseas market.

And I believe there's definitely a lot of opportunities for commercialization and monetization and we have strong confidence in converting our great technology into good business opportunities and revenue.

Your next question comes from Nick Lai from JPMorgan.

[Foreign Language] My first question is really related to humanoid robot ambition and the long-term strategy. First of all, mentioned that in the near term, we'll see the product launch at Beijing Auto should follow by mass production by year-end. Aside from that, is there any major milestone that investors should be mindful in the next, say, 1 or 2 years? And in addition to that, when we expand our footprint from a smart vehicle to humanoid robot, anything we can leverage regarding R&D, production and also supply chain.

[Interpreted] First of all, thank you for your question. And I would like to clarify something. We didn't mention April, but very much in second half of this year. I just want to clarify that from your question. And again, what you asked is very, very big, and I'll try to address it. First of all, last year, a lot of supply chain partners and also a lot of companies ask us the same question about robots supply chain or humanoid robot supply chain and whether or not it should be car grade, we believe that car grade is the minimum requirement because obviously, costs, they typically have 1 engine. And if the engine breaks down, it already called A class accidents. .

And when you look at humanoid robot, they have at least 7 to 8 joints and any kind of damage those so will cause information loss or big no loss, and it will cause a very, very serious accidents and will compromise on safety. And so we need to look at humanoid robot from at least a car grade standards. And since beginning of last year, we already started the development for our humanoid robot adopting car grade standards as well in preparation for its manufacturer.

So overall, you can see that XPeng is a very unique robotic company in that sense because we are adopting the same kind of high-level rigorous of developing a vehicle in developing our humanoid robots and you can actually see that we have to do a lot of in-house development covering not only the joints, but also the torso and other parts of the body from the SoC to the foundational model from data to all the training of the brain and cerebellum, et cetera. And we are very unique in that trend. I believe that are actually using a very, very challenging way or a very new methodology, which can be 10x harder than developing mobile taxi is doing our humanoid robots to achieve the highest quality mass production.

And by the end of the year, our targeted production is at least 1,000 units and I think future vehicle companies will also be robotic companies. However, one of the biggest difference between humanoid robots and vehicles is that robots actually generate a lot of value from the software and it can start at 50% already since day 1, and costs may start slow with only 10% to 15%. It will take some time to actually ramp up in the value creation. And I believe that they actually come from the same logic and also share the same origin. So whether when it comes to R&D, mass production, supply chain management, quality, et cetera, and also the global management, globalization management, the supply chain, sales and marketing services, et cetera, there's going to be a lot of similarity between car and product development.

And that sets us apart from our competition because we have always been doing things in-house with stack technology and also cross to make integration. And fundamentally, we use the same kind of logic as well. We develop our robot from the, I would say, elbow to hand to leg to feet, we do everything in-house or at least we do joint development, which again set us apart from other core companies or robot companies.

[Foreign Language] My second question is also related to humanoid robot regarding the cost and the selling price and how should we expect the cost reduction after mass production from year-end? And also, should we expect any external sales after mass production from year-end. Thank you. .

[Interpreted] This is a very good question. And I think when it comes to thinking about the cost structure for humanoid robot, first of all, it's very different from what we've seen in cost. There are 3 major cost items for similar robots. First of all, you have the hardware cost and then the R&D costs. Lastly, we have the operational cost. Hardware cost of the robot is very similar to a car. But when it comes to R&D costs, AI related cost will be way higher than that of vehicles, especially in the past, costs used to partner with Tier 1 suppliers when they can actually do the rule-based system and they can just borrow other people's already very established software and hardware solution, but that was in the past.

In the AI era day and age, you cannot do it the way that it was for especially humanoid robots development. And when it comes to operational costs, it's a completely different world as well because there is different data with different scenarios. And when you apply it and deploy it in the new scenario, you need to retrain the AI and the robot as well. And there are 2 types of humanoid robots. You have a general purpose, you have the specialized purpose robust as well. we mean by general purpose, basically, if you've attended college, you know that you first will take some durable purpose courses and allow you to have some transferable skills in general knowledge.

However, if you want to specialize in investment, for example, or in medical practice, that will require a lot of special training, right? And it's the same for humanoid robots, so I believe that when it comes to mass production, there will be chances or mass production will allow us to continue to drive down the BOM cost for Humanoid robot. However, software and operational costs will continue to improve, depending on what model and also what application scenarios that we're talking about. And we are different from a lot of the other companies out there because we do not target academia, we actually target actual deployment and commercialization.

And we will start go into the commercial scenario before going to industrial and lastly, households. Commercial application actually requires a lot of motion control, especially for the full body control, which is something that we're really good at and leading the industry. Industrial application will focus more on the hand movement and the agility of both hands, which we are working towards. And then household will be the most challenging scenario to actually deploy human robots in. And so we'll gradually move towards commercialization from commercial to industrial into household.

Your next question comes from Tina Hou from Goldman Sachs.

[Foreign Language] Congrats on a strong set of results. So my first question is regarding our overseas expansion. Wondering which will be the key market for us to achieve the 100% volume growth in overseas this year, and also looking at 2027 and 2028, what kind of products or technology are we going to introduce in order to drive further expansion overseas. And then also related to that, when will we start to launch our Kupon super hybrid platform models in the overseas market.

It's Brian. Let me address your question. In terms of key markets, obviously, we start our global journey in Europe and now Europe -- European market, I would say, represents our largest regional market, approximately 50% of our overseas volume is in Europe. And we actually saw our premium position EVs in a number of countries, especially in Nordic countries have a leading position in their categories. And also, we saw very encouraging growth in large markets like Germany, France and Great Britain. So I think, obviously, Europe will pretty represent a key focus for us. And then after Europe, Southeast Asia last year also represent a large important growth market for us. .

We saw a very, very exciting growth for Thailand, for Indonesia, Malaysia, and we continue to see that market become a very key growth point for our business. Outside of these 2 large markets, additional emerging markets like Middle East, like Central Asia, like Latin America also has great growth potential, and we actually have established operations last year, and we see continued penetration will lead to also good growth prospects in those emerging markets. So how do we really accelerate that development. I think it's actually a number of factors contributing to our growth prospects. First of all, as you mentioned, is actually we are launching more products that covers wider market segments for these international markets.

As we mentioned earlier this year, we intend to launch 4 new products, all 4 of them actually are global products. All 4 of them actually complements our current market segments either on the lower end or the high end. And also has a format that's actually, I would say, very, very attractive and potentially are useful for international markets as well. Also, as you just alluded to, this year, we also intend to launch our extended range product line by the end of this year to select markets. I think that will also help us cover some of the international countries where charging facility as well as driving distances has been building a block for EV penetration.

So I think that's one of the areas that we are focused on supporting the global growth. On top of it, we also have been stepping up our localization efforts, for example, last year in our key markets in Europe, in Southeast Asia, we have started local production for some of our products. And I think that will definitely be a very important part of our growth strategy by providing more attractive products, better service closer to the customers with local production facilities and supply chain associated with that. We also intend to launch our smart driving technologies, along with obviously the expected CAS regulation in place by the end of the year, hopefully, by early next year, our autonomous driving VLA 2.0 system can be utilized the international markets such as Europe and select markets in Southeast Asia as well.

And on top of it, I think there's other things we have to do as a company in organizational structure development, talent recruitment, brand building and marketing as well as we actually are starting to roll out our proprietary charging facilities in select countries as well. All those efforts are intended to increase our competitiveness in international markets and elevate XPeng's brand awareness and positioning. So we have a very exciting prospect in the next I would say, 3 to 4 years. We anticipate the global overseas market were representing much faster market growth compared to our overall growth rate as well as becoming a core profit center for our business.

[Foreign Language] My second question is regarding our AI investment and the overall computing power. So as Mr. Xiaopeng mentioned that this year, the physical AI investment will increase to RMB 7 billion. So wondering what is our compute power right now and also the plan for the next few years. And whether these investments are all recorded in R&D or some of it will be also allocated to capital expenses.

[Interpreted] Thank you for your question. Since this involves long-term investment, I can only provide a relatively general response to your question. In the coming years, I believe that R&D in the automotive sector of our business will continue to converge, and we will gradually stake that, but investment in AI will gradually increase and will trend upwards because of our conviction in AI development. And however, the R&D spending will become more efficient. So in the subsequent years, the growth rate of our AI R&D investment will not be as significant or aggressive as previous years.

Also, our major investment will include autonomous driving, smart cockpits and also robotaxi and humanoid robots among multiple categories. and capabilities. And so in the future, after mass production of humanoid robot begin to launch, we also see greater investment in human oil robots as well. And all of those investments will be booked as R&D expenses and not CapEx.

Regarding the second part of your question, I think nobody nowadays can pinpoint exactly what is the compute power kind of requirements in the long term for physical AI. And right now, we have 100s of thousands of GPU. In the future, I think we need to at least reach 100,000 units for computing power accumulation for physical data training purposes, at least that number. And I believe that cost training computing power requirement is going to be 1,000 time for digital -- over digital AI and humanoid robots or robotics, will be 100 -- sorry, 1,000x of that of vehicles computing power requirements or entire -- and in the future, definitely, I believe new methodology will be used to solve the computing power issue or shortage for physical AI.

And also, the infrastructure, including power generation as well. Those will be long-term challenge for physical AI. However, we believe that we're going to figure something out to address that in the long term. Thank you.

Your next question comes from Ming Lee from Bank of America.

[Foreign Language] So what is our current progress of robotaxi testing? Do you expect -- what do you expect an important milestone timing for our Robotics business with a safety driver and without a safety driver in operation.

[Interpreted] Thank you. I think I've already touched upon that question. We believe that a fully autonomous driving capability on the software side will actually arrive in about 1, 2, 3 years' time, not only in China, but also around the world. Our hardware development and regarding that has been moving and progressing smoothly. And right now, what is left is to address the regulatory requirements, and I think it will take time to do it step by step to obtain the testing license and also to move from having a safety driver on board to go in without a safety driver on board. And we are also doing some extra R&D for robotaxi global operation as well.

And so I believe that by second half of this year, we should be able to do some of the test drive with safety driver onboard. And by beginning of next year, hopefully, we can do without the safety driver on board. And in the future, we're going to open the whole system to cover not only China but also around the world, partnering with reliable operational partners around the world, using our platform, our technology and also our products so that we can provide this global tech facility or autonomous driving capability for users around the world.

[Foreign Language] So what do you expect the scale or costly number of our robotics business in the future? And which models will provide the robotaxi service?

[Interpreted] Regarding this question, I think the or the actual deployment of robotaxi services depends on the regulatory development. And I think in the future, all parts of this ecosystem needs to quickly develop and what kind of vehicles or what kind of model will support robotaxi, I think in the couple of years, there will be a lot of thinking and exploration. And I think from the mentally, we need to really figure out whether or not robotaxi should be driven by car or should be driven by robots. And I think in some time from now, people will actually see clearer with very clear results or answer to that.

Thank you. As there are no further questions, now I would like to turn the call back over to the company for any closing remarks. .

Thank you once again for joining us today. If there are state questions, please feel free to contact XPeng's Investor Relations through the contact information provided on our website or the Financial Communications.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello, ladies and gentlemen. Thank you for standing by for the Third Quarter 2025 Earnings Conference Call for XPeng Inc. [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 and Capital Markets of the company. Please go ahead, Alex.

Thank you. Hello, everyone, and welcome to XPeng's Third Quarter 2025 Earnings Conference Call. Our financial and operating results were issued by 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.xiaopeng.com.

Participants on today's call from management team will include Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu; 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 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.

[Interpreted] In Q3 2025, XPeng reported record sales -- record results in key operating metrics with new highs in deliveries, revenue, gross margin and cash reserves. Vehicle deliveries for the quarter totaled 116,007 units, a 149% increase year-over-year. The all-new XPeng P7 launched recently quickly became one of the top 3 BEV sedans priced between RMB 200,000 to RMB 300,000 we're seeing monthly deliveries to over 40,000 units starting in September.

Additionally, the company's gross margin exceeded 20% for the first time in Q3, and we reduced our net loss further. Our goal is to achieve breakeven for the company in the fourth quarter. These continuous operational improvements strengthen our focus on physical AI R&D, supporting the targeted mass production of our VLA 2.0 model, robotaxi and humanoid robots in 2026.

As AI models events become increasingly integrated with real-world data, machines are slowly gaining the ability to interact, communicate, transform and create within our physical environment. This development is reshaping the future of mobility and daily life.

Over the past 11 years, XPeng has dedicated itself to building full stack technologies in-house evolving from software-defined vehicles to the emerging realm of physical AI. We understand that vehicles and humanoid robot, the 2 primarily applications of physical AI, share a homogeneous physical world model, SoCs and infrastructure, allowing for rapid iteration and evolution.

Excitingly, new capabilities are continuously emerging from our physical AI technology stack. Over the next decade, my goal is to make Xpeng a leading global company in embodied intelligence. Focused on physical AI applications, we're developing an extensive portfolio of technologies, products and supporting business ecosystem.

Besides providing AI-powered vehicles to consumers worldwide, we aim to deploy pre-installed mass-produced robotaxis on a large scale and achieve the mass production of humanoid robots. We believe that an open and dynamic ecosystem is crucial to unlocking the full potential of physical AI for humanity.

To achieve this, we plan to open source our physical world model, launch robotaxi services in partnership with mobility platforms and relieve our humanoid robot SDK. This approach will expand the physical AI application ecosystem through collaborations with business and technology partners and accelerate the value creation process.

I'm also glad to report that as we introduce the one vehicle dual energy product cycle for AI vehicles, we'll expand our scale and increase our NAV market share through a wider product range. On November 6, we launched presales for the XPeng X9 Super Extended Range EV, an industry frontrunner in extended-range vehicles equipped with a 5C raised high-capacity LFP battery and a total range of up to 1,602 kilometers. .

It is the world's first large 7 seater to offer the longest range, highest AI computing power, smallest turning radius and most efficient space utilization in its category. We see super extended range EVs as crucial for accelerating the shift from ICE vehicles to NEVs. Since presales began for the 9 Super EREV, we've experienced unprecedented interest, especially in Northern regions and inland cities of China, attracting many customers who previously hesitated to switch to BEV models.

To date, preorders for this model are nearly 3x higher than the presale of the previous X9. On a like-for-like basis, the X9 Super EREV will officially launch on November 20 with deliveries starting immediately afterward. I anticipate reaching a new delivery record in December.

We plan to introduce 3 super extended range products in Q1 2026 focusing on alleviating key challenges for our EREV users by offering long, pure electric range and quicker 5C supercharging, thereby capturing more of the EREV market. We have put in more R&D expenses in 2025; as a result in 2026, we'll also launch 4 new 1 vehicle dual-energy models, including our first product launch in some key market segments. .

These innovative products will help us establish a presence in these markets and build leading products like the MONA M03. I'm confident that the 7 one vehicle dual energy models with super extended range technology debuting next year will greatly increase our total addressable market, or TAM, and provide significant sales growth opportunities.

On the global business front, we maintained strong sales growth and established a solid foundation for long-term expansion through our localized approach. In September 2025, our monthly overseas deliveries exceeded 5,000 units for the first time, a 79% increase year-over-year. During the third quarter, we grew our global presence with 56 new overseas stores, expanding our sales and service network to 52 countries and regions worldwide.

Additionally, our first European localized production facility at [indiscernible] in Grass, Austria, officially commenced operations with the initial batch of XPeng G6 and G9 rolling off the line. Simultaneously, XPeng's R&D center in Munich, Germany, officially began functioning, helping us better understand overseas customer needs and accelerate technological advancement and product launches.

In 2026, we plan to introduce 3 new overseas models, including popular mid to small SUVs that meet the diverse preferences of global consumers.

Our strong focus on investing in AI large models, computing infrastructure and data set is driving the continuous emergence of advanced capabilities from our physical world model. Our upcoming VLA 2.0 model, which has 10x more parameters than its predecessors, will substantially enhance safety and user experience in intelligent driving.

From my own recent driving experience during very complicated and complex road conditions, we experienced very impressive and unparalleled driving experience from the intelligent VLA model. So starting from late December, we will initiate a co-creation program with our early adopters.

In the early quarter of 2026, we aim to deploy the VLA 2.0 model across the entire Ultra line up. I see the mass production of VLA 2.0 as a major breakthrough in physical AI models. Offering a significant generational leap in user experience and attracting more people to choose Xpeng for its leading intelligent driving technology.

Going forward, XPeng will open source it's VLA 2.0 model to global commercial partners, aiming to provide industry-leading advanced driver assistance experience to a wider audience. Volkswagen will be the initial launch customer for the VLA 2.0 model. Additionally, XPeng's Turing AI SoC has earned a formal sourcing designation from Volkswagen with codeveloped vehicles expected to start mass production early next year.

Revenue from licensing our technology to external partnerships will be reinvested into our R&D, mainly to support iteration and upgrades of the Turing SoC and BLA models. This fosters a positive cycle of innovation and commercialization. We invite more automakers and Tier 1 manufacturers to collaborate with us on the Turing SoC and VLA 2.0, working together to promote the adoption of advanced intelligent technologies in both Chinese and global markets.

Traditionally, end-to-end models were able to maybe reach advanced Level 2 at its best; however, the rise of physical world model is speeding up the arrival of true autonomous driving. I believe that only preinstalled mass-produce robotaxis with a strong ability to generalize can achieve widespread adoption and create a sustainable business model.

In 2026, XPeng plans to launch 3 robotaxi models. Our technology stack for robotaxi does not depend on high-definition maps or LIDAR. This approach enables us to address current industry's challenges, including high cost, operational limitations and poor generalization, allowing for an efficient and scalable deployment worldwide.

We intend to begin pilot operations of XPeng robotaxi in China in 2026, continuously improving both software and hardware of robotaxi while building an operational ecosystem. I believe that a collaborative ecosystem where all industry stakeholders benefit is key to scaling rapidly. Therefore, we plan to open our SDK to our partners, and AMAP will be the first ecosystem partner for XPeng robotaxi. We also invite more companies in the mobility sector to explore robotaxi collaboration opportunities with us.

Our humanoid robots adopt a technology road map driven by its physical world model. With full support from our vehicle and powertrain R&D teams, we unveiled our next-generation Iron robot at the latest XPeng XPeng Tech Day. The Iron human-like posture and agile gate surprised and deeply moved many XPeng fans and also highlighted the great commercial potential of humanoid robots.

Currently, Iron demonstrates only a very small fraction of its capabilities. In Q2 2026, we plan to achieve full capability integration through cross-domain innovation aiming for performance and user experience for far surpass current market offerings. Our target is to begin mass production of advanced humanoid robots by the end of 2026.

Once produced, Iron will be first deployed in commercial scenarios, providing services like tour guiding, retail assistance and patrols. By the end of next year, I hope Iron will be working alongside us at XPeng stores, campuses and factories as our new team members. Additionally, XPeng Robotics will open its STK to global developers, inviting partners from various industries to collaborate on secondary development.

This will enable Iron to be trained and to evolve across diverse and long-tail real-world well scenarios, unlocking broader application possibilities. From a long-term perspective, I believe the market potential for humanoid robots will exceed that of automobiles. Once a new generation of robots reaches the inflection point just as China's EV industry did with electrification, we expect explosive growth ahead. I envision that by 2030, XPeng robots could sell over 1 million units annually.

With the launch of our one vehicle dual energy product cycle, I expect total deliveries in the fourth quarter to reach between 125,000 and 132,000 units reflecting a year-over-year growth of 36.6% to 44.3%. We project fourth quarter revenue to be roughly between RMB 21.5 billion to RMB 23 billion, up 33.5% to 42.8% from the previous year. .

XPeng's AI-driven vehicle business is in the early stages of rapid expansion in terms of scale and market shares, while robotaxi and humanoid robot programs are swiftly moving forward and towards mass production. I'm confident that XPeng will establish itself as a leader in physical AI, both in China and globally, delivering greater value for our customers and shareholders worldwide.

Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the third quarter of 2025.

Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the third quarter of 2025. I'll reference RMB only in my discussion today, unless otherwise stated.

Our total revenues were RMB 20.38 billion for the third quarter of 2025, an increase of 101.8% year-over-year and an increase of 11.5% quarter-over-quarter. Revenues from vehicle sales were RMB 18.05 billion for the third quarter of 2025, an increase of 105% year-over-year and an increase of 6.9% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly attributable to higher deliveries from newly launched vehicle models.

Revenues from services and others were RMB 2.33 billion for the third quarter of 2025, representing an increase of 78.1% year-over-year and an increase of 67.3% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily attributable to the increased revenues from after sales services and technical R&D services rendered to the Volkswagen Group due to the successful achievement of certain key milestones in the current quarter.

Gross margin was 20.1% for the third quarter of 2025 compared with 15.3% for the same period of 2024 and 17.3% for the second quarter of 2025. Vehicle margin was 13.1% for the third quarter of 2025 compared with 8.6% for the same period of 2024 and 14.3% for the second quarter of 2025.

The year-over-year increase was primarily attributable to the ongoing cost reduction, while the quarter-over-quarter decrease was due to targeted promotion to clear outgoing inventory during product transition. R&D expenses were RMB 2.43 billion for the third quarter of 2025 representing an increase of 48.7% year-over-year and an increase of 10.1% quarter-over-quarter.

The year-over-year and quarter-over-quarter increases were mainly due to higher expenses related to the development of new vehicle models and technologies, as the company expanded its product portfolio to support future growth. SG&A expenses were RMB 2.49 billion for the third quarter of 2025, representing an increase of 52.6% year-over-year and an increase of 15% quarter-over-quarter.

The year-over-year and quarter-over-quarter increases were primarily due to higher commission to the franchise stores, driven by higher sales volume as well as higher marketing and advertising expenses. As a result of the foregoing, loss from operations was RMB 0.75 billion for the third quarter of 2025 compared with RMB 1.85 billion year-over-year and RMB 0.93 billion quarter-over-quarter.

Net loss was RMB 0.38 billion for the third quarter of 2025 compared with RMB 1.81 billion year-over-year and RMB 0.48 billion quarter-over-quarter. As of September 30, 2025, our company had cash and cash equivalents, restricted cash, short-term investments and time deposits in total of RMB 48.33 billion.

To be mindful of the length of the earnings call, I will encourage listeners to refer to our earnings press release for more details on our third quarter 2025 financial results.

This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

[Operator Instructions] For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. [Operator Instructions] The first question today comes from Tim Hsiao with Morgan Stanley.

[Foreign Language] So my first question is about the physical AI because in the past, the competitive advantages of other companies were reflected in several aspects like cost, brand and channels. Just wondering if the management could elaborate a bit more about what aspects XPeng's long-term competitive advantage in physical AI will be demonstrated? And how will the company continuously enhance its strength in these areas? That's my first question.

[Interpreted] I think this is definitely a big question. The traditional way for automakers to make money is completely different from the new physical AI model generated kind of business format. They come from different DNAs. Traditionally, older traditional automakers focus on their own positioning and also about how they target their user segments and then everything boils down to their integration of Tier 1 suppliers and all the other different parts of the supply chain. However, when it comes to physical AI-generated model, the definition is different. We determine what the -- we -- everything boils down to do the definition of the future tech.

It involves full stack technology capability and also custom integration. For example, the launch of our Iron robot is a great example of that. So that's why different DNA is going to generate different products and different growth momentum. In the future, I believe that cars will be a new format of robotics, and it's going to actually come to the real life in the coming 5 to 10 years as the next generation of robotics in our life.

So traditionally, the integration of supply chain is completely different from what we are looking at right now, which is the physical AI technology integration across different domains and involves software, hardware and infrastructure upgrades, which will lead to a completely new set of products.

As a result, traditionally, software were only a small percentage of traditional car development, whereas right now, it takes up a large part of new product development. And I believe that when you look at our future development, we are actually going to see more and more physical AI components in the future for car development over 50%, and we are going to see that very, very soon. Thank you.

[Foreign Language] My second question is about revenue from the collaboration with Volkswagen. So first of all, congratulations on the project wins of Turing chips at Volkswagen. So may I know from which quarters related revenue will start to kick in? And how should we think about the trend of the revenue contribution from the collaboration with Volkswagen in December quarter and the full year 2026? That's my second question.

Tim, this is Charles. So in Q3, we delivered a few key development milestones on time. So you probably have seen that the revenue from the technology collaboration increased significantly quarter-over-quarter. And we continue to see that there are a few key development milestones to be delivered in Q4. So we believe that the revenue from technical collaboration in Q4 will be expected at a comparable level we see in Q3 2025.

And then regarding your question on the Turing SoC. Yes, we were -- our Turing SoC was selected by Volkswagen for the 2 B class vehicles were jointly developing. And we have already started to supply the Turing SoC to some of the our partners preproduction verification vehicles. So therefore, the revenue -- we would expect that the revenue from Turing SoC will start to be recognized in Q4 and probably in the small amount. But however, as our jointly developed vehicle SOP from early next year, and we would expect the revenue from the Turing SoC will ramp up with the sales volume of the 2 vehicles we going to develop.

In terms of the revenue from the technical collaboration in 2026, and we expect that as long as we can deliver the key milestones that are scheduled in 2026, we would expect that the revenue from the technical revenue from the full year 2026 would be comparable to that of the revenue we recognized in 2025.

So I think looking back, we have demonstrated that we can -- we delivered the revenue from commercialization of our technology for 7 consecutive quarters. And I think we believe that there are still opportunities we would like to explore to commercialize our technology and also as our CEO, Xiaopeng mentioned, and we will reinvest such revenue from the licensing or technical collaboration back into our R&D. Thank you, Tim.

Next question comes from Nick Lai with JPMorgan.

[Foreign Language] My first question is -- my 2 questions is actually related to [indiscernible] strategy and ambition in the longer term. At a recent technology day, XPeng demonstrated our first humanoid robot Iron which worked really like human. And can you talk about our technology road map and compare with the comparable peers. And where is our competitive advantage comparing with the peers in the medium and longer term? That's my first question.

[Interpreted] Thank you. Because there are so many robotics companies in the market, to be honest, technological and product development road map and strategy of XPeng's robotics is moving forward as we expect, according to our own plan. We have paid really little attention to any other differences in the robotics industry to other companies before we launch our own products.

Now when we look at XPeng, for example, our product philosophy is highly theoretical. You can actually -- well, it's highly human-like. That is the goal of developing our own humanoid robot. What's interesting about our product is that we realize that when we incorporate muscles and very bionic skin on to our robots, we actually attracted a lot of people to dare to hug him.

And this is very, very exciting because traditional robots really were not that attractive and appealing for human beings to give them a hug. In addition to that, we also would like to mention that in the future, I believe that across many aspects of life and work, we are going to see more and more robots that is working alongside us.

So for the current generation of XPeng robots, last time that we launched it, it was actually the seventh generation, and we are going to begin mass production of the eighth generation of our humanoid robots. In fact, we look at some of the available robotics in the market, I believe that a lot of them are between generation 3 and 5, which is mainly being driven by joints and all the operation of different hardware.

And when you look at the operation of hardware and software, you can see that the available products in the market look very similar in the way that they walk and they move. And these kind of robots, I believe, are very, very hard or difficult to commercialize in the end. So in the future generations of our robot, we actually have been thinking about what kind of technological route we should be used, and we have fully integrated actually hardware and software driven by integrated AI.

So this time, you can see that the robot that we showed to the market is based on our full stack R&D capability and cross domain integration. I believe that XPeng motors has many advantages when it comes to our robotics and humanoid robot development. For example, our physical AI resources have a synergy effect with our AI cars.

For example, we actually considering may be producing higher than car grade performance for our humanoid robot. And also our thinking logic on how to conduct business and mass production of our humanoid robot is largely driven by our knowledge and industry know-how in the EV industry.

For example, when we build the future sales and marketing layout and globalization, there's a lot of synergistic effects that we can enjoy from the existing layout with our car cells. Also I believe when it comes to the future robotics development, some company will still -- some of the players will come from auto-making industry. And I believe that XPeng will definitely have a first-mover advantage in this regard because of the data, the SoCs and the capability that we have. Thank you.

[Foreign Language] My second question is also related to humanoid robot long-term strategy and operations and [indiscernible] to commercialization. What are the key critical milestones that we should be mindful? And from now towards the end of '26, can you remind us what the capacity and expect the scale of our human robot operations? And also in terms of use case, by, say, 2030, you mentioned that 2030 we target to deliver 1 million units, can we also talk about the use case in the longer term?

[Interpreted] Thank you. To be honest, Iron's mass production probably the most challenging kind of vehicle of products I've ever worked on at XPeng Motors, if I have to make the comparison between mass-producing Iron's and other cars because there's a lot of challenges. For example, our ultimate goal is for it to be easily trained with human language so that it can really help us in various ways and there's a lot of room for improvement there when it comes to capability integration.

For example, if this robot can walk or run in various safe postures that requires to a lot of integration of capability as well. For example, it needs to have all the joints embedded in management and also coupling of different wiring, et cetera. Also, if we need to allow it to have more generalized kind of dexterous hand movements, well, it will also require a lot of hand-based VLA, which we believe by beginning of next year will be integrated.

We also need to allow it to have that kind of communication and language-based communication capability between the robot and humans. So that also will come from, for example, a lot of VLM and VLT, which is the small brain and large brain kind of modeling capability. But what I'm really excited to share here is that we will start entering the 1.0 stage of our new generation of mass-produced models next month.

I believe that in the next 10 months, we'll be able to actually promote the robot development in an orderly manner during mass production. And I think that's the first part of my answer. Thank you.

I think the ramp-up in robot production capacity is much simplier compared to cars. However, the commercialization of robots is indeed very, very challenging. It requires us to look for really new heights of technology and ultimately achieving more capabilities. Therefore, we hope to initially implement in several commercial scenarios included tour guiding, shopping or retail assistance, et cetera.

In 2026, we hope that we actually can see a lot of our own robots working alongside us at our XPeng stores, campuses for the first stage of field testing. At the same time, we are also opening our SDK to more of our partners so that our partners can easily and simply buy our robots and train them for commercialization purposes.

If your question is about future possibilities of scenario application, I think it's going to be even more than you think. For example, for commercialized robots, maybe you can switch their owns and allow them to go into the industrial production scenarios. And when will the robots go into our household setting? I think maybe 5 years' time, we still have a big chance of achieving that.

And I hope that through opening our SDK, we can allow more kind of partners to help us tackle those diverse and long-tail scenarios of application so that we can all enjoy a better robotics future and build a better ecosystem. Thank you.

The next question comes from Ming from Bank of America.

[Foreign Language] Why does XPeng choose to launch robot taxi service in 2026? Could you share your technology inflection point or how fast you lower your cost? And compared to other robot taxi companies in China, what is XPeng's technology path or business model? What is your advantages?

[Interpreted] Thank you, Ming, for your question. I think that within our R&D strategy, there are 2 key aspects, which are full stack self-development and also cross-domain integration. I believe that in 2026, we will be actually seeing a collection of inflection points within our own development system.

For example, we are going to be able to launch our current models into the robotaxi configuration of fleets, which, by that time, we believe that the inflection point will arrive. At the same time, our VRL models will continue to offer new capabilities for our future vehicles to be more robotic-like.

In addition to that, our second-generation VLA can actually train our intelligent driving Ultra cars and also in the future, maybe also train our mass version of cars using the same kind of large model, too. In other words, we have our cross domain capability based on our robotic development, which really can solve a lot of robotaxi current limitations, for example, the high cost of production and also the limitation of the mobility destinations.

For example, current mobile taxi now cannot really handle very complicated and complex road conditions and also in residential areas that has a lot of unpredicted scenarios and also a lot of them currently require LiDAR for their perception capability and so on. So in 2026, we hope that by commercializing fully share L4 capability in our robotaxi, we actually can have the dual development of the driverless L4 model together with an assisted driving L4 model.

With the launch of both method or road map in the future, I think very soon, it will be proven that XPeng has actually a better commercial logic thinking compared to other robotaxi companies and that will give us a great competitive advantage. Thank you.

[Foreign Language] So how does the management team think about the commercialization of your robot taxi business? Especially in the future, what is your planned milestone, for example, like in terms of the number of our fleet? Or when will you plan to roll out in different cities or overseas market? And also currently, you already have a cooperation with and could you elaborate more about your cooperation? And in the future, do we expand -- do you plan to cooperate with small partners like other ride-hailing companies?

[Interpreted] Thank you. Actually, next year, XPeng is going to launch 3 different types of robotaxi models at different price points to support different mobility purposes and demands. In the next phase of development, I believe, with the premise of regulatory approval, our priority is to really get everything running smoothly, when it comes to the whole technological and operation and business model.

So in that scenario, we hope to work with more and more business partner in the ecosystem. For example, AMAB will be a great partner. They are going to give us more development support when it comes to traffic and also payment and operation and services, et cetera. That really set us apart from a lot of the autonomous driving OEMs.

And I believe that in the future, for different countries and regions and different steps of development, we are going to actually launch more partnership with different service providers across different links. And for XPeng, what we need to do is that we are building our toolbox really well, and we're opening up our interface capability so that we can work more with our ecosystem partners in the future across different countries and cities.

And so once we really get everything up and running commercially in different environments, we can then quickly build our ecosystem. This is one of our considerations. Thank you.

The next question comes from Tina Hou with Goldman Sachs.

[Foreign Language] Let me translate my first question. So first, I would like to understand, over the next 1 to 3 years, do we have a rough revenue estimate or breakdown for our new businesses, including robotaxi humanoid robot as well as

Tina, it's Brian. First of all, I would say that for these future development areas, we do not provide any numerical guidance at the moment. Clearly, all those 3 areas, we anticipate volume, scale level production and operations in the next 12 months. For example, the land aircraft carrier from our flying car company is aimed to be delivered to end customers before the end of next year, will be in volume also scale, which I would say, in the thousands of range.

But the other 2, for example, the humanoid robot as well as autonomous driving robotaxi, as we just discussed earlier, next year, will be actually here, we'll see a lot of operational testing as well as scaling up process to make them ready for large quantity production and use. So I would say the contribution from next year will probably be limited.

But I think the volume will expect to ramp up rapidly once the model and the stability of these products is proven in the use consumer end as well as your application end. So the long-term goal of having 1 million per year humanoid robots sort of sales by 2030 is our long-term goal. And that is something that we have good confidence given we see the quick ramp-up into technology as well as multiple application areas in home, in offices, in factory settings.

So with all these future areas, we believe the potential is immense. So at this moment, unfortunately, I cannot give you the exact breakdown as well as precise cost estimates because these are still, I would say, evolving. But I think the overall trend is very exciting for us.

[Foreign Language] So my second question is regarding our passenger vehicles. So wondering if we can get more details on the new models, their segment as well as price segment, both in the domestic market as well as overseas and also do we have a volume target for 2026?

Tina, it's Charles here. I think we believe that one powertrain vehicles present very attractive opportunities. It is also one of our strategic initiatives to expand the volume of our each of our vehicles.

So I think on November 20, we are launching the X9 with pricing, that will be our first, we call it the Super EV product to be launched. And then you probably also have noticed that we have -- we already have 3 existing vehicles, Super Electric model, already registered with regulators, and we plan to launch those 3 products in early 2026.

As Xiaopeng also mentioned that we have 4 vehicles new vehicles when we launch, it will be equipped with both BEV as well as EREV powertrain options. And those 4 new vehicles are positioned in the different segment -- various pricing segments we're in. And we believe that, that will continue to enhance our product portfolio in each of the price segments we're targeting.

So in terms of the growth into next year, and we believe that the huge -- the one chassis dual powertrain vehicle models, the 7 models will significantly drive our growth next year. And also another growth driver we have seen is that the international market will continue to be a major growth driver for us.

With our current products available in the international market, we have already hit 5,000 per month for September and also October, the 2 consecutive months already. And of the 7 new vehicles we're launching next year, 3 of them -- at least 3 of them will go to international market. And so we are confident that the international market volume will continue to be a very important growth driver for us into 2026.

The next question comes from Pingyue Wu with Citic.

[Foreign Language] I have 2 questions. And my first question is about the new EREV model. And what do we think about the growth potential of our new EREV models in 2026? And my second question is about the humanoid robots. And how do we think about the real economy of the humanoid robots since we have implemented some new technologies, for example, the solid-state batteries and in terms of affordability, we are adding robot be affordable for family and say like RMB 200,000 or even less?

[Interpreted] First of all, regarding the first question, I think what's interesting that we discover from the sales figures that we gather from -- since the launch of X9 was that the targeted customers and also the actual users of BEV and EREV are quite different. So we believe that we can expect to actually see several times of quarter-over-quarter growth when the new version of X9 actually get delivered and actually different customer groups, when they purchase BEV versus ERV, they are using the cars across different scenarios as well.

And specifically, what I want to share is that, obviously, BEV and EREV users in different sizes of scale ofcars are also different. In larger vehicles, the percentage of EREV adoption is higher, whereas for Class A vehicles, especially smaller passenger vehicles, BEV ratio is actually higher. So I think we'll have to wait for more numbers to show maybe by Q4 and also Q1 next year before we actually can give you a more concrete answer. Thank you.

And the second part of your question, regarding the pricing affordability of robotics, I think, first of all, the price logic is very different between cars and robots. When we look at the cost of our Gen 6 and Gen 7 robots, they remain very high last year, but by first half of this year, when we were preparing for true mass production, we actually have enough reasons for us to actually believe the future retail sales price of the robotics -- the robots can be very similar to car prices.

And the second point that I want to mention here is that the traditional way of pricing a car is weight-based. It involves how many kind of iron and lithium and all kinds of elements included and components included in making a car, whereas robots, it's very different because the percentage of software in a robot is over 50% since day 1, whereas number is only 10% to 20% for a lot of cars.

In other ways, you have to put in a lot of cost to train the software and the model, and you need to have the overall capability to do a lot of integration and also domain controller as well. For example, you need to be able to combine all 4 SoCs into a super domain controller so that you can make them as light as possible and as affordable as possible.

These remain very challenging for many industry players. In other words, we really have high hopes for our future when it comes to robotics development. Hopefully, we are going to -- we expect to handle a limited amount of SKU integration, not as many SKUs as when you're making a cars. And we also will try our best to make the pricing of robots as affordable as possible. So it really can truly help and empower thousands of households in the future. Thank you.

The next question comes from Xiaoyi Lei with Jefferies.

[Foreign Language] I have just one question. Could you please provide an update on the progress of our overseas localized production for next year? And additionally, how do we plan to leverage our smart driving capabilities to drive the sales growth in international markets?

It's Brian, again. Just to address your question on overseas plan for next year. You're right, we actually initiated our local production this half -- second half of this year with first factory in Indonesia and also the -- another factory production facility with partnership with Magna in Austria.

Those, I think, is slowly ramping up the capacity. So we anticipate the volume for next year's production in these 2 plants will continue to rise and support our overall sort of overseas growth. I think in Europe, we are looking at the tens of thousands in terms of numbers of vehicle locally produced there. And in Indonesia, I think probably smaller, but also a sizable number, high thousands is something that we want to achieve.

Looking beyond those 2 plants, we continue to look at additional opportunities to have local capabilities in other markets as well as building local supply chain capabilities to support the localization in these key regions. So we will be increasing our local content, increasing our local stores materials and also looking for further localization strategy to be implemented.

So that's something I think is ongoing. I think it's a must do for a company has global ambitions. Looking at the global product sales next year, I think, as Charles mentioned, we're looking for higher growth in the international markets compared to our domestic market. We're also looking for higher contribution economically from those markets. So I would say in the next year or the year beyond, we're looking at a faster growing, higher profit contribution for our international businesses.

Since there are no further questions, I'd like to turn the call back over to the company for any 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 [indiscernible] Financial Communications.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]