Zhejiang Leapmotor Technology Co., Ltd. (9863) Earnings Call Transcript & Summary

This meeting is a closed door meeting of China International Capital Corporation Limited, CICC, and only invited guests are allowed to attend. Without the written permission of CICC and the speaker, no organization or individual is allowed to publish, forward, reprint, disseminate, copy, edit or modify the meeting contents and relevant information in any form. CICC reserves the right to investigate the relevant legal liability.

Good afternoon. I'm your host, auto analyst, [indiscernible] from CICC. Joining us, we have [indiscernible] Jiangming from Auto team. Welcome to the 2024 Full Year Earnings Call for Leapmotor. So today, we have the CFO, Mr. [ Li Peng Fei ]; Joint President, [ Wu Chiang ]; and Secretary of the Board, Mr. Shen Ke. So first of all, may I ask Mr. Shen to read out the disclaimer. Thank you.

Good evening dear investors. The content of this earnings call may contain certain forward-looking statements, specifically, including, but not limited to statements regarding the company's future financial condition, strategies, objectives, indicators and future market developments in which the company is or will be involved. These forward statements are based on the company's current and future business development strategies as well as the company's assumptions about the future business environment, which will inevitably involve a number of known or unknown risks and a number of uncertainties. These factors, which the company cannot predict, nor control, could cause the company's actual results and the company's industrial performance to differ from future results expressed or implied in the forward-looking statements. Therefore, we caution you not to place undue reliance on the forward-looking statements discussed on this call. These statements reflect only the opinions of the company's management as of this call, and the company undertakes no obligation to update or revise any statements made in this call in light of new information, future events or otherwise. The forward-looking events discussed in the call may not occur due to various uncertainties and assumptions. The above disclaimer applies to all forward-looking statements referred to in this call. In addition, shareholders and potential investors are also reminded that nothing contained in this earnings call constitute any state investment advice, nor does it constitute the basis or ground for any contract commitment or investment decision. Shareholders and potential investors are advised to exercise rational judgment and caution when trading the company's shares. Okay. Back to the host. Thank you.

Thank you. Thank you. Now we're going to invite Mr. [ Li PengFei ] to share with us the full year results of 2024 of the company.

Thank you. Good evening, dear investors. I'm Mr. Li Peng Fei from Leapmotor. So I'll be presenting you the full year earnings for the company 2024. First of all, operating highlights for the year. In Q4 last year, we have achieved the positive net profit, with RMB 80 million net profit in Q4. So we have achieved a target of positive profit of a single quarter ahead of schedule. So we are the second profit-making company in the EV start-ups. In Q4 2024, our GP margin was 13.3%, which is historical high since the establishment of the company. In 2024, we delivered 293,724 vehicles compared with 2023, which is 144,155. It represents a growth of 103.8%, which is the fastest-growing start-up brands of EV. And for the sales, we are ranking top 3 in all the start-up brands. In terms of financial performance, our total revenue was RMB 32.16 billion compared with -- which is up by 92% from 2023. The GP margin in 2024 was 8.4% compared with the same period of 2023. We improved by 7.9 percentage points 2 compared with last year was only 0.5%. And in the fourth quarter, our GP margin was 13.3%, which is highest GP margin for the single quarter since the establishment in 2024. The attributable net loss was RMB 2.82 billion compared with RMB 4.22 billion loss in 2023, it has been reduced by RMB 1.4 billion. Excluding the share payment, the adjusted net loss was RMB 2.35 billion compared with the RMB 3.52 billion 2023. It was reduced by RMB 7.17 billion. So the operating net cash was RMB 2.47 billion compared with RMB 1.8 billion in 2023, increased by -- it was much improved in 2024. The net free cash flow, RMB 6.32 billion compared with a negative RMB 320 million. It was increased by RMB 6.64 billion. In terms of sales, the total delivery was 293,724 vehicles, up by 103.8%, 40,000 delivered in the single quarter monthly -- on a monthly basis in quarter 4. And as of end of December 21, we have cumulated delivery of over 600,000. And the C Series delivery in 2024 was 225,071. And the C Series actually improved by 112.9% compared to 2023. In terms of product, we have launched the brand-new models. C10 delivered 75,469 vehicles. In the fourth quarter, C10 and also the full year C16 delivered 43,528. The monthly sales in fourth quarter was over 8,000. So C10 since the global debut have been winning awards and safety certification, including the industrial design awards in America, French Design Awards and also the European and [ California ] 5-Star certification. And also, it was granted a title of Zero Formaldehyde vehicles and also one of the best vehicles in terms of fire safety. And C10, in terms of industrial design, continue to build better experience. C16 is also excellent in design, intelligence, safety, reliability and user experiences, which is winning the best model for Auto Industry 2024 from International Auto Quality Standardization Association, providing excellent experiences. We plan to complete the B Series launch in 2025, which is a compact SUV, B10, midsized sedan B01, which is sport hatchback, B05. Those market -- those products are facing the largest market in China, which will be an important growth for the 100,000 sales target in 2025. And also at the compact SUV, we have made a debut in Paris 2024 in the Paris Car Show on March 10. The presale will officially start in this year. In terms of R&D, we have launched the 3.0 architecture, which is the first 4 domain in 1 centralized electric architecture, the first 80 to 95 chips, and also the first to have the network control domain and also OTA upgrade and also the first industry, the power technology in new energy and also reaching general adoption rate of the whole car architecture to 88%, which is the highest in the industry. And also, we successfully adopt the Clove centralized control technology, which will lead to the great success in series. In the fourth quarter, the monthly sales of over 30,000 C series. So -- and in the respective market, they have been capturing top 5 position. On the 10th of March, which is today, we will be launching the Leapmotor 3.5 architecture, which is the first super centralized central free control architecture with the 8650 smart driving chip, LiDAR and also supporting end-to-end integrated system and also spot features. In 2024, we have set up B2B -- sorry, the end-to-end large language model technical road map, building our institute as well as expanding a 500-people team, achieving the high-speed smart driving for the city, HPA, parking, memory parking and AI. In terms of AI infrastructure, continue to invest in resources to make sure we have the AI language model development and 2025 volume delivery. The brand-new LEAP 3.5 architecture is putting us in the first tier in autonomous smart drive integration. 2024, we continue to provide technical upgrade for the old and new users. On the LEAP 2.0 architecture, we have completed 8 OTA upgrade, adding 50 features, including NAP high-speed navigation, high-speed lane changing optimization, optimizing health, mobile charging, remote control. In LEAP 3.0 architecture, we completed 8 OTA upgrade, upgrading over 100 features, including NAP, national high-speed scenario, 12 high scenarios, HPA parking, AI language model. We have taken an important step to support the Alibaba Cloud’s Tongyi Qianwen, the large language model, and DeepSeek model connection, providing rich voice interaction. The user can choose a different language model in terms of the voice control, which goes to show our deep understanding and respect the user experience. So every user can enjoy a tailor-made, bespoke driving pleasure. In terms of sales management, we have Leapmotor special new model of retail, which has been gradually taking form in 2024. And also as of the end of last year, we have deployed 695 service stores, 727 covering 264 cities, which is 82 more cities covered comparing 2023. The company continued to adopt 1+N model. So as of 2024, we have 262 Leapmotor Center, 433 experience center, which is 186 more Leapmotor store compared with 2023. And also, we bring 77 quality partner channels, and the partner channels profitability was in excess of 80%. In retail, we are using full chain digital marketing service system and also DPM and other targeting tools based on the full life cycle philosophy of users from identifying the interest prospect to media targeting to invitation, test drive, order and also sales, we completely digitalized entire chain to improve the operational efficiency. In terms of services in 2024, we have seen massive improvement of service satisfaction. We have been building a high -- the after-sales service system covering 427 stores in the country. By providing dedicated butler, we can provide one-on-one services to every user. And also we can achieve the remote diagnostic technology to reduce the users' contact frequencies. We can also shorten the maintenance cycle by using optimization list. And also, we are providing the full scenario ecosystem to provide full cycle service capability. In terms of globalization, in May 2024, we formed the joint venture with Stellantis to create Leapmotor International to be in charge of the export sales and localized production overseas. From the 24th of September 2024, Leapmotor International have initiated the sales of C03 and T02 in the mainstream countries in Europe. As of end of December, we have exported 13,726 vehicles to overseas sales channel. We're also adopting overseas channel. We are building over 400 outlets in the world, including 350 in Europe and also about 50 in Asia Pacific, Middle East, Africa and South America. So expected in 2024, we are going to form 550 sales channels to lay down solid foundation for globalized sales. We're using Stellantis auto finance services and insurance, repair and maintenance and resources. We are quickly reaching a top-level service level for international carmakers to provide convenient aftersales services. Now Leapmotor International has already reached agreement with Stellantis Auto Finance to provide financial services to dealers and consumers. And also, we have 1 depot with 5 subdepot of spare parts so that we can provide spare part delivery twice a day to service network. In terms of ESG, in January this year, again, we have been rated AA by MSCI. So for 2 years in a row, we are leading the peers in the world in 2024. We're also having authoritative sustainable development rating and also our electric components and also providing strong support to the third-party customers. So on the 3rd of March 2025, we have signed an MOU with the FAW China pertaining in 2 aspects. First of all, each company will play out the strength in R&D technology, jointly develop the new energy vehicles, passenger vehicles, spare parts. And secondly, 2 parties has been discussing deepening collaboration of capital collaboration by capital collaboration, achieving the full chain resources synergy. So from January and February, we have sold cumulative 50,457 units, which is up by 167.8% from the period in 2023. Thank you.

Okay. Thank you. Thank you, Mr. Li, for the sharing. And now it's time for questions. Operator, how do we take questions?

[Operator Instructions]

Grateful for the presentation by the management. Congratulations to such wonderful resales. I'm from CICC. I have 3 questions for you. Now I wonder, do you have any guidance or update of guidance for 2025, including guidance on sales, GP margin and profitability? And the second question is to have you help us to map out the model planning for this year. And third question is about the capacity. Are you able -- based on the current capacity for the couple of years, are you seeing more demand for additional capacity?

To your first question regarding guidance on 2025, right now, the company expect that in 2025, the delivery full year including overseas delivery will be 500,000 to 600,000 units. So in terms of number of sales. So last year, in terms of GP margin, the full year GP margin was 10% to 11% of our target. In terms of the net profit, the full year target, we are striving to achieve profit in 2025. So that was our full year guidance for 2025. Now regarding the 2025 total model plan, well, first of all, in this year, as I mentioned in my presentation, we're going to be launching 3 models on the B platform, which is B01, B05. Tonight, we're actually going to also launch the B10 as presales. So these are the 3 brand -- brand-new 3 models in 2025 on the B-Series. So regarding the C Series, the C10, C16. C11. Well, C10, C16, as the 2 product launch in 2024, this year, they're going to have a facelift for 2025 addition, C11 in the middle of the year. There's also going to be a major facelift in the midterm of this year. So that will be our product mapping for the year. Now when it comes to capacity, right now, we have in Jinhua City of Zhejiang province where we have 2 factories. Of course, to cope with the upcoming production improvement, the company also have plan to add factory capacity. Thank you.

Next question from the phone number ended 6426.

I'm from Citi auto. I'm [indiscernible], auto analyst. Congratulations to the great results in 2024 Q4 and also embarking a new journey. So I have 2 questions. First of all, we have seen that last year, Q3, Q4, we have seen rapid improvement of GP margin. So you have your in-house R&D in terms of the LEAP 3.0 architecture. What's the contribution from this in-house components? Because I mean, regarding component, the seats, the door, trim, you might have Stellantis agreements. So you should be trying to improve your economy of scale, right? So I'm wondering in the future, whether it's the in-house R&D or external collaboration, what is the contribution to your GP margin? How can we see your competition with the top players in the market? That will be my first question.

Okay. You talked about the Q3, Q4 GP margin improvement. Well, in Q3, Q4, the improvement was significant come from many reasons. And first of all, that is because of overall sales in Q3, Q4 has been massively up, which provided the volume effect because we are able to reduce the fixed costs. Secondly, because Q3, Q4 have been seeing a model mix because Q3, Q4, C10, C16 were ramping up. They are now -- they are counting more shares in the C-Series, which is also positive contribution to GP margin. The third reason is when you mentioned the cost improvement. Well the cost improvement has a lot to do with our in-house development costs. In terms of in-house development, in-house production, particularly on the C series, they are seeing higher and higher proportion in the C Series. That also contributed to the cost down significantly. Of course, because of rising volume and also continue to drive down the procurement cost of spare parts and components, this has all contributed to the improvement of GP margin in Q3 and Q4. And also you mentioned that in the future, in terms of parts, what is the contribution from parts to the gross margin? Well, overall speaking, we are addressing a mass market. So resources -- in-house production resources is very important for having some profit from the foreign parts because most of the profit -- gross profit from a vehicle actually come from the gross margin from our in-house component and parts. So therefore, when we are able to meet our own demand, we are also expanding our channel to sell our parts to outside by using our resources and parts, so that we can combine both in-house use and also outside sales so that we can improve the size and volume of that business that will contribute to revenue, that will also help to amortize costs, and that's also going to contribute to the profitability and to support the profitability of whole vehicles. So that will actually help us to achieve high -- our product strength of high value for money, at the same time, this also contributed to stable profitability in our operation of the company. Thank you.

I have another question because we have seen that this year, last year, investment gain like Leapmotor International contribute about 10,000 net profit per car in overseas. So this is actually better than what people expected. So my question is, nowadays in Europe, you are selling Leapmotor vehicles, and you mentioned that, but also in Africa and other non-European regions. So I'm wondering, you are building channel in non-European regions, how fast it's going to be this year? Are you expecting some ramp-up in volume this year? Because in some regions, they might not have that kind of high entry barrier or sales barrier. So you're able to export with volume, but also profit. What's that going to be looking like?

Thank you. Regarding overseas channels, actually, overseas. Well, from -- other than Europe, we have over 300 network outlets in Europe. But also in other 3 major regions, we have about 50 outlets as a network. So in 2025, our target is to achieve 450 to 500 channel outlets in Europe and the rest of the regions, we hope to achieve around 200 -- over 200 channel outlets in the 3 regions. So moving from 50 to 200. So as you mentioned, outside of Europe, our vehicles was being sold to South America, Brazil, Middle East and Turkey and Asia Pacific, also in Australia. We have a model being sold over there already, and they are very popular by the local consumers. So in 2025, Leapmotor International will continue to drive up the -- all 4 regions so that we can quickly achieve our overseas sales target for Leapmotor International.

So next question from phone number ended with 2110.

I'm from Zhongtai Security, [indiscernible]. I'm an auto analyst. I have 3 questions. First of all, about the price range. Now for new product, which is above CNY 200,000, what is the timing for that? And what kind of plan do you have for that? My second question is about autonomous driving. Can you help us understand in terms of autonomous driving, like 100,000 to 200,000 or maybe over 200,000, what is the layout for autonomous driving product? And thirdly, about the overseas profit guidance in 2025?

All right. Let me start with your first question, which is new product above 200,000, what's the timing for 200,000 launch. As you know Leapmotor will have Class A, B, C, D, we have 4 platforms. Well, Platform D is a high-end platform for the company. This will be the model above RMB 200,000. Those are the main platform. The Platform D product will be expected to be launched in the first half next year, 2026. So by then, you're going to see on D platform product, we will continue to present our feature of Leapmotor to present you with a highly competitive product. Secondly, regarding autonomous driving, BYD this year and well and other peers continue to launch their autonomous driving product. Well, Leapmotor actually, in the past 2 years, we have actually making a lot of preparation in that regard. So you actually -- I invite you to actually follow us because this evening, we're going to have a Technology Day release, a press con for the Leapmotor. On the press con, we're going to give you details on the autonomous driving, particularly the adoption of autonomous driving product on B10, those kind of products. As you know, we have the technology strength at Leapmotor, our strength on the entire platform. So therefore, once we have autonomous driving technology adopted in any model, then it will be quickly rolled out throughout the entire platform on other models on the platform. So in terms of the smart driving democracy, I think our peers has been really helping us to drive ahead. They have really give us a huge push. And you can see we are making a lot of efforts in democratizing autonomous driving. So thirdly, regarding the profit guidance of overseas business 2025. We actually, what the company asked for Leapmotor International is to quickly expand our sales channel. The hope is to expand sales channel, improve our branding strength in overseas, improve overseas sales. Now when it comes to profit, both shareholders of the company has provided a target for Leapmotor International to breakeven. The target is to break even. But still, we are looking more on the branding channel and sales. We are hoping to quickly promote the Leapmotor brand to the whole world.

The next question from phone number 5325.

I'm [indiscernible] Securities auto analyst, [indiscernible], and I have 2 questions for you. The first question regarding your overseas business. Actually, I have 3 questions related to that. First of all, the sales guidance for overseas sales, particularly the sales guidance for Europe. Second, I see in March, you have C10 EREV version will be starting to be sold in Europe. So what do you think of the EREV policy there? And also the C10 BEV, EREV, what is the gross profit, respectively? And third question is like right now, where we have a bit more clarity in the European policy. So what do you think of your supply chain there? And the CKD capacity, what do you think of the deployment of CKD capacity in Europe?

To your first question, you are talking about overseas sales guidance, right? So in 2025, the overall overseas sales, we estimate to be 50,000 -- about 50,000 to 60,000 units. That will be the range of sales for overseas, for Leapmotor International as a sales target. Now regarding the EREV, the range extended version and what is it to do with BEV, the battery EV. Now EREV, not just being sold in Europe, but also in South America, in other regions, we'll be deploying EREV additions, including B10. There will be EREV addition of B10 in overseas. So for overseas market, you mentioned Europe and other regions, they have their consumption preferences. Actually, overseas, are adopting new energy a bit less than China. It's not as fast in Chinese adoption. So EREV is quite a considerable market overseas, particularly in other countries when the charging infrastructure was still not that built up as in China. So in that case, EREV, the range extended model will be a good choice where you can enjoy the advantage of having electric car, but also you are able to circumvent the charging anxiety. So that kind of model is going to be very in demand in overseas. So you talk about EREV versus BEV in terms of gross margin. What I can say right now, roughly EREV model and BEV is not going to be that different in terms of overall margin in overseas. Thirdly, was it about localization? I didn't get your question.

I just want to make sure you said the GP margin will be not that different, EREV and BEV.

Are you saying not different? I didn't hear.

Yes, not that different. And also, what's the gap?

Well, I don't think it's the right time, right place to talk about because the EREV model still need a bit of testing. Yes, thirdly, you talk about localization, right? Yes. When it comes to Europe and European Union, including other countries, of course, tariff is a well-known issue now. So Leapmotor, from our angle, working with our partners, the Stellantis Group, we are jointly exploring the process of localization. Because of our partnership of the 2 sites, we believe the localization process of Leapmotor will do very well in terms of speed and quality, which will be of a higher quality compared with our peers. So both sides has conducted a lot of preparation work. So it is expected that in near future, we're going to have specific actions to make it happen. Of course, we have to think about the cost of localization, any potential change of policy. There is still some uncertainties.

Right. Can I ask one more question? Because you talk about in overseas market, you're going to launch an EREV model, right? So do you have the time line for that?

It should be something -- sometime this year or second half of this year.

Okay. Got it. So my second question has to do with autonomous driving. First of all, the autonomous driver, how does it empower your business model? I wonder what it's going to drive yourselves with autonomous driving future. I mean, other than the empowerment from autonomous driving, what about the other factors, like robotaxi, those kind of direction, any ideas?

Well, in terms of the autonomous driving, it is going to be based on our own products. Of course, driving the sales is one thing. But for our end goal, it's more important to provide users with a satisfactory product. That's really more important for us because we want them to experience something that is more advanced, better experience and help to improve the overall competitiveness of the product. So that's what we are aiming for in terms of autonomous driving at the current stage.

Right. Can I add a bit of a question? Because previously, I see that you are advertising 150,000 with LiDAR. And by the end of this year, maybe 100,000, 150,000. Are you going to fit LiDAR on those models?

Well, in terms of autonomous driving, democracy or democratizing autonomous driving, as I mentioned, please tune in our press release tonight, which will be an hour later because in that press release, we're going to release the technology. I think it will be something you would expect. And also, when it comes to democratizing the technology to even lower-end model like A platform well, because next year, the A platform is going to be launched next year. So it's a bit too early to talk about it now.

Next question from 6221. You have the floor.

I'm [ Liang Fu ], auto analyst from Bank of America Security. Congratulations to results in Q4 last year. I have 3 questions. Now first of all, about the sales target, you talked about CNY 0.5 million as a sales target. Can you help us to break it down that by the end of this year? What is the contribution from B platform -- contribution from B-Series models? And what is from C?

Are you -- do you have more questions? Should we take the more before I respond to you?

Maybe you can address the first one before I ask the second one.

Our total sales target, as I mentioned, the full year sales target is 500,000 to 600,000 units. Now I can definitely tell you the 500,000 to 600,000 unit sales mix, it surely will be predominantly Series C and Series B. Series B, Series C contribution will be even higher. So you talk about the B Series and C Series, what is the contribution? What is exactly going to be their contribution? At the moment, I don't think it's the right timing to disclose because it has to do how we want to launch the B Series and also the C10, C16 sales target. And also, we're going to have a launch of the C11 new model -- 2025 model. For Series B, we have a very good expectation for the company. Tonight, we're going to launch the product. You're going to see the competitiveness. I'm sure it's going to be a blockbuster product. The 3 products from C Series C11, it's been loan for 3 years already. But still, C11 has maintained very vibrant vigor. So this year, we're going to launch a C11 midterm facelift and C10, C16, even though those were launched in 2026 in the case of C16. But in the first half of this year, we're also going to complete this C10, C16 facelifts. So this is going to further improve the product competitiveness. So we believe the C Series products after the launch of new models, the new facelifts, it's going to be very powerful and B Series C Series, they will be supporting our achievement of the sales target, which is 500,000 to 700,000 units a year.

I have another question regarding your LEAP 3.5 platform because today, you have published the new platform, LEAP 3.5. So in terms of the architecture of the platform, how do you expect the architecture to contribute to your margin or maybe a better contribution to the cost?

I'm sorry, your line is a bit -- is kind of breaking up. I didn't quite hear your question. Are you talking about the 3.5 platform? what was your question again? Yes. Your line is kind of breaking up.

My question actually has to do with the LEAP 3.5 platform that you have just released. So the new product under this new platform, how do you compare the GP margin compared with the Platform 3.0? Is there any improvement in terms of the gross margin compared with the platform 3.5 versus 3.0?

Are you talking about GP margin?

Yes.

Well, to your question, the platform 3.5 is actually improving our product capabilities, right. So that platform, as you know, platform is the foundation of a new energy vehicle for the electric, electronic architecture and is the soul of NEV. So Leapmotor has been exploring deeply in into the electric, electronic architecture of NEV, and we have launched a LEAP 3.0. And tonight, we're going to be releasing the brand-new LEAP 3.5 platform. Our B Series, C Series and facelift products will be all adopting the LEAP 3.5 platform. So that platform actually helped to improve our integration of domain control with high concentration domain control, this helped to improve the performance and capability of the whole vehicle, providing better and more product to the users. When it comes to the GP margin improvement, as I mentioned, the GP margin improvement come from many other factors. It's not simply coming from a platform by itself. The GP margin is not dictated by the platform by itself. It has to do with the overall sales of the company, economies of scale, the launch of model and the product mix. And also, it has to do with the improvement in cost control. Everything will contribute to GP margin in the end. It is not simply a factor of switching to a different platform or a new platform.

Well, let me just add to it a little bit. Mr. Li has given a very thorough answer, but I'd add. People who are asking the B Series, expect the sales will be -- the price will be lower than C Series, right? People will say B Series, GP margin should be dragging your margin down because the B Series will be lower margin than C Series. Would it be negative to the overall margin? Well, actually, B Series, they're using LEAP 3.5. Everything was optimized based on LAP 3.5. The power consumption was reduced, matching with the model. It's going to be a highly cost-effective product with both cost effectiveness and performance and features. So as a result, it's actually going to help to achieve a very healthy GP margin for the B Series. So B Series is not going to be a drag on the gross margin. So both B and C, they will have their respective advantage, and the cost will be optimal, very healthy gross margin on both.

My third question is about, can you help us to give us a bit more color on your overseas model launch in this year and the next year in terms of timing for the launch in overseas?

Well, in terms of launch of overseas models, as mentioned before, like this year, we're going to be launching the B Series, B10, maybe in the second half of this year, the B10 will be launched in overseas and other B Series products, including the A-Series product that we are about to launch in the future, they will be also launched in overseas. There was a plan for that as well. However, based on one thing, this is our overall plan. It has to do with our development process and development progress of the models. We are not completely locked in the second model yet. Some of the models have not been made public yet. So I'm not able to show you the launch plan before they are finalized with the plan. So I hope you understand that.

Next question from 9915.

Hello. I'm John [indiscernible] from Haitong Security. First of all, congratulations to the excellent results. I have 3 questions. First of all, let me confirm, you talked about 2025. Your JV target is to break even, right? And the second question is now the 13,000 units of export in 2024, what's the breakdown of T03 and C10 in export last year? And subsequently in the future, what is the view on the product mix when it comes to overseas sales? Is any plan in terms of the product mix?

Right, to your first question, let me confirm that regarding the Leapmotor International, our target is to, hopefully, they are able to break even. But we are expecting Leapmotor International to devote more resources in marketing and market development to sales boosting. So as to your second question, related contribution of T03 and C10 because our product have completed overseas certification. The timing is not exactly the same. So in terms of product mix right now is not a true representation of the end game or the ultimate sales mix. Right now, we still have a bit more T03 in the mix, a bit less in C10, this is what happening now. However, in November and December, C10, and even in January and February this year, C10 is actually ramping up fast. So from our angle, these are the 2 products we launched overseas, with the T3 and C10, we hope they will be having good development, both of them in overseas. Right now T03, as a miniature platform, is actually very popular in Europe. T03 is really welcomed by European users, which is a nice fit of the market in Europe. Now when it comes to C10, even though C10, as a model, is more like a mid- to large-sized product, but C10, as the case in China, it has presented excellent review and feedback. So right now, it is very popular to local -- among the local consumers. As you can see from the media coverage, you can see actually the positivity in terms of our product C10 in Europe is quite a popular product. So from our angle, right now, we are not really after a certain percentage of any product, right? At this stage, what we hope is to bring up the Leapmotor branding to overseas market, so that more overseas users are aware and accept Leapmotor's product. That is actually more important for us at this stage.

Got it. My third question is about autonomous driving because in the annual report, you mentioned that you will be adding AI computing power, data infrastructure, you're going to add more resources investment. Is there any quantifiable metrics for us, any numbers?

Well, to your question, as mentioned before, in 2025, our autonomous driving team is going to be expanding the headcount. The entire team is going to be moving from 500 people to over 600 people. And not just only the headcount of the team, but also quality of the team members. We're going to bring in more advanced autonomous driving talent to make sure we can achieve our strategy and to implement the strategy with the quality and volume that we're asking. And in terms of the total cost in 2025, we're going to be making investment about RMB 800 million, more than RMB 800 million as investment. In terms of computing power, we have invested, but also rented computing power with 1.5 TFLOPS computing power to make sure we have enough autonomous driving product development progress.

Thank you. As we are running out of time, let's take the final question, maybe final 2 questions. The next question is from 7946.

Management, first of all, congratulations to the company. I'm [indiscernible]. I'd like to ask you about the C-Series remodels. They will be built upon the LEAP 3.5 architecture and also you have a range of autonomous driving solution to be upgraded to the C Series. Would that be an impact on gross margin?

First of all, the C Series, whether C10, C16 and C11 this year, we're going to be seeing the midyear remodeling. They will all be using our LEAP 3.5 architecture. That's for sure. That's for sure already. Secondly, as you mentioned, is it going to be having an impact on a gross margin level -- as I responded -- Mr. Wu Chiang has responded previously, the LEAP3.5 platform. It's something that present technology strength, present technical capability, but also present cost capability, invariably provide further optimization. So that platform it's not going to have a negative impact on the GP margin for our upcoming products because this is based on our full suite in-house R&D by Leapmotor, so that we have the general adoption of technology across the platform. So any new technology will be adopted in scale on our products. So by using LEAP 3.5, this is going to be adopted on the B platform and C platform. This will help us to better control our costs with the products. So in our case, we'll be dedicated to providing even better and more advanced and more comfortable product experience to the users, at the same time, striving to maintain our advantage of providing better value for money. So there's actually a much better experience for the users.

Last question from investor ended 0877.

I'm [indiscernible] International. I have 2 financial short-term questions. Can you briefly give us an outlook on the Q1? The Q1 GP margin for Leapmotor, do you have any idea or outlook? And then in Q1, what is the expenses? Can you also give us a bit of a forecast on expenses in Q1 as well?

Well, because the first quarter, we are -- so today, we are having the full year 2024 earnings announcement. So it's not -- probably not a good timing to talk about data in the first quarter. But I can point you to some directions, if I may. We believe that overall GP margin in the first quarter this year. As of now, when we look at the gross margin in the first quarter compared with last December, there could be a small reduction because the overall sales in the first quarter, the monthly sales and the overall sales compared with the last December, there's been some gaps because in January and February, we will have cumulative sales of 50,457 units. So overall sales compared with last year, the same period last year was a massive growth year and year, which is a 167% growth. But on the month-on-month basis because December sales was still kind of lagging behind from December, where there was a sales of over 40,000 a month. So there is some seasonality of the NEV Market. However, our sales in January and February, we still outperformed the overall market. So the GP margin in the first quarter won't be a disappointment to you. Thank you.

Okay. So that's the time we have for today's call. We have been having an hour already. I'd like to thank the management for the presentation. I'd like to thank all the analysts. We look forward to hosting you again next time. And if you have any questions, feel free to reach out to Leapmotor Investment IR team. With that, we conclude today's call. Thank you, and goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]