Thank you for standing by. Welcome to Momenta first half 2026 interim results conference call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be question and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded. I'd like to hand the conference over to Simon Shao, Senior Director of the Corporate Financing Team. Please go ahead.
Good evening, everyone. Welcome to Momenta's first half 2026 interim results conference call. This is Simon Shao, Senior Director of Corporate Investment and Financing Team. Before we start, I would like to quickly remind everyone that today's discussions will contain forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from our current expectations. Please note that numbers stated in management's prepared remarks are in RMB terms, and we will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in the company's earnings release and filings with The Hong Kong Stock Exchange .
Joining us on the call today for the management presentation are our founder and CEO, Cao Xudong, and our Chief of Staff, An Ren. Additionally, our Senior Vice President, Sun Huan, will join us later for the Q&A session. With that, it is my great pleasure to turn the call over to our CEO, Xudong. The floor is yours.
Good evening, everyone. I'm Xudong, CEO of Momenta. Looking back at the first half of 2026, we remained deeply committed to our core mission, better AI, better life. We stayed firmly on our data-driven technology path, fully dedicated to building a world-leading foundational platform based on what we call our world model. Serving as our unified technical base, the world model allows us to build a profound understanding of the physical world. Through its three layers of pre-training, simulation, and reinforcement learning, we can horizontally integrate our solutions across mass production, Robovan, and the robotaxi, as well as other future-oriented scenarios. These technological advancements have translated directly into our business outcomes. To give you a high-level overview, our financial performance in the first half of the year was exceptionally strong. Our total revenue reached RMB 1.6 billion, delivering a robust year-over-year growth of 76%.
Our adjusted gross margins stood at an impressive 75%, which remains well above the industry average. At the same time, we have made significant strides toward profitability. Our adjusted net loss for the period was just RMB 14.1 million, narrowing by 97% compared to the same period last year. I want to emphasize that immediate profitability is not our primary objective at this current stage. Moving into the second half of the year, we will continue to strategically invest in R&D computing infrastructure, as well as the scalable commercialization and operations of our robot businesses. This remarkable improvement clearly demonstrates the operational efficiency and scalability of our business model. Underpinning both our financial success and our technological edge is our immense data moat. Coupled with our continuously expanding computing infrastructure, this strong foundation has driven scalable and high-quality growth in our mass production business.
We have delivered 105 mass-produced models, and our cumulative design wins have reached 219 vehicle models across 26 OEM customers. Our cumulative installations of solutions for mass-produced vehicles have officially broken through the 1 million unit mark. This firmly secures our position as the number one third-party supplier in the Urban NOA market. Furthermore, we are proud to say our footprint has now expanded to 10 countries and regions. Beyond the passenger vehicles, our commercial progress is well underway. Our Robovan has initiated small-scale trial operations in Suzhou, while our robotaxi is now testing or operating in six cities across three countries. Collectively, these comprehensive commercial operations have already empowered us to accumulate over 13 billion miles of real-world operational data. Looking forward, our latest generation R7 world model are being gradually deployed in mass-produced vehicles starting in the third quarter.
By translating the triple capabilities of pre-training, simulation, and reinforcement learning into real-world applications, R7 will deliver an intelligent driving experience that is much more human-like and, above all, much safer. We confidently expect NOA penetration, particularly Urban NOA, to continue its upward trajectory in the quarters to come. Against this highly favorable market backdrop, our mass production business solutions achieved exceptional growth. As of June 30th, we have established mass production partnerships with 26 OEM customers, spanning across domestic, international, and joint venture brands. Our cumulative design wins have now reached 219 vehicle models. To give you some context, that is a solid increase of 49 models compared to the end of 2025. More importantly, we currently hold a backlog of 114 secured, yet-to-be-delivered models in our pipeline. This massive backlog provides us with exceptional visibility and virtually guarantees the sustained growth of our mass production business moving forward.
Meanwhile, we successfully delivered 37 new mass-produced vehicle models in H1, bringing our cumulative total to those 105 models on the road today. We maintain our position as the number one third-party supplier in the Urban NOA solution market. Drilling down into the numbers, we added approximately 321,000 new units during the first half, with robust 84% year-over-year growth. As I highlighted in my opening remarks, our cumulative installations officially surpassed the 1 million unit milestone. More importantly, the pace at which we achieve every 100,000 new installations is accelerating rapidly. It took us nearly 24 months to reach our first 100,000 units. Today, it takes us only 36 days. This exponential acceleration not only validates the explosive market demand for our solutions, but also perfectly illustrates the compounding power of our business and the data flywheel.
Our commercial strategy for our mass production business can best be described as a blanket coverage strategy, in Chinese, [Non-English content]. In essence, this means maximizing our footprint to cover as many OEM customers and diverse vehicle models as possible. The logic behind this is clear. As competition in the automotive market intensifies, banking on a single vehicle model or hoping for a one-off blockbuster hit is far from enough to sustain long-term business viability. Furthermore, in today's highly complex and volatile environment, even our OEM clients find it incredibly difficult to accurately forecast the sales volume of any specific model. That is exactly why our strategic foundation relies on the law of large numbers. By diversifying our presence across a massive matrix of OEMs and vehicle models, we effectively neutralize individual market risks.
This is exactly how we will ensure our long-term victory in this ever-changing and highly unpredictable automotive landscape. During the first half of this year, we continued to deepen our partnerships with customers. Vehicles equipped with our solutions have delivered a growing number of best-selling models. Let me share a few standout examples. Among our domestic OEM customers, one leading partner's flagship large SUV is currently achieving monthly sales of approximately 10,000 units with Momenta solutions. Similarly, their mid to large SUV is recording about 14,000 units with our solutions in monthly sales. Furthermore, the MG 07 recorded sales of over 45,000 orders in just 19 days, and the Nissan Rogue secured over 10,000 blind booking orders in a mere seven days. Turning to our global OEMs and joint venture partners, we are experiencing equally strong momentum.
To name a few, the new BMW iX3 secured over 30,000 new orders within just two days, and the new generation Mercedes-Benz GLC SUV EV received more than 12,000 reservations within just 24 hours. Additionally, within the joint venture new energy SUV sector, models powered by Momenta solutions have consistently dominated the top five spots on the sales charts over recent months, with the [Non-English content] seven and Bozhi 3X serving as prime examples. This robust market validation proves our value. I firmly believe that the upcoming launch of our R7 solution will further empower our customers to continuously boost their vehicle sales performance. Securing high caliber customers and building long-term partnerships with them is no small achievement. This is particularly critical for our business, given the lengthy automotive industry product cycle.
Take Mercedes-Benz, our partner of more than nine years, as a perfect example of combined strategic investment and deep-rooted business partnership. Mercedes-Benz first engaged with and invested in Momenta back in 2017, followed by multiple subsequent rounds of investment. It also acted as a cornerstone investor in our IPO. Like I mentioned before, our intelligent driving solution has already been deployed on the all-new electric CLA. The all-electric GLC and GLE SUV made their debut recently. In addition, we will roll out our robotaxi services together in Abu Dhabi. Mercedes-Benz applies extremely rigorous standards when selecting trusted, advanced driving solution providers. Momenta has consistently delivered state-of-the-art solutions with remarkable speed to meet their requirements. Turning to our roadmap for next-generation capabilities, we have already initiated L3 R&D projects in collaboration with multiple OEMs.
In the first half of this year, we officially announced, alongside Audi, that the E7X model will serve as the launch model equipped with Momenta's Level 3 mass production solutions. Provided that the regulatory frameworks are in place, we expect to achieve mass production of L3-capable models within 2027. We firmly believe the commercialization of L3 will serve as a major catalyst for the whole industry, further accelerating the penetration rate of advanced intelligent driving. Regarding our global strategy, overseas expansion has clearly become a defining growth trend for us. As of today, vehicle models equipped with Momenta solutions have successfully expanded to 10 countries and regions around the world, including markets such as Norway, the U.K., the United Arab Emirates, Singapore, Australia, New Zealand, and Thailand. Our global expansion is advancing on two fronts.
Beyond supporting Chinese vehicle models in their overseas expansion, we are also actively progressing international projects directly with several global OEM customers. By combining the global rollout of Chinese models with the future mass production of these international projects, we are confident that our market penetration and brand influence on the global stage will be significantly strengthened. Next, let's move to our Robovan business. We established a strong foundation in 2025 by achieving our minimum viable product closed loop in Suzhou. Building on that, we have made highly positive progress in the first half of this year by officially launching small-scale trial operations. Empowered by our technological edge, our roadmap moving forward is clear. For the remainder of 2026, our goal is to complete commercial closed loop validation across two major domestic cities, supported by the operational launch of our Version 1.5 mass-produced vehicles.
Moving into 2027, we will enter a phase of rapid replication. We will expand our footprint to dozens of key domestic cities and take our first global step by entering the UAE market. This will be fueled by the delivery of multiple Version 1.5 models and our next-generation Version 2 vehicles. Finally, by 2028, these efforts will culminate in fully scaled operations across China and a robust international presence spanning the Middle East, Europe, Japan, South Korea, and Southeast Asia. All of this will be powered by a mature, comprehensive vehicle matrix, firmly securing our position as the industry leader, aiming to become the number one Robovan platform globally. Building on this momentum, we have already initiated a commercial deployment in the Robovan sector, securing preliminary commercial partnerships with multiple key customers.
Specifically, we are providing solutions for the express delivery network customers, including industry leaders such as JD.com, SF Express, and China Post, as well as franchise outlets of major players like [Non-English content], and J&T Express, just to name a few. Furthermore, our commercial scenarios are continuously expanding, now covering diverse use cases such as nighttime delivery, fresh produce, beverages, and fast-moving consumer goods. Similarly, our robotaxi business is making significant breakthroughs. By the first half of 2026, we secured crucial licenses and expanded our global footprint, with testing or operations now active across six cities in three countries. Focusing first on our domestic layout, we have successfully obtained licenses in four major Chinese cities. This rapid progress is a strong testament to both our technological maturity and our highly effective regulatory communication. Let me highlight these key milestones.
In Shanghai, we secured the driverless demonstration operation license in Pudong this January. We plan to officially launch public commercial operations jointly with EnjoyGo within 2026. Remarkably, it took us only eight months from starting road tests to securing this driverless license. This sets a new industry record and fully validates the safety and readiness of our technology. In Suzhou, we obtained the driverless demonstration application license in Xiangcheng District. This was the very first license of its kind in Jiangsu Province, marking a critical step in our commercial layout across the Yangtze River Delta. In Wuxi and Shenzhen, we have continuously expanded our testing footprint. We secured manned road test licenses in Wuxi this January, and most recently in Shenzhen this July, which proudly marks our official entry into the core of the Greater Bay Area.
Beyond our domestic achievements, our overseas expansion has been equally remarkable, proving the strong global generalization capability of our technology. In Abu Dhabi, we secured our road testing license in September 2025. Impressively, it took only three months from the arrival of our first vehicle to obtain this license, setting another local industry record for speed. Currently, we are actively pushing for the operational license and expanding our ODD. We are on track to launch public commercial operations within 2026 in close collaboration with our Middle Eastern partner, Lumo. In Germany, just this July, we reached a massive milestone by securing a nationwide Level 4 testing license from the KBA, the German Federal Motor Transport Authority. This allows us to conduct Level 4 autonomous driving tests on urban roads across the entire country. We are incredibly proud to be the very first Chinese company to receive this qualification.
This achievement not only validates the international competitiveness of our technology, but also lays a rock-solid foundation for our deep strategic layout in the European market. Looking ahead, we have a very clear roadmap for scaling our robotaxi business over the next few years. By firmly leveraging our data-driven map-free approach, we are rapidly expanding across both domestic and international markets. This strategy gives us the distinct advantages of massive data accumulation, significantly lower vehicle costs, and a much faster path to profitability. Let me share more details. By the end of 2026, we target to secure testing licenses in over 10 cities globally, with our fleet size reaching hundreds. Moving into 2027, we plan to expand our footprint to over 30+ cities worldwide, scaling our fleet to thousands.
More importantly, from a technology standpoint, we expect our algorithmic safety to achieve a level that is 10 x safer than average human drivers. Building upon this foundation of safety, 2028 will mark the year of massive scaled operations for us. We will successfully transition our robotaxi fleet from pilot trial capacities into a normalized, everyday commercial mobility service. This milestone will signify our ultimate leap from technological leadership to large-scale commercial operation. All of these incredible commercial milestones, from mass production to our global robotaxi fleet, are driven by one unified technological core. As we accelerate toward the large-scale commercialization of L4 autonomous driving, we remain firmly committed to our data-driven technology path. Today, I want to clearly define Momenta's core positioning in this new era. Our core positioning is building global leading world model foundation platform. This single powerful foundation empowers our entire ecosystem.
It horizontally integrates our solution across mass production, Robovans, robotaxis, and robotrucks. Looking even further ahead, it lays the very groundwork for what we call real intelligence, bringing Embodied AI into the physical world. We truly believe autonomous driving is the first massive application of physical AI. To achieve large-scale L4 commercialization, our world model platform relies on three core layers: pre-training, simulation, and reinforcement learning. First, pre-training. Feeding on massive data from over 1 million vehicles, 13 billion driving miles, and over 100 million golden data clips, our model is able to directly internalize physical loss. Second, simulation. We significantly boost our validation efficiency by focusing on scarce, long-tail scenarios and applying scientifically weighted mapping. Currently, we run 10 million simulated kilometers every single day. We intelligently categorize our datasets by reproduction difficulty, extremely difficult, moderately difficult, and easy, applying corresponding mapping weights.
Through this scientific approach, our 10 million simulated kilometers are actually equivalent to a staggering over 4 billion km of real-world road testing. This perfectly recreates long-tail hazards and drastically reduces our physical testing cost. Third, reinforcement learning. Through a continuous reward mechanism, our AI doesn't just copy good human drivers, it actively evolves to surpass them in both safety and efficiency. Ultimately, our world model is driven by a powerful positive data flywheel across four dimensions. First, data scaling. Our real-world driving data will grow from 10 billion km in April to 24 billion km by the end of this year, creating an unmatched closed-loop data barrier. Second, compute scaling. In the cloud, we are expanding from 20,000 to up to 60,000 GPUs this year. Third, model scaling. Fueled by this data and the compute power, our model parameters are expanding rapidly.
Finally, business scaling. Bigger models deliver better product experiences, which secures more design wins and drives revenue. More vehicles generate more data, and more revenue funds more compute. It is a perfect self-accelerating cycle. Powered by this unified platform, we are now rapidly expanding our commercial footprint from mass production into our Robovan and robotaxi operations globally. With that, I will conclude the strategic and business overview. I will now hand the call back to our moderator. Thank you.
Thanks, Xudong. Now, to discuss our financial results for the first half of the year, I will hand the call over to our Chief of Staff, An Ren. Ren, please go ahead.
Thank you, Simon, and hello, everyone. I am An Ren, Chief of Staff of Momenta. Please note that we will discuss some non-IFRS financial measures today. You can find detailed explanations in our earnings release and our filings with The Stock Exchange of Hong Kong. As Xudong highlighted earlier, I am very pleased to report that we delivered an exceptionally strong financial performance in the first half of the year. Our results are characterized by robust top-line growth, coupled with resilient pricing. For the first half of 2026, our total revenue reached RMB 1.6 billion, representing a significant year-over-year increase of 76%. Breaking down that top line, our NRE revenue reached RMB 995 million. This was fueled by our growing customer base, especially among global OEMs, combined with higher delivery volumes, thanks to our improved efficiency. Meanwhile, our licensing revenue reached RMB 607 million.
This growth was driven by a rapid increase in Urban NOA penetration in the first half of this year. As the market leader, we also accelerated mass production across more vehicle models, directly driving our rapid sales growth. In a highly competitive market environment, our licensing ASP has remained highly stable. This powerful combination of surging revenue and a stable ASP clearly demonstrates the premium value that our OEM customers place on our technology. Moving further down the income statement, our profitability profile continues to strengthen. For the first half of the year, our growth profit reached RMB 1.2 billion, representing a stellar 75% growth year-over-year. Now, turning to our bottom line, we made substantial progress. Our adjusted net loss narrowed by an impressive 97% year-over-year to just RMB 14 million.
In short, our business is scaling rapidly, our margins are expanding, and we are on track to move toward profitability in the long term. However, echoing Xudong's earlier point, maximizing short-term profitability is not our immediate focus. Moving into the second half, we will sustain our strategic investments in R&D, computing infrastructure, and the commercial scaling of our robot businesses. We are continuing to step up our investments in R&D. For the first half of the year, our R&D expenses reached RMB 1.2 billion, representing a 19% increase year-over-year. At the same time, our combined selling, general, and administrative expenses grew by approximately 50% year-over-year as we continue to scale our commercial operations globally. What this tells us is that our overall operating leverage is continuously improving. Beyond the income statement, this operational excellence also extends to our working capital. This efficiency is directly reflected in our cash flow.
During the reporting period, our operating net cash outflow narrowed significantly to RMB 381 million, representing a robust 46.8% improvement year-over-year. Our accounts receivable days have continued to improve steadily and modestly to 105 days. These metrics are clear indicators that our organic cash generation capability is strengthening rapidly. Furthermore, our balance sheet remains exceptionally strong. We currently hold approximately RMB 15 billion in cash reserves after IPO. This robust liquidity provides us with an abundant runway and deep financial resources, ensuring we are fully funded to support our long-term strategic investments and the technological R&D. That concludes our prepared remarks for today. Thank you all for your time and attention. Operator, we are now ready to open the call for questions.
Thank you. We will now begin the question and answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask your question in Chinese, please repeat it in English immediately after asking. There may be a short pause as we compile the Q&A roster. We will now take our first question. Our first question comes from Liping Zhao of CICC. Please go ahead, Liping, your line is open.
[Non-English content] I'll translate by myself. Good evening. Thanks for taking my questions, and congratulations to the company on your outstanding performance in the first half of the year. Given the overall slowdown in automotive demand in the first half of this year, how does Momenta maintain high revenue growth in such an environment? I would like to ask for your views on the long-term competitive landscape of this industry and how the company maintains its leading position as the number one in the third-party supplier market. Thank you.
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Now is the translation. Thank you, Liping. Autonomous driving is a massive market with very high potential. We see that in 2025, the penetration rate of Urban NOA in China was roughly more than 10%. We see that in the first half of this year, this penetration rate has been rising towards more than 15%, which is showing a very rapid growth. Delivering strong performance essentially boils down to consistently building a good technology, building a good product, and good execution. I will later on introduce how we have managed to perform very well in technology. For the product itself, for last year, Momenta has already introduced our R6 model, which is our reinforcement learning model. R7 model, introduced this year, is a world model. Driven by continuous technological and product innovation, we provide end users with a safe, seamless experience that they truly value and rely on.
In terms of delivery and execution, our execution efficiency has also been further improved. Last year, we delivered roughly 40 vehicle types, and for the first half of this year alone, we delivered around 37 types. We are customer centric. Every day we think about how to deliver better customer experience, better customer service. I think about it, our senior executives think about it, and our whole team thinks about it. Thank you.
[Non-English content] A quick follow-up question on this. We highly recognize the world model foundation proposed by Momenta, and would like to learn more about its latest progress. Thank you.
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Thank you for your good question. We have made a lot of progress in our R7 model, which has been centered around, first of all, model scaling, and secondly, data scaling. Leveraging advances in model and data scaling, we have started delivering the R7 model to key customers. R7 has achieved a 3 x- 5x improvement over R6 across many scenarios. From a cost perspective, R7 imposes no additional burden on our customers as its sensor configuration and chip configuration inherits that of the R6. We expect that a broad lineup of vehicles to adopt the R7 model in the second half of the year, including but not limited to the [Volkswagen ID.A ura T6], Cadillac XT5, Mercedes-Benz GLE, and BMW iX3, etc. Thank you.
Thank you. We will now move to our next question. Our next question comes from Bin Wang of Deutsche Bank. Please ask your question, Bin, your line is open.
[Non-English content] Could management provide update about the current progress in the global expansion, specifically regarding the deployment of both export vehicle and overseas meta models? Additionally, we are looking for further scale of the overseas business. What do you think are the key bottlenecks right now? Would it be the customer onboarding or product certification, localization capability or just the product competitiveness? Thank you.
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Thank you for your question. I will address it through three points. First of all, the progress of advanced intelligent driving in overseas markets has historically been slower than that in China, primarily due to stricter legal and regulatory frameworks. However, we are beginning to see positive shifts. For instance, regulations such as DCAS, Driver Control Assistance Systems in Europe are starting to relax, and we anticipate that the regulatory environment will open up for Urban NOA around in 2027. Second, once Urban NOA is legally permitted in these international markets, both Tesla and Chinese OEMs are planning to roll out their NOA features. Consequently, we expect the competition for Urban NOA in overseas markets to intensify significantly. Third, Momenta has already made substantial strategic progress globally to capture this opportunity.
First of all, we already have multiple vehicle models exported globally. To date, vehicles equipped with Momenta solutions have established a footprint across ten overseas countries and regions. Secondly, as Tesla and Chinese OEMs expand into international markets, traditional global OEMs are feeling an increasingly urgent need for Urban NOA capabilities. Leveraging our long-standing partnerships with these global customers, along with our massive accumulation of real-world driving data both domestically and internationally, Momenta is uniquely positioned. We can rapidly adapt our algorithms to local environments, thereby accelerating the mass production and deployment of localized models for global OEMs in their respective markets. Thank you.
Thank you. We will now proceed to take our next question. Our next question comes from Junming Zhang of Morgan Stanley. Please ask your question, Junming, your line is open.
[Non-English content] First, congratulations to Momenta on your outstanding first half results. I have two questions. First one is on project pipeline. You have 219 vehicle nominations, including 114 yet to enter production. As OEM accelerate model refresh cycle, are your criteria for selecting new projects also changing? Given your current resource base, what would you consider a reasonable level of outstanding projects that you can support? Thank you.
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Thank you, Junming, for your great question. First, to address your question regarding pipeline, I am very confident to reiterate that from the statements that you have previously heard from Xudong and Huan, we have a very strong and abundant pipeline on the road. What is worth mentioning is that the pipeline orders of Momenta follows the law of big numbers, which means that we do not singly solely rely on a single type of car models rather than given the dominance and increasing market share that we have, we cover a diversified portfolio of different car types and car type portfolios, therefore enable us to weather through different volatility in the very volatile car auto markets, and therefore sustains our stable growth down the road. Actually the sharp narrowing of our losses and improved operating cash flow were very well within our expectations so far.
We always argue that autonomous driving inherently burns cash is a total misconception. For startup, managing cash flow and the path to profitability is our ultimate responsibility to our customers. It gave us the independence to decisively invest in R&D and iterate the products without constantly relying on investor funding. This comes down to three things. First, our strategic judgment. From day one, Momenta has been highly capable at sizing markets, setting priorities, and timing our entries. This ensured we didn't burn money in the wrong places at the wrong time. Second, our pricing power and financial discipline. We serve top-tier customers by constantly elevating the product experience, which helps us bypass price wars. Also, we maintain a very healthy accounts receivable days of around 105 days.
Third, our mainline culture, which is deeply rooted in systematic capacity building. Building, reusing, tooling, and automating mainline is our daily habit. This capability allowed us to shrink vehicle delivery efforts from 400 people over two years down to just dozens of people in three months. This is a scalable software mindset, not a project mindset. Today, the culture has spread across every department, and our rule is very simple: Do it the first time, get a result, then build a system. To repeat it, build the system first to guarantee the result. Finally, to be clear, short-term profitability is not our immediate goal, and we will never compromise our tech leadership for quick financial gains. Rather than high efficiency, aggressive investments will also continue to come.
Thank you for your detailed answer. My second question was actually on cash flow and profitability, and you've already addressed it. I have no further question. Thank you.
Thank you. We will now move to our next question. Our next question comes from Yi Xi Lian of CITIC. Please ask your question, Yi Xi, your line is open.
[Non-English content] This Robo Week and had the opportunity to test drive the latest robotaxi and the Robovan product recently. The experience was excellent. My question for Cao is how will management develop Momenta L4's business going forward? Thank you.
[Non-English content]
Thank you very much for the question. I once used an analogy doing another event for the different process for building up a company from day one. There are basically two types of process. Many people set out with an ambitious goal to land on the moon. Then they figure out that since Mount Everest is the closest point to the moon, they decide to climb it. Yet to reach the moon, what you really need to do is to build the rockets. From my perspective, delivering L2 mass produced solutions is exactly how we could build that rocket rather than going to the moon directly. Landing on the moon, which represents our end goal of large-scale L4 driverless deployment. By contrast, climbing Mount Everest is analogous to building a dedicated fleet, a path that will prove difficult to sustain for commercialization and technical iteration over the long run.
For a long time, we have focused on accumulating massive volumes of raw data and activating our moat, the data flywheel. Today, our rocket is ready, and we can accelerate progress towards landing on the moon. As a result, you will begin to see tangible advances in our L4 initiatives. Five years from now, in the global market, we project a robotaxi market volume of 1.5 million units, with an annual gross margin of $10,000 per vehicle. For Robovan, we assume a market volume of 3 million units with an annual gross margin of $2,000 per vehicle. Combined, this represents a total addressable market exceeding $20 billion. Accordingly, we are targeting truly scalable segments rather than competing in small, low-barrier markets.
That said, thorough preparation is essential throughout this journey. Scaling up must follow a measured pace, and any groundbreaking innovation requires step-by-step validation. At the tactical execution level, our overall advancement framework revolves around two core pillars: one is safety and the other one is regulation. On the safety side, for driverless vehicles, we aim for an exceptionally high safety standard of near to zero failure performance, and we aim to improve our safety performance by almost 10 x every year. So that in order to reach the real scalable robot, it has to be at least 10 x much safer than human driving levels. For regulation, in my view, stringent regulation and controlled rollout speed are positive developments.
High standards create high entry barriers, which in turn foster a market environment where high quality players crowd out those inferior ones. We embrace regulation, and we maintain deliberate control over our rollout speed. As a result, drawing on our safety compliance expertise cultivated from our L2 mass production products and the strong generalization capability of our models, we have secured nationwide L4 testing licenses in Germany as well as a permit in Abu Dhabi. Thank you.
Thank you. We will now move to our next question. Our next question comes from Joey Yang of Bank of America Securities. Please ask your question, Joey. Your line is open.
[Non-English content] Also my question is, given the intense price competition taking place among the domestic OEMs, will this trend exert downward pressure on your licensing ASP and overall gross margin? How would you defend your premium pricing power going forward? Thank you.
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Thank you for the question, Joey. I will address this in three points. First of all, regarding our current ASP and pricing power, we have seen the intense price competition in the domestic market, and it has indeed placed pressure across the supply chain. Moving forward, you might see some adjustments in our ASP, but I want to be clear that this does not indicate a loss of pricing power of Momenta. Rather, it reflects our tiered pricing strategy and tiered pricing structure or what we call volume discounts as our mass production scales exponentially. Sharing the marginal cost reductions derived from economics of scale with our OEM partners is a healthy win-win commercial strategy.
Secondly, I want to reiterate that Momenta will never chase deals by blindly following the market and cutting prices without bottom lines. Autonomous driving is fundamentally a matter of life safety. A system that is cheap but unsafe will inevitably backfire and severely damage an OEM's brand reputation. Our premium pricing power is backed by tangible performance data. On certain models we partner with, the advanced ADAS optional package priced at over RMB 10,000 continues to achieve an impressive take rate of over 80%. This clearly proves that once the product experience crosses the threshold of user trust, consumers are more than willing to pay a premium for ultimate safety and exceptional driving experience.
Thirdly, regarding our future monetization models, we are actively exploring subscription models targeting end customers with our OEM clients, and leading industry indicators have already validated this path. Driven by a generational leap in product experience, the subscription rate for Tesla's v14 version surged to around 50% in the first half of this year. This demonstrates that delivering a disruptive experience is the absolute key to unlocking sustained consumer willingness to pay. At the same time, we are relentlessly advancing towards L3 autonomy with the upcoming launch of partnered models like the Audi E7X, coupled with the anticipated rollout of relevant regulations next year, intelligent driving business model is transitioning from licenses to subscription, enabling a step change in the per-vehicle revenue. Thank you.
Thank you. We have now reached the end of the question and answer session, and with that, we conclude our conference for today. Thank you for participating. You may now disconnect your line.