Good evening. I'm your host, Zhu Jiangming, from Zhejiang Leapmotor. We also don't fear change, and I believe in change. Welcome to the 2024 Q3 Earnings Call for Leapmotor. Present today, we have Leapmotor Founder, CEO, Chairman, Mr. Zhu Jiangming, Co-President, Mr. Wu Qiang, and also Shen Ke , Board Deputy. First of all, we're going to have Mr. Shen Ke formally deliver the audit disclaimer.
Thank you. Dear investors, good evening. The earnings call of Leapmotor may include forward-looking statements, specifically including but not limited to statements regarding the company's future financial strategy, strategy objectives, targets, and future market conditions in which the company participates or will participate. These forward-looking statements are based on the company's current and future business development strategies and the company's assumptions about the future business environment, which inevitably involves some known or unknown risks and uncertainties.
These factors, which the company cannot predict nor control, may cause the actual performance of the company and the performance of the industry in which the company operates to differ from the future performance expressed or implied in the forward-looking statements. Therefore, we caution that no undue reliance should be placed on the forward-looking statements discussed in this call. These statements only reflect the opinions of the company's management as of the date 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 other circumstances. The forward-looking events discussed in this call may not occur due to various uncertainties and assumptions. The above disclaimer applies to all forward-looking statements mentioned in this call.
In addition, shareholders and potential investors are reminded that nothing contained in this earnings call constitutes any investment advice, nor does it constitute the basis or ground for any contract commitment or investment decisions. Shareholders and potential investors are advised to act with discretion and caution when trading the company's shares.
Thank you. Thank you, Mr. Zhu. Now, may I ask Mr. Wu Qiang to cover Q3 performance 2024?
Thank you. Good evening. Welcome to the Leapmotor Q3 2024 earnings call. On the slide, we have a PowerPoint slide. If you're able to see it, we'd like to use it as a summary. First of all, in the third quarter, we have made many important progress. The third quarter delivery was 86,165, which is up by 61% Q- on- Q and 94% year on year. Among the delivered products, we're also seeing further optimization in Q3.
C-series accounted for 78.3% in terms of revenue. The third quarter revenue, CNY 9.8 billion revenue, represents 84% Q- on- Q and 74% gross year on year. And the GP margin in Q3 massively improved to 8.1% compared with the first nine months of the year, averaged only 4.8%. That was a massive improvement. Therefore, the Q3 net loss has been massively narrowed to only CNY 690 million. And also operating cash flow is steadily growing.
The Q3 operating cash flow was CNY 1.96 billion. And we also have a lot of cash at hand at CNY 18.7 billion cash at hand. And also in Q3, in terms of channel buildup, we are further deploying our channels. In overseas, based on our deployment by the end of October, in Europe, our distributor store will reach 339. So that is a basic summary. I'm going to provide a bit more details.
Now, on this slide, we're looking at our monthly sales, which is setting records month after month, and we can see from January to September this year and also October compared with 2023, we are seeing new highs being made every month, and also the models are seeing optimization of the model mix from Q1, Q2, Q3. The C-series contribution grew from 72% in Q1 to 75% Q2 and 78% Q3. So there was a constant improvement in the product mix, so the first nine months of the year, the total sales was 172.8 thousand units, and also on the 17th of October, we achieved the 500,000 units building out the production line, a landmark event. In October, the sales was 38.1 thousand, and the order in October is over 40,000. C11, C10, and C16, the three SUV orders exceed 10,000 each.
C11, C10, C16, the three SUVs come together to an excellent product mix to meet consumer different needs. The three models continue to ramp up volume so that Leapmotor is the only one where we have over 10,000 orders for three SUVs in the range of CNY 100-CNY 200,000. In terms of sales ranking, for many months, we are steadily among the top three of sales. Among the startups, we're basically top three. In the last week of September, the weekly sales was over 10,000. So we are moving up to the second place of startups, OEMs. Overall, business performance steadily grows, and profitability also improves significantly, and we have positive operating cash flow and sufficient funding.
You can see from the chart in Q3, CNY 9.86 billion of sales up by 84% Q- on- Q, 74% year on year, thanks to the significant growth delivery and improvement of product mix. Q3 8.1% also improved on GP margin compared with Q2, which is 2.8%. So we expect in 2024, the GP margin target will exceed our target, which is above the average 5%.
So the loss of CNY 690 million compared with last year, the first one and second quarter, it has been massively narrowed in terms of loss. It is because of the growth of sales and sales growth of revenue, improvement of profit margin, and control of costs. In Q3, operating cash flow CNY 1.96 billion, capital CapEx CNY 640 million. So free cash flows were CNY 1.3 billion. So Q4 operating cash flow will continue to be positive, both operating and net cash.
All the financial metrics go to show that while Leapmotor continues to improve on almost all metrics, C10, C16, and remodeled C11, C01, we continue our deployment and deploying the latest technology so that we completed the deployment of rollout of C lineups. These four models of C-series have formed a matrix in the price range of CNY 100,000-CNY 200,000 that target different markets, like five-seater SUV, six-seater SUV, and five-seater sedan. The six-seater SUV, the C16, provides the spacious feel of MPV, but also a style SUV with the Snapdragon 8295 chip and also the X chips and LiDAR. The BEV model achieved the 800V silicon carbide high voltage platform and three-in-one electric drive assembly, which have high performance, high efficiency, high intelligence, and high lifespan.
And also the first C10 that's designed by the five-star standard, both in China and Europe. The C10 chassis tuning was in collaboration with Stellantis and Maserati team to get to the premium car maneuverability. The company continues to build in China as the largest single market, but also expanding overseas, working with Stellantis, continuing to expand. T03 and C10 have completed the European Union WVTA certification. End of September, it's been launched officially in Europe by Leapmotor International. C01 is also a large five-seater. It's actually achieving top five in the NEV models.
A great result. After the C-series, in China and the world, we're going to launch our new generation B-series. The first model, B10, has made its debut on the 14th of October in Paris car show and also achieving great expectation and attention. This B10 is a compact SUV focusing on 100-150 thousand RMB market.
We expect by the Q1 2024, it's going to be launched in China. It's based on Leapmotor's brand new Leap 3.5 architecture with Qualcomm 8295 chip, with an AI large language model with LiDAR and Qualcomm's 8650 self-driving chip, so achieve the urban and expressway high advanced autonomous driving, assisted driving. Leap 3.5 architecture using higher integrated central controller with high integration multi-core electric power drive system with the new generation of control system. B-series is going to face the largest segment in China.
It's going to be the great growth driver for the company in 2025. In terms of R&D, we perform OTA in July for all the upgrades for the smart cockpit, and also AI model was launched in C10 so that we have the automobile assistance encyclopedia, so we are the first to launch AI model of the same price range.
In October, the OTA C10 also added 31 new features. After launch of C16, also we have performed the first OTA push with 39 new features and optimization. In terms of R&D, we'll continue to step up our R&D investment and achieve great progress. In the highway NAP and urban NAC, we are now rolling out end-to-end large model smart driving system development. In talent recruitment, right now we have over 400 R&D engineers. By the end of the year, it's going to be 500. In terms of AI computing, data infrastructure, we continue to build up the resources to make sure we have end-to-end AI large language model R&D and also volume delivery by 2025. In terms of channel, we continue to have one plus one channel model to expand the channel expansion and transformation.
By the end of September, our sales network covers 204 cities with 493 sales outlets and 362 service outlets. We expect over 700 sales outlets by the end of the year and over 400 service outlets by the end of the year. In terms of overseas, we were the fastest among all the Chinese EV makers to implement T03, C10 in Europe. As well as the first B10 as a historical trajectory. In overseas development, Stellantis helped Leapmotor products into the international market and providing support to the service customer services. As of October, we have 339 distributor stores in Europe, and they all have sales after-sales functionalities. Leapmotor International will deploy in Asia Pacific, Middle East, Africa, South America, forming a network of 500 stores.
In Europe, after sales, spare part delivery is having a spare part depot, five spare part sub-depots, and 140 district distribution centers so that we have twice a day delivery to the service networks. So in Q4, if you were to make any outlook, there will be a continuation of the rapid growth and improvement of financial performance. In sales, based on the hot-selling C-series product, we'll continue to grow our sales. We expect this year we're going to outperform our budget, which was 250,000 units. Better performance and finance. In GP margin, we're going to continue the favorable GP margin since Q3. Net loss should be narrowing consistently. On the 15th of November, in Guangzhou car show, we're going to make a debut of the brand new 3.5 architecture B-series, which is B10. So those are the summary of the Q3.
Let's have a discussion together with our chairman, Mr. Jiangming. Thank you.
Thank you, management, for excellent sharing. We're going to allow more time for investors. Operators, how do we ask questions, please?
Hi. If you have any questions, you can press the star and press one. Those are internet audience. You can enter a question in the chat box or press the raise hand button to ask a question. Again, you can ask questions on the phone, on the internet portal, or write down your question in the chat box. Thank you.
Hello, good evening. I'm Ying Dong from CICC. Congratulations to excellent results. We're very happy to see that Q3, now your sales order, GP margin, cash flow, or net profit, narrowing of the loss. We have seen a very strong momentum. I have two questions, starting with two questions.
First of all, I'd like to ask, what's your view on the subsequent sales and GP margin, the latest guidance? Mr. Wu talked about the sales and GP margin. We should be beating our budget this year. So what kind of level can we expect? And also, what about next year? Do we have any new guidance for next year? And the second question has to do with your B-series. After launch of B-series, what's your capacity planning and the CapEx guidance?
Hi, good evening. Let me take your first question regarding sales because today is the middle of November already. And you can see October, there were excellent results in October. We have 42,000 kind of order, competitive order, which is we can expect that in Q4, the sales should be massively higher as well compared with Q3.
So in terms of sales, we already have such a high base, like 40,000 competitive order in October. So in the coming two months, I think the Chinese government policy continues. The sales are still being supported. When it comes to GP margin, we were talking about Q3, we got to 8.1% on average. That was keep getting better and better. So we expect in Q4, there should be even better performance. Now, in terms of guidance for next year, because this is Q4, we are hopeful to get to 40,000 per month of sales for the full year. So we are aiming at 500,000 or even higher kind of as a target. We do have a foundation to aim that high because our C-series, our C-series, we are selling 10,000 every model.
Next year, by the middle of next year, C-series, we are going to further build on the product execution of C-series. And also, we are talking about the launch of B-series, which is a highlight for next year. We are going to be launching multiple models in the B-series based on the B platform. So in terms of sales, it is also going to contribute to next year as a substantial boost because the B-series and the T03 model, well, our C-series is really the Class A model. The Class A is the biggest segment, CNY 150,000 price range. In China, this is still the largest selling segment.
So therefore, Leapmotor, next year and also the year beyond, we are going to get an even greater potential for higher sales. So that was the C-series. Now, when it comes to B-series, it is a brand new platform, which is based on the Leap 3.5.
The 3.5 architecture includes autonomous driving, cockpit, and with higher-level integration, the HPC, central controller with highly integrated power electric drive system, and OBC, DC-DC are integrated, so technology is even more integrated. We're using the latest generation of our in-house Leapmotor super thermal management system. This is also something we're really looking forward to, so next year, the Leapmotor 3.5, the B-series, the latest generation of technology, so in terms of cost, performance, and reliability, the B-series will keep scaling new highs.
So I think with the addition of B-series, the sales of Leapmotor next year should be something we can look forward to. Now, regarding GP margin, now we continue to work on economies of scale, and we work to improve efficiency, reduce costs, and so it's going to be following the Leapmotor's objective, where we aim for 5% GP margin this year, next year above 10% GP margin.
So that was roughly our guidance for you at this moment. But I think we can get there faster. We can get there faster and better. Second question about the B-series capacity. Well, because in production, well, our order delivery is subject to the capacity. We have two factories in Jinhua put together. It's about 40,000, a little bit more than 40,000 capacity. And it's fully loaded, it's fully utilized. S
o we are accelerating the new factory in Hangzhou. We believe we're going to build up a new capacity in Qiantang of Hangzhou City. We hope by the first half of next year, it should be put into production as the progress goes for factory in Jinhua. We are planning, quite busy planning. So maybe end of next year or early beginning of the end of the beginning of next year to be a third factory.
We plan for a million units. So that was our plan for capacity. But that will not happen until the end of next year. So in terms of capacity, we are leaning in the future. We have significant support from the capacity supply.
Okay, thank you. That was very clear, giving us a bit more confidence and something to look forward to. Perhaps we can get more time for analysts, investors. Can we get questions from the line, please? Phone number ended 4626. You have the floor, please.
Hi. Thank you, Mr. Zhu, Mr. Wu. Thank you. I have two questions for you related overseas because we have seen that in October, you are there at the Paris car show. So my question is, now the first question is, we look at the European sales. What are the target audience appealing to, and how do you convert the target audience?
You see, you have a fleet going on tour in Europe. What are you doing to persuade these European consumers to convert them? How are they interested? How appealing is it to consumers? I mean, can you get some quantitative color to the sales? And secondly, we're looking at China-Europe. The geopolitical subtlety is really something we're looking to. So my question is, over the longer term, you are localizing in Europe. Are you remaining committed to localization in Europe? I mean, regardless of the relation between China-Europe or regardless of other partner or change of partner, are you able to carry out with the strategy of localization? Are you able to carry out and continue with the execution of the localization?
Okay. Thank you first to your first question. As I mentioned, Europe. In May, we have set up the company.
In March, we're starting to build a team in March and in May, we have the team put together in September. Leapmotor, we have T03, C10, passed the European Union certification. At the same time, based on our partner, Stellantis, leveraging on the existing dealer distributor network, so very quickly, in September, October, we are developing 350 distributor network and dealer network so that the cars are in the store now, so right now, in terms of the European distribution network, I think the network and the overall back-end service system, because we're using Stellantis, where they have existing dealers' network, so we have that already and we are not only selling the two models only because this is the original store. Because at Stellantis, they have 14 auto brands, so every dealer, they operate and carry multiple brands.
So all they need to do is give some space to Leapmotor and place it into the showroom. And we're going to generate sales. So this is the fastest way, the cheapest way to get to launch in Europe and to build up our dealer network in Europe. That's the fastest way and the most cost-effective way. The two models, C10, is a bestseller in China. We're selling 10,000 and 12,000 a month already. C10, 12,000 a month in China.
So in Europe, it's a flagship model. It's a flagship for Europe because generally, the automobile demand, they like it to be compact. Like C10 is a big model in Europe already. T03 is only a kind of a delicate and small model. It's kind of an AOO class in Europe. The model strategy for Leapmotor is, first of all, we want to build up a benchmark.
We want to use C10 to benchmark some of the best models in Europe, like Volkswagen ID.4 and Tesla Model Y, so they are at the same volume, similar performance, and also, we have even better intelligent features, so this is a flagship model by Leapmotor, and T03 was a volume driver, so at the moment, in terms of user acceptance for the appearance, internal trim, texture, maneuverability, people are very happy. They are very happy. The sales is going very well. I mean, Q3, we have exported over 6,000 units, so the sales momentum has been excellent.
Now, regarding geopolitics, indeed, this is a delicate timing. This is not a good timing to go global because the European Union just slapped 20% more duty, so we have to pay 30% duty exporting to Europe, so this is making it a bit more difficult to sell to Europe.
Europe and the global electrification is also seeing some headwinds in terms of geopolitics and governments' intentions. We also have to pay 30% tax. But if you look at it in China, you can see the future. Electrification is irreversible. In the future, there's still going to be a lot of drivers to motivate them to further go electric, to go NEV. Because why NEV has been so successful in China?
Because it has better maneuverability, drives better experience, a lower cost of use, and almost the same cost with ICE model. So naturally, it's a better product. If it's a better product, there's going to be a bigger market. So in many countries in the world, the oil versus the power is similar to China. The oil price versus electric tariff is similar. Like in Spain, oil and power is the same with China.
It's all 1.5x, right? So whatever works in China, it should work in those countries. And with the Chinese NEV progression, the cost of the automobile will benefit from bigger economy of scale. And this will further penetrate to overseas. Now, because of such a high tariff as Leapmotor, we need to further accelerate our localization. We are even more determined because we have 30% tariff. You have to put a freight. At least a car will cost EUR 1,000 shipment from China to Europe. So everything put together, I think selling EV to Europe is almost not competitive, even if we have the economy of scale. But if you are exporting whole cars, you don't really have a chance. So this is actually accelerating our resolution to go local.
We're accelerating a suitable place using Stellantis' advantage in the local where they have existing manufacturing capabilities so that we can deploy localization production of Leapmotor automobiles. So I think that is what I'm just talking about. We are very good at two things. First of all, we have dealers' network. We can quickly deploy into dealer network with the lowest cost by using the existing service network of Stellantis. So Leapmotor, we can deliver spare parts faster in Europe than in China. In China, it will take 48 hours. This is one thing. The other thing is Leapmotor is the best suited. Among all the Chinese OEMs, it's best suited to be deploying localization production. For localized production, Leapmotor also has enjoyed a unique advantage.
Okay, thank you. Thank you. That's very clear. I believe with localization, you definitely will create even better products to meet the demands.
Thank you.
Next caller, 9596. You have the floor, please.
Okay, thank you. I'm auto analyst, Liu Ling from Haitong Securities. Now, first of all, you can see excellent. You have excellent earnings and margin. We're very excited. Two questions for you. First of all, we can see in some of the months, the European passenger car NEV, we have seen some drops of sales. So I wonder, has the drop impacted or changed your shipment guidance or profit guidance for Europe? And secondly, your overall observation, is there any change to the demand for EREVs in Europe? Now, if we can see some observation of demand, would that impact your subsequent product rollout?
Yes, thank you. Indeed, European Union, Europe as a whole, the sales, we have some overall decline because the economy in Europe, we have war and everything. So they're declining.
Of course, Leapmotor, we have set 8,000-12,000 as our target. We remain confident in delivering that target. Because in Q3, we already exported over 6,000 units. And we also have like 12,000 units of order at hand. So Q4, if we are selling another 6,000, it's still quite possible. So second thing about the profitability, indeed, because of the additional tariff, this has indeed cut away a lot of profitability. The biggest objective is hopefully we can drive the sales up so that we can reduce the impact to profitability.
In terms of the sales of Leapmotor in the future, I think within two years, we're going to be relying on the Chinese market because for overseas market, it takes time for them to get to understand a new brand, getting user buy-in, and for the product to be rolled out completely for every series, every segment to deploy, it takes a process. In doing so, we want to expand the economies of scale. We want to expand size. And as I mentioned, we hope to get to localized production as soon as possible. This will be helpful for supporting the cost and getting advantage from the cost perspective. And based on our model, our rapid deployment model, we are able to get to this advantage. Now, the second question has to do with the EREV demand.
We can see indeed there was a significant demand for extended range EV because it depends on the habit, right? During weekend, they want to travel far. But normal days, they just travel in the urban city. So they do need a long-haul security. Like they can go to Europe. There are lots of charging facilities, but many charging facilities are still not yet built. So they do need an EREV to support the longer range. And also because Europe, they are more demanding in terms of the drivability. I believe many analysts have been to Europe. Europe, they drive very fast.
They drive so fast. So they are very demanding in terms of the maneuverability. This is exactly where EV comes into play because from 0 to 50, EV will be excellent to give that acceleration, giving you better experience of driving.
So EREV is a great fit for a market in Europe.
Thank you. Thank you. That was very clear. Thank you.
Next question from investor ended with 0521, please.
Thank you, Mr. Wu, Mr. Chen, for having me. I'm from Shanghai Securities auto analyst, Wang Zhao. Congratulations again to excellent earnings results. I have two questions for you. First of all, GP margin, yeah, there's a big improvement. You talk about product mix improvement, economy of scale. But is it possible to give a bit more color on the attribution? I mean, how much margin improvement comes from economy of scale? How much coming from cost structure? A bit of attribution, please. And second question about intelligent. As you can see, first half next year, autonomous driving will be an intelligent feature we launch.
So next year, are we able to see as a standard outfit like B10? They do have some LiDAR. Is it going to be available in all models? So if that's the case, what is your R&D investment next year? And how much do you expect to spend?
Right. First of all, on GP margin, we have been constantly dropping down costs. Everybody is involved working together without compromising quality. And even with improved quality, we're trying to drive down cost. Secondly, economy of scale, this is quite a very significant driver because in third quarter, we have explosive growth. GP margin was so much higher. It's really because C10, C16. As I mentioned, the improvement of product makes because T03 was a smaller portion. We now have C11, C16. It's about 16,000-20,000 a month. T03, we intentionally cut back on T03 shipment.
This month, it's only 4,000. This month, 4,000, 5,000, T03. Most of the sales will be high value. For our models, they are actually profit-making. This is a product mix. Secondly, as I mentioned, C10 and C11, this is a platform model. They are excellent building on platform. 70%-80% of the components are the same of the two models. You are looking at a six-seater versus a five-seater. But have you noticed many like hood or the lamp and front seat? They're all the same component. They share most of the components. This is really helping us with economy scale. In the future, we're going to drive more toward the platform-based model. We're also going to drive up the advantage from economy scale because indeed, our Q4 margin is something we're really looking forward to.
Now, when it comes to intelligence, we have just talked about from 2021. We are building intelligence a team. We are shifting our way. We have the chips. We have hardware. We have the full stack in-house and camera and LiDAR. We have everything in-house, but from 2021, we're starting to focus on intelligent driving algorithm. We have reshuffled our team, built a new team, so after three years, we are now able to get close to the level of the tier-one teams.
We have over 500 people. Our NAP, based on the latest OTA in October, we already have the LiDAR version. If you have LiDAR version, then the highway NAP is already best in class. It's still best in the industry. In terms of NAC, NAP was still developing, so by Q4 this year, in the last OTA, we're going to open up the OTA for point-to-point commuting.
So next year, next Q2, we hope that the static BEV, the urban self-built map and autonomous driving will be made available. So by the end of next year, we're going to be completely stay abreast with the tier-one in terms of autonomous driving. We're going to be the first tier of autonomous driving. I think our progress and our capability, our talent reserve, we're able to get there. And also, we're going to be popularized in intelligent driving. We want to make it more accessible because the B10, which is a CNY 100,000-CNY 150,000 model, even at B10, we are giving it LiDAR. We're giving LiDAR on that model. So we might be the fastest OEM to use Qualcomm 8650 for volume production. We're probably the first to be used on the first model B10.
We're going to be giving you Qualcomm 8650, which is a chip that is better than an Orin from NVIDIA in computing power, and the power consumption is only one-third of NVIDIA. So it's a very competitive chip and will be the first to make it available on our models so that we are able to build Leapmotor's unique advantage in the hardware of autonomous driving or intelligent driving.
Thank you. Thank you. Congratulations. I hope you're going to be even more successful in smart driving.
Thank you.
Next question for 9649. You have the floor, please.
Hello, Mr. Zhu, Mr. Wu. I'm Ming from Bank of America Securities. Two questions. First of all, a bit more color on your European capacity because, Mr. Zhu, you also showed up on the car show. You went to Europe and visited many places.
So my question is, what about your partners, Stellantis? What about their capacity going online? What's the progress? When can we expect that we can see some localized production? And also, you should have a lot of components that are going to be local resource in Europe. So I wonder, Mr. Zhu, based on your visit in Europe, based on your observation of the progress and supplier there, how much of a fit is the European supplier of your parts?
Thank you. Making Europe or production in Europe, we have to comply with some of the domestic requirements. And also, we're going to comply with the local industry requirements. You talk about Stellantis. Stellantis, they have 36 factories worldwide, and they have many factories in Europe. This is really helping us with the localization. It paved a very good foundation.
In terms of capacity, Stellantis, they have Fiat, Chrysler, and Citroën, so definitely, they have a lot of factories, so we have enough options to choose from. We have to be selective where we have relatively low cost of manufacturing, but also complying with the way of doing things in China so that we can actually we're going to have better localization and better component supports. So, we're looking to those sites. I believe very soon, we're going to have some information, some news for you in the specific location of that capacity. Because we want to avoid European tariffs, so we have to fit the 40% threshold of local production, 40%. It's not a simple assembly. These are really making local components. They have to be complying with that threshold. So we have to do a lot of localization in Europe.
Automotive in Europe is where the automobile started. So they do have a lot of spare part components, component supply in Europe like chassis, components like Bosch and Continental. There are many suppliers in Europe already. So it's relatively easy to pick a nice supplier. So I think in terms of the progress, we're hoping that end of next year, before the end of next year, we're going to start localized production.
Got it. Thank you. I have one more question. Because next year, you're going to have three models from the B-series. Can you roughly give us some color of the three models? Which quarter will be launched in China? And when can we expect to see the launch in Europe?
Well, in the Paris car show, this is the global debut of B10.
In a couple of days, it's going to be showing the three models in Guangzhou Car Show, Guangzhou Auto Show. So next year, next April, B10 will be delivered with its first model. And this is going to be the first SUV. We also have a sedan. We have a sedan aiming at delivery by Q3. So the last model will be Q4. So basically, that's the pacing. In terms of overseas, it will be a quarter behind China, generally a quarter behind China.
Thank you. Got it. Thank you, Mr. Zhu. No further questions.
Thank you. Okay.
Next caller, extension 0877. You have the floor, please.
Mr. Zhu, Mr. Wu, good evening. I'm Shen Dao from BOCOM International. I have two questions. Again, related to your overseas presence, Mr. Zhu just mentioned, and you give a little bit, quite a bit of detail because of the tariff.
You still want to get to the, I mean, for next year, you aim for 500,000. How much will be coming from overseas? And what is your expected GP margin? Is it going to be similar GP margin with the company's margin, or is it going to be 10% for overseas production? And second question, I'd like to ask about your smart driving. I mean, if you're using AI model, end-to-end computing, what about the cost per car? How much more does it have to cost? Because you look at the peers like Visual Solution, they are making available for models below 200,000. So how do you compete with those guys? So those were your two questions.
Thank you. All right. As mentioned, last month, we got 40,000 orders in October. So to achieve 500,000 unit sales next year, we have a good confidence.
That's probably a very conservative target. As I mentioned, our next year GP margin has to be above 10% next year. We can see Q3, we're getting 8.1%, very close to our target. Our target has been quite conservative, like 500,000 and 10% margin. That's our target. We might beat those expectations. We might well beat that target. It's going to be similar China versus overseas. Otherwise, you cannot sell because you have to pay 30% tariff and close to 10% freight. That's 40% already. And you have to take away some margin. It's going to be a very low gross margin. Otherwise, you're not able to sell. For next year, I think we should have similar margin, China versus overseas. Second question regarding smart driving, as you mentioned, you hope smart driving to be more democratized.
To democratize smart driving, we're going to be launching the most competitive solution, as mentioned, the Leap 3.5-based architecture. The Leap 3.5 is a high level of integration. The high integration, this is like central domain controller, smart driving, cockpit, infotainment. So four in one. We have the four in one, truly in one box. This is a further elevation of integration. At the same time, we're using the most competitive 8650 Qualcomm chip for smart driving. So we believe that our product will surely be very competitive.
Thank you. Okay. Thank you, Mr. Zhu.
Now, the caller ended 0749. 0749.
Oh, please. I'm from Zhongtai Securities. Congratulations for the excellent results in Q3. I have two questions. First, about overseas. Mr. Zhu, you just talked about Q3. You have exported 6,000 units, and you have 12,000 order backlog. So consumer in Europe, they have different preferences versus Chinese consumers.
I'm thinking like T03, C10 as the two models in Europe. What's the split between the two? That will be my first question.
Right. Thank you. So because in October, we have just started to sell in October. So at the moment, like 2080 or 3070, like 20%-30% C10. It varies from country to country. In some of the countries, they have even higher speed. It will not be until three to five months later before we see a more normal range, a normal ratio.
Yeah, yeah. On the second question, because this year, we're going to go to South America, Middle East, and other regions. We're going to go global to a broader market. So I'd like to see after Europe, what are the regions that you're going to be more focused next year to expand?
I mean, among those markets, any planning for localized assembly?
Yeah. Because we're not able to go to Europe. So other than China being the largest market, U.S. is the second largest. Europe, the third largest. The rest are more fragmented, like Japan, Korea. They have four, five million apiece. But the rest are all fragmented. And India actually has a lot of constraints to China. So we don't really have a lot of places to go to. So we thought in the future, South America should be a market that's relatively better, like Australia is another good market other than Europe. Middle East. Well, Middle East is another good destination. I think these are the three.
Got it. Thank you.
Well. Thank you. Maybe it's time for us to take the last two questions, please.
Hi. I'm Zheng Yuan from Zheshang Auto Analyst.
Thank you. You talk a lot about the planning for China and overseas. I have two questions, if I may. Mr. Zhu just mentioned that you have the Leap 3.5 platform, a lot of advantage to the platform. In terms of cost-cutting, you have the B series model on that platform. Is there any quantitative advantage to offer us? And the second question is about the B platform sales planning. Are they planning for the sales of B series? What do you think of the model ramp-up on B platform? Is it going to be having some impact on your gross margin?
Okay. For B platform, from the very beginning, we designed the platform to be excellent in cost. It's highly cost-optimized. So I believe the B platform, well, compared with other peers, is highly competitive in cost. We have our own smart driving platform using 8295, 8650.
That is the best optimal solution with the best value for money. Of course, it's only part of the picture. There are many details. I'm not able to provide all the details, but at least I can give you some confidence that the B platform is very cost-advantageous. And also, NSL wants them to make sure they have GP margin defended at a level without compromising the overall GP margin of Leapmotor as a whole.
Got it. Thank you. What about the sales planning? What do you plan for sales in a month?
Well, for B platform, we have a high hope for B platform. So I'm not saying next year, but in the next two years, within the next two years, we believe the B platform should get to or even exceed the sales of C platform.
Understood. Thank you, Mr. Zhu. No further questions at the moment.
All right. So it's been an hour since the call. And thanks to the management for your presence, and thanks to all the industrial analysts. We look forward to the next call with you. If there's any question, feel free to reach out to our team at Leapmotor. And that concludes the earnings call today. Thank you and goodbye.