Dear investors, good evening. I'm your host, Yu Xiaofei, Analyst with Guosen Securities. Welcome to the 2023 interim results conference call for Leapmotor. Joining us from the management, we have Mr. Wu Qiang, Co-President; SVP and Board Secretary Jing Hua; as well as Head of Electric and Electronic Product, Mr. Zhou Xuning. We'll be taking your question toward the end of the call, and the operator will provide instruction to asking questions.
If you have question, if you're dialing on phone, you can press star one. If you are dialing on the internet, you can actually enter your question by text or raise your hand by pressing the raise hand button. Again, i f you have a question later, you can press star one on your phone, if you're joining us on the internet, on the interface of the browser, you can enter your question with text, or you can raise a hand to ask your question in person.
Now, disclaimers. Please be reminded that the content contained in the Leapmotor 2023 interim results conference call may contain certain forward-looking statements. In specific, including, but not limited to, statements regarding the company's future financial position, strategies, goals, objectives, and metrics, as well as future development in the market in which the company participates or will participate. These forward-looking statements are based on the company's existing future business environment strategies and its assumption about the business environment, which invariably involve a number of known and unknown risks and uncertainties.
These factors, which are beyond the company's knowledge and control, may cause the company's actual performance 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. Accordingly, please be cautioned that undue reliance should not be placed on the forward-looking statements discussed in the call. These statements reflect the views of the company's management as of the day of the call, and the company undertakes no obligation to update or revise any statements made in this call in light of new information, further events, or otherwise. The forward-looking events discussed in this call may not occur as a result of 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 conference call constitute any investment advice, nor does it form the basis or foundation of any contract amendment or investment decision. Shareholders and potential investors are urged to exercise rational judgment and caution when trading the company shares. Now, I'm going to hand over to SVP and Board Secretary, Madam Jing Hua, to talk about the 2023 interim results operating highlights.
Good evening. Welcome to the call. In 2023, in the first half of the year, based on our rapid iteration of full-suite R&D and product development in the first quarter, we have completed the switchover of the old models, and the new model has been well received by the market. In June, we deliver a new height in the history of the company. In the first half, we deliver 44,502 C- range, account for 80%.
Thanks to this, in the first half, our product price has been lower, but despite that, the revenue per car has been improved by over 30%. If you look at last year, the same period was at CNY 100,000 per vehicle, is now improved to CNY 130,000 per vehicle. On the 1st of March, we launched the first Extended Range C11 EREV. The launch of the Extended Range version has driven up the sales of C11. C11 became the most popular NEV in the range of CNY 150,000- CNY 200,000. In next couple of years, we will continue to drive the EREV and BEV. In every new model, we are going to have Extended Range version and battery version. In 2023, at end of June, we accumulated delivery over 200,000 new energy vehicles. In July, we again set a monthly new record of delivery of 40,335 vehicles. C- range accounted for 85% of the delivery.
We continue to focus on the experience of users, continue to deliver the latest application through OTA. In the first half, we performed four OTA upgrades. C platform will have over 60 new features, including ACC strategy, LCC lane optimization, parking identification optimization, energy consumption efficiency, the new UI of smart driving, and also we have the transparency, chassis recording, maintenance reminder, as well as other features. In terms of the R&D, we continue to work on the new model development. The R&D expenditure improved by 66% year-on-year. In the Munich Auto Show, we will be showcasing the global strategic release to announce the LEAP 3.0, and also the first global model for LEAP 3.0. The LEAP 3.0 includes what we have released on the last day of July, which is the Four Leaf Clover integrated model architecture, w hich further iterates on the CTC we have been using, the cell-to-chassis integration without the use of packs, so that we can provide more safety, better performance, greater spaces, and faster charging.
We continue to deliver the electric drive. We have the silicon carbide electric drive system, using 800 V as our charging platform. The LEAP 3.0 also uses a Qualcomm Snapdragon 8295 chip. We developed a high-performance, full dimension, smart cockpit, with the application for customized scenarios to cater to different needs, so that we have different experiences for different users, providing excellent experiences. In the meantime, the smart driving system, with 30 high sensitivity sensors and high computing power algo module, we can provide the urban LEAP Pilot. Snapdragon 8295 from Qualcomm can achieve integration of smart cockpit smart driving, with high green computing power module, with 280 FLOPS computing power.
In the second half of the year, we will be launching C01 in the Extended Range version. To make sure we can keep up with the growth of sales before the end of the year, we will be delivering a positive GP per month. In terms of marketing network, in the first half, we have optimized over 20 outlets. We cover six more cities. We have been optimizing our dealers. We are rationalizing and rearranging the stores. In the future, we will continue to optimize network, improve the sales capability per store. We have invited the former executive of Toyota, the first president of Lexus in China, Mr. [inaudible] , who became the full assistant to Mr. Zhou. In terms of managing the stores and sales channels, he will be really taking the lead. We will be giving the floor to Mr. Wu for financial highlights.
Good evening. Happy to be with you for the 2023 interim results call. In 2023, our financial performance in the first half of the year, we have seen a stable and steady, robust performance. In terms of financial, we have CNY 5.8 billion, which is up by 19.4% year-over-year. This year is based on our delivery, which is 44,500 vehicles. The sales breakdown has also been improved. In the first half of the year, our main contributor come from the C platform, C11, mostly around the models on the C platform. The average ASP in the first half, compared with last year, it has been improved to CNY 130,000, compared with CNY 110,000 last year. By optimizing the sales mix and more delivery have been driving higher numbers in the first half of the year.
On the April, May, June, July, we have been delivering more than 10,000 units a month. In the second half, we will also try to get to 15,000- 20,000 vehicles per month. Our GP margin continued to improve and optimize. In the first six months of the year, the average margin was -5.9% . Compared with last year, which is -20%, it has been much improved. In Q2, our GP margin was -5.2%. Basically, we are making improvements. As Ms. Jing said, in the second half, we'll be striving to achieve a positive GP margin on a single month basis. Other expenses, we also are seeing a very competitive performance expenses, and those figures continue to improve. Sales expenses, CNY 820 million, compared with CNY 399 million, increased by 105%.
It's mainly because in the first half of the year, our new model launches, as well as the new branding efforts, have been intensified, and also we have been adding headcounts in the sales team. SG&A was CNY 395 million, which is higher than CNY 307 million. R&D also improved by 56% year-over-year. As we continue to invest in the new models, as we are adding the remuneration, this will also increase as a result. I n terms of CapEx, in the first half is around CNY 600 million, mainly used for the Jinhua production site, where we'll be doing capacity investment. In the first half, our operating cash flow become positive for the first time. In the first six months, we have CNY 150 million positive cash flow, which is a great trend in terms of operating cash.
Our cash at hand, we have CNY 10.2 billion cash and cash equivalents. That was the interim result for Leapmotor, where we have robust financial performance and excellent business performance. On top of that, in the first half of the year, Leapmotor also made a lot of efforts in driving down costs by technology. Technology driving costs down is what we're good at. Let me give you examples. Like some of the cost efforts, we have achieved a 15% comprehensive cost down in the first half of the year, including on the 31st of July, we released the Four Leaf Clover integrated electronic architecture. Other than the advanced features, which is future oriented when it comes to intelligence on the automobile, we really set the groundwork for future intelligence, and also by improving user experience, it is also part of the effort to drive down costs.
The centralized integrated control, 15 feature are now centralized on one central HPC. Controller has reduced from 50 to 20. Harness wise, harness was now down to below 1,500 m . This is really the shortest harness in the industry that really provide efficiency gain. By way of the Four Leaf Clover, we have also achieved the OTA upgrade, without shutting down the vehicle. OTA will happen without shutting down the vehicle. This will also help to reduce energy consumption. That was a brief review of the business and we'll be happy to take your questions. B ack to you.
Thank you, Ms. Jing. Thank you, Mr. Wu. Thank you for the sharing. Now, would like to invite questions. Operator, how do we take questions again?
Good evening. If you have a question, if you're dialing in on phone, you can press star one. If you are joining us on the web browser, you can enter a question on the browser, or you can click on the raise hand button to ask a question. Again, if you have a question and you are dialing in, you can press star one. On the web browser, you can enter your question by text, or you can click the raise hand button to ask a question in person.
Can you hear me?
Yes, I can hear you.
Thank you for this chance. Congratulations to such a bright figures. I'm for Guosen Securities . I'm the Auto Analyst, Tang Shuxia. I see the industry competition become very intense, price cut after price cut. What plan does the management have in that regard?
Cost management has always been what we are focusing on and acting on because based on our full suite R&D philosophy and our insight on technology and R&D efficiency, that has been ongoing ever since.
Thank you.
Let me put in a few more words on the planning. Starting from September, the model launches to be debuted on Munich Auto Show, and also next year, the year after. All the range of the models will be equipped with the Four Leaf Clover centralized architecture. The centralized Clover architecture have significant benefit in cost effectiveness at different price ranges, from CNY 100,000- CNY 200,000 +. At different price range, we'll be using the one single centralized architecture. This is the most efficient way of doing it, regardless of model. Within this architecture, we can provide different options to consumers, entry level, mid-range, premium.
This is in itself a way of driving cost, improving efficiency, and driving more experience. In September, we are launching the CTC, cell-to-chassis 2.1, which will further adopt integrated structure of the car body to be more compact, more lightweight, more rigidity, and better cost. D o you have a further question?
No, please carry on.
I would like to give you another example. Fo r some of the smaller features, like some of the pedestrian beep, we have been using 8155 chip, is now directly driven instead of a standalone discrete feature. Instead of using discrete features, now integrated, which is cost saving. Also, we have removed the speaker of the dashboard. This will also help to reduce the cost, but also allow better audio experiences. Also the super integrated thermal management by highly integrated design.
15 module are now centralized in one thermal manager, so that we have better optimization, better cost, better lightweightness. This is the process that's ongoing.
Understood. Got it. In summary, you are saying, on the one hand, you are doing this by technology, like Four Leaf Clover architecture, CTC, and also you talk of the speaker, kind of a technical upgrade of the speaker. Second thing is by sharing on the same platform, so you have better economies of scale. That was very clear. Thank you, Mr. Wu. That's my question for now.
I'd like to add a few things. As we deliver more vehicles, we have better economies of scale, which will further improve our amortization depreciation. With higher deliveries, with more deliveries, like if we have more sales per store, this will help us to reduce the rebates to the sales channels. All this goes to cost saving.
Understood. Got it. That's pretty clear. Thank you.
Next question, please.
Hello, Ms. Jing and Mr. Wu. Ming from BofA. Two questions. First of all, like to get your sense on the second half of the year. What do you think of the plan of the new product? You probably wouldn't say much about new product, but whatever you can say, what type of vehicles? Is it class A, class B? That would be my first question. The other question is, recently, some of the models will have about a price cut of about CNY 20,000. How does that help to drive up sales by slashing price in some of the premium configs?
Hi, Ming. Thank you for the question. For new product launch, next year, we're going to have two new model next year, brand new, with Four Leaf Clover electric architecture. Those will be new models. The year after, in 2025, we're going to have two more brand-new models. They will have EREV and BEV versions, both. Of the four brand-new model, we're going to have an upgrade, facelift, brand new facelift of C platform as well. Next year, and also the year after, of the four new launches, that's going to be class A, they're going to be mid to large class B vehicles. Now, as to the price down in the first seven months for the high premium configs, it is really to further improve the product mix so that we sell more high-end configs.
Because high config model have higher margin, the price cut doesn't really impact on our improvement of margin going forward.
Thank you, Ms. Jing. I'd like to also ask about, you have more and more products. You are going to have BEV and EREV version both. Like C11, and also they're going to have a higher contribution in that product line. Over the longer time, like next year or the year after, what do you think of the BEV versus EREV? What is the split of the both? Also, some of the battery suppliers, they are now providing battery that can charge faster. Does it really help to resolve the range anxiety? Would you still think EREV to be an excellent product at this moment of time? Particularly in places where they don't have so many chargers, will EREV be more attractive there?
We will continue to drive EREV and BEV. For every new model, we're going to have both versions, Extended Range and battery version. Like the smart cockpit, smart driving experience will be highly consistent. There are high rate of repetition. Like C11, in April, May, EREV are selling more, which is about 60% EREV. But in June, July, BEV outperformed EREV. That ratio does not impact on the supply chain. It doesn't really affect the production ramp-up, because there's a high rate of overlap. A new model, going forward, will be the same. Based on the order of the customer, we'll make adjustment to the supply chain and production scheduling.
When it comes to the fast-charging batteries, our 800 V high voltage charging platform will be launching next year in a new product. It is in line with the user's demands, improving the experience, which is why, in the LEAP 3.0 that we're going to release, in that architecture, we'll also support 800 V charging. It will be supported in the LEAP 3.0.
Thank you, Ms. Jing. If I may, can I have another question? Recently, there have been news or rumors, people talking about maybe there could be some collaboration with a certain company. Is there any information you can share with us for the potential collaboration?
Well, when it comes to the reportings, we will not be specifically comment on any coverage. We won't confirm nor deny. However, this is what I say in terms of business. We have a full suite R&D at Leapmotor.
Gradually, in terms of development of models, technological collaboration, and in terms of technology application, particularly in the range of CNY 100,000 + price range, we are super competitive. Investors might not be interested, but the industry does take a great interest, and people do agree that we are very competitive in that. Potentially, we might be having opportunity to collaborate on technology. It is a possibility. This is something we'll be actively exploring and to capture these opportunities, because the benefit is to broaden our business and also increase the volume, improve our influence, and also bring about direct revenue gain. Obviously, in terms of Leapmotor technology, in Chinese market, on the auto market, we can provide great products at the same time. We're using the same technology and same technical capability to develop another approach for business collaboration. This is something we are also happy to explore.
Actually, in terms of Four Leaf Clover architecture, while we are launching this, we announced four way of collaboration. Four way of collaboration does not come from thin air. They all come from actual communication with parties. In terms of specific progress, please stay tuned to any possible announcements.
Thank you. I have no further question.
Thank you for that. 0464. That will be the number of the caller. Please ask the question.
Hello, both. Thank you for taking the call. Congratulations to the results. A few questions to ask you. The first is about, in the first half, GP margin has improved quite a lot. Can you elaborate a bit the reason why you have improved on margin? Starting from March, price has been coming down. What about the general margin improvement?
I mean, the margin improvement really speak to your strength and capability. Mr. Wu has talked about the new platform, the LEAP 3.0 platform, is going to be very much costing down. Can you quantify how much cost saving can you get from LEAP 3.0 compared with LEAP 2.0? Any numbers on that? That would be my first question, if I may.
In terms of improving operational efficiency and GP margin, we do it by composite approaches. We talk about LEAP 3.0, centralized architecture. It is only one of the composite measures. It is only one of the many cost-down assets. In terms of GP margin and cost, we look at it comprehensively, including in the future models, we will be covering class A, class B, class C, and T03. The price from CNY 60,000 -CNY 200,000.
In that price range coverage, particularly in 2025, when that model was launched in 2025, it's going to be a class A model. That is really based on the market, based on the demand of the customer. We have been cutting back on some of the redundant accessory configuration without compromising on the user experience. In terms of supplier, we will further perform vertical integration so that to shorten the supply chain, reducing the material needed, and also to reduce the margin outlay in terms of supply chain. Commercial cost down, c ommercial terms are ongoing to be negotiated every year. That is going to be part of the comprehensive effort for reducing cost, improving margin, ultimately achieving positive margin and further moving towards even higher margins.
Let me add to it. Now, in the first half, in terms of iteration of models, iteration of products, the price has been reduced by CNY 30,000 -CNY 50,000. Overall price has been down by CNY 30,000 -CNY 50,000. Other than the industry benefit from lower price sales, the drastic decline of sale price benefit the entire industry. We have 3%-5% cost down, cost saving in supply chain. There is a unique feature in Leapmotor, because we have been driving down manufacturing costs substantially this year. Because the Jinhua expansion and also ramp up of the Jinhua production size, the manufacturing production cost has been massively down compared with last year. Mr. Wu has mentioned that our R&D, even if you take away the sale, our R&D accounts for 30% of the BOM.
By way of electronic architecture cost saving, controller cost saving, electric drive, and front LAN cost down, all this has help us. That while we are reducing sales price, we have been able to improve margin. Thank you.
Thank you. Thank you both for the answer. My second question is, as you talk about in the first half, you have been consolidating the channels, rationalizing the channels. What about your plan going forward in terms of the number of your channels? Ms. Jing talk about how Mr. Zhou has come on board. Have you seen anything, expectation in the channel optimization?
Well, we have revised the objective and target. At the beginning of the year, we said we want to expand to 800 channels by the end of the year, but now it has been revised.
Our objective is not to increase the number of channels, rather, we should be improving the sales capability of the channels. That will be the change. Mr. Zhang has come on board. In terms of the layout of the channels, he has put forward a few opinions. First of all, we want to increase the comprehensive service capability in the city. That includes delivery and after-sales. We need to build capacity into the store in the city. Secondly, we want to optimize the store density in different districts and different cities. Right now, the density sometimes needs to be improved. Therefore, we have cut over 20 stores, but we increased the coverage of cities by six more cities. That's the way we're heading. All in all, we aim to improve the sales capability per store.
Thank you for that. My third question is, what about your overseas? Any plan for overseas market?
Well, overseas sales. By the second half of the year, our overseas sales will not be of any significant size yet. However, we are mainly working on preparing products and preparing for the countries, mainly in Europe and Southeast Asia, where we are working on the channels, and also including Middle East. That's what we're working on, building networks there. I'd like to mention that in terms of overseas marketing leads, was Lin Yuan, former Chairman of the SAIC Motor Europe. Ren Min is now in charge of overseas marketing. In addition to T03, that's going to be ready next year. The new model launch next year will also have an overseas version to be launched for overseas. We are getting it ready for E.U. certification.
When it comes to overseas sales, in the second half or middle of second half of the next year, we're going to see some sizable contribution from overseas sales.
Thank you. Very clear. I'll get back to the queue.
Thank you. Thank you for the question as well. Chen Dai, you have a question from [inaudible] International ?
Yes. Hello. I'm from [inaudible] International. I have two questions. In the second half of the year, you have the mid to large model launch. What are your expectations in terms of volume, GP margin for that new model? A bit more detailed question on that. Second question takes us back to the competition. Recently, there have been some price cut actions in the industry. What do you think of the market? What do you feel how the demand responds to these price cuts? Have you experienced more orders after price cut of your high config models?
Well, C01 margin, on C platform, actually, for every model on C platform in the second half of the year, they're going to be turning up positive margin for all the C platforms. We expect the sales, well, because sedan will not be selling as much as SUV, but when it comes to C01, BEV plus the EREV is going to drive up sales. You were asking the second half of the year what the market will perform. In July and August, we already feel the price is now moving. In the second half of the year, we expect the competition will remain. There's going to be intense competition, but Leapmotor is ready. We are ready, and we have the potential for further cutting prices.
Got it. If I may have a follow-up question. In the first half, your R&D expenditure has increased a lot. Where are you investing mostly in R&D? In the second half, in the future, what's going to be the dollar amount of R&D, and also the percentage-wise?
R&D is mainly for the new model R&D, and also is going to be for the electronic components, intelligence system. That's mainly for the R&D for those areas. When it comes to where it's heading in terms of trend, you can see on every quarter, our expenses are quite balanced. In the first half, we have a CNY 800 million R&D expended, CNY 400 million in Q1, CNY 400 million in Q2. It's pretty balanced in terms of expenses. Expense ratio-wise, the ratio in the second half will be further down.
It's going to be lower in the second half because in the second half, revenue could be substantially larger in the first half, expenses could be similar or in line the first half, therefore, ratio will drop.
Got it. Congratulations again.
Thank you for that question. 6426. That will be the phone number of the next caller.
Thank you, Ms. Jing, Mr. Wu. Thank you. I'm Kang Kai from China Securities. I have a few questions for you. With more sales, your GP margin has improved. If you look at longer run, where do you want the margin to be? Because you talk about R&D capability, you have your self-supply components. Also self-supply component could also help to contribute to your margin. How much contribution can I expect from that? Thank you.
Our future margin for future model could be above 25%, which is in line with the industry average. For the last couple of years, like this year or next year, we want to be capturing market share, which is why the overall margin could be set at a lower target. By the end of the year, it's got to be turning into positive, then we gradually bring it up.
Let me chip in on this question. Recently, even if we have positive GP margin, it's going to be a single- digit in China. Over the longer run, Leapmotor has some idea and thinking on this. We talk about overseas market just now, where we have Mr. Ren Min, who's in charge of overseas market development.
At the same time, in terms of developing overseas markets, if we spend more efforts, normally they're going to have a higher margin compared with Chinese market. Of course, things could change in the future. All in all, overseas market, if we are ramping up overseas contribution, if we have faster breakthroughs, there could be important partnerships that we can build together. Based on the partnership, that will help us to ramp up the sales in overseas so that we can enjoy and benefit from higher margin. That's another way of boosting margin. Also, we'll be seeking, in the short term or near term, we're going to play out our technology advantage. W e are the Tier 1 supplier of the core systems ourselves.
Therefore, we are in a position to use some of our technology for sharing, for collaboration, like Middle East, Southeast Asia, Europe. Those are markets for selling cars, but those are also markets where there are local organizations who are keen to work with us on technology, keen to work with us on R&D. These are two level of potential business markets. We're going to be active on both. In terms of technological collaboration, it's going to bring us revenue and much higher margin compared with selling cars. Basically, the revenue from technical collaboration are pure profits. By building business model in short term or midterm, our margin could be get to 20%+ like what Ms. Jing has said.
Got it. That was clear. I have another question, which take us back on cars. On the C platform, does have a lot of highlights. These highlights are being seen in your competitors' models. Over the longer run, on that price range, like the CNY 100,000-CNY 200,000, how do you keep getting the attention of the consumer? What's your idea of appealing to the customer with your products?
We are really focused on electrification and intelligence. These are the two areas that we innovate and iterate on the products. Our strength is that all the technical innovation could be compatible to the previous models. Example, based on LEAP 3.0. In terms of smart driving system, we're now able to bring about 30 components with the high-definition maps, with the positioning system. In terms of smart cockpit, we're able to use Qualcomm Snapdragon 8295 chips to support seamless streaming of media with the gigabit upload and download capability, with high awareness interactive system.
Therefore, in terms of value for money, in terms of the overall cost control and also other than value for money, we're also providing more intelligent experience to the users, as well as electrification, which also help to reduce cost.
Got it. You talk about intelligence, let me ask you another question. Consumer will be looking more at the autonomous driving. What about the R&D progress? What is your goal? Can you update us a bit on that as well?
In terms of autonomous driving on the new platform, we'll be using two different configs. The first is based on Snapdragon 8295, which is integrated, and also with our chips, which is a high computing power. Based on the two approaches, they're going to be available in the new models to be launched.
Thank you.
Let me chip in here. When it comes to the new electric architecture, it has entry level, mid-range, and premium. At the premium level, we can get to L2++ feature. On LEAP 3.0 architecture, we are able to support expressway and urban way, [railway]. Next year, the new model for next year, we are launching expressway, [inaudible], and also urban commuting system. At the moment, at the volume models, we are using HD maps. That's roughly the layout.
Thank you. Got it.
Thank you for the questions. Next. Ding Wenjuan from CICC.
Thank you. Good evening. I'm Wenjuan from CICC. Just to follow on the previous questions, first of all, profitability, I'd like to ask a bit more. We were talking about mid to long-term vision is going to get to 20%-25% GP margin. Considering that your rebate to distributor is accounted for as revenue side. In the first half of the year, Q2, - 5.2% GP margin. In the future, if you get to 25% margin, if you put in the rebate, your actual margin will be higher than that, isn't it right?
Yes. It is a matter of accounting. The distributor rebate in the industry is average, like 8%-10%, because our sales is not that high yet. If we put it back in, the actual margin is already positive on our side, if you take away this rebate. When I talk about 20%-25% margin, it is still on the financial statement kind of margin.
First of all, we are going to have a positive margin on single vehicle. And what Mr. Wu said, in terms of the technical collaboration, we can get some revenue.
We have a clear idea of the revenue from technical collaboration, which is excellent in margin and revenue. Thirdly, in terms of electronic components, as we develop technical collaboration, the supply of the electronic components will also contribute to the margin. If you break it down, electronic components, electric drive. Actually, electric drive is not that profitable at the moment. It has still a very slim margin. If you talk about electric battery, controller, lamps, if you look at the average margin, it is around 25% margin. When we are selling 300,000 units of vehicles, or if we are selling components to third parties, that is going to contribute to the margin to about 5%-8%, 6%-8%, because that accounts for 30% of the total BOM cost. Industry average is about 25% margin.
That means the components will bring 6%-8% margin to the company if we sell it. Different ways put together, I think Leapmotor, we are still very hopeful that we can get to a margin above 25% for Leapmotor.
Thank you. That is a lot of detail. Also, now we are approaching the end of August. Do you have any update or prospect for the remainder of the year?
Well, Mr. Wu has mentioned that in August. We will be having the number of August in just a few days, very soon.
What about Q4?
In Q4, we hope we are going to be selling more than 20,000 units a month, on a single month. This week is 15,000-20,000. Our KPI for this year is sales, but also positive margin. Both are the KPI. We have to strike the balance between the sales and margin.
Got it. Thank you. Also a question on CapEx, not just for this year, but also next year and after. Other than the Jinhua production site, what about the recent CapEx plan? Thank you.
For the first half, our CapEx was CNY 600 million. It is mainly for the Jinhua expansion and also QianTang factory construction. Actually, last year, we have had some CapEx to the QianTang factory. In the second half and next year, we might have some CapEx for QianTang factory, the Jinhua factory capacity has been around 30,000 units a month. Therefore, in terms of the investment of QianTang factory, it will happen mostly next year.
What about CapEx?
Yeah, the CapEx will be basically quite balanced.
It wouldn't be really swinging too much because, you see, Leapmotor, the total accumulated CapEx is only CNY 5 billion. We won't expect the big swings. We have had a factory that can turn up 360,000 vehicles a year. Also, we will have a component factory that can also supply 300,000 units of vehicles.
We will be waiting for good news from you. Thank you.
Thank you for the question.
Thank you for all the questions. In the interest of time, can we have the last two questions? First of all, [inaudible] .
Hi, Ms. Jing , Mr. Wu. Thank you for the time. I have a question that in the first half, T03 has been lower in sales year-over-year. I would like to understand why T03 was selling less. Is it because of your control, or is it because of the market, or is it because of the feedbacks?
For T03, starting from last year, we have intentionally tried to control T03 sales because it's below CNY 100,000. Margin is difficult to turn positive for a model below CNY 100,000. We're focusing on Leapmotor, we want to have both volume and margin. Those are important to us. T03, starting from second half of last year and now, we continue to improve the contribution from the C platform. When it comes to T03, we still have 1,000-2,000 deliveries every month. T03 is going to be sold overseas mostly. In Europe, we have four or five countries where we're selling T03 already, but because it's only limited to the Europe certification, because T03 has just approved, with a small volume certification.
This year, we can only sell 1,500 units this year, but next year, in Q1 next year, we're going to have a high volume certification. Therefore, in the future, T03 will be mostly sold overseas.
Thank you. G ot it. What about China? Even if you have order, you will want to control the sales of T03, is that right?
Actually, T03 is priced at CNY 60,000-CNY 90,000. Compared with competitors, our price is rather high, actually. If we want to drive our sales, we have to make adjustment to price. If you cut the price, margin will be impacted, so we will just leave it as it is now.
You were saying by Q4, you're going to have 15,000-20,000 sales every month. What about C11, C01? What about the specific contribution of those models?
C11 is the bigger part, is the bigger share. In September, October. We're going to have a C01 EREV. With the C01 EREV, it's going to be driving up the sales of C01.
What about the main share? We'll be keeping 85% of contribution from C platform?
Yes, in the overall product mix, it's 85% in July, but I think in the second half of the year, it's going to be keeping that range or even higher contribution from C platform.
What about the full year revenue target? The volume of the loss-making, how do you intend to reduce the loss?
Revenue, you can do the math yourself. The ASP is CNY 130,000 revenue per car. It's going to be higher, not lower, going forward. Loss is definitely is going to be narrowed. In the second half, we can expect better margin. The second half will have even better performance in terms of loss narrowing.
You were saying this year's target, you say you want to have positive margin by the end of the year. What's the break-even expectation? What's the time point for breaking even?
Let me put it this way. In our prospectus, we have provided. Before the IPO, we have an option scheme for the team. In the option scheme, there are two targets. By 2024, we want to have positive margin. By 2025, we want to break even. If we fail any of the KPI, all the option will be void for all the team.
Got it. Another question. For the EREV versus BEV, you're saying it change from month to month. What about the full year-wise? EREV versus BEV, what's the split?
At the moment, for C11, in terms of the delivered C11, it's about 50/50 between Extended Range version and battery version. In the end, it comes down to the users. Different cities, different user groups, they might have different preferences toward the EREV version and the BEV version. And also, the first-time NEV buyer, they are more likely to go for EREV version. For those who know new energy vehicle well, they might choose BEV. They are more likely to choose a BEV.
Thank you. Can I ask about the capacity planning? What's the plan for capacity in Qiantang factory?
We plan for 400,000 units a year for Qiantang factory. The Qiantang factory, we have done the civil engineering, and also electric component factory workshop has been invested. Now, in terms of expansion or new capacity, need the NDRC approval. We are waiting for the approval from NDRC before we invest in the overall car manufacturing capacity. We plan for 400,000 units for Qiantang.
Thank you. My last question. Right now, you have EREV now. How do you distinguish the users or pricing point between the EREV and BEV? How do you differentiate the two?
Extended Range and battery, there are two quite different user groups. Those who have the range anxiety, usually they go for EREV. For those urban commuters who have easy access to charger, they are more likely to bu y a battery EV. It's completely up to the users. At Leapmotor, when we launch models, we do not want to focus on any of the version, particularly when we are defining the model.
EREV and BEV, they have about 80% or more in terms of component sharing. Our model, the BEV or EREV delivery are completely driven by the market, completely driven by the user. None of the stores are prioritizing anything towards C01 EREV or C01 BEV. None is prioritized. It's completely up to the user. In the future, the same goes to the new model launch in the future. We're going to have both EREV and BEV. They are simply two different configs for the same model. It's up to the user to choose.
Thank you.
Thank you for the questions and answer. I will be relaying some of the questions from the online investors. The second half of next year, what about the new car plan?
I have talked about it, let me repeat. In the second half, we're going to be launching a new model, which is C01 EREV. It's a large sedan, Extended Range version. In the upcoming Munich Auto Show, we'll be launching a new model, which is based on LEAP 3.0. That model will not be launched until next year. Next year, we'll be delivering two brand-new models. Our target is that by 2025, before 2025, we'll be launching seven new models. In the future models, we'll be focusing on CNY 150,000-CNY 250,000. At the same time, we want to make sure our product is differentiated in terms of dimension, or there's going to be some features which are differentiated. Thank you.
Thank you, Ms. Jing. With that, we have used up all the time allocated for this call. Thank you for joining this call. Hope to see you again next time.
If you have any further questions, feel free to reach out to IR team of Leapmotor, but also you can reach out to us at Guosen Securities . I'm Yu Xiaofei, an auto analyst. With that, it concludes the call. Thank you and goodbye.