Baidu, Inc. (NASDAQ:BIDU) Q2 2023 Earnings Call Transcript

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Thomas Chong: Good evening. Thanks management for taking my questions. And congratulations I have two questions. The first is about our Robo taxi business. Management mentioned that the unit economics in some cities are improving. Could management share the logic and the efforts taken behind it. What’s your plan in terms of the city expansion and the volume market for fully drive operations in the upcoming quarters. In addition, when can we expect the Altice 6 vehicle to be launched, what’s the projected size of the vehicle fit for this year? And how could it potentially impact the cost? My second question is on Auto Solutions, which vehicle models will hit the role in the later half of this year and next year? And how should we size up the financial impact on the books?

Robin Li: Thanks for the attention. This is Jan. I will start from the low tax section. Our autonomous train service is rapidly gaining traction in major cities, providing valuable data that to the development of our drivers technology. This data is instrumenting in [Indiscernible] facility, efficiency and overall experience our operations. As a result, we have guided a strong part from both customers and regulators, enabling us to expand into new locations and significant increase of rates. This positive feedback to our large operations also drove the improvement our model and the improved model drove the expansion of our operations, providing us to the forefront of the global leading home autonomous driving technology. On the logic behind the improvement, here, I would like to take Wuhan’s operation as example.

We have continued to scale up service in Wuhan in the past year. If you compare with the situation 1 year ago, you may notice that firstly, our fully [Indiscernible] have expanded significantly growing from five week [Indiscernible] one year ago to almost 200 in August this year. Secondly, the operation area for free service has expanded by around fifteen-fold in Wuhan. Meanwhile, the operation also has been further expanded, covering both [Indiscernible] and morning and the evening, as well as later net operation. Certainly, [Indiscernible] is now selling more passengers to tear becoming one of the largest areas of providing fully travelling service in the world. And firstly, in terms of the order, the proportion of fee rate orders to all our operations has increased from 10% in last August to 55% in July this year.

All the progress mentioned about contribute to the improvement of OUE. Looking ahead, we will continue to focus on the operation intensities and average regions like Beijing and Wuhan to further expand the fleet side and operation areas of driverless operations, and thus gladly improved the unit economically. Next year, we aim to enter into [Indiscernible] tool to conduct full [Indiscernible] ride hailing services and expanded the skill of fleet drives commercial operations. [Indiscernible] the time line for market production is proceeding as planned. It brings us a significant cost advantage with mass production costs lowered by 50, compared with the previous generation. Though it will be great to come the majority in our operation recovery, preparing the unit economics closer to profitability point.

Last, on auto solutions business, currently providing assistant driving product to note [Indiscernible] standards in terms of generalization and safety, failing to testified consumer demand for convince and efficiency producing this the [Indiscernible] competition in China’s EV market has led to a general decline in the profitability within the automotive sector. And OEMs have been showing softened demand for integrating drilling and leading more towards cost cutting measures to the cumulated sales. Which has affected and is also expected to our [Indiscernible] auto solutions in the short-term. However, we believe that our market opportunity ahead in the long run driven by the consumer demand for intelligent driving. We plan to launch our safety navigation pilot product, Apollo safety driving market at our place later this year.

As we look ahead, we believe the change in the auto industry is hiding towards intelligent driving with exciting opportunities in the future, and we will capitalize on this change with cutting edge technologies and sensible business model. Thank you.

Operator: This concludes our question-and-answer session and does conclude our conference for today. Thank you for participating. You may now disconnect.

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