ECARX Holdings, Inc. (NASDAQ:ECX) Q3 2023 Earnings Call Transcript

Peter Cirino: Yes. Thanks for your question. Let me go and address both elements. We have a large number of new launches as we go into 2024. So we see launches across all of our products, both in the digital cockpit space with as I mentioned earlier with Antora and AntoraPro, those vehicles, vehicles deploying those systems launched throughout 2024 on a number of different brands. We mentioned some today, especially with the Volvo EX30 is a significant launch for us as it enables us to deliver vehicles globally throughout, I believe it’s more than 40 countries on that vehicle. Also, we mentioned the Lincoln CO08 with our full stack solution is a key benchmark product for ECARX and it’s very well received in the marketplace as well.

As we go through 2024, we expect launches with our digital cockpit products as well as additional launches on the Skyland ADAS system. So we’ll continue to see the steady progress that we’ve made in 2023 and extend that into 2024. As Phil mentioned, we’re continuing to invest in our pipeline with future product developments, both in the ADAS space as well as the digital cockpit space. Recently, we announced the Mobileye collaboration that will bring new and unique product offering to our portfolio with a future launch on a polyester 4 Coupe as well as we’ll likely be making additional announcements as we go through the next 1 to 2 quarters on investments in our digital cockpit platform as well. And then, your second question was relative to Huawei; I would say we’re really excited to see Huawei enter the market.

I mean, they are a very strong competitor that brings a great technology stack. But we’re also quite excited about the offering that ECARX can bring both with our computing platform, our software stack and the Flame Auto collaboration that we have with Meizu [ph]. So ECARX is a very unique — has a very unique position in the market because we truly offer a fully vertical technology stack. So we go, as I said earlier in the call, we go from silicon right through the cloud services. And I think we bring a very competitive product offering to that space. Huawei is a great company and it’s great to see them invest in the automotive marketplace. I think it demonstrates the potential for this — for the continued expansion of this product in the market and how customers — how end customers are differentiating their purchases in vehicles.

And I think if you look at our product offering, it’s very capable as well, provides a very unique user experience, especially with the Flame auto stack and the full cell phone integration that we can do with the Mazu cell phones. And I think we’re very comfortable with our ability to compete on a go-forward basis and excited to see additional new technology partners come into the space and really demonstrate how significant the demand will be in the future.

Operator: Next question comes from the line of Cheng [ph] from CICC.

Unidentified Analyst: Congratulations on the results for this quarter. So in Sachin from CICC. So I see some great progress in the software provided by ECARX in this quarter’s presentation. So I would like to ask 2 questions regarding the software products. The first one is regarding the Cloud Peak which is launched in the Volvo EX30. I think it is probably launches on a hardware platform that is not produced by ECARX. So could you give us on how is the projects — how the products collaborate with the other party? And what is the business model? And what is the gross margin be like in this project? So that’s my first question. The second question is regarding the [indiscernible] system. So it has been launched on Lincoln COO08 but we have noticed that it is not launched in Lincoln COO06.

So could you give us some guidance what kind of projects will be sliding which ones or not? And could you also refresh us what is the radiator business model like? And what are the — are there going to be more projects going to launch Renato? So that’s my second question. My last question is regarding the autonomous driving functions on the Skyline Pro. So who is actually responsible for developing these functions? And how is the business model to be like?

Peter Cirino: Yes, thank you for your questions. So let me try to address them one by one. So as we look at the Cloud Peak solution that we’ve launched on the EX-30. This is a demonstration of ECARX capability to deliver products on a global scale. So we have a significant number of engineers that are actively working on continuing to mature that product. It’s a product that we developed jointly with our joint venture with Volvo Cars and one that will feature the Google Automotive services. In that environment, as we mentioned earlier, it is launched on a Qualcomm SoC as well as with through tight collaboration through a great partner that we have with Visteon on the supply chain side. But I would say ECARX is playing a position of a system integrator and software developer.

We’ve also contributed significantly to the hardware design in that environment. As we have already announced in our Antoro series, we bring supply chain capabilities to our portfolio. So we operate in a number of different business models to deliver those solutions to the marketplace but we play a very strong position in terms of development of the software delivering the UI UX that has been detailed by mobile cars and also integrating all the solutions from Google Automotive into the software capabilities of that vehicle. Relative to the Flame auto position, it’s the Lincoln 08 is really a great product. And when you couple that with the cell phone integration and the unique user experience that we bring through our full vertical technology stack, I think it really is a differentiating product in the marketplace.

There are many new launches coming with the Flybe Auto solution in the software stack. And in that construct, we have unique relationship with Mazor that we work very tightly with them on the integration of that capability into the vehicle. There are a large number of launches inside our pipeline and we’re working to deploy that on more vehicles as we go through 2024 and 2025. And I think it provides an extremely solid user experience and differentiating user experience with the full integration of the cell phone in the vehicle. And we really see that’s the — one of the core founding principles in ECARX that both D and Eric saw, they establish our business. Is this not only this importance of both software and compute power to the automotive experience on a go-forward basis but the integration of, let’s say, one digital life inside the vehicle, where your cell phone and the car become one user experience and through the collaboration with the Sins Major Group, we bring that to life and the Lincoln 208 plus in the number of launches that we’ll see throughout 2024 and go forward.

And then lastly, you mentioned autonomous. On the Sky land Pro system, there’s a — it’s a significant activity from GC and from ECARX to develop the driving algorithms for that vehicle driving and parking algorithms for that vehicle. And a significant portion of that development was done in-house. We often engage a number of partners. And I think we’ve announced that Blackstone was a key partner for us in the deployment of that system. And some of the some of the solutions and software stack primarily with perception software was done by Plaxesimit but much of the driving decision software, sensor fusion software and so on, ECARX brought to that vehicle. And as we have — as I look across our future deployment relative to the OTAs that will come to that vehicle, we will continue to deploy new features in that ADAS system as we move through this quarter and next quarter and we believe quite strongly it will be a competitive solution, both in the China market and potentially even in the global market.