Xiang Li: Actually, since we founded Li Auto, we’ve always dreamed of becoming a $1 trillion or RMB1 trillion company. And as you can see, next year, we’re expecting to become RMB100 billion company already. So personally, I have never run — built a company from billion — $100 billion company from scratch. And most of my colleagues have not had that experience either. Most of my colleagues, either they come from companies that are smaller than that or they come from companies that became that ours years ago or they work off of a remote office does not headquartered in China. So we have seen this issue a long time ago. So since 2019, we’ve been starting to study software and hardware companies that have reached the size of RMB1 trillion very, very deeply to see how they manage their business at different stages and what we can learn from them.
And one thing in common that we’ve seen is that they’ve all transformed to a matrix organization when they reach the level of about RMB10 billion. And so for Li Auto, when we started from zero to one, speed was efficiency, speed meant everything. But as time went on, we saw that in a very long value chain where quality and efficiency is very important. In our one to 10 stage, quality is efficiency. So a successful enterprise will need to be able to — for their internal purposes, we need to have a very robust planning perception execution process. And for their customers, they need very strong R&D from product, sales and services. So the matrix organization was the only way to manage this entire process end to end. To make an analogy, the horizontal teams make sure that they built the road, they maintain the roads and the roads are good run for vehicles.
And the vertical teams are the ones that build cars, maintain the fleet and make sure the cars run smoothly on the road. And these cars are on the well built and maintained roads are responsible for delivering good services and products to our consumers, which forms a very healthy cycle. So we first started piloting this thought in what we call IPD, integrated product development, and the process has actually been validated by the success of L9, L8 and L7, where you might have seen the success of Li ONE, which in a certain view could be a coincidence. But through the application of IPD, we’ve made that a certainty so that we can replicate the success with our current and ongoing future product development. So we are now in the process of applying our pilot process on a much larger scale to make sure that our company can continue to turn out successful products and services to our customers.
Operator: And our last question will come from Jing Chang with CICC. Please go ahead.
Jing Chang: So my first question is about effect of in the third quarter, our R&D and selling expense increased to 1.8 billion to 1.5 billion . So, you gave a small guidance on next year’s expense ratio. And considering that next year, we will have a brand-new BEV platform model on the market and a more complicated and a more channel network layout. So, in addition, in terms of R&D partially grew mainly to our in-house research.
Johnny Tie Li: This is Johnny. I will take your first question about R&D expenses. This year’s R&D expenses will test as we guided, will be around USD1 billion, which is RMB7 billion for the whole year. It’s as expected. And for next year, currently, we see over RMB10 billion to RMB12 billion depending on our final decision on some investments will start next year in 2024. So, it will be RMB10 billion to RMB12 billion for next year.
