And my second question is about the third quarter and fourth quarter GP margin guidance. When can we return to a 10% or double-digit level as well as the third quarter, fourth quarter SG&A as a percentage of the revenue guidance? That’s all from me. Thank you.
William Li: Okay. Thank you, Jeff. Stanley, please answer the first question.
Stanley Qu: Yes, regarding the cash flow, I think — sorry. Yes, regarding the cash flow and also the refinancing plans, I think several points about this. One is regarding operating cash flow, I think as the delivery volume ramp-up from Q3 this year, our operating cash flow will be significantly improved compared with Q1 and Q2 of this year. And we also carried out a series of measures to control the CapEx investment and also manage our investment cadence prudently like delay or cancel of certain CapEx investments. This will also help us to manage the healthy cash flow. And additionally, as explained in William’s comments, we received US$740 million strategic investment from CYVN. And we also completed the offering of our first off-balance sheet ABS in Q3.
I think both our U.S. dollar and also RMB financing channels remain [undrafted] (ph). And all those will enable us to keep a healthy cash position and support the ongoing business development of the company. And regarding the financing — refinancing plan, we will disclose our plan accordingly if there is any capital market-related updates. But at this moment, I think we don’t have the precise information to comment with you. Yes, that’s the first question regarding the cash flow and also refinancing plan. The second is for this year’s margin?
Jeff Chung: Yes.
Stanley Qu: For this year’s margin, I think we have explained in the previous questions. And for Q3, our target is to achieve the double-digit gross profit margin and Q4 is 15%. And for SG&A guidance, I think the absolute value will grow along with our delivery volume and sales growth, but the percentage of total revenue will decrease. But according to the market situation, the adjustment and the change of our marketing strategy will be quite dynamic. So at this moment, I cannot give you the precise guidance about the percentage of SG&A over sales revenue. Thank you, Jeff.
Jeff Chung: Thank you. Just a correction here. I mentioned the inventory Q-on-Q delta was RMB5 billion, which was wrong. I just checked that the Q-on-Q data was only RMB2 billion. That’s it from my side. Thank you. Thank you very much.
Stanley Qu: Yes, welcome. Thank you.
Operator: The next question comes from Ming-Hsun Lee of Bank of America. Please go ahead.
Ming-Hsun Lee: [Foreign Language] So I have two questions. The first question is, currently, you have eight products to cover the majority of the luxury car segment. So, could you give more guidance on any of the new product plan next year under the NIO brand as well as the ALPS brand? And the second question is, what is your latest business progress for the mobile business? Thank you.
William Li: [Foreign Language] [Interpreted] Thank you for your question. For NIO brand, actually, we don’t plan to launch any new products in the year of 2024. Of course, we will still roll out some routine facelifts or product upgrades, but we haven’t planned any new products for next year, because we think that it’s more important for us to stay focused on our existing eight products on the NT2 platform to continuously improve its qualities and also market performance. Just like in 2021, we didn’t launch any new models, but still we have realized a very good gross margin, sales volume as well as quality performance. So that’s the plan for the brand of NIO. In terms of our mass market brand, ALPS, we plan to launch the very first model from ALPS in the second half of next year.
Right now, the R&D activities are proceeding according to the plan. Actually, we have just rolled out the verification build of the first model from ALPS and this model will be highly competitive in its product segment. And also for the brands of ALPS, its R&D philosophy is different from that of NIO. ALPS is targeting at the mass market, and we will not have many products in the lineup for ALPS. But for NIO, it’s different. It is targeting at the premium segment where we care more about the personalization and also the differentiation of the products. Just like Mercedes and BMW in China, they are selling 40, 50 models. That is a unique character of the premium segment. But for ALPS, for the mass market, it will be more family oriented and we will also care more on the sales volume of each model launched by ALPS.
In terms of our phone business, our mobile phone will be developed mainly for our new users, especially the users of our NT2 products. And the phone itself is developed centering on the vehicles, but with better mobility and connectivity experience. We are actually believing that with the phone business, it can help us to improve the competitiveness of our vehicle products, because our phone business is not to compete with those phone makers. Instead, we would like to use the phone as a carrier to provide the best experience for our vehicle users. Moreover, the underlying software and the underlying logic between the phone and the cars shares quite a lot of similarities. In terms of the launch plan for the phone, we plan to introduce our first phone product in the second half or in late September.
Operator: The next question comes from Paul Gong of UBS. Please go ahead.
Paul Gong: Thanks for taking my questions. So two questions here. The first question is regarding the sales channel. You mentioned that you are going to expand it. You feel it’s behind of the BMW and Mercedes Benz in terms of the channel as well as a sales person. But how does it compare to other EV start-ups? Are we ahead or are we behind? And how much do you think about the expansion of the store network and the sales personnel versus the sales efficiency improvement? And you also mentioned you are going to reach 30,000 monthly sales capability. How does that compare to today? Is that fair to assume? Currently, we have the capability to sell 20,000 monthly sales, given we already achieved that in July and expanding would be about 50% compared to today to 30,000.
How does this mathematics work? This is my first question. The second question is regarding the battery swap versus fast charging given the batteries, the semiconductors as well as even the charging piles, DC charging stations, all these seems to be rolling out with the industrial efforts. How — I understand it’s good to have both the battery swap as well as the fast charging, but would you consider the rolling out of fast charging kind of weak and the battery swap convenience and the competitive edge of NIO’s cars? Thank you.
William Li: [Foreign Language] [Interpreted] Thank you for your questions. If you look at the size of the sales teams in comparison to other EV start-ups in China, actually, by the end of June, the size of our sales team is only half of those of other companies. Of course, in terms of the service network, we have specialties and the teams working for the power swap stations, roadside services as well as at the new houses. So for the service and community part, we have a bigger team than other EV start-ups. But when it comes to the actual sales person, in our company, we call them fellows. In terms of the number of fellows, we are — actually have a much smaller team than all the other companies in the industry. In April and May this year, our delivery volume was not very high.
By then, we didn’t really realize the importance of the sales capabilities. We’re taking any actions. But starting from June, as we ramp up our delivery volumes, we gradually realize that the insufficient sales teams has affected the satisfaction and also the execution of many things, including test drive and also order conversions. That’s why starting from July, we have started to develop our sales channels as well as the sales team. For comparison, to ramp up to the comparable side, we believe that we need around 5,000 people working on the sales team. But of course, it takes time for us to have that many people on the team and also to train them with the corresponding capabilities. In terms of the delivery volume, in July, we have delivered more than 20,000 cars, but that demonstrated our capability in terms of the deliveries, which is relatively easier than realizing sales capabilities.
