We have also engaged discussions with the upstream companies in the battery supply chain. We stand there are some capacities reserved for the lithium carbonate this year. And starting from this year, we are going to see more output from the upstream capacities. At the same time, considering the market demand, we believe the demand probably is not going to be strong compared with the past. But if we balance the supply and the demand regarding the lithium carbonate we believe probably in the fourth quarter of this year is quite likely the lithium carbonate will go down to probably around RMB200,000 or even lower. The third factor, we believe, is that starting from the third quarter of this year, we’re going to start more product deliveries. This is mainly because more new products will be delivered to our users starting from the second quarter of this year.
So, we believe with the ramp-up of the vehicle deliveries, the amortization rate of the fixed cost will also improve. So, our target still remains that we can achieve the vehicle gross margin of 18% to 20%, and we’re very confident that we can achieve that. For the first quarter of this year, we believe that we’re going to face more pressure on the vehicle gross margin, considering the overall situation, because this is a transitional period for the company when it comes to the vehicle sales because we are transitioning into a new technology platform for our product portfolio to the NT2.0. So it means that for the existing generation of the ES8, ES6 and EC6, we won’t need to have some measures to accommodate the subsidy reduction as well as some subsidization of the show cards.
At the same time, when it comes to the production capacities because we need to prepare for the launch of the new generation ES8, ES6 and EC6 in our Factory I. So we need to do some modifications on the tooling of the production line, this has affected the output of the Factory I in the first quarter, which result in a higher vehicle cost of our products. So at the same time, when it comes to the specific quarter, that is the first quarter of this year, we will also see that EC5 contribute as a large portion of the overall vehicle delivery, which will also affect the gross margin in the first quarter.
William Li: Thank you, Tim.
Tim Hsiao: Great. Thank you very much.
Operator: Your next question comes from Ming-Hsun Lee with Bank of America. Please go ahead.
Ming-Hsun Lee: So my first question is related to operating expense. So in the past, you — William mentioned that R&D per quarter is expected to be around RMB 3 billion. But this year — this quarter, we saw that the expense is close to RMB 4 billion. So we want to understand if there is a new guidance for sales and marketing as well as R&D expense?
Stanley Qu: Hi, Ming, this is Stanley. The guidance for R&D expense, I think we keep this guidance. And our average base for each quarter of 2023, we will — the non-GAAP R&D expense will be around RMB 3 billion to RMB 3.5 billion.so that’s for R&D expense. And for SG&A, as mentioned by William along with the start of user delivery of our NIO NT2.0 product in Q2, we think our sales efficiency will be improved gradually, and the ratio effecting versus sales revenue is expected to drop significantly. So that’s for the first question. Thank you, Ming.
William Li: Just to add to Stanley’s point, regarding the SG&A, because we also need to consider the investment for the European market. For the European market, right now, we are still at a relatively early stage in terms of the vehicle sales and the deliveries. We believe this is more like an investment period for our global market expansion.
