Paul Gong: Hi. Thanks. Thanks for taking my questions. Two questions. The first one is regarding the latest sales trend of ES7 and ET7. I understand that the 866 these three models are phasing out. That is a temporary weekly before switching to the new platform. And I also see you have put a lot of the expectation on the NT2.0 platform products. But what has been driving the weakness of the ES7 and the ET7 recently? Is that due to the immediate hangover effect of the subsidy that cards or is that due to the supply chain bottleneck, or is it like capacity allocation to ET5 that has cannibalized the ES7 and ET7 sales. So what has been the reason for the recent weekly of these two NIO platform kind of flagship models? My second question is regarding the efficiency improvement.
I think William had some spoken in Germany the beginning of this year regarding the key effort of efficiency improvement in 2023. So what has been the key area that you want to improve? We can still see you invest a lot for the future, including the batteries 1,000 working stations to be deployed for this year, including the expansion and NIO house in Europe, but where can we find the efficiency improvements and the expense ratio or reduction for the rest of this year?
William Li:
William Li: Thank you, Paul, for your question. We can see that for the first two months of this year, the market demand is not that strong, especially when it comes through the demand for the BEV. We see this has suffered some impact. But if you look at all the peers, I believe most peers have published their delivery results for the first two months. This is actually affecting everyone in the market. I believe a very important factor is the subsidy cuts. Starting from this year, there will be no more subsidies. And this will create some short-term effect on everyone in this market. But when it comes to NIO specifically, because we have a relatively higher MSRP, so this impact on us is actually relatively lower compared with others.
Starting from the February, we can see the demand is recovering week by week, including the ES7 and the ET7 compared with January. So for the ES7 and ET7, we can see that in their specific segment, they’re still very competitive. So we are very confident when it comes to the demand for the ES7 and the ET7 in the long run. But in the short term, yes, we are facing some pressure. I believe there are multiple factors we have to consider probably like the Spring Festival and the low seasonalities of the auto market as well as the subsidies or other micro environment. But still, we are very confident with our product competitiveness in their specific segment. Yes, actually, the efficiency improvement is the most important half for NIO this year.
Last year because of the project progress and we have multiple projects going in parallel. So the human resources increased is much faster compared with the past. But when it comes to the efficiency improvements, we are not talking about the cutting projects. We believe that the efficiency is more about improving the efficiency per person. We can improve the overall efficiency of the whole organization when it comes to the R&D, sales and service and also management. At the same time, we also need to do some prioritization of a different kind of a project, including the R&D projects and also the CapEx investment. So it means that we need to look at the priority in terms of the timeline and also the investment. So over €“ all in all the efficiency improvement were more focused on the output and the quality of the output as well as to the prioritization.
Thank you, Paul.
Paul Gong: Thank you.
Operator: The next question comes from Nick Lai with JPMorgan. Please go ahead.
