Xiaopeng He: [Foreign Language] [interrupted] Let me address your first question. Regarding our product lineup, we are going to meet the lower tier city demands by offering MONA and other new products. And right now, we’re not in a position to disclose too much specific information, but what I can see — what I can say right now is that, we aim to offer top notch ADAS technology and capabilities to a lower tier market as well, including Tier 2, all the way to Tier 4 cities, audience — I mean, customers. And we are going to set those autonomous driving capability as standard configurations in our future lineups for those cities as well. And we are also going to reform our distribution channels for the lower tier market. Thank you.
Regarding your second question on the R&D expenses, actually we’ve been putting in a lot of thoughts in the past three quarters and we’ve actually done a lot in — starting from the beginning of this year to reduce our R&D fee. Let me give you several examples. When we started the overhaul in our restructuring of the organization. The first thing that we did is to cut R&D expenses. And we also have been advocating this module based design rationale that can allow us to put everything on the same architecture, the SEPA 2.0. We also have actually encouraged and asked our suppliers to put their R&D expenses into the BOM to reduce the overall R&D expenses on our front. The last thing that we — another thing that we did was to actually equipped our R&D team with more systematic tools and ways that could allow better integration and mutual compatibility of different parts, so that our overall R&D expenses can be cut even further.
So going into 2024, we are going to actually strengthen several capabilities. The first one is our overall design capability of our models and products. We also will strengthen our craftsmanship, which is also critical in manufacturing. We will continue to improve our smartification, I mean, the intelligence of our products. We’ll also do R&D improvement in the — for the international market to strengthen our globalization capability. And we will also put in some R&D efforts to prepare for our long term development and also for our long term strategy as well. So in terms of the absolute value of our R&D expenses in 2024, definitely it’s going to be higher than this year.
Unidentified Analyst: [Foreign Language]
Operator: The next question comes from Jing Chang with CICC. Please go ahead.
Jing Chang: [Foreign Language] Okay. This is my only one question. Regards to autonomous driving, which we believe will become the key sector in the field next year. So how do we expect the seat of autonomous driving to reshape the contacted landscape of the industry? We will be very quickly to be seen in the maybe next one to two years, or will we take much longer time? We also see that many traditional OEMs have chosen to cooperate with other companies in the practice of autonomous driving. So in contrast, can you share some details of our — advantages of our in house research?
Xiaopeng He: [Foreign Language] [interrupted] Thank you for your question. This is Xiaopeng. I think the upcoming five years will actually ushering an era of rapid development for ADAS adoption and technology development. It’s going to be very similar to the stage where we see the rapid development of NUV penetration from back in 2018 to 2022. And I remember back in 2020, we saw a huge uptake in the penetration rate of new energy vehicles in the market. And I think right now in terms of ADAS technology adoption. We’re still in a warming up stage in terms of the technology readiness and also for the whole industry as well. We definitely are seeing more and more younger customers who are embracing this new technology, who are willing to try this new experience.
And in the future, we are very optimistic about the adoption rate improvement, because we — first of all, we’re very excited to see that there are more and more participants in the industry that are helping us to educate a wider audience that are cultivating the market to get it ready for this upcoming exciting era of ADAS adoption. Now regarding our advantages or strength in having this full stack in house R&D capability, there’s a long list of examples of strength that I can give you. I mean, just to name a few, localization of the self-development of the technology is one of them. And the second thing is to control the cost of production, because even though we are seeing a wider customer base that are trying to embrace the technology, they still want to have both safety, in terms of experience and also affordability as well.
So having full stack development capability definitely allow us to control the cost better. And another good advantage of having that capability is that, it can allow us to embrace upcoming and their cutting edge technology very timely as well. For example, in the past year, we saw this emergence of the application of large language models and having full stack R&D capability allow us to do full domain end-to-end application of this new technology, which would not be possible without that capability and that is actually happening without a lot of our peers who are struggling to adopt new technology as well. And another good point that I would like to make is that, we are seeing more and more — tighter and tighter coupling with AI technology with car manufacturing capability or R&D capability, and we need to have, for example, the next gen EE architecture, the unified ADAS domain, start cockpit and voice assistant to actually embrace this tighter coupling with AI technology.
And that actually requires a lot of integration on not just the hardware level, but also hardware together with software and AI as well. And we are very proud that currently we are very capable of doing that, thanks to our full stack R&D capability.
