But as you mentioned, whether we want to further like increase our targets for the gross margin, I don't think we want to do this at this moment. As for the gross margin, with the strong momentum of quarterly deliveries, rise of average selling price, reduction of battery pack, and other BOM costs and improvement of manufacturing efficiencies, our gross margin has substantially increased in the second quarter. Because if you look at the state in the first half, I think the R&D expenses are under great control with around like RMB 500 million to RMB 600 million per quarter despite the model launch.
But nowadays, since you have received a lot of refinancing and have a much stronger balance sheet than last year, will you consider to build the second plant by yourself? Steven, please go ahead.----------------------------------------------------------------------------------------------------------------------------------------------------------------Okay. So 2 quick questions. Please ask your question.Thank you, everyone. Stay safe.This transcript is produced by AlphaStreet, Inc. The first question about the vehicle margin, we still expect the gross margin to expect double digits in — by the end of 2020 with further decrease in bond cost, including the battery package and also sales of more products with higher gross margin and continued optimization of our manufacturing cost. So the first question is that I think the market seems -- does not understand too much on the Battery-as-a-Service. Please register in advance of the conference using the link provided below and dial in 10 minutes prior to the call, using participant dial-in numbers, Direct Event passcode and unique registrant ID which would be provided upon registering. Thank you for standing by for NIO Inc.'s second-quarter 2020 earnings conference call. Congratulations on the solid progress, and thanks for taking my questions. Our balance of cash and cash equivalents, restricted cash, and short-term investments was RMB 11.17 billion or USD 1.58 billion as of June 30, 2020.And now, for our business outlook. So two very simple high-level questions. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call. Then it means that the users can pay RMB 258,000 at the beginning, but for this, they cannot get the loan from the bank because of the government policy restrictions.But if we can go with the BaaS solution, then it means that with the new product homologation policy and the certification policy, the users can have less payment at the beginning, but they can still enjoy the loan for their monthly payment, which, just like you mentioned, should be able to lower the down payment as well as the monthly payment for the users. And the second simple question is really on volume. So generally, all these reasons drive us to achieve positive cash flow in Q2.All right. Rui Chen - Director, Investor Relations. NIO’s innovative business model based on the separation of battery and vehicle has won wide recognition from the users and the industry.In April, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the National Development and Reform Commission and the Ministry of Finance jointly issued the latest new energy vehicle subsidy policy, which clearly stated to encourage the development of the battery swap technology and innovative business models based on the separation of battery and vehicle. According to the details shared, I think the NIO Hefei [Phonetic] needs to apply for IPO within four years and complete the deal within five years after the initial investment. The decrease in other sales over last quarter was mainly attributed to decreased revenues derived from the home chargers installed and accessories sold, which were in line with the decreased vehicle sales in the first quarter of 2020.Cost of sales in the first quarter was RMB1.54 billion, or $217.4 million, representing a decrease of 50.4% quarter-over-quarter and a decrease of 16.8% year-over-year. Starting from April, our sales and deliveries have witnessed a solid recovery. Private Securities Litigation Reform Act of 1995. The increase of vehicle margin was mainly driven by the decrease in purchase price of certain materials and lower unit manufacturing costs, attributed from increased production volume in the second quarter of 2020. [Operator Instructions] I will now turn the call over to your host, Mr. Rui Chen, Director of Investor Relations of the Company. Why do we see a gap between the production capacity and the sales?----------------------------------------------------------------------------------------------------------------------------------------------------------------This is Steven. This is Stanley. This year, the Chinese government launched the NEV and the -- Thanks for the question. The significant increase in deliveries and the direct sales model and the great support from supply chain partners have enabled us to achieve positive operating cash flow for the first time in our history.In the second quarter of 2020 -- the second quarter of 2020 is a milestone quarter for us. And will you consider to launch the ET7 at certain time or with the fourth model via different model? So this is quite helpful with the take rate of speaking.But normally speaking, the take rate for the NOP right now is around -- right now, for the take rate of the NIO Pilot is around 25%. Please refer to NIO’s press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures.With that, I will now turn the call over to our CEO, Mr. William Li. So the exact number.I don’t think that we have — supposed to give the guidance for the absolute dollar amount of the expenses for the current quarter. Let's conquer your financial goals together...faster. According to our preliminary research, we believe NIO China meets the requirements to go public in China, but we will make this dynamic decision based on the market situation.Our strategy is, NIO Inc. is going to hold the controlling stake in NIO China for the long-term.According to our previous press release, NIO Inc. has the redemption rights and the warrants on the NIO China project. We don't need to say that we will build this plant by the clock. And for example, we asked the supplier to extend the credit terms from 60 days to 90 days and also asked for them to accept the banknotes instead of cash for the payment of the purchase.
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