OEM代工混合生产模式

During the Track Record Period, we entered into various outsourcing arrangements with third-party OEM suppliers for production of certain components of our in-vehicle hardware products and up to complete in-vehicle hardware products under OEM arrangements.

Through outsourcing the production and/or assembly of certain components of in-vehicle hardware products and in-vehicle hardware products, we believe we are able to avoid direct exposure to the risks and expenses associated with operating our own production facilities.

We generally engage service providers to provide warehouse management services including managing daily purchase orders, receiving and delivering products, managing inventory, etc.

In line with industry practice, we engage Independent Third Party contract manufacturers to assemble and manufacture our products. This approach allows us to focus our resources on technologies innovation, sales and marketing, and customer service.

Although we engage contract manufacturers to assemble and manufacture our products, we typically purchase raw materials, key hardware components and customized parts from suppliers in the market directly, thereby ensuring the quality of our products.

All intellectual property rights arising from the assembly, manufacture and supply of products, including the intellectual property rights of customized tooling and finished products, will be owned by us.

In 2020, 2021 and 2022 and the six months ended June 30, 2023, our purchase amount from Jabil was nil, RMB16.7 million, RMB65.8 million and RMB19.6 million, respectively.

While we engaged Jabil to produce our LiDAR products in the past, we currently only engage them for the production of certain components for our products, as we are gradually shifting the production of our LiDAR products in-house.

In 2020, 2021 and 2022 and the six months ended June 30, 2023, our purchase amount from Luxvision (which includes purchase amount from Luxsense given that Luxsense is an indirect subsidiary of Luxvision) was nil, nil, RMB77.5 million and RMB54.0 million, respectively.

We also leverage contract manufacturers to produce certain products, mainly including humanoid Alpha Mini and smart robotic appliances, to increase the flexibility of our production capacity and optimize our production network.

For FY2020, FY2021, FY2022 and 6M2023, the amount of subcontracting service fee paid by us was RMB80.3 million, RMB105.8 million, RMB63.8 million and RMB6.9 million, respectively, accounting for 19.6%, 18.8%, 8.9% and 3.3%, respectively, of our total cost of sales for the corresponding year/period.

During the introduction stage of new products and services, our production manufacturing team and our contract manufacturers are jointly responsible for process planning to ensure compliance with our specifications and quality requirements.

In order to better meet market demands and ensure adequate supply for our diversified product offerings, we cooperate with reliable OEMs to produce a portion of products primarily for dealing with short-term demand surges (e.g. during the rice harvest season) and for catering to certain of our customers' demands for products manufactured with paddies from designated regions.

We do not rely on any single OEM supplier, and we maintain good relationships with multiple OEM suppliers throughout the Track Record Period.

The production volume attributed to OEM production increased from 7.5 thousand tons in the three months ended March 31, 2022 to 24.8 thousand tons in the three months ended March 31, 2023, primarily due to certain customers' demands for products manufactured with paddies from designated regions, and we also leverage such increased engagement of OEM suppliers in or near the same region to increase efficiency of delivery and control logistics costs.

Additionally, we also work with selected third-party distilleries which produce base liquor for us strictly in accordance with our specifications and requirements.

These collaborated distilleries provided us with approximately 7,404 tons, 20,546 tons and 7,817 tons of sauce aroma base liquor in 2020, 2021 and 2022, respectively.

As we continue to build additional production facilities to enhance our production capacity, we expect to gradually reduce sourcing base liquor from these collaborated distilleries.