A. History and Development of the Company The Group began its operations in 2015 through Chengxing Zhidong, a PRC limited liability company. The Group undertook a reorganization, or the Reorganization, to facilitate its initial public offering in the United States. As part of the Reorganization, the Group incorporated XPeng Inc., an exempted company incorporated under the laws of Cayman Islands, in December 2018. Subsequently, XPeng Inc. established XPeng Limited, a limited liability company established in the British Virgin Islands. XPeng Limited then established XPeng (Hong Kong) Limited, a Hong Kong limited liability company, as its wholly-owned subsidiary. XPeng (Hong Kong) Limited then established Xiaopeng Motors as a wholly foreign-owned enterprise in the PRC. -76- Table of Contents As a transitional arrangement of the Reorganization, Xiaopeng Motors entered into a series of contractual agreements with Chengxing Zhidong and its shareholders in September 2019, pursuant to which Xiaopeng Motors exercised effective control over the operations of Chengxing Zhidong. In connection with the Reorganization, substantially all of the former shareholders of Chengxing Zhidong have exited from Chengxing Zhidong and obtained, by themselves or through their respective affiliates, shares of XPeng Inc. based on their respective shareholding in Chengxing Zhidong prior to the Reorganization. In May 2020, Xiaopeng Motors completed its purchase of 100% equity interest in Chengxing Zhidong. Consequently, Chengxing Zhidong became an indirect wholly-owned subsidiary of XPeng Inc. In August 2020, we listed our ADSs on the NYSE under the symbol “XPEV.” In July 2021, we listed our Class A ordinary shares on the Hong Kong Stock Exchange under the stock code “9868.” In July 2023, we and the Volkswagen Group entered into the VW Technical Framework Agreement on strategic technical collaboration and the VW Share Purchase Agreement for strategic minority investment by the Volkswagen Group in us. Our principal executive offices are located at No.10, Cencun Fengzhuang Avenue, Tianhe District, Guangzhou, Guangdong 510640, People’s Republic of China. Our telephone number at this address is +86-20-6680-6680. Our registered office in the Cayman Islands is located at the offices of Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. Our agent for service of process in the United States in connection with our registration statements is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168. We maintain our website at https://www.xpeng.com/. The information contained on, or linked from, our website is not a part of this annual report. The SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. B. Business Overview Overview We are a leading Chinese Smart EV and NEV company that designs, develops, manufactures, and markets Smart EVs and NEVs that primarily appeal to the large and growing base of middle-class consumers in China. We are also expanding our international presence, with a focus on the mid- to high-end segment in the global passenger vehicle market. Since inception, we have taken an innovative technology path to our envisioned future of mobility. We intend to empower consumers with our differentiated Smart EVs and NEVs that can offer disruptive mobility experiences. We believe this can be achieved by fast iteration of software and seamless integration with hardware, which enable us to lead the innovation of Smart EV and NEV technologies and provide differentiated Smart EV and NEV products to consumers. Since our inception in 2015, we have become one of the leading Smart EV and NEV companies in China, with leading software and hardware technology at our core and bringing innovation in advanced driver assistance, smart connectivity and core vehicle systems. We develop full stack advanced driver assistance systems, or ADAS, software in house and have deployed such software on mass-produced vehicles. We started to roll out our XNGP in March 2023 and have made XNGP available in cities without HD map coverage since November 2023. As a result, its geographical coverage has expanded swiftly in China. -77- Table of Contents Our Smart EVs and NEVs are designed to appeal to the large growing base of middle-class consumers globally. We primarily target the mid- to high-end segment in the global passenger vehicle market. Consumers choose our products primarily because of attractive design, industry-leading electrification and smart technologies, interactive smart mobility experience and long driving range. Since December 2018, we have launched and continuously upgraded a series of strategically positioned vehicle models. We are building a rapidly expanding, diversified portfolio of attractive Smart EV and NEV models to capture the growing demand for Smart EVs and NEVs and appeal to the differentiated needs of a broad customer base. • In March 2025, we upgraded the G6 and the G9 to their respective 2025 Edition and started delivery during the same month. • In April 2025, we upgraded the X9 to its latest 2025 Edition. • In July 2025, we launched the G7 and started delivery during the same month. • In August 2025, we launched the Next P7 and started delivery during the same month. • In November 2025, we launched the X9 EREV and started delivery during the same month. • In January 2026, we upgraded the P7+, the G6 and the G9 to their respective 2026 versions, and launched the EREV versions of the G7 and the P7+. • In March 2026, we launched the EREV version of the G6 and started delivery during the same month. • In April 2026, we upgraded the MONA M03 to its latest 2026 Edition and started the presale of GX. We currently offer the following models: • Sedan • MONA M03 (BEV) with a wheelbase of 2,815 mm and CLTC range between 510 km and 640 km. • Next P7 (BEV) with a wheelbase of 3,008 mm and CLTC range between 702 km and 820 km. • P7+ (BEV / EREV) with a wheelbase of 3,000 mm and CLTC total range between 615 km and 725 km for BEV version and reaches 1,550 km for EREV version. • SUV • G6 (BEV / EREV) with a wheelbase of 2,890 mm and CLTC total range of 625 km for BEV version and reaches 1,704 km for EREV version. • G7 (BEV / EREV) with a wheelbase of 2,890 mm and CLTC total range between 602 km and 702 km for BEV version and reaches 1,704 km for EREV version. • G9 (BEV) with a wheelbase of 2,998 mm and CLTC range between 625 km and 725 km. • MPV • X9 (BEV / EREV) with a wheelbase of 3,160 mm and CLTC total range between 650 km and 750 km for BEV version and reaches 1,602 km for EREV version. -78- Table of Contents Our ADAS and in-car intelligent operating system enable customers to enjoy a differentiated smart mobility experience, and our Smart EVs and NEVs can be upgraded through OTA firmware updates to introduce enhancements and new functionalities. Continuous innovation in software is one of the key factors that differentiate our Smart EVs and NEVs and has become a critical value proposition appealing to customers. We seek to expand our customer reach by extending our online and physical sales and service network. We had a total of 721 stores, covering 255 cities in China as of December 31, 2025. These stores in our sales network include both stores directly operated by us and franchised stores. In addition, we actively engage in online marketing through various channels to further enhance our brand recognition and customer acquisition. We aim to offer our customers a convenient charging and driving experience by providing them with access to a vast, rapidly-growing charging network. Our customers can choose to charge their Smart EVs or NEVs using home chargers, at XPENG self-operated charging station network or at third-party charging stations. In addition, we started to launch the 480kW S4 supercharging stations in China in 2022. As of December 31, 2025, XPENG self-operated charging station network further expanded to 3,159 stations, including 2,654 XPENG self-operated supercharging stations and 505 destination charging stations. Our S4 and S5 supercharging stations have covered 222 cities in China, including all of the tier-1 and the new tier-1 cities. Our manufacturing philosophy centers on quality, continuous improvement, flexibility and high operating efficiency. We currently mainly manufacture our vehicles at our own Zhaoqing and Guangzhou plants. In addition, as of March 31, 2026, the construction of our new manufacturing base in Wuhan has been completed, which had obtained the property ownership certificate upon completion of the inspection and acceptance procedures conducted by relevant government authorities. Our total revenues grew rapidly from RMB30,676.1 million in 2023 to RMB40,866.3 million in 2024, and further to RMB76,719.7 million in 2025. The deliveries of our Smart EVs and NEVs increased from 141,601 units in 2023 to 190,068 units in 2024, and further to 429,445 units in 2025, representing a significant year-on-year growth rate of 125.9% between 2024 and 2025. Along with strong revenue growth, our gross profit margin increased from 1.5% in 2023 to 14.3% in 2024, and further increased to 18.9% in 2025. Products Our products include Smart EVs, NEVs and advanced ADAS software system. We design, develop, manufacture and market Smart EVs and NEVs, and we develop full-stack ADAS software system in-house. We design our Smart EVs and NEVs to satisfy the needs and preferences of middle-class consumers in China. Primarily priced in the mid- to high-end segment, our Smart EVs and NEVs offer customers a great-to-drive and great-to-be-driven experience, as well as compelling value proposition. P7 Our second mass-produced Smart EV, the P7, is a four-door sports sedan. We started the production of the P7 and began delivery in May 2020. In November 2020, we unveiled the P7 Wing, a limited edition designed to maximize the sporty and dynamic style of the sports sedan with a pair of specifically-designed scissor-style front doors, which are traditionally only available in luxury sports vehicles. We started the delivery of the P7 Wing in March 2021. In March 2023, we upgraded the P7 to P7i, and started the delivery during the same month. In March 2024, we introduced a new version of P7i, being the first time we brought scissor-style front doors to two-wheel drive models, and started delivery during the same month. -79- Table of Contents Next P7 In August 2025, we launched the Next P7, which is an all-new coupe sports sedan, and started delivery during the same month. The Next P7 is built on an 800V high-voltage SiC platform and equipped with a 5C ultra-fast-charging intelligent battery. G9 In September 2022, we launched the G9, which is a mid- to large-sized SUV, and started mass delivery in October 2022. Featuring our powertrain system using 800V high-voltage Silicon Carbide (SiC) platform, the G9 demonstrates greater energy utilization efficiency and charging efficiency compared to other EVs built on a 400V platform. In March 2025 and January 2026, we upgraded the G9 to its 2025 Edition and 2026 Edition, respectively. G6 and G6 EREV In June 2023, we launched the G6, which is a coupe SUV, and started delivery to customers in July 2023. Based on our next-generation technology architecture, SEPA 2.0, the G6 is equipped with our powertrain system using 800V high-voltage SiC platform and features cutting-edge front and rear integrated aluminum body die-casting technology and Cell Integrated Body (CIB) battery-body integration technology. In March 2025 and January 2026, we upgraded the G6 to 2025 Edition and 2026 Edition, respectively. In March 2026, we further launched the EREV version of the G6 and started delivery during the same month. X9 and X9 EREV In January 2024, we launched the X9, which is a large seven-seater MPV, and started delivery during the same month. Based on our next-generation technology architecture, SEPA 2.0, the X9 is equipped with our powertrain system using 800V high-voltage SiC platform and features cutting-edge front and rear integrated aluminum body die-casting technology and CIB battery-body integration technology. The X9 is equipped with an active rear-wheel steering system and intelligent dual-chamber air suspension, providing customers with an enhanced driving experience. Also, the X9 features our smart in-car operating system, XOS Tianji. In September 2024, we introduced a new version of the X9. In April 2025, we upgraded the X9 to the 2025 Edition. In November 2025, we launched the X9 EREV and started delivery during the same month. The X9 EREV features a combination of a large-capacity fuel tank that was designed for extended-range operation, and supports 5C ultra-fast-charging capability under an 800V high-voltage SiC platform. MONA M03 In August 2024, we launched the first model of the MONA series, MONA M03. Deliveries of MONA M03 started in August 2024. MONA M03, an all-electric hatchback coupe, has a wheelbase of 2,815 mm and CLTC range between 510 km and 640 km. MONA M03 demonstrated leading wind resistance among mass-produced pure electric hatchbacks. In April 2026, we upgraded the MONA M03 to the 2026 Edition. P7+ and P7+ EREV In November 2024, we launched the P7+ and started delivery during the same month. With a 5,056 mm body length and a 3,000 mm wheelbase, the P7+ allows rear passengers ample headroom and enough room for both rows to stretch out. Equipped with our in-house the Hawkeye Visual Solution, P7+ features built-in advanced ADAS across the entire lineup. -80- Table of Contents In January 2026, we launched the 2026 Edition of the P7+ and its EREV version, the P7+ EREV, and started delivery during the same month. The 2026 Edition of the P7+ is built on an 800V high-voltage SiC platform and equipped with a 5C ultra-fast-charging intelligent battery. Its EREV version offers a combined CLTC range of 1,550 km. G7 and G7 EREV In July 2025, we launched the G7 and started delivery to customers in the same month. The G7 was designed for families and individual consumers seeking advanced technology and comfort. In addition, the G7 supports ADAS and smart infotainment systems and supports 5C ultra-fast charging under an 800V high-voltage SiC platform. In January 2026, we launched the 2026 Edition of the G7 and its EREV version, the G7 EREV, and started delivery during the same month. The G7 EREV version offers a combined CLTC range of 1,704 km. Plans to Launch New Models We plan to continuously introduce new models and facelifts to expand our product portfolio and customer base. We have invested in multiple powerful EV vehicle platforms over the past few years. Our future models will be based on these platforms and our latest technology architecture, adaptable and flexible with multiple vehicle platforms. Deliveries of our Smart EV and NEV The following table sets forth the number of our vehicles delivered to customers in the periods indicated: For the three months ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Total 18,230 23,205 40,008 60,158 21,821 30,207 46,533 91,507 94,008 103,181 116,007 116,249 Our Technologies We develop most of our key technologies in-house to achieve a rapid pace of innovation and tailor our product offerings for consumers. By developing our proprietary software and hardware technologies, we are able to retain better control over the performance and experience of our Smart EVs and NEVs and have the flexibility to continuously upgrade them. Our ADAS We have dedicated significant research and development efforts in ADAS technology, which we believe is a key element for the Smart EV and NEV experience. Our research and development capabilities enable us to continuously improve our ADAS and achieve fast system iterations. In 2021, we rolled out NGP for highway driving and advanced automated parking, or the Valet Parking Assist, as part of our proprietary XPILOT 3.0, through OTA firmware updates. In 2022, we revealed XNGP, which was intended to enable driver assistance in the full spectrum of driving scenarios. When XNGP is activated with a set destination, the vehicle itself can perform a wide range of driving tasks such as cruising, changing lanes, getting around stationary vehicles or obstacles, and navigate through intersections. We started to rollout our XNGP in March 2023, and have made XNGP available in cities without HD map coverage since November 2023. As a result, its geographic coverage has expanded swiftly in China. In May 2024, we introduced end-to-end model to smart driving, and in July, we upgraded our ADAS to achieve nationwide full-scale availability with no restrictions on cities, routes, or road conditions. In August 2024, we revealed our Hawkeye Visual Solution and made the P7+ launched in November 2024 our first vehicle model equipped with Hawkeye Visual Solution, while our OTA updates in January 2025 empowered other eligible models with the updated ADAS. In March 2026, we commenced the gradual rollout of our latest ADAS, VLA 2.0, to users. -81- Table of Contents XOS Tianji XOS Tianji is our next-generation smart in-car operating system, which offers a comprehensive suite of smart in-car functionality that aims to integrate our smart driving capabilities with next-generation smart cabin scenarios and advance the human-machine co-driving experience. It features multi-tasking on a single screen, a customizable XDock, real-time Surrounding Reality (SR) display, all-round safety warnings, and smart voice assistant. We expect XOS Tianji to serve as a sophisticated in-car companion and automotive expert for our consumers’ daily use. In January 2024, we launched the X9, our first model equipped with XOS Tianji. On May 20, 2024, we introduced an all-domain large language model for smart cockpits. In July 2024, we announced a full scale rollout of the updated in-car OS to all eligible models globally, which adds features such as remote voice control, gesture control, and versatile NFC touch control. In January 2025, we introduced several new features including a personalized operating system that supports multi-language voice controls such as English, French, and Thai. Powertrain Powertrain plays a critical role in our ability to deliver safe and high-performance EVs at competitive prices. The powertrain of our Smart EV and NEV consists of the battery system, electric drive system, high voltage system and vehicle control unit, or VCU. Leveraging our superior in-house research and development capabilities, we are able to differentiate our Smart EVs and NEVs in key powertrain features, such as charging efficiency, battery safety, range, noise, drivability and digitization. The powertrain’s ECUs are amenable to OTA firmware updates, which enable us to improve the powertrain’s functions and customer experience after delivery. The battery system of our Smart EV and NEV utilizes high-energy density battery cells. We utilize lithium nickel manganese cobalt oxide, or NCM, cells and LFP cells for our batteries. Through our research and development efforts, we seek to enhance the energy density of the battery pack and reduce its cost, while also maintaining its safety, reliability and longevity. We rolled out our powertrain system using 800V high-voltage SiC platform on the debut of the G9 in September 2022. As a result, the G9 demonstrated greater energy utilization efficiency and charging efficiency compared to other EVs built on a 400V platform. In addition, we launched the X9 EREV in 2025, our first EREV model, which features 5C ultra-fast-charging and 800V high-voltage SiC platform, demonstrating great energy utilization efficiency and resolves range anxiety. SEPA 2.0 In April 2023, we unveiled our next-generation technology architecture SEPA 2.0 (Smart Electric Platform Architecture). SEPA 2.0 brought a series of more advanced architectural solutions, from our in-house development autonomous driving software to vehicle engineering. SEPA 2.0 is expected to accelerate our R&D cycle and optimize R&D efficiency and enable us to meet the diverse customer needs at optimized costs. SEPA 2.0 is adaptable and flexible with multiple vehicle platforms for wheelbases between 1,800 mm and 3,200 mm and scalable to support a variety of vehicle types. SEPA 2.0 integrates various features, including smart technology, powertrain, and advanced manufacturing (front and rear integrated aluminum body die-casting technology, Cell Integrated Body (CIB) technology). We started delivery of the G6, our first new production model built on SEPA 2.0 in July 2023. -82- Table of Contents Sales and Marketing We seek to cost-efficiently expand our customer reach and grow sales. We had a total of 721 stores, covering 255 cities in China as of December 31, 2025. These stores in our sales network include both stores directly operated by us and franchised stores. While currently we primarily sell products and services in China’s market, we also made positive progress in overseas markets since we delivered the first batch of G3 to Norway in December 2020. Our footprint currently extended across multiple continents, including multiple countries or regions in Europe, Asia and other continents. Comprehensive Services We offer our customers a comprehensive suite of charging solutions and after-sales services, as well as various value-added services. These services offer our customers a convenient experience and enable full lifecycle engagement with our customers, which in turn improves their loyalty. Charging Solutions We aim to offer our customers a convenient charging experience by giving them access to a wide and expanding charging network in a cost-efficient manner. Our customers can choose to charge their EVs using home chargers, XPENG self-operated charging station network, or third-party charging stations. We will continue to expand the XPENG self-operated charging station network coverage, to provide greater accessibility and enhanced charging experience to our customers. In September 2022, we launched seven 480kW S4 supercharging stations in five cities in China. Our S4 and S5 supercharging stations significantly shortened the charging time for our customers with the models that are equipped with 800V high-voltage platform. Moreover, the 5C ultra-fast-charging intelligent battery, which is available on most of our models, further reduces the charging time and enhances the overall safety performance. As of December 31, 2025, XPENG self-operated charging station network further expanded to 3,159 stations, including 2,654 XPENG self-operated supercharging stations and 505 destination charging stations. Our S4 and S5 supercharging stations have covered 222 cities in China, including all of the tier-1 and the new tier-1 cities. On January 5, 2025, we and the Volkswagen Group China announced a Memorandum of Understanding (MOU) to jointly build charging networks in China. Over 20,000 charging piles operated by both parties across 420 cities in China will be accessible to customers of both us and Volkswagen Group China. Both parties will also jointly explore the cooperation on co-branded super-fast charging stations, accelerating the expansion of charging networks and enhancing the charging experience for customers. Furthermore, on January 14, 2025, we and BP Pulse announced the signing of a Memorandum of Understanding (MOU) to establish a strategic partnership. This collaboration enables reciprocal access to our respective charging networks and aims to offer customers access to over 30,000 charging piles across 420 cities in China. We are one of the EV companies that have established self-operated charging networks in China, and we will continue to expand the network of our charging stations through XPENG self-operated charging stations and strategic partnerships to better serve our customers. On September 23, 2025, we and Charge+ have officially announced a strategic partnership to enable long distance driving for EVs by building a network of high-powered supercharging hubs across Southeast Asia, including Singapore, Malaysia, and Thailand. After-Sales Services and Warranty We provide efficient after-sales services both offline and online. Offline services are available at our service centers and cover repairs and maintenance for our Smart EVs and NEVs. We also provide online after-sales services, which are enabled by our cloud capabilities and high-speed connectivity of our Smart EVs and NEVs. Our system is able to monitor vehicle performance status in real time, remotely diagnose certain vehicle malfunctions and potential issues and recommend solutions to prevent problems. Certain software-related issues can be resolved remotely through OTA updates. In addition, we have developed an intelligent remote diagnosis system, which detects potential system error before it occurs to ensure vehicle safety. We also offer competitive warranty terms for our Smart EVs and NEVs. -83- Table of Contents Other Services We also offer the following services. • Insurance Technology Support. We provide technology support to our customers who purchased our Smart EVs and NEVs so they may readily obtain automotive insurance from insurance companies. To offer a convenient experience, we leverage some intelligent functions with patented technology to help customers to quickly make insurance claims. In April 2023, GIIA, a Group VIE as an insurance intermediary with qualifications for nationwide sale of insurance products, collection of insurance premiums, investigation and settlement of losses on an agency basis, started operating and entered into cooperation agreements with certain mainstream insurance companies. We also announced strategic cooperation relationships with leading insurance companies to explore insurance products and services in relation to ADAS. • Automotive loan referral and auto financing. We cooperate with financial institutions and connect them with customers who seek automotive financing solutions. To complement services of these financial institutions, we also offer auto financing to our customers through a wholly-owned subsidiary. Such auto financing program is treated as an installment payment program for accounting purposes and the Group records the relevant installment payment receivables on its balance sheets. Strategic Transactions On July 26, 2023, we and the Volkswagen Group entered into the VW Technical Framework Agreement on strategic technical collaboration and the VW Share Purchase Agreement for strategic minority investment by the Volkswagen Group in us. Pursuant to the VW Technical Framework Agreement, we and the Volkswagen Group will cooperate on joint development of the two B-class battery electric vehicles models for sale in the Chinese market under Volkswagen brand, leveraging respective core competencies and our G9 platform and connectivity and ADAS software. Pursuant to the VW Share Purchase Agreement, on December 6, 2023, we completed the issuance of an aggregate of 94,079,255 Class A ordinary shares to Volkswagen Nominee for approximately US$705.6 million. Furthermore, on February 29, 2024, we and the Volkswagen Group announced to have entered into a Master Agreement on Platform and Software Strategic Technical Collaboration (the “Master Agreement on Strategic Technical Collaboration”), to jointly develop two B-class battery electric vehicles. As part of the Master Agreement, we and the Volkswagen Group have also entered into a joint sourcing program for the common parts of vehicles and platform that used by both parties. On April 17, 2024, we and the Volkswagen Group have entered into a framework agreement on technical collaboration with respect to Electrical/Electronic architecture. Under the E/E Architecture technical collaboration, we and the Volkswagen Group will jointly develop and integrate our latest generation of E/E Architecture to Volkswagen’s China Main Platform (CMP) in China. The jointly developed E/E Architecture is expected to equip Volkswagen brand electric vehicles produced in China from 2026. On July 22, 2024, we and the Volkswagen Group announced to have entered into a Master Agreement on E/E Collaboration to jointly develop E/E Architecture for all locally produced vehicles based on Volkswagen’s China Main Platform (CMP) and Modular Electric Drive Matrix (MEB) platform. On January 5, 2025, we and the Volkswagen Group China announced a Memorandum of Understanding (MOU) to jointly build charging networks in China. Over 20,000 charging piles operated by both parties across 420 cities in China will be accessible to customers of both us and Volkswagen Group China. Both parties will also jointly explore the cooperation on co-branded super-fast charging stations, accelerating the expansion of charging networks and enhancing the charging experience for customers. On August 15, 2025, we and the Volkswagen Group announced that both parties have entered into an Agreement on Expanding E/E Architecture Technical Collaboration (the “Expanded Technical Collaboration”). The signing of this agreement marks that the E/E Architecture will be not only integrated into Volkswagen’s electric vehicle platforms, but also deployed across its Internal Combustion Engine (ICE) and Plug-in Hybrid Electric Vehicle (PHEV) platforms in China, thereby significantly expanding the strategic technical collaboration to broader markets. -84- Table of Contents On August 27, 2023, we entered into a share purchase agreement with DiDi and Da Vinci Auto Co. Limited, a wholly-owned subsidiary of DiDi, to acquire, in consideration for the Company’s newly issued Class A ordinary shares, the entire issued share capital of Xiaoju Smart Auto Co. Limited, which, together with its subsidiaries, is contemplated to be able to operate the smart auto development business previously conducted by DiDi. We and DiDi simultaneously entered into the DiDi Strategic Cooperation Agreement to embark on cooperation in various areas, including the research and development of the new Smart EV model, operation of the Company’s Smart EV models on DiDi’s ride sharing platform, marketing, financial and insurance services, charging, Robotaxi and the joint development of international markets. On November 13, 2023, upon the initial closing of the DiDi Share Purchase Agreement, we issued 58,164,217 Class A ordinary shares to DiDi, and DiDi’s smart auto development business became wholly owned by us and its financial results have been consolidated into our consolidated financial statements. On August 13, 2024, upon the SOP closing of the DiDi Share Purchase Agreement, we issued 4,636,447 Class A ordinary shares to DiDi, and started to deliver MONA M03 in the same month. We may issue additional Class A ordinary shares to DiDi under the DiDi Share Purchase Agreement upon satisfaction of certain milestones under such agreement. Manufacturing Our manufacturing philosophy centers on quality, continuous improvement, flexibility and high operating efficiency. We take a lean production approach, with the aim of continuous optimization in operating efficiency and product quality. We currently mainly manufacture our vehicles at our own Zhaoqing and Guangzhou plants. In addition, as of March 31, 2026, the construction of our new manufacturing base in Wuhan has been completed, which had obtained the property ownership certificate upon completion of the inspection and acceptance procedures conducted by relevant government authorities. With the development of our international expansion, we strategically collaborate with third-party manufacturers in certain overseas markets to support localized production. For instance, we have engaged local manufacturing partners and initiated localized production projects in 2025 in Europe and Southeast Asia. We may continue to expand such arrangements as our international operations grow. Data Privacy and Security We are committed to complying with applicable data protection laws and protecting the security of personal data. We mainly collect and store data relating to the usage of the ADAS system, infotainment system, as well as data collected through our sales and services channels. Such data primarily includes, among others, name, contact information and payment information. In addition, we also collect vehicle data of our Smart EVs and NEVs, including, among others, vehicle condition, location information, assisted driving information, charging status, maintenance status, as well as information of the in-car infotainment system, such as information relating to smart voice assistant, smart navigation, music, data traffic and third-party apps. Such data is collected in accordance with applicable data protection laws and regulations. Our privacy policy, which is provided to every customer, describes our data processing activities. Specifically, we undertake to manage and use the data collected from customers in accordance with applicable laws and make reasonable efforts to prevent unauthorized use, loss, or leakage of customer data and will not disclose sensitive customer data to any third party without appropriate and necessary business needs, except under legal requirement or certain circumstances specified in the customer consent. We implement data security measures, for instance, access control and identity verification. We strictly limit and monitor employee access to customer personal data. We provide data privacy and information security training to these employees and require them to report any information security breach. Our business partners may have access to the data collected within the scope of their service. We take various measures, such as entering into separate confidentiality agreements or data protection agreements with our business partners, adopting necessary data security measures such as encryption, to protect such data. We use a variety of technologies to protect the data with which we are entrusted. For example, we segregate our internal databases and operating systems from our external-facing services and intercept unauthorized access. We anonymize personal data by removing personally identifiable information, when such information is not relevant to our business. We encrypt personal data in transit, using sophisticated security protocols to ensure the integrity and confidentiality. We back up our personal data and operating data on a regular basis in separate back-up systems to minimize the risk of customer data loss or leakage. Whenever an issue related to data privacy is discovered, we take prompt actions to upgrade our system and mitigate any potential problems that may undermine the security of our system. We also have a dedicated privacy and security team and a Data Protection Officer responsible for data protection. We believe our policies and practice with respect to data privacy and security are in compliance with applicable laws and prevalent industry practice in all material aspects. -85- Table of Contents Competition We have strategically focused on offering Smart EVs and NEVs for the mid- to high-end segment of the global passenger vehicle market. We directly compete with (i) other EVs, including pure play EVs, and NEVs, which include plug-in hybrid electric vehicles, hybrid electric vehicles and fuel cell electric vehicles, especially those targeting the mid- to high-end segment, and (ii) ICE vehicles in the mid- to high-end segment offered by traditional OEMs. Furthermore, traditional OEMs that have strong brand recognition, substantial financial resources, sophisticated engineering capabilities and established sales channels may shift their focus towards the EV market in the future. We believe that our competitive advantage over existing and potential competitors lies in our innovative product offerings localized for consumers in China, ability to offer a great-to-drive and great-to-be-driven experience, robust software and hardware technologies, scalable and efficient platforms and our winning Smart EV and NEV team. Intellectual Property We have developed a number of proprietary systems and technologies, and our success depends on our ability to protect our core technology and intellectual property. We utilize a combination of patents, trademarks, copyrights, trade secrets and confidentiality policies to protect our proprietary rights. Employees As of December 31, 2023, 2024 and 2025, we had a total of 13,550, 15,364 and 19,884 employees, respectively. The following table sets forth a breakdown of our employees categorized by function as of December 31, 2025. Function Number of Employees Percentage to Total Research and development 8,845 44.5% Sales and marketing 5,501 27.7% Manufacturing 4,783 24.1% General and administration 55 0.3% Operation 700 3.5% Total 19,884 100% As of December 31, 2025, 19,499 of our employees were based in Chinese Mainland or Hong Kong, and 385 of our employees were based overseas. We believe we offer our employees competitive compensation packages and a dynamic work environment that encourages initiative and is based on merit. As a result, we have been able to attract and retain talented personnel. As required by PRC regulations, we participate in various government statutory employee benefit plans, including social insurance, namely pension insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance, and housing funds. We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government regulations from time to time. In addition, we purchased additional commercial health insurance to increase insurance coverage of our employees. Historically, we have offered and sold our Smart EVs to our employees at discounts. We enter into standard labor, confidentiality and non-compete agreements with our employees. The non-compete restricted period typically expires within two years after the termination of employment, and we agree to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. -86- Table of Contents We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes causing material negative publicity. Facilities We own land use rights with respect to a parcel of land of over 600,000 square meters in Zhaoqing, Guangdong Province, and such land use rights expire in 2067. We have constructed our Zhaoqing plant on this parcel of land, and the plant has an approved construction area of over 440,000 square meters. We purchased land use rights with respect to an additional parcel of land of over 370,000 square meters in Zhaoqing, Guangdong Province with a construction area of over 220,000 square meters, and such land use rights expire in 2070. In 2024, we acquired another parcel of land of 9,100 square meters in Zhaoqing. We also own land use rights with respect to a parcel of land of over 63,000 square meters in Guangzhou, Guangdong Province, and such land use rights expire in 2070. We have constructed our manufacturing facility, which is used as our Intelligent Manufacturing Innovation Center on this parcel of land, and the plant has a construction area of over 117,000 square meters. We also own land use rights with respect to a parcel of land of over 68,000 square meters with respect to our technology park in Guangzhou, Guangdong Province, and such land use rights expire in 2061. In addition, we own land use rights with respect to a parcel of land of over 1,000,000 square meters in Wuhan, Hubei Province, and such land use rights do not expire until 2072 or at a later time. We have commenced the construction of a new manufacturing base on this parcel of land in July 2021. As of March 31, 2026, the construction of our new manufacturing base in Wuhan has been completed, which had obtained the property ownership certificate upon completion of the inspection and acceptance procedures conducted by relevant government authorities. As of December 31, 2025, certain manufacturing buildings of Guangzhou and Zhaoqing plants and the land use right of the Wuhan base, Zhaoqing and Guangzhou plants and Guangzhou Xiaopeng Technology Park, and the equipment of Wuhan base were secured for the long-term bank loans with a total appraised value of RMB5.80 billion. We also maintain a number of leased properties. Our Guangzhou plant is located in Guangzhou, Guangdong Province, where we lease over 1,100,000 square meters of land with 974,000 square meters of construction area. In addition, we lease a number of properties in Beijing, Shanghai and Shenzhen as well as in Silicon Valley and San Diego in the United States, primarily for research and development. We also lease a number of facilities for our direct stores, self-operated charging stations and logistics centers across China and several flexible workspaces or co-working spaces in overseas countries and regions. We intend to add new facilities or expand our existing facilities as we scale up our business operation. We believe that suitable additional or alternative space will be available in the future on commercially reasonable terms to accommodate our foreseeable future expansion. Insurance We maintain property insurance, public liability insurance and driver’s liability insurance. Pursuant to PRC regulations, we provide social insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees based in China. We also purchase additional commercial health insurance to increase insurance coverage of our employees. We do not maintain business interruption insurance or key-man insurance. We believe that our insurance coverage is in line with the industry and adequate to cover our key assets, facilities and liabilities. -87- Table of Contents Legal Proceedings We are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising from the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Raw Materials and Suppliers We incur significant costs related to procuring components and raw materials required to manufacture our Smart EVs and NEVs. We use various components and raw materials in our business, such as steel and aluminum, as well as lithium battery cells, millimeter-wave radar, or mmWave radar, and semiconductors. The prices for these components and materials fluctuate, and their available supply may be unstable, depending on market conditions and global demand for these materials, and thus our business and operating results are subject to variability in the cost and availability of these components and materials. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Increases in costs, disruption of supply or shortage of components and materials could have a material adverse impact on our business.” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We are dependent on our suppliers, some of which are single-source suppliers. Suppliers may fail to deliver necessary components of our Smart EVs and NEVs according to our schedule and at prices, quality levels and volumes acceptable to us.” We procure components from both domestic suppliers and global suppliers, and choose suppliers based on a variety of factors, such as technological expertise, product quality, manufacturing capacity, price and market reputation. To improve cost efficiency and control supply chain risk, a majority of our components are purchased in China. Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China or the rights of our shareholders to receive dividends and other distributions from us. PRC Permissions and Approvals We have obtained all requisite permissions and approvals that are material to the Group’s operations in China as of the date hereof, including Zhaoqing Xiaopeng New Energy, and our Smart EVs and NEVs (the MONA M03, the Next P7, the P7+ (including the P7+ EREV), the G6 (including the G6 EREV), the G7 (including the G7 EREV), the G9, the X9 (including the X9 EREV)) being listed in the Announcement of the Vehicle Manufacturers and Products issued by the Ministry of Industry and Information Technology of PRC, or the MIIT, which is the entry approval for Zhaoqing Xiaopeng New Energy to become a qualified manufacturer for the manufacturing and sales of our Smart EVs and NEVs. Given the significant amount of discretion held by local PRC authorities in interpreting, implementing and enforcing relevant rules and regulations, as well as other factors beyond our control, we cannot assure you that we have obtained or will be able to obtain and maintain all requisite licenses, permits, filings and registrations. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Certain of our operating subsidiaries may be required to obtain additional licenses or permits or make additional filings or registrations.” Furthermore, the PRC authorities have promulgated new or proposed laws and regulations to further regulate securities offerings that are conducted overseas by China-based issuers. For more detailed information, see “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on M&A Rules and Overseas Listings” and “Item 4. Information on the Company—B. Business Overview—Regulation—Regulation Related to Internet Security and Privacy Protection”. According to these new laws and regulations, if enacted in their current forms, in connection with our future offshore offering activities, we may be required to fulfill filing, reporting procedures with or obtain approval from the CSRC, and may be required to go through cybersecurity review by the PRC authorities. However, we cannot assure you that we can obtain the required approval or accomplish the required filing or other regulatory procedures in a timely manner, or at all. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Actual or alleged failure to comply with laws, regulations, rules, policies and other obligations regarding privacy, data protection, cybersecurity and information security could subject us to significant reputational, financial, legal and operational consequences,” “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations.” -88- Table of Contents Regulation Related to Corporate Governance and Foreign Investment The establishment, operation and management of companies in China are mainly governed by the PRC Company Law, which was issued by the Standing Committee of the National People’s Congress and was last amended in December 2023. The revised PRC Company Law took effect in July 2024. Among other things, the law stipulates that the subscribed capital contributions in a limited liability company must be fully paid by the shareholders within five years of the incorporation date of such company. The Provisions on Implementing the Registered Capital Registration and Management System under the PRC Company Law promulgated by the State Council in July 2024 further set out some transitional arrangements for companies established prior to June 30, 2024. The PRC Company Law applies to both PRC domestic companies and foreign-invested companies. On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, and on December 26, 2019, the State Council promulgated the Implementing Rules of the Foreign Investment Law, or the Implementing Rules, to further clarify and elaborate the relevant provisions of the Foreign Investment Law. The Foreign Investment Law and the Implementing Rules both took effect on January 1, 2020 and replaced three previous major laws on foreign investments in China, namely, the Sino-foreign Equity Joint Venture Law, the Sino-foreign Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their respective implementing rules. Pursuant to the Foreign Investment Law, “foreign investments” refer to investment activities conducted by foreign investors (including foreign natural persons, foreign enterprises or other foreign organizations) directly or indirectly in the PRC, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of enterprises within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (iv) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council. The Implementing Rules introduce a see-through principle and further provide that foreign-invested enterprises that invest in the PRC shall also be governed by the Foreign Investment Law and the Implementing Rules. The Foreign Investment Law and the Implementing Rules provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries. Foreign investments beyond the negative list will be granted national treatment. Foreign investors shall not invest in the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with certain special requirements on shareholding and senior management personnel, etc. In the meantime, relevant competent government departments will formulate a catalogue of the specific industries, fields and regions in which foreign investors are encouraged and guided to invest according to the national economic and social development needs. The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely The Special Management Measures for the Entry of Foreign Investment (Negative List) (2024 version), or the 2024 Foreign Investment Negative List, as promulgated on September 6, 2024 by the National Development and Reform Commission, or the NDRC, and the Ministry of Commerce, or the MOFCOM, and taking effect from November 1, 2024, and the Encouraged Industry Catalogue for Foreign Investment (2025 version), as promulgated by the NDRC and the MOFCOM on December 15, 2025 and taking effect on February 1, 2026. Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. -89- Table of Contents According to the Implementing Rules, the registration of foreign-invested enterprises shall be handled by the State Administration for Market Regulation, or the SAMR, or its authorized local counterparts. Where a foreign investor invests in an industry or field subject to licensing in accordance with laws, the relevant competent government department responsible for granting such license shall review the license application of the foreign investor in accordance with the same conditions and procedures applicable to PRC domestic investors unless it is stipulated otherwise by the laws and administrative regulations, and the competent government department shall not impose discriminatory requirements on the foreign investor in terms of licensing conditions, application materials, reviewing steps and deadlines, etc. Pursuant to the Foreign Investment Law and the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the MOFCOM and the SAMR, which took effect on January 1, 2020, a foreign investment information reporting system has been established and foreign investors or foreign-invested enterprises shall report investment information to competent commerce departments of the government through the enterprise registration system and the national enterprise credit information publicity system, and the administration for market regulation shall forward the above investment information to the competent commerce departments in a timely manner. Regulation Related to Manufacturing New Energy Passenger Vehicles Under the PRC laws, a newly-established manufacturer of new energy passenger vehicles shall first complete the filings with the competent local counterpart of the NDRC, and thereafter obtain the entry approvals from the Ministry of Industry and Information Technology, or the MIIT, for itself and the new energy passenger vehicles to be manufactured by them. On June 2, 2015, the NDRC and the MIIT promulgated the Administrative Measures for Newly-established Manufacturers of Pure Electric Passenger Vehicles, or Circular 27, which took effect on July 10, 2015. According to Circular 27, a newly-established manufacturer for pure electric passenger vehicles shall satisfy specific requirements including, among others, having complete vehicle research and development capabilities, power systems and other necessary technologies, and shall obtain the NDRC approval with respect to the project investments in manufacturing the pure electric passenger vehicles. According to the Administrative Measures for Investment in Automobile Industry, which was subsequently promulgated by the NDRC on December 10, 2018 and took effect on January 10, 2019, the projects in relation to newly-established manufacturer for pure electric passenger vehicles shall be filed with the competent provincial counterpart of the NDRC, which supersedes the requirement of obtaining the approval from the NDRC under Circular 27. In addition, according to the Administrative Measures for the Entry of Manufacturers of New Energy Vehicles and the Products promulgated by the MIIT on January 6, 2017, which took effect on July 1, 2017 and last amended on July 24, 2020, or Circular 39, the MIIT is responsible for the national-wide administration of new energy vehicles and their manufacturers. The manufacturers shall apply to the MIIT for the entry approval to become a qualified manufacturer in China and shall further apply to the MIIT for the entry approval for the new energy vehicle products before commencing the manufacturing and sale of the new energy vehicle products in China. Both of the new energy vehicle products and their manufacturers will be listed in the Announcement of the Vehicle Manufacturers and Products issued by the MIIT from time to time, or the Manufacturers and Products Announcement, if they have obtained the entry approval from the MIIT. Furthermore, to obtain the entry approvals from the MIIT, the manufacturers shall meet certain requirements, including, among others, having obtained the approvals or completed the filings with the NDRC in relation to the project investments in manufacturing the electric vehicles, having capabilities in the design, development and manufacture of automotive products, ensuring product consistency, providing after-sales service and product safety assurance, and the new energy vehicles shall meet the technical criteria contained in Circular 39 and other safety and technical requirements specified by the MIIT and pass the inspections conducted by the relevant state-recognized testing institutions. Any manufacturer manufacturing the new energy vehicles without obtaining the entry approval or selling new energy vehicles not listed in the Manufacturers and Products Announcement may be subject to penalties including fines, forfeiture of illegally manufactured and sold vehicles and spare parts and revocation of its business licenses. -90- Table of Contents Regulation Related to Compulsory Product Certification According to the Administrative Regulations on Compulsory Product Certification as promulgated by the General Administration of Quality Supervision, Inspection and Quarantine, or the QSIQ, which was merged into the SAMR afterwards, on July 3, 2009 and became effective on September 1, 2009 and as most recently revised on September 29, 2022 and implemented on November 1, 2022, and according to the List of the First Batch of Products Subject to Compulsory Product Certification as promulgated by the QSIQ in association with the State Certification and Accreditation Administration Committee, or the CAA on December 3, 2001, and became effective on the same day, QSIQ is responsible for the quality certification of automobiles. Automobiles and the relevant accessories must not be sold, exported or used in operating activities until they are certified by certification authorities designated by CAA as qualified products and granted certification marks. Regulation Related to Government Subsidies and Exemption of Vehicle Purchase Tax for Purchasing New Energy Vehicles On April 22, 2015, the MOF, the Ministry of Science and Technology, or the MOST, the MIIT and the NDRC jointly promulgated the Circular on Financial Subsidies on the Promotion and Application of New Energy Vehicles from 2016 to 2020, or the NEV Financial Subsidies Circular, which took effect on the same day. The NEV Financial Subsidies Circular provides that those who purchase new energy vehicles specified in the Catalogue of Recommended New Energy Vehicle Models for Promotion and Application issued by the MIIT, or the Recommended NEV Catalogue, may enjoy government subsidies. Furthermore, a preliminary phase-out schedule for the provision of subsidies during the period from 2016 to 2020 contained in NEV Financial Subsidies Circular specifies that the subsidy amount per vehicle, or subsidy criteria, for the year 2017 to 2018 will be reduced by 20% compared to that of the year 2016, and the subsidy criteria for the year 2019 to 2020 will be reduced by 40% compared to that of the year 2016. On December 29, 2016, the MOF, the MOST, the MIIT and NDRC jointly promulgated the Circular on Adjusting the Subsidy Policies on Promotion and Application of New Energy Vehicles, or the Circular on Adjusting the NEV Subsidy Policies, which became effective on January 1, 2017, to enhance the technical requirements and adjust the subsidy criteria of qualified new energy vehicles in the Recommended NEV Catalogue. The Circular on Adjusting the NEV Subsidy Policies caps the subsidy amount from the local governments at 50% of the subsidy amount from the central government, and further specifies that national and local subsidies for purchasers purchasing new energy vehicles (except for fuel cell vehicles) from 2019 to 2020 will be reduced by 20% as compared to the then-existing subsidy standards. The MOF, the MOST, the MIIT and the NDRC promulgated a series of circulars in 2018 and 2019 to further adjust the technical requirements and subsidy criteria of new energy vehicles eligible for government subsidies. On April 23, 2020, the MOF, the MOST, the MIIT and the NDRC jointly issued the Circular on Improving Subsidy Policies on Promotion and Application of New Energy Vehicles, which took effect on the same day, or the 2020 NEV Financial Subsidies Circular, which extends the implementation period of financial subsidy policy for new energy vehicles to the end of 2022. The 2020 NEV Financial Subsidies Circular further specifies that the subsidy criteria for new energy vehicles during the period from year 2020 to 2022 will generally be reduced by 10%, 20% and 30% compared to the subsidy standard of the previous year respectively, and the number of vehicles eligible for the subsidies will not exceed approximately two million each year. Furthermore, on December 31, 2020 and December 31, 2021, the abovementioned authorities further promulgated another two similar circulars to reiterate the principles including among others, the subsidy criteria reduction rate as stipulated in the 2020 NEV Financial Subsidies Circular. On December 26, 2017, the MOF, the State Administration of Taxation, or the SAT, the MIIT and the MOST jointly issued the Announcement on Exemption of Vehicle Purchase Tax for New Energy Vehicle, or the Announcement on Exemption of Vehicle Purchase Tax, pursuant to which, from January 1, 2018 to December 31, 2020, the vehicle purchase tax is not imposed on purchases of qualified new energy vehicles listed in the Catalogue of New Energy Vehicle Models Exempted from Vehicle Purchase Tax jointly issued by MIIT and the SAT. On April 16, 2020, the MOF, the SAT and the MIIT further promulgated the Announcement on Relevant Policies for the Exemption of Vehicle Purchase Tax for New Energy Vehicles, which took effect on January 1, 2021, and further extended the exemption period for the vehicle purchase tax of new energy vehicles to December 31, 2022. Furthermore, on September 18, 2022, the MOF, the SAT and the MIIT stipulated the Announcement on Continuation for the Exemption of Vehicle Purchase Tax for New Energy Vehicles, which continues to extend the exemption period for the vehicle purchase tax for new energy vehicles to December 31, 2023. On June 19, 2023, the MOF and the MIIT issued the Announcement on Continuation and Optimization for the Exemption of Vehicle Purchase Tax for New Energy Vehicles, pursuant to which new energy vehicles purchased during the period from January 1, 2024 to December 31, 2025 shall be exempted from the vehicle purchase tax and the exemption amount for each new energy passenger vehicle shall not exceed RMB30,000; new energy vehicles purchased during the period from January 1, 2026 to December 31, 2027 shall be subject to the vehicle purchase tax at a reduced rate by half and the exemption amount for each new energy passenger vehicle shall not exceed RMB15,000. -91- Table of Contents Regulation Related to Electric Vehicle Charging Infrastructure Pursuant to the Guiding Opinions of the General Office of the State Council on Accelerating the Promotion and Application of the New Energy Vehicles which took effect on July 14, 2014, the Guiding Opinions of the General Office of the State Council on Accelerating the Construction of Charging Infrastructure of the Electric Vehicle which took effect on September 29, 2015, the Guidance on the Development of Electric Vehicle Charging Infrastructure (2015-2020) which took effect on October 9, 2015 and the Development Plan for the New-energy Vehicle Industry (2021-2035) which took effect on October 20, 2020, the PRC government encourages the construction and development of charging infrastructure for electric vehicles, such as charging stations and battery swap stations, and requires relevant local authorities to adopt simplified construction approval procedures and expedite the approval process. In particular, only newly-built centralized charging and battery replacement power stations with independent land occupation are required to obtain the construction approvals and permits from the relevant authorities. Government guidance price should be implemented in managing the rate of the charging service fees before the year 2020. The Circular on Accelerating the Development of Electric Vehicle Charging Infrastructure in Residential Areas jointly promulgated by the NDRC, the National Energy Administration, the MIIT and the Ministry of Housing and Urban-Rural Development on July 25, 2016 provides that charging infrastructures in residential areas should be covered by product liability insurance policies and charging safety liability insurance policies, and operators of electric vehicle charging and battery swap infrastructure facilities are required to be covered under safety liability insurance policies. Furthermore, on January 10, 2022, the NDRC, together with other competent government authorities, promulgated the Implementation Opinions on Further Improving the Service Guarantee Capability of Electric Vehicle Charging Infrastructure, targeting to further strengthen the electric vehicle charging infrastructure’s capacity by optimizing the construction of urban public charging network and accelerating the effective coverage of the fast-charging facilities on the highways. In addition, on July 20, 2023, the NDRC and the MIIT, together with several other government authorities, promulgated the Several Measures for Promoting Automobile Consumption, which aims to strengthen the construction of supporting facilities for new energy automobiles by, among others, accelerating the construction of charging infrastructure in townships and countries, highways, residential areas and other locations. Moreover, in 2024, the Ministry of Finance, the MIIT and the Ministry of Transport jointly launched a nationwide pilot project for the development of county-level charging and battery swap infrastructure from 2024 to 2026, supported by central fiscal incentive funds aimed at achieving full coverage of charging facilities in townships across China. In June 2025, the NDRC, the National Energy Administration and other relevant authorities issued the Notice on Promoting the Scientific Planning and Construction of High-Power Charging Facilities, which sets a target of more than 100,000 high-power charging facilities nationwide by the end of 2027, with a focus on promoting the construction of such facilities in highways and core urban areas. Furthermore, on September 24, 2025, the NDRC, the National Energy Administration, the MIIT, the Ministry of Housing and Urban-Rural Development, the Ministry of Transport and the State Administration for Market Regulation jointly issued the Three-Year Doubling Action Plan for Electric Vehicle Charging Facility Service Capacity (2025-2027), which sets an overall target to build 28 million charging facilities nationwide by the end of 2027, and outlines five special actions to upgrade public charging facilities, optimize charging conditions in residential areas, promote large-scale vehicle-grid interaction, improve power supply capacity, and enhance charging operation service quality. Moreover, various local governmental authorities have implemented measures to encourage the construction and development of the electric vehicle charging infrastructure. For instance, on June 14, 2025, the General Office of the Municipal Government of Guangzhou promulgated the Three-Year Action Plan for Promoting the Development of the Intelligent Connected New Energy Vehicle Industry in Guangzhou, which took effect on the same day and will remain effective for three years, aiming, among other things, to accelerate the high-quality development of the intelligent connected new energy vehicle industry in Guangzhou and promote the construction of supporting facilities for new energy vehicles. -92- Table of Contents Regulations Relating to Parallel Credits Policy on Vehicle Manufacturers and Importers On September 27, 2017, the MIIT, the MOF, the MOFCOM, the General Administration of Customs and the QSIQ jointly promulgated the Measures for the Parallel Administration of the Corporate Average Fuel Consumption and New Energy Vehicle Credits of Passenger Vehicle Enterprise, which were last amended on June 29, 2023 and took effect on August 1, 2023. Pursuant to the measures, the vehicle manufacturers and vehicle importers above a certain scale are required to maintain their new energy vehicles credits, or NEV credits, above zero. The NEV credits equal to the aggregate actual scores of a vehicle manufacturer or a vehicle importer minus its aggregate targeted scores calculated in a manner as stipulated under the measures. Excess positive NEV credits are tradable and may be sold to other enterprises through a credit management system established by the MIIT. Negative NEV credits can be offset by purchasing excess positive NEV credits from other manufacturers or importers. According to these measures, the requirements on the NEV credits shall be considered for the entry approval of passenger vehicle manufacturers and products by the regulators. If a passenger vehicle enterprise fails to offset its negative credits, its new products which fuel consumption does not reach the target fuel consumption value for a certain vehicle models as specified in the Evaluation Methods and Indicators for the Fuel Consumption of Passenger Vehicles will not be listed in the Manufacturers and Products Announcement or will not be granted the compulsory product certification, and the vehicle enterprises may be subject to penalties according to the relevant rules and regulations. Regulation Related to Automobile Sales and Consumer Rights Protection Pursuant to the Product Quality Law of the PRC promulgated on February 22, 1993 and most recently amended on December 29, 2018, a manufacturer is prohibited from producing or selling products that do not meet applicable standards and requirements for safeguarding human health and ensuring human and property safety. Products must be free from unreasonable dangers threatening human and property safety. Where a defective product causes physical injury to a person or property damage, the aggrieved party may make a claim for compensation from the producer or the seller of the product. Producers and sellers of non-compliant products may be ordered to cease the production or sale of the products and may be subject to confiscation of the products and fines. Earnings from sales in contravention of such standards or requirements may also be confiscated, and in severe cases, the violator’s business license may be revoked. Pursuant to the Regulations on the Administration of Recall of Defective Automobile Products, which was issued by the State Council on October 22, 2012 and amended on March 2, 2019, together with the relevant implementing measures as issued by the SAMR, or the Recall Regulations, manufacturers shall recall all defective automobiles in accordance with requirements contained therein; otherwise, the product quality supervision department of the State Council shall order manufacturers to recall accordingly. On November 23, 2020, the SAMR issued a Circular on Further Strengthening the Regulation of Recall of Automobile with Over-The-Air (OTA) Technology, or the OTA Recall Circular, pursuant to which automobile manufacturers that provide technical services to sold automobiles through OTA technology are required to complete filings with the SAMR in accordance with the Recall Regulations, and for technical services through OTA implemented from January 1, 2020 to the date of issuance of the OTA Recall Circular, the automobile manufacturers shall make supplementary filings with the SAMR before December 31, 2020. In addition, if an automobile manufacturer uses OTA technology to eliminate defects and recalls its defective products, it shall make a recall plan and complete a filing with the SAMR in accordance with the Recall Regulations. On February 25, 2025, the MIIT promulgated the Notice on Further Strengthening the Administration of Access, Recall and OTA Upgrading of Intelligent Connected Vehicle Products, which aims to strengthen the management of access and recall for intelligent connected vehicle products and to further regulate the OTA upgrading activities. In particular, the notice requires that technical parameters relating to combined driving assistance systems and OTA upgrading be added to the main technical parameters table for vehicle products, and such parameters will be incorporated into the MIIT’s administration of product access and production consistency and filed with SAMR to facilitate defect investigations and recalls. -93- Table of Contents According to the Administrative Measures on Automobile Sales promulgated by the MOFCOM on April 5, 2017, which took effect on July 1, 2017, automobile suppliers and dealers shall sell automobiles, spare parts and other related products that are in compliance with relevant provisions and standards of the state, and the dealers shall, in an appropriate manner, expressly indicate the prices of automobiles, spare parts and other related products as well as the rates of charges for various services on their business premises, and shall not sell products at higher prices or charge other fees without express indication. Automobile suppliers and dealers are required to file the basic information through the information management system for the national automobile circulation operated by the competent commerce department of the State Council within 90 days after the receipt of a business license. Where there is any change to the filed information, automobile suppliers and dealers must update such information within 30 days upon such change. The Guiding Opinions on Further Strengthening the Construction of Safety System for New Energy Vehicle Enterprises issued by the MIIT, together with certain other PRC governmental authorities, on March 29, 2022, proposes to comprehensively enhance the safety capabilities of enterprises in safety management mechanism, product quality, operation monitoring, after-sales service, accident response and handling, as well as enhance network security, improve the safety of new energy vehicles, and promote the high-quality development of the new energy vehicle industry. According to the Notice on the Filing of Online Upgrade of Automotive Software promulgated and implemented by the MIIT Equipment Industry Development Center on April 15,2022, filing shall be made for a vehicle manufacturer that has obtained the manufacturing permission license for road vehicles, the vehicle products with OTA upgrade function produced by it and the OTA upgrade activities conducted, with tiered filing based on the impact assessment of specific upgrading activities. In particular, it can be divided into three categories: (i) for upgrading activities not involving changes in product safety, environmental protection, energy saving, anti-theft and other technical performance, enterprises may directly conduct such upgrading activities after filing; (ii) for upgrading activities involving changes in product safety, environmental protection, energy saving, anti-theft and other technical performance, enterprises shall submit verification materials to ensure that the products comply with national laws and regulations, technical standards and specifications as well as other relevant requirements. Among them, for upgrading activities involving the change of technical parameters in this Notice, enterprises shall apply for product change or extension with the MIIT in accordance with the management requirements of this Notice before filing such upgrading activities, with such upgrade subject to the completion of product admission under this Notice according to the process so as to ensure the consistency of vehicle product production; and (iii) for upgrading activities involving vehicle autonomous driving functions (Level 3 and above of driving automation classification), they should be approved by the MIIT. According to the Circular on Further Strengthening the Administration of the Market Access, Recall and Online Software Upgrading of Intelligent Connected Automobiles promulgated and implemented by the MIIT and State Administration for Market Regulation, or the SAMR, on February 25, 2025, automobile manufacturers shall take the initiative to perform their principal responsibilities for product quality and safety. In particular, enterprises that implement OTA upgrading activities shall file for record with the MIIT and the SAMR as required, and ensure that their automotive products after OTA upgrading comply with the relevant requirements of national laws and regulations, technical standards and technical specifications. the SAMR will conduct record-filing assessment and supervision and inspection in a timely manner, regulate the methods for upgrading and application of OTAs, and prevent enterprises from concealing vehicle defects or evading liability through OTA upgrading. Furthermore, the Consumer Rights and Interests Protection Law, as promulgated on October 31, 1993 and most recently amended in 2013 by the Standing Committee of the National People’s Congress of China, or the SCNPC, imposes stringent requirements and obligations on business operators. Failure to comply with the consumer protection requirements could subject the business operators to administrative penalties including warning, confiscation of illegal income, imposition of fines, an order to cease business operations, revocation of business licenses, as well as potential civil or criminal liabilities. -94- Table of Contents Regulations Relating to Autonomous Driving The MIIT, the Ministry of Public Security and the Ministry of Transport issued the Administrative Norms for Road Testing and Demonstrative Application of Intelligent Connected Vehicles (Trial Implementation) on July 27, 2021, which took effect from September 1, 2021. The norms are the primary national level regulatory document on road testing of autonomous driving vehicles in the PRC, pursuant to which, any entity intending to conduct a road testing and demonstrative application of intelligent connected vehicles must provide a self-statement on road testing safety and a temporary license plate for each tested vehicle. Demonstrative application refers to activities involving the pilot and trail effects of running intelligent connected vehicles with passengers and goods, which are carried out on designated sections of roads, urban roads, regions and other roads that are used for passage of public motor vehicles. An applicant entity must satisfy, among others, the following requirements to obtain the required licenses: (i) it must be an independent legal person registered under the PRC law with the capacity to conduct manufacturing, technological research or testing of vehicles and vehicle parts, which has established protocol to test and assess the performance of autonomous driving system and is capable of conducting real-time remote monitor of the tested vehicles; (ii) the vehicle under road testing must be equipped with a driving system that can switch between autonomous pilot mode and human driving mode in a safe, quick and simple manner and allows human driver to take control of the vehicle any time immediately when necessary; (iii) the tested vehicle must be equipped with the functions of recording, storing and real-time monitoring the condition of the vehicle and is able to transmit real-time data of the vehicle, such as the driving mode, location and speed; (iv) the applicant entity must sign an employment contract or a labor service contract with the driver of the tested vehicle, who must be a licensed driver with more than three years’ driving experience and a track record of safe driving and is familiar with the testing protocol for autonomous driving system and proficient in operating the system; (v) the applicant entity must insure each tested vehicle for at least RMB5 million against car accidents or provide a letter of guarantee covering the same. During the testing, the testing entity should post a noticeable identification logo for autonomous driving test on each tested car and should not use autonomous driving mode unless in the permitted testing areas specified in the self-statement. If the testing entity intends to conduct road testing in the region beyond the administrative territory of the certificate issuing authority, it must again provide the former materials and supplementary materials (if any) to the authority supervising the road-testing of autonomous cars in that region. In addition, the testing entity is required to submit to the provincial authority a periodical testing report every six months and a final testing report within one month after completion of the road testing. In the case of a car accident causing severe injury or death of personnel or vehicle damage, the testing entity must report the accident to the provincial authority within 24 hours and submit a comprehensive analysis report in writing covering cause analysis, final liability allocation results, etc. within five working days after the traffic enforcement agency determines the liability for the accident. On November 17, 2023, the MIIT, the Ministry of Public Security, the Ministry of Housing and Urban-Rural Development and the Ministry of Transport issued, with effect from the same day, the Notice of Implementing the Pilot Program of Access and On-road Traffic of Intelligent Connected Vehicles. This notice also included an annex setting out implementation guidelines for the pilot program. The notice and its implementation guidelines established a pilot program for the on-road testing of intelligent connected vehicles. Pursuant to the notice, the authorities may select intelligent connected vehicles for on-road traffic pilot programs on the basis of road tests and product demonstrations. Eligible intelligent connected vehicles are those which are equipped with L3 or L4 autonomous driving functions (as defined in the Taxonomy of Driving Automation for Vehicles) and are capable of being mass produced. To be considered for the pilot, manufacturers and users of these vehicles must jointly develop an application plan and apply for the pilot qualification. The users must purchase vehicular insurance, apply for registration, monitor the operation of the vehicle, and ensure that the vehicle is used safely. If the intelligent connected vehicle will be used to provide transportation services as part of the pilot, the requisite operational licenses must also be obtained. The implementation guidelines provide that the users of the vehicles must (i) be an independent legal person registered under the PRC law that has fixed business premises in the city where the intelligent connected vehicles are to be operated and the capabilities to effectively support the development of safety and security work for the operation of the intelligent connected vehicles; (ii) establish a team that includes a team lead and management personnel, each with specified tasks and duties, to ensure the safe operation of the intelligent connected vehicles; (iii) establish a sound operational safety system, monitor the intelligent connected vehicles to ensure road safety, and respond in the event of emergencies, and (iv) obtain the appropriate operational licenses and qualifications if the user is engaged in the operation of transportation services. On July 26, 2024, the Ministry of Natural Resources promulgated the Notice on Strengthening the Administration of Surveying, Mapping and Geoinformation Security Relating to Intelligent Connected Vehicles. This notice provides that surveying and mapping activities related to intelligent connected vehicles must be conducted in accordance with the law, that confidential and sensitive geographic information data must be strictly managed, and that electronic navigation maps must be strictly reviewed. In addition, the notice implements requirements for the storage of geoinformation data and cross-border transfer of such data, strengthens the regulation of geoinformation security, and encourages the exploration of geographic information security applications. -95- Table of Contents Regulation Related to Value-Added Telecommunications Services Among all of the applicable laws and regulations, the PRC Telecommunications Regulations, or the Telecom Regulations, promulgated by the PRC State Council on September 25, 2000 and most recently amended on February 6, 2016, is the primary governing law, and sets out the general framework for the provision of telecommunications services by domestic PRC companies. Under the Telecom Regulations, telecommunications service providers are required to procure operating licenses prior to their commencement of operations. The Telecom Regulations distinguish “basic telecommunications services” from “value-added telecommunications services”, or “VATS”. VATS are defined as telecommunications and information services provided through public networks. A telecom catalogue was issued as an attachment to the Telecom Regulations to categorize telecommunications services as either basic or value-added, which was most recently updated in June 2019. The Administrative Measures on Telecommunications Business Operating Licenses promulgated by the MIIT in 2009 and most recently amended in July 2017, set forth more specific provisions regarding the types of licenses required to operate VATS, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses. Under these regulations, a commercial operator of VATS must first obtain a VATS License from the MIIT or its provincial level counterparts, otherwise such operator might be subject to sanctions including corrective orders from the competent administration authority, fines and confiscation of illegal gains and, in the case of significant infringements, the websites may be ordered to close. In addition, pursuant to the Administrative Measures on Internet Information Services promulgated by the State Council in 2000 and amended in 2011, “internet information services” refers to the provision of information through the internet to online users and are divided into “commercial internet information services” and “non-commercial internet information services”. A provider of commercial internet information service must obtain the VATS License for internet information service. If the operator provides internet information on a non-commercial basis, it only needs to file the relevant information with the provincial Communication Administration. In 2006, the predecessor to the MIIT issued the Circular of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business, according to which a foreign investor in the telecommunications service industry of China must establish a foreign-invested enterprise and apply for a telecommunications business operation license. This circular further requires that: (i) PRC domestic telecommunications business enterprises must not lease, transfer or sell a telecommunications business operation license to a foreign investor through any form of transaction or provide resources, offices and working places, facilities or other assistance to support the illegal telecommunications service operations of a foreign investor; (ii) value-added telecommunications enterprises or their shareholders must directly own the domain names and trademarks used by such enterprises in their daily operations; (iii) each value-added telecommunications enterprise must have the necessary facilities for its approved business operations and maintain such facilities in the regions covered by its license; and (iv) value-added telecommunications enterprises are required to maintain network and internet security in accordance with the standards set forth in relevant PRC regulations. If a license holder fails to comply with the requirements in the circular or cure such non-compliance, the MIIT or its local counterparts have the discretion to take measures against such license holder, including revoking its license for value-added telecommunications business. According to the 2024 Foreign Investment Negative List and the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, which were most recently amended by the State Council on April 7, 2022 and took effect on May 1, 2022, as for the telecommunications businesses open for foreign investment according to China’s WTO commitment, except as otherwise stipulated by the state, the equity interest of foreign investors in the value-added telecommunications enterprises shall not exceed 50%. On April 8, 2024, the MIIT issued the Notice on the Pilot Program for Expanding the Opening up of Value-added Telecommunications Services. The notice provides for the establishment of a number of pilot programs, which are to be initially carried out in designated districts in Beijing, Shanghai, Hainan and Shenzhen. In these districts, restrictions on foreign equity ratios will be removed for internet data centers, content delivery networks, internet service providers, online data processing and transaction processing service, information releasing platforms and delivery services included in information services (excluding the operation of internet news information, online publishing, online audio and video, and internet culture), as well as information protection and processing services. -96- Table of Contents Regulation Related to Financing Lease According to the Administrative Measures of Supervision on Financing Lease Enterprises formulated by the MOFCOM and effective on October 1, 2013, financing lease enterprises shall use lease properties with clear ownership and capable of generating revenue to carry out the financing lease business and shall report the relevant data in a timely and truthful manner through the National Financing Lease Company Management Information System. Financing lease enterprises shall not engage in deposits, loans, entrusted loans or other financial services. Without approval of the relevant government authorities, financing lease enterprises shall not engage in inter-bank borrowing or other businesses and must not carry out illegal fundraising activities under the disguise of a financing lease company. In addition, the measures also provide that financing lease enterprises shall give adequate consideration to and objectively evaluate the value of assets leased back, set purchasing prices for subject matter thereof with reference to reasonable pricing basis in compliance with accounting principles, and shall not purchase any subject matter at a price in excess of the value thereof. Furthermore, the PRC Civil Code promulgated by the National People’s Congress and effective on January 1, 2021 sets forth general terms about financing lease contracts and further provides that the lessor and the lessee may agree on the ownership of the leased property upon expiry of the lease term. If the ownership of the leased property is not or is not clearly agreed between the parties and cannot be determined pursuant to the PRC Civil Code, the leased property shall be owned by the lessor. Our auto financing program is treated as an installment payment program for accounting purposes and the Group records the relevant installment payment receivables on its balance sheets. Regulation Related to Insurance Agency According to the Provisions on the Supervision and Administration of Insurance Agents, or the Insurance Agents Provisions, issued on November 12, 2020 and took effect on January 1, 2021 by the China Banking and Insurance Regulatory Commission, or the CBIRC, the predecessor of the National Financial Regulatory Administration, an insurance agent refers to an entity or an individual entrusted by insurance companies to handle insurance business by and within the authorization of, and which collects commissions from insurance companies, including the professional insurance agency, the ancillary-business insurance agency and the individual insurance sales agent. In order to engage in insurance agency business, a professional insurance agency shall obtain an insurance agency business permit issued by the National Financial Regulatory Administration or its local counterpart. After obtaining the business license, the insurance agency company has to satisfy the requirements prescribed by Insurance Agents Provisions or other relevant regulations on the shareholder and management qualification, capital contribution, articles of association, corporate governance and internal control procedures with viable business model and sound business and financial information system. In addition, professional insurance agencies shall, within 5 days from the date of occurrence of any of the following circumstances, report to the National Financial Regulatory Administration through the supervision information system and make public disclosure: (i) change of name, domicile or business address; (ii) change of shareholders, registered capital or the form of organization; (iii) change of name or capital contribution of a shareholder; (iv) amendments to the articles of association; (v) equity investment in, or establishment of offshore insurance institutions or non-operating institutions; (vi) division, merger, dissolution, or termination of insurance agency business activities of branches; (vii) change of the principal person-in-charge of a sub-branch; (viii) administrative penalties, civil punishment or pending investigation of suspected illegal crime; or (ix) other reportable events prescribed by the insurance regulatory body under the State Council. Regulation Related to Internet Security and Privacy Protection PRC governmental authorities have enacted laws and regulations with respect to Internet information security and protection of personal information from any abuse or unauthorized disclosure. Internet information in China is regulated and restricted from a national security standpoint. The Decision in Relation to Protection of Internet Security enacted by the SCNPC on December 28, 2000 and amended on August 27, 2009, provides that, among other things, the following activities conducted through the Internet are subject to criminal punishment: (i) gaining improper entry into a computer or system of strategic importance; (ii) intentionally inventing and spreading destructive programs such as computer viruses to attack the computer system and the communications network, thus damaging the computer system and the communications networks; (iii) in violation of State regulations, discontinuing the computer network or the communications service without authorization; (iv) leaking state secrets; (v) spreading false commercial information; or (vi) infringing intellectual property rights through internet, etc. -97- Table of Contents On July 1, 2015, the Standing Committee of the National People’s Congress issued the National Security Law, which came into effect on the same day. The National Security Law provides that the state shall safeguard the sovereignty, security and cyber security development interests of the state, and that the state shall establish a national security review and supervision system to review, among other things, foreign investment, key technologies, internet and information technology products and services, and other important activities that are likely to impact the national security of the PRC. On November 7, 2016, the SCNPC promulgated the Cybersecurity Law, which came into effect on June 1, 2017 and was amended on October 28, 2025. The Cybersecurity Law applies to the construction, operation, maintenance and use of networks as well as the supervision and administration of cybersecurity in China. Under the Cybersecurity Law, “networks” is defined as systems that are composed of computers or other information terminals and relevant facilities used for the purpose of collecting, storing, transmitting, exchanging and processing information in accordance with certain rules and procedures. “Network operators”, who are broadly defined as owners and administrators of networks and network service providers, are subject to various security protection-related obligations, including: (i) complying with security protection obligations in accordance with tiered cybersecurity system’s protection requirements, which include formulating internal security management rules and manual, appointing cybersecurity responsible personnel, adopting technical measures to prevent computer viruses and cybersecurity endangering activities, adopting technical measures to monitor and record network operation status and cybersecurity events, taking measures to classify, backup and encrypt important data; (ii) formulating cybersecurity emergency response plans, timely handling security risks, initiating emergency response plans, taking appropriate remedial measures and reporting to regulatory authorities; and (iii) providing technical assistance and support for public security and national security authorities for protection of national security and criminal investigations in accordance with the law. Network service providers who do not comply with the Cybersecurity Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses. On June 10, 2021, the Standing Committee of the National People’s Congress of China promulgated the Data Security Law, which took effect in September 2021. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data shall designate the personnel and the management body responsible for data security, carry out risk assessments for its data processing activities and file the risk assessment reports with the competent authorities. In addition, the Data Security Law provides a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. We may be required to make further adjustments to our business practices to comply with this law. On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, effective on September 1, 2021. According to the Regulations on Security Protection of Critical Information Infrastructure, a “critical information infrastructure” refers to an important network facility and information system in important industries such as, among others, public communications and information services, as well as other important network facilities and information systems that may seriously endanger national security, the national economy, the people’s livelihood, or the public interests in the event of damage, loss of function, or data leakage. The competent governmental authorities and supervision and management authorities of the aforementioned important industries will be responsible for (i) organizing the identification of critical information infrastructures in their respective industries in accordance with certain identification rules, and (ii) promptly notifying the identified operators and the public security department of the State Council of the identification results. -98- Table of Contents The Administrative Provisions on Security Vulnerability of Network Products were jointly promulgated by the MIIT, the CAC and the Ministry of Public Security on July 12, 2021 and took effect on September 1, 2021. Network product providers, network operators as well as organizations or individuals engaging in the discovery, collection, release and other activities of network product security vulnerability are subject to these provisions and shall establish channels to receive information of security vulnerability of their respective network products and shall examine and fix such security vulnerability in a timely manner. Network product providers are required to report relevant information of security vulnerability of network products with the MIIT within two days and to provide technical support for network product users. Network operators shall take measures to examine and fix security vulnerability after discovering or acknowledging that their networks, information systems or equipment have security loopholes. According to these provisions, the breaching parties may be subject to administrative penalty as regulated in accordance with the Cybersecurity Law. On August 20, 2021, the SCNPC promulgated the PRC Personal Information Protection Law, which took effect from November 1, 2021. Pursuant to the PRC Personal Information Protection Law, personal information refers to the information related to an identified or identifiable individual recorded electronically or by other means, excluding the anonymized information, and processing of personal information includes among others, the collection, storage, use, handling, transmission, provision, disclosure, deletion of personal information. In addition to processing of personal information within the PRC, the PRC Personal Information Protection Law also applies to the processing of personal information outside the PRC under any of the following circumstances: (i) where the purpose is to provide products or services to individuals within the PRC; (ii) when analyzing or assessing the activities of domestic individuals; or (iii) other circumstances as stipulated by laws and administrative regulations. The PRC Personal Information Protection Law explicitly sets forth the circumstances where it is allowed to process personal information, including (i) the consent from the individual has been obtained; (ii) it is necessary for the conclusion and performance of a contract under which an individual is a party, or it is necessary for human resource management in accordance with the labor related rules and regulations and the collective contracts formulated or concluded in accordance with laws; (iii) it is necessary to perform statutory duties or statutory obligations; (iv) it is necessary to respond to public health emergencies, or to protect the life, health and property safety of individuals in emergencies; (v) carrying out news reports, public opinion supervision and other acts for the public interest, and processing personal information within a reasonable scope; (vi) processing personal information disclosed by individuals or other legally disclosed personal information within a reasonable scope in accordance with this law; or (vii) other circumstances stipulated by laws and administrative regulations. In addition, this law emphasizes that individuals have the right to withdraw their consent to process their personal information, and the processors must not refuse to provide products or services on the grounds that the individuals do not agree to the processing of their personal information or withdraw their consent, unless processing of personal information is necessary for the provision of products or services. Before processing the personal information, the processors should truthfully, accurately and completely inform individuals of the following matters in a conspicuous manner and in clear and easy-to-understand language: (i) the name and contact information of the personal information processor; (ii) the purpose of processing personal information, processing method, type of personal information processed, and the retention period; (iii) methods and procedures for individuals to exercise their rights under this law; (iv) other matters that should be notified according to laws and administrative regulations. Furthermore, the law provides that personal information processors who use personal information to make automated decisions should ensure the transparency of decision-making and the fairness and impartiality of the results, and must not impose unreasonable differential treatment on individuals in terms of transaction prices and other transaction conditions. On December 28, 2021, the CAC, together with certain other PRC governmental authorities, promulgated the Revised Cybersecurity Review Measures that replaced the previous version and took effect from February 15, 2022. Pursuant to these measures, the purchase of network products and services by an operator of critical information infrastructure or the data processing activities of a network platform operator that affect or may affect national security will be subject to a cybersecurity review. In addition, any online platform operator possessing over one million users’ individual information must apply for a cybersecurity review before listing abroad. The competent governmental authorities may also initiate a cybersecurity review against the operators if the authorities believe that the network product or service or data processing activities of such operators affect or may affect national security. Article 10 of the Revised Cybersecurity Review Measures also set out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review, including (i) risks of critical information infrastructure being illegally controlled or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the business continuity of critical information infrastructure; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors; (iv) compliance with PRC laws, administrative regulations and departmental rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, and maliciously used by foreign governments for a listing, as well as network information security risks; and (vii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security. -99- Table of Contents The PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transfer. For example, on July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which came into effect on September 1, 2022. These measures require a data processor providing data to overseas recipients and falling under any of the specified circumstances to apply for a security assessment of cross-border data transfer by the national cybersecurity authority through its local counterpart. On February 22, 2023, the CAC promulgated the Measures on the Standard Contract for Cross-border Transfer of Personal Information, which became effective on June 1, 2023. These measures require personal information processors providing personal information to overseas recipients by entering into standard contracts and falling under any of the specified circumstances to file with the local counterpart of the CAC within ten business days from the effective date of the relevant standard contracts. Furthermore, on March 22, 2024, the CAC promulgated the Provisions on Promoting and Standardizing Cross-Border Data Transfer, which set forth the circumstances exempted from performing the security assessment or filing procedures for cross-border data transfer and further clarify the thresholds and scenarios for data processors to go through these procedures as stipulated under the aforementioned measures. However, substantial uncertainties still exist with respect to the interpretation and implementation of these measures in practice and how they will affect our business operation and the value of our securities. On September 24, 2024, the CAC promulgated the Regulations for the Administration of Network Data Security, which came into effect on January 1, 2025. The Regulations for the Administration of Network Data Security restates and further specifies the legal requirements for personal information, important data, cross-border data transfer, network platform services, and data security. Among others, if the network data processing activities have or may have impacts on national security, such activities shall be subject to national security review in accordance with relevant laws and regulations. Any failure to comply with such requirements may subject us to suspension of services, fines, revocation of relevant business permits or business licenses and other penalties. Regulation Related to Intellectual Property Patent Patents in the PRC are principally protected under the PRC Patent Law, which was initially promulgated by the SCNPC in 1984 and was most recently amended in 2020. Invention patents are valid for twenty years, utility model patents are valid for ten years, and since June 1, 2021, the validation period for design patents whose application date is after June 1, 2021 are extended to fifteen years, in each case from the date of application. Copyright Copyrights in the PRC, including software copyrights, is principally protected under the PRC Copyright Law, which took effect in 1991 and was most recently amended in November 2020 and other related rules and regulations. Under the PRC Copyright Law, the term of protection for software copyrights is 50 years. The Regulation on the Protection of the Right to Communicate Works to the Public over Information Networks, as most recently amended on January 30, 2013, provides specific rules on fair use, statutory license, and a safe harbor for use of copyrights and copyright management technology and specifies the liabilities of various entities for violations, including copyright holders, libraries and Internet service providers. -100- Table of Contents Trademark Registered trademarks are protected under the PRC Trademark Law, which was adopted by the SCNPC in 1982 and most recently amended in 2019, as well as the Implementation Regulations of the PRC Trademark Law adopted by the State Council in 2002 and most recently amended in 2014 and other related rules and regulations. The State Intellectual Property Office, formerly known as the Trademark Office of the State Administration for Industry and Commerce, handles trademark registrations and grants a protection term of ten years to registered trademarks and the term may be renewed for another ten-year period upon request by the trademark owner. Domain Name Domain names are protected under the Administrative Measures on Internet Domain Names promulgated by the MIIT on August 24, 2017 and effective since November 1, 2017. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration. Regulation Related to Employment, Social Insurance and Housing Fund Pursuant to the PRC Labor Law, which was promulgated in 1994 and most recently amended in 2018, and the PRC Labor Contract Law, which was promulgated on June 29, 2007 and amended on December 28, 2012, employers must execute written labor contracts with full-time employees. All employers must comply with local minimum wage standards. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative and criminal liability in the case of serious violations. In addition, according to the PRC Social Insurance Law implemented on July 1, 2011 and most recently amended on December 29, 2018 and the Regulations on the Administration of Housing Funds, which was promulgated by the State Council in 1999 and most recently amended in 2019, employers in China must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, and medical insurance and housing funds. Regulation Related to Foreign Exchange and Dividend Distribution Regulation on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as most recently amended in 2008. Under PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China. In 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, or Circular 59, which substantially amends and simplifies the previous foreign exchange procedure. Pursuant to Circular 59, the opening and deposit of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In 2013, SAFE promulgated the Notice on Promulgation of the Provisions on Foreign Exchange Control on Direct Investments in China by Foreign Investors and Supporting Documents, which specified that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. In February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. Instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications, conduct the registration and perform statistical monitoring and reporting responsibilities. -101- Table of Contents In March 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 allows all foreign-invested enterprises established in the PRC to settle their foreign exchange capital on a discretionary basis according to the actual needs of their business operation, provides the procedures for foreign invested companies to use RMB converted from foreign currency-denominated capital for equity investments and removes certain other restrictions under previous rules and regulations. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using RMB funds converted from their foreign exchange capital for expenditure beyond their business scope, direct or indirect securities investment and providing entrusted loans or repaying loans between non-financial enterprises. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016, which reiterates some of the rules set forth in Circular 19. Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB capital converted from foreign exchange may be used to extend loans to related parties or repay inter-company loans (including advances by third parties). However, there are substantial uncertainties with respect to Circular 16’s interpretation and implementation in practice. In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements and stamp with the outward remittance sum and date on the original copies of tax filing records, and (ii) domestic entities must retain income to account for previous years’ losses before remitting any profits. Moreover, pursuant to Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the registration procedure for outbound investment. On October 23, 2019, SAFE issued Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or the Circular 28, which took effect on the same day. Circular 28 allows non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective foreign investment restrictions and other applicable laws. On December 4, 2023, SAFE issued the Notice on Further Deepening Reforms to Promote the Facilitation of Trade and Investment, which provides that qualified high-tech, “professional, sophisticated, unique and new” and technology-based small and medium-sized enterprises in specified areas can borrow foreign debt on their own within an amount not exceeding the equivalent of US$10 million. In addition, this notice restructured the asset realization account of capital accounts to the settlement account of capital accounts. The equity transfer consideration funds in foreign currency received by a domestic equity transferor (including institutions and individuals) from domestic parties, as well as the foreign exchange funds raised by domestic enterprises through overseas listing, may be directly remitted to the settlement account of capital accounts. Funds in the settlement account of capital accounts may be settled and used at discretion. On September 12, 2025, SAFE issued the Notice of the State Administration of Foreign Exchange on Matters Concerning the Deepening of Reform in the Administration of Foreign Exchange for Cross-border Investment and Financing, which further streamlined foreign exchange administration relating to cross-border investment and financing on a nationwide basis. Pursuant to this notice, (i) the registration of basic information for pre-establishment expenses under inbound direct investment is abolished, and foreign investors may directly open pre-establishment expense accounts and remit pre-establishment funds with banks without completing such registration prior to account opening; (ii) the registration for domestic reinvestment by foreign-invested enterprises is abolished, and provided that the investment complies with the negative list for foreign investment access and the domestic investment project is genuine and compliant, the investee enterprise or equity transferor is no longer required to complete the registration for receiving domestic reinvestment, and the domestic reinvestment funds may be directly transferred to the relevant account; and (iii) foreign investors and foreign-invested enterprises are permitted to reinvest foreign exchange profits lawfully generated from foreign direct investment in the PRC, and such foreign exchange funds may be directly remitted to the capital account of the investee enterprise or the capital account settlement account of the equity transferor. -102- Table of Contents Regulation on Dividend Distribution The principal regulations governing dividends distributions by companies include the PRC Company Law, the Foreign Invested Enterprise Law and its implementing rules. Under these laws and regulations, both domestic companies and foreign-invested companies in the PRC are required to set aside as general reserves at least 10% of their after-tax profit, until the cumulative amount of their reserves reaches 50% of their registered capital unless the laws and regulations regarding foreign investment provide otherwise. PRC companies are not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Regulation on Foreign Exchange Registration of Overseas Investment by PRC Residents In 2014, SAFE issued the SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 regulates foreign exchange matters in relation to the use of special purpose vehicles by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a “special purpose vehicle” refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC residents or entities through special purpose vehicles, namely, establishing foreign-invested enterprises to obtain ownership, control rights and management rights. SAFE Circular 37 provides that, before making a contribution into a special purpose vehicle, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch. In 2015, the SAFE Notice 13 amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to special purpose vehicles but had not registered as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the special purpose vehicles with qualified banks. An amendment to the registration is required if there is a material change with respect to the special purpose vehicle registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentations or failing to disclose the control of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. Regulation Related to Stock Incentive Plans In February 2012, SAFE promulgated the Notice on Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies, or the Stock Option Rules, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rules and other relevant rules and regulations, domestic individuals, which means the PRC residents and non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, who participate in a stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly-listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. The PRC agents must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such PRC residents. In addition, SAFE Circular 37 provides that PRC residents who participate in a share incentive plan of an overseas unlisted special purpose company may register with SAFE or its local branches before exercising rights. -103- Table of Contents Regulation Related to Tax Enterprise Income Tax Under the Enterprise Income Tax Law of the PRC, or the EIT Law, which became effective on January 1, 2008 and was most recently amended on December 29, 2018, and its implementing rules, enterprises are classified as resident enterprises and non-resident enterprises. PRC resident enterprises typically pay an enterprise income tax at the rate of 25% while non-PRC resident enterprises without any branches in the PRC should pay an enterprise income tax in connection with their income from the PRC at the tax rate of 10%. An enterprise established outside of the PRC with its “de facto management body” located within the PRC is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a PRC domestic enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define a de facto management body as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Enterprises qualified as “High and New Technology Enterprises” are entitled to a 15% enterprise income tax rate rather than the 25% uniform statutory tax rate. The EIT Law and its implementation rules provide that an income tax rate of 10% should normally be applicable to dividends payable to investors that are “non-resident enterprises,” and gains derived by such investors, which (a) do not have an establishment or place of business in the PRC or (b) have an establishment or place of business in the PRC, but the relevant income is not effectively connected with the establishment or place of business to the extent such dividends and gains are derived from sources within the PRC. Such income tax on the dividends may be reduced pursuant to a tax treaty between China and other jurisdictions. Pursuant to the Arrangement between the Chinese Mainland and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, or the Double Tax Avoidance Arrangement, and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from the in-charge tax authority. However, based on the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based on the Announcement on Relevant Issues Concerning the “Beneficial Owners” in Tax Treaties issued on February 3, 2018 by the SAT and effective from April 1, 2018, comprehensive analysis based on the stipulated factor therein and actual circumstances shall be adopted when recognizing the “beneficial owner” and agents and designated wire beneficiaries are specifically excluded from being recognized as “beneficial owners”. -104- Table of Contents Value-Added Tax On December 25, 2024, the SCNPC promulgated the Value-Added Tax Law of the PRC, which came into effect on January 1, 2026, and the Regulation on the Implementation of the Value-Added Tax Law of the PRC, which came into effect on the same day. Pursuant to the Value-Added Tax Law of the PRC and its implementation regulation, unless otherwise stipulated by relevant laws and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products, while qualified input VAT paid on taxable purchases can be offset against such output VAT. On April 4, 2018, the MOF and the SAT issued the Notice on Adjustment of VAT Rates, which took effect on May 1, 2018 and provides that the taxable goods previously subject to VAT rates of 17% and 11% respectively are subject to lower VAT rates of 16% and 10% respectively starting from May 1, 2018. Furthermore, according to the Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the MOF, the SAT and the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject to VAT rates of 16% and 10% respectively become subject to lower VAT rates of 13% and 9% respectively starting from April 1, 2019. Regulations on M&A Rules and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the CSRC, adopted the Regulations on Mergers of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. Foreign investors shall comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased capital of a domestic company, and thus changing the nature of the domestic company into a foreign-invested enterprise; or when the foreign investors establish a foreign-invested enterprise in the PRC, purchase the assets of a domestic company and operate the assets; or when the foreign investors purchase the asset of a domestic company, establish a foreign-invested enterprise by injecting such assets and operate the assets. The M&A Rules purport, among other things, to require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. Furthermore, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which were available to the public on July 6, 2021 and emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies, and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies, and provided that the special provisions of the State Council on overseas offering and listing by those companies limited by shares will be revised and therefore the duties of domestic industry competent authorities and regulatory authorities will be clarified. On February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures, and relevant five guidelines on the application of Regulatory Rules, which took effect from March 31, 2023, requiring Chinese domestic companies’ overseas securities offerings or listings be filed with the CSRC. The Overseas Listing Trial Measures clarify the scope of overseas offerings or listings by Chinese domestic companies which are subject to the filing and reporting requirements thereunder, and provide, among others, that Chinese domestic companies that have already directly or indirectly offered and listed securities in overseas markets prior to the effectiveness of the Overseas Listing Trial Measures shall fulfil their filing obligations and report relevant information to the CSRC within three working days after conducting a follow-on securities offering on the same overseas market, and follow the relevant reporting requirements within three working days upon the occurrence and public disclosure of any specified circumstances provided thereunder, including (i) change of control; (ii) investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities; (iii) change of listing status or transfer of listing segment; (iv) voluntary or mandatory delisting. In addition, where the main business of an issuer undergoes material change after overseas offering and listing, and is therefore beyond the scope of business stated in the filing documents, such issuer shall follow the relevant reporting requirements within three working days after occurrence of the changes. For violations of these provisions or measures, the competent Chinese authorities may impose administrative regulatory measures, such as orders for correction, warnings, fines, and may pursue legal liability in accordance with law. -105- Table of Contents Furthermore, on February 24, 2023, the CSRC, together with certain other PRC governmental authorities, promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (“Revised Confidentiality and Archives Administration Provisions”), which came into effect on March 31, 2023. According to the Revised Confidentiality and Archives Administration Provisions, Chinese companies that directly or indirectly conduct overseas offerings and listings, shall strictly abide by the relevant laws and regulations on confidentiality when providing or publicly disclosing, either directly or through their overseas listed entities, documents and materials to securities service providers such as securities companies and accounting firms or overseas regulators in the process of their overseas offering and listing. In the event such documents or materials contain state secrets or working secrets of government agencies, the Chinese companies shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level with the approving authority; in the event that such documents or materials, if divulged, will jeopardize national security or public interest, the Chinese companies shall strictly fulfill relevant procedures stipulated by applicable national regulations. The Chinese companies shall also provide a written statement of the specific state secrets and sensitive information provided when providing documents and materials to securities companies and securities service providers, and the securities companies and securities service providers shall properly retain such written statements for inspection. According to the Revised Confidentiality and Archives Administration Provisions, where overseas securities regulators or relevant competent authorities request to inspect, investigate or collect evidence from Chinese domestic companies concerning their overseas offering and listing or their securities companies and securities service providers that undertake securities business for such Chinese domestic companies, such inspection, investigation and evidence collection must be conducted under the cross-border regulatory cooperation mechanism, and the CSRC or competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanism. C. Organizational Structure The following diagram illustrates our corporate structure as of March 31, 2026. Certain entities that are immaterial to our results of operations, business and financial condition are omitted. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%. -106- Table of Contents (1) Investors in our Class A ordinary shares and ADSs are purchasing equity interest in XPeng Inc. (2) Chengxing Zhidong and its subsidiaries are primarily involved in research and development, manufacturing and selling our Smart EVs and NEVs and providing after-sales services. One of Chengxing Zhidong’s subsidiaries, Zhaoqing Xiaopeng New Energy, holds an Enterprise Investment Project Filing Certificate of Guangdong Province for the Zhaoqing plant and has been listed in the Announcement of the Vehicle Manufacturers and Products issued by the MIIT, which enables it to be a qualified manufacturer of EVs. (3) Guangdong Xiaopeng Motors Industry Holding Co., Ltd. and its subsidiaries are primarily involved in providing value-added services. (4) 50% of equity interest in Zhipeng IoV is held by us, and Mr. Zhiyuan Chen holds the other 50% of the equity interest in Zhipeng IoV. (5) 50% of equity interest in Yidian Smart Mobility is held by us, and Mr. Dawu Zhao holds the other 50% of the equity interest in Yidian Smart Mobility. (6) Xintu Technology is wholly owned by Kuntu Technology. The ultimate holding company of Kuntu Technology is Guangzhou Chengpeng Technology Co., Ltd., in which Ms. Chuxu Li holds 100% of the equity interest. (7) GIIA is wholly owned by Guangzhou Xuetao, and Mr. Yeqing Zheng, our vice president, holds 100% equity interest in Guangzhou Xuetao. (8) Wholly held by XPeng Dogotix Holdings Limited through intermediary holding entities. (9) Guangdong Pengxing Smart Co., Ltd. and its subsidiaries are primarily involved in research and development of robots with human-robot interaction functions. -107- Table of Contents Contractual Arrangements with the Group VIEs and Their Shareholders XPeng Inc. is a Cayman Islands holding company, and the Group’s operations are primarily conducted through its subsidiaries in China and through contractual arrangements with the Group VIEs. Under the PRC laws and regulations, (i) the provision of value-added telecommunication service in the PRC is generally subject to foreign investment restrictions and license requirements, and therefore, we operate such business in China through Zhipeng IoV and Yidian Smart Mobility, which both operate our mobile Apps; (ii) the operation of land surface mobile surveying and preparation of true three-dimensional maps and navigation electronic maps is subject to foreign investment prohibitions and license requirements, and therefore, we operate such business in China through Xintu Technology and its subsidiary, which is Zhipeng Kongjian, which is primarily engaged in the operation of land surface mobile surveying and preparation of true three-dimensional maps and navigation electronic maps. We have applied for and received several surveying and mapping qualifications with respect to our business and will continue upgrading such qualifications; and (iii) the provision of insurance agency service in the PRC is subject to foreign investment restrictions and license requirements, and therefore, we operate such business in China through GIIA, which is primarily engaged in the business of providing insurance agency services. We have entered into a series of contractual arrangements with each of Zhipeng IoV, Yidian Smart Mobility, Xintu Technology and GIIA, each a Group VIE, and its respective affiliate shareholders, as described in more details below, including (i) power of attorney agreements, equity interest pledge agreements and loan agreements, which provide us with effective control over such Group VIEs; (ii) exclusive service agreements, which allow us to receive substantially all of the economic benefits from such Group VIEs; and (iii) exclusive option agreements, which provide us with exclusive options to purchase all or part of the equity interests in or all or part of the assets of or inject registered capital into such Group VIEs when and to the extent permitted by PRC law. As a result of these contractual arrangements, we maintain a controlling financial interest as the primary beneficiary of the Group VIEs for accounting purposes (as defined in US GAAP, ASC 810). We have consolidated their financial results in our consolidated financial statements without owning a majority equity interest in Zhipeng IoV or Yidian Smart Mobility or any equity interest in Xintu Technology or GIIA. The Group VIEs do not have a material contribution to the Group’s results of operations and the Group VIEs do not support material revenues reported within other subsidiaries of our company. In the opinion of Fangda Partners, our PRC legal counsel: • the ownership structures of Xiaopeng Technology, Xiaopeng Smart Mobility, Xiaopeng Motors Sales and each of the Group VIEs in China do not and will not violate any applicable PRC law, regulation, or rule currently in effect; and • the contractual arrangements among Xiaopeng Technology, Xiaopeng Smart Mobility, Xiaopeng Motors Sales, each of the Group VIEs and their shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and will not violate any applicable PRC law, regulation, or rule currently in effect. However, there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations related to the contractual arrangements. We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the aforesaid business we engage in, we could be subject to severe penalties including being prohibited from continuing operations. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” All the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration or court proceedings in China. For additional information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the Group VIEs and their respective affiliate shareholders to operate certain businesses that do not have and are not expected in the foreseeable future to have material revenue contributions to the Group. Such contractual arrangements may not be as effective as direct ownership in providing operational control and otherwise have a material adverse effect as to our business.” -108- Table of Contents The following is a summary of the currently effective contractual arrangements by and among (i) Xiaopeng Technology, Zhipeng IoV and its individual shareholders, (ii) Xiaopeng Smart Mobility, Yidian Smart Mobility and its individual shareholders, (iii) Xiaopeng Technology, Xintu Technology and its shareholder and (iv) Xiaopeng Motors Sales, GIIA, Guangzhou Xuetao and its individual shareholder. Contractual Arrangements with Zhipeng IoV and Its Individual Shareholder(s) Exclusive Service Agreement Under the exclusive service agreement executed in September 2021 (the “Zhipeng IoV 2021 Exclusive Service Agreement”), Zhipeng IoV appointed Xiaopeng Technology as its exclusive services provider to provide Zhipeng IoV with services related to Zhipeng IoV’s business during the term of the Zhipeng IoV 2021 Exclusive Service Agreement. In light of the relevant changes in Zhipeng IoV’s shareholding structure in 2024, Zhipeng IoV and Xiaopeng Technology further entered into an exclusive service agreement on April 20, 2024 (the “Zhipeng IoV 2024 Exclusive Service Agreement”), which replaced the Zhipeng IoV 2021 Exclusive Service Agreement. Pursuant to the Zhipeng IoV 2024 Exclusive Service Agreement, in consideration for the services provided by Xiaopeng Technology, Zhipeng IoV shall pay Xiaopeng Technology annual fees, which should be mutually agreed by both parties and can be adjusted according to Xiaopeng Technology’s suggestion to the extent permitted by PRC law. Unless terminated in accordance with the provisions of the Zhipeng IoV 2024 Exclusive Service Agreement or terminated in writing by Xiaopeng Technology, the Zhipeng IoV 2024 Exclusive Service Agreement shall remain effective for 20 years from April 20, 2024 , and can be automatically renewed for one year every sequent year unless otherwise terminated in accordance with the terms of the Zhipeng IoV 2024 Exclusive Service Agreement or by a written notice served by Xiaopeng Technology. The Zhipeng IoV 2024 Exclusive Service Agreement also provides that Xiaopeng Technology has the exclusive proprietary rights in any and all intellectual property rights which are developed by Zhipeng IoV at the request of Xiaopeng Technology or are developed by the parties jointly. Our directors consider that the above arrangements will ensure the economic benefits generated from the operations of Zhipeng IoV will flow to Xiaopeng Technology and hence, our company as a whole. Loan Agreement Pursuant to the loan agreement executed in September 2021 (the “Zhipeng IoV 2021 Loan Agreement”), Xiaopeng Technology provided the then individual shareholders of Zhipeng IoV with a loan in the aggregate amount of RMB5.0 million to fund business activities as permitted by Xiaopeng Technology. The then individual shareholders agreed that the proceeds from the transfer of their respective equity interests in Zhipeng IoV, pursuant to the exercise of the right to acquire such equity interest by Xiaopeng Technology under the exclusive option agreement, may be used by such individual shareholders to repay the loan to the extent permitted under PRC law. The Zhipeng IoV 2021 Loan Agreement will remain effective until the earlier of (i) 20 years after the execution date of the Zhipeng IoV 2021 Loan Agreement; (ii) the expiry date of Xiaopeng Technology’s licensed operating period; and (iii) the expiry date of Zhipeng IoV’s licensed operating period. During the term of Zhipeng IoV 2021 Loan Agreement, Xiaopeng Technology has the right, at its sole and absolute discretion, to accelerate maturity of loan at any time. On April 20, 2024, the former individual shareholders of Zhipeng IoV, the current individual shareholder of Zhipeng IoV and Xiaopeng Technology entered into a tri-party loan assignment agreement (the “Zhipeng IoV Loan Assignment Agreement”), pursuant to which the former individual shareholders of Zhipeng IoV assigned all of their rights and obligations under the Zhipeng IoV 2021 Loan Agreement to the current individual shareholder of Zhipeng IoV, and Xiaopeng Technology agreed that the current individual shareholder of Zhipeng IoV to assume all of the rights and obligations of the former individual shareholders of Zhipeng IoV under the Zhipeng IoV 2021 Loan Agreement. -109- Table of Contents Equity Interest Pledge Agreement On April 20, 2024, the current individual shareholder of Zhipeng IoV, Zhipeng IoV and Xiaopeng Technology entered into an equity interest pledge agreement (the “Zhipeng IoV 2024 Equity Interest Pledge Agreement”), which replaced the equity interest pledge agreement previously executed in September 2021 by and among the then individual shareholders of Zhipeng IoV, Zhipeng IoV and Xiaopeng Technology. Pursuant to the Zhipeng IoV 2024 Equity Interest Pledge Agreement, the current individual shareholder of Zhipeng IoV has pledged all its equity interests in Zhipeng IoV as a security interest, as applicable, to guarantee Zhipeng IoV and such shareholder’s performance of their respective obligations under the relevant contractual arrangements, which include the Zhipeng IoV 2024 Exclusive Service Agreement, the Zhipeng IoV 2024 Exclusive Option Agreement, the Zhipeng IoV 2024 Power of Attorney, the Zhipeng IoV 2021 Loan Agreement and the Zhipeng IoV Loan Assignment Agreement. If Zhipeng IoV or its current individual shareholder breaches their respective contractual obligations under these agreements, Xiaopeng Technology, as pledgee, will be entitled to certain rights regarding the pledged equity interests. In the event of any such breaches, upon giving written notice to Zhipeng IoV’s current individual shareholder, Xiaopeng Technology to the extent permitted by PRC laws may exercise the right to enforce the pledge, which is being paid in priority with the equity interests of Zhipeng IoV from the proceeds from auction or sale of the equity interests. The current individual shareholder of Zhipeng IoV agrees that, during the term of the Zhipeng IoV 2024 Equity Interest Pledge Agreement, such shareholder shall not transfer the equity interests, place or permit the existence of any security interest or other encumbrance on the equity interests or any portion thereof, without the prior written consent of Xiaopeng Technology. Zhipeng IoV’s current individual shareholder may receive dividends distributed on the equity interests only with the prior consent of Xiaopeng Technology. The Zhipeng IoV 2024 Equity Interest Pledge Agreement remains effective until all obligations under the relevant contractual agreements have been fully performed or all secured indebtedness have been fully paid, whichever is later. The equity pledge under the Zhipeng IoV 2024 Equity Interest Pledge Agreement takes effect upon the completion of registration with the relevant PRC government authority. The registration of the equity interest pledge under the Zhipeng IoV 2024 Equity Interest Pledge Agreement, as required by the relevant laws and regulations, has been completed in accordance with PRC laws. Power of Attorney On April 20, 2024, the current individual shareholder of Zhipeng IoV, Zhipeng IoV and Xiaopeng Technology entered into a power of attorney (the “Zhipeng IoV 2024 Power of Attorney”), which replaced the power of attorney previously executed in September 2021 by and among each of the then individual shareholders of Zhipeng IoV, Zhipeng IoV and Xiaopeng Technology. Pursuant to the Zhipeng IoV 2024 Power of Attorney, the current individual shareholder of Zhipeng IoV has irrevocably undertaken to appoint Xiaopeng Technology or its designated persons (including but not limited to directors and their successors and liquidators replacing but excluding those non-independent or who may give rise to conflict of interests) to exercise the following rights relating to all equity interests held by the current individual shareholder of Zhipeng IoV during the term of the Zhipeng IoV 2024 Power of Attorney: to act on behalf of such shareholder as his exclusive agent and as his attorney-in-fact to exercise such shareholder’s rights in Zhipeng IoV according to the articles of association of Zhipeng IoV, including but not limited to, the rights to (i) convene and participate in shareholders’ meeting pursuant to the articles of Zhipeng IoV in the capacity of a proxy of the current individual shareholder of Zhipeng IoV; (ii) exercise the voting rights, and adopt resolutions, on matters to be discussed and resolved at shareholders’ meetings and the appointment and election of directors, supervisors and other senior management of Zhipeng IoV to be appointed by the shareholders, dispose the company assets, amend the articles of Zhipeng IoV and exercise the rights of the current individual shareholder in the event of liquidation of Zhipeng IoV; (iii) sign or submit any required document to any company registry or other authorities in the capacity of a proxy of the current individual shareholder; (iv) to exercise rights of the current individual shareholder and any other voting rights of current individual shareholder under the relevant PRC laws and regulations and the articles of associations of Zhipeng IoV, as amended; (v) subject to (ii), to sign and execute any related documents including but not limited to share transfer agreements, asset transfer agreements and shareholder resolutions when there is a transfer of shareholding in Zhipeng IoV by the current individual shareholder in accordance with the Zhipeng IoV 2024 Exclusive Option Agreement, assets transfer, capital reduction or capital increase in Zhipeng IoV; and (vi) to instruct the directors and senior officers to act in accordance with the instruction of Xiaopeng Technology and its designated persons. Subject to other terms in the Zhipeng IoV 2024 Power of Attorney, the Zhipeng IoV 2024 Power of Attorney shall remain effective for 20 years from April 20, 2024 and can be automatically renewed for one year every sequent year. The Zhipeng IoV 2024 Power of Attorney may be terminated by mutual agreement of the relevant parties in writing or when there is a breach of the Zhipeng IoV 2024 Power of Attorney by Zhipeng IoV or its current individual shareholder which is not remedied within a reasonable time or 10 days after being requested to remedy the breach. -110- Table of Contents Exclusive Option Agreement On April 20, 2024, the current individual shareholder of Zhipeng IoV, Zhipeng IoV and Xiaopeng Technology entered into an exclusive option agreement (the “Zhipeng IoV 2024 Exclusive Option Agreement”), which replaced the exclusive option agreement previously executed in September 2021 by and among each individual shareholder of Zhipeng IoV at the time, Zhipeng IoV and Xiaopeng Technology. Pursuant to the Zhipeng IoV 2024 Exclusive Option Agreement, Zhipeng IoV and its current individual shareholder, jointly and severally, have irrevocably granted Xiaopeng Technology an irrevocable and exclusive right to purchase and require Zhipeng IoV’s current individual shareholder to transfer, or designate one or more entities or persons to purchase and require Zhipeng IoV’s current individual shareholder to transfer the equity interests in Zhipeng IoV then held by such current individual shareholder, and the assets of Zhipeng IoV, once or at multiple times at any time in part or in whole at Xiaopeng Technology’s sole and absolute discretion to the extent permitted by PRC law. The purchase or transfer price for the equity interests in Zhipeng IoV shall be equal to the amount of relevant registered capital actually contributed by the current individual shareholder in Zhipeng IoV while the purchase price for the assets of Zhipeng IoV shall be equal to the net book value of such assets, and if such amount in each case is lower than the minimum price permitted by PRC law, the minimum price permitted by PRC law shall be the purchase price. This agreement will remain effective until all equity interests of Zhipeng IoV held by its current individual shareholders and all of Zhipeng IoV’s assets have been transferred or assigned to Xiaopeng Technology or its designated entities or persons. Subject to the relevant PRC laws and regulations, Zhipeng IoV’s current individual shareholder has also undertaken that he will return to Xiaopeng Technology any consideration he receives in the event that Xiaopeng Technology exercises the options under the Zhipeng IoV 2024 Exclusive Option Agreement to acquire the equity interests in Zhipeng IoV. Further, pursuant to the Zhipeng IoV 2024 Exclusive Option Agreement, Zhipeng IoV and its current individual shareholder have respectively undertaken to perform certain acts or refrain from performing certain other acts unless they have obtained prior approval from Xiaopeng Technology, including but not limited to matters including: (1) The current individual shareholder shall not transfer or dispose in any manner the exclusive option or grant any security over or create any third party rights over the exclusive option; (2) Zhipeng IoV shall not increase or reduce its registered capital, or cause it to merge with other entity; (3) Zhipeng IoV shall not dispose of any material assets (other than in its ordinary course of business); (4) Zhipeng IoV shall not terminate any material contract or enter into any contract that will conflict with existing material contracts; (5) The current individual shareholder shall not appoint or remove any director, supervisor or any other officer that should be appointed by them; (6) Zhipeng IoV shall not distribute any distributable profit, bonus or dividend; (7) Zhipeng IoV shall not take any action (including inaction) that will affect its continued existence or adopt any action that will lead to the possibility of its cessation of business, liquidation or dissolution; (8) Zhipeng IoV shall not amend its articles; and (9) Zhipeng IoV shall not lend or borrow any fund, provide guarantee or any form of security, or undertake any substantial obligations other than in its ordinary business operation. -111- Table of Contents Contractual Arrangements with Yidian Smart Mobility and Its Shareholders Exclusive Service Agreement Under the exclusive service agreement executed in September 2021 (the “Yidian Smart Mobility 2021 Exclusive Service Agreement”), Yidian Smart Mobility appointed Xiaopeng Smart Mobility as its exclusive services provider to provide Yidian Smart Mobility with services related to Yidian Smart Mobility’s business during the term of the Yidian Smart Mobility 2021 Exclusive Service Agreement. In light of the relevant changes in Yidian Smart Mobility’s shareholding structure in 2024, Yidian Smart Mobility and Xiaopeng Smart Mobility further entered into an exclusive service agreement on April 20, 2024 (the “Yidian Smart Mobility 2024 Exclusive Service Agreement”), which replaced the Yidian Smart Mobility 2021 Exclusive Service Agreement. Pursuant to the Yidian Smart Mobility 2024 Exclusive Service Agreement, in consideration for the services provided by Xiaopeng Smart Mobility, Yidian Smart Mobility shall pay Xiaopeng Smart Mobility annual fees, which should be mutually agreed by both parties and can be adjusted according to Xiaopeng Smart Mobility’s suggestion to the extent permitted by PRC law. Unless terminated in accordance with the provisions of the Yidian Smart Mobility 2024 Exclusive Service Agreement or terminated in writing by Xiaopeng Smart Mobility, the Yidian Smart Mobility 2024 Exclusive Service Agreement shall remain effective for 20 years, starting from April 20, 2024, and can be automatically renewed for one year every sequent year unless otherwise terminated in accordance with the terms of the Yidian Smart Mobility 2024 Exclusive Service Agreement or by a written notice served by Xiaopeng Smart Mobility. The Yidian Smart Mobility 2024 Exclusive Service Agreement also provides that Xiaopeng Smart Mobility has the exclusive proprietary rights in any and all intellectual property rights which are developed by Yidian Smart Mobility at the request of Xiaopeng Smart Mobility or are developed by the parties jointly. The above arrangements will ensure the economic benefits generated from the operations of Yidian Smart Mobility will flow to Xiaopeng Smart Mobility and hence, our company as a whole. Loan Agreement Pursuant to the loan agreement executed in September 2021 (the “Yidian Smart Mobility 2021 Loan Agreement”), Xiaopeng Smart Mobility provided the then individual shareholders of Yidian Smart Mobility with a loan in the aggregate amount of RMB5.0 million to fund business activities as permitted by Xiaopeng Smart Mobility. The then individual shareholders agreed that the proceeds from the transfer of their respective equity interests in Yidian Smart Mobility, pursuant to the exercise of the right to acquire such equity interests by Xiaopeng Smart Mobility under the exclusive option agreement, may be used by such individual shareholders to repay the loan to the extent permitted under PRC law. The Yidian Smart Mobility 2021 Loan Agreement will remain effective until the earlier of (i) 20 years after the execution date of the Yidian Smart Mobility 2021 Loan Agreement; (ii) the expiry date of Xiaopeng Smart Mobility’s licensed operating period; and (iii) the expiry date of Yidian Smart Mobility’s licensed operating period. During the term of Yidian Smart Mobility 2021 Loan Agreement, Xiaopeng Smart Mobility has the right, at its sole and absolute discretion, to accelerate maturity of loan at any time. On April 20, 2024, the former individual shareholders of Yidian Smart Mobility, the current individual shareholder of Yidian Smart Mobility and Xiaopeng Smart Mobility entered into a tri-party loan assignment agreement (the “Yidian Smart Mobility Loan Assignment Agreement”), pursuant to which the former individual shareholders of Yidian Smart Mobility assigned all of their rights and obligations under the Yidian Smart Mobility 2021 Loan Agreement to the current individual shareholder of Yidian Smart Mobility, and Xiaopeng Smart Mobility agreed that the current individual shareholder of Yidian Smart Mobility would assume all of the rights and obligations of the former individual shareholders of Yidian Smart Mobility under the Yidian Smart Mobility 2021 Loan Agreement. -112- Table of Contents Equity Interest Pledge Agreement On April 20, 2024, the current individual shareholder of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility entered into an equity interest pledge agreement (the “Yidian Smart Mobility 2024 Equity Interest Pledge Agreement”), which replaced the equity interest pledge agreement previously executed in September 2021 by and among the then individual shareholders of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility. Pursuant to the Yidian Smart Mobility 2024 Equity Interest Pledge Agreement, the current individual shareholder of Yidian Smart Mobility has pledged all of such shareholder’s equity interests in Yidian Smart Mobility as a security interest, as applicable, to guarantee Yidian Smart Mobility and its individual shareholder’s performance of their respective obligations under the relevant contractual arrangements, which include the Yidian Smart Mobility 2024 Exclusive Service Agreement, the Yidian Smart Mobility 2024 Exclusive Option Agreement, the Yidian Smart Mobility 2024 Power of Attorney, the Yidian Smart Mobility 2021 Loan Agreement and the Yidian Smart Mobility Loan Assignment Agreement. If Yidian Smart Mobility or its current individual shareholder breaches their contractual obligations under these agreements, Xiaopeng Smart Mobility, as pledgee, will be entitled to certain rights regarding the pledged equity interests. In the event of such breaches, upon giving written notice to Yidian Smart Mobility’s current individual shareholder, Xiaopeng Smart Mobility to the extent permitted by PRC laws may exercise the right to enforce the pledge, which is being paid in priority with the equity interests of Yidian Smart Mobility from the proceeds from auction or sale of the equity interests. The current individual shareholder of Yidian Smart Mobility agrees that, during the term of the Yidian Smart Mobility 2024 Equity Interest Pledge Agreement, such shareholder shall not transfer the equity interests, place or permit the existence of any security interests or other encumbrance on the equity interests or any portion thereof, without the prior written consent of Xiaopeng Smart Mobility. Yidian Smart Mobility’s current individual shareholder may receive dividends distributed on the equity interests only with prior consent of Xiaopeng Smart Mobility. The Yidian Smart Mobility 2024 Equity Interest Pledge Agreement remains effective until all obligations under the relevant contractual agreements have been fully performed or all secured indebtedness have been fully paid, whichever is later. The equity pledge under the Yidian Smart Mobility 2024 Equity Interest Pledge Agreement takes effect upon the completion of registration with the relevant PRC government authority. The registration of the equity interest pledge under the Yidian Smart Mobility 2024 Equity Interest Pledge Agreement, as required by the relevant laws and regulations, has been completed in accordance with PRC laws. Power of Attorney On April 20, 2024, the current individual shareholder of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility entered into a power of attorney (the “Yidian Smart Mobility 2024 Power of Attorney”), which replaced the power of attorney previously executed in September 2021 by and among each of the then individual shareholders of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility. Pursuant to the Yidian Smart Mobility 2024 Power of Attorney, the current individual shareholder of Yidian Smart Mobility has irrevocably undertaken to appoint Xiaopeng Smart Mobility or its designated persons (including but not limited directors and their successors and liquidators replacing but excluding those non-independent or who may give rise to conflict of interests) to exercise the following rights relating to all equity interests held by the current individual shareholders of Yidian Smart Mobility during the term of the Yidian Smart Mobility 2024 Power of Attorney: to act on behalf of such shareholder as his exclusive agent and as his attorney-in-fact to exercise such shareholder’s rights in Yidian Smart Mobility according to the articles of association of Yidian Smart Mobility, including but not limited to, the rights to (i) convene and participate in shareholders’ meeting pursuant to the articles of Yidian Smart Mobility in the capacity of a proxy of the current individual shareholder of Yidian Smart Mobility; (ii) exercise the voting rights, and adopt resolutions, on matters to be discussed and resolved at shareholders’ meetings and the appointment and election of directors, supervisors and other senior management of Yidian Smart Mobility to be appointed by the shareholders, dispose the company assets, amend the articles of Yidian Smart Mobility and exercise the rights of the current individual shareholder in the event of liquidation of Yidian Smart Mobility; (iii) sign or submit any required document, which shall include meeting minutes, to any company registry or other authorities in the capacity of a proxy of the current individual shareholder; (iv) to exercise rights of the current individual shareholder and any other voting rights of the current individual shareholder under the relevant PRC laws and regulations and the articles of associations of Yidian Smart Mobility, as amended; (v) subject to (ii), to sign and execute any related documents including but not limited to share transfer agreements, asset transfer agreements and individual shareholder resolutions when there is a transfer of shareholding in Yidian Smart Mobility by the current individual shareholder in accordance with the Yidian Smart Mobility 2024 Exclusive Option Agreement, assets transfer, capital reduction or capital increase in Yidian Smart Mobility; and (vi) to instruct the directors and senior officers to act in accordance with the instruction of Xiaopeng Smart Mobility and its designated persons. Subject to other terms in the Yidian Smart Mobility 2024 Power of Attorney, the Yidian Smart Mobility 2024 Power of Attorney shall remain effective for 20 years from April 20, 2024, and can be automatically renewed for one year every sequent year. The Yidian Smart Mobility 2024 Power of Attorney may be terminated by mutual agreement of the relevant parties in writing or when there is a breach of the Yidian Smart Mobility 2024 Power of Attorney by Yidian Smart Mobility or its current individual shareholder which is not remedied within a reasonable time or 10 days after being requested to remedy the breach. -113- Table of Contents Exclusive Option Agreement On April 20, 2024, the current individual shareholder of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility entered into an exclusive option agreement (the “Yidian Smart Mobility 2024 Exclusive Option Agreement”), which replaced the exclusive option agreement previously executed in September 2021 by and among each of the then individual shareholders of Yidian Smart Mobility, Yidian Smart Mobility and Xiaopeng Smart Mobility. Pursuant to the Yidian Smart Mobility 2024 Exclusive Option Agreement, Yidian Smart Mobility and its current individual shareholder, jointly and severally, have irrevocably granted Xiaopeng Smart Mobility an irrevocable and exclusive right to purchase and require Yidian Smart Mobility’s current individual shareholder to transfer, or designate one or more entities or persons to purchase and require Yidian Smart Mobility’s current individual shareholder to transfer the equity interests in Yidian Smart Mobility then held by such individual shareholder, and the assets of Yidian Smart Mobility, once or at multiple times at any time in part or in whole at Xiaopeng Smart Mobility’s sole and absolute discretion to the extent permitted by PRC law. The purchase or transfer price for the equity interests shall be equal to the amount of the relevant registered capital actually contributed by the current individual shareholder in Yidian Smart Mobility while the purchase price for the assets of Yidian Smart Mobility shall be equal to the net book value of such assets, and if such amount in each case is lower than the minimum price permitted by PRC law, the minimum price permitted by PRC law shall be the purchase price. This agreement will remain effective until all equity interests of Yidian Smart Mobility held by its current individual shareholder and all of Yidian Smart Mobility’s assets have been transferred or assigned to Xiaopeng Smart Mobility or its designated entities or persons. Subject to the relevant PRC laws and regulations, Yidian Smart Mobility’s current individual shareholder has also undertaken that he will return to Xiaopeng Smart Mobility any consideration he receives in the event that Xiaopeng Smart Mobility exercises the options under the Yidian Smart Mobility 2024 Exclusive Option Agreement to acquire the equity interests in Yidian Smart Mobility. Further, pursuant to the Yidian Smart Mobility 2024 Exclusive Option Agreement, Yidian Smart Mobility and its current individual shareholder have respectively undertaken to perform certain acts or refrain from performing certain other acts unless they have obtained prior approval from Xiaopeng Smart Mobility, including but not limited to matters including: (1) The current individual shareholder shall not transfer or dispose in any manner the exclusive option or grant any security over or create any third party rights over the exclusive option; (2) Yidian Smart Mobility shall not increase or reduce the registered capital of the Company, or cause the Company to merge with other entity; (3) Yidian Smart Mobility shall not dispose of any material assets (other than in its ordinary course of business); (4) Yidian Smart Mobility shall not terminate any material contract or enter into any contract that will conflict with existing material contracts; (5) The current individual shareholder shall not appoint or remove any director, supervisor or any other officer that should be appointed by them; (6) Yidian Smart Mobility shall not distribute any distributable profit, bonus or dividend; (7) Yidian Smart Mobility shall not take any action (including inaction) that will affect its continued existence or adopt any action that will lead to the possibility of its cessation of business, liquidation or dissolution; -114- Table of Contents (8) Yidian Smart Mobility shall not amend its articles; and (9) Yidian Smart Mobility shall not lend or borrow any fund, provide guarantee or any form of security, or undertake any substantial obligations other than in its ordinary business operation. Contractual Arrangements with Xintu Technology and Its Shareholder Exclusive Service Agreement Under the exclusive service agreement executed in August 2021, Xintu Technology appointed Xiaopeng Technology as its exclusive services provider to provide Xintu Technology with services related to Xintu Technology’s business during the term of the exclusive service agreement. In consideration for the services provided by Xiaopeng Technology, Xintu Technology shall pay Xiaopeng Technology annual fees, which should be mutually agreed by both parties and can be adjusted according to Xiaopeng Technology’s suggestion to the extent permitted by PRC law. Unless terminated in accordance with the provisions of the exclusive service agreement or terminated in writing by Xiaopeng Technology, the exclusive service agreement shall remain effective for 20 years from August 12, 2021, and can be automatically renewed for one year every sequent year unless otherwise terminated by a written notice served by Xiaopeng Technology. The exclusive service agreement also provides that Xiaopeng Technology has the exclusive proprietary rights in any and all intellectual property rights which are developed by Xintu Technology at the request of Xiaopeng Technology or are developed by the parties jointly. Our directors consider that the above arrangements will ensure the economic benefits generated from the operations of Xintu Technology will flow to Xiaopeng Technology and hence, our company as a whole. Loan Agreement Pursuant to the loan agreement executed in August 2021, Xiaopeng Technology should provide the shareholder of Xintu Technology with a loan in the aggregate amount of RMB2.0 million to fund business activities as permitted by Xiaopeng Technology. The shareholder agrees that the proceeds from the transfer of the equity interest of the shareholder in Xintu Technology, pursuant to the exercise of the right to acquire such equity interest by Xiaopeng Technology under the exclusive option agreement, may be used by the shareholder to repay the loan to the extent permitted under PRC law. The loan agreement will remain effective until the earlier of (i) 20 years after the execution date of the loan agreement; (ii) the expiry date of Xiaopeng Technology’s licensed operating period; and (iii) the expiry date of Xintu Technology’s licensed operating period. During the term of loan agreement, Xiaopeng Technology has the right, at its sole and absolute discretion, to accelerate maturity of loan at any time. Equity Interest Pledge Agreement Pursuant to the equity interest pledge agreement executed in August 2021, the shareholder of Xintu Technology has pledged all of its equity interest in Xintu Technology as a security interest, as applicable, to respectively guarantee Xintu Technology and its shareholder’s performance of their obligations under the relevant contractual arrangement, which include the exclusive service agreement, exclusive option agreement, power of attorney and loan agreement. If Xintu Technology or its shareholder breaches their contractual obligations under these agreements, Xiaopeng Technology, as pledgee, will be entitled to certain rights regarding the pledged equity interests. In the event of such breaches, upon giving written notice to Xintu Technology’s shareholder, Xiaopeng Technology, to the extent permitted by PRC laws, may exercise the right to enforce the pledge, which is being paid in priority with the equity interest of Xintu Technology from the proceeds from auction or sale of the equity interest. The shareholder of Xintu Technology agrees that, during the term of the equity interest pledge agreements, such shareholder shall not transfer the equity interest, place or permit the existence of any security interest or other encumbrance on the equity interest or any portion thereof, without the prior written consent of Xiaopeng Technology. Xintu Technology’s shareholder may receive dividends distributed on the equity interest only with prior consent of Xiaopeng Technology. The equity interest pledge agreements remain effective until all obligations under the relevant contractual agreements have been fully performed or all secured indebtedness have been fully paid, whichever is later. -115- Table of Contents The equity pledge under the equity interest pledge agreement takes effect upon the completion of registration with the relevant PRC government authority. The registration of the equity interest pledge as required by the relevant laws and regulations has been completed in accordance with PRC laws. Power of Attorney Pursuant to the power of attorney executed in August 2021, the shareholder of Xintu Technology has irrevocably undertaken to appoint Xiaopeng Technology or its designated persons (including but not limited to directors and their successors and liquidators replacing but excluding those non-independent or who may give rise to conflict of interests) to exercise the following rights relating to all equity interests held by the shareholder of Xintu Technology during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and as his attorney-in-fact to exercise such shareholder’s rights in Xintu Technology according to the articles of association of Xintu Technology, including but not limited to, the rights to (i) convene and participate in shareholders’ meeting pursuant to the articles of Xintu Technology in the capacity of a proxy of the shareholder of Xintu Technology; (ii) exercise the voting rights, and adopt resolutions, on matters to be discussed and resolved at shareholders’ meetings and the appointment and election of directors, supervisors and other senior management of Xintu Technology to be appointed by the shareholder, dispose the company assets, amend the articles of Xintu Technology and exercise the rights of the shareholder in the event of liquidation of Xintu Technology; (iii) sign or submit any required document to any company registry or other authorities in the capacity of a proxy of the shareholder; (iv) to exercise rights of the shareholder and any other voting rights of the shareholder under the relevant PRC laws and regulations and the articles of associations of Xintu Technology, as amended; (v) subject to (ii), to sign and execute any related documents including but not limited to share transfer agreement, asset transfer agreement and individual shareholders resolutions when there is a transfer of shareholding in Xintu Technology by the shareholder in accordance with exclusive option agreement, assets transfer, capital reduction or capital increase in Xintu Technology; and (vi) to instruct the directors and senior officers to act in accordance with the instruction of Xiaopeng Technology and its designated persons. Subject to other terms in the power of attorney, the power of attorney shall remain effective for 20 years from August 12, 2021, and can be automatically renewed for one year every sequent year. The power of attorney may be terminated by mutual agreement of the relevant parties in writing or when there is a breach of the power of attorney by Xintu Technology or its shareholder which is not remedied within a reasonable time or 10 days after being requested to remedy the breach. Exclusive Option Agreement Pursuant to the exclusive option agreement executed in August 2021, Xintu Technology and its shareholder have irrevocably granted Xiaopeng Technology an irrevocable and exclusive right to purchase, or designate one or more entities or persons to purchase the equity interests in Xintu Technology then held by shareholder, and the assets of Xintu Technology, once or at multiple times at any time in part or in whole at Xiaopeng Technology’s sole and absolute discretion to the extent permitted by PRC law. The purchase price for the equity interests in Xintu Technology shall be equal to the amount of relevant registered capital contributed by the shareholder in Xintu Technology while the purchase price for the assets of Xintu Technology shall be equal to the net book value of such assets, and if such amount in each case is lower than the minimum price permitted by PRC law, the minimum price permitted by PRC law shall be the purchase price. This agreement will remain effective until all equity interests of Xintu Technology held by its shareholder and all of Xintu Technology’s assets have been transferred or assigned to Xiaopeng Technology or its designated entities or persons. Subject to the relevant PRC laws and regulations, Xintu Technology’s shareholder has also undertaken that it will return to Xiaopeng Technology any consideration he receives in the event that Xiaopeng Technology exercises the options under the exclusive option agreement to acquire the equity interests in Xintu Technology. Further, pursuant to the exclusive option agreement, Xintu Technology and its shareholder have respectively undertaken to perform certain acts or refrain from performing certain other acts unless they have obtained prior approval from Xiaopeng Technology, including but not limited to matters including: (1) The shareholder shall not transfer or dispose in any manner the exclusive option or grant any security over or create any third party rights over the exclusive option; 116 Table of Contents (2) Xintu Technology shall not increase or reduce its registered capital, or cause it to merge with other entity; (3) Xintu Technology shall not dispose of any material assets (other than in its ordinary course of business); (4) Xintu Technology shall not terminate any material contract or enter into any contract that will conflict with existing material contracts; (5) The shareholder shall not appoint or remove any director, supervisor or any other officer that should be appointed by them; (6) Xintu Technology shall not distribute any distributable profit, bonus or dividend; (7) Xintu Technology shall not take any action (including inaction) that will affect its continued existence or adopt any action that will lead to the possibility of its cessation of business, liquidation or dissolution; (8) Xintu Technology shall not amend its articles; and (9) Xintu Technology shall not lend or borrow any fund, provide guarantee or any form of security, or undertake any substantial obligations other than in its ordinary business operation. Contractual Arrangement with GIIA and its Shareholder On July 22, 2022, Xiaopeng Motors Sales, Mr. Tao He, our co-founder, his spouse, and Guangzhou Xuetao, of which 50% equity interest is owned by Mr. Tao He and 50% is owned by his spouse, entered into a cooperation agreement. According to the cooperation agreement, Xiaopeng Motors Sales designated Mr. Tao He and his spouse as its representatives to acquire 100% of equity interest in GIIA through Guangzhou Xuetao on the same day. On January 31, 2024, Xiaopeng Motors Sales, Mr. Tao He, his spouse, and Guangzhou Xuetao agreed to terminate the above described cooperation agreement. On the same day, a series of contractual arrangements with GIIA were executed by Xiaopeng Motors Sales, Guangzhou Xuetao and Mr. Yeqing Zheng, the individual shareholder of Guangzhou Xuetao, the key terms of which are summarized as follows. Exclusive Service Agreement Under the exclusive service agreement executed in January 2024, GIIA appointed Xiaopeng Motors Sales as its exclusive services provider to provide GIIA with services related to GIIA’s business during the term of the exclusive service agreement. In consideration for the services provided by Xiaopeng Motors Sales, GIIA shall pay Xiaopeng Motors Sales annual fees, which should be mutually agreed by both parties and can be adjusted according to Xiaopeng Motors Sales’ suggestion to the extent permitted by PRC law. Unless terminated in accordance with the provisions of the exclusive service agreement or terminated in writing by Xiaopeng Motors Sales, the exclusive service agreement shall remain effective for 20 years from January 31, 2024, and can be automatically renewed for one year every sequent year unless otherwise terminated by a written notice served by Xiaopeng Motors Sales. The exclusive service agreement also provides that Xiaopeng Motors Sales has the exclusive proprietary rights in any and all intellectual property rights which are developed by GIIA at the request of Xiaopeng Motors Sales or are developed by the parties jointly. Our directors consider that the above arrangements will ensure the economic benefits generated from the operations of GIIA will flow to Xiaopeng Motors Sales and hence our company as a whole. -117- Table of Contents Loan Agreement Pursuant to the loan agreement executed in January 2024, Xiaopeng Motors Sales should provide Mr. Zheng, the individual shareholder of Guangzhou Xuetao, with a loan in the aggregate amount of RMB31.5 million to acquire 100% of equity interest in GIIA through Guangzhou Xuetao from Mr. Tao He and his spouse. Mr. Zheng has pledged all of his equity interest in Guangzhou Xuetao as a security interest to repay the loan provided by Xiaopeng Motors Sales and guarantee the performance of other obligations under the loan agreement. The loan agreement will remain effective until the earlier of (i) 20 years after the execution date of the loan agreement; (ii) the expiry date of Guangzhou Xuetao’s licensed operating period; and (iii) the expiry date of GIIA’s licensed operating period. During the term of loan agreement, Xiaopeng Motors Sales has the right, at its sole and absolute discretion, to accelerate maturity of loan at any time. Equity Interest Pledge Agreement Pursuant to the equity interest pledge agreement executed in January 2024, Mr. Zheng, the individual shareholder of Guangzhou Xuetao, and Guangzhou Xuetao (collectively, the “Pledgors”) have pledged all of his equity interest in GIIA as a security interest, as applicable, to respectively guarantee the performance of obligations of the Pledgors under the relevant contractual arrangement, which include the exclusive service agreement, exclusive option agreement, power of attorney and loan agreement. If the Pledgors breach their contractual obligations under these agreements, Xiaopeng Motors Sales, as pledgee, will be entitled to certain rights regarding the pledged equity interests. In the event of such breaches, upon giving written notice to the Pledgors, Xiaopeng Motors Sales may exercise the right to enforce the pledge to the extent permitted by PRC laws, which is being paid in priority with the equity interest of GIIA from the proceeds from auction or sale of the equity interest. The Pledgors agree that, during the term of the equity interest pledge agreement, it shall not transfer the equity interest, place or permit the existence of any security interest or other encumbrance on the equity interest or any portion thereof, without the prior written consent of Xiaopeng Motors Sales. The Pledgors may receive dividends distributed on the equity interest only with prior consent of Xiaopeng Motors Sales. The equity interest pledge agreement will remain effective until all obligations under the relevant contractual agreements have been fully performed or all secured indebtedness have been fully paid, whichever is later. The equity pledge under the equity interest pledge agreement takes effect after the Pledgors and Xiaopeng Motors Sales have duly signed such agreement. The registration of the equity interest pledge as required by the relevant laws and regulations is currently in process as of the date hereof and we expect to complete such registration in due course in accordance with PRC laws. Power of Attorney Pursuant to the power of attorney executed in January 2024, Mr. Zheng and Guangzhou Xuetao (collectively, the “GIIA Shareholder”) have irrevocably undertaken to appoint Xiaopeng Motors Sales or its designated persons (including but not limited directors and their successors and liquidators replacing but excluding those non-independent or who may give rise to conflict of interests) to exercise the following rights relating to all equity interests held by the GIIA Shareholder during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and as his attorney-in-fact to exercise such shareholder’s rights in GIIA according to the articles of association of GIIA, including but not limited to, the rights to (i) convene and participate in the shareholder’s meeting of GIIA pursuant to the articles of GIIA in the capacity of a proxy of the GIIA Shareholder; (ii) exercise the voting rights, and adopt resolutions, on matters to be discussed and resolved at shareholder’s meetings and the appointment and election of directors, supervisors and other senior management of GIIA to be appointed by the GIIA Shareholder, dispose the company assets, amend the articles of GIIA and exercise the rights of the GIIA Shareholder in the event of liquidation of GIIA; (iii) sign or submit any required document, which shall include meeting minutes, to any company registry or other authorities in the capacity of a proxy of the GIIA Shareholder; (iv) to exercise rights of the GIIA Shareholder and any other voting rights of the GIIA Shareholder under the relevant PRC laws and regulations and the articles of associations of GIIA, as amended; (v) subject to (ii), to sign and execute any related documents including but not limited to share transfer agreement, asset transfer agreement and individual shareholders resolutions when there is a transfer of shareholding in GIIA by the GIIA Shareholder in accordance with exclusive option agreement, assets transfer, capital reduction or capital increase in GIIA; and (vi) to instruct the directors and senior officers to act in accordance with the instruction of Xiaopeng Motors Sales and its designated persons. -118- Table of Contents Subject to other terms in the power of attorney, the power of attorney shall remain effective for 20 years from January 31, 2024, and can be automatically renewed for one year every sequent year. The power of attorney may be terminated by mutual agreement of the relevant parties in writing or when there is a breach of the power of attorney by the GIIA Shareholder which is not remedied within a reasonable time or 10 days after being requested to remedy the breach. Exclusive Option Agreement Pursuant to the exclusive option agreement executed in January 2024, the GIIA Shareholder has irrevocably granted Xiaopeng Motors Sales an irrevocable and exclusive right to purchase, or designate one or more entities or persons to purchase, the equity interests in GIIA then held by the GIIA Shareholder, and the assets of GIIA, once or at multiple times at any time in part or in whole at Xiaopeng Motors Sales’ sole and absolute discretion to the extent permitted by PRC law. The purchase price for the equity interests in GIIA shall be equal to the amount of relevant registered capital contributed by the GIIA Shareholder while the purchase price for the assets of GIIA shall be equal to the net book value of such assets, and if such amount in each case is lower than the minimum price permitted by PRC law, the minimum price permitted by PRC law shall be the purchase price. This agreement will remain effective until all equity interests of GIIA held by the GIIA Shareholder and all of GIIA’s assets have been transferred or assigned to Xiaopeng Motors Sales or its designated entities or persons. Subject to the relevant PRC laws and regulations, the GIIA Shareholder has also undertaken that it will return to Xiaopeng Motors Sales any consideration it receives in the event that Xiaopeng Motors Sales exercises the options under the exclusive option agreement to acquire the equity interests in GIIA. Further, pursuant to the exclusive option agreement, the GIIA Shareholder has irrevocably undertaken to perform certain acts or refrain from performing certain other acts unless they have obtained prior written approval from Xiaopeng Motors Sales, including but not limited to matters including: (1) The GIIA Shareholder shall not transfer or dispose in any manner the exclusive option or grant any security over or create any third party rights over the exclusive option; (2) The GIIA Shareholder shall not increase or reduce GIIA’s registered capital, or cause it to merge with any other entity; (3) The GIIA Shareholder shall not dispose or cause GIIA to dispose of any material assets (other than in its ordinary course of business); (4) The GIIA Shareholder shall not terminate or cause GIIA to terminate any material contract or enter into any contract that will conflict with existing material contracts; (5) The GIIA Shareholder shall not appoint or remove any director, supervisor or any other officer that should be appointed by them; (6) The GIIA Shareholder shall not cause GIIA to distribute any distributable profit, bonus or dividend; (7) The GIIA Shareholder shall not take any action (including inaction) that will affect GIIA’s continued existence or adopt any action that will lead to the possibility of its cessation of business, liquidation or dissolution; (8) The GIIA Shareholder shall not amend its articles; and -119- Table of Contents (9) The GIIA Shareholder shall not lend or borrow any fund, provide guarantee or any form of security, or undertake any substantial obligations other than in its ordinary business operation. Transfer of Equity Interest in Zhaoqing Xiaopeng New Energy Prior to January 2022, each of (i) Zhaoqing Xiaopeng Motors Co., Ltd., or Zhaoqing Xiaopeng, which is a wholly-owned subsidiary of the Company, and (ii) Zhaoqing Kunpeng Motor Technology Co., Ltd., or Zhaoqing Kunpeng, which is jointly owned by Mr. Heng Xia and Mr. Tao He, held 50% of the equity interest of Zhaoqing Xiaopeng New Energy. Pursuant to a share transfer agreement between Zhaoqing Xiaopeng and Zhaoqing Kunpeng, dated February 13, 2020, Zhaoqing Kunpeng shall transfer the 50% of the equity interest of Zhaoqing Xiaopeng New Energy to Zhaoqing Xiaopeng at the price of the higher of (i) RMB1 or (ii) the capital injection actually paid by Zhaoqing Kunpeng upon the earlier of (i) the removal of the PRC foreign investment restrictions in whole-unit vehicle industry; and (ii) December 31, 2022. In January 2022, Zhaoqing Kunpeng transferred all of its equity interest in Zhaoqing Xiaopeng New Energy to Zhaoqing Xiaopeng. As a result, Zhaoqing Xiaopeng New Energy has become our wholly-owned subsidiary. Zhaoqing Xiaopeng New Energy holds an Enterprise Investment Project Filing Certificate of Guangdong Province for the Zhaoqing plant and has been listed in the Announcement of the Vehicle Manufacturers and Products issued by the MIIT, which enables it to be a qualified manufacturer of EVs. Yuecai Investment in Chengxing Zhidong On March 12, 2021, a capital increase agreement was entered into among Chengxing Zhidong, Xiaopeng Motors, Guangdong Xiaopeng Automotive Industry Holding Co., Ltd. and Guangdong Yuecai Industrial Investment Fund Partnership Enterprise (Limited Partnership), or Yuecai. Pursuant to the capital increase agreement, Yuecai subscribed for 0.3% equity interest in Chengxing Zhidong for an aggregate consideration of RMB500 million. If an affiliated entity of Chengxing Zhidong, including but not limited to XPeng Inc. or Xiaopeng Motors, completes a public listing within three years from the settlement of the capital increase, the parties may agree to exchange all or a portion of Yuecai’s equity interest in Chengxing Zhidong for shares in the publicly listed entity based on the public offering price. If such public listing does not take place within three years from the settlement of the capital increase, Chengxing Zhidong may repurchase Yuecai’s equity interest for RMB500 million and an interest based on an agreed annualized rate of 6%. On June 11, 2021, Yuecai notified Chengxing Zhidong that it irrevocably undertakes not to exercise the rights under the capital increase agreement to request Xiaopeng Motors to purchase the shares of Chengxing Zhidong held by it in connection with our listing on the Hong Kong Stock Exchange. Accordingly, Yuecai continued to be a shareholder of Chengxing Zhidong in respect of its entire investment in Chengxing Zhidong following our listing on the Hong Kong Stock Exchange. On March 18, 2024, we made payment to repurchase Yuecai’s equity interest in Chengxing Zhidong and as of the date of this annual report, Yuecai is no longer a shareholder of Chengxing Zhidong. D. Property, plants and equipment Please refer to “B. Business Overview—Facilities” for a discussion of our property, plants and equipment.