Summary of Shenchi Electric's Conference Call Company Overview - **Company**: Shenchi Electric - **Industry**: Electric machinery and robotics Key Points Financial Performance - In Q2 2025, Shenchi Electric's performance was impacted by a return issue with Costco Canada, resulting in a profit loss of approximately 20 million yuan. However, excluding this factor, revenue and profit remained strong, exceeding 70 million yuan [2][3] - The company achieved historical highs in both revenue and profit for the first half of 2025, despite fluctuations due to North American tariffs [3] Market and Sales Insights - Shenchi Electric's generator sets are primarily sold in North America, Southeast Asia, Africa, and Europe, with North America yielding higher profits due to higher unit prices [2][4] - The company employs a floating pricing mechanism, which stabilizes gross margins. It is expected that future capacity releases will enhance operational efficiency [5] - The company anticipates annual revenue growth of 30%-40% over the next few years, despite a less than expected performance in the general machinery business in Q3 due to North American order tariffs [4][20] Product and Quality Management - The gross margin for the electric motor business is approximately 10%. The North American market shows better profitability due to higher unit prices [6] - Shenchi Electric has implemented a lifetime return policy at Costco Canada, which has led to a return rate of up to 10%. The company has restructured its supply chain and production processes to mitigate large-scale return incidents [8][9][11] Robotics Development - Shenchi Electric has signed a cooperation agreement with Xiteng Robotics, focusing on the development of wheeled and explosion-proof modules, with sample delivery and validation expected by the end of the year [2][12][13] - The company is actively engaging with various robotics manufacturers to enhance product quality and expedite market entry [7][18] Strategic Partnerships and Future Outlook - The company is exploring collaborations with local enterprises in Chongqing, such as Seres and Changan, for robot product development [19] - Shenchi Electric is optimistic about its growth trajectory, with plans to enhance its product offerings and operational capabilities in the robotics sector [20] Production Capacity and Market Demand - Shenchi Electric's new projects are primarily focused on large clients in North America, with significant capacity increases expected by the end of the year and into the first half of the next year [15][16] - Despite a decline in North American market demand, the company has maintained growth in non-North American markets through strategic warehouse and factory developments [16][22] Diesel Generator Business - Shenchi Electric has a factory in Jiangsu producing large diesel generator sets, with annual revenue from this segment ranging from tens of millions to one billion yuan [21] - The company has experience in delivering large diesel generator sets for data centers, although this segment represents a smaller portion of overall revenue [21] Additional Insights - The company is focused on improving its operational efficiency and product quality to meet high standards in the robotics and electric machinery sectors [17][18] - Shenchi Electric's team configuration in robotics leverages its existing strengths in electric motors and controls, enhancing its competitive edge in the market [17]