Leapmotor frantically presses the accelerator key

Author | Chai Xuchen

Editor | Wang Xiaojun

Unexpectedly, during the off-season for car sales, Leapmotor has become an "outsider" in the intense competition.

On the evening of May 19, Leapmotor released its Q1 financial report for this year, with quarterly revenue nearly doubling year-on-year, surpassing 10 billion yuan; even more surprising is that in the sales off-season, which typically requires promotions, Leapmotor's overall gross margin actually showed a quarter-on-quarter improvement trend, reaching a historic high of 15%.

Specifically, the unexpected results from Leapmotor are significantly attributed to strategic cooperation revenue, confirming approximately 300 million yuan in technical service fees, with gross profit around 200 million yuan.

Therefore, despite price reductions to clear old inventory in the first quarter, Leapmotor's total revenue and gross margin increased against the trend; at the same time, this revenue allowed Leapmotor's sales structure to shift downwards (the sales ratio of B10+C10 increased by nearly 12% quarter-on-quarter, while the higher-priced C11 and C16 declined by 7% quarter-on-quarter), resulting in an increase of 3,000 yuan in average vehicle price to 114,000 yuan.

However, it is worth mentioning that after excluding the impact of cooperation, Leapmotor's actual gross margin of 13.3% still exceeded expectations, remaining basically flat with the previous quarter. This reflects the effectiveness of scale effects and Leapmotor's ongoing cost management optimization. It can be said that Leapmotor's profitability is continuously strengthening.

Overall, Leapmotor has exceeded market expectations for three consecutive quarters, and from Q1 last year to Q1 this year, Leapmotor's market share in the new energy vehicle sector has shown a continuous upward trend. At the financial report meeting, Leapmotor's Vice President Li Tengfei stated that this year they will strive for annual sales of 500,000 to 600,000 vehicles, a gross margin of 10-12%, and the goal of annual breakeven.

With a surge in delivery volume and a healthy profit structure, this means that as competition enters deeper waters, Leapmotor, as a new player, has carved out its own piece of the cake in the advantageous price range of BYD and is poised to secure a ticket to the finals.

Industry insiders believe that under the pricing of extremely cost-effective products, especially with the B series models having lower configurations than the C series this year, Leapmotor's key to achieving profitability for the entire year relies on cost control capabilities and scale effects.

According to Li Tengfei, the LEAP3.5 platform has brought about a 30-40% cost reduction effect. All revamped models will be adapted to LEAP3.5, sharing costs with the B series. With the groundwork laid, whether the B series can take over from the C series and uphold Leapmotor's scale will be of utmost importance.

In this regard, Leapmotor has provided a sales guidance of 130,000 to 140,000 units for the second quarter, equivalent to selling 43,000 to 47,000 new cars per month. It is worth mentioning that in April, Leapmotor achieved the title of new force sales champion with 41,000 units delivered. In other words, Leapmotor has demonstrated its determination to continuously secure the title of "monthly sales champion among new car manufacturers."

To achieve this ambition, Leapmotor will launch a series of product brands this year. In addition to the already unveiled B10 and B01, the B05 is expected to debut at the Chengdu Auto Show at the end of August and be delivered in the fourth quarter; additionally, the C series models will undergo a facelift in June to July to enhance competitiveness in the same price segment At the same time, the larger D series models will debut in the fourth quarter.

Not only on the product side, but also in sales, Leapmotor is accelerating its expansion.

First, according to the plan, Leapmotor's channel target this year is to exceed 1,000 stores, speeding up the layout of Leapmotor center stores and urban showroom stores, further penetrating core automotive business districts.

More importantly, the overseas market will also begin to "support the family" for Leapmotor. The expected overseas sales for Leapmotor in 2025 was originally around 50,000 to 60,000 units, but due to nearly 14,000 units completed in the first four months, Leapmotor has raised its overseas sales target to 50,000 to 80,000 units. In the second half of the year, Leapmotor International will invest in B10 and B01, which are more in line with European demand for small cars.

Currently, Leapmotor is also accelerating its layout of overseas channels.

In the first quarter, Leapmotor International had 500 channels, with a net increase of 100 channels in Europe compared to the previous quarter. People close to Leapmotor revealed that the speed of its overseas channel deployment is very fast, which may drive Leapmotor's overseas sales this year to exceed expectations, especially by leveraging Stellantis's brand recognition to quickly open up the market, and the B platform models are more suitable for European market demands.

Backed by Stellantis, Leapmotor will achieve the localization assembly project of C10 at its Malaysia factory by the end of this year; at the same time, it expects to achieve localized production in Europe by mid-next year. With the accumulation of global experience from C10 and B10, along with information on local market consumption habits provided by Stellantis, Leapmotor's globalization path may be faster than most new car brands.

From this perspective, achieving the sales target of 500,000 to 600,000 units this year seems not difficult.

However, a small hiccup is that due to battery production capacity issues, the recent production and delivery of the B10, which is expected to ramp up this year, has been affected. Li Tengfei stated that this issue will be resolved by late May, and the upcoming launch and delivery of B01 will not be affected by the supply of batteries and other components. This will allow the B series to contribute more significantly to Leapmotor's scale.

Industry insiders believe that with the catalysis of new vehicles on the B platform and the expectations of collaboration with FAW in parts supply and equity cooperation, Leapmotor's market value has at least 30% growth potential. This means that this new force dark horse is likely to reach a valuation of over 100 billion soon.

Perhaps, as long as Leapmotor can maintain its rhythm, it will further lock in its winning edge. However, the current market environment is unpredictable, and in the face of competitors' relentless pressure, Leapmotor not only needs to stabilize but also to accelerate the pace of consolidating its market share