The king of cost-performance has become the number one among new forces

It's hard to imagine that the cost-focused "tech guy" Leapmotor has managed to rise to the top of the new forces in the automotive industry during the recent wave of "high-end alternatives."

On August 18th, Leapmotor released its financial report, and despite the industry's sales slump in the first half of the year, this dark horse's revenue more than doubled, with gross profit growth even more pronounced, stabilizing at a double-digit gross margin, setting a historical high for the company. Under its rapid growth, Leapmotor has crossed the threshold of positive net profit for the first time in the first half of the year, becoming the second new force to achieve half-year profitability after Li Auto.

Behind this impressive performance lies the undeniable magic of "scale effects." In the first half of the year, Leapmotor secured the top spot in sales among new forces with 221,700 units sold. Riding this wave of success, Leapmotor decided to seize the momentum and announced during the earnings call that it would change its full-year profit and loss target to full-year profitability, while also raising its annual sales target to 580,000-600,000 units.

This means it aims to achieve monthly sales of over 75,000 units, challenging the sales limits of new forces. As for next year, CFO Li Tengfei boldly stated that they aim to challenge 1 million in sales, a year ahead of the original expectation set by Chairman Zhu Jiangming.

A few years ago, Leapmotor did not receive much spotlight, but it has clearly found a path to breakthrough and is rolling the snowball bigger and bigger. However, in a time when most automakers have conservative growth expectations, Leapmotor does not consider itself aggressive, with Zhu Jiangming stating to Wall Street News, "The target of 1 million annual sales is a must; it's the survival bottom line, otherwise, it will be very exhausting."

Last year, Zhu Jiangming said that to survive in the long run, sales must exceed 3 million units, and this year his ambition has escalated, "4 million is our big goal." It’s worth noting that this scale can already stand shoulder to shoulder with giants like BYD and General Motors. This also aligns with Zhu Jiangming's new "persona" for Leapmotor—aiming to become a world-class electric vehicle company in the future.

Next, will the entire automotive industry undergo a new change because of it, and will its competitors simply back down?

A Triumphant Song

At the beginning of the year, they were still preparing to strive for annual profit and loss balance, but after the mid-year report, it was as if they were on a roll, declaring that they would net 500 million to 1 billion this year. Clearly, Leapmotor itself did not anticipate such smooth sailing this year.

In just one year, Leapmotor's sales surged from 86,000 units in the first half of last year to 222,000 units in the same period this year. Moreover, in July this year, it reached a high of 50,000 monthly sales, firmly holding the top spot in sales among new forces.

Currently, there are no signs of the price war cooling down. Amid the trend of model structure sinking, Leapmotor has achieved half-year profit for the first time in the fiercely competitive market segment of 150,000 yuan, netting over 30 million against the trend.

From the financial report breakdown, although Leapmotor continued to invest in intelligence and channels in the first half of the year, the revenue growth of 15.4 billion yuan during the same period was already ten times the growth of the three expenses; the gross margin surged from 1.1% in the first half of last year to 14.1%.

In the context of a general trend of consumption downgrade, data proves that the "good but not expensive" strategy set by Zhu Jiangming six years ago is beginning to show its power. Leapmotor is stepping into a harvest period, proving to the market that the "cost-performance route can also be profitable." In the view of industry insiders, the price range of 100,000 to 200,000 yuan is the largest market for domestic new energy vehicle users and one of the most competitive markets. In this segment, cost-effectiveness remains the key to wealth, and Leapmotor has become the king of hot-selling models.

In the first half of the year, Leapmotor's "reinforcement troops," the B10 and B01, were launched, while the evergreen C11 from its C series underwent a facelift. The market response was enthusiastic, with the B10 exceeding 10,000 deliveries in the month following its launch (May), becoming the brand's fastest model to break the 10,000 delivery mark; the B01, launched at the end of July, locked in over 10,000 orders within 72 hours of its release.

Taking this year's main B series as an example, priced just over 100,000 yuan, it offers end-to-end assisted driving, lidar, and an 800V platform, which were previously priced at 200,000 to 300,000 yuan by competitors, along with scenario-based experience configurations like "refrigerators, TVs, and sofas." This level of configuration is more aggressive than most peers, making it hard for mainstream consumers to resist.

The secret to extreme cost control lies in Leapmotor's self-research strategy. Zhu Jiangming told Wall Street News that Leapmotor is now not only self-developing the three electric systems, intelligent cockpit, and intelligent driving but is also starting to develop high-value-added components like AR-HUD and seats in-house.

Zhu Jiangming is doing everything possible to "dehydrate" components, leaving cost space to continuously enhance product strength. Coupled with platform support, Leapmotor can rapidly iterate and launch new products, concentrating firepower to seize market share in a volatile market.

Industry insiders believe this combination has provided Leapmotor with ample opportunities for expansion. From the perspective of industry competition, competitors like BYD are constrained by "anti-involution" due to price wars, allowing Leapmotor to penetrate the 150,000 yuan models of its rivals, creating a positive cycle of reputation and consumer mindset.

Therefore, the achievements in the first half of the year have given Leapmotor great confidence, and the upcoming "golden September and silver October" has provided even greater imagination space, especially since Leapmotor still has several trump cards ready to be played.

A New King is Rising

Riding the tailwind of the market, Leapmotor continues to accelerate on the path of scale growth.

At this earnings conference, management hinted that sales in August and September would see significant growth, thus raising the total sales target for this year to 580,000 to 650,000 units, with plans to attack the million annual sales mark next year, corresponding to over 80,000 monthly sales.

This level of sales is considered a "no man's land" for new forces, as no brand has previously set such an ambitious target. A monthly sales figure of 50,000 is already an insurmountable barrier for many players, with only a few lucky ones like BYD, Geely, and Li Auto achieving it.

In a time when most car manufacturers' growth expectations are becoming conservative, if Leapmotor can realize its million dream, it will have entered the TOP 2 of domestic vehicle manufacturers, completely reshaping the entire new energy industry.

A new king is rising, and investors are the first to fully adjust their expectations. In just two months, Leapmotor's stock price surged nearly 50% from 51 Hong Kong dollars in June. As of August 20, Leapmotor's market capitalization briefly surpassed 100 billion Hong Kong dollars.

"Leapmotor has made significant progress in the capital market, rising from a low of over 20 to a high of 76, with trading volumes increasing from millions to tens of millions, and at times reaching over a billion. Many funds have started to pay attention to Leapmotor," Zhu Jiangming told Wall Street News The continuous progress has indeed boosted the morale within the team, but Zhu Jiangming does not consider himself an extremist. He knows that now is not the time to celebrate with champagne. In his view, the fluctuations in rankings are only temporary. "Brands like WM Motor and Neta, which have been sales champions, have now disappeared. Today, it's just the turn of Leapmotor to be the sales champion, which is nothing special."

On the eve of the finals, all competitors are striving to break into the top tier, with competitors like Deep Blue, Ledo, ZEEKR, BYD Dynasty/Ocean, and Geely Galaxy closely pursuing, all wanting a piece of the pie from Leapmotor.

"We have just won the War of Resistance against Japan, and we are only just crossing the breakeven point. If Leapmotor cannot quickly increase sales and enhance profitability and market share, it could be very dangerous." Zhu Jiangming believes that the next three years will be the most intense finals period for the industry. "Leapmotor must maintain its speed to keep moving forward and not be trampled upon."

In this regard, Zhu Jiangming has a clear plan: achieve sales of 500,000 to 600,000 units this year, reach 1 million units in two years, and aim for 4 million units in five years. He wants to continue to transcend boundaries and become a top-tier giant in the global automotive industry, standing tall in the industry.

At this performance meeting, the management pressed the fast-forward button on Zhu Jiangming's vision, advancing the million-unit target by a year.

Zhu Jiangming has stated that the target of 1 million units is a must; it is the survival bottom line, otherwise, it will be very exhausting. Only car manufacturers that sell a million vehicles annually can achieve stable profitability. In the traditional fuel vehicle era, Great Wall and Geely both went through the baptism of selling over a million units before truly becoming well-known car manufacturers, and Leapmotor must also go through this process.

However, how will Leapmotor achieve this FLAG? Zhu Jiangming's solution is to make each model an evergreen in the industry, maintaining strong sales momentum.

From the product planning perspective, the C-series product matrix in the 100,000 to 200,000 yuan range was completed last year, helping Leapmotor solidify its market position. This year, the B-series will further explore the 60,000 to 100,000 yuan range for incremental growth. The A-series and D-series will be launched in 2026, ultimately forming a complete product line covering the mainstream price range of 60,000 to 300,000 yuan to meet the needs of different consumer levels.

According to internal planning, Leapmotor will launch its third B-series new car at the Munich Auto Show this year. Next year will be a big year for Leapmotor, with five to six new models, including flagship SUVs and MPVs from the A-series and D-series.

Securing Victory

On the path to a positive cycle, Zhu Jiangming seems to have won his bet, and behind this gamble is his clear understanding of capabilities, resources, and circumstances.

Zhu Jiangming, who is well-versed in the laws of technological iteration, believes that "electric vehicles are essentially electronic products, and their iteration and price reduction will definitely be much faster than traditional fuel vehicles. Two years is the update cycle for smart electric vehicles."

In his view, in the current market environment of declining consumer prices, cost-effectiveness will increasingly become the preference for consumers. "Some users who are used to buying Chanel may occasionally buy Uniqlo and might also consider Leapmotor. If they find it no different after using it, they will become loyal fans."

Although Leapmotor's scale is still difficult to compete with BYD and others, by mastering core technologies and controlling pricing power in the supply chain, once the scale begins to rise, it will undoubtedly gain a greater leverage on the profit scale In order to join the "Million Club," Leapmotor still has two trump cards—expanding into lower-tier markets and accelerating overseas expansion.

Zhu Jiangming revealed that Leapmotor aims to expand into third- and fourth-tier cities, where there is still a large amount of untapped demand, which is also a common goal for XPeng, ZEEKR, Nio, and others. While searching for domestic stock, Leapmotor's overseas market layout has been fast-tracked after partnering with automotive giant Stellantis.

Currently, Leapmotor has established about 600 stores in Europe and other regions through partnerships with dealers. Sources close to Leapmotor have disclosed that its overseas channel deployment speed is very fast, especially under the brand endorsement of Stellantis, with global models like the B series expected to quickly open up the market, driving this year's overseas sales beyond expectations.

At the same time, Leapmotor's factory in Malaysia will achieve localized assembly of the C10 by the end of this year, and there are plans for localized production in Europe next year, providing a safeguard for overseas volume amid tariff disputes. Leapmotor's goal is to double its overseas sales next year, reaching 100,000 to 120,000 units.

With the accumulation of experience in global models and support from Stellantis in local market insights, Leapmotor's path to globalization may be faster than most new forces. This is akin to a "dimensionality reduction strike" for other new forces, and it is also one of the core reasons Leapmotor locks in its winning edge in the red ocean market, ultimately achieving significant volume and profitability.

Zhu Jiangming once candidly stated that compared to those global automakers, Leapmotor is only making a little pocket money, "The top ten automakers are making a fortune, while we are just seeing some improvement in volume. Although our profits and gross margins feel good compared to domestic ones, with Leapmotor rapidly entering overseas markets, it is also very beneficial for improving gross margins."

While exporting, Leapmotor is also adding a layer of profit protection by leveraging its identity as a technology supplier.

From an automaker to a tier 1 supplier, Leapmotor's role in the industry has further expanded, and its self-developed technology system has thus entered a return cycle. According to institutional analysts, if Leapmotor can continue to open up a model of licensing electronic architecture to automakers, and if its revenue becomes recurring, its valuation multiple may still have room for further upward movement.

From adhering to a "tech-savvy" foundation with full self-research, focusing on the 150,000 market to become the "Uniqlo of the automotive industry," to sharing technology and overseas markets with Stellantis, Leapmotor's imagination of upgrading to a "quasi-giant" in the automotive circle is rapidly being released.

In the global new energy vehicle market, a new disruptor has emerged