Leapmotor boldly enters the luxury car market

Author | Chai Xuchen

Editor | Wang Xiaojun

The Pudong Art Museum under the Oriental Pearl has long been synonymous with trends, fashion, and street culture, and is one of Shanghai's most important business districts. It has now become the showcase for "the Uniqlo of the automotive world," Leapmotor.

On the evening of October 16, Leapmotor's first model in the D series, the D19, appeared alongside spokesperson Fei Xiang by the Huangpu River, an area previously dominated by limited edition Mercedes-Benz G-Class, Lincoln, and Jaguar Land Rover vehicles. At this technology launch event, where the final price was not disclosed, Leapmotor showcased all the technology and top-tier hardware accumulated over the past decade.

Chairman Zhu Jiangming positioned the D19 alongside premium new energy products like the ZunJie S800, ZEEKR 001FR, and Tesla Model S, proclaiming the slogan "to be the flagship among flagships."

As a flagship model, the D19 first establishes its stance through its dimensions. With a length exceeding 5.2 meters, a width close to 2 meters, and a wheelbase over 3.1 meters, it is a standard large SUV. The exterior features the "big wheel hub" of the Maybach S-Class, flat windows, and a two-tone body, which are also common in high-end luxury cars.

In terms of intelligence, the D19 is equipped with two of Qualcomm's latest Snapdragon 8797 flagship chips, with a computing power of up to 640 TOPS. For driving control, the D19 includes air suspension and Bosch's One-box line control braking system, utilizing CTC 2.0 battery integration technology. Additionally, in other configurations and interiors, this car is also filled with "big brand" suppliers.

It seems that Leapmotor is also aiming to enter the luxury car market for a share of the pie.

However, in a post-event interview, Zhu Jiangming emphasized to Wall Street Journal that the D series, like other series, "sets prices based on costs."

According to previous market news, the price of the D19 is positioned between 250,000 to 300,000 yuan, less than one-third of its competitors. Zhu Jiangming firmly used Ermenegildo Zegna and Uniqlo as examples, clearly stating the abandonment of premium pricing, instead leveraging efficiency and platformization to boost profit margins through large sales volumes.

Over the past three years, Leapmotor's C series and B series have relied on this strategy to become the current leader among new forces, maintaining the top spot in new force sales for seven consecutive months. However, Zhu Jiangming soberly stated, "Nio, Li Auto, Nezha, and WM Motor have all been the leading figures." A momentary lead is normal; the automotive industry is a long marathon, and it is still unknown who can reach the finish line.

Clearly, Leapmotor is not satisfied with this alone; it is beginning to attempt to build its own brand system, completing all segments as an automotive giant—using the D series to capture a share of the massive price range of 200,000 to 300,000 yuan.

Zhu Jiangming hopes to prove through the D series that he has the capability to enter higher-end price ranges and can compete directly with mainstream brands like Li Auto and Aito in product experience.

While the D series is moving upward, Leapmotor will also launch the all-new Lafa5 next month, targeting the youth market at around 100,000 yuan. Leapmotor is simultaneously extending upward and downward from the B and C series. Next year, Leapmotor will introduce 2-3 products in the D series and 2 products in the A series Series A, B, C, and D will all be launched, covering a complete price range from 60,000 to 300,000 yuan.

After reaching the first milestone of one million units, this challenger is rapidly heading towards the next million mark. Perhaps a new giant, a new disruptor is quietly emerging. However, under the current intense elimination competition, Leapmotor's burden is heavier than ever; it must steady the helm to reach the shores of the final destination.

The following is a transcript of the conversation with Leapmotor Chairman Zhu Jiangming, Senior Vice President Cao Li, and Vice President Zhou Ying:

Q: How will the brand positioning of Leapmotor change after the launch of the D platform? How will you continue to maintain growth momentum?

Zhu Jiangming: With the launch of the D series, the brand positioning still adheres to "good but not expensive." It does not mean that the D series will pursue high profits or be a luxury brand; that is not the intention. But it is a high-end product, the flagship of the flagship, with unique features and superior configurations. We must be technically advanced, with leading configurations and performance, and aim to make the D series a benchmark in the industry. The product is luxurious, but the price is not; the D series, like other series, is priced based on its cost.

Looking ahead to the fourth quarter, Leapmotor is relatively optimistic; the goal of 500,000 units for the whole year will definitely be achieved ahead of schedule. In addition to the highly competitive B series that has already been released, as well as the Lafa5 and C series products, next year we will launch 2-3 products from the D series, which was released last night, and 2 products from the A series. The year 2026 will be the largest year for Leapmotor's entire product line, and I believe the overall sales growth of Leapmotor is foreseeable.

Q: When discussing the D series yesterday, you mentioned using many top suppliers. How does Leapmotor ensure the cost price of vehicles?

Zhu Jiangming: We have made many innovations to achieve an excellent cost structure. For example, we developed an integrated electric drive and generator system in collaboration with ZF, where one motor acts as both a generator and an electric motor, achieving a weight reduction of several dozen kilograms and saving several thousand yuan. There are many such examples; we achieve a good cost structure through these technological innovations without sacrificing performance and functionality.

Q: How does it feel to be the leader now?

Zhu Jiangming: I would like to borrow a quote from Ren Zhengfei: "Always overlook success and see only problems and difficulties." Because we do not yet have that qualification; the ones who have been the leading figures are Nio, Li Auto, and Xpeng. Temporary leadership is normal; the automotive industry is a long marathon, and no one knows who can reach the finish line, so we can only keep working hard to change our shortcomings and promote our strengths to reach the finish line.

Cao Li: Leapmotor has always been very pragmatic and low-key. Our goal is to become a world-class new energy vehicle company; whether we are the leader will depend on the long term.

Q: Leapmotor has long been known for its frugal "engineering man" image. What is the reason for breaking the norm and hiring a spokesperson this time?

Cao Li: Being frugal does not conflict with hiring a spokesperson. Although we are frugal, we also need to improve the efficiency of our marketing communication. Therefore, hiring a spokesperson at this stage, especially for the promotion of the D series, can resonate with many users. The alignment of excellent artists and celebrities with Leapmotor's spirit can better spread Leapmotor's car-making philosophy, which is actually a more efficient approach Question: Please discuss the key to D19's success from the perspectives of strategy, product, and marketing.

Zhu Jiangming: Leapmotor does not differentiate between luxury and non-luxury; rather, our configurations and product sizes vary. Of course, our models in the 90,000 range aim to match all configurations, handling, performance, quality, and design of current vehicles in that price range, hoping to become the best.

Question: In ten years, reaching 1 million units, what share will the D series occupy among the new 100,000 units?

Zhu Jiangming: The reason we can achieve this sales figure is still due to technological innovation, comprehensive self-research, and self-manufacturing. Our technical foundation is solid, and it is precisely because of this technical foundation that the entire D series platform's technical capabilities can enter the next stage and produce better products.

Achieving success with the D series is not that difficult; it relies on the D19 and future models, and whether they have the product strength to satisfy consumers and encourage them to make purchases. Leapmotor's strategy is to leverage technical capabilities to create good products, followed by a relatively reasonable pricing strategy.

Question: The competition in the 90 series is indeed very fierce, with the Galaxy M9 already priced at 170,000-180,000. Will the D19 be priced around 200,000?

Cao Li: This is actually an irrational statement. If the cost is close to 300,000 and still sells for 180,000, that would be unreasonable. The cost of all high-end configurations in the D series will definitely not be low. We are confident that under the same configurations, our pricing will definitely be the most advantageous, which is Leapmotor's consistent pricing strategy for products, so it cannot be simply said that we can compare any car with the lowest price.

Question: Now that we are at 80-degree large batteries, integrating a large battery into the range extender should be quite a challenge, right?

Cao Li: We want users to use electricity as much as possible because the experience and economy of using electricity are the best. On this basis, if I need to solve the occasional trips back home or long-distance travel once or twice a year, I need to address the issues of not having to queue for charging or anxiety, so we have a small fuel tank as a backup.

There are definitely many technical difficulties involved because the range extender itself will have an engine range extender system, as well as a fuel tank and pipelines, which will occupy a lot of layout space. Therefore, based on this, we have made many innovations, applying our original CTC for the first time in range extender models, allowing it to have no battery cover, increasing integration, and fitting over 80 degrees of electricity in that space. Coupled with our cooperation with CATL, utilizing their efficient battery cells.

This series of integrations can achieve very good and extreme balance in energy density, layout space, vehicle body strength, and weight.

Question: Is Leapmotor's market value currently underestimated?

Zhu Jiangming: The market pricing certainly has its rationality, and we will not deliberately maintain the stock price.

Question: Will there be plans for improvement in profit margins, especially regarding profitability in the future?

Zhu Jiangming: Speaking of profitability, I will use clothing as an example. I am wearing Ermenegildo Zegna, which had a net profit of about 750 million RMB last year, while Uniqlo had 17.6 billion RMB The gross profit margin for high-end brands is very high because their costs may only be 20-30% at most. For example, a suit from Ermenegildo Zegna is expensive, but its rent is also high, as it needs to be placed in the best malls and stores in every top city, leading to high operating costs and low sales volume, which is also one of its issues.

Leapmotor has always insisted on making mass-market products and pursuing not very high gross margins; we rely on scale. In the first half of this year, we barely crossed the breakeven point because our R&D investment has significantly increased compared to last year, in order to ensure technological advancement and the number of vehicles launched in the market.

After crossing this breakeven point, we are confident that Leapmotor will be profitable in the second half of this year. If our sales volume further grows significantly next year, the overall R&D cost will not continue to grow exponentially; there may be some increase, but the growth rate of expenses will be lower than the growth rate of gross profit. Therefore, as Leapmotor's scale continues to expand, I believe that future profitability is definitely promising.

Q: Many brands are launching products with large batteries; how can we stand out?

Zhu Jiangming: Range-extended models will definitely not have a large number in the future and may not grow quickly. Only those who are not short on money and are willing to spend an extra 10,000 yuan to buy an engine plus a range extender will consider it, as they want to ensure a worry-free trip home during the Spring Festival without queuing for charging. They also need to meet the requirements of pure electric mode in their daily lives. Therefore, we judge that future range-extended models must have large batteries.

I have also used the C16 range-extended vehicle for a while, which has a range of 280 kilometers, but in reality, it is about 200 kilometers after a 30% reduction. If you live in Shanghai or Beijing, it means you have to plug in a charging cable every day when you get home, and unplug it the next morning before going to work, which is very inconvenient for them.

Therefore, we believe that range-extended vehicles must improve their pure electric range to achieve charging once a week or at most twice, which would provide users with great convenience. This scenario is the direction for future range-extended vehicles.

Q: Are there any corresponding plans for high-end channel expansion?

Cao Li: The D series does not require channel penetration and will choose the largest target market, focusing on excellent stores that can support the market, such as cities like Beijing, Shanghai, Guangzhou, and Shenzhen, as well as potential first- and second-tier cities.

Q: The product rhythm is something everyone is concerned about; can you share any details?

Cao Li: In December, there will be a large-scale event for our tenth anniversary, where General Zhu will talk about our ten years of development history and brand philosophy, as well as what kind of development strategy we will have in the next ten years, including more product and technology unveilings. Additionally, the Lafa5 will soon have further pre-sale and release information.

Q: What is the opportunity for the D19 release?

Cao Li: The debut of the D19 is not a gift for Leapmotor's tenth anniversary, but rather that our technology, product strength, and user demand have reached a suitable point. Moreover, we will not limit ourselves to only the D series for high-end branding; in the future, we will also achieve the highest level of technology, the best materials, and the best partners in the A, B, C, and D series Question: How does Leapmotor think about balancing suppliers and self-developed technology?

Zhu Jiangming: Because companies like Bosch and ZF have been working on chassis control for many years, especially with this generation based on Onebox, based on REPS, and based on the chassis technology from traditional fuel vehicles, they have indeed done an excellent job. If we were to do it ourselves, could we? Yes, we could, but the input-output ratio is not that high, and it takes a long time since it is a safety-critical component.

For these key core components related to safety and reliability, we still choose to use the best available. Apart from that, we focus on self-research and self-manufacturing. As you can see, Leapmotor has produced its own components, and we aim to achieve a quality level that matches the best in the industry before we apply them.

At the same time, we will increasingly expand into high-value-added components that we were not originally good at. For example, this year we have started mass production of air conditioning compressors, as the quality of automotive air conditioning compressors varies significantly, and they have a relatively high failure rate. This year, we achieved mass production ourselves. In fact, our own compressors have a defect rate far lower than that of the original suppliers.

So in the future, Leapmotor will continue to expand self-research and self-manufacturing into some high-value-added core components. This year, we also started mass production of seats, and the monthly production of seats has reached 20,000 to 30,000 units, partially replacing suppliers. This is a gradual process.

Question: What is the current situation of Leapmotor's production capacity domestically and internationally?

Cao Li: Regarding factory capacity, we are currently strictly following our production planning to ensure future sales targets.

As for overseas, we previously announced that we will localize production for the B10 in Europe, and this is progressing smoothly. The D19, being a full-size vehicle, will not have a high volume overseas, so it will not be prioritized for overseas production. If there is demand, we will consider some exports.

Question: What is Leapmotor's strategy for catching up with the first tier of intelligent driving?

Cao Li: Our strategy for intelligent driving is to closely follow the industry. So far, all the technical directions regarding intelligent driving in the industry have become relatively clear, which is why we plan to equip the D series with high-level intelligent driving systems from the first tier next year. We believe that next year will be a breakthrough point for higher-level intelligent driving, and according to our plan, we will surpass and reach the first tier in the first half of next year.

In terms of investment in intelligent driving, we have invested heavily in the past two years, making it the area with the most resource investment in our R&D. Therefore, we will do our best to narrow the gap in intelligent driving levels.

Zhu Jiangming: Leapmotor is not the fastest in many technologies, including 800V high voltage. We should be considered the latest to start, but to date, Leapmotor has the highest number of vehicles equipped with 800V high voltage. All of our C series models, C11, C10, and C16, have fully adopted 800V silicon carbide fast charging.

Because of Leapmotor's systematic capabilities and our fully self-research capabilities, once a certain technology matures, it will be quickly applied and integrated. The intelligent driving industry has gone through many phases, from high-precision maps to no maps, to end-to-end, to one-piece end-to-end, to the so-called VLA large model, with a new concept or direction emerging every six months Question: Some players believe that VLA is not necessary, as it requires a large amount of computing resources and is very costly. How does Leapmotor think about this?

Zhu Jiangming: Whether it is VA or VLA depends more on the present or the future. From the current stage, although using VLA provides greater computing power, is there a significant difference in achieving overall intelligent driving effects compared to VA? Not really. However, as technology matures and continues to develop in the future, reserving more computing resources will definitely be beneficial for future product upgrades.

Question: Why did Qualcomm launch the 8797 on D19?

Zhu Jiangming: It is more about continuity. The original 8295 could do both cockpit and ADAS, and Leapmotor has achieved that. From that time to 8650 and then to 8797, the continuity of our entire technical platform tools is a major reason.

The second reason is the choice of Qualcomm, as Qualcomm is still the leader in cockpit chips, and we believe that the integration of cockpit and driving is also an important direction for the future. Therefore, we think that pursuing this path is a good choice. Of course, with the increasing number of advanced intelligent driving technologies, the cockpit and driving may be separated, but for some mid-range configured products, using a single chip for cockpit and driving integration is also a significant trend. Based on these two reasons, we are currently developing on the entire Qualcomm series.

Question: D19 also adopts central domain control technology. What kind of disruptive changes will this technology bring to the vehicle's user experience in the future?

Zhu Jiangming: Central domain control is also an important direction for the future. We believe that in the future, there will be two parts: one is that the entire energy chain system will become more integrated and highly integrated, and the entire chassis may also move towards single-chip centralized control, developing in the direction of large integration.

On top of that, with the cockpit and intelligent driving central domain control model, after Leapmotor took the lead, many competitors have also started to move in this direction. We can see many similar things at various press conferences, which can shorten your wiring harness and increase your integration. Increasing integration is definitely a direction. Just like our smartphones, the number of chips is decreasing, integration is increasing, power consumption is decreasing, and performance is increasing. This is a significant direction for intelligent vehicles in the future