Leapmotor: Full-year profit target lowered to 3 billion yuan, robotics already in planning

After monthly deliveries broke 100,000 units, what does Leapmotor need to think about next:

How to convert sales volume into higher profits?

On August 24, Leapmotor released mid-year results for 2026, and the results were very outstanding. During the reporting period, the company achieved revenue of 38.11 billion yuan, a 57.2% year-on-year increase; net profit attributable to the Company's equity holders was 210 million yuan, marking three consecutive semi-annual profits. However, affected by rising raw material prices, changes in product mix, and other factors, the Company's gross margin in the first half of the year fell to 11.7%, a decrease of 2.4 percentage points compared to the same period last year.

In the earnings call, several pieces of information revealed by Leapmotor management are worth noting: The Company's expected full-year net profit was lowered from approximately 5 billion yuan at the beginning of the year to about 3 billion yuan; the full-year overall gross margin is expected to be 13% to 14%, with a gross margin for vehicle sales of approximately 10% to 11%; the overseas sales target for 2027 is 350,000–400,000 vehicles.

In addition, company executives revealed that the Company has clear plans for the embodied robotics business and will officially release related information subsequently.

Significant Sales Breakthrough

In the first half of 2026, Leapmotor deliveries reached 356,487 vehicles, a 60.8% year-on-year increase, ranking first in sales among new EV brands in China. After entering the second half of the year, the growth momentum accelerated further: July monthly deliveries were 101,267 vehicles, a 102% year-on-year increase, exceeding 100,000 units for the first time.

Leapmotor has currently completed its layout of the A, B, C, and D four-series product matrix, covering the mainstream price range of 60,000 yuan to 300,000 yuan. The A series undertakes volume sales tasks, the B and C series form the core sales base, and the D series undertakes brand premiuming and profit improvement functions.

Among them, the A10 went on the market and achieved the roll-off of the 100,000th mass-produced vehicle in 135 days; from May to July 2026, it ranked first in sales of Chinese Brand SUVs for three consecutive months; the D19 quickly broke through monthly sales of 10,000 units after launch, with July deliveries of 10,043 vehicles; C series facelift models exceeded 30,000 vehicles in sales in June, and the cumulative user base of the C series has exceeded 850,000.

From the perspective of product structure, Leapmotor has formed portfolio growth through different price segments and vehicle classes. This model helps reduce the volatility risk of a single vehicle model, and is also beneficial for spreading R&D, manufacturing, channel, and supply chain costs.

However, scale does not necessarily equal profit. Leapmotor's gross margin in the first half of the year fell from 14.1% to 11.7%, mainly due to raw material price fluctuations.

Gross Margin Decline, Full-year Profit Target Lowered

Leapmotor's significant growth in sales and revenue resulted in a decline in gross margin per vehicle.

Specifically, Leapmotor's gross profit in the first half of the year was 4.45 billion yuan, a 29.7% year-on-year increase, but the gross margin fell to 11.7%, a decrease of 2.4 percentage points compared to the same period last year.

Of course, the reason for the decline in gross margin per vehicle lies in raw material fluctuations.

At the same time, in terms of the full-year outlook, Leapmotor's expectations have been adjusted downwards. Management stated that achieving the full-year net profit target of approximately 5 billion yuan formulated at the beginning of the year will be difficult, and the current expected full-year net profit is about 3 billion yuan, with an overall gross margin expected to be 13%–14% and a vehicle sales gross margin of approximately 10%–11%.

Management judges that major raw material prices in the second half of the year, especially lithium carbonate prices, are expected to remain relatively stable; as sales increase, material procurement, manufacturing expenses, and fixed cost amortization will be further optimized, thereby promoting sequential gross margin improvements.

Going Overseas Prioritizes "Grabbing Share" Over Profit in Short Term

The overseas business is the segment with denser information released at this earnings meeting.

Data shows overseas growth is quite outstanding. In the first half of 2026, Leapmotor's exports reached 96,294 vehicles, a 372.6% year-on-year increase, accounting for 27% of total sales in the first half of the year. Cumulative exports from January to July 2026 were 113,863 vehicles, completing 75.9% of the annual challenge target. The Company expects full-year overseas sales to reach 200,000 vehicles.

For next year, Leapmotor management is also very optimistic, giving a sales expectation of 350,000–400,000 vehicles, with the target nearly doubling the estimated completion volume for 2026. In terms of regional structure, Europe will still be the largest market, while the share of markets such as South America, Southeast Asia, and Australia will further increase.

However, overseas sales growth and overseas profitability are not fully synchronized.

Management stated that this is because during the initial stage of the cooperation, the gross margin level for Leapmotor selling vehicles to Leapmotor International was agreed to be low, and the priority goal for the first three years was to rapidly expand the market and increase sales. Currently, Leapmotor International achieved profitability in 2025, but experienced a slight loss in the first half of 2026 due to operational factors; the Company expects to make up for losses in the second half of the year through operational adjustments to achieve stable annual profitability.

Leapmotor's overseas strategy remains "scale first, profit later".

For Leapmotor, Stellantis provides three important supports:

First, local channel resources, helping Leapmotor quickly enter Europe, South America, and other markets;

Second, manufacturing capability, reducing capital expenditure and time costs for building overseas local factories;

Third, supply chain and logistics resources, which are beneficial for alleviating ocean freight and local parts procurement pressure.

However, local production does not naturally mean a significant increase in profit margins. Management admitted that overseas local production can optimize tariff costs, but local parts procurement prices are higher than in China, so there is a need to rebalance between tariff savings and increased procurement costs, therefore the gross margin improvement brought by localization is not as obvious as the market imagines.

Leapmotor is promoting overseas localization production, mainly in Malaysia, Spain, and Brazil.

Regarding the Malaysia project, the C10 has completed SOP and entered the formal mass production stage, and the B10 is planned for mass production and launch in the third quarter of 2026.

Regarding the Spain Zaragoza project, factory supporting renovations have been completed; the B10 is expected to go into production in the third quarter of 2026, the B05 is planned for trial production within the year and formal mass production in 2027, and the supporting battery factory is also expected to start mass production in the third quarter.

Regarding South America, the Company has selected the Goiânia factory in Brazil as the localized assembly base, and the B10 is planned to go into production in the second half of 2027.

From the project progress, it can also be seen that the proportion of local production in the 2027 overseas sales target is not high. Management expects, the main model for overseas local production in 2027 will be the B10, with a production volume of about 50,000 vehicles, which will be flexibly increased subsequently based on policy changes and cooperation refinement progress.

Leapmotor has proved that it can sell cars well and has gained recognition in both domestic and overseas markets. Next, the Company needs to answer: while overseas sales grow rapidly, can it truly convert scale into stable and sustainable profits.