Leapmotor Semi-Annual Report: After Breaking Through Scale, How to Move Towards a New Stage of Quality Profitability?

On August 24, Leapmotor released its 2026 semi-annual financial report.

The financial report shows that in the first half of 2026, Leapmotor achieved operating revenue of 38.11 billion yuan, a 57.2% year-on-year increase; net profit of 210 million yuan, compared to 30 million yuan in the same period last year, achieving semi-annual profitability consecutively; total vehicle deliveries exceeded 356,000 units, a 60.8% year-on-year increase, ranking first among new forces; gross margin was 11.7%, a decrease of 2.4 percentage points compared to the same period, of which the gross margin in the second quarter of 2026 was 12.6%.

Aside from the decline in gross margin, Leapmotor's other core financial indicators were excellent, moving in two directions opposite to XPeng's report released on the same day. The report shows that XPeng's operating revenue in the first half of 2026 was 32.78 billion yuan, a 3.8% year-on-year decline; net loss expanded significantly to 3.12 billion yuan, compared to a net loss of 1.14 billion yuan in the same period; total vehicle deliveries were approximately 166,000 units, a 15.8% year-on-year decline; however, gross margin increased to 20.6%, an increase of 4.1 percentage points compared to the same period last year.

Comparing the financial data of these two top new forces, the differences in Leapmotor and XPeng's corporate underlying routes are obvious. The former prioritizes scale, using higher sales to dilute costs, "forcing out" positive profit, at the cost of pressure and decline in gross margin; XPeng sticks to the high-end intelligent route, with high per-vehicle gross margin, but sacrifices sales scale in the short term, with huge R&D investment, still in the cash-burning phase, and not yet profitable.

It is difficult to judge which carmaker is better based on a single financial report. What is commendable is that as the current top new forces, both Leapmotor and XPeng have their own survival logic for winning the market. Regarding XPeng's financial report analysis, an article was pushed yesterday (《Automotive revenue 19.7 billion, robot financing hits domestic new high, is XPeng diversifying?）. Interested parties can check it out, so I won't elaborate further.

Today's article focuses on Leapmotor behind the financial report—a new force that relies on scale for profitability but may be constrained by scale.

Scale Profitability Target of Every New Force Automaker

New forces that were once criticized for "burning money" now have fewer losing companies in the top ranks. Li Auto achieved quarterly profitability for the first time in Q1 2023, Leapmotor in Q2 2025, while XPeng and Nio also achieved profitability in Q4 last year.

Behind profitability, the core is the increase in delivery volume, i.e., scale expansion. Last year, Nio benefited from the hot sales of ES8 and Firefly models, as well as the sales boost from the Onvo brand, bringing the normally loss-making Nio to a profitable moment. XPeng CEO He Xiaopeng once stated that selling cars at scale is a key point in auto market competition, and scale with profit is XPeng's goal for 2026.

When it comes to expanding scale, Leapmotor currently does the best among new forces. In the first half of this year, Leapmotor's global deliveries reached 356,487 units, a 60.8% year-on-year increase, ranking as the sales champion among new forces, even exceeding some past strong joint venture carmakers, such as GAC Toyota (341,100 units). In July, Leapmotor delivered 101,000 units, becoming the first domestic new force to break 100,000 units in a single month.

In the overseas market, Leapmotor's scale is also far superior to other new forces. In the first half of the year, Leapmotor exported 96,000 units, a 372.6% year-on-year increase, exceeding the total export volume of the entire year of 2025, accounting for 27% of total sales, while XPeng's overseas export sales were only 31,600 units. Leapmotor CFO Li Tengfei predicts that the total overseas sales for the year could reach 200,000 units.

As a "latecomer" among new forces, Leapmotor is able to overtake the rest and secure the "scale" advantage first. Leapmotor's choice is worth pondering. Compared to the early high-profile, high-burning, high-end strategy of WeXPengLi, Leapmotor has carved out a differentiated route—full-domain in-house R&D to reduce costs, focusing on high cost-effectiveness, winning by scale, avoiding head-on combat.

Scale cannot do without cost reduction and efficiency improvement. Many carmakers make cost reduction and efficiency improvement slogans, but no one has seen Leapmotor with the company up and down all anchored on this thing. In March this year, Leapmotor launched A10. The top trim is less than 100,000 yuan but equipped with LiDAR and 8295 chip, Leapmotor turns the impossible into the possible. Leapmotor A product line head Jiang Feng revealed that the answer behind this lies in every part costing money, the collapse of throwing clay models back to drawing board.

Leapmotor has many products like A10 that "shake the table" upon launch, offering the same configuration at a lower price, while still having profit. It has to be said, this is a skill, with courage behind the choices. Cost control is usually the strength of traditional carmakers. Technically speaking, to make a high cost-performance product, Leapmotor can, they should also be able to.

But the problem lies in whether to dare. "I often say we put two-thirds of our feet on the cliff edge, I have the confidence, I have the courage, I dare to put myself in a desperate situation and be reborn. But not all companies dare to follow me, they have the ability, but they don't have the courage. We have thousands of people up and down, with a resolution to die hard. This is also a Leapmotor competitive advantage." Leapmotor Senior Vice President Xu Jun said as such.

Not only daring to make bold changes in products, but also having such courage in channels. Now that Leapmotor is selling well overseas, when they announced cooperation with Stellantis at first, it was full of controversy. At that time, domestic and overseas exports were popular, export methods were not clear, Leapmotor immediately announced adopting the "borrowing a ship to sail" model, investing technology and products, and establishing a Leapmotor International joint venture company overseas controlled by the partner, handing over sales and manufacturing rights in markets outside Greater China to the joint venture company to handle.

Looking back at this controversial choice today, it has already borne fruit. Relying on Stellantis's long-established dealer resources, Leapmotor skipped the time-consuming and money-consuming overseas store expansion cycle, and only took two years to quickly open up the European market. Overseas sales have seen explosive growth, becoming a dark horse in new force overseas expansion.

Being able to win on scale in the short term depends on Leapmotor's step-by-step planning and timely choices behind the scenes. At least this ensured Leapmotor's survival during the key elimination competition period in the market. As for how to live better, this is the issue Leapmotor needs to consider next.

From Scale to Quality

If net profit determines whether a carmaker can survive, then gross margin determines whether a carmaker can live well.

Li Auto CEO Li Xiang once stated that the threshold for the healthy operation of intelligent electric vehicle enterprises is a gross margin of 20%. Behind XPeng achieving the 20% threshold gross margin, a string of numbers in the financial report attracts attention, which is that their service and other income reached 4.73 billion yuan, a 67.1% year-on-year increase. The most important part is VW's intelligent driving technology licensing income.

High gross margin means earning money more comfortably, the enterprise can live better. For Leapmotor, in order to improve gross margin in the future and achieve sufficient profitability, there are still some challenges.

Firstly, the depth of the core technology moat is not enough. Leapmotor has always focused on full-domain in-house R&D to achieve systematic cost reduction through technology self-research, but the current self-research capability mainly serves to reduce costs and increase volume, and may still need to be supplemented in terms of forward-looking technology reserves for the future. Whether it is XPeng's intelligent driving or Toyota's hybrid technology, it illustrates one point: technology is king remains the core guideline of the automotive industry, and is also the driving force for scale expansion and monetization.

Leapmotor clearly knows this well, and recent technical promotion actions are accelerating. On one hand, promote the robotics industry layout. Business information shows that Leapmotor's subsidiary Zhejiang LingSheng Power Technology wholly established Huzhou LingSheng Precision Manufacturing Co., Ltd. in July, with a registered capital of 210 million yuan. The business scope covers industrial robot manufacturing and intelligent robot R&D. Li Tengfei stated: "New energy vehicle enterprises, especially new energy vehicle enterprises with full-domain in-house R&D capabilities, are one of the most capable enterprises to do embodied robots. Leapmotor has its own planning, and in the near future, everyone will receive our formal announcement about specific information on Leapmotor robots."

On the other hand, it is understood that Leapmotor will hold its annual technology launch conference on September 16, releasing its new architecture's assisted driving solutions and latest achievements in the three-electric field. Li Tengfei stated: "Intelligent driving products under the new architecture have a 'huge, leapfrog improvement' compared to existing products."

New expansion and new achievements in technology development fields mean that Leapmotor may significantly increase R&D investment in the future, which might compress gross margin space in the short term. In the first half of the year, Leapmotor's R&D investment was 2.32 billion yuan, less than half of XPeng's 5.82 billion yuan R&D expenditure. Whether Leapmotor can replicate the high efficiency-output ratio of automobiles on robots is still unknown.

Secondly, overseas export channels are constrained by others, and profit earnings have been conceded. As a key development market for future domestic carmakers, Leapmotor currently relies on Stellantis's overseas sales channels, and must give up half of the profit, with potential hazards in long-term globalization development.

In response to this, Leapmotor is implementing localization production in phases. Relying on Stellantis Group factory resources, the Zaragoza factory B10 in Spain will be put into production in the third quarter, and the C10 in Gurun, Malaysia has already mass-produced. Li Tengfei stated that localization can optimize tariff costs, but local parts procurement costs are higher than in China. After offsetting both, the gross margin improvement is limited, and net profit improvement is mainly reflected in the medium to long term.

Finally, the high-endization dividend has not yet been significantly realized, and the cost-performance ratio mindset may constrain brand upward movement. Although Leapmotor has already launched higher-priced D series models to attack the 220,000-320,000 yuan price band, the long-term market impression of focusing on extreme cost-effectiveness and cost priority has taken deep root. This stereotypical cognition may become resistance on the road of subsequent brand breakthrough.

From the perspective of product delivery structure, D19 started deliveries in mid-April, and D99 was launched until the end of June. The delivery volume of high-end D series in the first half of the year was limited. Even when D19 sales exceeded 10,000 for the first time in July, in the global delivery volume of 101,000 units in that month, the D series share was still less than 10%, and the sales base still firmly relies on the A, B, C three affordable product lines in the 60,000-180,000 yuan price range to bottom out.

In summary, Leapmotor achieved semi-annual profitability again, with losses and gains in the process. How to balance scale and profit quality in the future is Leapmotor's next proposition. As a "latecomer" among new forces, moving from catching up with the top with cost advantages to the need to transform towards profit quality. The weapon for survival in the past has now become a constraint that needs to be weighed on the road of transformation.

Scale and premium, high volume and high-end, short-term profitability and long-term technology investment, several difficult problems are before our eyes. And this time, Leapmotor needs to provide its own answer first.