Leapmotor 2026 Interim Results Conference Call
[AI Key Takeaways]
Financial Performance
- Net profit for the first half of 2026 was RMB 210 million, marking consecutive semi-annual profits
- Revenue reached RMB 38.11 billion, up 57.2% year-on-year from the same period in 2025
- Gross margin stood at 11.7%, down 2.4 percentage points year-on-year from 2025, primarily due to rising raw material costs
- Cash and cash equivalents totaled RMB 38.59 billion
Business Progress
- Total vehicle deliveries in the first half of 2026 amounted to 356,487 units, a 60.8% year-on-year increase, ranking first among Chinese new-energy vehicle brands
- July sales reached 101,267 units, up 102% year-on-year, making it the first new-energy vehicle brand to surpass 100,000 monthly deliveries
- Export volume was 96,294 units, up 372.6% year-on-year, accounting for 27% of total sales in the first half
- Completed the layout of the ABCD product matrix across all price segments, achieving comprehensive coverage of the mainstream price range from RMB 60,000 to RMB 300,000
Next Quarter Guidance
- Expected annual net profit is approximately RMB 30 billion, falling short of the initial target of RMB 50 billion set at the beginning of the year
- Full-year gross margin is projected to be around 13-14%, with vehicle gross margin at approximately 10-11%
- Overseas sales are expected to exceed 150,000 units for the full year, with potential to challenge the 200,000-unit target
- Next year's overseas sales target is 350,000-400,000 units, aiming to reach the 400,000-unit level
opportunity
- The overseas market has become a key second growth curve, with next year's overseas sales target set at 350,000-400,000 units
- A new architecture for advanced driver-assistance systems (ADAS) will be launched in September, featuring major technological releases in intelligent driving and battery-electric powertrains
- Deepened cooperation with Stellantis Group, with progress made in R&D services and localized production
- Localized assembly projects are advancing in Malaysia, Spain, Brazil, and other regions to reduce costs and improve efficiency
Risks
- Rising raw material costs are impacting gross margins, driven by fluctuations in bulk commodity prices
- The new energy vehicle (NEV) market is fiercely competitive, requiring continuous product innovation to maintain competitiveness.
- The EU has raised local procurement requirements for Chinese automakers, necessitating adaptation to these policy changes.
[AI Conference Transcript]
Operator
Thank you all for joining this meeting. We are about to begin; please hold on a moment.
Host
Hello everyone, and welcome to Leapmotor's 2026 interim results conference call. Representing management on today's call are Mr. Li Tengfei, CFO of Leapmotor; Mr. Wu Qiang, Co-President of Leapmotor; and Mr. Shen Ke, Board Secretary. To start, I would like to invite Mr. Shen Ke, the Board Secretary, to read the disclaimer.
Shen Ke
Thank you, moderator. Good evening, investors. I am Shen Ke, Board Secretary of Leapmotor. I will now read the disclaimer for this earnings conference call.
This earnings conference call may contain certain forward-looking statements, including but not limited to statements regarding the Company's future financial position, strategic objectives and targets, and the development of future markets in which the Company participates or intends to participate. These forward-looking statements are based on the Company's current and future business development strategies and its assumptions regarding the future business environment.
These statements inevitably involve known and unknown risks and uncertainties. Factors beyond the Company's knowledge and control may cause actual results, both for the Company and its industry, to differ materially from those expressed or implied by such forward-looking statements.
Therefore, we caution participants not to place undue reliance on the forward-looking statements discussed in this call. These statements reflect the views of the Company's management only as of the date of this conference call. The Company assumes no obligation to update or revise any statements made during this call in light of new information, future events, or other circumstances.
The forward-looking events discussed in this call may also fail to materialize due to various uncertainties and assumptions. The above disclaimer applies to all forward-looking statements mentioned in this conference call.
Furthermore, shareholders and potential investors are reminded that nothing contained in this conference call constitutes investment advice, nor does it form the basis for any contractual commitment or investment decision. Shareholders and potential investors are advised to exercise rational judgment and prudence when trading the Company's shares.
Moderator, we would now like to invite Mr. Li Tengfei to share an overview of the Company's performance for the first half of 2026.
Li Tengfei
Thank you, Moderator. Dear friends, I am Li Tengfei from Leapmotor. I will now present an overview of Leapmotor's overall performance for the first half of the year.
First, regarding operational highlights: In the first half of 2026, the Company reported a net profit of RMB 210 million, marking consecutive half-yearly profitability. Total vehicle deliveries reached 356,487 units, representing a 60.8% increase from 221,664 units in the same period of 2025, ranking first among new energy vehicle (NEV) startups in China by sales volume.
In July 2026, the Company's sales hit a new record high of 101,267 units, up 102% year-on-year. This marks the first time monthly deliveries have exceeded 100,000 units, making us the first NEV startup brand in China to achieve this milestone. Among the top five brands with published data for the first five months of this year, Leapmotor ranked fourth globally among new energy passenger vehicle brands based on comparable end-user registration numbers.
In the first half of 2026, the Company's export volume reached 96,294 units, a year-on-year increase of 372.6%, surpassing the total export volume for the entire year of 2025 and accounting for 27% of total sales in the first half of 2026. Exports in July 2026 totaled 17,569 units, establishing overseas markets as a significant second growth curve for the Company.
Leapmotor's cumulative global deliveries have surpassed 1.6 million units. Since its launch in April, the D19 model has seen sustained sales growth, with average monthly sales exceeding 7,000 units. Sales of the D19 exceeded 10,000 units in July 2026, ranking first in sales among large SUVs priced under RMB 400,000.
From a financial perspective, revenue for the six months ended June 30, 2026, was RMB 38.11 billion, an increase of 57.2% compared to RMB 24.25 billion in the same period of 2025. This change was primarily driven by an increase in the delivery volume of complete vehicles and spare parts.
The gross margin for the six months ended June 30, 2026, was 11.7%, a decrease of 2.4 percentage points from 14.1% in the same period of 2025, mainly due to rising raw material costs and changes in the vehicle product mix. The gross margin for the second quarter of 2026 was 12.6%, an improvement of 3.2 percentage points compared to the first quarter of 2026.
For the six months ended June 30, 2026, the net profit attributable to shareholders of the Company was RMB 210 million, compared with RMB 30 million for the same period in 2025. Excluding share-based payments recorded as part of employee benefit expenses, the adjusted net profit for the six months ended June 30, 2026, was RMB 270 million, compared with RMB 330 million for the same period in 2025.
Net cash generated from operating activities for the six months ended June 30, 2026, was RMB 2.17 billion, compared with RMB 2.86 billion for the same period in 2025. Free cash flow for the six months ended June 30, 2026, was RMB 140 million, compared with RMB 860 million for the same period in 2025.
The Company maintains ample liquidity. As of June 30, 2026, the balance of cash and cash equivalents, restricted cash, financial assets at fair value through profit or loss, and bank time deposits stood at RMB 38.59 billion.
In terms of sales volume, the Company's vehicle deliveries in the first half of 2026 amounted to 356,487 units, representing a 60.8% increase from 221,664 units in the same period of 2025. Among the top five brands based on comparable terminal registration data released for the first five months of this year, Leapmotor ranked fourth globally among new energy passenger vehicle brands.
The Company's sales reached a new high in July 2026, totaling 101,267 units, a year-on-year increase of 102%. This marked the first time monthly deliveries exceeded the 100,000-unit threshold, making it the first emerging EV brand in China to achieve this milestone. By the end of July 2026, Leapmotor's cumulative global deliveries had surpassed 1.6 million units.
In the first half of 2026, the Company's export volume reached 96,294 units, a year-on-year increase of 372.6%, exceeding the total export volume for the entire year of 2025 and accounting for 27% of total sales in the first half of 2026. Export volume in July 2026 was 17,569 units. Cumulative exports from January to July 2026 totaled 113,863 units, establishing overseas markets as a significant second growth curve for the Company.
Since the fourth quarter of 2024, the Company's cumulative export volume has reached approximately 200,000 units.
Regarding product strategy, by the end of the first half of 2026, the Company had completed its full-price-range layout across the A, B, C, and D product matrices, achieving comprehensive coverage of the mainstream price segment from RMB 60,000 to RMB 300,000. Each series ranks among the leaders in its respective sub-segment. This balanced product structure creates a multi-tiered growth dynamic, with synergistic volume increases across all series providing solid support for the Company's sustained and steady sales growth.
On March 26, 2026, the Leapmotor A10 was officially launched, bringing LiDAR and parking-space-to-parking-space navigation assistance into the sub-RMB 100,000 price range for the first time. Positioned as a global model for intelligent, premium, long-range SUVs, the A10 embodies the core philosophy of offering high quality at an affordable price and democratizing technology. It features a CLTC range of 505 km, the Qualcomm 8650 autonomous driving chip and 8295 smart cockpit chip, full-scenario intelligent assistance from parking space to parking space, oil-cooled electric drive, and an impressive 88.1% space utilization rate.
It provides comprehensive, no-compromise mobility solutions for mainstream families and quality-conscious users. Leveraging its robust class-leading capabilities, the A10 quickly ignited the market upon launch, with scaled deliveries continuing to rise. On August 7, 2026, the 100,000th mass-produced A10 rolled off the production line, setting a new record for the fastest time to reach 100,000 units for the Leapmotor brand, achieved in just 135 days since its launch.
For three consecutive months from May to July 2026, it retained the top spot in sales among Chinese-brand SUVs, becoming a phenomenal product in the mainstream household pure electric SUV segment. Furthermore, the A10 has received high recognition from authoritative institutions and media, achieving the highest score in Jielan Road's 2026 H1 small SUV recommendation value assessment and ranking first in Chezhinwang's Q2 2026 domestic SUV quality leaderboard.
On April 16, 2026, the D19, the first model built on Leapmotor's flagship D platform, was officially launched. Leveraging a decade of accumulated technical expertise and product advantages tailored for all scenarios, the D19 quickly ignited the market upon release, with both showroom traffic and order volumes soaring. Its genuine popularity confirms its status as the benchmark among top-tier flagships.
During its first full month of deliveries after launch and in June, the D19 topped sales charts for large SUVs priced under RMB 400,000 for two consecutive months. In July, it delivered 10,413 units, officially joining the ranks of models with monthly sales exceeding 10,000 units. In Jiangnan Road's 2026 H1 study on new energy vehicle brand health, the D19 ranked first in the net promoter score (NPS) segment for new cars priced between RMB 200,000 and 300,000, with user recognition in the premium market continuing to climb.
In terms of core technology, the D19 extended-range version is equipped with an ultra-large 80.3 kWh battery dedicated to extended-range systems, achieving a CLTC pure electric range of over 500 km and supporting an 800V high-voltage platform. The pure electric version features a 115 kWh CATL super-hybrid cell pack, delivering a CLTC range of 720 km and supporting a full-stack 800V high-voltage platform.
Regarding intelligence, the D19 is powered by dual Qualcomm 8797 chips, delivering a combined computing power of up to 1280 TOPS. Coupled with a V2V assisted driving large model, it enables a full-scenario intelligent driving experience from parking space to parking space. From aesthetics, comfort, and range to intelligence, handling, and safety, the Leapmotor D19 redefines the value benchmark for full-size flagship SUVs in the RMB 300,000 class with its six-dimensional flagship-level experience.
On April 24, 2026, the Lafa 5 Ultra was officially launched at the Beijing Auto Show. Positioned as the most powerful 'Ultra' model under RMB 150,000, it offers young users an accessible, fully-equipped sports coupe option. The Lafa 5 Ultra achieves comprehensive advancements across four key dimensions: official sports kits, driving performance, build quality and materials, and assisted driving capabilities.
The launch of the Lafa 5 Ultra trim is based on Leapmotor's deep insight into the 'wanting it all' consumption demands of younger demographics. By offering a top-tier trim that maximizes both functional and emotional value, it further fills the gap in the RMB 100,000–150,000 pure electric coupe market. Since its launch in late 2025, the Lafa 5 series has achieved cumulative sales of over 40,000 units, firmly holding the top sales position in the trendy pure electric coupe segment priced between RMB 90,000 and 130,000.
The addition of the Ultra trim will help the Lafa 5 series tackle the young consumer blue ocean market more effectively with a more complete lineup, aiming to create another blockbuster hit.
On June 16, 2026, the all-new Leapmotor C10, C11, and C16 were officially launched, completing an iteration and upgrade of product capabilities. This facelift continues to adhere to a user-centric approach, implementing over 50 significant upgrades in styling, range, intelligence, comfort, and safety. It comprehensively covers the mainstream consumption bracket of RMB 120,000–180,000, providing users with class-leading configurations and experiences.
The three updated C-series models have received consistent acclaim from users, with steady improvements in market performance and continuous month-on-month sales growth. Sales exceeded 30,000 units in June, with the C10, as a benchmark in its segment, consistently breaking the 10,000-unit mark monthly and ranking among the top domestic mid-size SUVs. Since its launch in 2021, the C11 has remained a hot seller, with cumulative sales of approximately 350,000 units, becoming an evergreen model in its segment.
The C16 has entered the top tier of six-seat SUVs priced under RMB 200,000 in terms of sales volume, with monthly sales continuing to rise. The C-series user base has exceeded 850,000, and the proportion of positive word-of-mouth among these users continues to improve, jointly forming the core pillar of the brand's scale growth.
On June 25, 2026, the Leapmotor D99 was officially launched. Positioned as a tech-luxury flagship MPV, it is another representative model of Leapmotor's flagship D platform, maximizing the platform's advantages to provide users with six major luxury experiences: flagship aesthetics, flagship comfort, flagship range, flagship intelligence, flagship driving control, and flagship safety.
As the second flagship product on the D platform following the D19, the launch of the D99 completes Leapmotor's product lineup in the high-end MPV market, forming a dual-flagship matrix of flagship SUVs and flagship MPVs. Since its launch, the D99's average selling price has exceeded RMB 300,000, successfully driving an upward leap in Leapmotor's brand value and demonstrating the effectiveness of its premiumization strategy through market performance.
The D platform will fully empower the D99 with million-yuan-level technology, making flagship products accessible to more consumers.
On July 16, 2026, Leapmotor officially launched two heavyweight models based on the comprehensively updated B platform: the new B01, a youthful and stylish sedan with ultra-long range, and the new B10, a global smart-enjoyment long-range SUV. As the culmination of Leapmotor's philosophy of making technology accessible, the new B01 and B10 feature four trump cards: a global 800V 3C fast-charging system, dual zero-gravity seats in the front row, an extra-large AR HUD, and a 17.3-inch 3K central control screen.
Directly addressing long-standing pain points in the RMB 100,000-class pure electric vehicle market, such as compromised configurations, range limitations, and reduced intelligent features, these models offer a value progression featuring RMB 100,000-class pricing, RMB 200,000-class range capability, and RMB 500,000-class configuration levels, providing young users with a comprehensive travel experience without compromise.
On August 11, 2026, the Leapmotor A05 was officially launched, offering five trim levels with a starting price of RMB 63,900. Leveraging Leapmotor's 11 years of full-domain self-developed technological capabilities, the A05 continues the product characteristics of the hit model A10 on the same platform with consistent sincerity. By featuring class-exclusive advanced driver-assistance systems, superior range performance within its class, and optimal attention to detail quality, it creates the best solution for premium compact cars. It is a must-consider option for buyers within the RMB 100,000 budget and serves as a crucial piece in Leapmotor's puzzle to achieve annual sales of one million units this year.
In terms of R&D, the Leap 4.0 central domain control architecture was first deployed on the D19. Relying on the 8797 chip and ultra-large memory, it pioneered the super-coordination of cockpit and driving systems, breaking down the barriers to deep coordination between traditional vehicle cockpits and intelligent driving systems, and realizing unified intelligent control of the entire vehicle via a single 'brain.' This architecture supports both single and dual 8797 chip platforms, enabling dynamic allocation of computing power and automatically adjusting chip performance based on driving scenarios.
Entertainment scenarios prioritize GPU and CPU usage, while assisted driving strengthens NPU computing power, ensuring efficient utilization of hardware resources and achieving bidirectional data interoperability between the cockpit and intelligent driving systems. Navigation information, intelligent driving visuals, and entertainment content are rendered seamlessly and switch imperceptibly, with the status of intelligent assisted driving synchronized in real-time to the instrument cluster and central control screen.
Furthermore, on-board transmission achieves global millisecond-level response, ensuring no latency from perception and decision-making to execution, thereby guaranteeing a timely and reliable experience. Currently, urban navigation assisted driving is available across all Leapmotor A, B, C, and D series models. Additionally, nationwide urban navigation assisted driving will be rolled out to vehicles based on the Leap 3.0 architecture in the third quarter of 2026.
A new architecture for advanced driver-assistance systems (ADAS) will be launched in September 2026, delivering a significant upgrade in intelligent driving experience. Leveraging its comprehensive in-house R&D capabilities, Leapmotor has achieved full ADAS coverage across its lineup, from the entry-level A Series to the flagship D Series. This makes high-quality advanced driver assistance no longer a privilege for the few, but an accessible part of everyday mobility.
Regarding distribution channels, as of June 30, 2026, Leapmotor's sales and service network covered 298 cities, achieving a city coverage rate of 87.4%. The company had established a total of 1,064 sales outlets and 562 service centers, representing an increase of 258 sales outlets and 101 service centers compared to the same period in 2025.
While continuously expanding its channel scale, the company simultaneously advanced its brand channel upgrade strategy by officially launching a new multi-functional flagship store model. This model integrates display, test drives, delivery, after-sales service, owner events, and technology platform showcases into a single comprehensive facility. Currently, flagship stores in Shanghai and Shenzhen have officially opened for operations, setting a benchmark for the national channel network and further enhancing Leapmotor's terminal customer experience and channel operational efficiency.
In terms of retail, during the first half of 2026, the company continued to deepen its user lifecycle-centric retail management system, focusing on refined operations, which drove core business metrics to new highs. By the end of June 2026, the company's market share in the new energy passenger vehicle market rose to 5.71%, up from 4.22% at the end of the first quarter, firmly securing the top position among emerging EV brands.
Regarding potential customer management and conversion, the conversion rate for potential customers reached 4.3% in the first half of 2026. The store visit rate by potential customers increased by 5.8 percentage points compared to the first quarter, while the test drive rate rose by 19.3 percentage points. In channel and store management, the tiered management system was continuously upgraded, creating a differentiated structure characterized by autonomy for top-tier stores, intensive coaching for mid-tier stores, and rigorous replacement for underperforming stores, thereby leading to an overall improvement in network capabilities through higher operational benchmarks.
In terms of service, in 2026, the company adhered to the first principle of serving car owners well, focusing on customer needs and leveraging the principles of speed, quality, and cost-effectiveness. It is committed to making user service a hallmark of the Leapmotor brand. The Net Promoter Score (NPS) for services in the first half of 2026 reached 57.8, a year-on-year increase of 39.6%.
In the first half of 2026, the company continued to uphold its four major service commitments. With the launch of the D Series, it comprehensively upgraded service standards, introduced digital management tools, optimized Moments of Truth (MOT) in service processes, expanded concierge service scenarios, and conducted high-quality owner events while optimizing the in-app owner experience. These efforts further enhanced users' sense of safety and convenience in vehicle usage, strongly supporting the construction of the service brand.
Regarding globalization, cumulative exports from January to July 2026 reached 113,863 units, achieving 75.9% of the annual challenge target. Full-year exports are expected to steadily exceed 150,000 units, with the potential to challenge a target of 200,000 units. Overseas exports in the first half of 2026 totaled 96,294 units, accounting for 27% of total sales for the period, surpassing the total export volume for the entire year of 2025. This continues to position Leapmotor as the leader among Chinese emerging EV brands in global expansion.
In the European market, the company performed particularly well. In Italy, a traditional automotive powerhouse, Leapmotor's market share in the pure electric vehicle segment exceeded 25%. With 23,000 pure electric vehicles registered in the first half of the year, it ranked first in sales in the Italian pure electric market for consecutive periods. In June 2026, Leapmotor became the best-selling Chinese electric vehicle brand in the German market.
In the UK market, Leapmotor has become the third best-selling Chinese pure electric vehicle brand in terms of retail sales. Leapmotor's success in winning over customers in traditional automotive industrial powerhouses not only validates its product strength but also signifies that its internationalization strategy has taken root, marking a key and solid step forward.
As of June 30, 2026, Leapmotor International has established over 1,000 outlets with integrated sales and after-sales service capabilities across more than 45 international markets, including Europe, South America, North America, Asia-Pacific, and the Middle East and Africa. Among these, there are over 900 outlets in Europe, more than 50 in the Asia-Pacific market, over 30 in South America, and more than 30 in North America.
In the second quarter of 2026, Leapmotor officially entered the Mexican market, marking its first step into North America. The local channel layout has initially taken shape. The Leapmotor brand is accelerating the deployment of localized assembly and production overseas.
In Southeast Asia, the localized assembly project in Malaysia has made substantial progress. Leveraging the Stellantis Group's plant in Johor, Malaysia, the C10 model has completed Start of Production (SOP) and entered formal mass production, with sales in the Malaysian market set to launch soon. The B10 model is scheduled to achieve mass production and simultaneous market launch in the third quarter.
In Europe, the localized assembly project in Spain is advancing in parallel. The Stellantis Group's Zaragoza plant has completed the necessary retrofitting. The B10 project is expected to commence formal production in the third quarter, while the B05 project plans to begin trial production within the year, with formal mass production targeted for 2027. The battery factory supporting these models has also completed retrofitting and is expected to start mass production in the third quarter.
In South America, the company and Stellantis Group have selected Stellantis's Goiania plant in Brazil as the assembly base for the South American localized assembly project. Localized assembly production of the Leapmotor B10 will be initiated first, with formal mass production planned for the second half of 2027.
Regarding Environmental, Social, and Governance (ESG), the company released its fourth independent annual ESG report in the first half of 2026, comprehensively showcasing the latest achievements in sustainable development practices. As ESG-related work steadily advances, the company's sustainability capabilities continue to gain recognition from authoritative international institutions.
During this period, the company achieved two significant rating milestones: it secured an AA rating in the MSCI ESG Ratings for the third consecutive year. Additionally, in the latest assessment by a globally authoritative sustainable development rating agency completed in the first half of the year, the company's rating advanced from Bronze to Silver, with its comprehensive ranking jumping to the top 15% of participating companies globally, a significant leap from the previous top 35%. This further solidifies the credibility of the company's international brand and its competitive advantage in the global supply chain.
In terms of digitalization, Leapmotor officially launched its self-developed corporate-level AI product in the first half of 2026 and completed the iteration to version 2.0. This has established a unified, secure, and user-friendly foundation for enterprise AI applications, empowering the deep integration of AI technology into the entire management chain, including R&D, supply chain, marketing, and general office operations.
Leapmotor continues to deepen the application of AI technology across various business areas. By focusing on complex business scenarios and key operational links, the company aims to enhance design innovation, risk identification, customer service, and operational collaboration efficiency, thereby supporting cost reduction, efficiency improvement, and overall operational quality enhancement.
In the R&D sector, applications are being developed around scenarios such as AIGC-based styling design, AI voiceprint recognition, process knowledge Q&A, and battery defect identification, improving design innovation, fault diagnosis, and response efficiency to process issues. In the supply chain sector, the company is advancing applications such as market supply and demand risk analysis, battery cell procurement optimization, and intelligent review of contract terms, supporting risk warning and procurement decision-making.
In the marketing domain, we focus on scenarios such as intelligent scoring of customer fault descriptions, assessment of first-time fix rates for repairs, Voice of Customer (VOC) insights, AI-based store inspections, and intelligent verification of vehicle presentation videos, thereby enhancing customer insights, content operations, and service quality. In the general office administration domain, we are driving the implementation of applications such as document processing and intelligent translation, data analysis and report generation, and intelligent customer service, to improve employee collaboration and operational management efficiency.
By continuously embedding AI capabilities into key business processes, we are driving the expansion from standalone tool adoption to scaled business applications, injecting intelligent momentum into the company's high-quality development.
Thank you all and the management team for your sharing. We will now turn the floor over to our investor friends. Could the conference assistant please explain the procedure for asking questions?
Conference Assistant
Hello everyone. If you wish to ask a question, participants joining via phone should first press the '*' key on their handset, followed by the number '1'. Participants joining online may type their questions in the interaction area of the live stream or click the 'raise hand' button to request voice participation. Thank you.
Host
We now invite the investor with the phone number ending in 0464 to ask their question. Please provide your name and institution name first. You may now speak.
Ren Danlin
Good evening, Mr. Tengfei, Mr. Wu, and Mr. Shen. I am Ren Danlin, an automotive analyst based in Tokyo. Thank you very much, Mr. Tengfei, for the detailed introduction, and congratulations to the company for achieving such strong results in the second quarter despite headwinds. I would like to ask the leadership two questions, which I will address one by one.
First, could Mr. Tengfei please break down the revenue contributions from carbon credits and R&D services in the second quarter, including other non-automotive businesses? Second, looking ahead to the second half of the year, will there be any marginal changes in pressure on the cost side?
Additionally, have there been any updates to our current earnings guidance, including guidance on automotive sales gross margins? These two questions relate to earnings guidance.
Li Tengfei
Well, from a Q2 perspective, our total carbon credit revenue for the first half of the year amounted to RMB 800-900 million, with Q2 contributing approximately RMB 500 million. Although our Leapmotor International unit achieved strong sales performance in Europe, the unit price of carbon credits has declined. As I shared during the Q1 earnings call, this drop in unit price is a key factor.
Similar to the trajectory seen in our domestic market, the average selling price (ASP) of carbon credits has decreased compared to last year. Consequently, the growth in total carbon credit revenue has not kept pace proportionally with the increase in sales volume.
Regarding contributions from R&D services, as many of you may have noted, we are engaging in deeper discussions with partners such as FAW and Stellantis on R&D collaboration. I believe we will soon announce positive news regarding finalized partnerships in this area.
Secondly, regarding our full-year profit guidance: At the beginning of the year, we set a net profit target of approximately RMB 5 billion. However, based on current conditions, achieving this target has become significantly challenging.
This is primarily due to the well-known rise in raw material prices this year, which has compressed our gross margins. Based on our current analysis, we now expect the full-year net profit to be around RMB 3 billion.
We project the overall gross margin to be in the range of 13% to 14%. Thank you.
Ren Danlin
Mr. Tengfei, I would like to follow up: Does this mean that our R&D services contributed little to no revenue in H1, including Q2? There was some contribution, but it was not significant, correct?
Li Tengfei
We will provide specific disclosures once these business initiatives are fully implemented.
Ren Danlin
Understood. Additionally, the gross margin is between 13% and 14%. What is the approximate gross margin level for the automobile sales segment?
Li Tengfei
Regarding automobile sales, you are referring to complete vehicles, correct? We estimate the gross margin for complete vehicles to be around 10% to 11%.
Ren Danlin
Understood, thank you. Mr. Li's explanation was very clear. Thank you for your response.
Host
Next, we invite the investor with the phone number ending in 6032 to ask a question. Please state your name and institution first. You may proceed. Thank you.
Wu Pingyue
Hello, I am Wu Pingyue, an automotive analyst at CITIC Securities. I have two questions for management. First, regarding the partnership between Leapmotor and Stellantis: we have already seen Stellantis announce a collaboration based on Leapmotor's technology for pure electric vehicles.
Could management elaborate further or clarify how Leapmotor generates revenue from this process? Additionally, will there be future expansions, such as extended-range electric vehicles (EREVs) or a second car model?
Regarding the cooperation with Stellantis, I have a question. We have recently noticed that the EU may gradually increase requirements for local procurement by Chinese automakers within the bloc. In terms of our production partnership with Leapmotor International, can we leverage this? Specifically, will we utilize Stellantis' supply chain? This is my first question.
My second question concerns overseas sales. Could you please provide an update on our overseas sales targets for next year, as well as the breakdown by region? Thank you.
Li Tengfei
First, regarding the cooperation with Stellantis, as the previous investor just mentioned, we are certainly hopeful about further positive developments in the near term. We expect to announce further concrete progress in our partnership with our collaborators soon.
Our collaboration is primarily based on Leapmotor's mature capabilities in supplying core components for the 'three-electric' systems (battery, motor, and electronic control). We aim to empower our partners through these component supplies. This is the overall direction of our cooperation.
As for the financial benefits this cooperation will bring to Leapmotor, to be honest, I prefer to wait until the partnership is fully implemented before providing a detailed breakdown of the expected returns.
Secondly, regarding your question on localized procurement and whether Leapmotor International will use Stellantis' supply chain: Stellantis Group's existing local supply chain capabilities are indeed a very important resource for us.
Stellantis Group will provide significant support to both Leapmotor and Leapmotor International in selecting supply chains. However, we will not completely rely on or simply adopt Stellantis' existing local supply chain structure.
We will conduct a comprehensive evaluation, guided by our original intention to create higher-quality products at lower costs. Leapmotor and Leapmotor International will work together with Stellantis to select the optimal supply chain.
With Leapmotor International's localized supply chain as the foundation, our overall operations will be more efficient, and cost control will be more effective.
Thirdly, regarding our overall overseas targets for next year: our initial overseas sales target for this year was set at 100,000 to 150,000 units. As mentioned earlier in the report, we are on track to exceed our annual goals, and achieving our challenging target of 150,000 units for this year is virtually assured.
We project that total sales this year could reach 200,000 units, with overseas sales also approaching the 200,000-unit mark. Therefore, based on our overseas sales targets for next year, both Leapmotor International and the Stellantis Group express strong confidence in our performance.
Currently, our overall overseas sales target for next year is estimated to be between 350,000 and 400,000 units. Across Leapmotor, the Stellantis Group, and Leapmotor International, we aim to challenge the 400,000-unit sales milestone next year.
Regarding the geographic distribution of sales you asked about, we do not anticipate significant changes from this year's pattern next year. Europe will remain our primary market. However, we expect further expansion in South America, leading to an increased share of sales from that region next year.
We will also continue to strengthen our efforts in Southeast Asia, the broader Asia-Pacific region, and Australia.
Wu Pingyue
Thank you very much to our leadership for sharing these insights.
Host
Let us now move on to the next investor. We invite the investor with the phone number ending in 7490 to ask their question. Please state your name and institution first. Thank you.
Ming, Automotive Expert at Zhongtai Securities
Good day, executives. I am Ming, an automotive expert at Zhongtai Securities. I have two brief questions. First, we have observed that the company's overseas production capacity has expanded rapidly over the past two years. Looking ahead to next year, what is the designed production capacity for our factories in Spain (Europe) and Latin America?
Regarding the second question, I would like to seek clarification. Since Stellantis previously indicated that profitability might not be the primary objective for overseas operations in the first three years, what is the current level of actual per-unit profitability if we look at real overseas terminal sales? Specifically, I am interested in metrics such as profit margins or the actual net profit per vehicle in overseas markets. These are my two main questions.
Li Tengfei
Alright, regarding the first question on production capacity: Currently, in Europe and South America, we primarily leverage our partners' factories for localized production. We have had extensive discussions with the Stellantis Group on this matter.
Our partners have been highly supportive. Whether in Europe, South America, or other major regions, our partners at the collaborating factories within the Stellantis network fully ensure the supply of production capacity for Leapmotor, prioritizing our needs.
As everyone knows, the Stellantis Group has relatively ample production capacity in major regions like Europe and South America. Therefore, production capacity is actually an advantage for Leapmotor, given our strong partnership, so we do not need to worry about capacity constraints.
We maintain thorough communication and have developed a robust plan for production capacity, which can fully meet Leapmotor's localization demands in Europe, South America, and other major regions.
Regarding the second question on profitability, this issue involves several aspects. From Leapmotor's perspective, since Leapmotor International is our joint venture—with us holding a 49% stake and the partner holding 51%—the analysis differs.
From the standpoint of Leapmotor as a company, our gross profit refers to the margin generated before selling vehicles to Leapmotor International. As mentioned by the previous participant and as I have stated multiple times, we had an agreement for the first three years.
Consequently, our overall gross margin level has indeed been relatively low. Now, as the end of this three-year agreement period approaches, both parties will sit down for further comprehensive discussions.
In practice, our cooperation has made significant progress over these past three years, as evidenced by sales volumes. Moreover, Leapmotor International achieved profitability last year, and its operational performance this year remains very strong.
Therefore, under this model, we have achieved rapid sales growth. Moving forward, we will continue to further discuss the international operations of Leapmotor. From our perspective, priority is currently given to overseas sales volume.
We believe the overseas market is currently in a phase of rapid growth, and it is crucial to seize this key development window as quickly as possible. While we certainly value profitability, we prioritize sales growth above all else.
Zhongtai Securities Automotive Expert Ming
Understood, thank you. The explanation was very clear. We wish the company continued success in its future performance.
Li Tengfei
Alright, thank you.
Host
Thank you for the answer. Next, we invite the investor with the phone number ending in 7074 to ask a question. Please provide your name and institution first before speaking. Due to technical issues with the investor's device, we will connect to the next investor first. Can you hear us?
Liu Lin
Yes, I can hear you now. Apologies, I forgot to unmute earlier. Good evening, Mr. Li, Mr. Wu, and Mr. Shen. First, congratulations on such strong results. I am Liu Lin, an analyst covering overseas markets at Guosheng Securities.
I have two questions regarding intelligent driving. Previously, we discussed with investors that Leapmotor has demonstrated excellent intelligent driving capabilities, both on the A10 platform and the D platform. Beyond the late-mover advantage we observe technically, what are other secrets behind achieving such superior capabilities despite relatively low R&D investment? That is my first question.
The second question is regarding intelligent driving. We currently observe two trends. First, from the perspective of L2+ and L3 capabilities, the differentiation in user experience among top-tier players has become less apparent to consumers. Consequently, competition is shifting more towards cost efficiency.
The second trend is that players in the L2+ and L3 segments, including both suppliers and OEMs, are beginning to encroach on L4 territory. Therefore, we would like to ask: Is our current technical path for intelligent driving primarily a cost-reduction strategy for L2+/L3, or does it hold the potential to breakthrough into L4-level capabilities? Is fully autonomous driving the ultimate ceiling of our technology roadmap? This is the second question.
Li Tengfei
Regarding the first question about the input-output ratio of Leapmotor's current investments in intelligent driving: As you mentioned, Leapmotor has seen widespread recognition for its intelligent driving performance this year across its A-series and D-series models. Additionally, we launched intelligent driving features for our B and C series mid-year.
The intelligent driving systems in the A and D series gained broad consumer acceptance upon their initial launch, and the B and C series have also received extensive positive feedback from users. As mentioned earlier in the report, we will launch our new intelligent driving products based on a new architecture this September.
To give you an early preview, we believe the intelligent driving products under this new architecture represent a significant leap forward compared to our current offerings. We warmly invite investors and friends from the investment community to visit Leapmotor in Hangzhou this September to experience our new intelligent driving solutions firsthand.
As for why our investment has been relatively modest yet yielded such significant results, I have shared previously that Leapmotor has been continuously investing in intelligent driving; this is not a recent development.
Since our inception, we have positioned intelligent driving as a core direction for the company's technological development. However, in the early stages, we focused more on laying the foundation. Under the leadership of Mr. Zhu, we decided not to rush into heavy investment while the technical roadmap remained uncertain.
The technical landscape has undergone numerous changes, ranging from HD maps to vision-based approaches and subsequent planning and control algorithms. Given these shifts, we avoided hastily committing capital to any single or multiple options amidst the complex and evolving technology stack.
It was only when we identified physical models and large-model-based approaches as the definitive future direction for intelligent driving that we significantly increased our investment in this area during the second half of last year, scaling up resources across talent acquisition and other key aspects.
Including the models we launched last year, a large number of vehicles are now equipped with our intelligent driving products, generating substantial data. These factors have contributed to significant improvements in our overall intelligent driving capabilities this year. This forms the core rationale for the further advancement of our intelligent driving products scheduled for launch in September.
Due to our precise grasp of the overall strategic direction, we avoided many detours. As a result, although our initial investment was relatively modest, we ramped up resources decisively once our strategy was confirmed. Leveraging our strong foundation, we have achieved significant progress within a relatively short period.
Regarding your question on the technical roadmap for intelligent driving, we have comprehensive layouts across L2+, L3, and even L4 levels. From our perspective, our scope extends beyond just L2+; it encompasses L3 and L4, covering both intelligent driving software and hardware.
Our hardware portfolio includes not only the specific components for intelligent driving but also chassis hardware. We have established a comprehensive layout across these areas.
Liu Lin
Understood, thank you, Mr. Tengfei.
Host
Thank you for the sharing. We will now invite investors from code 9915 to ask questions. Please state your name and institution before speaking. Thank you.
Zhang Jieying
Good evening, management team. I am Zhang Jieying, an automotive analyst at Guotai Haitong. I have three questions. First, regarding exports, following up on a detail mentioned by Mr. Tengfei: Given the sales target of 350,000 to 400,000 units for next year, have you discussed how much of this volume will come from localized production?
Secondly, regarding overseas operations, has there been any change in the expectation for the start of production at the Spanish factory in October? Also, what is your outlook for net profit per vehicle after production begins? That concludes my first question on overseas business.
Regarding the second question about the technology launch event in September, as Mr. Tengfei may have just mentioned, there will be new technologies and demonstrations in the area of intelligent driving. Apart from this, are there any other updates you could share with us in advance?
For the third question, we have noticed that the company's subsidiary has recently established business operations related to robotics. We also observed that a competitor released news today regarding humanoid robots. Could you share your outlook on related robotics businesses and any additional information? That’s all.
Li Tengfei
The first question concerns local production volume. I will address the first two questions together. Regarding the commencement of production at our Zaragoza plant in Spain, we plan for Mr. Zhu, along with the company's management team, to visit the facility in October. They will join executives from Stellantis to attend the inauguration ceremony for the localized production of the B10 model in Zaragoza, Spain.
The overall timeline is progressing very smoothly. As for next year's localized production volume, as I mentioned earlier, the B10 will be the only locally produced model primarily available for sale next year. Therefore, within our total projected volume of 350,000 to 400,000 units, the localized production volume of the B10 will not be particularly large.
Since this is our first year of overseas localized production, it involves a period of adjustment and integration with our partners. We expect the localized production volume of the B10 next year to be around 50,000 units.
Of course, this figure is subject to changes in policy and the smoothness of our integration process. If policy changes become more favorable, our overall localized volume could increase. As I mentioned earlier, production capacity is not an issue.
Our primary focus, together with our partners, is to create value for Leapmotor's overall sales volume. This includes addressing your question about the impact of localized production on net profit margins.
While localization does offer tariff optimization benefits, we also observe that localized component procurement entails a significant price increase compared to domestic sourcing in China.
After offsetting these factors, localization has indeed improved the overall gross margin level (including CDO), but the improvement is not as pronounced as some might have expected.
Of course. We are also forecasting that, with the further implementation of enhanced legislation, EU tariff policies will shift. We believe this will lead to more favorable policies supporting localization, with regulatory bias increasingly favoring local operations.
Therefore, we believe the resulting boost to net profits from localization will not be immediate but will materialize in the near future. As policies continue to evolve, they will further enhance the strategic value of localization.
We believe that whether in Europe, South America, or other global markets, localization remains a key objective for Leapmotor. It is consistently a core strategic direction for our international expansion.
Regarding your question about the September technology launch event: our Tech Day is tentatively scheduled for September 16. Beyond intelligent driving, we will unveil several major technological advancements. The event will also feature participation from senior industry experts and distinguished guests.
To be honest, due to company regulations, I cannot disclose too many details about the tech launch at this moment. However, we sincerely invite everyone to join us on September 16 in the beautiful city of Huzhou, Zhejiang Province, to witness the unveiling of Leapmotor's latest comprehensive technological innovations.
I can share that we will announce significant breakthroughs in both intelligent driving and our battery and electric drive systems.
Finally, regarding the reports you mentioned about our business scope including robotics: we have seen these as well. This simply reflects an addition to the business scope of a newly established subsidiary under Leapmotor Power. It is a routine adjustment to our operational scope.
We understand the strong interest in Leapmotor's next moves in robotics. I would say that new energy vehicle (NEV) manufacturers, especially those with full-stack in-house R&D capabilities like ours, are among the best-positioned companies to develop embodied AI robots.
As the person in charge, I can confirm that we do have our own plans in this area. In the near future—likely very soon—you will receive our official announcement with specific details regarding Leapmotor's robotics initiatives.
Zhang Jieying
Understood, very clear. Thank you, Mr. Tengfei.
Host
Thank you to management for sharing. We will now invite the investor with the phone number ending in 9225 to ask a question. Please state your name and institution first. You may proceed. Thank you.
Zhang Shu
Good evening, members of the management team. I am Zhang Shu, an automotive analyst at Huatai Securities. I have two questions for management. The first concerns our full-year gross margin. Since you mentioned earlier that our gross margin would see further quarter-on-quarter improvement in the second half of the year, could you elaborate on the key drivers behind this expected sequential increase?
My second question relates to the sales mix of our vehicle models. In the past two months, we have launched both the upgraded D-series and our new A05 model. Could you break down the average monthly sales targets for our A, B, C, and D series for the second half of the year? Those are my two main questions.
Li Tengfei
Regarding the overall improvement in gross margin, there are several contributing factors. First, as you can see, Leapmotor's total sales volume has risen rapidly in recent months. The primary driver for the gross margin expansion is the economies of scale from higher production volumes, which have led to further optimization in both material costs and manufacturing overhead.
Secondly, concerning the rise in overall material costs, particularly for bulk commodities, we have observed that prices have stabilized after the surge seen in the first half of the year. We expect bulk commodity prices, including lithium carbonate, to remain relatively stable in the second half.
Therefore, as our scale expands, the resulting economies of scale will continue to optimize material costs and manufacturing expenses, thereby driving the overall improvement in our gross margin.
It is worth noting that our current gross margin has essentially returned to the level seen in the same period last year. While this may not be considered an exceptional performance, achieving this result amidst the current macroeconomic backdrop required relentless effort from the entire company.
Regarding the composition of our total sales volume, as you can see, the BC series has maintained last year's sales levels with a slight increase. This is because the BC series products were already launched last year.
As for the D series, since the launch of the D19 and D99, we have seen sustained strong performance. Additionally, the A series launches are complete, with both the A10 and A05 now released.
The combined sales volume for the A10 and A05 has exceeded 30,000 units. This essentially represents our current sales structure.
Zhang Shu
Thank you for sharing.
Host
Due to time constraints, we will proceed to the final two questions in the Q&A session. We now invite the investor with the phone number ending in 0401 to ask their question. Please state your name and institution before speaking. Thank you.
Mai Yizhi
Hello, thank you very much to the company leadership for this opportunity to ask questions. I am Mai Yizhi from Changjiang Auto. I have two brief questions. First, our recently launched models—the A10, D19, D99, and A05—have all been hit products. Could you share the company's key new vehicle launch plans for 2027 at this stage?
Secondly, regarding our factory in Spain, production is expected to start soon with a capacity of tens of thousands of units. With a second factory potentially coming online in one to two years, and considering the EU's anti-subsidy tariffs on pure electric vehicles and potential future measures on plug-in hybrids, can our planned capacity cover the risk exposure for our European export sales? This is particularly relevant given our expectation of significant growth in overseas sales next year.
Li Tengfei
Regarding the first question on model planning, I can provide a clear answer. With the launch of Leapmotor's new A05 model this year, our major model launches are essentially complete for the remainder of the year. There may still be minor updates or facelifts for specific models later on.
Looking ahead to 2027 and our key model planning, I would like to highlight that the number of all-new model launches by Leapmotor in 2027 is expected to exceed that of 2026. We will also introduce brand-new products within our D series.
For the C series, we plan to launch both all-new models and next-generation replacements for existing C series vehicles. These next-generation models represent entirely new product offerings. Similar launches are also planned for the B series.
Therefore, next year will remain a significant year for Leapmotor's product launches, indeed a very substantial one. From an internal preparation standpoint, our company is well-equipped, and product readiness is not a concern for us.
We are currently carefully refining our overall product rollout schedule. Given the high volume of new products this year, along with annual updates to existing models, our primary focus is ensuring that each product launches at an optimal time. This timing strategy is what we are prioritizing right now.
Regarding the second question about the Spanish factory and capacity issues, I have largely addressed similar concerns earlier. Please rest assured regarding production capacity, as we are approaching this matter with great caution and seriousness in collaboration with our partners.
We have reserved sufficient production capacity to ensure robust localized manufacturing capabilities, whether in Europe, South America, or other major regions.
Our overseas partners currently have ample capacity. We are evaluating and selecting factories that best facilitate the implementation of our partnership, taking into account factors such as the factory's inherent capacity and its ability to support production volumes for our collaborative models.
This selection process also considers local cost structures and the availability of surrounding component suppliers. We are comprehensively evaluating all factors to choose the most optimal production locations.
This highlights a significant advantage of partnering with Stellantis: it enables us to achieve faster localization with lower costs and provides more options, allowing us to select the best possible solutions and enhance our localization efforts.
Mai Yizhi
Understood, very clear. Thank you to the company's leadership for the clarification. I also wish the company continued success in gaining market share against the headwinds, with sustained growth in sales volume and financial performance. Thank you.
Li Tengfei
Alright, thank you.
Host
Thank you for the management's response. Next, we invite investors from line 1909 to ask questions. Please provide your name and institution first before speaking. Thank you.
Marilyn Monroe
Hello management, thank you for giving me the opportunity to ask questions. I am Meng Lu, an automotive analyst at Soochow Securities. I have two main questions. First, regarding our investment income, we noted a loss in the first half of the year. Could you please explain the specific reasons for this?
Second, regarding current exports, what is the general situation with overall shipping capacity? During the Q1 report, it was mentioned that terminal order volumes exceeded our shipping capacity. I would like to know if there have been any breakthroughs in terms of shipping speed and capacity limits currently?
Additionally, we observe that overseas channels have expanded significantly, surpassing 1,000 locations. What are the future plans for overseas channel development? Thank you for addressing these two questions.
Li Tengfei
Alright, regarding the first question on investment income: I can share that while our investment losses were not significant, we did incur certain losses in the first half of the year. This was partly due to a slight loss recorded by Leapmotor International during the same period.
The primary driver was actually the impact of foreign exchange gains and losses in the first half, which affected our joint venture. We are currently making adjustments in this area and expect to offset the first-half losses in the second half of the year.
Overall, we believe there should be no major issues with Leapmotor International's full-year profitability this year.
Regarding the second question on ocean freight: As seen in various reports, the explosive growth in Chinese new energy vehicle (NEV) exports has led to tight capacity for roll-on/roll-off (Ro-Ro) vessels. This situation was further exacerbated by geopolitical conflicts, resulting in significant supply constraints in the first half of the year.
We are engaging in in-depth communication and cooperation with major shipping companies, including our global strategic partner, the Stellantis Group. Overall, shipping speeds have improved compared to March and April.
We are confident in achieving our annual overseas sales target of 200,000 units. Regarding overseas channels, as you mentioned, we now have over 1,000 outlets, with the vast majority located in Europe.
We will continue to expand our channel network in Europe, particularly in Eastern and Northern European countries where our presence has been relatively limited. Looking ahead, our next key focus for overseas expansion will be South America.
The number of channels in South America is growing rapidly. Last month, we officially entered the Argentine market, launching sales there. We are also rapidly expanding into other South American markets, including Brazil, Chile, and Uruguay.
This includes further development of our channels in the Asia-Pacific region. From our perspective, our partners in Europe, South America, and Asia-Pacific possess extensive local channel networks and strong capabilities.
For instance, Stellantis holds the number one market share in South America, leading the second-place competitor by a wide margin. By leveraging our partners' strength, our overseas channel expansion remains highly efficient, laying a solid foundation for doubling our overall sales volume.
Meng Lu
Thank you for the clear explanation. I look forward to seeing further breakthroughs by the company in technology exports and other areas. I have no further questions. Thank you.
Li Tengfei
Great, thank you.
Host
Thank you to the management team for attending, and once again, thank you to all investors and analysts for your participation. We look forward to our next interaction. Should you have any further questions, please feel free to contact the Leapmotor Investor Relations team at any time. That concludes today's meeting. Thank you, everyone.
More details:LEAPMOTOR IR
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