In March 2026, China's New Energy Vehicle (NEV) startups delivered some encouraging news.

Among the early pioneers in the NEV sector—NIO, XPeng, Li Auto, and Leapmotor—their 2025 financial reports revealed a significant milestone: Li Auto maintained annual profitability for three consecutive years, Leapmotor achieved its first full-year profit, and both NIO and XPeng reported quarterly profits.

This marks the first time these four companies have collectively delivered positive profits since the rise of 'NEV startups' around 2015. As we stand at the dawn of the next decade, these financial reports signify more than just numbers—they herald a transition from the 'scale-at-all-costs' phase to a sustainable path of 'self-generated growth'.

Li Auto: Navigating Strategic Shifts Amid 'Growing Pains'

A direct comparison of Li Auto's 2025 financial data with that of 2024 paints a less-than-rosy picture.

According to Li Auto's unaudited financial results for the quarter and full year ended December 31, 2025, revenue reached RMB 112.3 billion in 2025, down 22.3% from RMB 144.5 billion in 2024. Vehicle sales revenue stood at RMB 106.7 billion, a 23% decline from RMB 138.5 billion in 2024. Gross profit for the year was RMB 21 billion, a 29.2% drop from RMB 29.7 billion in 2024, with a gross margin of 18.7%, down 1.8 percentage points from 20.4% in 2024. Net profit for 2025 was merely RMB 1.1 billion, an 85.8% decrease from RMB 8 billion in 2024. Non-GAAP net profit for 2025 was RMB 2.4 billion, a 77.5% reduction from RMB 10.7 billion in 2024.

This financial report has faced criticism, with some media outlets claiming Li Auto is 'experiencing unprecedented performance deceleration'.

Indeed, Li Auto faced numerous challenges in 2025. First and foremost, product sales volume fell short of expectations. According to financial data, Li Auto delivered 406,300 vehicles in 2025, over 90,000 fewer than the 500,000 units delivered the previous year. In the 2025 NEV sales rankings, Li Auto not only trailed Leapmotor but also lagged behind the 'resurgent' XPeng. Industry analysts attribute this to the underperformance of Li Auto's pure electric vehicles (EVs), which were expected to drive sales growth, while its traditional strengths saw declining sales due to an overall market slowdown and increased competition. In 2025, the growth rate of domestic extended-range electric passenger vehicles plummeted. Data from the China Automobile Dealers Association's automotive market research division showed that while domestic pure EV sales reached 7.877 million units, up 24.4% year-on-year, extended-range EV sales totaled 1.235 million units, a mere 6% increase. In terms of market share, extended-range EVs accounted for just 9.4% of wholesale new energy passenger vehicle sales in 2025, with their share declining for five consecutive months starting from June 2025, dropping to 7.5% in October.

Beyond declining sales volume, Li Auto's average vehicle price also decreased. The rising sales share of the more cost-effective Li Auto i6 and increased discounts on older L-series models contributed to the reduction in annual profit. Notably, despite the revenue decline, Li Auto's R&D expenditure increased. Annual R&D costs reached RMB 11.3 billion, a slight 2.2% year-on-year rise, with Q4 R&D spending soaring to RMB 3 billion, a 25.3% year-on-year surge, further impacting profitability.

However, as Li Auto Chairman and CEO Li Xiang noted, since Q4 2025, Li Auto has demonstrated positive changes in organizational efficiency, supply capabilities, and sales systems, including improved dealership efficiency, resolved production capacity issues for the Li Auto i6, and a rebound in Li Auto i8 sales. Financial data shows that Li Auto's revenue in Q4 2025 rose 5.2% quarter-on-quarter, with vehicle sales revenue increasing 5.4% QoQ. More importantly, after a net loss of over RMB 600 million in Q3 2025, Li Auto returned to profitability in Q4.

As the only domestic NEV startup to maintain annual profitability for three consecutive years, Li Auto's 2025 financial report may not be visually appealing, but it resembles a 'transition-phase report card'—amid shifting engines, Li Auto is gathering momentum. With the mass production of self-developed chips, accelerated overseas expansion, and deep AI layout (AI deployment), Li Auto in 2026 is worth anticipating.

(Image Source: AI)

Leapmotor: From Chaser to Leader

Leapmotor had a remarkable 2025, not only claiming the top spot among domestic NEV startups in sales but also achieving a significant milestone—full-year profitability.

According to recently released financial data, Leapmotor delivered 596,000 new vehicles in 2025, doubling its sales volume for the second consecutive year. It reported a net profit of RMB 540 million, achieving its first full-year profit and becoming the second of these four NEV startups to do so. Annual revenue reached RMB 64.73 billion, a 101.3% increase from 2024, with a gross margin of 14.5%, a new annual high.

Leapmotor's profitability proves that a 'high-quality yet affordable' business model can succeed in the new energy sector. Compared to other NEV startups, Leapmotor's average vehicle price is relatively low, with some analyses suggesting a profit of around RMB 900 per vehicle. However, cumulative gains, coupled with cost reductions, enabled Leapmotor to achieve a net profit of RMB 540 million in 2025. It was revealed that Leapmotor locally produced over 65% of its vehicle BOM (Bill of Materials) components last year, particularly high-value-added core components like powertrains, headlights, seats, compressors, and AR-HUDs, significantly lowering costs.

On the other hand, Leapmotor led domestic NEV startups in overseas sales in 2025. Official data shows Leapmotor exported 67,052 vehicles in 2025. As of December 31, 2025, Leapmotor International (a joint venture established by Leapmotor and Stellantis in May 2024) had established approximately 900 outlets across roughly 40 international markets, including Europe, the Middle East, Africa, South America, and Asia-Pacific, with over 800 in Europe, over 50 in Asia-Pacific, and over 30 in South America. Leapmotor International achieved annual profitability in 2025, providing steady investment returns for Leapmotor.

Notably, while Leapmotor's extended-range products performed strongly, its pure EV models launched in 2025 also gained traction, becoming a key driver of annual sales growth. In 2025, Leapmotor introduced the B-segment pure electric sedan B01, which, despite being priced in the highly competitive RMB 100,000–120,000 range, delivered over 10,000 units for two consecutive months post-launch, with annual sales reaching 67,900 units (data from China Association of Automobile Manufacturers). Another pure electric sedan, the T03, sold 77,000 units in 2025 (data from CAAM).

However, challenges lie ahead for Leapmotor, despite its current lead. CICC noted in a research report that while Leapmotor has entered a full-profit cycle, its cost-effective approach makes scaling profit margins difficult, requiring continued effort.

NIO: After 11 Years of Losses, First Quarterly Profit

'We have no Plan B.' This statement by NIO Founder, Chairman, and CEO William Li during the Q3 2025 financial results media briefing, when discussing Q4 profitability targets, carried a 'do-or-die' undertone—and NIO delivered.

On March 10, 2026, NIO released its Q4 and full-year 2025 financial reports. In Q4 2025, NIO achieved an operating profit of RMB 1.25 billion, marking its first quarterly profit, with cash reserves reaching RMB 45.9 billion, a significant near-RMB 10 billion quarter-on-quarter increase. Li stated that quarterly profitability fully validates the core competitiveness of NIO's technology roadmap, products, and business model, reflecting sustained improvements in systemic capabilities and operational efficiency, laying a solid foundation for long-term sustainable development.

Indeed, NIO's full-year financial report was also impressive, with multiple records broken. In 2025, NIO delivered 326,000 new vehicles, a 46.9% year-on-year increase, a new high. Annual revenue reached RMB 87.49 billion, up 33.1% year-on-year, a record. Gross profit totaled RMB 11.92 billion, an 83.5% year-on-year surge, a new high. The overall gross margin was 13.6%, up 3.7 percentage points year-on-year, the highest since 2022. The vehicle gross margin was 14.6%, up 2.3 percentage points year-on-year, also the highest since 2022.

Analysts suggest that NIO achieved quarterly profitability through significant cost reductions, particularly in R&D. Financial data shows that NIO's quarterly R&D expenses declined throughout 2025, from RMB 3.18 billion in Q1 to RMB 2.02 billion in Q4, with annual R&D costs at RMB 10.605 billion, an 18.6% year-on-year decrease. However, even with reduced R&D investment, NIO's full-year R&D spending ranked second among the four NEV startups, trailing only Li Auto. NIO's cost control was comprehensive, with marketing expenses also falling from RMB 4.4 billion in Q1 to RMB 3.54 billion in Q4, a nearly 20% drop. Besides management cost reductions, declining lithium carbonate prices and self-developed chips also lowered NIO's per-vehicle BOM costs. Data shows that NIO's per-vehicle cost dropped from RMB 230,200 in 2024 to RMB 201,400 in 2025. 'Our self-developed NX9031 chip delivers computing power equivalent to four industry-leading chips, reducing per-vehicle costs by over RMB 10,000,' revealed NIO Co-Founder and President Qin Lihong.

Based on this, analysts point out that NIO's quarterly profitability was primarily driven by improved product gross margins, especially the rising share of high-margin products. In December 2025, NIO ES8 deliveries reached 22,300 units, accounting for nearly 70% of NIO's brand sales, with a gross margin of 20%. Meanwhile, the '5566' series and Le Dao L90 models achieved per-vehicle gross margins of 15%–20%. Thus, NIO's Q4 2025 profitability appears healthy.

After 11 years of losses, NIO finally achieved its first quarterly profit, but this is merely an interim goal. During the Q4 and full-year 2025 financial results conference call, NIO management stated that the company aims to achieve full-year Non-GAAP profitability in 2026.

XPeng: Back in the Mainstream Competition

Like NIO, XPeng also emerged from 11 years of losses into the light.

On March 20, XPeng released its Q4 and full-year 2025 financial results. In Q4 2025, XPeng achieved total revenue of RMB 22.25 billion, a 38.2% increase from Q4 2024 and a 9.2% rise from Q3 2025, a new quarterly high. Net profit reached RMB 380 million, marking single-quarter profitability. For the full year, XPeng reported total revenue of RMB 76.72 billion, an 87.7% year-on-year increase, a record. The annual gross margin was 18.9%, a new high. Net loss narrowed by 80.3% year-on-year to RMB 1.14 billion. Annual deliveries reached a record 429,400 units, a 125.9% year-on-year increase. R&D spending totaled RMB 9.49 billion, up 47% year-on-year.

After several challenging years, XPeng returned to mainstream competition in 2025, ranking second in annual sales, trailing only Leapmotor. In terms of model mix, the XPeng MONA M03 accounted for roughly 46% of 2025 sales, becoming XPeng's best-selling model. The P7+ followed with about 20%. Beyond sedans, XPeng also made gains in the SUV market, with the G6 and G7 accounting for about 12% and 6% of annual sales, respectively.

While sales growth directly supported XPeng's profitability improvement, unlike other NEV startups, XPeng also gained new profit drivers from 'technology dividends.' Financial data shows that XPeng's annual service and other revenue surged by 65.6% year-on-year to RMB 8.34 billion, accounting for about 10.9% of total revenue, with a related business profit margin as high as 68.2%. According to financial disclosures and earnings call information, this explosive growth was primarily driven by technical service revenue from XPeng's partnerships with automakers, notably Volkswagen. 'We believe a technology-led business model will forge a profit path distinct from traditional automakers,' stated XPeng Chairman and CEO He Xiaopeng. XPeng's collaboration with Volkswagen now extends beyond platform architecture, with Volkswagen becoming a mass production partner for XPeng's Turin AI chip, and R&D services successfully delivered.

CMB International's research report attributes XPeng's Q4 net profit to higher-than-expected technical service revenue recognition and carbon credit trading. This business model of commercializing 'intelligent driving technology' as a standardized product provides XPeng with a high-margin, asset-light secondary growth curve amid vehicle gross margin pressures. However, it also exposes XPeng's profit structure's reliance on specific partners and project timelines. Whether XPeng can stabilize its core business through vehicle sales alone during technical service revenue downturns remains an open question.

As spring arrives, the first batch of NEV startups has finally achieved quarterly or annual profitability, but an even tougher race lies ahead—'surviving long and thriving well'.

Profitability has never been the finish line. As policy incentives fade, competition intensifies, and technology evolves rapidly, the real test has just begun. Can quarterly profits translate into full-year profitability? Can technology exports become a sustainable profit source? On China's NEV table, the final act is far from over.

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