Produced by Leadar Auto. Written by Peng Cheng. Edited by Meng Shuai.

Leapmotor, which had just savored the sweetness of full-year profitability in early 2025, found itself saddled with a 390 million yuan loss in the first quarter of 2026.

According to Leapmotor's latest financial report, the company's global sales exceeded 110,000 vehicles in the first quarter of this year, with quarterly revenue reaching 10.82 billion yuan, both setting new records for the same period.

However, Leapmotor's gross profit margin for the quarter plummeted from 14.9% year-on-year to 9.4%, resulting in a net loss attributable to the parent company of 390 million yuan for the quarter, halting its streak of three consecutive quarters of profitability.

Research by Guojin Securities indicates that the decline in Leapmotor's gross profit margin in the first quarter was primarily due to shifts in the vehicle product mix, the insufficient realization of scale effects from sales volume, and increased manufacturing costs stemming from relatively low capacity utilization in Q1 2026.

In April this year, Leapmotor's monthly sales surpassed 70,000 vehicles, breaking its own record for monthly sales among new automotive forces. Despite management's confidence in achieving the annual sales target of one million vehicles, Leapmotor still faces a significant sales gap to reach this milestone.

Furthermore, the nearly 400 million yuan loss in the first quarter has exerted considerable pressure on Leapmotor's goal of achieving 5 billion yuan in annual profit. Li Tengfei, Vice President of Leapmotor, bluntly stated that factors such as raw material costs, the international political environment, and industry price fluctuations pose certain risks to achieving this target.

Notably, just a week before the financial report's release, Stellantis announced an expansion of its strategic partnership with Leapmotor, with both sides planning to further deepen their collaboration based on the outcomes of their previous cooperation.

Revenue Growth Without Profit Increase: A Return to Loss in the First Quarter

On May 15, Leapmotor released its financial report for the first quarter of 2026. During the reporting period, the company achieved revenue of 10.82 billion yuan, a year-on-year increase of 7.98%, setting a new record for the same period.

However, Leapmotor's profitability performance was less than impressive. In the first quarter of this year, the company recorded a net loss attributable to the parent company of 390 million yuan, an increase from the 130 million yuan loss in the same period last year.

On a quarterly basis, Leapmotor also reversed the positive trend of achieving a net profit attributable to the parent company of 360 million yuan in the fourth quarter of last year.

Meanwhile, Leapmotor's gross profit margin also declined. In the first quarter of this year, the gross profit margin was 9.4%, not only lower than the 14.9% in the same period last year but also below the 15% in the fourth quarter of last year, with both year-on-year and quarter-on-quarter declines exceeding 5 percentage points.

Regarding the first-quarter performance, Leapmotor explained in its financial report that the revenue growth was primarily driven by increased deliveries of complete vehicles and spare parts, partially offset by a decrease in average selling prices due to shifts in the vehicle product mix.

Leapmotor also stated that the year-on-year decline in gross profit margin was mainly due to shifts in the vehicle product mix, partially offset by ongoing cost management efforts, and a reduction in strategic cooperation business.

The quarter-on-quarter decline in gross profit margin was primarily due to shifts in the vehicle product mix and increased manufacturing costs per unit resulting from decreased production volume.

In terms of cash flow, in the first quarter of this year, Leapmotor's net cash generated from operating activities was -6.61 billion yuan, with free cash flow at -7.4 billion yuan.

Caitong Securities pointed out in its research report that the company's overall operating performance was under pressure in Q1, but the results were in line with expectations. The decline in Q1 sales volume growth was affected by the downturn in industry demand, leading to a slowdown in year-on-year growth and a halving of quarter-on-quarter sales.

At the same time, the company's sales matrix experienced a structural decline this quarter, with the sales proportion of the C series dropping to 45.1%. This resulted in a double blow to the company's gross profit margin and ASP in Q1, with the gross profit margin declining to 9.4% and the average selling price per vehicle dropping to 98,000 yuan, a new low in nearly two years.

Additionally, reduced revenue from partners also impacted the company's operations this quarter. However, overall, the company's Q1 loss was relatively small, and the performance remained in line with expectations.

During the financial report conference call, Li Tengfei, Vice President of Leapmotor, revealed that the company's gross profit margin for complete vehicles in the first quarter was expected to be around 7%, roughly in line with the annual figure last year.

Li Tengfei further explained that the year-on-year and quarter-on-quarter declines in gross profit margin were primarily due to the impact of seasonal factors on first-quarter sales, which prevented the full realization of scale effects. Additionally, increased capacity and component reserves compared to the same period last year led to a decline in capacity utilization and a significant rise in manufacturing costs.

Furthermore, sales in the same period last year were mainly dominated by the C series models, while this year, the proportion of the slightly lower-margin B series models increased in the first quarter.

Li Tengfei also mentioned that the impact of rising raw material costs was not significant. The company had already stocked up on major raw materials last year, which could basically cover production needs in the first quarter. However, the stockpile would be depleted, and the price increases for key materials had not yet ended. The impact of rising raw material prices began to be felt in the second quarter, but the effect on the current gross profit margin was not expected to be overly large.

Nevertheless, Li Tengfei admitted, "If raw materials (such as lithium carbonate, chips, and precious metals) continue to rise from the third to the fourth quarter, it will have a significant impact on Leapmotor's gross profit margin, assuming terminal prices remain unchanged."

Li Tengfei also disclosed, "Some competitors are already adjusting their retail prices. In the second half of the year, the company will closely monitor material price trends amid changes in the geopolitical environment. If raw material prices continue to rise significantly, the entire industry will ultimately have to increase retail prices."

According to data from the China Passenger Car Association, from January to February 2026, the profit margin of China's automotive industry was 2.9%, still relatively low compared to the average profit margin of 5.8% for downstream industrial enterprises.

The squeezed profit margins across the industry have further intensified Leapmotor's profitability pressure. Li Tengfei expects that the company's gross profit margin in the second quarter will see some improvement compared to the first quarter but may not reach the level of the fourth quarter last year, estimated to be between 12% and 13%.

One of the favorable factors supporting this expectation is that, as the current highest-priced model in the brand's lineup, the D19 has accumulated 15,000 orders shortly after its launch.

Li Tengfei stated that, in terms of gross profit margin per vehicle, there has been little change compared to the original plan and previous expectations, but sales growth and product mix improvements will have a positive impact on overall profitability. "The company has set a target for the D19 team to stabilize monthly sales at around 10,000 units to maintain D series sales and pave the way for the subsequent D99."

Can Leapmotor's Premiumization Strategy Successfully Break Through Amid Pressure to Achieve 5 Billion Yuan in Annual Profit?

According to Tianyancha, Leapmotor went public on the Hong Kong Stock Exchange in 2022. In 2026, Leapmotor has set two core business objectives: achieving annual sales of one million vehicles and a net profit exceeding 5 billion yuan.

Compared to the nearly 600,000 vehicles sold in 2025, the target of one million vehicles for the full year represents a year-on-year growth of over 66%.

In the first quarter of this year, Leapmotor sold 110,155 vehicles, completing only about 11% of the annual target.

However, in April this year, Leapmotor's monthly sales reached 71,387 vehicles, breaking its own record for monthly sales among new automotive forces.

Li Tengfei also stated during the financial report conference call that, based on current trends, the company is confident in achieving the annual sales target of one million vehicles.

According to Leapmotor's plan, the estimated sales volume for the second quarter is 240,000 to 250,000 vehicles, with a total of about 360,000 vehicles in the first half of the year. This means that to achieve the one million target, Leapmotor needs to deliver approximately 640,000 vehicles in the second half of the year.

In comparison, achieving the profit target is even more challenging for Leapmotor. The 390 million yuan loss in the first quarter has created an initial gap, with approximately 5.4 billion yuan still needed to bridge the annual profit target.

Li Tengfei stated that the 5 billion yuan net profit target will not be adjusted for now, but factors such as raw materials, the international political environment, and industry price fluctuations pose certain risks to achieving this goal.

To further enhance the company's profitability, Leapmotor is implementing multiple measures.

For example, the D99, Leapmotor's first MPV model positioned as a technology-driven luxury flagship, is scheduled to start pre-sales in June and be launched for delivery in July. After the D99's launch, it is expected to further enhance Leapmotor's high-end product lineup and open up new growth opportunities.

In addition to the D99, Leapmotor has also confirmed plans for a second brand. It is reported that the products under Leapmotor's second brand will be positioned above 300,000 yuan and are expected to be unveiled as early as the end of this year or next year, with a launch in mid-2027 or the second half of 2027, targeting the premium market to increase average selling prices and profitability.

However, the overall industry environment is adding more uncertainty for Leapmotor. Against the backdrop of significantly compressed industry profit margins, rising prices of upstream raw materials are forcing a reversal in the automotive market's direction, with the prolonged "price war" entering a turning point.

Around the May Day holiday, more than ten automakers released price adjustment announcements in quick succession. BYD raised the price of its intelligent driving optional package from 9,900 yuan to 12,000 yuan, Changan Kaicene announced a price increase of 3,000 yuan, Chery Exeed increased prices by 5,000 yuan, and Xiaomi's new SU7 models saw price hikes ranging from 4,000 to 8,000 yuan across the lineup.

Furthermore, starting in 2026, the purchase tax exemption for new energy vehicles will be reduced from full exemption to a 50% exemption, with the maximum tax reduction capped at 15,000 yuan. This has further prompted the new energy vehicle industry to shift from price competition to a focus on technological prowess.

Securing a Dedicated Production Line for Mass-Produced Vehicles in Europe: Continuous Ramp-Up in Globalization

A week before the release of the first-quarter report on May 8, the Stellantis Group announced an expansion of its strategic partnership with Leapmotor. According to information disclosed by Stellantis, the two sides will advance their cooperation on three levels.

First, they will increase production capacity at the Figueruelas plant in Zaragoza, Spain. Both sides are evaluating the addition of new production lines for the production of Opel's new all-electric C-segment SUV, with production potentially starting as early as 2028, sharing the production line with the existing Peugeot 208 and Lancia Ypsilon models. The Leapmotor B10 model may also start production at this plant as early as this year.

As part of Stellantis's growth strategy for the European electric vehicle market, the aforementioned new Opel model will utilize components from Leapmotor International's supply chain to reduce costs. It is reported that the plant has produced over 10 million Opel Corsa models since 1982.

Second, the Stellantis Group and Leapmotor will conduct joint procurement through Leapmotor International, leveraging China's new energy vehicle supply chain to enhance price competitiveness while combining the European supply chain to ensure supply resilience and accelerate the launch of new models.

Third, both sides will provide long-term development support for the Madrid-Villaverde plant, planning to introduce a new Leapmotor model starting in the first half of 2028 to fill the production capacity left by the discontinuation of the Citroën C4.

The two sides are also discussing the transfer of ownership of the plant to Leapmotor International's Spanish subsidiary. The models produced will meet the requirements for "European manufacturing" and will be sold by Leapmotor International in Europe, the Middle East, and Africa.

Leadar Auto found through research that cooperation between the two sides actually began as early as October 2023. At that time, the Stellantis Group planned to invest approximately 1.5 billion euros to acquire approximately 20% of Leapmotor's equity, becoming a significant shareholder in Leapmotor.

In addition, the Stellantis Group and Leapmotor will establish a joint venture company named "Leapmotor International" with a 51%:49% ownership ratio.

Apart from the Greater China region, this joint venture will have the exclusive rights to export and sell Leapmotor's automotive products in all other global markets, as well as the exclusive right to manufacture these products locally.

However, in Europe, concerns regarding "Chinese automobiles infiltrating the European manufacturing system" are mounting. Some analysts express apprehension that while this move may offer short-term relief for capacity utilization issues, it could, in the medium to long term, squeeze the market space for European local brands and potentially result in a "hollowing out" of the supply chain.

EU policymakers are also closely monitoring whether the requirements for local component content can be genuinely enforced, as shifts in the regulatory landscape could impact the depth of cooperation.

It is worth noting that Leapmotor's global expansion is already gaining momentum across multiple regions. According to the financial report, in the first quarter, Leapmotor's overseas sales soared to 40,901 vehicles, marking a new record high with a year-on-year increase of 442%, accounting for 37.1% of its total sales.

In April, Leapmotor's overseas sales reached 14,225 vehicles, representing 19.9% of its total sales, continuing to set the pace for new automotive forces in overseas markets.

Remarkably, Leapmotor's performance in the European market has been exceptional. In 16 European countries, vehicle registrations for Leapmotor reached 23,300 units, a year-on-year surge of 726.5%. In 12 EU countries, sales of Leapmotor's pure electric models approached 17,000 units, ranking first among Chinese pure electric brands.

Li Tengfei stated that the company's full-year overseas sales target for 2026 remains unchanged at 100,000 to 150,000 vehicles. "Given the performance in the first four months, we believe the probability of achieving 150,000 units in annual overseas sales has significantly risen."

Leapmotor, which led new automotive forces in sales in 2025, aims to achieve annual sales of one million vehicles and a profit of 5 billion yuan in 2026. Leadar Auto will keep a close eye on its progress.