In the first half of 2026, Leapmotor's revenue soared to RMB 38.110 billion, marking a 57.2% year-on-year increase and meeting market expectations. On the profit front, the gross profit for the first half reached RMB 4.445 billion, with a gross margin of 11.7%. The adjusted net profit for the first half stood at RMB 270 million, translating to a net profit margin of 0.7%. However, profitability fell short of market expectations, prompting a reduction in the annual net profit target from RMB 5 billion to RMB 3 billion.

(The following is a financial report summary in billions of RMB, with data sourced from Wind and compiled by Financial Records.)

In the first half of this year, the price of lithium carbonate surged by over 130%, automotive-grade memory chips by 150%-300%, and the manufacturing cost per vehicle rose by RMB 3,000-7,000. The phase-out of subsidies also significantly impacted Leapmotor, a company known for offering competitively priced vehicles.

Meanwhile, the first half of the year marked a transitional phase for Leapmotor's model lineup. The decline rate of the older C-series models outpaced the growth rate of the new models (A10, D19). The combination of increased sales volume, reduced prices, cost pressures, and a gap in model availability resulted in a 'revenue growth without profit increase' mid-year report.

Nevertheless, Leapmotor's mid-year report is considered a commendable performance in 2026, a year when automakers are generally under pressure. It also emerged as the sole profitable automaker among the four new forces: NIO, XPeng, Li Auto, and Leapmotor.

From a market perspective, automakers that excel in a particular stage are often characterized by a relatively high-end attribute, such as superior autonomous driving capabilities or strong brand recognition.

However, a closer look at the financial report reveals that Leapmotor's success among the new forces is not attributed to a standout feature but rather its adherence to the fundamentals of manufacturing. By integrating upstream processes, Leapmotor has captured profits that are often overlooked, enabling it to maintain profitability.

This embodies the essence of a stealthy achiever excelling without boasting.

01 Model Transition and Declining Gross Margin

Leapmotor's revenue in H1 2026 reached RMB 38.11 billion, up 57.2% year-on-year. In the first half of 2026, Leapmotor delivered 356,487 vehicles, marking a 60.8% year-on-year increase.

Judging by the revenue and delivery volume in the first half of the year, Leapmotor is still on a high-growth trajectory, but the era of 'doubling' has officially ended. Revenue in H1 2026 declined by 5.9% compared to H2 2025, reaching RMB 38.11 billion from RMB 40.48 billion, a decrease of 5.9%. Deliveries also declined by 4.9% compared to H2 2025.

The high base in the second half of 2025 is the primary reason for the negative year-on-year growth. In 2026, the reduction in new energy vehicle purchase tax incentives, coupled with expectations of the expiration of local trade-in subsidies by the end of the year, led to a significant surge in purchases in the second half of 2025.

Notable changes also occurred at the model level.

Leapmotor initially relied on the C-series for volume but shifted this structure with the launch of the B-series in 2025. In 2026, the A and D series complemented the lineup, forming a complete matrix that 'covers the entry-level segment downward and tests the high-end segment upward' for the first time.

In a sense, the successful launch of the A-series allowed Leapmotor to diversify beyond a single price band strategy.

The A10 was launched at the end of March, with the 100,000th unit rolling off the production line in 135 days. It ranked first among Chinese brand SUVs for three consecutive months from May to July and topped the sales charts for all SUV categories in July. The company described it as the primary volume contributor. The combined monthly sales of the C10, C11, and C16 models remained at approximately 30,000 units.

Leapmotor's sales structure indicates that the price war in the new energy vehicle market is intensifying, with prices continuously declining. This inevitably puts pressure on automakers' profits.

The median retail price of the A10 is RMB 76,000, making it the best-selling model in the first half of the year. We calculated Leapmotor's per-unit economic model and found that the gross profit per vehicle in the first half of the year was RMB 12,000, with a gross margin of 11.7%, down 2.4 percentage points year-on-year.

Leapmotor's gross profit in the first half of 2026 was RMB 4.445 billion, with a gross margin of 11.7%, down 2.4 percentage points year-on-year. The full-year gross margin guidance is 13%-14%, indicating significant pressure in the second half of the year based on the first half's data.

Of course, the decline in gross margin is also partly attributable to rising raw material prices (lithium carbonate, copper, aluminum, plastics).

02 Meticulous Operations and Finally Standing Above the Break-Even Point

Breaking down the per-unit economic model, revenue per vehicle only decreased by RMB 2,500. In the first half of 2026, Leapmotor's revenue per vehicle was RMB 107,000, down 1.83% year-on-year.

In terms of revenue per vehicle, consumers' core purchasing range for Leapmotor remains around RMB 100,000-110,000. Taking the best-selling C10 from the C-series as an example, its median retail price is RMB 132,800, while the current A and B series models precisely meet consumer demand.

Being able to buy an A10 with 800V for RMB 76,000 means a model priced at the RMB 100,000 level is equipped with hardware that was only available in RMB 250,000 models two years ago. Consumers are truly benefiting from the 'configuration inflation' dividend (dividend meaning 'benefits'), but for Leapmotor, it is hard to say that all the effects are positive.

Under Leapmotor's self-research and self-production model, the upfront fixed investment depreciation and amortization for new models (A10/B10) are amplified in low-priced models. In the second quarter of this year, the adjusted net profit after excluding share-based payments was RMB 270 million, down 18% year-on-year.

However, Leapmotor has excelled in cost control.

Leapmotor's R&D expense ratio in H1 2026 was only 6.1%, sales expense ratio 5.2%, and administrative expense ratio 2.6% (totaling approximately 13.9%). Compared to NIO and XPeng (whose combined three expense ratios consistently exceed 25%-30%), Leapmotor's cost control is extremely restrained.

This proves its 'extreme refined operation,' but it also shows that its low profitability is purely due to extreme compression of front-end product pricing and gross margin space, not backend expense wastage.

Through such meticulous operations, Leapmotor managed to maintain a slim profit in the first half of the year, when automakers were collectively struggling, and stood above the break-even point, becoming the only profitable automaker among the four new forces: NIO, XPeng, Li Auto, and Leapmotor.

Of course, profitability still fell short of market expectations, with the annual net profit target reduced from RMB 5 billion to RMB 3 billion (-40%). In fact, the downward revision of profit guidance and the failure to meet the first half's guidance indicate that management does not have high expectations for the current profitability level.

CFO Li Tengfei stated directly on the conference call that the original target was 'extremely difficult to achieve.' Based on the new guidance, approximately RMB 2.8 billion needs to be achieved in the second half of the year, 13 times the first half's amount. At least in the current context of subsidy reductions this year, expectations for Leapmotor's profits should not be too high.

03 Accelerated Capital Expenditures, Overseas Expansion Increases Inventory, and Financial Pressure Remains

Leapmotor's capital expenditures in the first half of 2026 were RMB 2.03 billion, with capital expenditures maintained above RMB 2 billion for the past two years. The number of physical stores increased to 1,064 during this period, a 32% growth rate.

Leapmotor is expanding its business footprint through volume-driven expansion and using its self-research capabilities to widen the profit gap in the red ocean price war. This logic inevitably brings some financial pressure during model transitions.

Inventory turnover days during this period were 36.95 days, resulting in dual capital occupation from 'new vehicle stockpiling' and 'old vehicle backlog.'

At the same time, the surge in overseas exports has increased inventory pressure due to 'shipping in transit.'

Leapmotor's overseas exports reached 96,000 units in the first half of 2026, up 372.6% year-on-year. The supply chain cycle for cross-border deliveries is extremely long, from domestic factory production, port storage, shipping (usually 30-45 days), overseas customs clearance, to entry into Stellantis' local channel warehouses. The longer the supply chain, the higher the inventory value on the books.

Unlike asset-light automakers that directly purchase Tier 1 finished assemblies, Leapmotor's self-production model means it must store large quantities of upstream raw materials (such as copper, aluminum, chips, battery cells) in its factories, as well as work-in-progress (WIP) in the workshops. The longer the self-production chain, the more inventory capital is tied up on the production line.

Therefore, cash flow performance was relatively poor. Operating cash flow in the first half of 2026 was RMB 2.17 billion, down 77.7% quarter-on-quarter and 24.1% year-on-year.

The gross margin space for low-priced models like the A10 is relatively thin. If the price war in the terminal market intensifies in the second half of the year or if the backlog of old model inventory cannot be cleared quickly, the net realizable value of this inventory may fall below its book cost. In that case, Leapmotor will face significant write-down pressure, directly eroding its operating profit in the second half of the year.

04 A Stealthy Achiever Excels Without Boasting

Although the self-research approach has brought significant financial pressure to Leapmotor, it must be acknowledged that Leapmotor's ability to engage in meticulous operations and continuously launch new models at lower prices relies precisely on this strategy.

In the first half of 2026, Leapmotor's R&D investment was RMB 2.317 billion, with an R&D expense ratio of 6.1%, representing a 22.3% year-on-year increase in absolute terms.

Leapmotor's official 'full-domain self-research' approach focuses on achieving a self-research and self-production ratio of approximately 65% of the total vehicle cost.

This does not refer to technological generational breakthroughs like Tesla's (self-researching chips, integrated casting) or BYD's (self-researching battery cells, vertical integration of mining). Instead, it means bypassing Tier 1 suppliers and handling system integration and hardware manufacturing in-house.

For example, consider the battery system. In a RMB 100,000-level vehicle, battery cells account for 70%-80% of the battery pack cost (approximately RMB 16,000-27,000).

If finished PACK battery packs are directly purchased from CATL or Farasis Energy, suppliers charge approximately 15%-20% in integration manufacturing premiums and R&D amortization.

By assembling CTC and BMS in-house, Leapmotor eliminates the middleman's (PACK's) gross margin and reduces module and upper cover structural components, lowering battery system costs by 5%-8% and saving approximately RMB 1,500-2,500 per vehicle.

Traditional automakers purchasing cabin-driving integration or domain controllers from Bosch or Desay SV incur significant software licensing and hardware integration fees. Leapmotor's in-house software and hardware integration saves RMB 1,000-2,000 per controller.

Clearly, Leapmotor's self-research is essentially about integrating upstream suppliers, particularly in manufacturing, by capturing profits that suppliers would otherwise earn. This results in products with comparable configurations at half the price, which is the foundation of Leapmotor's market position.

This approach is very similar to Toyota's strategy in the last century and fundamentally different from today's automakers that heavily invest in areas like chips and end-to-end intelligent driving along the smile curve. This may also be the core reason why Stellantis values Leapmotor.

Therefore, even in marketing, whether it is autonomous driving, range, or brand services, Leapmotor lacks standout memorable points. However, by relying solely on cost-effectiveness, Leapmotor has become a top performer at this stage.

Zhu Jiangming, hailing from Yiwu, may have inherited a relatively pragmatic business acumen from the 'trading feathers for sugar' (a traditional Chinese saying meaning to exchange small or seemingly insignificant items for something more valuable) tradition. Having experienced price wars at Dahua and Hikvision, he possesses strong business acumen and sensitivity but weaker macro-narrative capabilities, often leading the market to overlook his achievements.

This aligns with the saying: A stealthy achiever excels without boasting.

Of course, Leapmotor's proud '65% full-domain self-research and self-production' is a powerful tool for capturing supplier premiums in high-ASP, high-gross-margin scenarios. However, in a challenging environment dominated by low-priced vehicles, the massive factory depreciation, R&D amortization, and work-in-progress inventory may evolve into unavoidable fixed cost negative leverage. This necessitates continuous new model launches to maintain sales volume and sustain scale profits.