Chery Automobile recently released its first quarterly report since listing in Hong Kong. In the first three quarters of this year, Chery's total revenue reached 241.234 billion yuan, up 12.29% year-on-year; gross profit came in at 39.004 billion yuan, up 32.38%; and gross margin stood at 16.17%, up 2.46 percentage points.

Interestingly, what has recently been driving Chery's sales volume is the QQ3, a model priced in the tens of thousands of yuan. Even as low-priced cars sell in explosive numbers, gross margin continues to rise—evidence that the genuinely profitable parts of the business, exports and new energy, are growing solidly. Gross profit growing nearly three times as fast as revenue stems from the same dynamic.

First, the shift from fuel to electric. In the first half of the year, new energy revenue reached 59.284 billion yuan, accounting for 41.4% of total revenue, while fuel vehicles accounted for 48.5%—a gap of just 7 percentage points. After more than two decades of building fuel vehicles, Chery is on the verge of seeing its oil and electric revenue switch places.

The product lineup has kept pace. The all-new QQ3 has topped 10,000 monthly sales for six consecutive months; the Fengyun A9 ranks first in sales among pure electric mid-size cars in the 150,000-yuan segment; and the Zongheng G700 has planted the flag of "China's No.1 Luxury SUV" in eight markets, including Saudi Arabia, the UAE, and Mexico. The most telling figure in the entire financial report, however, is another number: in the first three quarters, Chery accounted for one-seventh of China's new energy vehicle exports. In other words, out of every seven new energy vehicles China exports, one is made by Chery.

Its approach to going global has also evolved. What was once "selling cars abroad" is now "moving the system overseas": its European operations center and research institute in Spain have been put into use, with decision-making power for R&D and compliance placed directly on the ground in Europe; its Rosslyn plant in South Africa came on stream in July, with a localization rate targeted at 40% by 2028; and its Rayong base in Thailand began production in April. Next year's overseas growth target is set at 20%.

One detail is easy to overlook: Chery has joined the International Automotive Task Force (IATF) as its third board member from Asia. This matters more than any sales ranking—for the first time, a Chinese automaker has taken a seat at the table where global automotive quality standards are made. Ranking first among Chinese brands in monthly sales in Europe is the return on that system.

R&D has also been stepped up: 11.046 billion yuan, up 40.21% year-on-year—growth 3.3 times that of revenue—invested in solid-state batteries, hybrid transmissions, and AI. What has already landed is visible: Xunlong instant charging adds 500 kilometers of range in five minutes, and V2G has become the industry's first commercially implemented AC solution, charging during off-peak hours and selling electricity back to the grid during peak hours, first rolled out in Shanghai, Guangzhou, Hefei, and Wuhu.

In the entire financial report, the only unattractive part is net profit attributable to shareholders of 13.963 billion yuan, down 2.8% year-on-year. Gross profit increased by nearly 10 billion yuan, yet net profit fell. Where did the money go?

Two line items. R&D spending rose by 3.168 billion yuan—the 11 billion yuan mentioned above; and exchange gains and losses swung from a net gain of 2.974 billion yuan last year to a net loss of 3.171 billion yuan, a swing of 6.1 billion yuan. The two are almost the same size, together eating up two-thirds of the newly added gross profit.

The exchange rate issue is ultimately not complicated. In the first three quarters, Chery exported 1,499,100 vehicles, accounting for 70% of total sales of 2,076,900 vehicles. Among automakers with annual sales of two million vehicles, there is no second one like this. Seventy percent of revenue is settled in foreign currencies, so when the renminbi moves, the financial statements move. According to management, excluding exchange gains and losses, profit is above 17 billion yuan.

So this quarterly report is, in effect, understated by that 2.8% figure. Gross profit is getting fatter, the revenue mix of oil and electric is switching places, overseas expansion has shifted from selling cars to building systems, and R&D intensity has been pulled to its highest since listing. The slight decline in profit is a fluctuation brought by exchange rates, not a problem with the business itself.

Looking at a longer time axis, Chery is the Chinese automaker best at selling abroad—and also the one most dependent on foreign markets. For more than two decades, exports have given it scale and profit, and also handed it a bill for exchange rates. The step it needs to take now is to go from being an export champion to "a company that builds cars on other people's doorsteps"—this is much harder than selling several hundred thousand more cars a year, and part of the tuition has already been paid.

Fortunately, Chery can afford this tuition. Its export foundation of more than two decades is there, factories in Spain, South Africa, and Thailand are ramping up one after another, next year's overseas growth target of 20% has been set, and new energy revenue is visibly about to overtake fuel vehicles. If this step succeeds, Chery will not just be the Chinese automaker that exports the most, but the first Chinese automaker to truly turn itself into a multinational corporation.