Leapmotor: Encountering Hurdles in Its Leading Momentum, How to Break Through?

Leapmotor released its financial report for the third quarter of 2025 after the Hong Kong stock market closed on November 18th, Beijing time. This financial report presents a mixed picture and fails to maintain Leapmotor's usual momentum of outperforming market expectations. Specifically:

1. Good performance in revenue: The total revenue in the third quarter reached 19.45 billion yuan, significantly exceeding the market expectation of 18.33 billion yuan. This is mainly due to the recognition of a 250 million yuan carbon credit income this quarter and the sequential increase in the average selling price of vehicles this quarter.

2. The average selling price of vehicles continues to rise sequentially: In the third quarter, due to the mass production and delivery of the low - cost small car B01 in Leapmotor's vehicle model structure, its proportion in the model structure increased sequentially to 18%. The overall model structure continued to shift downwards. Therefore, the market expected the average selling price of vehicles to show a sequential decline.

However, the actual average selling price of vehicles was 112,000 yuan, increasing by 6,000 yuan sequentially. Dolphin Research believes this may be because: ① There were promotional discounts on old models in the previous quarter, but there was no such impact this quarter; ② The proportion of overseas sales in the model structure continued to increase sequentially by 0.4 percentage points to 10% this quarter; ③ There was recognition of carbon credit income in the third quarter.

3. The gross profit margin of vehicle sales also exceeded expectations: The gross profit margin of vehicle sales in the third quarter increased by 0.9 percentage points sequentially to 14.5% this quarter, exceeding the market expectation of 12.9%. This is mainly due to a. the sequential increase in the average selling price of vehicles; b. the recognition of pure gross - profit carbon credit income this quarter; c. the decline in the per - vehicle amortization cost brought about by the release of scale effects.

4. However, the three major expenses are still increasing, mainly because of the continuous increase in investment in intelligence and channel expansion: Leapmotor continued to increase its investment in the three major expenses this quarter. Among them, the R & D expenses were 1.2 billion yuan, increasing by 120 million yuan sequentially. This is mainly due to the continuous increase in investment in super - extended - range models and intelligence. The company previously planned to achieve end - to - end urban NOA capabilities before the end of the year.

In terms of sales expenses, the sales expenses this quarter were 950 million yuan, increasing by 150 million yuan sequentially and also exceeding the market expectation of 880 million yuan. This is mainly because Leapmotor continued to increase channel construction, add sales staff, and increase marketing expenses this quarter. The number of Leapmotor's domestic retail channels increased by 60 to 866, and the channels continued to penetrate downwards, preparing for the volume increase of the B - series models in the model structure and the upcoming A - series models.

5. The net profit decreased sequentially and was lower than market expectations: Although the gross profit margin of vehicle sales this quarter exceeded expectations, the significant increase in the three major expenses eroded Leapmotor's net profit. Leapmotor's net profit this quarter was 150 million yuan, still decreasing sequentially and also lower than the market expectation of 200 million yuan, dragging down the release of the profit margin.

Dolphin Research's view:

Overall, Leapmotor's total revenue and gross profit margin in the third quarter performed well, continuing to improve sequentially and both exceeding market expectations. However, the net profit was eroded due to the significant sequential increase in the three major expenses, showing a sequential decline and also being lower than the market expectation of 200 million yuan.

Looking forward to the fourth quarter and 2026:

Leapmotor previously guided that the annual gross profit margin in 2025 would be 14% - 15%, the annual net profit in 2025 would be 500 million - 1 billion yuan, and the annual sales volume in 2025 would be 580,000 - 650,000 vehicles.

Judging from the current sales trend, even though there is a negative impact of the withdrawal of local subsidies in the fourth quarter, Leapmotor still takes various measures to boost the order volume and sales volume:

① Leapmotor increased the promotion efforts in November. Specifically, the "B01" sedan received an additional 2,000 - yuan cash subsidy, the "C11" SUV and the "C10" SUV each received an additional 2,000 - yuan cash subsidy, and the "B10" SUV and the "C16" SUV each received an additional 4,000 - yuan cash subsidy.

② Leapmotor also launched the pre - sale of the "Lafa5" hatchback in November.

Dolphin Research expects that driven by the promotion policies and the launch of new models, Leapmotor's sales volume in the fourth quarter is expected to reach 218,000 vehicles, continuing to increase by 25% sequentially, corresponding to an annual sales volume of 613,000 vehicles in 2025.

Regarding the gross profit margin in the fourth quarter, although Leapmotor increased the discount rate in the fourth quarter, with the recognition of 500 million yuan of pure - gross - profit carbon credit income in the fourth quarter and the continuous decline in the per - vehicle fixed amortization cost driven by the scale effect, Dolphin Research expects that the gross profit margin in the fourth quarter can still continue to increase marginally sequentially.

Looking forward to 2026:

Leapmotor previously set a sales target of 1 million vehicles in the domestic market and 100,000 - 150,000 vehicles in the overseas market in 2025, achieving nearly double the sales volume compared to 2025. At the same time, it gave a net profit guidance of 5 billion yuan for 2026.

However, the current stock price obviously does not reflect this expectation of continued high - growth sales volume. Dolphin Research believes that this mainly comes from two major core concerns of the market about Leapmotor:

① There will be a negative impact of the withdrawal of purchase tax in 2026, and the users in the price range of Leapmotor's main models are price - sensitive.

② Leapmotor may still face pressure in upgrading its brand image, and there are concerns that the sales performance of the three new models in the D - series may fall short of expectations.

However, Dolphin Research believes that Leapmotor's core competitiveness can still support its growth logic:

a. Leapmotor has always strengthened its cost advantage through a high degree of vertical integration and a high proportion of self - research, self - production, and self - supply, enabling it to continuously launch models with higher cost - performance ratios than its competitors. It transforms the cost advantage into a price advantage and consolidates its model strategy of "lower price, larger space, and higher configuration", meeting the demand for high cost - performance of price - sensitive users in the 100,000 - 200,000 - yuan price range. Leapmotor expects to increase the proportion of self - research and self - supply to 80% next year, second only to BYD.

b. Through cooperation with Stellantis in overseas expansion, the certainty of overseas expansion should be very high among new - energy vehicle startups:

Leapmotor can utilize Stellantis' brand power, channels, and production capacity in Europe. Moreover, the two shareholders have reached an agreement that the primary goal in the early stage of exports is sales volume rather than profit, enabling Leapmotor to continue to achieve early - stage accumulation and large - scale expansion of sales volume in Europe through its high - cost - performance advantage in the export market.

The A - series models to be launched by Leapmotor in 2026 and the currently launched B - series models meet Europe's demand for low - cost small cars (the market share of small cars below grade A and A0 in Europe reaches 60% - 70%). At present, Leapmotor's overseas expansion progress has obviously accelerated, and the overseas orders from October to November have reached 27,000 units. It is expected that there will be no problem in achieving the overseas sales target of 100,000 - 150,000 vehicles in 2026.

This article is from the WeChat official account "Dolphin Investment Research" (ID: haituntouyan), author: Dolphin Research. It is published by 36Kr with authorization.