Leapmotor's sales volume increased by 25.8% in the first quarter, but it suffered a net loss of 390 million yuan.

In the elimination race of new energy vehicles, Leapmotor (09863.HK) has always presented itself with an image of "being economical". In 2025, it just became the second new - force automaker after Li Auto to achieve annual profit.

However, the first - quarter report released on May 15 made the market re - examine the fundamentals of this "top student in cost control".

The financial report shows that in the first quarter of 2026, Leapmotor delivered 110,600 vehicles globally, a year - on - year increase of 25.8%, continuing to lead the new - force camp; the revenue reached 10.82 billion yuan, a year - on - year increase of 8.0%, hitting a record high for the first quarter.

But behind the data, the net profit attributable to the parent company showed a loss of 390 million yuan. This not only further expanded compared with the loss of 130 million yuan in the same period of 2025 but also ended the profit trend of the previous quarter. The net loss per vehicle was about 4,000 yuan.

What concerns the market more is that the gross profit margin dropped from 14.9% in the first quarter of last year to 9.4%. In 2025, Leapmotor's annual gross profit margin was 14.5%.

Why did the loss of a company with continuously increasing sales expand in the first quarter? Leapmotor attributed the reason in the financial report to the change in product structure, which pulled down the average selling price, and the significant increase in various expenses.

At the subsequent first - quarter earnings call, Li Tengfei, the vice - president and CFO (Chief Financial Officer) of Leapmotor, dissected the performance. At the same time, he confirmed the long - rumored second - brand plan and reiterated the annual sales target of 1 million vehicles and the net profit target of 5 billion yuan set at the beginning of the year.

Where does the loss come from?

As for the loss, at the first - quarter earnings call that night, Li Tengfei gave a more specific explanation. The combination of three factors - insufficient capacity utilization, the downward shift of product structure, and the increase in expenses - made Leapmotor hand in a quarterly report lower than expected while achieving the best delivery volume in the same period.

First of all, in the first quarter, affected by seasonal factors such as the Spring Festival holiday and the withdrawal of subsidy policies, the actual effective production days of Leapmotor decreased, and the capacity utilization rate was far lower than that in the fourth quarter of last year. Although the year - on - year sales increased by 25.8%, there was an obvious decline compared with the more than 180,000 vehicles in the fourth quarter of last year, resulting in an increase in the manufacturing cost and parts procurement cost per vehicle, which directly compressed the gross profit space.

Secondly, the average selling price of Leapmotor's cars is decreasing. In the first quarter of 2025, Leapmotor's main models were the C - series models with relatively high gross profit; while in the first quarter of this year, the sales proportion of the B - series, which focuses on cost - effectiveness, increased significantly. Affected by this, the ASP (average selling price) per vehicle in the first quarter dropped to 98,000 yuan. The downward shift of the product structure pulled down the overall gross profit margin level.

In addition, the expenses are rising. The financial report shows that in the first quarter, the sales, management, and R & D expense ratios were 6.3%, 4.1%, and 9.6% respectively, and the R & D investment continued to increase. The intensive launch of new models A10, D19, and Lafa5 Ultra, combined with the rapid expansion of overseas channels, pushed up various expenses. At the stage when the scale effect has not been fully released, these upfront investments directly impacted the current profit and loss.

Regarding the decline in the gross profit margin in the first quarter, Li Tengfei also added an overlooked factor at the earnings call. The carbon credits, other business revenues, and the benefits from strategic cooperation projects were not included in the first quarter, which also had a certain impact on the current gross profit margin performance.

However, a research report from Guojin Securities pointed out that the first - quarter performance was characterized by "short - term pressure on the gross profit margin and slightly better - than - expected profitability". Although the book loss expanded, considering its available funds of about 30.6 billion yuan and the safe and abundant cash flow, it provided sufficient support for subsequent development.

New car production ramping up and overseas expansion become the repair fulcrums

Facing the choice between scale and profit, Leapmotor's management's answer is to "prioritize volume first". By expanding the scale to spread the cost, and relying on new cars and the overseas market to repair profitability.

The short - term measure is to quickly increase the production of new cars. The A10 launched at the end of March and the D19 launched in April are entering the production ramping - up period.

Cao Li, the senior vice - president of Leapmotor, told Caixin that the A10 has started double - shift production, with a delivery target of 26,000 - 27,000 vehicles in May and an attempt to exceed 30,000 vehicles in June. Li Tengfei introduced that the expected monthly sales target of the D19 is 10,000 vehicles, and the first MPV, the D99, will start pre - sales in June.

Meanwhile, Leapmotor maintained its sales guidance of 240,000 - 250,000 vehicles for the second quarter. Adding the 110,000 vehicles already delivered in the first quarter, it is expected to complete about 360,000 vehicles in the first half of the year, which means that the second half of the year will contribute 64% of the annual sales. Li Tengfei expects that the gross profit margin in the second quarter will rebound to 12% - 13%.

The growth of the overseas market has become the medium - term fulcrum.

In the first quarter of this year, Leapmotor's exports reached 41,000 vehicles, a year - on - year increase of 442%. In April, the exports increased by 134% year - on - year. Models such as the Lafa5 and A10 are accelerating their entry into overseas markets, and emerging markets such as South America are gradually picking up. The annual export target is 100,000 - 150,000 vehicles.

"Leapmotor is the fastest among new - force automakers in localizing." During the Beijing Auto Show, Zhu Jiangming, the founder of Leapmotor, told Caixin that Leapmotor's overseas sales in the first quarter exceeded expectations, and the B10 became the top - selling model overseas. Germany, the UK, and Italy are the top three sales markets. Leapmotor International adopts a light - asset model and achieved profitability in 2025. CKD production will start at the Stellantis factory in Spain in the fourth quarter of this year.

The earnings call also revealed that Leapmotor is using the Stellantis factory in Brazil to promote local production to cover the South American market. The Opel brand under Stellantis will also produce the Leapmotor B10 on the same production line at the Spanish factory. The two parties previously announced the joint development of an Opel pure - electric SUV with the internal code O3U, using Leapmotor's electric platform, with a target annual production of about 50,000 vehicles, and it is expected to be launched in 2028. Through "technology output + capacity sharing", Leapmotor's role in Europe is shifting from simple exports to local manufacturing.

In the long - term layout, Leapmotor's second brand will target the 300,000 - yuan market.

At the first - quarter earnings call, Leapmotor officially confirmed the second - brand plan for the first time. Li Tengfei said that the new brand will make its debut as early as the end of 2026 or the beginning of 2027 and will be launched in the middle or second half of 2027, targeting the high - end market above 300,000 yuan. Currently, the average selling price of the D19, the highest - priced model of Leapmotor's main brand, is about 250,000 yuan. The second brand attempts to enter the high - premium market, forming a differentiated pattern of "the main brand for volume, the new brand for profit".

From the perspective of the profit - making logic, the second brand is a key part for Leapmotor to improve the overall gross profit and achieve the profit target of 5 billion yuan. However, it will take time from its debut to large - scale sales. In the current highly competitive market above 300,000 yuan, Li Auto, NIO, Huawei - affiliated brands, and traditional luxury brands are in a full - scale melee. Whether a new brand can quickly establish itself remains unknown.

The annual target is still uncertain

At the beginning of 2026, Leapmotor set two core business targets: to strive for annual sales of 1 million vehicles and to achieve a net profit of over 5 billion yuan. Judging from the actual performance in the first quarter, it is not easy to achieve this profit target.

Li Tengfei reiterated at the earnings call that "this target will not be adjusted", and at the same time, he also admitted that "there are certain risks in achieving it" due to external variables such as raw material price fluctuations and the terminal price war in the industry.

Although Zhu Jiangming did not attend the earnings call, he said frankly in a recent conversation with the chairman of NIO: "This year, we also set the goal of 1 million vehicles. It's very difficult, but there is hope and possibility, so we still have to give it a try."

"Based on the speed and trend of sales growth, we are very confident about achieving 1 million vehicles." Li Tengfei believes that the D - series models will contribute significantly to Leapmotor's sales. After the D19 stabilizes its sales above 10,000 units, it will also lay a good foundation for the sales of the D99.

In April, Leapmotor's monthly delivery volume reached 71,387 vehicles, a year - on - year increase of 73.9%, ranking first among new car - making brands and breaking its own monthly sales record.

For Leapmotor, the production ramping - up of the A10 and D19, the expected recovery of the gross profit margin in the second quarter, the scale effect of new cars in the second half of the year, and the launch of the second brand will all be key variables for Leapmotor to get out of the profit trough.

In addition, at this earnings call, Li Tengfei also revealed that the cooperation projects between Leapmotor and its partners are progressing smoothly. It is expected that the model jointly developed with Hongqi will be mass - produced this year. Moreover, Leapmotor is in in - depth communication with FAW Group, and it is expected that there will be relatively significant positive news in the second and third quarters of this year.

This article is from the WeChat official account "Caixin Auto", author: Caixin Auto, reprinted with permission from 36Kr.