New Forces October Sales Battle: Li Auto Tops the Chart, Leapmotor Makes a Comeback

October has always been a golden month for automobile sales. With the support of the "trade-in for new" national subsidy policy, the domestic new energy vehicle market has seen significant growth, especially with the new car-making forces achieving widespread sales increases.

In the sales ranking of new car-making forces for October, Li Auto secured the top position with a delivery volume of 51,400 units; Leapmotor emerged as a dark horse this month, surpassing Aito with a delivery volume of 38,200 units, ranking second. Additionally, brands like XPeng, ZEEKR, Xiaomi, and Voyah also set historical records for their highest monthly deliveries in October. Only Li Auto and Nio experienced a slight decline in sales compared to the previous month, but overall, the trend remained stable. In the same month, Nio's delivery volume was 21,000 vehicles.

It is noteworthy that while most automakers experienced a surge in sales, Nezha Auto has yet to announce its sales data for October. Looking back at September, Nezha Auto's sales were 10,100 units, a year-on-year decline of 23.41% and a month-on-month decrease of 8.06%. This performance has widened the gap between it and other new car-making forces that were once on the same level.

1. Li Auto Dominates, Leapmotor Becomes the Biggest Dark Horse

In 2020, at the Li Auto owner day, facing external doubts about "Li Auto's range-extended electric technology being outdated," Li Auto founder Li Xiang emotionally rebutted and publicly criticized the choices of other technological routes in the market at that time: "What technology have they developed? A group of people with no user thinking, completely unconcerned about users!"

From the final results, it can be seen that the range-extended electric technology that Li Auto insists on indeed reflects a user-oriented design philosophy.

Returning to the sales figures for October this year, Li Auto delivered 51,400 new vehicles, although this is a 4.22% decline compared to the previous month, it still represents a year-on-year growth of 27.3%, maintaining its position at the top of the new forces sales ranking. As of October 31, 2024, Li Auto's total deliveries for 2024 reached 393,300 units, with a historical cumulative delivery volume exceeding 1 million units.

All four models of the L series range-extended vehicles under Li Auto are hot-selling models, especially the Li L6 launched in mid-April this year, which, as its first model priced below 300,000 yuan, successfully turned the situation around when Li Auto faced sales difficulties due to setbacks in the Mega project.

Li Auto CEO Li Xiang stated in the third-quarter earnings call that the Li L6 has sold over 139,000 units in its first six months. On average, the monthly sales of a single model reached 23,200 units, surpassing the total monthly sales of all models from Nio and XPeng combined.

It is noteworthy that Li Auto's sales forecast for the fourth quarter is 160,000 to 170,000 units, with a year-on-year growth rate even lower than that of the third quarter, while the average vehicle price will further decline. Over the past year, Li Auto has repeatedly lowered its annual sales targets, with earlier targets being 800,000 units and 560,000 to 640,000 units. It can be said that the fourth-quarter sales guidance did not meet market expectations, and on the day the financial report was released, Li Auto's stock price on the US market fell by 13.58% From the perspective of product layout, Li Auto was initially able to occupy the top spot in sales among new energy vehicle manufacturers due to its range-extended electric vehicles, mainly because pure electric technology was not yet mature at that time, and Li Auto accurately grasped user needs. With the continuous advancement of pure electric technology, user acceptance of pure electric models has been increasing. Li Auto plans to launch multiple pure electric models starting in 2025, including new cars that may be named M8 or M9, aiming to respond to market changes through a rich product line.

Following closely behind Li Auto in sales, Leapmotor has also received positive market feedback after shifting to a "high cost-performance" strategy. In October, Leapmotor delivered 38,200 new vehicles, a year-on-year increase of 109.7%, achieving record highs for several consecutive months. Among them, the Leapmotor C10, C11, and C16 are the main hot-selling models, with October orders also setting a record, reaching 42,500 units in a single month, with all three models exceeding 10,000 orders.

According to previous news, Leapmotor's new B series first model B10, which is set to debut at the Guangzhou Auto Show, is expected to be priced between 100,000 and 150,000 yuan and will be equipped with lidar, which is expected to further boost Leapmotor's sales growth.

Ranking third, Seres achieved sales of 36,000 units in October, a year-on-year increase of 104.61%, with cumulative sales from January to October reaching 352,700 units, a year-on-year increase of 310.99%.

Thanks to the support of Huawei's HarmonyOS technology, Aito M7 and M9 have become the main sales drivers for Seres, delivering 15,800 and 16,000 units in October, respectively. Since its launch, the new Aito M7 has accumulated over 200,000 deliveries, while the M9 has exceeded 160,000 orders within 10 months of its launch.

In the remaining positions on the list, the sales differences among various brands are not significant. Deep Blue Automotive ranks fourth with sales of 28,800 units, followed closely by ZEEKR, XPeng, Nio, and Xiaomi, all of which exceeded 20,000 units in sales in October. Among them, Xiaomi Automotive set a new record for monthly deliveries, while Nio, despite a slight month-on-month decline in sales, still remains among the top. BAIC Jihe and Denza ranked ninth and tenth with sales of 11,100 and 10,800 units, respectively.

II. Sales Surge, What About Profitability?

From the sales perspective, several new energy vehicle manufacturers have performed commendably, but in terms of gross margin and net profit, most new energy vehicle manufacturers have experienced varying degrees of decline. In order to compete for market share, various brands have launched lower-priced models, leading to pressure on gross margins.

As a "top student" among new energy vehicle manufacturers, Li Auto is undoubtedly one of the most profitable new energy vehicle companies in China. In the third quarter of this year, Li Auto's revenue reached 42.9 billion yuan, a year-on-year increase of 23.6%, with a net profit of 2.8 billion yuan, achieving profitability for eight consecutive quarters.

Li Auto stated that thanks to the strong sales of the Li L6 and the continuous increase in the sales proportion of models priced above 300,000 yuan, both delivery volume and revenue in the third quarter reached historical highs. In the market for new energy vehicles priced above 200,000 yuan, Li Auto's market share increased from 14.4% in the second quarter to 17.3% in the third quarter In terms of gross margin, Li Auto's overall gross margin is 21.5%, returning to a healthy line above 20%, slightly lower than 22% in the same period last year, but higher than 19.5% in the previous quarter. During the quarter, Li Auto's selling, general, and administrative expenses amounted to 3.4 billion yuan, a significant year-on-year increase of 32.1%. Research and development expenses were significantly reduced to 2.6 billion yuan, a year-on-year decrease of 8.2% and a quarter-on-quarter decrease of 14.6%.

Li Auto explained that the main reasons were the reduction in design and R&D costs for new products and technologies, as well as a decrease in some salary expenses due to layoffs in the first half of the year. Clearly, the increase in sales, the reduction in R&D expenses, and the layoff measures collectively helped Li Auto's overall gross margin return to above 20%.

However, after the third-quarter financial report was released, Li Auto faced pessimistic sentiment in the secondary market, with its stock price plummeting nearly 14%. Some market analysts attributed the management's conservative expectations to the impact of Huawei's HarmonyOS.

As the biggest competitor to Li Auto's L series, Aito's M9 has accumulated over 160,000 pre-orders, continuing to be the monthly sales champion in the Chinese market for models priced above 500,000. The cumulative delivery volume of Aito's new M7 this year has also surpassed 160,000 units, closely rivaling Li Auto's L6. Since its launch, the sales of Li Auto's L6 have exceeded 139,000 units within six months.

As a car manufacturer deeply tied to Huawei, Seres not only delivered an outstanding financial report in the third quarter but also exceeded market expectations with its gross margin growth.

In that quarter, Seres' revenue reached 41.582 billion yuan, a year-on-year increase of 636.25%; net profit soared to 2.413 billion yuan, surpassing the total net profit for the first half of the year. The cumulative net profit for the first three quarters reached 4.038 billion yuan. In terms of gross margin, Seres' gross margin for the third quarter was 25.53%, a year-on-year increase of 19.21%.

Currently, the price of the Aito M9 is above 450,000 yuan, while the M7 is priced between 250,000 and 330,000 yuan. Although Seres has not disclosed the gross margin per vehicle, industry insiders generally speculate that the gross margin for the Aito M9 is between 30% and 40%, while the M7's gross margin is about 15%, with a difference of more than double between the two.

From 2021 to 2023, Seres reported losses for three consecutive years, with losses of 2.793 billion yuan, 3.832 billion yuan, and 2.450 billion yuan, respectively. However, with the launch of the Aito M9, Seres' loss situation has gradually improved. The hot sales of models priced above 500,000 have allowed Seres to achieve profits in one quarter that cover the losses of the past year, proving the profitability of high-end models.

Perhaps in an effort to catch up with Aito, or to increase competitiveness in the pure electric market, Li Auto will reintroduce a brand new pure electric model to the market in 2025. According to market news, Li Auto's new models to be launched next year will reach 8, including 5 extended-range models, 1 super flagship, and 2 pure electric models.

Li Auto's Senior Vice President Zou Liangjun stated in the earnings call that Li Auto hopes to achieve a sales growth rate that is twice that of the new energy market growth rate of over 200,000 next year. Li Xiang also expressed great confidence in the subsequent pure electric models and will strive to place pure electric SUVs in the top tier of the high-end market Three, how long can selling cars at a loss continue?‍‍‍‍‍‍‍‍‍‍‍‍‍

In the sales ranking of new forces, apart from Li Auto and Seres, the other new force brands have not yet released their third-quarter financial reports. However, in the increasingly heated market competition, in order to solidify their position in the new energy market, car companies have to go all out, and the competition has become even more intense.

Taking Nio and XPeng as examples, in order to stay in the game, both brands have launched models priced below 200,000 yuan. In particular, the MONA M03 launched by XPeng has a price range of 119,800 yuan to 155,800 yuan, and within 72 hours of its launch, the number of pre-orders exceeded 50,000, greatly alleviating XPeng's predicament of low sales.

In the first full month after the MONA M03 was launched, its delivery volume reached 21,400 units, setting a new historical high for XPeng's monthly delivery volume. The delivery volume in October further increased to 24,000 units, a year-on-year growth of 20%.

However, the launch of this strong model has also brought new challenges. Due to capacity issues, XPeng has experienced delays in vehicle deliveries, leading to a lot of negative feedback. Many car owners, in order to meet the deadline for the "national subsidy" policy, have had to cancel their orders with XPeng and choose other brands or models instead.

In contrast, Nio's low-priced brand, Leidao, has a Battery as a Service (BaaS) rental plan starting at 149,900 yuan, making it Nio's first model priced below 200,000 yuan. In October, the delivery volume of the Leidao L60 was 4,319 units, although it increased by 419.11% year-on-year, the monthly sales still did not exceed 10,000 units, which is a significant gap compared to XPeng's MONA M03, which has delivered over 10,000 units for two consecutive months since its launch.

Looking ahead to the fourth quarter, the sales performance of Nio and XPeng may see some improvement compared to the previous quarter, but whether they can achieve profitability is still questioned by the market. Especially after launching new models at lower prices, the overall gross margin performance has become an important indicator for outsiders to measure the success of car companies' strategies. Currently, the market holds a relatively pessimistic view towards XPeng and Nio, which are still in a loss-making state.

Xiaomi Auto plans to launch a brand new SUV model next year, which may also bring an increase in sales; however, the pricing range will still determine the future sales space for Xiaomi Auto. For Li Auto, which has temporarily faced setbacks in the pure electric market, whether it can regain its momentum next year largely depends on its new model's pricing strategy.

Looking at the entire industry, the vast majority of car companies are under certain pressure from losses, and the issue of increasing revenue without increasing profit has become a challenge for most car companies.

Data released by the China Passenger Car Association recently showed that the automotive industry revenue reached 10.1 trillion yuan in 2023, a year-on-year increase of 12%, but the profit was only 508.63 billion yuan, with a profit margin of only 5.0%. From January to August this year, the profit margin of the automotive industry fell below 5%, standing at 4.7%, lower than the average profit margin of 6.2% for downstream industrial enterprises.

From January to August this year, the price war has led to a cumulative loss of 138 billion yuan in the overall retail market for new cars. Car companies are exchanging price for volume, and the entire industry chain is also feeling the pressure. ** Downstream automobile dealers generally face cash flow deficits and an increasing risk of funding chain breakage.

Currently, exchanging sales for scale has become the norm in the entire automobile market. Major automakers are compressing supply chain costs to create pricing space for price wars. While driving suppliers to the brink, most automakers have not made a profit. In the absence of a final solution from automakers, the loss pressure in the fourth quarter of this year may further intensify