This year's biggest dark horse in the automotive industry is born

Author | Chai Xuchen

Editor | Zhou Zhiyu, Wang Xiaojuan

In the domestic mainstream automotive market, a disruptive dark horse has emerged.

From being a second-tier player with a monthly sales scale of 10,000 units a year ago to now preparing to hit a monthly sales target of 40,000, Leapmotor, which had previously not received much spotlight, has unexpectedly become an anomaly in the new energy vehicle market.

With the successive launch and facelift of four models in the C series this year, Leapmotor's scale has surged, delivering 38,100 vehicles in October, surpassing Aito to become the second-best new force after Li Auto. Chairman Zhu Jiangming revealed that Leapmotor will exceed its annual sales target of 250,000 units this year. This has also brought some "happy troubles," as its two factories in Jinhua, Zhejiang are now operating at full capacity.

Not only has sales surged, but with the hot sales of high-margin models like the C16 and C10, Leapmotor's gross margin in the third quarter rebounded by 5.5 percentage points to 8.2%, exceeding market expectations; losses have also shrunk, with an adjusted net loss of 540 million yuan.

This means that Leapmotor has finally achieved a breakthrough in brand recognition in a fiercely competitive market, aligning its sales and financial levels with giants like Li Auto, BYD, and Tesla. Zhu Jiangming confidently set a flag at the earnings conference, stating, "Next year, a sales target of 500,000 units and a gross margin of over 10% is the minimum goal."

It is important to note that there are many players in the mainstream market, and both "new waves" and "old money" are eager to break BYD's monopoly, but there have yet to be any successful cases.

What has allowed Leapmotor to stand out amidst the smoke of market share and price wars is its focus on the price segment it occupies, providing users with competitive products.

With a "Uniqlo" strategy and a "half-price Li Auto" label, Leapmotor's C series SUVs have quickly gained popularity in the market this year, becoming the brand's moat. Leapmotor President Wu Qiang revealed that over 80% of the new orders in October were for the C series, with each of the C11, C10, and C16 models receiving over 10,000 orders. This has allowed Leapmotor to firmly establish itself in the 150,000 yuan price segment.

In terms of product strength, Leapmotor has shifted from meticulous all-domain self-research to focusing on investments in intelligence, especially in smart driving. Wu Qiang stated that Leapmotor is currently increasing its investment in manpower, computing power, and equipment for smart driving, even establishing a separate smart driving research institute, with plans to mass-produce end-to-end capabilities next year. Zhu Jiangming has boldly claimed that they aim to enter the top tier of smart driving by the end of next year.

By focusing on specific product categories, price segments, and product strength, Leapmotor's strategy aligns with that of "new force leader" Li Auto.

In Zhu Jiangming's view, electric vehicles are essentially large electronic products, and their iteration and price reduction speed are much faster than traditional fuel vehicles. At the same time, in the current market environment of consumer downgrading, cost-effectiveness will increasingly become a consumer preference After capturing the 150,000-200,000 yuan market segment, Leapmotor aims to continue its momentum and dive deeper into the 100,000-150,000 yuan range, which holds greater market share potential. Zhu Jiangming has thus unveiled the new B series as a game changer.

Zhu Jiangming revealed that the B series will be a key contributor to incremental growth next year, with plans for three models that are set to replicate the success of the C series and enter the largest sub-market in China. "Although it is a B-class car, we want to sell it at A-class car prices," Zhu Jiangming stated, adding that advanced driving features will be incorporated, using lidar and the Qualcomm 8650 chip in the B series.

Zhu Jiangming expects the B series to reach a scale of 40,000 units per month, surpassing the C series within the next two years. These two series will together become the main force for Leapmotor, accounting for 60% to 70% of sales.

In other words, Leapmotor is preparing to capture the market from 100,000 to 200,000 yuan. According to data from the Passenger Car Association, this price range accounted for 51% of passenger car sales in the first ten months of this year. To achieve this, Leapmotor is building new production capacity in Hangzhou and Jinhua, which will commence production in the first half of 2025 and early 2026, respectively, aiming for a total production capacity of 1 million units per year.

Looking ahead, Leapmotor will also launch the A and D series by 2026, targeting models priced at 60,000-80,000 yuan and 250,000 yuan, respectively. Zhu Jiangming's grand vision is to achieve full coverage of the 60,000-250,000 yuan market through the "ABCD" platforms.

On the other hand, leveraging resources from Stellantis, Leapmotor International is also preparing to follow a similar growth trajectory as in China, expecting to welcome an explosive growth phase after solidly navigating the first two years of cultivation. To this end, Leapmotor will accelerate local manufacturing to reduce tariffs and transportation costs, gradually expanding into the Asia-Pacific, Middle East, and South American markets.

At this moment, Leapmotor's ambition is also evident—aiming to become the next BYD. In the eyes of the market, Leapmotor seems to have already won, but Zhu Jiangming has posed a soul-searching question to himself.

"Currently, selling 500,000 units a year is enough to survive, but if we can't reach a million units in three to five years, can Leapmotor still survive?" In an interview, he candidly stated to Wall Street Insights that market share is crucial for Leapmotor. Currently, Leapmotor ranks 9th or 10th among new energy vehicle companies, and in the next three years, Leapmotor must significantly increase its sales, "You can only survive in the top five, and you can only thrive in the top three."

Zhu Jiangming is not being overly optimistic, as the mainstream market where Leapmotor currently operates is filled with temptation but also fraught with crises. Established automakers like BYD, Great Wall, and Geely, with abundant resources, are fiercely competing in this price range, while newer players like XPeng are ramping up their efforts. Once-prominent brands like Neta are gradually losing their voice amid the reshuffling.

Most players are hesitant to claim victory, as the wheel of fate is always turning.

Zhu Jiangming stated that everyone is currently competing for market share from fuel vehicles, which is relatively easier. The next phase will see no incremental growth, only fierce competition within the existing market, making it significantly more challenging. "Without scale, you won't even have the capital to compete," Zhu Jiangming bluntly remarked The only ultimate means of survival is to scale up and become a giant with a voice. Zhu Jiangming believes that to truly survive until the end, one must have over 3 million vehicles. His heavy bets on new series and going overseas are aimed at gradually approaching this scale. In the global automotive market, a top-tier seed player is growing rapidly.

However, on this path to advancement, Leapmotor must respond to the ever-changing market dynamics with a more agile posture, so that its dream of becoming a giant can truly be realized