In 2023, leading the way to achieve self-blood generation | Jianzhi Research

On the evening of March 25th, Leapmotor announced its annual performance for 2023.

As a leading manufacturer of second-tier new energy vehicles in China, Leapmotor not only narrowed the gap with first-tier new energy vehicle manufacturers in terms of sales volume, but also reached a turning point in profitability.

In 2023, Leapmotor achieved operating income of 16.75 billion yuan, a year-on-year increase of 35.2%; the gross profit margin turned positive for the first time, reaching 0.5%, an increase of 15.9 percentage points year-on-year; operating cash flow also turned positive for the first time for the whole year, reaching 1.08 billion yuan; the net loss also narrowed to 4.216 billion yuan, compared to 5.1 billion yuan in 2022.

1. Q4 Sales Hit a Record High, Gradually Catching Up with XPeng and Li Auto

In Q4 2023, Leapmotor's total sales reached 55,000 vehicles, a 135% year-on-year increase and a 25% increase from the previous quarter. Leapmotor once again set a new quarterly sales record, surpassing its peers NIO (30,000 vehicles) and NIO (50,000 vehicles), ranking second only to Li Auto (130,000 vehicles) and XPeng (60,000 vehicles).

Leapmotor completed the transition from the low-priced pure electric vehicle T series to the mid-to-high-priced extended-range vehicle C series in terms of product structure.

The first extended-range vehicle C11 of Leapmotor achieved an annual sales volume of 80,000 vehicles, accounting for 56% of the total sales, further increasing the sales proportion of the C series.

However, it is worth noting that the multiple price discounts by Leapmotor at the end of the third quarter and the fourth quarter had an impact on the per-vehicle income in the fourth quarter. This to some extent offset the increase in unit price brought by the increase in sales proportion of the mid-to-high-priced C series by Leapmotor.

Leapmotor, which joined the price war, reduced the prices of its T03 (by 8,000-10,000 yuan) and C series (official subsidy of 10,000 yuan) multiple times from September to November 2023, resulting in a per-vehicle income of only about 98,000 yuan in the fourth quarter, a decrease of 29,000 yuan from the previous quarter.

In 2024, Leapmotor's price reduction and promotion strategy continues. Earlier this year, Leapmotor once again offered a promotion where customers can enjoy a 17,000 yuan discount voucher for a 5,000 yuan deposit for all models. It is evident that sales growth and market share increase are still the core goals of Leapmotor.

2. Gross Profit Margin Turns Positive for the First Time in 2023, Net Loss Does Not Expand

In the third quarter of 2023, Leapmotor finally broke market doubts and achieved a positive gross profit margin for the first time, reaching 1.2%. Also, in the full year of 2023, Leapmotor also achieved an annual positive gross profit margin for the first time, reaching 0.5%, an increase of 15.9 percentage points year-on-year.

Leapmotor's sustained positive gross profit margin is believed by Wall Street News·Jianzhi Research to be due to the following reasons: First, since the second quarter of 2023, Leapmotor has shifted its focus to extended-range models, significantly reducing the cost of power batteries. The extended-range versions of Leapmotor's models have seen a nearly 50% decrease in battery capacity compared to the pure electric versions.

With the increase in sales proportion of Leapmotor's mid-to-high-priced extended-range C series models (reaching 73% in 2023), the overall per vehicle revenue in 2023 has increased compared to 2022, leading to an improvement in gross profit margin.

Secondly, Leapmotor, which insists on independent research and development across the board, has gradually begun to enjoy cost reductions brought about by economies of scale. In 2023, Leapmotor's net loss was 4.22 billion yuan, a decrease from 5.1 billion yuan in 2022. Previously, XPeng also stabilized its gross profit margin only after achieving sales of nearly 100,000 vehicles in 2021.

Although Leapmotor's delivery volume in 2023 was only 144,000, falling short of the annual target of 200,000 vehicles, the company still aims to achieve an annual sales target of 300,000 vehicles in 2024. If successful, economies of scale will continue to have a positive impact on the gross profit margin.

3. Expenses remain relatively rigid

With the advent of the era of intelligent driving in the automotive industry, many new energy vehicle companies have increased their research and development investment in the field of autonomous driving.

In 2023, Leapmotor's R&D expenses reached 1.92 billion yuan, a year-on-year increase of 36.1%. Leading Leapmotor has always insisted on independent research and development in areas such as motors, electronic controls, and vehicle networking solutions.

In the fourth quarter of 2023, Leapmotor gained recognition from the overseas automotive giant Stellantis Group, deeply integrating with Stellantis Group's international joint venture company "Leapmotor International," and became one of the only two domestic new energy vehicle companies to monetize their technology.

Leapmotor's sales expenses also continued to grow, with sales expenses in the fourth quarter of 2023 reaching 1.795 billion yuan, a year-on-year increase of 61.2%.

In 2023, Leapmotor, which adopts a direct-operated and franchised model, began implementing a survival of the fittest model for its dealers, requiring efficiency improvements and optimizing the number of direct-operated stores. By the end of 2023, Leapmotor had 560 stores, covering 182 cities, an increase of 2 cities compared to the previous year For Leapmotor, in 2023, it finally achieved positive operating cash flow and self-generation of funds. In 2023, its net cash flow from operating activities was 1.08 billion yuan.

At the end of the fourth quarter of 2023, Leapmotor's cash and cash equivalents, restricted cash, and bank time deposits amounted to 19.39 billion yuan, an increase of 98.2% compared to the same period last year. Combined with the positive operating cash flow, Leapmotor has already achieved a positive cycle in its operations.

Leapmotor finally achieved a positive gross profit margin in 2023, marking a milestone in self-generation of funds, getting closer to successfully joining the ranks of top carmakers