Leapmotor (Trans): FY net profit guidance cut from RMB 5bn to RMB 3bn

Below is Dolphin Research's Trans of Leapmotor's FY26 H1 earnings call.

I. Key takeaways from the results

1. Full-year net profit guidance cut from RMB 5 bn to ~RMB 3 bn.

The initial full-year net profit guide was RMB 5 bn, which management now calls 'highly challenging' under current conditions, mainly due to rising raw material costs compressing GPM. The new guide is ~RMB 3 bn.

2. Full-year GPM guided at 13%–14%, with vehicle GPM at 10%–11%.

H1 GPM was 11.7%, down 240bps YoY (vs. 14.1% in H1 2025). Q2 GPM was 12.6%, up 320bps YoY.

Management expects H2 GPM to exceed H1. Even a return to last year's level would not be considered strong, and hitting that target will require significant effort.

3. Carbon credit revenue was RMB 800–900 mn in H1, with ~RMB 500 mn in Q2; R&D services had no material contribution in H1.

Carbon credits in Europe are tracking well, but pricing is lower than last year (as flagged in Q1), so revenue growth lags unit growth in absolute terms. On R&D services, projects with FAW and Stellantis continue, and management said related announcements are coming soon; H1 revenue was 'some' but not material and will be disclosed upon formal milestone acceptance.

4. Key H1 financials

a. Topline: revenue of RMB 38.11 bn (+57.2% YoY); attributable net profit of RMB 210 mn; adj. net profit of RMB 270 mn.

b. Cash: period-end cash and equivalents of RMB 38.59 bn; operating cash flow of RMB 270 mn (vs. RMB 2.86 bn a year ago), FCF of RMB 140 mn (vs. RMB 860 mn a year ago).

c. Investment income: a loss in H1, which management attributed to FX volatility weighing on JV earnings. This is expected to reverse in H2, with Leapmotor Intl’s full-year profitability unaffected.

II. Earnings call details

2.1 Management remarks

1. Sales and market position

a. H1 deliveries were 356k units (+60.8% YoY), ranking No.1 among China's new EV makers. Jul sales exceeded 100k units for the first time (+102% YoY), making Leapmotor the only new EV maker with a 100k+ delivery month.

b. Ranked No.4 globally among NEV brands by sales. Domestic NEV share rose to 5.71% in H1 (vs. 4.22% at end-Q1); H1 lead-to-order conversion rate was 4.3%.

2. Product matrix: full rollout across A/B/C/D series

a. A series: A10 launched in Mar, bringing LiDAR and advanced ADAS below RMB 100k; the 100,000th unit rolled off on Aug 7, and it topped domestic SUV sales for three straight months from May to Jul. A05 launched in Aug with a starting price of RMB 63,900.

b. B series: on Jul 16, upgraded B10 and B01 were launched on an 800V platform with zero-gravity seats and a large center display. They deliver a RMB 200k-level experience at sub-RMB 100k price points.

c. C series: refreshed C10/C11/C16 launched on Jun 16 across the RMB 120k–180k band, with combined Jun sales topping 30k units. Since its 2021 debut, C11 has sold over 350k units, and the C series has over 850k users cumulatively.

d. D series: D19 launched on Apr 16 and was the top-selling large SUV for two consecutive months, with the range-extender version using an 80.3kWh pack and the BEV version at 111kWh (CATL cells). D99, a flagship MPV with an ASP above RMB 300k, launched on Jun 26.

e. Sedans: Lafa launched in Apr targeting sporty and younger users in the RMB 100k–150k band. Since its late-2025 launch, the series has sold over 40k units cumulatively.

3. Technology and AD

a. The Leap 4.0 architecture debuts on D19, built on Qualcomm 8797 with single/dual SoC options, enabling scenario-based scheduling of GPU/CPU/NPU. Cabin and AD data are integrated, with millisecond-level response.

b. The AD stack now covers the entire A/B/C/D lineup.

4. Domestic channels and service

a. As of Jun 30, coverage reached 298 cities (87.4% city coverage), with 1,064 sales stores and 562 service outlets, net adds of 258 and 101 respectively vs. 2025.

b. New multi-function stores (showcase, test-drive, delivery, and after-sales in one) have been introduced, with flagship stores in Shanghai and Shenzhen already operating. H1 service NPS reached 57.8%.

5. Intl expansion and localization

a. H1 exports were 96.3k units (+72% YoY), already above full-year 2024 exports. Jul exports exceeded 17k units, taking Jan–Jul exports above 113k, with full-year exports likely above 150k.

b. BEV share in Italy surpassed 25%. In Jun, Leapmotor became the No.1 Chinese NEV brand in Germany and ranked No.3 in the UK.

c. By end-Jun, Leapmotor entered 45 countries across Europe, South America, and Africa, with 1,000+ stores (900+ in Europe, 50 in APAC, 30+ in South America). Leapmotor entered Mexico in Q2.

d. Localization: the Malaysia assembly plant has started SOP for C10, and B10 will enter mass production and launch in Q3. The Spain plant with Stellantis has been secured; B10 local assembly in Stellantis' Brazil facility is planned for H2 2027.

6. ESG and digitalization: received MSCI ratings for three consecutive years, with EcoVadis upgraded from Bronze to Silver and a rank improvement from top 35% to top 15%. In-house AI has been upgraded to 2.0 and is embedded in R&D, supply chain, marketing, and customer service.

2.2 Q&A

Q: Can you break out Q2 revenue from carbon credits and R&D services?

A: Carbon credits were RMB 800–900 mn in H1, with ~RMB 500 mn in Q2; R&D services had no material contribution in H1. Carbon credit sales in Europe progressed well, but pricing declined vs. last year (as guided in Q1), so revenue growth lagged the absolute growth in volumes.

On R&D services, projects with FAW and Stellantis continue, and management said related announcements are coming soon.

Q: Did R&D services contribute any revenue in H1?

A: Some, but not material; details will be disclosed after formal milestones. Management did not provide specific amounts or revenue recognition criteria.

Q: Any change in H2 costs, and is the full-year profit guide updated?

A: Full-year net profit guidance cut from RMB 5 bn to ~RMB 3 bn; GPM guided at 13%–14%. Management said the RMB 5 bn net profit target set at the start of the year is 'highly challenging' in the current environment, mainly due to rising raw material prices directly impacting GPM.

Under current conditions, the guide is full-year net profit of ~RMB 3 bn and full-year GPM in the 13%–14% range.

Q: What is the vehicle-level GPM?

A: Vehicle GPM is ~10%–11%. This is lower than the overall GPM of 13%–14%, with the delta driven by non-vehicle revenue such as carbon credits and R&D services.

Q: How does Leapmotor benefit from the EV tech partnership with Stellantis? Could it extend to range-extended or a second model?

A: Management declined to detail the benefit path or new model specifics, saying new cooperation will be announced soon. They emphasized Leapmotor's mature component supply capability as the foundation of the partnership, aiming to export this advantage to partners, which defines both the cooperation direction and Leapmotor's benefit.

More details will be shared after formal announcements.

Q: With the EU's new local procurement requirements, can Leapmotor leverage Stellantis' supply chain?

A: It can leverage but will not fully rely on it; supplier selection will still prioritize quality and cost. Stellantis' existing supply chain is an important resource, and Stellantis will support supplier selection for Leapmotor and Leapmotor Intl.

However, Leapmotor will not rely entirely on Stellantis' local supply chain. Building on Leapmotor Intl's own local supply chain, the company expects higher efficiency and better cost control.

Q: What is the overseas sales target for this year and next year, and how by region?

A: This year is expected at 200k units; next year's goal is 350k–400k units, with a stretch goal of 400k. The original 2025 target was 120k–150k units; management now expects to achieve 200k units.

They are confident about next year and, together with Stellantis, aim for 400k units. Regional mix will be similar to this year: Europe remains the core, South America will be a key contributor, with APAC and Australia also in the mix.

Q: What is the planned capacity for Europe (Spain) and Latin America next year?

A: No specific capacity numbers were given; capacity will be borrowed from partners and is not a bottleneck. Europe and South America currently use partners' capacity, with full support and commitment from Stellantis to meet Leapmotor's needs.

Management stressed Stellantis has ample capacity in Europe and South America, making capacity an advantage rather than a concern.

Q: Stellantis said profitability is not the main target for the first three years. What is Leapmotor Intl's per-vehicle profitability?

A: Leapmotor Intl's overall GPM will remain very low for the first three years; the top priority is overseas volume, not profit. Leapmotor Intl is a JV, with Leapmotor owning 49% and Stellantis 51%; Leapmotor's margin reference is the price before selling to Leapmotor Intl.

The three-year period will pass quickly, after which both parties will revisit Leapmotor Intl's operating arrangements. The JV was profitable last year, and this year's operations are also strong with rapid growth.

Management said the company is still in a hyper-growth phase and needs to capture more share overseas. While profitability matters, volume is the top near-term priority.

Q: Leapmotor achieves strong AD results with modest spend. What's the secret?

A: Early investment focused on laying the foundation, and spending was ramped only after the large-model direction became clear last H2. AD investment did not start recently; from inception, intelligence was a core tech direction, but early efforts focused on groundwork rather than heavy spending for output.

The tech route evolved from HD map-based to mapless approaches. Management avoided rushed decisions until they saw physics-based and large-model approaches as the future, after which they increased budget and hiring last H2. Models with in-house AD launched last year, building substantial data, enabling the new solution to be unveiled in Sep.

The conclusion: once the direction is clear, concentrate investment to achieve outcomes in a shorter time with more controlled spend.

Q: Is the AD roadmap focused on L2+/L3 cost control, or moving toward L4?

A: Pursuing both paths, with software and hardware roadmaps for L2+, L3, and L4. Hardware includes not only AD components but also chassis and other systems, with comprehensive plans in these areas. No timeline or cost targets were disclosed for each tier.

Q: Of the 350k–400k overseas target next year, how many will be locally produced? Is the Spain plant still opening in Oct?

A: Only B10 at ~50k units will be locally produced next year, a small share; the Spain plant opens in Oct. CEO Zhu Jiangming and Stellantis senior leadership will attend the Spain plant opening in Oct, with plans progressing smoothly.

Next year, only B10 will be locally produced, so its share within 350k–400k units is small, at ~50k units. More locally produced models will follow as the company scales.

Q: How much improvement in per-vehicle net profit from localization?

A: GPM will improve vs. current levels, but not as much as the market expects. Localization brings tariff advantages, but local component costs are higher than in China, limiting net GPM benefit after offsets.

As tariff policies evolve, localization benefits should become more visible, so the net profit uplift will not show immediately but should materialize over time. Localization in Europe, South America, and other regions is a critical strategic direction.

Q: Beyond AD, what else will be unveiled at the Sep event?

A: Dated for Sep 16, with new technologies in AD, batteries, and motors; details remain under wraps. In addition to the new AD solution, other technologies will debut with industry experts participating. The new AD solution will be rolled out across the A to D series simultaneously.

Management said it is not convenient to disclose more now and invited participants to the event in Huzhou, Zhejiang (elsewhere noting Hangzhou).

Q: A subsidiary added robotics to its business scope. What's the outlook for robotics?

A: Plans are in place and an official announcement is coming soon, while noting scope additions by subsidiaries are common. Management acknowledged recent news and said adding new business scopes is a routine practice.

They added that NEV makers with in-house R&D have unique advantages in embodied intelligence and humanoid robotics. The company indeed has plans and will make formal announcements soon.

Q: Why will H2 GPM be higher than H1?

A: Mainly scale effects as monthly volumes ramp, plus stabilizing raw material prices. First, rapid sales growth in recent months brings scale benefits, improving raw material and manufacturing costs.

Second, raw material inflation pressures stabilized in H1, with commodities steadying and lithium carbonate prices more stable. Combined with scale and manufacturing optimization, GPM will improve.

Management also cautioned that even a return to last year's level is not a strong GPM, and achieving that already requires major effort.

Q: Post C-series refresh and A05 launch, what is the monthly sales mix across A/B/C/D?

A: B and C series show modest YoY growth, D series is strong, and the two A-series models exceed 30k units per month combined. B and C series are up modestly YoY.

D series sales have been very strong since D19 and D99 launched. A10 and A05 are fully launched, and the two models together will exceed 30k units per month, which roughly defines the current mix.

Q: What are the new model plans for 2027?

A: More new models than in 2026, with additions across D, C, and B series. Management said next year remains a heavy new-model year; after A05, major launches for this year are largely done, with only minor refreshes likely.

In 2027, the D series will see new models, the C series will have both new models and upgrades, and the B series will also add new models. Internal product prep is not a major challenge; the focus is to pace launches and refreshes.

Q: What is the capacity of the Spain plant and progress on a second plant? How exposed is export risk to EU BEV/PHEV policy changes?

A: Reiterated no capacity constraints and ongoing selection of the optimal plant, without addressing EU policy risk exposure. With local partners, both parties remain prudent on capacity; Europe and South America have ample capacity to support localization.

Plant selection balances available capacity, location, and supply chain conditions to find the best site. Having a local partner like Stellantis is a major advantage, enabling lower-cost localization and broader optionality.

Q: Why did investment income show a loss in H1?

A: Mainly FX volatility weighing on JV earnings, expected to reverse in H2. The key factor was FX impacts on JV profitability.

This should be offset in H2, and Leapmotor Intl's full-year profitability will not be affected.

Q: Are export shipping capacity constraints still an issue? Any plans to expand overseas channels?

A: Shipping capacity has improved vs. Mar–Apr and can support 200k overseas deliveries this year. China NEV exports drove a surge in Ro-Ro demand, tightening capacity in H1; the company has engaged major shipping firms and Stellantis' global strategic partners.

On channels, overseas stores now exceed 1,000, mostly in Europe, with plans to expand in Eastern and Northern Europe.

South America is another focus: the company entered Argentina last month and will sell in Brazil, Argentina, and Uruguay, with rapid expansion expected in South America and continued APAC buildout.

Management said Europe and APAC are in partnership with Stellantis, while in South America, Stellantis' network is highly developed with a No.1 share far ahead of No.2, which will be leveraged to drive volume growth.

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