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Author | Chai Xuchen
Editor | Zhou Zhiyu
Leapmotor's sales records are still being refreshed.
Since the beginning of this year, Leapmotor has been accelerating rapidly. In January, the delivery volume was only 25,000 units, but just over six months later, the delivery volume in August surged to 57,000 units. It seems inevitable to surpass the 60,000 mark next. What’s more noteworthy is that this rising star has become the second new force car company to achieve profitability after Li Auto, making money earlier than Nio and XPeng.
In such a fiercely competitive industry, why is Leapmotor breaking through?
“Half-price Li Auto,” “price butcher,” “car circle Redmi”... High configuration at low prices has become Leapmotor's hallmark. In the past two years, under the ongoing heated price war in the automotive industry, Leapmotor has capitalized on market dividends with its cost-based pricing strategy.
With its ambitions soaring, Leapmotor has raised its annual sales guidance and aims to sprint towards a million annual sales next year, corresponding to a monthly sales target of over 83,000 units. This is a &#34;astronomical number&#34; for most new forces currently.
In an interview after the Chengdu Auto Show, Leapmotor's Senior Vice President Cao Li concretely described this grand strategic blueprint to Wall Street Insight: once the four series of models, A, B, C, and D, are complete, Leapmotor will truly possess the systemic capability to hit the annual sales target of one million.
In his expectations, the B series, which focuses on volume, is expected to achieve monthly sales of 30,000 to 40,000 units, while the C series could contribute around 40,000 units in monthly sales; the A and D series sales are limited by positioning and pricing, but combined, they could also sell up to 30,000 units a month. At this point, Leapmotor's total monthly sales would exceed 80,000 units, “Our total annual sales next year will not just be one million units,” Cao Li stated confidently.
By capturing the mainstream market of 100,000 to 300,000 yuan, Leapmotor has revealed its &#34;fangs.&#34;
It is understood that in addition to the ABCD series, Leapmotor is also brewing a new product line—lafa, preparing to enter the personalized market. The first product, lafa5, will debut at the Munich Auto Show on September 8.
Interestingly, lafa5 actually evolved from the B series, originally named B05. The independent lafa series indicates a subtle shift in Leapmotor's strategy. In this regard, Cao Li explained to Wall Street Insight, “Now that the ABCD series is basically fully laid out, while perfecting the matrix, we need to create a more personalized series, because satisfying this user group can help us achieve greater volume.”
Cao Li emphasized, “Personalization is not a niche market; it is also a mass market. We hope that this (lafa) series can have enough volume to support it.”
From the perspective of the market and competitors, Leapmotor is expected to continue its momentum. However, while charging ahead, Leapmotor is not without concerns.
Previously, the brand had not built consumer awareness in the personalized market corresponding to lafa, nor in the high-end market of the D series priced above 300,000 yuan. Can the Leapmotor brand sustain its current rapid pace, and how will it balance the increasingly complex overseas market environment and potential tariff barriers?
The following is a transcript of the conversation with Cao Li, Senior Vice President of Leapmotor, and Zhou Ying, Vice President:
Question: When will Leapmotor's assisted driving technology be able to show its true potential?
Cao Li: We have significantly increased our investment in assisted driving over the past two years. Strategically, we will continue to embed hardware across our entire model range, ensure sufficient safety redundancy, and continuously iterate on software. I believe that the first half of next year will definitely see us in the leading tier.
Question: Have you considered introducing assisted driving suppliers in the future?
Cao Li: Our philosophy remains firmly rooted in self-research and development. If there are more open forms of cooperation in the future, I think we can explore them. Leapmotor has always maintained a relatively open attitude. At least all our core components are self-developed, utilizing our competitive systems and components.
Question: The B series is now basically around 100,000, and there are plans for the A series products in the lower price range. How do you make sensitive distinctions between these models?
Cao Li: If we look at the volume and price segmentation of consumer market models, there is still a range difference between A and B, especially in overseas markets like Europe, where B is considered a mainstream model, while A is equivalent to the domestic A0.
In China, the differences between A and B are also quite obvious. The B10 represents a segment above the traditional compact car. The traditional A and A0 segments are the main focus of our A series, so there will still be some noticeable differences in size, product quality, and price.
We have already reached the 100,000 level for the B series, and how to position the A series is crucial, as a few thousand or ten thousand yuan can significantly influence a user's car purchasing decision, especially in the price range below 100,000.
Question: The D series is aimed at the 300,000 and above market, which is highly competitive. Leapmotor has not sold cars at such a high price before. What is the overall consideration now?
Cao Li: The D series is currently positioned around 300,000, which traditionally approaches the price range of luxury cars. However, there is a trend in the Chinese consumer market for users' car purchasing budgets to move upwards, which is still a very large mainstream market. The D series can also achieve a relatively large scale in terms of volume.
Similarly, at the 300,000 price point, we can compete with large new energy vehicles currently on the market priced at 500,000 or even above. As for whether the brand can support such a price, I believe our brand will accumulate value over time.
Question: Leapmotor's speed of going overseas is very fast. How can you further shape and strengthen the brand image in the international market to make the Leapmotor brand more recognizable overseas?
Zhou Ying: Relying on the Stellantis Group, we have nearly 600 outlets in the European market. In traditional automotive consumption and manufacturing powerhouses like Germany, we have also received high user evaluations.
There is no shortcut to brand building. To be frank, we are still a relatively unfamiliar brand to overseas consumers. In this process, how to quickly gain their favor relies more on our product competitiveness, which can refer to the trajectory of Leapmotor's development in the domestic market
&#34;Higher configuration, better quality, good but not expensive.&#34; This product concept is equally applicable overseas, where the automotive consumption philosophy is more rational in regions with developed car consumption.
Q: What are the main concerns of overseas dealers when dealing with relatively traditional markets like Europe?
Zhou Ying: This year, we have initially gained local market recognition through the introduction of T03 and C10. Next, we will accelerate the introduction of new products, including the all-new B10 at the Munich Auto Show in September, as well as a new globally strategic product, LAFA5. Throughout this process, we will continuously strengthen the integration and adaptation of the local team and the domestic team.
Cao Li: Leapmotor is a car company, but we want to make Leapmotor a global brand. This requires us to understand local user needs and cultural differences when entering global markets. Gradually, acceptance of Chinese new energy vehicle brands is increasing, and we will truly speak with our technological strength and products, rather than just telling a story.
Q: Leapmotor manufactures a significant proportion of components in Europe. If we localize production, will this change our cost management or pricing strategy?
Cao Li: There is indeed an impact in this regard. It is impossible to have 100% uniformity when going overseas; manufacturing costs, especially in Europe, are very high, and labor costs are also very high. Therefore, we will balance this economic aspect. To meet the 40% localization requirement in Europe, we will choose some major components, such as seats and bodywork. However, this area has very mature industrial manufacturing, so we will select local suppliers with advantages to help us with these.
We can export our self-developed core components, which have high added value and relatively controllable transportation costs, such as controllers, motors, and cabins. Therefore, we will adopt a balanced approach, which will lead to a slight increase in costs, but the overall selling price in Europe will still differ from that in the domestic market.
The domestic market is currently very competitive, and everyone is becoming more aggressive, but it will not just be a price war; instead, it will be about technology—being more advanced and faster, with better quality and interior design. This is a positive trend; there will definitely be some who fall and some who succeed in the competition, and those who succeed will be the ones with stronger technological capabilities and better products. This is the direction Leapmotor has always aimed for, rather than selling at lower prices, which is not sustainable in the long run.
Q: Is local manufacturing a more advanced stage or an inevitable stage for Leapmotor to become a global brand compared to exporting? With Chinese car companies flooding into the Southeast Asian market, a price war seems unavoidable. How does Leapmotor view this phenomenon?
Cao Li: From the historical development of the entire automotive industry, localization is definitely inevitable. The speed of reflecting local demand should be fast enough; you need to understand local needs, user demands, market environment demands, and even government-level demands sufficiently
To do market sizing, localization is definitely necessary. Currently, in Southeast Asian countries, when the production capacity of Chinese car companies is already very crowded, this is a state in the development process. However, we need to find a balance; it doesn't mean that entering every large-scale market requires 100% localization. We need to assess whether localization is cost-effective at this stage, considering factors like tariffs, the status of local supply chains, local manufacturing costs, and comparing them with our export status, as well as whether we can keep up with market response speed. We need to find a balance.
Q: What is the current progress of Leapmotor's localized production in Europe and the production plan for localized models?
Cao Li: Currently, we are making very steady progress, aiming to localize the production of the B10 and subsequent new products in Europe next year. This also utilizes Stellantis's factory capacity to introduce our products and meet local tax requirements for localization, achieving the best economic efficiency and competitiveness.
Q: What is the progress of the cooperation with FAW?
Cao Li: Regarding the cooperation with FAW, I find it puzzling that people are saying 10%. We are steadily advancing the cooperation on one of the models with FAW, and discussions on capital cooperation are also ongoing.
Q: Recently, there has been a sudden surge in pure electric large SUVs. What are Leapmotor's thoughts on this?
Cao Li: This is actually related to the demand from market users. As living standards gradually improve, including the situation of multi-child families, the demand for multi-seat models is increasing compared to before. Therefore, everyone will be working on this, as they are all seeing this trend, which is very normal.
Q: Recently, Leapmotor and Zhongxin Innovation established a company called New Energy Company. What are the future thoughts on battery swapping?
Cao Li: We have established a joint venture with them, mainly focusing on batteries. As for battery swapping, we are currently pricing our vehicles based on C2C, and we haven't made extensive plans or designs for battery swapping.
Q: How has Leapmotor gradually established itself as a leader among new forces?
Zhou Ying: From the first product, the T03 sold a few hundred units a month, and the C11 initially sold one to two thousand units a month. By last year, the monthly sales of the C11 exceeded ten thousand. The B01 model exceeded ten thousand units in sales in its second month after launch. From this process, we can see that this is the accumulation of Leapmotor's technology and capabilities. By the time we reached the B series, we had achieved very good scale effects and word-of-mouth effects.
Q: Leapmotor's gross margin has increased to 14.1%. Compared to other new forces, it is still relatively low. In the future, do you expect it to reach over 20% like competitors, or maintain a relatively balanced state?
Cao Li: All our products are priced based on cost; we do not blindly pursue high gross margins because our goal is to become a global car company. We must have scale, with future targets of 3 million to 4 million units to enter the top ten global car companies. In this process, we must still maintain a reasonable gross margin to ensure the company can sustain steady growth. Therefore, at this stage, I believe a gross margin of 14-15% is relatively reasonable
Question: Does the expansion and parts business have a greater support for Leapmotor's gross margin improvement?
Cao Li: The parts or external cooperation indeed has a certain supplementary role, but we are still primarily focused on complete vehicles. Our first priority is to scale this up. In the future, as the volume of parts increases, expanding external sales will be our new growth curve, and the future space is very large. At this stage, we need to focus on volume and increase Leapmotor's market share.
Question: What effect does Leapmotor want to achieve at international auto shows like the one in Munich?
Zhou Ying: This year's Munich Auto Show was organized and operated by Leapmotor's international team, and many changes occurred during this process. In addition to the Munich Auto Show, there will be large overseas auto shows in the fourth quarter, all accompanying our internationalization process. We are not going blindly; auto shows are a good scene for consumers and the industry to understand this brand. Therefore, we will appropriately advance our participation in auto shows in other markets in conjunction with the overall market expansion and product situation.
Question: When considering overseas models, does Leapmotor prioritize scale or profit first?
Cao Li: Our pricing strategy overseas indeed prioritizes scale, but profit must also be considered because revenue is necessary to invest in the market and build the brand. As for how to price, it still depends on competition. I need to balance having a certain profit to support continuous investment in brand building and market deployment to support the primary factor of volume and increase it.
Question: Is the main increment in the second half of this year from the newly launched B series, and where will the main increment for next year's million sales target come from?
Cao Li: The B series is actually the largest market in terms of volume, around 100,000 to 150,000 units. Whether it's this year's 600,000 units or next year's 1 million units, in the proportion of A, B, C, and D, B and C are the main sales contributors. A and D are not niche markets either. Only by achieving the expected volume for A, B, C, and D can we have the premise to reach 1 million.
To maintain 1 million units, we need at least 80,000 to 100,000 units per month. First, both B and C series need to exceed 40,000 units, while the D series, with three higher-priced models, has an annual target of 30,000 to 40,000 units. If all models are aligned according to this ratio, it will exceed 1 million units.
Question: What considerations led to LAFA5 being separated from the B series?
Cao Li: Now, the products in the A, B, C, and D series are basically laid out, and while the matrix is complete, we need to create more personalized series because satisfying this user group can increase volume. What I mean by personalization is not a niche market; it is also a mass market. We expect this series to have enough volume to support it

09863

The million-dollar goal is made concrete

- Leap Motor has significantly increased its vehicle deliveries, reaching 57,000 units in August, up from 25,000 in January.  
- The company aims to surpass 100,000 annual sales next year, driven by its competitive pricing strategy and the introduction of new models, including the lafa series.  
- Despite its rapid growth, Leap Motor faces challenges in establishing brand recognition in international markets and navigating complex competition.

Leapmotor's ambitions are ramping up