Key Takeaways
Zhejiang Leapmotor Technology Co. (HKEX: 9863) reported an 8 percent year-over-year increase in first-quarter revenue to CNY 10.82 billion, though profitability declined as the company navigates a shifting product mix and intense market competition.
"In Q1, the company’s revenue is CNY 10.8 billion, up by 8 percent," Chief Financial Officer Li Tengfei said on the company's earnings call. He attributed the growth primarily to increased vehicle and parts deliveries, which was partially offset by a lower average selling price due to product mix changes.
The electric vehicle maker's gross margin fell to 9.4 percent in the first quarter, a significant drop from 14.9 percent in the same period last year. Net loss widened to CNY 390 million from CNY 130 million a year earlier. Leapmotor delivered 110,155 vehicles in the quarter, a 25.8 percent increase from the prior year, with exports accounting for over a third of sales at 40,901 units.
Despite the margin pressure, Leapmotor's management maintained its full-year guidance. The company reaffirmed its Q2 sales target of 240,000 to 250,000 units and its annual profit goal of CNY 5 billion, though it acknowledged "potential risks" from raw material price volatility.
In a strategic update, executives confirmed the development of a second brand intended to capture a different market segment. The new brand is scheduled for an official debut by the end of 2026, with its first products expected to launch by the middle of 2027. The move pits Leapmotor against local rivals like Nio Inc. and XPeng Inc., which are also expanding their brand portfolios to cover more price points.
The guidance and new brand announcement provide a roadmap for growth, but the sharp decline in gross margin highlights the execution challenges in China's competitive EV market. Investors will watch closely to see if strong delivery growth, particularly in overseas markets, can offset margin pressures in the coming quarters. The company's next major catalyst will be its Q2 earnings report and the May sales figures to be announced on June 1.
This article is for informational purposes only and does not constitute investment advice.
