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Recently, Leapmotor released its financial report for the first half of 2024.

Data shows thatLeapmotor delivered 86,696 vehicles in the first half of the year, a year-on-year increase of 94.8%, and its revenue was 8.85 billion yuan, a year-on-year increase of 52.2%.In the first half of the year, the gross profit margin was 1.1%. Although the net loss was still 2.212 billion yuan, the net operating cash inflow was 270 million yuan. Among the new energy vehicle companies that are generally suffering from increasing losses and continuous cash flow bleeding, Leapmotor is a breath of fresh air.

Moreover, Leapmotor's operating conditions are improving. The gross profit margin was -1.4% in the first quarter, and improved to 2.8% in the second quarter. It is expected that the gross profit margin will perform better in the second half of the year.In July, Leapmotor's net growth exceeded 28,000 vehicles, with 22,100 vehicles delivered.The delivery volume has been maintained at over 20,000 units for two consecutive months. The success of Leapmotor C10 and Leapmotor C16 has put Leapmotor into a channel with rapid sales growth.

In the early days, Leapmotor's performance was not impressive among the new forces. However, in the past two years, with the launch of extended-range models with product iterations, Leapmotor's new product matrix has taken off rapidly, taking advantage of the surge in PHEV sales in the market. Its delivery volume in many months this year has surpassed that of new forces such as Weilai and Xiaopeng. Among the new forces, only Ideal has a healthier cash flow than Leapmotor.

What exactly enabled Leapmotor to successfully counterattack and take the leading position among new forces?

Competitiveness lies not in "half-price ideal" but in full-stack self-development

Leapmotor has the nickname "half-price ideal", and some people jokingly call Leapmotor the most successful car company in COSPLAY Ideal.

This is not an insult, but a compliment.

Because of Ideal's success, half of the car industry has followed Ideal's product definition and launched many large SUVs with 6 or 5 seats, including some established car companies. Look at the SUVs and MPVs that are now launched as family cars. Are they all following Ideal's example of refrigerators, TVs and sofas? Are their interior configurations and designs moving in the direction of Ideal?

However, most of these cars did not make any waves in the market. The reason why Leapmotor succeeded in COSPLAY was not because of how similar it was, but because of Leapmotor's full-stack self-developed technology, which is also Leapmotor's technological moat.

Leapmotor is one of the new forces in the automotive industry with the highest level of self-developed technology. Since its establishment, Leapmotor has been a technology-driven company.When you see Leapmotor’s first two products, the S01 and T03, it’s not hard to tell that this is a car company that has not experienced the beatings of the market and is full of the romance of science and engineering men.

Opening up their minds to learn the ideal product definition and making cars is just to open up the Ren and Du meridians leading to the market for Leapmotor, which has a solid foundation, so that the technology accumulated by Leapmotor can be better presented to the market. The basis of success is that Leapmotor itself makes good cars.

For a new force, full-stack self-development is a high threshold, but it is what Leapmotor has always insisted on. The vehicle architecture, smart cockpit, electronic and electrical architecture, electric drive architecture, intelligent driving system and other key areas involving a new energy vehicle have always been in the hands of Leapmotor.

This allows Leapmotor to develop vehicle models more flexibly and efficiently, and maintain a certain degree of differentiation from products in the same class in terms of core product strength. Leapmotor's smart cockpit experience and intelligent driving level have certain advantages among products of the same price, making it more competitive in the market.In addition, Leapmotor plans to launch urban intelligent driving functions based on an end-to-end intelligent driving model in 2025.This will further enhance Leapmotor's competitiveness.

Cost control is the core

In addition to bringing Leapmotor stronger product competitiveness, full-stack self-developed technology also enables Leapmotor to achieve cost advantages.

In fact, the industry has long had a clear understanding of the advantages of full-stack self-developed products. Today, mainstream car companies including BYD, Geely, etc., are all doing this. BYD has even further mastered the vertical supply chain and achieved industry-leading cost control capabilities.

However, the key to Leapmotor's standing out from the new forces is that it has been able to successfully implement a full-stack self-developed strategy despite being so much smaller than these giants.

In the Zero Run car,The entire vehicle uses its own CTC battery-chassis integrated structure, the electric drive architecture uses its own eight-in-one electric drive, and the intelligent driving uses its own Lingxin 01 intelligent driving chip, so 60% of the cost of the entire vehicle is controlled by Leapmotor itself.This enables Leapmotor to achieve higher R&D efficiency and lower vehicle manufacturing costs.

Moreover, as Leapmotor's sales gradually increase, the scale effect becomes more prominent, and the cost per vehicle of Leapmotor is further reduced. In addition, Leapmotor can export its technology platform to share the R&D costs, which further enhances its cost advantage over other non-full-stack self-developed car companies.

The combination of these advantages enables Leapmotor to maintain strong price competitiveness in the most competitive market segment of 150,000 to 200,000 yuan.

Of course, if you look at the actual amount of money that is being invested in R&D,The proportion of Leapmotor's R&D is actually not outstanding. Its R&D investment in the first quarter was 520 million yuan, and the R&D revenue ratio was 14.92%.The R&D investments of NIO, Xiaobian and Li Auto were 2.86 billion yuan, 1.35 billion yuan and 3 billion yuan respectively, and the R&D-to-revenue ratios were 28.86%, 20.61% and 11.72% respectively.

Leapmotor has lower R&D investment, and its R&D revenue ratio is only slightly higher than Ideal. Although due to different R&D directions, we cannot directly say who has a higher R&D input-output ratio. However, Leapmotor can complete full-stack self-development with a smaller scale and lower R&D investment, which also reflects that Leapmotor has higher R&D efficiency and innovation capabilities than many automakers. This may become the key to Leapmotor's long-term competitiveness in the new energy vehicle market with rapid technological iterations.

Final Thoughts

Leapmotor has now entered a positive cycle. The four models it recently launched, namely C01, C11, C10 and C16, have been recognized by the market and can maintain a certain market share for a long time. At the same time, Leapmotor also has strong partners overseas to help expand its overseas territory, bringing more room for imagination for Leapmotor's growth.

I believe that as long as Leapmotor can maintain its strategic focus and continue to strengthen its product matrix in the core price range of 150,000-200,000 yuan, it will be able to maintain a certain size in this user group with the largest user base in China. Although Leapmotor still needs to make more efforts in the horizontal and vertical aspects of its product matrix to achieve its goal of entering the top five in the automobile market within three years, it will not be a problem to get a share of the new energy market and become a small and beautiful car company like Mazda.