The Other Side of Leapmotor's "Aggressive Strategy": Quality Control and Compliance Issues Await Resolution

Deep News
08/20

Leapmotor has achieved its first half-year net profit turnaround, marking a significant milestone in its latest interim results. On August 18, Leapmotor released its performance report for the first half of 2025, showing a net profit of RMB 30 million and an adjusted net profit (non-IFRS) of RMB 330 million. This achievement makes Leapmotor the second new energy vehicle startup to realize half-year profitability.

Within the broader new energy vehicle market context, this aligns with the assessment that 2025 represents the "scaled profitability inaugural year" for EV startups. Previously, Xiaomi Corp., XPeng, and NIO Inc. have all established clear profitability timelines. Taking Xiaomi as an example, financial results disclosed on August 19 showed that second-quarter automotive business operating losses narrowed significantly to RMB 300 million, with profitability expected in the second half. Company executives indicated that Xiaomi does not participate in automotive price wars or excessive competition, focusing instead on product delivery, with expectations to achieve single-quarter or single-month automotive business profitability in the second half.

The commencement of the "scaled profitability inaugural year" carries profound implications for numerous automotive companies. From an industry competitive landscape perspective, China's new energy vehicles are leading global transformation through incremental contributions. Li Auto, Leapmotor, Xiaomi, XPeng, and NIO Inc. are collectively approaching profitability inflection points, maintaining high cash reserves and experiencing surging delivery volumes. However, this simultaneously signals the beginning of an ultimate competition centered on technology, brand positioning, and ecosystem development.

These three pillars present challenges for Leapmotor, particularly as the company simultaneously raises its annual sales target and plans to challenge the ambitious goal of one million annual sales next year under its "aggressive strategy."

During the first half of this year, China's EV startup landscape underwent dramatic reshaping, breaking the previous "NIO-XPeng-Li Auto" triumvirate. Latest statistics show that Leapmotor ranks among the top three new energy startups by half-year sales volume.

Leapmotor has earned two industry monikers: "half-price Li Auto" and "automotive Redmi," with cost reduction, efficiency improvement, and market share capture consistently serving as key strategies for the "low-profile" Leapmotor. However, negative effects are becoming increasingly apparent behind this approach.

Quality-related issues including abnormal noises and infotainment system lag have been continuously reported on various platforms. These include complaints about Leapmotor C10 experiencing dashboard and central control screen blackouts after unlocking, and Leapmotor C11 models reportedly suffering from slow OTA system updates.

Online platforms feature extensive discussions about "Is Leapmotor really worth buying?" These discussions highlight both Leapmotor's advantages in attracting consumers through high cost-effectiveness and concerns about poor quality stability, range discrepancies, inconsistent after-sales service, and varying autonomous driving experiences.

Industry analysts suggest this phenomenon stems from multiple factors: Leapmotor's cost-reduction incentives, potential compromises due to cost control considerations, and certain technological gaps. Automotive companies must balance survival instincts focused on low-price volume strategies with long-term technological investment planning.

Similar to Xiaomi's strategy, Leapmotor is also pursuing premium market positioning. However, this presents significant challenges, requiring the company to overcome at least two obstacles.

First, Leapmotor has historically secured market position through "low price, high configuration" strategies, achieving market breakthrough via cost reduction and efficiency improvement. Simultaneously, these approaches have established Leapmotor's mid-to-low-end positioning and brand image, potentially creating lasting consumer perceptions in the market.

Second, Leapmotor faces formidable competition in its target segments, with some brands already establishing strong positions in markets above RMB 300,000, while others like NIO Inc. are advancing through main brand iterations or sub-brand initiatives. Against the backdrop of technological gaps in certain areas, Leapmotor faces enormous challenges in achieving differentiated breakthrough strategies.

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