"The Chinese automotive industry is currently in a state of 'Darwinian' (survival of the fittest) competition."

"But we don't want to grab Chinese market share at all costs."

These two statements were made by Mercedes-Benz CEO Ola Källenius last week. The reason is simple: influenced by factors including the Chinese market, the global luxury automaker he leads delivered devastating results for the first half of 2025 - net profit plunged 56%, essentially cut in half year-over-year.

Interestingly, while his two statements are logically sound, some "latecomers" in the Chinese automotive industry have found their evolutionary path precisely in the "Darwinian" competition he described, gradually getting on track.

Looking back at the sales performance in the first half of this year, there exists a clear "growth trio" among new energy vehicle companies: Leap Motor, XPeng, and Xiaomi (listed here by sales performance ranking, with no hierarchical implications in subsequent mentions). They are not only among the top five new forces in terms of first-half sales, but also the fastest-growing companies among the top five. Moreover, these three companies have the highest annual sales target completion rates among all new forces (since annual sales targets can reflect a company's production and sales capacity limits to some extent, completion rates better represent actual operational efficiency).

What's interesting is that these three well-performing companies coincidentally chose to release their first-half financial reports in a cluster (Leap Motor just released on Monday, followed by Xiaomi and XPeng on Tuesday). When we analyze their performance side by side, we can clearly see the real rules of this brutal elimination contest and how to achieve victory.

Against the backdrop of the industry being deeply mired in a price war, the biggest common point in the "growth trio's" performance is achieving extremely rare "benign growth" - simultaneous upward spiral of sales volume and gross margin.

This result can be attributed to two core reasons: first, strong economies of scale being unleashed, and second, precise grasp of automotive consumer market trends.

The first point is actually easy to understand. As a heavy asset manufacturing industry, scale is the eternal law for spreading costs and improving profits. Taking the per-vehicle performance perspective of the "trio" as an example, although their average selling prices vary, all clearly show steady growth in both sales volume and per-vehicle gross margin.

Leap Motor, as the new force sales champion in the first half, saw its Q2 sales surge 53% quarter-over-quarter to 134,000 units. This rapid scale expansion is one of the main reasons its gross margin could stabilize at 13.6% and exceed market expectations. Based on this, Leap Motor has ambitiously raised its full-year sales guidance to 580,000-650,000 units, targeting the grand goal of 1 million units next year. Continuously expanding scale will become the most solid moat for its profit growth.

XPeng and Xiaomi similarly benefited from sales improvements. XPeng's Q2 sales increased steadily by 10% quarter-over-quarter, while Xiaomi SU7 broke 100,000 cumulative sales within 4 months of launch, with July deliveries exceeding 30,000 units. Rapid production ramp-up brought significant cost dilution effects, paving the way for profit growth and upcoming profitability moments.

Building on economies of scale, the three companies improved single-vehicle value through different approaches, jointly driving gross margin growth.

Leap Motor, with the lowest and most stable average selling price, derives its profit growth core from strong internal capabilities - cost control. Through "full-stack self-development" from three-electric systems, smart cockpits, intelligent driving to chassis and lighting core components, Leap Motor controls cost definition rights. This high degree of vertical integration enables it to achieve gross margin improvement even as average selling price decreases due to hot sales of B-series models - this is the purest efficiency victory.

XPeng's gross margin improvement clearly demonstrates the path of "seeking profits through technology." The reason its Q2 vehicle sales gross margin could improve to 14.3% is the significant optimization of product structure. The MONA M03, positioned for mainstream entry-level market, saw its sales proportion drop 12 percentage points, while more expensive upgraded G6, G9, X9 and other premium models increased their proportion by 17 percentage points. Behind this is XPeng's comprehensive product generation renewal and overall product capability enhancement.

Xiaomi's gross margin improvement is more "straightforward." On one hand, the SU7 Ultra model priced over 500,000 yuan achieved cumulative sales exceeding 10,000 units in Q2 alone, while total SU7 sales across all variants were less than 80,000 units in the same period, single-handedly significantly boosting overall profit levels. This also suggests that as the higher-priced YU7 launches on a large scale in Q3, Xiaomi will gain additional support in both sales volume and gross margin.

A month and a half ago, Xiaomi YU7 "stunned" the entire industry with the amazing figure of "nearly 290,000 pre-orders within 1 hour." Lei Jun excitedly called it "a miracle created together with users." For a time, various opinions emerged, with labels like "marketing success" and "fan blind loyalty" being easily attached.

With the recent release of a third-party consulting organization survey on Xiaomi YU7 pre-order users, we can glimpse this user group's true identity for the first time, and the trend they reveal together with YU7 - in China's automotive market, brand power and emotional value are rapidly becoming more decisive factors than cold parameters.

The sales figures of Xiaomi YU7 in different cities during the first two months also reflect some demographic statistics mentioned in the user group report: This group, clearly different from the "replacement purchase" mainstream theme of the automotive market in recent years while showing obvious brand preference, had previously been ignored by traditional automakers and their product systems.

The final result is that a group of users thinking "I hope I can spot my car at a glance on the street," "I drive every day, others will also see the appearance, good looks are emotional value output," "I just want my car to be different from ordinary electric vehicles" ultimately chose YU7.

In this earnings call, Lu Weibing also emphasized two related latest data points: one is that iPhone users accounted for 54.5% of July lock-in users, and secondly, the proportion of female users continues to rise. Both are closely linked to the demographic characteristics of appearance-focused groups.

Xiaomi's success has shown the entire industry the tremendous energy of "emotional value." This wave is not an isolated case - the other two players in the "growth trio" have also responded in their own ways.

Coincidentally, XPeng's new P7, which recently held its debut launch event, although different from YU7 in product design, also pays great attention to appearance and emphasizes the emotional value products can bring to consumers.

Leap Motor's style remains relatively "simple and direct" in this regard, with its emotional value approach being more straightforward. Because it reduces costs through full-stack self-development, it can continuously provide consumers with products offering "larger space, higher configuration, lower prices," precisely meeting target users' psychological needs to "get a good deal" and "buy smartly" when consuming, even gradually capturing market share from traditional domestic automakers.

It's worth noting that while Leap Motor uses A, B, C three series to attack the mainstream market, it has also revealed plans for its premium flagship D series, set to debut this October. This indicates that Leap Motor is not avoiding premium positioning, but has chosen a more prudent path with different timing for brand value enhancement compared to competitors.

It can be said that the rise of the "growth trio" marks the early arrival of an important inflection point in China's automotive market: after experiencing the "survival of the fittest" in configuration competition, the stage where brand power determines victory has arrived. The era of relying purely on parameter stacking is ending; the future belongs to brands that can truly understand users' hearts and create unique emotional connections for them.

When domestic market "Darwinian battles" produce phased winners, globalization upgrades from an "optional choice" to a "parallel race" determining future heights. The ultimate goal of going overseas is to "make money abroad," providing companies with a second growth curve. In this regard, the "growth trio" actually made key progress in the first half of 2025.

Leap Motor exemplifies the "asset-light" model. The core of its globalization strategy is the "Leap Motor International" joint venture established with Stellantis, the world's fourth-largest automotive group. By the end of June this year, Leap Motor's overseas channels had rapidly exceeded 600 stores, with Europe alone accounting for 550. To ensure subsequent capacity, Leap Motor has also reached deeper cooperation with European roll-on/roll-off giant Grimaldi Group.

In production deployment, Leap Motor is rapidly advancing by leveraging its partners' global networks. It has launched a Malaysian localized assembly project, which will be directly based on Stellantis Group's existing Gurun factory in Kedah, Malaysia. According to Leap Motor's official planning, it will promote European localized production next year with optimistic expectations of "doubling European market sales next year."

XPeng demonstrates adaptability to local conditions. In the European market with extremely high brand and technology requirements, it chooses to enter directly, establishing a direct sales system to ensure service quality and brand image. But in emerging Southeast Asian markets like Indonesia, it pragmatically cooperates with local company Handal Indonesian Motor (HIM) through complete knockdown (CKD) assembly for localized production.

Leap Motor has also announced the launch of a Malaysian localized assembly project earlier this year, which will be based on Stellantis Group's existing Gurun factory in Kedah, Malaysia.

Although Xiaomi started latest among the three, it also provided its roadmap in this earnings report, clearly setting a goal to enter the European market by 2027.

The innovative models, execution speed, and strategic vision demonstrated by the new force "growth trio" already indicate their potential to define the future in this brutal elimination contest.

Perhaps this is the most profound response to overseas traditional giants' stance: you think competition in the Chinese market is too intense and don't want to invest; but given time, Chinese automakers will definitely bring the extreme competitiveness and product capabilities forged through trials in the Chinese market to your doorstep.

Avoidance is always the worst strategy, because in the future global automotive market, rules will be set by those strong players who dare to fight and emerge victorious in the most brutal environments.