The automotive industry has always been subject to cyclical sales patterns, and after the key marketing periods of September and October, along with the shopping frenzy of November 11th, the window for manufacturers to achieve their sales targets for the year is rapidly closingWith only about a month left in 2024, many emerging car companies have reported their annual sales completion rates hovering between 50% and 85%. Amidst this backdrop, one name stands out as the most promising growth contender this year: Leap Motor.

Leap Motor has positioned itself as the first new car manufacturing force to complete its annual sales targetFrom January to November 2024, the company has managed to double its deliveries compared to the previous year, reaching a total of 251,207 vehiclesRemarkably, in November alone, the brand achieved a milestone by delivering over 40,000 units, an impressive 117% increase year-on-year.

Following companies like Li Auto and Hongmeng Zhixing, Leap Motor has firmly established itself among the ranks of new carmakers that have surpassed the 200,000 sales threshold this year.

In October, Zhu Jiangming, chairman and CEO of Leap Motor, made a bold assertion that the company is on the verge of achieving sales comparable to BYD's milestone of 300,000 to 400,000 units

In 2020, BYD sold over 416,000 vehicles, and its growth trajectory in the subsequent years has consistently exceeded 100%. Leap Motor's phenomenal sales growth this year has led some market analysts to project that its annual sales could reach upwards of 300,000 units.

Zhu's insights reflect a broader industry sentiment that only companies that rank in the top five will survive, while those in the top three will thriveLeap Motor is undoubtedly solidifying its position in this competitive landscape.

Surging Sales: Leap Motor Leads the Charge

As the year draws to a close, manufacturers are ramping up production, a trend observed throughout automotive historyThe fourth quarter has proven no exception to this ruleThe cumulative benefits of trade-in policies and aggressive promotional events have revived the automotive market's vitality.

By the end of November, many automotive brands collectively experienced a surge in sales, with several setting new performance records

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Notably, BYD once again shattered its own record by selling over 500,000 units in NovemberXpeng and Deep Blue exceeded monthly sales of 30,000 units, while Xiaomi Cars exceeded its annual goal of 100,000 units ahead of schedule and set its sights on a new target of 130,000. Additionally, Hongmeng Zhixing delivered more than 40,000 units for two consecutive months.

Despite the overall rapid progress within the industry, Leap Motor's growth trajectory has remained distinctiveBenefiting from the strong performance of its C-series SUVs, Leap Motor has achieved monthly sales of more than 30,000 units for three consecutive months since August and surpassed the 40,000 mark in November, marking a significant milestone in monthly deliveries.

This marks the second consecutive year that Leap Motor has secured its position as the third-largest new car manufacturer in terms of total sales

In March 2023, the company officially launched its range-extended products, sparking a surge in salesLast year, Leap Motor surpassed Xpeng and Neta by achieving total annual sales of 144,000 units, making it only second to Li Auto and NIO in the new carmaker rankings.

In the second half of this year, ongoing improvements in product structure have further propelled Leap Motor's salesThe jump from 20,000 units in June to 30,000 in August, and then to over 40,000 in November showcases an impressive growth span in just five months.

This year's cumulative sales from January to November have reached 251,000 units, a significant increase from the previous year's figures, following the sales of Li Auto and Hongmeng Zhixing, who achieved 442,000 and 393,000 units, respectively.

The consistent monthly sales growth not only reflects Leap Motor's robust product offerings but also demonstrates an increasing brand strength

With this positive momentum, Leap Motor is likely to continue solidifying its industry position.

Maintaining Competitive Edge: Leap Motor Eyes Profitability

The record-breaking sales figures have contributed to a remarkable rise in Leap Motor's revenue as wellBy the third quarter of 2024, the company had amassed total revenues of 18.7 billion yuan, surpassing the total earnings of 16.7 billion yuan for all of 2023. Notably, the revenue for the third quarter alone saw a year-on-year growth of 74.3% and a quarter-on-quarter increase of 83.9%, totaling 9.86 billion yuan.

With consistent sales growth, the focal issue now for Leap Motor, as with many emerging car manufacturers, is profitabilityBy the third quarter, the company recorded a reduced net loss of 690 million yuan, marking a 28% decrease compared to 990 million yuan during the same period last year

This figure also reflects a substantial reduction of 42% from the 1.2 billion yuan loss recorded in the prior quarter.

During this period, Leap Motor managed to improve its gross margin significantly, with a third-quarter gross margin of 8.1%, a considerable increase from just 1.2% in the previous year and 2.8% in the second quarter.

This positive comparison indicates encouraging prospects for the companyLeap Motor attributes the improvement to heightened cost-cutting measures while maintaining product quality, alongside changes in product mix and the realization of economies of scale, which are considered the core driving forces for future margin enhancements.

Data indicates that as of the third quarter, the proportion of the company’s entry-level T-series vehicles has decreased to 21.7%, while the C-series, which offers more value-added features, has increased its share to 78.3%. Notably, popular models such as the C10 and C16 are witnessing monthly sales ranging from 16,000 to 20,000 units

This production strategy—characterized by a high degree of component sharing among popular models—has further amplified the scale-efficiency effect, leading to a marked improvement in overall gross margins.

It is clear that as 2024 approaches, Leap Motor is accelerating its efforts to establish a positive cycle encompassing production, sales, and profitability, inching closer to a pivotal profitability threshold.

As Zhu previously indicated, Leap Motor's gross margin aims for an overall target of 10% next year, with aspirations to stabilize at 15% in the coming three years, setting a benchmark that aligns with industry averagesThe projected acceleration in profitability may occur sooner than initially anticipatedIn a recent media communication, he hinted at the possibility of Leap Motor achieving profitability before the second half of 2025.

This optimistic forecast signifies a shift in the competitive landscape of the automotive market

The ongoing trend of “survival of the fittest” emphasizes that the market is not just attracting weak players but is also nurturing those with strength, thereby allowing Leap Motor to thrive in this environment.

In a stark contrast, while companies like Li Auto and Seres are bolstering their profitability, brands such as Avita, Landwind, and Zhiji are just crossing the threshold of 10,000 units in monthly sales, and others like Neta and Jiyue find themselves grappling just below survival thresholds.

Leap Motor’s anticipated profitability in 2025 indicates a clearer outline of the competitive race ahead, further solidified by its steady climb towards achieving high monthly sales as it aims for an accelerated growth trajectoryThis progression suggests that it could soon transform into a mature and formidable presence within the automotive sector.

Underestimated Newcomers: Leap Motor's 2025 Ambitions

A pertinent question emerges: What sets Leap Motor apart from its competitors?

Firstly, it has adeptly positioned itself within the high-capacity submarket

Data from the China Passenger Car Association indicates that vehicles priced below 300,000 yuan account for over 80% of the passenger car market, with those below 150,000 yuan capturing nearly half at 50.9%. The segment priced between 150,000 and 300,000 yuan contributes a substantial 33.9%, revealing a vast potential for both existing and new market growth.

Leap Motor's mid-to-long-term strategy focuses on mainstream models and refrains from entering the segment below 300,000 yuan in the short termThe company plans to launch three new B-series models priced between 100,000 to 150,000 yuan by 2025, with the first global version based on the latest LEAP 3.5 technology framework, the B10, showcasing its debut in October.

This product range is anticipated to inject fresh momentum into Leap Motor's sheer sales driven towards a target of 500,000 vehicles next yearAdditionally, entry-level A-series models and the D-series priced between 200,000 and 300,000 yuan are also in the planning phase.

Moreover, since last year, Leap Motor has gained considerable traction by addressing consumers' concerns about range anxiety, leading to the release of its range-extended models

This strategic shift has even prompted comparisons to being a “stand-in” for Li Auto, specifically with models like the C16 being labeled the “small Li Auto” in some circles.

While the comparisons with Li Auto underscore Leap Motor’s capabilities, the recent conclusions drawn might be somewhat simplistic.

Sales data reveals that range-extended vehicles accounted for a mere 20% of total sales in the first three quarters of this year, while the C-series—its best-performing category—has demonstrated that despite being cheaper than equivalent pure electric models, it remains significantly more appealing than other budget options, highlighting a preference for consumers to balance product pricing and performance.

Taking into account the vast market size under 200,000 yuan, Leap Motor has remained consistently committed to understanding and addressing contemporary consumer preferences through continuous product and matrix optimization.

By introducing range-extended vehicles in 2023 and planning for AI-driven models by 2025 in response to the ongoing trend toward intelligence in vehicles, Leap Motor is clearly positioning itself for the future.

Therefore, the upcoming generation of models theoretically emphasizes balancing affordability with high features, while targeting larger capacity markets, which are fundamental to Leap Motor’s acceleration ahead.

2025 will be the last year in which new energy vehicles qualify for exemption from purchase tax

Starting in 2026, the tax will be halved, disproportionately affecting demand for products priced under 200,000 yuan due to elastic pricing principles.

Given this context, a reasonable expectation suggests that manufacturers focusing on this niche market will see further acceleration in sales, particularly with the launch of Leap Motor’s competitively-priced intelligent new vehicles.

As the brand continues to navigate its business landscape, it finds itself at a critical juncture, moving beyond the challenges of scale production and distribution toward a new chapter in its evolution.

For Leap Motor, publicly listed on the Hong Kong Stock Exchange, the only major hurdle holding back significant market recognition at this point is valuationCompared to its peers like NIO and Xpeng, which also remain unprofitable, Leap Motor's price-to-sales ratio of 0.9 is notably lower than NIO’s 1.01 and Xpeng's 2.4, despite its superior total sales volumes and predictable future growth

This suggests that Leap Motor is currently undervalued in a scenario of high growth certainty.

This discrepancy brings about a peculiar situation: Leap Motor is currently operating at full capacity, with reports emerging of around 40,000 pending orders as of November, leading the company to consider limiting inbound orders for specific models as it approaches "explosion" levels of demandThe strong expectations surrounding Leap Motor are evident, yet the market appears to be in a holding pattern, awaiting confirmation of these bold predictions.

Furthermore, given the plethora of investment opportunities within the industry and Leap Motor’s valuation resting at approximately 30 billion yuan, larger funds struggle to engage with such a smaller entity.

Nonetheless, it is believed that this may merely represent a transitory phaseWith a net cash reserve of about 20 billion yuan, positive cash flow, and gross profit margin improvements, coupled with booming sales and impending profitability, there is no compelling reason for Leap Motor to remain stagnant at its current valuation level