Leapmotor (零跑): Can an export-led play push the EV upstart to a million cars?

Strong quarter, tight cost control

Leapmotor (零跑) reported a solid fourth-quarter 2025 set of results after Hong Kong trading closed on March 16. Revenue was RMB 21.0 billion, up 56% year‑on‑year and broadly in line with market expectations. The company’s gross margin rose modestly to 15%, up 0.5 percentage points quarter‑on‑quarter — a surprise given management had warned that heavier promotions would offset scale benefits. Operating profit was RMB 220 million and net profit RMB 360 million, beating consensus by about RMB 120 million. Sales expenses climbed to RMB 1.3 billion amid heavier advertising and network expansion, while R&D and administrative costs were tightly managed at RMB 1.19 billion and lower QoQ.

It has been reported that an increase in carbon‑credit income tied to Leapmotor’s accelerating overseas sales materially helped the margin. Reportedly, carbon‑credit revenue recognition in Q4 doubled versus the prior quarter, providing near‑pure profit uplift similar to patterns seen at other exporters.

Exports, local production and vertical integration

Leapmotor’s bold strategic bet is obvious: scale through exports while upgrading product mix at home. Management is targeting 1 million vehicles in 2026 (10–15% overseas, 850k–900k domestic) and has guided that hitting that volume could deliver RMB 5 billion in net profit (near a 5% net margin). The company says its overseas network has grown rapidly to roughly 900 outlets (about 800 in Europe) and that Jan–Feb 2026 export volumes reached 24,000 units — about 40% of recent monthly sales, up from 14.6% in Q4. Local manufacturing capacity is being built out too: a European CKD plant and a battery‑pack factory are expected to start in 2026, while a Malaysia KD line and potential South American expansion via partner Stellantis are also planned. Leapmotor currently self‑develops about 65% of vehicle costs and aims to push that to 80% (including battery cells) in 2026 to lock in cost advantages.

Growth target faces policy, competition and execution risks

Can exports and vertical integration make up for tougher domestic policy and fiercer competition? Skeptics point to three big risks. First, Beijing restored the 5% vehicle purchase tax on NEVs and changed trade‑in subsidy rules to be price‑proportional, reducing support for sub‑RMB150k models — Leapmotor’s bread‑and‑butter price band. Second, 2026 brings intense product cycles from incumbents and other “new forces” (Geely, Great Wall, Xpeng among them), turning the 10–20k RMB segment into a zero‑sum fight. Third, the scale jump from roughly 600k in 2025 to 1.0–1.1m is a very high bar amid an industry whose overall growth is moderating.

Geopolitics matters too. Export success depends on local production, regulatory windows (EU carbon‑credit rules create a short‑term tailwind) and the robustness of global supply chains — even modest trade frictions or regulatory scrutiny could complicate the plan. Leapmotor’s overseas push gives it an outlet other Chinese EV makers covet. But can the export model truly lead the “new forces” to a million cars, or will policy and competition clip its wings? Execution — not ambition — will decide.