© Reuters Leap Motor’s first ‘send’: In Q3, both revenues and losses increase or rely on range-extended models to cut costs and reverse losses
News from the Associated Finance Press, November 14 (Reporter Liu Yang)After listing on the Hong Kong Stock Exchange, Leap Motors delivered its first performance report with mixed results.
On November 14, Leap Motors released its financial report for the third quarter of 2022. During the period, the company’s revenue was 4.288 billion yuan, a year-on-year increase of 398.5%, the net loss was 1.34 billion yuan, a net loss of 720 million yuan in the same period last year, an increase of 86.33% year on year; Free cash flow was -500 million yuan, an improvement from -617 million yuan in the same period last year.
“The third quarter results reflect the results of Leapmotor’s product development and marketing efforts.” Zhu Jiangming, founder, president and CEO of Leapmotor, said that despite challenges in the supply chain, Leapmotor still achieved quarterly revenue. “The two C-platform models are favored by the market, resulting in an increase in the average selling price of the model portfolio and a substantial improvement in the gross profit margin.”
During the period, Leapmotor’s gross profit margin was -8.9%, compared to -44.5% in the same period last year and -25.6% in the second quarter of 2022. “Improvements year year-on-year and quarter-over-quarter are primarily due to sales growth, model structure improvements and average selling prices,” Leaps said.
The financial report shows that in the third quarter, total shipment volume of Leapmotor vehicles was 35,608, an increase of 186% year-over-year. Among them, the delivery volume of T03 was approximately 17,800 units, a year-on-year increase of 48%; C11 shipment volume was approximately 17,300 units, a year-over-year increase of 6721%; started the delivery of C01 in September of this year was 561 units.
The T03, which accounts for nearly half of the sales volume and costs less than 100,000 yuan, has become the main factor driving down the overall gross profit rate of zero-stroke cars. “Actually, it is difficult to achieve a positive gross profit for the A00 car. In order to improve the gross profit as soon as possible, we raised the price of the T03 in August.” Leapmotor Senior Vice President and Board Secretary Jing Hua admitted that Leapmotor originally planned to use the C platform. There are two models to improve the product structure, but the T03 does not have an extended range version.
According to Jinghua, Leapmotor will launch the C11 extended range version at the end of this year to further optimize the product sequence. “In the case of high battery costs in recent years, extended range and hybrid products are still highly competitive in terms of cost and product performance.” According to Jinghua, because products with extended runtimes require less power, their annoyances from rising battery prices are also relatively small, and Zero Running must pursue economies of scale as it strives to improve gross profit.
According to the plan, two new vehicle platforms from Leapmotor are already in development. “Besides the current C platform, by the end of 2025, all new models developed by Leapmotor will have both pure electric and extended-range versions,” Jinghua revealed.
Indeed, rapidly expanding production and sales scale through extended-range or hybrid models, thereby reducing costs and improving gross profit margins, has become the primary strategy for new automakers, including Leapmotor and traditional automakers, to transform into new energies. Previously, Nezha Automobile launched the extended range Nezha S version with cruising range up to 1160km; the Huawei-powered Wenjie brand is a loyal fan of extended range technology.
In addition to the product technology field, Leapao also explained that the companies criticized by the industry insisted on global self-research, but R & D investment was low. The financial report shows that Leapmotor’s R&D expenditure in the third quarter was 404 million yuan, an increase of 138.9% from 169 million yuan in the same period of 2021, and an increase of 42.3 % compared to 284 million yuan in the second quarter. Although there has been a substantial increase year-on-year and month-on-month, there is still a large gap from Weilai Automobile’s planned R&D expenditure of 3 billion yuan in just one quarter.
“In terms of comprehensive self-research, Leapao focuses on electrical components. Because we have accumulated and experience in the electronics industry, the overall development efficiency will be relatively high. At the same time, Leapao’s founding team has ten Several years of AI visual processing expertise may give Leapmotor a unique intelligence edge.” Jinghua said that Leapport focuses on electronic and electrical architecture, intelligent driving and intelligent cockpit, mainly to reduce BOM cost” The parts gross profit margin is about 15% to 25% When it reaches a certain scale, some of Leapmotor’s self-developed and self-produced parts can also achieve the corresponding gross profit, which can reduce the cost of vehicle products.
According to Leap Motor’s prospectus, from 2019 to 2021, Leap Motor’s total revenue will be 117 million yuan, 631 million yuan and 3.132 billion yuan, respectively, with a compound annual growth rate of 417.48%; the net loss will be respectively 901 million yuan, 1.1 trillion yuan, 2.846 billion yuan, and the total loss in three years reached 4.847 billion yuan. It is expected to continue losing money in 2022.
