Leapmotor Executive: Auto Industry Enters Era of Slim Margins, Demanding Transformation

At the 2026 China Automotive Chongqing Forum, Xu Jun, Senior Vice President and Chief Operating Officer of Leapmotor, stated that the automotive industry is transitioning from an era of abundant opportunities to a new normal characterized by modest profit margins. He explained that the previous "bonus era" emphasized rapid expansion to capture market share, whereas the current "modest-margin era" demands companies possess the agility to adapt quickly and adjust strategies in a timely manner. Xu outlined three core capabilities enterprises must develop to thrive in this new phase: First, shift the competitive logic from competing on technical specifications to defining products based on users' real-world driving scenarios, thereby avoiding redundant features and resource waste. Second, evolve product thinking from relying on a single hit model to consistently building a portfolio of hit products, supported by systematic R&D and streamlined processes to ensure efficient iteration. Third, adhere to long-termism and recognize the power of compounding over time, understanding that the new energy vehicle (NEV) industry operates on long cycles—short-term leadership does not guarantee long-term success. According to data released, Leapmotor delivered 81,569 vehicles in May, up 81% year-over-year, setting a new record high. In the first quarter of 2026, the company achieved global deliveries of 110,155 units, including 40,901 units exported overseas—the highest among China’s emerging EV makers. Revenue for the quarter reached RMB 10.82 billion, an 8.0% year-over-year increase and a record high for the period. However, gross margin declined to 9.4%, down from 14.9% in the same period of 2025 and 15.0% in Q4 2025, primarily due to shifts in product mix and reduced strategic partnership-related business. Net loss widened to RMB 3.9 billion, compared to a net loss of RMB 1.3 billion in the same period of 2025.