Written by | Zhang Yu
Editor｜Yang Bocheng
Title image | IC Photo
The capital market has finally ushered in the fourth new force in car manufacturing. On September 29, Leap Motor was officially listed on the main board of the Hong Kong Stock Exchange, and it is also the first new car-making force to use the Hong Kong Stock Exchange as the first listing place.
However, Leapmotor suffered a cold snap on its first day of listing, and its stock price fell sharply in a row. As of the closing of Hong Kong stocks on the first day of listing, Leap Motor’s share price fell 33.5% to HK$31.9 from its issue price of HK$48, and as of the close on September 30, its share price fell again by 22.26% to HK$24.8, corresponding to a total market value of HK$28.339 billion . It has only been listed for two days, and the total market value of Leapmotor has almost halved.
“In the current environment, it is really not a good time for Leap Motor to go public, but I don’t care much about the stock market during this period. Because car building is a long-distance race, and only through the later stage can it reflect its true value. Zhu Jiangming, founder and chairman of Leapmotor, said in response to Leapmotor’s first-day break, “We hope to be better ourselves, constantly improve the core competitiveness of our products, continue to launch good products, and do well.” Service, practice internal skills, and get the share at the fastest speed in the process of rapidly developing new energy vehicles to replace fuel vehicles.”
Can the Leapcar that got the life-saving money from the Hong Kong Stock Exchange successfully cross the line of life and death?
The story of value for money is not easy to tell
On October 1st, various new car-making forces announced their delivery report cards for September. Among them, the delivery of Leapmotor was 11,039, which was slightly lower than the delivery of 12,525 in August, second only to which Zha Auto’s 18,005 vehicles and Li Auto’s 11,531 vehicles ranked third, surpassing Weilai and Xiaopeng Motors.
With the increasing delivery volume, Leapmotor’s revenue has also ushered in a leapfrog growth. According to the prospectus, from 2019 to 2021, Leap Motor’s revenue was 117 million yuan, 631 million yuan and 3.132 billion yuan respectively. In the first half of 2022, its revenue increased by 479.4% year-on-year to 5.082 billion yuan.
The rapid expansion of stores has also driven the increase in Leap Motor’s revenue to a certain extent. As of July 2022, Leap Motor’s sales and service network has increased to 151 cities, covering 443 stores and 49 directly-operated stores. .
Prior to this, Leap Motor’s gross profit margin performance was once unbearable, but with the continuous deepening of its layout in the mid-to-high-end market, Leap Motor has achieved a rapid recovery in gross profit margin from -95.7% in 2019 to 2021. In the first half of 2022, its gross profit margin will continue to rise to -25.9%. In a horizontal comparison, both NIO and Li Auto have stabilized their gross profit margin at around 20%, while the gross profit margin is negative, which means that Leapmotor still cannot cover labor, material and other costs, and has fallen into the “sell one car and lose one car”. “in a vicious circle.
The root of the problem lies in the price/performance strategy. At present, Leap Motor still relies on low-end models to drive the overall delivery volume. According to the delivery data in September, although Leap Motor has completed the delivery of 11,039 new cars, a year-on-year growth rate of 152.23%, the price range is 79,500 yuan -9.65 The 10,000 yuan zero-run T03 contributed most of the deliveries.
According to the official data of Leapmotor, in 2020 and 2021, Leapmotor will deliver 11,391 and 43,121 new cars respectively, of which Leapmotor T03 will deliver 10,266 and 38,463 respectively, accounting for more than 89% of the total. In the first half of the year, Leapmotor vehicle sales increased by 265% year-on-year to 52,000 units, of which Leapmotor T03 delivered 33,000 units, accounting for 63.5%.
In fact, Leapmotor also realized the limitations brought by the cost-effective strategy, so it explored the mid-to-high-end market. In September 2021, Leapmotor released the mid-size SUV Leapmotor C11, with a price range of 179,800 yuan to 239,800 yuan. However, as of December 31, 2021, a total of 22,500 orders had been obtained and 3,695 Leapmotor C11s had been delivered. .
After entering 2022, the sales situation of Leapmotor C11 is still unspeakably optimistic, and it has decided to continue to explore the mid-to-high-end market. On September 28, the pure electric medium and large car Leapcar C01 was officially launched, with a price range of 193,800 yuan to 286,800 yuan. This model has great advantages in configuration, functions, data, etc., and uses CTC battery body integration for the first time. technology. According to the official disclosure of Leapmotor, Leapmotor C01 has already received 100,000 pre-orders before its launch.
At the same time, Leap Motor is also stepping up the launch of other new models. It stated in its prospectus that it plans to launch new models at a rate of 1 to 3 models per year in the future, and launch 7 new models by the end of 2025, covering various Various sizes of sedans, SUVs and MPVs. As a supplement to existing products, Leapmotor plans to launch extended-program versions of new models in the same period or later based on self-developed program-extending technology.
Today, Leap Motor is still in the stage of burning money for growth, and this has become the fundamental reason why Leap Motor is not favored by the secondary market.
A person in the new energy vehicle industry told DoNews (ID: ilovedonews) that, in general, the decline in Leapmotor’s share price shows that most investors are not optimistic about it. Leap Motor’s main model, Leap Motor T03, lacks market imagination. In contrast, the secondary market will pay more attention to the intelligence, service and after-sales network and core technologies of new energy vehicle manufacturers.
Is the global self-research a “gold-absorbing black hole”?
Leap Motor was established in December 2015, jointly invested by Zhejiang Dahua Technology Co., Ltd. and its main founder. Backed by security monitoring equipment giant Dahua Co., Ltd., Leapmotor has achieved self-developed and self-developed electronic components such as electric drive, BMS, perception, computing, control, etc., and has the ability to iterate rapidly in mass production, which is also its difference It is the core advantage of other new car-making forces. According to Frost & Sullivan, Leapmotor is currently the only new energy vehicle company in China that has the capability of independent research and development in all areas.
In the prospectus, Leapmotor explained the concept of “global self-development”: We self-developed all key software and hardware in the core system and electronic components of smart electric vehicles, and realized the unification of underlying interfaces, algorithms and data communication protocols. , This unique model and capability has built a platform-based electronic and electrical architecture and vehicle architecture that can be highly reused among different electric vehicles.
According to Zhu Jiangming, the global self-research is higher-end than the full-stack self-research proposed by Xiaopeng Motors. The full-stack self-research only includes software, not hardware, and the hardware has to rely on a third party. The global self-research is to build from the bottom to realize all independent research and development of software and hardware.
For example, the most important component of electric vehicles, the power battery, Leapmotor has established its own battery R&D team since 2016. In addition to the battery cells, modules, battery packs and BMS are self-developed and produced. In addition, Leapmotor also cooperated with Dahua to develop the intelligent driving chip “Lingxin 01”, claiming to be the first domestic new energy vehicle manufacturer to put self-developed chips into mass production.
It cannot be ignored that global self-research is inseparable from the continuous input of funds, but as of now, Leapmotor is still mired in losses. According to the prospectus, from 2019 to the first quarter of 2022, Leap Motor’s net losses were 901 million yuan, 1.1 billion yuan, 2.846 billion yuan and 1.042 billion yuan, respectively, and adjusted losses were 810 million yuan, 935 million yuan, 2.629 billion yuan and 969 million yuan, with a cumulative loss of 5.343 billion yuan.
One reason Leapmotor continues to lose money is that research and development expenses remain high. According to the prospectus, from 2019 to the first quarter of 2022, Leap Motor’s R&D investment was 358 million, 289 million, 740 million and 245 million respectively, with a total investment of 1.632 billion yuan, and the proportion of revenue decreased year by year, respectively 30.64 billion yuan %, 45.8%, 23.6% and 12.3%. In terms of horizontal comparison, in 2021, the R&D expenses of Weilai, Xiaopeng Motors and Ideal Auto will be 4.59 billion, 4.114 billion and 3.29 billion respectively, and the R&D expenses of Leapmotor are much lower than the latter three, which has attracted Some doubts from the outside world.
However, judging from the use of funds raised by Leapmotor, it seems that it intends to continue to increase R&D spending. According to the prospectus, it is expected that 40% of the net amount will be used for research and development of new models, autonomous driving technology, and three-electric system technology; Factory automation level, etc.; 25% will be used to expand business and enhance brand awareness, including overseas business such as opening overseas flagship stores in the European market in 2023; 10% will be used for operations and general corporate purposes.
Obviously, global self-research will become the key development direction of Leapmotor after its launch. Zhu Jiangming once said: In traditional fuel vehicles, the mechanical part accounts for 70%, and the electronic part accounts for 30%. The new energy vehicle is just reversed, and the electronic part has become the main body. He believes that for electronic products, most of the electronic parts must be designed by themselves, so that the efficiency and cost performance are the best, and at the same time, they can be better platformed.
But good technology is “burned” with money. In the global self-research, Leapmotor faces at least two difficulties: one is how to increase R&D expenses for Leapmotor, which is at a loss and still has a negative gross profit margin; The second is that the global self-research does not seem to be transformed into competitiveness. It is not known whether the global self-research is suitable for the current Leapcar and what the actual effect will bring.
At this stage, something more urgent than lack of money and a stock price break has happened: Leapcar, which relies on miniature electric vehicles, is experiencing a marked slowdown in the growth of the miniature electric vehicle market. According to the data from the Passenger Federation, in August 2022, the domestic sales of pure electric vehicles were 490,000, of which the sales of A00-class pure electric vehicles were 124,000, accounting for 25.31%, a decrease of 5% from the previous month. Ping An Securities also pointed out in the research report that considering that the new energy penetration rate of A00-class vehicles has been basically saturated, the growth rate of the A00-class new energy market will slow down in 2022. The outlook is not optimistic.
Leapmotor has already landed in the capital market, but at present, it does not seem to be very attractive to investors. In 2021, Zhu Jiangming once released the harsh words of “surpassing Tesla in 3 years” and “selling 800,000 vehicles in 2025”. If according to the current development situation, Zhu Jiangming will only be harsh words.