Leapmotor maintains its 1 million unit delivery target, but near-term margins remain under pressure

Overview

This report is a management meeting memo on Leapmotor released by Goldman Sachs after the Asia Communacopia + Technology conference. The report focuses on the 2026 delivery target of 1 million units, the path to margin recovery, premiumization through a second brand, domestic and overseas ADAS strategy, and overseas localization expansion. The company still maintains a relatively aggressive medium- to long-term sales plan, but near-term margins are affected by costs, the low-margin overseas mix, and first-quarter sales scale.

Core views

Management maintains the 2026 delivery target of 1 million units, mainly supported by launches of new vehicles such as the updated C10, C11, C16, D99, and A05. On profitability, first-quarter vehicle gross margin was 7.5%, affected by a high proportion of overseas sales, low margins from transfer pricing, and higher per-vehicle allocated costs due to low sales volume; the company expects second-quarter sales to reach 240,000 to 250,000 units, with overall gross margin of 12%-13%, and believes there is still further room for margin recovery in the second half. Over the medium to long term, the company has proposed a 2030 sales target of 4 million units, of which about 40%-50% will come from overseas, and plans to enter the premium market above RMB 300,000 through a second brand.

Analysis framework

The report mainly draws on management discussions and company guidance to distill key changes in deliveries, gross margin, product cycle, intelligent driving, and overseas localization. The focus is not valuation modeling or rating changes, but identifying the balance between the company's operating targets and margin pressure, as well as execution milestones for overseas expansion and premiumization strategy.

Methodology notes

• Meeting notesAsia Communacopia + Technology management discussion

  Tracking management guidance and operating roadmap

  Through conference discussions, the report organizes the company's latest comments on sales, gross margin, product launches, ADAS, and overseas business. It is suitable for tracking operating execution progress, but it is not equivalent to a formal rating report.

• Research frameworkGS Factor Profile

  Comparing growth, financial returns, valuation multiples, and composite factors

  The disclosure section explains that Goldman Sachs' factor framework compares stocks horizontally using metrics such as sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples, but the main body of this report does not provide specific factor percentile results for Leapmotor.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Zhejiang Leapmotor Technology (9863.HK)

  Subject company of the report

  Strengths

  It maintains its 2026 delivery target of 1 million units, has a clear product launch cadence, and possesses a domestic self-developed ADAS team, overseas localization布局, and a premium second brand plan.

  Weaknesses

  First-quarter vehicle gross margin was only 7.5%, with low-margin overseas business, cost inflation, and insufficient sales scale putting pressure on margins.

  Comparison

  The report presents it within the China autos and smart EV coverage universe, including companies such as BYD, Li Auto, NIO, XPeng, and Hesai, but the main text does not provide detailed valuation or financial comparisons.

  Risks

  There are execution risks around delivery targets, gross margin recovery, premium brand launch, overseas production rollout, and ADAS technology roadmap.

• Stellantis

  Partner related to overseas localization cooperation

  Strengths

  It may support Leapmotor's local production in Europe through a plant transfer involving the Madrid Villaverde factory in Spain.

  Weaknesses

  The arrangement still depends on announcements, asset transfer, and the establishment of a local European supply chain.

  Comparison

  Compared with a pure export model, local production is more helpful for tariff mitigation and regional supply chain development.

  Risks

  There is policy and execution uncertainty around the factory transfer, 2028 mass production, and exemption from anti-subsidy tariffs.

• Hesai、Qualcomm、Mobileye

  Parties related to the ADAS supply chain and technology solutions

  Strengths

  Domestic urban NOA uses Hesai LiDAR and Qualcomm chips, while the overseas L1/L2 solution adopts Mobileye's mature solution to meet launch timing requirements.

  Weaknesses

  Running domestic self-developed and overseas mature solutions in parallel may increase the difficulty of technology integration and product consistency management.

  Comparison

  China emphasizes self-developed capability, while overseas markets place more emphasis on mature solutions and delivery timing.

  Risks

  Iteration of intelligent driving features, compliance with local data storage, and supply chain coordination may affect user experience and overseas launch timing.

Key data

• 2026 delivery target1 million unitsThe company maintains full-year delivery guidance, including 350,000 units in the first half and 650,000 units in the second half.
• First-quarter ASPRMB 98,000Average selling price disclosed by management for the first quarter.
• First-quarter vehicle gross margin7.5%Mainly affected by a high proportion of overseas sales, low-single-digit overseas gross margin, and higher per-vehicle allocated costs caused by low sales volume.
• First-quarter overseas sales mixabout 37%Overseas sales are recognized based on transfer pricing, with gross margin in the low single digits.
• Second-quarter sales outlook240,000-250,000 unitsOf which overseas sales are expected to be 40,000-50,000 units, representing about 18% of the total.
• Second-quarter overall gross margin guidance12%-13%Overall gross margin guidance provided by the company after the earnings call.
• 2030 sales target4 million unitsThe company plans for about 40%-50% of sales to come from overseas markets.
• Premium second brand price bandabove RMB 300,000The first model is planned to debut no later than the first quarter of 2027 and is expected to launch in the second to third quarter of 2027.
• Domestic first-quarter sales70,000 unitsExcluding overseas sales; about 40% were equipped with urban NOA, corresponding to fewer than 30,000 urban NOA vehicles.
• ADAS R&D teammore than 500 engineersThe company uses a self-developed ADAS software solution in China.
• ADAS configuration mix40% advanced, 50% mid-trim, 10% basicA-, B-, and C-segment models share the ADAS solution, while the D series uses a dual Qualcomm architecture.
• Overseas JV net margin target3%-5%The target is to align with the group's overall profitability.
• Europe local production milestoneMass production in 2028The company has chosen Spain as its local production base in Europe and hopes to obtain an exemption from anti-subsidy tariffs.
• South America channel targetExpand from 35 stores to 65 storesStores are already operating in Brazil and Chile; the company plans to enter more markets and may start production at a KD plant by the end of 2026 or in the first half of 2027.

Impact & implications

For investors, the report reinforces the long-term narrative of Leapmotor's sales growth and global expansion, but the key near-term question is whether delivery volume growth can drive gross margin recovery. If second-quarter sales, overseas mix, and overall gross margin improve in line with guidance, the first-quarter margin pressure would ease; if overseas localization, the second brand, and ADAS investment progress poorly, this could affect the company's ability to achieve its 2030 sales target and margin improvement path.

Risks

• Cost inflation, the low-margin overseas mix, and low first-quarter sales volume may continue to suppress gross margin.
• The 2026 delivery target of 1 million units depends on new model launches, a ramp-up in second-half sales, and channel execution.
• There is still uncertainty around government subsidy policies, and the company's full-year sales target does not yet incorporate any potential contribution from additional subsidies.
• The second brand's entry into the price band above RMB 300,000 faces validation in terms of brand recognition, product strength, and competitive landscape.
• Running domestic self-developed ADAS and overseas mature solutions in parallel creates risks related to technology iteration, integration, compliance, and data localization.
• Local production in Spain, a South American KD plant, and overseas channel expansion involve uncertainties in policy, supply chain, plant transfer, and return on investment.
• Whether the overseas JV margin target can align with the group's overall profitability still requires verification from subsequent operating data.

What to watch

• The launch schedule for the updated C10, C11, and C16 models in June, as well as D99 from late June to early July and A05 in August.
• Whether new local government subsidy policies are introduced around mid-year or in the third quarter, and whether the company adjusts its sales or profitability assumptions.
• Whether second-quarter sales of 240,000-250,000 units, overseas sales of 40,000-50,000 units, and overall gross margin of 12%-13% can be delivered.
• Whether gross margin continues to recover in the second half as product mix improves and sales scale expands.
• Whether the first model of the second brand can debut by the end of 2026 or in the first quarter of 2027, and launch in the second to third quarter of 2027.
• Whether the company's self-developed VLA large model can be delivered via OTA in the fourth quarter.
• Progress on the Spain plant transfer, the 2028 mass production plan, and exemption from European anti-subsidy tariffs.
• Execution of the expansion in South American stores from 35 to 65, and whether the South American KD plant can be established by the end of 2026 or in the first half of 2027.