It seems that the “hundred billions dream” of Fu Liquan, chairman of Dahua, is about to come true.
On August 29, according to the documents of the Hong Kong Stock Exchange, Zhejiang Leapao Technology Co., Ltd. passed the listing hearing of the Hong Kong Stock Exchange, and CICC, Citigroup, JPMorgan Chase, and CCB International served as the joint sponsors of the IPO.
If it successfully landed on the Hong Kong Stock Exchange this time, Leapmotor will become the fourth listed new car-making force after Weilai, Ideal and Xiaopeng, and also the “first stock” in the second echelon of the new car-making force.
Profits remain the top priority
As the second echelon of domestic new power brands, the development of Leap Motor has always attracted much attention. After submitting the listing application in March this year, there has been a wave of discussions inside and outside the industry. Regarding the development of Leap Motor, there have always been two different Sound, now that Leapmotor is IPO, the sound of development is getting louder and louder, Leapmotor seems to usher in its own prosperous era.
Let’s take a look at the results of Leapmotor Cars first.
In the whole year of 2021, Leapmotor will deliver over 40,000 electric vehicles, an increase of over 400% compared to 2020. In terms of deliveries, Leapmotor is the fastest-growing company among the leading emerging electric vehicle companies in China.
At present, Leapmotor has launched four models in the market, namely the intelligent pure electric coupe S01, the intelligent pure electric mini car T03, the medium-sized intelligent pure electric SUV C11 and the intelligent pure electric medium and large-sized sedan C01, covering medium and large sedans, miniature cars Cars, coupes and neutral SUVs.
In terms of production capacity, Leapmotor’s factory production line in Zhejiang has an annual production capacity of 200,000 vehicles, and has established a complete independent manufacturing capacity.
In terms of technology research and development, unlike other new power car manufacturers, Leap Motor adheres to the technical route of full-stack self-developed technology. The technology covers intelligent driving, intelligent cockpit and traditional three-electricity level. It is the type and number of invention patents among the new power brands. The largest one .
Among them , Leapmotor’s self-developed CTC battery-chassis integration technology is called the power battery 3.0 era.
The CTC structure has great advantages in cost and cruising range. It combines the battery and the chassis structure into one, reducing the number of parts and the total mass of the battery pack, thereby reducing the production process and improving efficiency.
After delivering the C01 in the third quarter, Leapmotor will become the first car company in the world to adopt CTC technology in a mass-produced model.
For car companies, mastering the core technology of car production can avoid becoming a foundry for car production and take the lead in the competition. The investment in full-stack self-developed technology and automobile production has made Leapmotor firmly in the second echelon of the new car-making forces, and it has also preempted the IPO.
However, with continuous investment in technology and a large amount of capital, Leapmotor is in a state of long-term losses.
According to financial information, Leapmotor Motors achieved profits of 117 million yuan, 631 million yuan, 3.132 billion yuan and 1.992 billion yuan in 2019, 2020, 2021 and the first three months of 2022, respectively, corresponding to losses of 901 million yuan in the same period. , 1.1 billion yuan, 2.846 billion yuan and 1.042 billion yuan.
That is to say, the revenue is increasing year by year, but the net loss is expanding year by year.
Although new car brands cannot escape the fate of losing money, compared with the new power brand “Weixiaoli” in the market during the same period, the situation of Leap Motor is not very optimistic.
After years of development, “Weixiaoli” has now achieved a positive gross profit margin. In contrast, Leap Motor’s three-year gross profit margins from 2019 to 2021 are -95.7%, -50.6% and -44.3%, respectively, and -26.6% in the first three months of 2022.
Although gross profit margins have improved year by year, there is still a long way to go before gross profit margins turn positive.
Long-term technology research and development requires profit backfeeding and hematopoiesis. Currently, how to achieve positive gross profit margins and reverse the loss situation is an urgent problem for Leapmotor.
After the IPO, it may be an excellent opportunity for Leapmotor to make a comeback against the wind.
Frost & Sullivan predicts that the market will become the fastest growing new energy vehicle segment by the end of 2023, while the first three models of Leapmotor are all focused on hitting the low-end market, resulting in low profits in the market.
In May 2022, the launch of the C01 means that Leap Motor has begun to hit the mid-to-high-end market. The C01 has achieved a market record of over 20,000 orders after only four hours of pre-sale.
Leapmotor should take advantage of the victory and continue to launch more “capable” models in the market.
According to Leap Motor’s plan, seven new pure electric models will be launched by the end of 2025 at a rate of one to three models per year, all of which will be positioned as mid-to-high-end brands.
In addition, relying on full-stack R&D technology, Leapmotor did not show its own differentiation advantages.
For a long time, Leapmotor has been out of the circle by its cost-effectiveness, and users bought it just because it was cheap. The price advantage can indeed drive short-term sales, but in the long run, differentiated products are the core competitiveness.
Whether it is Tesla or “Wei Xiaoli”, consumers can mention one or two things when it is mentioned, but when it comes to Leapcar, it seems difficult for consumers to name its representative model or core technology at the first time. In general, there are not many products, but there is no differentiation advantage.
In the market, there is a lack of representative Leapcars, and no matter how powerful the rhetoric is, it seems pale.
In addition, Leapmotor is frequently complained by users for its poor user experience and intelligence.
The competition on the intelligent driving track is becoming more and more fierce. In order for Leapmotor to achieve profitability as soon as possible, a lot of effort has to be made in the creation of technology and products.
bumpy road
The prospectus was submitted on March 17, and it was officially approved on August 29. It took 5 months for Leap Motor to apply for an IPO. From this point of view, it is not easy for Leap Motor to apply for an IPO.
According to the procedure, if the application for IPO is not passed within six months, it will be regarded as invalid, and it needs to be re-submitted. Leapmotor can be said to be “stuck”.
Leap Motor’s IPO road is like a microcosm of its bumpy road to building a car. It was vigorous at first, then exhausted for a long time, and finally accumulated a lot.
Threatening to surpass Tesla in full-scenario autopilot technology within three years, and then frequently benchmarking against Tesla, Leapmotor has a lot of momentum.
Founded in 2015, Leapmotor was born out of Dahua, a security giant. Zhu Jiangming, then the vice chairman of Dahua and the CTO of Dahua Co., Ltd., personally built the car.
Dahua, who is determined to build a car, has accelerated the development of zero-run cars in an all-round way from technology and capital.
From a technical point of view, Dahua has been deeply involved in the field of electronics all the year round, and can transfer its accumulated experience of technology and data in the IT field to the R&D process of Leapmotor, and at the same time speed up the R&D and save costs.
In terms of funding, as early as the establishment of Leapmotor, Dahua Co., Ltd. made a bet of 400 million yuan, and then continued to provide funds for the research and development of Leapmotor.
In July 2021, Leapmotor officially announced that it had completed a pre-IPO round of financing of over 4.5 billion yuan, and received an investment of 3 billion yuan from the Hangzhou Municipal Government. The Hangzhou Municipal Government’s investment adds to the national team’s halo in zero-run cars.
Dahua does not choose to be a travel operator or technology provider like other cross-border players, but builds cars by itself. In addition, it develops full-stack self-developed technologies.
Leapmotor is a menacing car in the market, and various actions have undoubtedly raised expectations for the market. In the eyes of many people, Leapmotor has the momentum to break through on the intelligent driving track.
However, the actual performance seems to be somewhat disappointing. Dahua, a “outsider” in the car circle, is embarrassed on the road of car building .
How to build a car? This is indeed a big problem for Leap Motor, which was just established in 2015.
For Dahua, which is close to blank in the automotive field, it can be said that the underlying logic of car building is completely unknown, and the road to car building is more like crossing the river by feeling the stones.
“When I first wanted to make cars in 2015, I really didn’t know what specialties there were in cars. When I recruited people, it was all smeared.” Zhu Jiangming, founder and chairman of Leap Motor, recalled.
In addition, Leapmotor’s inability to obtain production qualifications has put it in an embarrassing situation for a long time.
As early as 2015, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued the “Regulations on the Management of Newly-built Pure Electric Passenger Vehicle Enterprises”, which stipulates that car companies must have “production qualifications” and “product qualifications” before they can produce pure electric vehicles.
Because of the lack of qualifications, Leapmotor can only look for Changan Automobile as an OEM. It is a brand that focuses on the concept of “self-produced and self-developed”, but the actual delivery is OEM. Leapmotor is a little embarrassing in the market.
In addition, in the S01 media test drive organized by Leapmotor, a media teacher was stopped by the traffic police during the test drive because he did not have a temporary license.
In 2019, Leapmotor launched the first model S01, but due to its peculiar shape and the positioning of a coupe with a smaller audience, consumers did not buy the S01.
From S01 to T03, Leapmotor seems to have been delaying time, and it was slowly back on track until C11 was launched.
All in
Dahua, a security giant, chose to disrupt the arena of intelligent driving across borders for obvious reasons.
The new energy vehicle track continues to be hot, the market has a lot of room for imagination, and intelligent driving has become a major trend in the automotive field.
Fu Liquan, chairman of Dahua, expects to increase Dahua’s valuation through the intelligent driving car industry and break through the 100 billion valuation, so he gave it a go and bet on the intelligent driving track.
Throughout the car-making track, capital continues to be crazy.
Leapmotor ranks second in domestic car manufacturing, and its investment and strength in car manufacturing should not be underestimated.
The traditional car companies represented by Geely and BYD, the new car-making forces represented by “Weixiaoli”, and the technology companies represented by Huawei and Xiaomi have been increasing their bets. More and more crossover players.
The development of intelligent driving is full of variables and limitations, and Leapmotor may face greater challenges than imagined.
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