Leapmotor is adding robotics to its list of future ambitions. During the company's mid-year results conference on the evening of August 24, management revealed that it has formulated a plan for embodied intelligence robots, with more details expected to be released soon. The leadership team also offered a more optimistic outlook for the company's financial performance in the second half of the year.

In the second quarter, Leapmotor managed to recoup the losses it suffered in the first three months of the year. According to its interim report, the company posted revenue of RMB 38.11 billion for the first half, a year-on-year increase of 57.2%, while deliveries reached 356,500 units, up 60.8%. In July alone, monthly sales surpassed the 100,000-unit mark for the first time. Net profit attributable to shareholders stood at RMB 208 million for the first half. After accounting for the RMB 390 million loss in Q1, the second quarter delivered a net profit of approximately RMB 600 million. This profit not only covered the earlier quarterly deficit but also kept the company in the black for the entire first half. During the same period, gross margin rebounded to 12.6% from 9.4% in the first quarter.

Cash flow also improved significantly in the second quarter. Based on calculations from the interim and Q1 reports, Leapmotor recorded a net operating cash inflow of roughly RMB 8.78 billion in Q2, a sharp turnaround from the RMB 6.61 billion net outflow seen in the first quarter. The interim report attributed the year-on-year decline in first-half operating cash flow primarily to higher inventory levels from advance stockpiling. Quarterly cash flow figures, the company noted, remain subject to fluctuations tied to inventory preparation and delivery schedules.

Although sales volumes have climbed, per-vehicle profitability remains modest. The company's comprehensive gross margin for the first half came in at 11.7%, down 2.4 percentage points from a year earlier. While both revenue and deliveries grew by more than 50%, the gross margin actually fell below last year's level. Management cited rising raw material costs and a shift in product mix as the main reasons. Excluding share-based compensation, adjusted net profit for the first half was RMB 270 million, down from RMB 330 million in the prior-year period. Free cash flow also contracted to RMB 140 million, compared with RMB 860 million a year ago.

Carbon credits remain a notable line item on the income statement. At the results conference, management stated that carbon credit revenue for the first half amounted to approximately RMB 800 million to RMB 900 million, with around RMB 500 million generated in the second quarter alone. That figure is close to the roughly RMB 600 million net profit recorded for Q2, meaning that assessing how much the core vehicle business actually earned requires a closer look at vehicle-level gross margins. The interim report showed that revenue from services and other sales jumped 118.3% year-on-year to RMB 2.51 billion, driven largely by rising overseas deliveries and related carbon credit trading income.

Looking ahead, management projects a full-year comprehensive gross margin of 13% to 14%, with vehicle gross margin expected to land between 10% and 11%. The anticipated improvement in the second half is expected to come from lower material and manufacturing costs as sales volumes expand. Even if these targets are met, vehicle gross margin will remain around the 10% level, leaving relatively thin profit margins.

Leapmotor is also pushing to expand its overseas sales footprint this year. First-half exports reached 96,300 units, a surge of 372.6% year-on-year, accounting for 27% of total sales. Management expects overseas sales to hit approximately 200,000 units this year, with a target of 350,000 to 400,000 units next year. While overseas sales are growing quickly, their contribution to overall profit improvement has yet to be proven. Manufacturing in Spain can help avoid tariffs, but the cost of locally sourced components is higher than in China. Management estimates that localized production will reach around 50,000 units next year, with some gross margin improvement expected—though the gains may not be as significant as outsiders anticipate.

Leapmotor's second-quarter results offer a clear illustration of how rapid sales growth can quickly push the income statement past the breakeven point. However, the interim report also shows that gross margin declined year-on-year, free cash flow trailed the previous year's level, and the overseas business is still being scaled up—meaning profit improvement will likely proceed at a gradual pace. The company has already demonstrated its ability to ramp up sales volume. With monthly deliveries now above the 100,000-unit threshold, the next challenge is to lift vehicle gross margins and get the overseas operation to start contributing meaningfully to profits. For a new-energy vehicle maker at this stage of development, achieving consistent profitability matters far more than a single quarter in the black.