Seres Group Swings to $253 Million Loss in H1 2026

Seres Group Reports Loss in First Half of 2026

Seres Group swung to a substantial loss in the first half of 2026, reversing the profit recorded during the same period last year as higher key component costs and a sizable asset impairment weighed on financial performance. The company reported a net loss attributable to shareholders of 1.72 billion yuan ($253 million), compared with net profit of 2.94 billion yuan in the first half of 2025. Revenue reached 57.49 billion yuan, representing a 7.87% year-on-year decline. Net loss excluding non-recurring items was 2.38 billion yuan, compared with a profit of 2.47 billion yuan a year earlier.

Vehicle Sales Remained Relatively Stable Despite Revenue Pressure

Seres sold 196,580 vehicles during the first half of 2026, a modest 1.02% decline from the same period last year. New energy vehicle sales, however, increased 3.87% year-on-year to 178,777 units, showing continued demand for the company's electrified vehicle portfolio despite broader pressure across the domestic passenger-vehicle market. The relatively stable vehicle volume compared with the sharper decline in revenue indicates that product mix, pricing and cost pressures were important contributors to the weaker financial outcome. Seres said several key models were undergoing product transitions during the second quarter, limiting the ability to fully capture production and sales scale benefits.

Seres Group Monthly Vehicle Sales, 2024-2026

The company's monthly sales performance shows considerable variation during the first seven months of 2026. Sales reached 45,948 units in January before falling to 15,013 units in February and recovering to 27,484 units in March. Deliveries then increased to 35,461 units in April and 36,480 units in May, followed by 36,194 units in June and 26,679 units in July. The figures also show that 2026 monthly volumes remained below several corresponding 2025 levels after January, although the company continued to record substantial vehicle volumes through the second quarter. The product-transition period therefore coincided with a period of uneven monthly sales performance.

Battery and Chip Costs Put Pressure on Margins

Rising prices for important NEV components became a major source of pressure on Seres' manufacturing economics during the reporting period. The average daily price of battery-grade lithium carbonate increased 132.2% year-on-year during the first half, raising costs for battery-related inputs. Automotive-grade chips also experienced structural shortages and sharp price increases. Seres said it chose not to respond by lowering component quality standards and instead maintained its premium supply-chain requirements. While that approach supported its product and supply-chain positioning, it also limited the company's ability to immediately offset higher input costs, contributing to weaker near-term operating profitability.

Gross Margin Declined as Costs Increased

Seres' gross margin fell to 21.8% in the first half of 2026, down 4.7 percentage points from the corresponding period a year earlier. Cost of sales declined 2% to 44.9 billion yuan, but the reduction was insufficient to offset the combined effect of weaker revenue and higher component costs. The margin deterioration highlights the pressure facing NEV manufacturers when material costs rise faster than pricing or product-mix improvements can compensate. Seres' product transitions during the second quarter also meant that the expected scale benefits from production and sales had not yet been fully realized, adding another challenge to profitability during the period.

Asset Impairment Added to the Financial Burden

Beyond operating cost pressure, rapid technological changes across the NEV industry resulted in a significant impairment charge for Seres. The company recorded an impairment loss of 1.75 billion yuan on intangible assets during the first half of 2026. Other gains and losses also represented a loss of 2.31 billion yuan, compared with a loss of only 33 million yuan in the same period last year. These items materially increased the reported loss and demonstrate how fast technology cycles can affect the carrying value of assets in an industry undergoing rapid product and platform development. Research and development expenses simultaneously increased 27.4% year-on-year to 3.73 billion yuan.

Operating Expenses and Cash Flow Remained Under Pressure

Seres' selling and distribution expenses declined 5.3% year-on-year to 8.47 billion yuan, indicating some reduction in commercial spending despite the company's ongoing product transitions. However, net cash flow from operating activities was negative 12.38 billion yuan during the reporting period. The company attributed the negative operating cash flow mainly to lower cash receipts from vehicle sales and payments associated with previously issued bank acceptance bills as they matured. The combination of weaker operating cash generation and increased research and development spending reflects the financial demands of maintaining product competitiveness while the NEV sector continues to undergo rapid technological and market changes.

Seres Maintained a Strong Liquidity Position

Despite the reported loss and negative operating cash flow, Seres said its operating resilience remained solid, supported by substantial liquidity and relatively low interest-bearing debt. Inventory turnover was approximately 7.5 days in the second quarter, significantly below the industry average, indicating rapid movement of inventory through the business. Cash reserves exceeded 73.15 billion yuan at the end of the reporting period and represented 57% of total assets. Interest-bearing debt accounted for only 3.2% of total assets, while just 398 million yuan was due within one year. Total assets stood at 128.35 billion yuan, down 10.81% from the end of 2025.

China's Passenger-Vehicle Market Added Further Pressure

The broader China passenger-vehicle market also presented challenging conditions during the first half of 2026. Seres cited China Passenger Car Association data showing that domestic passenger-vehicle retail sales exceeded 8.7 million units during the period, representing a 20.2% year-on-year decline. The company noted that the segment priced above 400,000 yuan was the only price band to record growth, with retail sales increasing 18.8% year-on-year. New energy vehicle sales in that higher-priced segment grew even faster, rising 45.9%. The data underscores the importance of premium positioning as manufacturers face intensifying competition across the broader passenger-vehicle market.

Seres and Huawei-Linked NEV Strategy

Seres operates within an ecosystem that includes its partnership with Huawei, making its financial and product performance relevant to the broader development of premium connected NEVs in China. During the first half, Seres continued investing heavily in research and development while its key models underwent product transitions. The higher R&D spending reflects the company's effort to keep pace with rapid technological iteration across the sector. At the same time, the decision to preserve premium component and supply-chain standards despite higher battery and semiconductor costs indicates that Seres continued to prioritize product positioning rather than relying on lower component specifications to protect short-term margins.

Investor Confidence Measures Expanded in 2026

Seres also took several measures intended to strengthen investor confidence following the deterioration in first-half profitability. The company paid more than 1.39 billion yuan in cash dividends during the reporting period, while cumulative share repurchases exceeded 587 million yuan as of July 2026. In July, the controlling shareholder and core management team increased their holdings on a large scale. Directors, senior executives and key employees completed a 148 million yuan share-purchase plan within three trading days of the announcement. These actions provided a direct signal of shareholder and management commitment while the company navigated weaker revenue, higher component costs, asset impairment and the continuing transition of its product portfolio.

Seres Financial Outlook Following H1 2026

Seres enters the second half of 2026 with a mixed financial picture: vehicle sales remained comparatively resilient, NEV volumes increased year-on-year, and the company retained a substantial cash position, but profitability was affected by component inflation, product transitions and asset impairment. The 132.2% increase in battery-grade lithium carbonate prices and structural shortages in automotive chips illustrate the cost volatility facing NEV manufacturers. Meanwhile, increased R&D spending and continued product development point to ongoing investment requirements. The company's ability to translate product transitions into stronger scale benefits, manage component costs and convert vehicle sales into operating cash flow will remain important to its financial performance.

Frequently Asked Questions

What happened to Seres Group's profitability in the first half of 2026?
Seres Group reported a net loss of 1.72 billion yuan in the first half of 2026, reversing the 2.94 billion yuan net profit recorded a year earlier. Revenue declined 7.87% to 57.49 billion yuan, while net loss excluding non-recurring items reached 2.38 billion yuan. Higher prices for batteries and automotive chips increased manufacturing costs, while a 1.75 billion yuan impairment loss on intangible assets further affected results. Product transitions during the second quarter also limited the immediate benefits of production and sales scale.

How did Seres vehicle sales perform in the first half of 2026?
Seres sold 196,580 vehicles during the first half of 2026, representing a 1.02% year-on-year decline. Its new energy vehicle sales were stronger, reaching 178,777 units and increasing 3.87% year-on-year. The sales performance indicates that overall vehicle demand remained relatively resilient despite broader pressure in the domestic passenger-vehicle market. However, product transitions during the second quarter affected the company's ability to fully realize scale benefits. Revenue declined more sharply than total vehicle sales, highlighting the additional impact of product mix and cost pressures.