Leapmotor Shares Fall After Wider Q1 Loss Despite Strong EV Sales Growth

Leapmotor shares declined sharply in Hong Kong trading after the Chinese electric vehicle manufacturer reported a substantially wider first-quarter net loss. Investor sentiment weakened despite the company posting record first-quarter revenue and strong delivery growth. The stock dropped more than 11 percent during early trading and touched its lowest level in over two months as the market reacted to deteriorating profitability and shrinking margins.

The EV maker, backed by Stellantis NV, reported a first-quarter net loss of 390 million yuan, compared with a loss of 130 million yuan during the same period last year. The company attributed the increase in losses mainly to weaker total gross profit and higher operating expenses. Gross margin also declined significantly, falling to 9.4 percent from 14.9 percent a year earlier, reflecting mounting pricing pressure and higher operational costs across the competitive electric vehicle market.

Despite profitability challenges, Leapmotor achieved strong revenue growth during the quarter. The company generated first-quarter revenue of 10.82 billion yuan, representing its highest-ever revenue performance for a first quarter. Strong customer demand and higher vehicle deliveries helped offset part of the pressure caused by lower margins and rising expenses.

Vehicle deliveries remained a major growth driver for the company during the reporting period. Leapmotor delivered 110,155 vehicles in the first quarter, highlighting continued momentum in the domestic electric vehicle market. Overseas operations also contributed significantly to the company’s performance, with export volumes reaching record levels as international demand continued to expand.

Leapmotor’s overseas exports totaled 40,901 vehicles during the quarter, accounting for 37.1 percent of its total sales volume. The company continues to strengthen its presence outside China, positioning international markets as a key long-term business growth engine. Expanding overseas distribution and leveraging partnerships are expected to remain important strategic priorities for the automaker.

The company’s delivery momentum continued into the second quarter. In April alone, Leapmotor delivered a record 71,387 vehicles, while overseas sales reached 14,225 units. The latest figures indicate sustained consumer demand and improving international market penetration despite challenging industry pricing conditions and intensified competition among EV manufacturers.

Leapmotor also confirmed plans to launch a second independent brand after experiencing strong growth in its core business. Company executives stated during an earnings call that products under the new brand could debut by the end of this year and may officially enter the market during the middle or second half of next year.

According to earlier reports, the upcoming brand is expected to focus on premium models priced above 300,000 yuan. This strategy would mark a significant expansion beyond Leapmotor’s current portfolio, which mainly targets the affordable mass-market electric vehicle segment. The move could help the company diversify revenue streams and strengthen its position in higher-margin categories.

Investors are now closely monitoring upcoming earnings reports from other major Chinese electric vehicle manufacturers. Nio Inc is scheduled to release its financial results on May 21, while Xpeng and Li Auto are both expected to announce their first-quarter earnings on May 28. The results are likely to provide broader insight into profitability trends, pricing competition, and demand conditions across the Chinese EV industry.

Frequently Asked Questions

Why did Leapmotor shares decline after the first-quarter results?
Leapmotor shares fell because the company reported a significantly wider net loss for the first quarter despite achieving strong revenue and delivery growth. Investors reacted negatively to the sharp decline in gross margins and rising operating expenses, which raised concerns about profitability. Although vehicle sales and overseas exports continued to grow at a strong pace, the market remained cautious about the company’s ability to maintain sustainable earnings in an increasingly competitive Chinese electric vehicle industry.

How important are overseas markets to Leapmotor’s future growth?
Overseas markets are becoming a major growth driver for Leapmotor as the company rapidly expands exports and international operations. During the first quarter, overseas sales accounted for more than one-third of total vehicle deliveries, highlighting strong demand outside China. The company is using international expansion to diversify revenue sources and reduce dependence on the domestic market. Continued growth in exports, combined with new premium-brand plans, could help strengthen Leapmotor’s long-term global market position.