First-half profit, but not everything is improving
Leapmotor remained profitable in the first half of 2026, marking its second profitable half-year in a row. The bottom line was net income of 210 million yuan. That represents a substantial jump from the same period last year, when earnings were still considerably lower.
The downside is that profitability looks less robust on closer inspection, as important quality metrics weakened. In particular, gross margin, operating cash flow and free cash flow declined compared with the previous year, even though revenue and unit sales rose significantly.
Revenue up 57%, deliveries up 61%
Revenue rose to 38.11 billion yuan in the first half of the year, driven by increased deliveries of vehicles and spare parts. Leapmotor delivered a total of 356,487 vehicles, an increase of 60.8% year over year. According to the company, this puts it at the top among China’s new automotive brands.
For the European market, one important factor is Leapmotor’s close relationship with Stellantis. This partnership could accelerate distribution outside China, but it does not guarantee high margins while the model range and pricing strategy are still being established in new markets.
Gross margin declines but recovers quarter over quarter
Although gross profit increased to 4.45 billion yuan for the half-year, the gross margin fell to 11.7% from 14.1%. Leapmotor cited higher raw-material costs and a change in its model mix. During periods of growth, this mix is often the lever that boosts volumes in the short term but comes at the expense of margins.
The development within the half-year is noteworthy: gross margin reached 12.6% in the second quarter, 3.2 percentage points higher than in the first quarter. This suggests that profitability is at least stabilizing sequentially, potentially due to improved economies of scale, optimized costs or a more favorable mix of variants.
Cash flow: Operating cash flow falls sharply, free cash flow plunges
Cash flow shows the greatest weakness. Net cash flow from operating activities amounted to 2.17 billion yuan, a decline of 24.1%. Leapmotor attributes this primarily to higher spending caused by advance inventory buildup, meaning more purchasing before the vehicles are sold and paid for.
Free cash flow fell sharply to 140 million yuan from 860 million yuan. This is a warning sign for short-term cash generation, but it does not automatically indicate a crisis. During periods of expansion, model launches and internationalization, free cash flow can fluctuate temporarily because working capital and investments must be funded in advance.
Nevertheless, the liquidity position remains comfortable: At the end of June, cash, deposits and certain financial assets totaled 38.59 billion yuan.
Higher spending on development and sales as exports drive growth
Leapmotor is stepping up the expansion of its portfolio and markets. R&D expenditure rose to 2.32 billion yuan (+22.8%), while selling expenses increased to 1.99 billion yuan (+41.1%), partly due to additional advertising, promotions and sales staff.
Exports were particularly dynamic. Leapmotor shipped 96,294 vehicles abroad in the first half of the year, an increase of 372.6%. This accounted for 27% of sales and already exceeded the company’s total export volume for all of 2025. Management is targeting around 200,000 international sales in 2026 and 350,000 to 400,000 vehicles in 2027.
This is significant for Europe because higher export volumes increase the likelihood that Leapmotor will establish a greater presence with competitive prices over the medium term. At the same time, the faster a brand grows internationally, the more important after-sales service, spare-parts availability and reliable software updates become. Otherwise, customer satisfaction can quickly deteriorate.
One-million target: Pace must increase significantly in the second half
Leapmotor is maintaining its annual target of 1,000,000 vehicles. After seven months, it had delivered 457,754 vehicles, equivalent to 45.8% of the annual target. Over the remaining five months, Leapmotor would have to deliver an average of around 108,449 vehicles per month, more than the record 101,267 delivered in July.
New models such as the A10, D19 and A05 are expected to help close the gap. The D19 recorded 10,043 deliveries in July, and Leapmotor also reported a production milestone: The 100,000th A10 rolled off the production line 135 days after its market launch.
Driver assistance: City navigation for several model series, update plans take shape
Leapmotor also intends to accelerate the rollout of driver-assistance systems. According to the company, City Navigation Assistance is already available in the A, B, C and D series. A nationwide rollout for models based on the LEAP3.0 architecture is planned for the third quarter, while a new assistance solution based on a new architecture is also due to be unveiled in September.
For the DACH region—Germany, Austria and Switzerland—such feature announcements initially indicate the company’s technological direction, but their practical relevance here depends heavily on homologation, software approvals and the specific implementation of the systems in EU variants. This pattern is also familiar from the Tesla world: Hardware and software may promise a great deal, but what matters is which functions are ultimately enabled via updates in each region.
What this means for Europe
Leapmotor’s first half of 2026 presents a combination of strong growth and earnings quality that is not yet consistently stable. The company is profitable and its international expansion is gaining momentum, but margins and cash flow are under pressure. For buyers in Germany, Austria and Switzerland, the main signal is that Leapmotor is increasingly likely to become a serious competitor. The decisive test, however, will be how effectively the brand manages scaling, service infrastructure and software maturity outside China.
