China’s electric vehicle maker Leapmotor has become the latest member of the nation’s elite ‘10K club’ after selling 10,059 EVs in March, a quantum leap in sales that is a timely boost for the firm’s planned IPO in Hong Kong.
A 200% surge in its EV sales enabled the company to leapfrog more storied rivals like Nio, whose deliveries dipped below 10,000 for the month. Leapmotor’s total car sales in the first quarter soared 410% to 21,579.
The first quarter “is a blowout for Leapmotor,” said Leng Zelin, a transport analyst with Beijing-based consulting firm and tech portal TMTPost.
Zhejiang-based Leapmotor was co-founded by Zhu Jiangming and Fu Liquan. Zhu, who sees the company taking on and even overtaking Tesla, says March’s sales surge “blew past everyone’s expectations.” The company, which counts Sequoia Capital China among its investors, filed an application for its IPO in Hong Kong last month.
Until recently, Leapmotor was crawling under the radar. It’s gained momentum mainly from sales of the T03, a no-frills sub-compact shipped at the rock-bottom price of 73,900 yuan ($11,621).
The diminutive EV accounted for 90% of total sales last month as Leapmotor cut back on non-essential parts to slash prices. That helped it grow sales, particularly in the nation’s vast countryside and lower-tier cities where budget two-seaters and subcompacts are proven to command mass appeal.
That rural base helped the T03 outsell Tesla’s Model 3 in the first quarter, lending some credence to Zhu’s ambitions.
A perfect storm of spiralling input costs, waning government subsidies and supply chain disruptions is weighing heavily on the sector though, causing Asia Financial’s China Electric Vehicles index to slump about 27.6% this year. The gauge of 14 leading China EV makers is down about 3% in April. The darkening outlook for the industry is exacerbated by uncertainty over the possible delisting from US exchanges of some EV makers.
These were among factors that prompted TMTPost to warn last month that the company may need to accept a lower valuation for its IPO.
“Much of China’s EV euphoria since last year has evaporated and investors should look before they leap,” says Leng.
While aspiring to beat Tesla, Leapmotor is languishing in the red with aggregate losses of 5 billion yuan since 2019, according to its prospectus. Raw materials and consumables represented 91.2% of Leapmotor’s total sales cost last year.
- By Frank Chen