Imagine standing at the starting line of a crowded racetrack, surrounded by eager competitors. Some have already taken a commanding lead, becoming synonymous with the industry, while you're just beginning, still figuring out your direction. This is the challenge facing Leapmotor, an emerging electric vehicle (EV) manufacturer that started from scratch. As it prepares for its Hong Kong IPO, can the company break free from its cash-burning predicament and truly lead the new energy vehicle race, potentially challenging Tesla's dominance?
The New Landscape: From "Wei Xiaoli" to "Ling Na Wei"
On September 20, Leapmotor announced its upcoming listing on the Hong Kong Stock Exchange, scheduled for September 29. This makes it the fourth Chinese EV startup to go public and the first among the second-tier competitors. Unlike NIO, XPeng, and Li Auto (collectively known as "Wei Xiaoli"), which chose dual listings in the U.S. and China, Leapmotor and its second-tier peers initially targeted China's STAR Market before settling for Hong Kong after repeated rejections.
The Chinese EV landscape has evolved significantly since 2014-2015 when these companies first emerged. While "Wei Xiaoli" quickly rose to prominence through first-mover advantages and precise market positioning, second-tier players like Leapmotor, Neta, and WM Motor found themselves playing catch-up.
In April 2022, Leapmotor briefly claimed the monthly delivery crown among Chinese EV startups, only to lose it to Neta in subsequent months. This volatility highlights the intense competition in the sector, where no company can afford complacency.
The Founder's Journey: From Security Tech to Automotive Newcomer
Leapmotor's founder, Jiangming Zhu, brings a unique background to the EV race. Born in 1967, Zhu is older than any of the "Wei Xiaoli" founders and boasts an impressive entrepreneurial track record. After graduating from Zhejiang University and working at Motorola, Zhu co-founded Dahua Technology in 1993, where he served as CTO and helped build it into a global leader in security surveillance systems.
"When I first considered making cars in 2015, I truly didn't know what specialties were involved in automotive manufacturing. When recruiting, I didn't even know which positions to fill," Zhu recalled about Leapmotor's early days.
Despite his lack of automotive experience, Zhu recognized the convergence between Dahua's core competencies in visual recognition and algorithms and the emerging needs of smart vehicles. "Among the world's top 10 companies by revenue, except for Walmart, all are related to automobiles. As automotive core technologies evolve toward smart connectivity, our skills in visual recognition and algorithms become crucial," Zhu explained.
The Production Challenge: From Workarounds to Full Autonomy
Leapmotor's path to production mirrors the regulatory challenges facing Chinese EV startups. When China halted new EV production licenses in 2016, Leapmotor adopted an unconventional approach: building its own factory in Jinhua for most manufacturing processes while relying on Changjiang Automobile for final assembly. Early Leapmotor vehicles even bore "Changjiang Leapmotor" badges.
The company finally obtained its production license in July 2021, just as Changjiang Automobile faced bankruptcy. This timing proved fortuitous, allowing Leapmotor to continue operations independently.
The IPO Push: Financing as a Lifeline
Leapmotor's financials reveal why the IPO is crucial. From 2019 to 2021, the company's revenues grew from ¥117 million to ¥3.13 billion, but net losses expanded from ¥901 million to ¥2.85 billion. Like its peers, Leapmotor sells vehicles at a loss, with 2021 costs of ¥4.52 billion exceeding its ¥3.13 billion revenue.
The company's cash position also trails far behind "Wei Xiaoli." As of 2021, Leapmotor held ¥4.34 billion in cash, compared to NIO's ¥15.33 billion and Li Auto's ¥30.49 billion.
Wu Baojun, Leapmotor's president, emphasized: "Listing isn't about wealth realization—it's about raising capital for early-stage development." The message is clear: Leapmotor needs substantial funding to continue competing.
The Product Strategy: From Microcars to Mainstream
Leapmotor's delivery growth tells an interesting story. While the company targets the ¥150,000-300,000 mid-to-high-end market, its best-selling model in 2021 was the T03 microcar (priced at ¥69,000-85,000), accounting for nearly 90% of its 43,748 deliveries.
This creates a profitability challenge, as microcars typically offer slim margins. Leapmotor's newer models—the C11 SUV (¥160,000-200,000) and upcoming C01 sedan (¥180,000-270,000)—aim to shift this mix toward higher-margin segments.
The Road Ahead: Survival in a Crowded Field
Zhu has set ambitious goals, including surpassing Tesla in smart technology within three years. "Unlike other EV startups, Leapmotor develops its entire smart driving system from hardware to software," Zhu claims, emphasizing the company's vertical integration strategy.
As Wu Baojun noted before the IPO: "In this rapidly evolving smart EV era, selling 7,000 vehicles monthly isn't fundamentally different from newcomers like Xiaomi or Baidu starting from zero. Our focus is simply on surviving to see the future."
For Leapmotor, the Hong Kong listing marks not an endpoint, but the beginning of an even more challenging race—one where staying power may prove more valuable than early speed.