Welcome to the 2025 Internal Results Conference Call for Leapmotor. We're joined by CFO Mr. Li Tengfei, Joint President Mr. Wu Qiang, and the Board Secretary Mr. Shen Ke from Leapmotor . Please, Professor Mr. Shen, read out the disclaimer, please.
Good evening, dear investors. I'm Shen Ke, Board Secretary of Leapmotor. The content of this online call may contain certain forward-looking statements. Specifically, these include but are not limited to statements regarding the company's future financial position, strategies, objectives, metrics, and the future development of the markets in which the company participates or will participate. These forward-looking statements are based on the company's current and future business development strategies and assumptions made by the company regarding the future business environment. They inevitably involve certain known and unknown risks, as well as uncertainties.
Factors beyond the company's anticipation and control may cause the company's actual performance and the performance of the industry in which it operates to differ from the future performance expressed or implied in these forward-looking statements. Therefore, we hereby remind you that undue reliance should not be placed on the forward-looking statements discussed in this call. These statements reflect only the views of the company's management as of the day of this call. The company undertakes no obligation to update or revise any statement made in this call based on new information, future events, or other circumstances. Furthermore, the forward-looking events discussed in this call may not occur due to various uncertainties and assumptions. The above disclaimer applies to all forward-looking statements mentioned in this call.
Additionally, please note that nothing contained in this earning conference call constitutes any investment advice, nor does it form the basis or grounds for any contract undertaking or investment decision. Shareholders and potential investors are urged to exercise rational judgment and act with prudence when trading company shares. Back to you.
Thank you, Mr. Shen. May I invite Mr. Li Tengfei to cover the Internal Results 2025?
Good evening. I'm Li Tengfei from Leapmotor. I'm now going to take you through Leapmotor's Internal Results in 2025. First of all, operational headlines. In the first half of 2025, the net profit in the half year was CNY 30 million. For the first time, we have net profit in the interim and becoming the second company in the EV startups in the company to have interim profitability.
In the first half, the gross profit margin was 14.1%, which is a historical new high since the foundation of the company. In the first half of this year, the total delivery of the company is 221,764, which is number one in the startup brands in China. In July, the delivery hit another new high to 50,129 vehicles, becoming number one for five consecutive months, and also the only one who delivered more than 50,000 units in 2025. In terms of financial, as of the end of June, the income was CNY 24.25 billion. The monthly gross profit margin was 14.1%. Sorry, we're having some difficulty with the connection. The growth of margin was really because of the economy scale from rising sales, and also we have continued to do cost management. Thirdly, optimization of product mix. Fourthly, is revenue from other business.
As of the end of June, the attributable net profit was compared to the same period last year, was a -CNY 2.21 billion. As of the end of June, the attributable net profit was CNY 330 million compared with a negative CNY 2 billion same period last year. End of June, the operating net cash was CNY 2.86 billion in net cash compared with CNY 270 million net cash the same period of 2024. As of the end of June this year, the free cash flow was CNY 860 million compared with - CNY 480 million same period last year. Our cash at hand is abundant. As of the end of June, the cash and cash equivalent recorded by fair value, as well as the financial assets and bank deposits, was CNY 29.58 billion.
In terms of sales, in the first half of 2025, the total sales were 21,664 units, which is number one in Chinese startup EV brands, and which is up by 155.7% compared with the same period of 2024. In July, we hit another new high with 50,129 units. For five consecutive months, we are number one in the EV startups in China and the only one that delivered more than 50,000 in a month in 2025. In June, we have marked the delivery of 800,000 vehicles cumulatively as a milestone. Since the IPO of 13 months, the global delivery has been over 100,000 units. The monthly delivery was more than 14,000. In June, C11 accumulated sales reached more than 250,000, and C16, for eight consecutive weeks, they have been ranking top in mid-to-large SUVs.
C10, we have also been really the first one to be the fastest to deliver more than 10,000 a month. They really speak to the sales and brand capabilities. B01, since launching 24th in July, within 72 hours, we have more than 10,000 in orders. We are going to see some even new sales in terms of the B10. In terms of new product launch out of the B platform, we have been performing facelifts of the three models under the C platform, further enriching the product matrix to deliver diversified demand. All these models are based on the LEAP 3.5 architecture, providing most cutting-edge technology. We are also achieving end-to-end assisted driving in SUV for CNY 120,000 with LiDAR and Qualcomm 8650.
Since the launch in a month, we have actually achieved awards in 18 awards, including the latest standards awards, the Comfort Store EV Corpic Energy Efficiency Award, the first to get the Green Design Awards in the National CMS Design, the first to have the American Design Platinum Award, and the first and the only one to get the Platinum and the Golden Award for French Design. Leapmotor is also launching on the 24th of July, a high-quality sedan facing young individuals and young families, with the leading 650 km super long range, super luxury, with multiple features, including the flat tire control, stability control, and a comprehensive capability to make its way into Class A sedans with disruptive productivity.
The new model, we have launched on the 15th of May, attaching 800 V high-voltage LiDAR end-to-end assist driving, and the chassis technology that's only seen in a million RMB class kind of vehicle, and make it its way to CNY 140,000, which is the only product that gives you 600 km range with the 800 V fast charging, retuning the chassis with 220 kW high voltage with better driving pleasure and experience. Our C10 has been getting five-star safety in China, Europe, and Australia, and getting multiple design awards internationally. We have the only one that we're using CTC 2.0 and 800 V products, which is a brand new six-seater and five-seater SUV. The C11, based on the milestone of 250,000 unit sales, we have a new facelift on the 10th of July, compared with the original C11, is actually we have over 110 new experiences with 125 spec upgrades.
By the end of the month, we're also going to hit the mid-size SUV market with 150,000- 200,000 vehicles fitted with LiDAR and 800 V charging. In terms of R&D, on March 10, the company launched LEAP 3.5 architecture using Qualcomm 8650 and Qualcomm 8295 smart cockpit portfolio, redefining the assist driving, placing a domain controller under the total controller so that we have the highest concentration of central mobility, with also the battery thermal management and chassis upgrade. In the first half of 2025, we continue to invest in R&D. We have increased the size of computing resources by 100%, and we have deployed end-to-end algorithm, city NOA navigation, and we are also developing the LEAP 3.5 with the Qualcomm 8650 assisted driving solution. It took us only six months to deliver this application and make it available on the platform Bs.
We are going to continue to invest in R&D, and in 2025, we're going to completely really achieve the urban assisted driving. Our full-domain natural AR HUD has been fitted on the brand new C11 with a maximum 60-inch VR HUD supporting three mode switching and smart urban management that in the future is going to cover the main models under the C platform. Based on our advantage in optical imaging technology, we are leveraging the startup team with experience in the surveillance and security industry. We're making sure we get high-quality imaging and cost advantage. We have the full domain's in-house R&D in terms of VR algorithm, integrating efficient ADAS, smart cockpit, and HUD systems. We are able to deliver the product with a shortened delivery cycle, enhancing interaction experience.
In the first half of this year, we are improving the comprehensive efficiency by about 1% by optimizing the process components, cooling system, electric motor, battery control, and other dimensions. We continue to lead the industry by our professional and comprehensive efficiency. The new generation compressor is volume production and optimizing NVH, reaching the best level of performance in the industry. Our battery was the first to be recognized to meet the new national standard for power EV. We have got accreditation with the most stringent national security certificate ahead of the schedule by one year. Based on the most rigorous standard, our battery has passed 1,029 safety tests and 120A stringent performance tests. Also, with all the models under Leapmotor, we are now developing over 250,000 sets of C4, C2 batteries, setting new standards with ultra safety, ultra faster, ultra intelligence, ultra performance, and ultra intelligence.
In terms of sales, as of the end of June, we are covering 286 cities in the sales network, which is 88 cities more than last year. We are deploying 806 sales outlets. We are building different core distributors with the financial programs in the first half. The same shop performance has exceeded by 82%. In the second half of the year, we will continue to deploy in the tier one, tier two cities. We are going to penetrate into cities where we are not represented so that we can improve the coverage, quality, and performance of the channel. Expected by the end of 2025, we are going to cover another 60 cities. Coverage of the cities in the country will improve to 90%, improving brand coverage. We will continue to deploy our central store and urban showroom deployment to penetrate into core retails.
In terms of retail, we are deploying a full-chain digital marketing and service system, building a user-centric operating system, integrating online, offline servers, data points to provide seamless coverage of the full scenario experience based on the smart tools based on DMP. We are actually delivering the full life cycle, full chain, full scenario application, driving business practice with data and standardized procedures. The 360 system solution provides full data visibility in the process and also establishes industry benchmark in operational efficiency. In the first half of the year, we comprehensively enhance our core leadership metrics. We are seeing a 5% improvement from the operational efficiency. The outlet operation efficiency improved by 27%. In terms of services, in the first half of the year, we continue to get excellent results. Our fast response rate within 15 minutes was 99.5%, which is 9 percentage points higher year-on-year.
The one-time repair rate of the maintenance of vehicle rose to 98.3%, which is up by 4.4 percentage points month on month. The spare power supply within 48 hours, that ratio was 91.5%, which is also up by 14.3% compared to last period. To jointly develop the NEV passenger vehicle and components and parts, our new model has been launched. We are now present with the subsequent work with the joint model with FEW. We are also exploring feasibility of capital collaboration so that we can achieve the full industrial resources synergies. On the 26th of March, the CSRC has issued approval for Zhejiang Leapmotor Technology Co. to issue a private placement of stocks. The bank is approved to submit the private placement on the 25th of June. The bank's AGM has passed a revised ethical association so that the capital registration can be increased. That was in progress.
In terms of globalization, in the first half of 2025, the company exported 20,370 units of export tow vehicle, which is number one in startups. In June, Leapmotor's market share in Germany is over 1%. In July, more than 4,000 European users have placed orders for Leapmotor products, which is a historical high. The first B10 has been launched in June. They are being shown in September. We are continuing to expand our brand influences overseas. In terms of the German satisfaction survey, we're actually number one as a new brand in terms of the automobile satisfaction in Germany. On June 12th, multiple world, the overseas version of the C10 and T03 has been launched in Hong Kong, leading the world. The 1,500 Leapmotor center was located in Hong Kong, further improving our global sales network. Hong Kong becomes an important hub connecting to Europe and Southeast Asia.
As of the end of June, Leapmotor International has over 600 outlets in Europe, Middle East, Africa, and Asia-Pacific, including 550 in Europe and 50 in Asia-Pacific. We're quickly moving along international. On April 14th, we announced the lanterns to kick off the Leapmotor factory in Malaysia for the local assembly project. On the 7th of August, the first C10 was completed to be rolling off the line. We plan, before the end of next year, 2026, we're going to build a localized production factory in Europe, further deploying the global market landscape. In terms of ESG, in the first half, we released the third report demonstrating our latest technology in sustainability. In January this year, the company has received MSCI ESG AA rating for the second year in a row. That rating goes to show Leapmotor's leadership in environmental protection, social responsibility, and corporate governance.
In terms of technology for good, we continue to dedicate our technology innovation to social value creation. On the 26th of March, we donated CNY 5 million to the Disabled Foundation in Zhejiang Province, helping the province to support the public good projects to improve the quality of life and social participation for persons with disabilities so that technological advancement can truly become an important force to promote social justice and achieving economic and environmental benefits. Thank you. We're going to leave the time for the audience for questions. Operator, how do you do questions?
Hello. If you have a question, if you're dialing in, you can dial star one. Those of you joining us on the web, you can actually enter your question in the interactive room by typing your question or press the raise hand button. If you have any question, you can start press star one on your phone. If you're joining us on the web, you can write down your question on the chat box or raise your hand.
Good evening. Maybe I can start with a question, two small questions. First of all, we have seen that this year Leapmotor sales were excellent. To our knowledge, the order was also pretty good. Just to ask you, first of all, regarding the sales, what's the outlook in August and September in terms of sales? For the long term, are you going to update your full-year sales guidance? The second question is also the GP margin remained high in the first half, a new high actually in GP margin. What about the subsequent quarters? Any outlooks?
OK, to the first question regarding sales, a lot of people have seen, like Mr. Zhu has posted yesterday.
He said in the last weekend, in the two days, the net order was over 6,200. Over two days. The sales was, the momentum was excellent. We expect the August and September sales will have a significant growth. The August sales compared with July, which was 50,000 units, we believe there's going to be a sharp rise compared with July. In Q3, we expect the Q3 sales will be 170,000- 180,000 units. When it comes to full-year sales guidance, we have guided 500,000- 600,000 units. Based on the performance of the first half, which was an excellent performance, and based on our outlook in Q3 and Q4, we believe the sales guidance will be adjusted to 580,000- 650,000 units as a range. That's the first question regarding sales. Second question regarding GP margin.
Overall GP margin in the first half maintained at a high level, 14%, above 14%. For the full year, we believe the first half, there is some seasonality. The second half should be better than the first half. In the first half, we have had some older models where they are switching over to new models. We believe in the first half, the gross profit margin, we believe the second half does have potential to improve compared with the first half in terms of gross profit margin.
Thank you. Just to follow up, what's the latest sales guideline? How much was the export and how does domestic sales?
At the beginning of the year, we guided overseas sales. We believe the guidance was not changed that much. The new additional guidance was mostly from the international market.
Can we take the question from the audience? Phone number ended 9350. You have the floor, please.
Hello. Good evening. I'm Kangkai from Civic Auto. Congratulations, strong earnings, and also great results in the first half. I have two questions. First of all, we have seen, like in the annual report, you say in the first half of the year, the sales revenue growth was coming from the carbon credit trading. My question is, the non-auto sales revenue, which was about CNY 1.1 billion, how much from the CNY 1.1 billion was actually, how this is split in Q1, Q2, and how do you break it down?
In terms of the carbon trading, indeed, in the first half, we have monetized some of the carbon trading, which fully demonstrated Leapmotor's collaboration with Stellantis and advantage. Because Stellantis in Europe has a lot of familiarity with the carbon trading operation, this is really helping us to get to this trading level.
In the first half of the year, some of the transaction was about CNY 200 million- CNY 300 million in terms of a month. As I mentioned, CNY 1.1 billion of the non-auto sales revenue. The carbon trading business is not entirely non-auto sales because this is only from a financial basis, because the trading is also coming from the sales of cars. There is some, actually, there is a collaboration coming from the collaboration. Some come from the direct operation, which brought about some of the non-auto sales revenue.
Thank you. I'd like to ask, like the auto industry is now in the process of anti-involution, anti-involution by the regulator. I think with that background, what is your pricing strategy and competition strategy? Would you revise them? Are you also going to use this opportunity of anti-involution to get ready for better capabilities?
Yeah, thank you for the question.
Leapmotor, as a Chinese car maker, we highly support the government's and the national policy. We are fully supportive of the government's intention to correct some of the chaos of the industry. Leapmotor, we are not going to go ahead with the involution. We are not going to compete that is beyond the scope. From the competitive angle, ourselves, if you look at the pricing and the strategy, our gross profit margin was massively higher. The model's gross profit margin has been very well protected. We are doing this with our own technical capability, our capability of cost control, and also to develop the pricing based on our strategy and our strategy for competition. The overall strategy, I think we are nowhere near involution. We talk about supporting the 60-day payment terms in the industry.
We talk about it in open venues that we have always been doing this 60 days payment principles. We don't really need the government to tell us to do this because that's what we have always been doing. In terms of competition, we believe when it comes to anti-involution, we are very supportive. We are fully in favor of the government's intention to crack down involution. It doesn't change our strategy because we were never on the side of the involution.
Thank you, Mr. Li. Very clear.
Thank you.
Next question from phone number ended 1175. Zhang Huizhou.
Hello. This is Ming from BofA Securities. Thanks, Ming, for having me. I have two questions. First of all, regarding has the company guided any latest guidance on expenses rates? Because you can see you have higher revenue rising fast, but your expense rate was dropping. I wonder, based on the latest sales guidance, can you update us on the expenses?
Here's the thing. We never openly guided the expenses rate. That's because as the sales expand quickly, the sales revenue is increasing, and the expense rate is actually dropping very fast. Like you said, we believe in the first half of the year, as the company's sales overall are performing better, the sales revenue continues to grow. As a result, the overall expenses, in terms of absolute expenses, it's rising, but the expenses ratio will be dropping really fast.
Understood. Thank you. My second question is about the overseas going global. Just to confirm, say like next year, you're going to start to produce vehicles locally in Europe. Is there any expectation of the sales contribution next year or the year after next? What's more is Stellantis, are they still going to purchase carbon credit for you next year or the year after next?
First of all, for overseas sales, in terms of overseas sales next year, we expect we're going to achieve a localized production in Europe next year. The B-series model will be the first to be localized in Europe. We expect overseas sales will quickly rise. We expect that next year in Europe, the overseas sales are going to achieve doubling growth compared to the sales this year. We hope we're going to double the growth next year because the overall speed of growth has been done in China. We believe in overseas, we can do the same. Specifically, the overseas sales guidance, we still have to give it some time. We have to see the overseas sales performance in the second half of the year.
As I said, last month in Europe, our sales were over 4,000 units in Europe. The sales are growing really fast in Europe. It was actually faster than our expectation. At this moment of time, I can only say what we are planning at this moment in terms of sales. However, based on the actual sales performance in the second half of the year, maybe we're going to update the market or revise our guidance later on in the second half of the year. In terms of credit purchase, the overall credit purchase in Europe was pursuant to some of its own rules. Our credit pool, based on the credit pool as a rule, there was a three-year term limit.
Right now in Europe, when it comes to carbon emission, we believe in the next year or two, the Stellantis group, including the main OEMs in Europe, they all need to purchase credits. That's our view.
Understood. Thank you, Mr. Li.
Next question is from phone number ended 9915.
Hello. I'm Zhang Jueying, auto analyst from Guotahaitong. Congratulations to the company for outstanding results. Mr. Li Tengfei, you just said your full-year sales will be revised to 580,000- 650,000. Under this new sales target, what is the guidance of gross profit margin in the second half of the year?
I didn't catch what you said just now because the line was unclear. In the second half of the year, gross profit margin, we believe, is going to maintain the overall gross profit margin in the first half of the year. We hope there could be a slight increase in gross profit margin. When we get to a certain size, we do expect a gross profit margin at around 15%. We hope to get close to that target.
Understood. Now, for the full year, let's say 15% GP margin, if that's the outlook. Are you talking about full year 15%?
Yeah, that's probably the case. With the full year GP margin, we hope to be like 14% to 15% full year GP margin-wise.
Understood. OK, my second question is for B05 and the D-series product plans and the launch schedule. Can you help us to sort it out?
Yeah, for B05. Mr. Zhu, next month, he's going to go to Germany in a Munich car show with the global debut of B05 in Munich. In November this year, B05 will be launched in China. Now, regarding the D-series models, D, you know this year marks the 10th anniversary of Leapmotor. D-series is going to be the model that celebrates the 10-year anniversary that really puts together all the experience and capability of Leapmotor that we built up in the last decade. It's going to be a heavyweight product. It's going to be launched soon. Probably by October this year, we're going to have the first public debut of D-class, D-series models.
Understood. You talk about you have revised the sales target this year. What about next year's sales guidance? Any rough guidance for next year?
Right now, in terms of the company, we are entirely confident to challenge the target of 1 million sales next year, 1 million units next year.
OK, understood. Previously, there was a question. When you answered that question, you said next year, you're going to produce in Europe, starting with the B-series. Just confirm that detail.
Yeah, that's the plan. That's the plan. Next year, we're going to have B platform to be localized in Europe, to be the first for localized production in Europe.
Thank you. Thank you. That's all my questions.
OK, next question is phone number ended 7074. You have the floor.
Good evening. I'm Guosong Haiwei. My name is Liu Yun. Just to follow up with the previous question from other investors, next year, you're going to challenge 1 million sales. Can you break it down for us, the 1 million sales target? I mean, the A-series, D-series, and the current models, what is the rough split?
I apologize. Today is the 18th of August. It is still quite a distance from next year.
Even though we do have some internal plan, we still have to deal with any changes that might happen in the second half of the year. There's no way for me to give you a breakdown of any sales of all the models next year. Let me begin by talking about the current models. Those have been like B-series that have been launched and the C-series. We hope they're going to have some growth in sales next year. Secondly, next year, we're going to launch A platform, A platform, and D platform. Now, based on the tempo and the habits of Leapmotor, we hope A platform and D platform, once launched, they're going to meet our expectation of sales. So A, B, C, and D, the four platforms are going to contribute to the 1 million sales together. Specifically, the breakdown might not be available until later.
We're going to talk to the market regarding any specific information.
If I may, I have another question. We talked about GP margin. There was a time the phone was kind of breaking up. I don't know if I missed it in the breakdown of the GP margin because this quarter was excellent. Just to check the GP margin, I mean, you're going to have some strategic collaboration and carbon revenue. What about the GP margin for the whole vehicle?
We only talk about the entire business. It does not include the spare parts or other subsidiary business. Full car, whole car vehicle GP margin was about 12%.
OK, that's my questions.
Next question is coming from phone number ended 7490. You have the floor.
Good evening. I'm Zhen Jia Ming from Zhongtai Auto. Congratulations to the outstanding accomplishment in the first half. I have two questions for you. First of all, about smart driving. We have seen that actually in the first half of the year, your R&D investment was rising. The announcement has mentioned that you're going to continue to invest in VLA. What about the subsequent smart driving roadmap, like the Urban NOA? What is the timeline for Urban NOA?
Now, regarding the smart driving, the company will never waver. We are going to follow our strategy for the in-house full stack self-development. In terms of smart driving, we're going to really comprehensively develop our capability and power to develop our smart driving. As I mentioned, the technical roadmap, we talk about a large language model, technical roadmaps. We expect that by the end of this year, we're able to achieve the Urban NOA. By the end of this year and early next year, we are going to be part of the first-tier players in autonomous driving. We are quickly expanding our investment in the smart driving, whether investment of resources, manual, and labor, and technology. We quickly ramp up our investment.
Thank you. I have a follow-up question about the overseas business. You can see T10 and T03 have been selling overseas. What about the B-series when it comes to overseas and also the profitability outlook?
You're asking about the B-series, right? As I mentioned, the B-series is actually the first batch of B10 has been shipped to be exported in July. B10 will also be showcased in car shows in September in Europe. The B-series and C-series, they are also gradually going to be launched globally next year. Now, regarding the overseas profitability from the company perspective, in the recent year or two, we are not really going after high margin when it comes to overseas business. What we want is the rapid market presence, market ramp-up. We want to get the market presence, rapid ramp-up, branding, product presence to establish ourselves overseas and also to unlock the top of mind of overseas consumers. With that foundation, we are able to pursue profitability later.
Thank you. I have no further question.
The next question is coming from phone number ended 9515. You have the floor.
Hello. I'm Zhen Da from Puying International. I have two questions, domestic and international. For domestic, I have seen your channel. You are actually covering more cities and counties where you don't have a presence yet. When it comes to the domestic channel this year or next year, how are you going to increase the newly covered counties and cities? What is the potential increment that you can expect from the uncovered cities yet? Are we going to diminish margin increment from the cities that you haven't covered yet?
The second question is about international production capacity. You mentioned that next year you might have Europe's question regarding channels. In China, the main markets, overall main market has been covered already. We're just going to deepen our coverage. Other than deepening coverage, we're also expanding, expanding to the bland market. I wouldn't call them bland markets. It's just, it's not like you don't have enough margin increment from the bland market.
We're just trying to expand our channel and coverage because now with the fast, rapid growth of the penetration of new energy vehicles, we're seeing the penetration moving from Tier 1, Tier 2, which has been highly penetrated. Now they are penetrating the Tier 3 to Tier 5s. Other cities, they are seeing opportunity of new energy sales, new energy vehicle sales. We do believe the entire China, the sales of NEV is going to accelerate. We want to expand our presence in China to meet that growth penetration. Like in Northeast China, in Northwest of China, when they have cold temperatures in the winter, we have a specific product to deal with that environment. In Northeast and Northwest consumer, they're going to have better experience using new energy vehicles.
In terms of the new urban coverage by channel, there is no worry that we're going to have diminishing marginal increase by expansion of coverage. In terms of the performance of the new stores, it was actually increasing quite fast compared with the last period. Overall, store performance has been improving really rapidly. We're not just focusing on the number of channels, but also the quality of the channels. We really take a strong interest in the profitability of our distributors and dealers. 70%- 80% of the dealers in Leapmotor are profit-making. We are making sure we have more channels, but also good channels, not just quantity, but also quality. A second question regarding the overseas capacity. We are not concerned about the capacity in overseas because we do have Stellantis as a powerful partner. Our overseas capacity deployment and the ramp-up of new capacity will be really fast.
You can see what we're doing in Europe, what we are doing in Southeast Asia. It's really going on fast. Therefore, while we are seeing growth in sales, the capacity is also going to come online based on the demand from sales. It's going to come up fast. We do have a lot of plans with the partners. No worries on that front. Leapmotor, we do have a huge advantage when it comes to going global compared with our peer competitors.
Thank you. Very clear. Thank you.
OK, next question coming from phone number ended 1909.
Hello. Thanks for having me on. I'm Ximeng Lu from Dong Securities. I have two questions. You mentioned that next year, you're going to have localized production in Malaysia and Europe. What is the corresponding CapEx? How much this year or next year regarding CapEx? For the second question, it is on the financial statements regarding the licensing fee. Because in Q1, there is some licensing fee. How much will you expect in Q2? How should we think of the licensing fee in the subsequent quarters? What is the overall size when it comes to licensing fee?
To your first question regarding the CapEx, it's not a big problem because for us, the investment in overseas was invested by Leapmotor International. It was not invested by Leapmotor Company ourselves. Secondly, our overseas projects are mostly retrofit projects. We perform retrofit based on existing production lines. The overall investment will be much smaller compared with greenfield projects. Thirdly, both parties, both shareholders are going to leverage on our advantage. We have our own advantage as shareholders to jointly optimize the overseas investment. Now, to your second question, I apologize. I didn't hear your question well. Can you repeat that? Can I ask you to repeat your question?
Yeah, sure. I was asking about Q1. There is some licensing fee contribution from partners. Do you have it in Q2? How should we think of in subsequent quarters?
Yeah, when it comes to licensing fee, in Q1, indeed, we do have some licensing fee. In Q2, there will also be some. Like we work with the partners. We have their projects with the partners. We have partner projects. Some of the projects are still underway in terms of negotiation.
OK, thank you. No further question. Very clear.
Next question is coming from phone number ended 9518.
Good evening. I'm Zhong Siting from Huazhi Securities. I have two questions for the management. First of all, the non-auto business progress, like your business as a Tier 1 component supplier. Secondly, the second question is about the 2025, 2026, the full-year profit guidance.
In terms of the sales of components as Tier 1, we've been through 10 years of the self-development, self-made components. The components that are self-developed and self-made, we are really ahead of industry. They are really fully demonstrated and validated in Leapmotor's products. Now, in terms of the component sales, this year, we have made really big progress, including selling to the traditional OEMs in China with SOP in some of the Chinese OEMs. The Leapmotor component sales look to be very promising in its future. Second, regarding annual net profit guidance, in the previous guidance, we tried to get to break even in the past periods. However, based on the first half performance of the year, the first half, we have got a profit this year so far.
As you know, in terms of sales number, in the second half, demand will be greater than the first half. The sales expectation will be higher in the second half compared with the first half. In terms of full-year profitability, our target used to be trying to get break even. Now, we are trying to get to the full-year profits. That's becoming our target. We hope we're able to get to CNY 500 million- CNY 1 billion as a net profit level.
OK, thank you.
Next question is from phone number ended 04020. You have the floor. We missed that call. Next one is from, can we get the phone number ended 0420 to be back online? The next question is from phone number ended 0521.
Hello. I'm Wan Zihao from Zhangjiang Auto. I have a few questions for you. First of all, regarding the carbon credit, you mentioned that about CNY 200 million. The full year is going to be a few hundred million. Overseas profit guidance was aiming at breaking even. In terms of the carbon credit income, would you retain it as a profit, or are you going to invest it as overseas marketing? My second question is about the European growth of new energy vehicles. This year has been very strong. In the next year or the year after next, I mean, the entire industry beta was excellent. Are you going to revise the local sales in Europe?
The first about the carbon credit. Carbon credit is very clear. The income from carbon credit is attributable to the OEM. It's attributable to Leapmotor. Of course, we are not the only one who gets carbon credit as an NEV maker in overseas.
There's a lot of competition in overseas, not just in Europe, but also global. The NEV competition is quite intense. Therefore, we're going to exercise discretion to better support ourselves in overseas. As I mentioned, in the first year or two in overseas business, we're not going to pursue the high margin or excessive margin. We still want to start by focusing on the branding product sales ramp-up to capture the overseas sales and to get in a better position overseas. We're going to exercise discretion to see how should we deal with the income. Are we going to use that proceed to support the MPMI? How much do we want to use it? In what way are we going to use it to support overseas sales? Second question regarding the Europe sales outlook.
Like you mentioned, the entire sales guidance this year, we actually did not revise the overseas sales guidance this year. We did not. This year is going to be like 50,000, 60,000 of sales that remain unchanged because we saw that this year, this year is actually our global presence. When I talk about global, it's mostly in Europe because in South America, we only started selling in April this year in Latin America. Mostly we're talking about Europe. This year is actually the first full year when we conduct overseas business. You know, Leapmotor as a company, we are a rather cautious company. We did not easily revise our sales guidance overseas. However, if you look at how we perform in the first half in overseas sales and the sales performance in July, it's been going on very well, pretty smooth.
The Leapmotor brand has been really generally accepted by European users. As I mentioned in Germany, Germany is a traditional auto power. An NED product from Leapmotor is doing very well in Germany. German users like our model. They like our quality technology. There's a high level of recognition. We believe this year, we are very comfortable to deliver the sales guidance for overseas sales this year. Yeah, thank you. Just another small question regarding the financial report. The non-auto revenue in the first half was CNY 1.1 billion. You talk about other income, which is about CNY 500 million. What is included in the other revenues, other incomes? Other income, as I mentioned, mostly is the income from the carbon credit and also the income working with partners on the partner programs. Also, there's a trading company, which is directly run where they have the sales.
There was a more increase of revenue from increase of sales. The auto component revenue and licensing fee, they are not recorded as the other income. Who bought it? The CNY 1.1 billion, the non-auto revenue. Are you referring to the CNY 1.1 billion? Yeah, yeah, because the non-auto is CNY 1.1 billion revenue, right? Other revenues are CNY 600 million. Yeah, actually, other income was mostly government subsidies. Government subsidies mostly accounted as other revenues.
OK, understood. Thank you.
OK, thank you. As we are running out of time, let's wrap up the Q&A with the last final two questions.
OK, I'm Xiaoyu from Zhifang Auto. I have two questions for you. Next year, you're going to have, well, the new energy vehicles purchase tag will no longer be extended. How is it going to impact your sales and profit next year? Because you still have quite aggressive sales target growth next year.
The capital market does have the concern, and I understand that. From the company perspective, we consider that there might be impact, but it's going to be minimal impact. It's probably just next Q1, mostly January and February next year, there will be a bit of impact. For the full year, the impact is negligible. Why do I say so? You can see in 2022, there was the end of national subsidy, right? In 2023, after the national subsidy was gone, the full-year sales were not really impacted by the disappearance of the subsidy. Also, we have massive improvement of penetration of NEV in 2023 compared with 2022. It's not impacted by the lack of subsidy. When it comes to purchase tax, next year, we'll actually see 50% off purchase tax. I think it's going to be a similar case scenario in 2022 when the national subsidy was gone.
It's only going to have an impact in a very short period of time. There could be a slight impact of the sales of that period, or maybe there could be some front-loading of sales demand. If you look at a four-year perspective, we're talking about, you know, the urban sales of, you know, 10, 20... You're going to have a penetration increase of NEV in China. You're going to see a higher penetration. If you look at the overall market as a whole, we do expect further improvement of the new energy vehicle next year in China. We do not consider that the purchase tax thing is going to have any impact on the sales. In terms of profitability, I want to also not worry because we have always been balancing our equity resources in our competitiveness and also leveraging our cost control.
With those capabilities, we are very confident we're going to build a highly competitive product. In terms of profit margin-wise, we are also not worried. We fully believe that we can again deliver an excellent achievement as we did this year.
Just a follow-up of a question. Maybe in October, you're going to be launching D-Series, right? The debut of D-Series. There has been a lot of speculation regarding the pricing of D-Series. Your peers are launching blockbuster models like Li Auto, Xiaomi. They have a lot of blockbuster models. What strategy will you compete with them with your D-Series? How would you characterize the B-Series and what price brand?
D-Series, there's a lot of interest in the D-Series, which will make a debut in October this year. The launch of the first product will be in the first quarter next year. There is going to be an official launch of D-Series next Q1. There is going to be a lot of lineups in D-Series other than SUV. There is going to be highly competitive MPVs. Stay tuned. In terms of D-Series products, as you mentioned, there is a competition out there. Indeed, in the segment with D-Series, our peers have launched a lot of competitive products. In the future, they are also going to launch even more. In the coming period of time, our peer competitors are going to launch similar products. For Leapmotor, we are going to stick to our own strategy.
Regardless of whether it is CNY 100,000 vehicle or CNY 200,000 vehicle or, you know, the CNY 300,000 at the D-Series, we are going to stick to our core technical competitive strategy with high value for money. When you see it, when you see the D-Series, you are going to know it. You are going to know it is going to be the same with the C-Series product. It is going to amaze you as our C-Series amazed you before. The level of value for money in the D-Series is going to be delivered with our efforts, with our technology, with our R&D, and with our core competency. The users are going to benefit from a product with higher value for money. With less money, they are going to experience a more premium product. It is something we are going to stick to all the way.
Regardless of the price range we are going to dwell in by Leapmotor, in every price range, we are able to deliver a blockbuster product. The more consumers are able to benefit from the core product philosophy. We believe in China, consumers, like even when they are looking at a vehicle with CNY 300,000, the Chinese consumers, they still need to look at Leapmotor for offering better value for money.
OK, thank you. Those are my two questions.
OK, final question from phone number ended 7820.
Thank you for having me. I am Li Xiaoyi from Jefferies. I actually have a question from overseas. In Q2, Leapmotor International, what is the profit margin of the auto sales for Leapmotor International? If you can share with us, can you break it down by different regions to give us the guidance? Because in the past, you are going to bring in the B-Series, you are going to bring in EREV. Can you really guide us in terms of the specific plan for introducing the new models? I would also like to ask about right now, you are supplying the component parts to Stellantis. What's the progress in that? When are you going to see the number of revenue recognition in your financial report?
OK, the first question on MPMI, the Leapmotor International, as you can see in the first half, they are profit-making in the first half of the year on MPMI. Now, overall MPMI GP margin, because the main sales were coming from Europe, the main profit was coming from Europe in the first half as well.
Because we're only taking a stock, we're not really in a position to give you detail of the MPMI's GP margin level because it's probably better to be released from the earning results from our partners. From Leapmotor's perspective, we, I mean, as a partner, I think in terms of sales or margin, MPMI as a partner has done a good job in sales and profit. They have really achieved the plan. The shareholders on both sides. That's on the GP margin of MPMI. Second question regarding the plan of deployment of the new model overseas. The B10s as a battery vehicle will be launched in September in Europe. End of this year or next year, B10, there's the EREV model, but it's not available in China. B10 EREV is available overseas. The EREV of B10 will also be launched globally by the end of the year or next year.
The other product from a B-Series will also be gradually launched next year globally. Also, the A-Series product will also gradually be launched overseas next year. That's our plan for overseas model launching. For this year, for the EREV model of C10, it has started in April, the first half of this year in Europe. If you look at in Europe, the EREV models were very well accepted and welcomed by the users. The third question regarding the sales of parts to the Stellantis group. As you can see, we have a mega announcement with the component sales to Stellantis. We do have an SOP business. Because the SOP does take time, there's time to do the R&D to match that. We expect the large-scale overseas sales will probably be seen next year or the second half of next year.
Understood. Just to follow up, like in the beginning of the year, Leapmotor International's profits, you said profit is not your priority. You probably just want to hit balance, break even. It sounds like you are making profit in the first half. Does it mean that Leapmotor International's profit margin was actually better than what you expected at the beginning of the year? For next year, when you have a European factory, does it mean that Leapmotor International's profit improvement will be further boosted?
In the first half of the year, when it comes to Leapmotor International's profitability, because in the first half, Leapmotor International, I can say they are profit-making, but the profit is not particularly big. The size of profit is within the expectation of both shareholders.
Of course, we said Leapmotor International at this moment, in the first initial years, the most important job is to boost sales, to enhance Leapmotor's global branding presence. Both shareholders, or neither shareholder, look at profit as the number one priority for Leapmotor International. Of course, we also care about profit. We don't want Leapmotor International to be loss-making, which is really not in the interest of any shareholder. The profitability of Leapmotor International in the first half is in line with the expectation of the shareholders. Leapmotor International is placing profit into the marketing efforts, which is planned for. Now, when it comes to localized production, when we have local production and factories, there's going to be efficiency improvement. The competitiveness will be enhanced, mainly due to different tariffs. You know very well, different tariffs will be applied or tariffs will not be applied once it's made locally.
The competitiveness of the model will be greatly enhanced. As I said, in the first few years of Leapmotor International, we prioritize rapidly improving global sales, global branding, instead of focusing on profit in the first few years. Next year, once we have local production, even with better margin from Leapmotor International, we are still asking that Leapmotor International invest or reinvest most of the improved margin to marketing, market development, expansion, to quickly expand sales, to expand Leapmotor's global and European presence.
Thank you.
OK, I think that's the time we have today. We have a good discussion. Thanks to the management for your presence, and thank you all for joining this call. We look forward to meeting you in the next call. If you have any other questions, feel free to reach out to our team at Leapmotor. With that, we conclude today's call. Thank you.