Summary in Plain Language
Jiuhao, a company that gained popularity with its balance bikes and differentiated itself with "smart electric vehicles," experienced a very unusual situation in the first half of 2026: although electric vehicle sales increased by nearly 20% and total revenue rose by over 20%, the net profit attributable to the listed company decreased by nearly 20%. The company's available cash for flexible operations was also halved. Essentially, its old strategy of earning higher prices through a "tech-driven" image no longer works in the highly competitive domestic electric two-wheeler market. On one hand, traditional giants like Yadea and Aima have made smart features standard in their products, leaving Jiuhao without its unique advantages, forcing it to compete in the lower-priced (3,000-4,000 RMB) market, where it earns less per unit sold. On the other hand, Jiuhao is shifting its focus to overseas markets. Its previously established channels for scooters and balance bikes have helped it become the global leader in smart lawn mowing robots, with overseas revenue accounting for nearly 44% of its total income, generating more profits than in the domestic market. Now, as Jiuhao approaches annual revenues of 20 billion RMB, its previous model of being a small, high-tech startup no longer fits its current scale. The increase in revenue does not correspond to an increase in profit; rather, it seems to be a necessary cost of entering the global manufacturing giants' league.
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Detailed Explanation
1. The Counterintuitive Situation: More Electric Vehicles Sold, Less Profit for Jiuhao?
Many might think Jiuhao is having trouble selling its products, but in fact, it sold 2.84 million electric vehicles in the first half of 2026, which is one vehicle sold every 10 seconds, with a network of 11,500 stores nationwide. The problem lies in the fact that while sales increased, the average price per vehicle decreased. Jiuhao used to target the mid-to-high-end market, selling vehicles for over 4,000 RMB and earning a premium due to smart features. Now, by entering the lower-priced segment, its average selling price has dropped, and although sales increased by 19%, revenue only increased by less than 10%. This means that the additional 500,000 units sold generated less profit than the 100,000 units it sold at the higher price.
Additionally, costs have risen faster than revenue due to promotional discounts, rising raw material prices, and the need to invest in new stores. As a result, despite high sales, profits have decreased. This is not a sign of poor management but a consequence of entering the mass market.
2. The Once-Distinctive Smart Features Are Now Standard
When Jiuhao entered the electric vehicle industry, its smart technology was a game-changer. Traditional electric vehicles required keys, while Jiuhao's balance bike technology allowed for keyless unlocking, phone-based vehicle location, and automatic fault detection. It was called the "Apple of the electric vehicle industry" and could charge higher prices for these unique features. However, these advantages have become standard in the industry. Now, even Yadea and Aima offer these features in their 3,000 RMB models. Jiuhao must compete on supply chain costs, channel density, and promotional efforts, areas it has not previously focused on.
3. Overseas Markets as the New Lifeline?
Jiuhao's most profitable business is now its smart lawn mowing robots, which have become the global leaders. In the first half of 2026, overseas revenue grew by 42%, twice as fast as domestic revenue, with a gross margin of 36% compared to 25% domestically. The company's new overseas success is driven by its smart lawn mowing robots, which are mainly sold in Europe, where 90% of the market demand comes from households with lawns. These robots are easy to use and have been sold out during peak shopping seasons. Jiuhao did not need to build new channels from scratch; it already had access to major retailers like Walmart and Carrefour in Europe, saving billions in development costs.
4. The Competition for Overseas Market Share Is Intense
Jiuhao faces strong competition from established players in the garden machinery industry, such as Husqvarna, which has been in the market for decades and has a strong local presence and after-sales service network. It also faces domestic competitors like Kowos and Zhumai, which are developing similar smart lawn mowing robots. Once these companies lower their supply chain costs, they may start price wars, threatening Jiuhao's technical advantages. In such a competitive environment, the key factors will be after-sales service, channel coverage, and brand recognition.
5. The Profit Decline Is a Crucial Part of Jiuhao's Growth
The profit decline is actually a necessary step in its transformation. As a large company, Jiuhao must invest in expanding its channels, research and development, and marketing to become a globally recognized brand. The temporary drop in profits is a price to pay for scaling up from a small, high-tech startup to a multinational enterprise.