Summary of Key Points
In the first half of this year, the "mid-term report" for new entrants in the automotive industry was released, revealing a significant reshuffle of market positions: ZeroRun made a remarkable comeback to become the top seller, while Li Auto faced difficulties in its transformation; there is a clear contradiction between high sales volume and profitability (high-selling cars don't necessarily generate profits, and those with high gross margins are still not profitable); none of the leading new players have achieved even half of their annual targets, putting them under immense pressure for the second half of the year. Going global has become a new competitive arena, with ZeroRun already achieving scale, while other brands are still in the testing phase. Overall, the new energy market has entered a period of competition for existing customers, and the industry's restructuring is accelerating, with profit quality and sustainability becoming new criteria for evaluation.
I. Major Market Reshuffle: ZeroRun Surges to the Top, Li Auto Struggles with Transformation
Sales volume is a fundamental indicator for new players in this industry, but the changes in rankings this first half of the year exceeded many expectations:
- ZeroRun Becomes the Dark Horse Champion: With 356,000 units delivered in the first half of the year, a year-on-year increase of 61.2%, it outperformed its competitors by 110,000 units and was the only new entrant to sell nearly 100,000 units per month. Its strategy focused on cost-effectiveness (low prices + in-house development to reduce costs), with models like the C11 and T03 appealing to lower-income consumer markets.
- Li Auto Experiences First-Year Decline: Once the leader in extended-range vehicles, Li Auto delivered 193,500 units in the first half of the year, a year-on-year decrease of 5.1%, making it the only major new player to show negative growth. This is due to its transition to all-electric vehicles: on one hand, its extended-range market share has been eroded by competitors like Xpeng and Deep Blue; on the other hand, its all-electric models (such as the MEGA) have not yet achieved significant sales, leading to a weakening of its foundation.
- NIO Recovers, but Xiaomi Faces Challenges: NIO delivered 191,000 units in the first half of the year, a year-on-year increase of 67.4%, thanks to its multi-brand strategy (including the Alpina line) and new product offerings. Xiaomi, with only two models available, sold over 180,000 units, but its limited product portfolio limits its growth potential.
- Hongmeng Smart Mobility Stabilizes in Second Place: With Huawei's support, it delivered 240,000 units, maintaining its second-place position, thanks to high-end models like the Askar M7.
In short, the previous dominance of NIO, Xpeng, and Li Auto has been shattered, and the gap between new players has widened, with the Matthew effect (the strong getting stronger) becoming more pronounced.
II. Sales Volume Does Not Equal Profitability: Some Sell Much but Lose More, Others Have High Margins Yet Still No Profits
The market now focuses not just on sales volume but also on profitability:
- ZeroRun: Despite high sales, its profit margin plummeted from 14.9% last year to 9.4%, resulting in a loss of 390 million yuan. Its low-price strategy sacrificed profits to gain market share.
- Li Auto: The gross margin for its vehicles dropped significantly from 19.8% last year to 6.1% in the first quarter, leading to a net loss of 2.3 billion yuan. The competition in extended-range vehicles and heavy investment in all-electric models undermined its profitability.
- Xpeng and NIO: Although they have high gross margins (20.6% for Xpeng and 19% for NIO, respectively), both are still not profitable due to high research and development and sales expenses. However, they have substantial cash reserves (40 billion yuan for NIO), so they are not in a dire situation for now.
In summary, new players face the challenge of either selling large volumes at the expense of profits or having high margins but burning through capital quickly. Profitability sustainability has become the biggest test for them.
III. Annual Targets Missed by Wide Margin: None Have Met Half of Their Goals
At the beginning of the year, all companies set annual targets, but halfway through, none have achieved even 50%:
- ZeroRun: Aiming for 1 million units, it has only delivered 356,000, meaning it needs to sell 107,000 units per month in the second half to meet its goal, which will likely result in further profit losses due to price cuts.
- Li Auto, Xpeng, Xiaomi: Their achievement rates are around 30% (e.g., Li Auto's target of 500,000 units vs. actual 190,000 units). They need to launch new models aggressively in the second half to meet their targets.
- Hongmeng Smart Mobility: With a target of 1 million units, it has only delivered 240,000 units, showing that management underestimated the market's competitiveness.
The second half of the year presents a tough challenge for all new players: they must either cut prices to boost sales (sacrificing profits) or lower their targets (losing face), but the intense competition in the industry shows no sign of slowing down.
IV. Going Global as a New Battleground: ZeroRun Has Achieved Scale, Others Are Still Exploring
The domestic market has turned into a contest for existing customers, and going global has become an opportunity to differentiate themselves:
- ZeroRun Takes the Lead: It exported nearly 100,000 units in the first half of the year, accounting for 30% of its total sales, with a single-month export volume of 21,000 units in June, exceeding last year's annual total. Its European factory will help reduce costs and potentially generate more profits overseas.
- Other Brands Are Still Testing the Waters: NIO and Xpeng have less than 10% of their sales coming from overseas markets, mainly focusing on building distribution channels and testing their brands, without yet generating significant overseas revenue.
Going global not only increases sales but also allows them to avoid domestic price wars, which is crucial for their long-term survival.
Final Note: The Mid-Term Report Is Just a Start
The results of the first half of the year are just a preliminary assessment; the real challenge lies ahead in the second half, with price wars, new product competition, technological advancements, and accelerated global expansion. Only those brands that can balance sales volume and profits and successfully enter overseas markets will emerge as winners.
(The entire analysis is written in plain language, avoiding technical jargon, making it easy for non-financial professionals to understand.)