Xiaomi achieves first automotive profit while XPeng and Zeekr close on breakeven.

A number of Chinese electric vehicle makers have posted their Q3 with results with the overall theme being one of profitability or solid paths towards it as the market starts to mature.

Xiaomi EV demonstrated the most dramatic production ramp-up, while XPeng and Zeekr significantly narrowed their losses, as NEVs take an ever greater share of China’s overall car market.

Leapmotor, profitable already last quarter, posted its second consecutive profitable quarter, while industry giant Geely Auto reported a substantial surge in net income, driven by record sales.

The third-quarter earnings season so far paints a picture of a maturing market, where brands are beginning to convert soaring deliveries into improved financial health.

Xiaomi

Xiaomi Group’s nascent electric vehicle division reported a landmark quarter, with its innovative business segment, which includes EVs and AI, achieving quarterly operating profitability for the first time.

The division recorded an operating revenue of approximately RMB 700 million (£77 million / $98 million), propelled by a record-breaking 100,000 deliveries in Q3, including a monthly high of 40,023 units in September.

The company’s production capability has dramatically accelerated, with the second 100,000 units taking roughly the same time to deliver as the first.

Based on this momentum, Xiaomi EV is projected to hit its annual delivery target of 350,000 units this week, with Citi analysts suggesting the final figure could approach 400,000.

Leapmotor

Leapmotor similarly confirmed its journey towards sustained profitability, recording a net income of RMB 150 million (£16.5 million / $21.1 million) for the quarter.

This marks its second consecutive quarter in the black, it’s solid performance driven by record quarterly deliveries of 173,852 vehicles, more than double the number from the same period last year.

This surge enabled the company to hit its 500,000-unit annual sales target a month and a half early, leading it to raise its full-year forecast to over 600,000 units.

The company’s gross margin also improved significantly to 14.5%, attributed to economies of scale.

XPeng

XPeng made significant progress on its path to profitability, reporting its smallest quarterly net loss in five years.

The loss narrowed to just RMB 380 million (£41.8 million / $50 million) in the third quarter, an 78.93 percent decrease year-on-year.

Its non-GAAP net loss was even smaller at RMB 150 million (£16.5 million ($21.1 million), putting it on the verge of breakeven.

This improvement was supported by record quarterly deliveries of 116,007 vehicles and a surging revenue of RMB 20.38 billion (£2.24 billion / 2.87 billion), which more than doubled compared to the previous year.

Zeekr

Zeekr Group also showcased a dramatically improving financial position, with its net loss plummeting by 84.9% year-on-year to RMB 307 million (£33.8 million / $43 million).

The company, which includes the Zeekr and Lynk & Co brands, delivered 140,195 vehicles in the quarter, generating a robust revenue of RMB 31.56 billion (£3.47 billion / $4.44 billion).

A key factor in the reduced loss was an 8.6 percent year-on-year decrease in R&D expenses, while the company maintained a strong gross margin of 19.2 percent, indicating healthier underlying operations.

Geely Auto

Established automaker Geely Auto demonstrated the profitability possible at scale, posting a 59% year-on-year increase in net income to RMB 3.82 billion (£420 million / $538 million).

This was fuelled by record quarterly revenue of RMB 89.2 billion (£9.8 billion / $12.5 billion) and record sales of 761,009 vehicles.

A key driver of this growth was the Geely Galaxy sub-brand, which sold over 1 million vehicles from January to October, surpassing its annual target ahead of schedule.

The strong performance puts the wider Geely Auto brand at 82.6% of its three-million-unit annual goal, which it expects to hit with new product launches in the fourth quarter.

The collective results from these companies highlight a sector capitalising on robust demand and improving operational efficiency.

Summary

The long held criticism of China’s NEV industry has been the lack of profitable businesses, with only Li Auto and Leapmotor achieving profitability until now from the start-up era of brands, but with significantly reduced losses year-on-year for Zeekr and XPeng, it’s clear that the tide is turning.

The real surprise is the success of Xiaomi, turning its first profit from their automotive division in just 18 months since the launch of their first car, which demonstrates both the intense appeal the products have driven as well as the company’s incredibly efficient business model.

We will await NIO’s financial results with some anticipation, CEO William Li initially declaring intent to turn a profit in Q4 this year, and will keep an eye on Li Auto’s results following what’s been a more challenging year for the brand.