Minmetals Securities·2025-09-26 23:30Investment Rating - The investment rating for the automotive industry is "Positive" [1] Core Insights - Since Q2 2024, companies like Geely, Leapmotor, Xiaopeng, and Xiaomi have seen continuous growth in sales and market share, while leading companies have lost market share [5][11] - The growth of new entrants is primarily at the expense of leading companies such as BYD and Tesla, which saw their market shares decrease by 5.1% and 2.3% year-on-year, respectively [5][15] - The scale effect is becoming evident, with Leapmotor and Xiaopeng showing significant improvements in gross margins, reaching 13.6% and 17.3% respectively in Q2 2025, while Xiaomi's gross margin is at 26.4% [5][19] - Companies like Leapmotor, Xiaopeng, and Xiaomi are expected to achieve breakeven on a quarterly basis within the year, with annual sales around 500,000 units likely to lead to single-vehicle profitability [6][24] Sales Trends - The introduction of cost-effective models by Geely, Leapmotor, and Xiaopeng has driven rapid sales growth, with new entrants achieving quarterly sales between 80,000 to 130,000 units [7][11] - The market share of leading companies has been eroded, with a significant portion of growth coming from the exit of weaker competitors [11][15] Revenue Trends - Companies with increasing market shares, such as Geely, Xiaopeng, and Leapmotor, reported revenue growth rates of 41%, 125%, and 166% year-on-year in Q2 2025 [16] - BYD, despite a decline in market share, maintained a revenue growth of 15% year-on-year [16] Gross Margin - The gross margins of new entrants like Xiaopeng and Leapmotor are improving due to scale effects, with margins approaching normal industry levels [19] - Traditional automakers are facing declining gross margins due to the transition to electric vehicles, with some companies like GAC reporting negative margins [19][20] Operating Expenses - Leapmotor and Xiaopeng have seen a significant reduction in per-vehicle operating expenses due to scale effects, with combined R&D, sales, and management expense ratios around 23.9% and 23.1% respectively in Q2 2025 [21] Single Vehicle Profitability - Companies like Xiaopeng and Xiaomi are nearing breakeven points, with Leapmotor already close to breakeven in Q2 2025 [24] - Annual sales of approximately 500,000 units are projected to lead to single-vehicle profitability for these companies [24]