China car wars have surprising winners
Katrina Hamlin
August 21, 2025
A staff member opens the door of a Leapmotor B10 EV car during a media event, in Beijing, China
February 28, 2025. REUTERS/Tingshu Wang/File Photo
HONG KONG, Aug 21 (Reuters Breakingviews) - Size isn't everything - and China's car price war is the latest to prove it. Smaller players including Stellantis (STLAM.MI), opens new tab partner Leapmotor (9863.HK), opens new tab and smartphone maker Xiaomi (1810.HK), opens new tab have by some measures outpaced the world’s biggest electric-vehicle maker BYD (002594.SZ), opens new tab since 2022, when companies first began slashing prices to win customers. Mid-size manufacturers can’t depend on economies of scale alone, so they exploit other advantages like tech and branding.
Recent results suggest that’s working. Leapmotor reported its first-ever half-year profit, opens new tab of 30 million yuan ($4.2 million) on Tuesday. Xiaomi’s fledgling electric-car unit narrowed its operational loss to 300 million yuan in the second quarter and reckons it could turn profitable later this year. Xpeng, opens new tab (9868.HK), opens new tab more than halved its own net loss to 1.1 billion yuan, and analysts at Bernstein now think it could break even in the fourth quarter.
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They are doing well by other measures, too. Consultancy Automobility reckons $12.6 billion Leapmotor’s share of China's new energy vehicle market reached, opens new tab 3.7% in the first half, more than double its 2022 level. Xiaomi, which started exploring EVs in 2021 and launched its first car last year, sold nearly 160,000 vehicles in the first half. Their shares have rallied by around 200% and 500% respectively since the first salvos of the price war were fired. BYD's Hong Kong-listed stock (1211.HK), opens new tab, by contrast, trails with a 75% rise; and while its market share has grown since 2022, its piece of the pie has recently fallen below 30%, compared with 33.8% a year ago.
One successful tactic is a technological edge. Leapmotor, Xiaomi and Xpeng developed their own assisted driving systems, for example. They have proportionately higher research and development budgets than larger rivals, with Xpeng's hitting 12% of revenue and Leapmotor's almost 8% in the first half of 2025. By contrast, BYD is forecast to spend 6.6% of its top line on R&D this year, per LSEG data. As well as using their know-how in their own products, they both license their tech - Leapmotor to Stellantis and Xpeng to Volkswagen (VOWG.DE), opens new tab.
Branding is another variable. Xiaomi's smartphones and electronics had already made it a household name in China. Seres (601127.SS), opens new tab, another carmaker thriving amidst intense competition, achieved something similar by partnering with mobile phone giant Huawei, which provides software and displays its vehicles across hundreds of stores in China. In April, its AITO M8 model tallied 30,000 orders within 24 hours, according to the group's prospectus, opens new tab for its upcoming Hong Kong listing.
China's car wars are producing some unexpected victors.
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Context News- Xiaomi’s adjusted net profit grew 70% to 21.5 billion yuan ($3 billion) in the first six months of the year compared with the same period in 2024, the smartphone and electric-vehicle maker said on August 19. Revenue grew 38% to 227 billion yuan. Its EV unit, which includes other new initiatives such as AI, saw its loss from operations narrow to 300 million yuan in the second quarter.
- Xpeng posted a net loss of 1.1 billion yuan in the first half of 2025, compared with 2.65 billion yuan in the same period last year, according to filings on August 19. Total revenue grew 133% to 34.1 billion yuan.
- Zhejiang Leapmotor Technology reported a net profit of 30 million yuan over the first six months of 2025, marking its first-ever half-year net profit, the company said on August 18. Revenue rose 174% to 24.3 billion yuan.
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