Leapmotor Unveils Plug-in Hybrid Tech but Lacks License to Sell in China, Eyes Overseas First

Introduction

On September 16, 2026, Leapmotor unveiled its LEAP 5.0 architecture and three core technologies. Among them, the MM-i multi-mode hybrid electric drive marked the company's official entry into the plug-in hybrid (PHEV) segment, completing a full powertrain lineup spanning pure electric, range-extended electric, and plug-in hybrid. In a subsequent group interview, Zhu Jiangming further confirmed to Huxiu that the production line for this technology is already operational.

However, a critical fact has been almost entirely overlooked: Leapmotor does not hold the license to sell plug-in hybrid vehicles in the Chinese market.

The Regulatory Barrier

Under China's current Automotive Industry Investment Management Regulations, vehicle investment projects are classified into two categories: fuel-powered vehicles and pure electric vehicles. Plug-in hybrids, because they "use an engine to provide driving power," fall under the fuel-powered vehicle investment category. Range-extended electric vehicles, which "rely solely on electric motors for driving power," are classified under pure electric vehicle investments.

New energy vehicle startups predominantly hold licenses as "pure electric passenger vehicle (including range-extended electric passenger vehicle) manufacturers," meaning they are legally unqualified to produce plug-in hybrids.

In response to Huxiu's inquiry, a Leapmotor representative confirmed exclusively: "This hybrid system will first be deployed in overseas models. The overseas models fall under Leapmotor International, a joint venture, and are not affected by the licensing issue. Domestic production licenses are currently being applied for."

This means that in the short term, Leapmotor cannot sell plug-in hybrid models in China. Yet, during the interview, Zhu Jiangming repeatedly emphasized that "plug-in hybrid technology is actually quite suitable for the domestic market as well."

Given the regulatory context, Zhu's statement reads more like a public expression of regret.

Why Invest in a Market You Can't Enter?

Investing heavily in production lines and R&D for a domestic market you cannot access seems puzzling for any automaker. But viewed through a global lens, Leapmotor's logic becomes clear.

PHEVs: The Missing Piece for Overseas Expansion

Leapmotor's rationale for developing PHEVs is rooted in China's vehicle export data.

According to Dataforce, in 2025, China's PHEV exports to Europe surged 155% year-on-year, while pure EV export growth was only 12%. By June 2026, Chinese-brand PHEVs held a 34% market share in Europe—an all-time high. For every three new PHEVs sold in Europe, one comes from a Chinese brand.

Leapmotor has already benefited from this export boom. In the first half of 2026, the company exported 96,294 vehicles, a 372.6% increase year-on-year, surpassing its total 2025 export volume and accounting for 27% of total sales.

From this perspective, even without domestic sales, Leapmotor's move to fill the PHEV gap for overseas markets makes complete strategic sense.

A Looming Shadow: EU Anti-Subsidy Investigation

However, the outlook for Chinese PHEV exports is clouded by uncertainty.

The European Commission has launched an anti-subsidy investigation into Chinese plug-in hybrids, preparing to impose additional PHEV import tariffs on top of existing pure EV tariffs. Morgan Stanley research notes that after PHEVs were exempted from 2024's pure EV tariff measures, their share of China's auto exports to the EU rose from 6% in 2024 to 28% in the first seven months of 2026. The EU is likely to close this loophole.

If such policies take effect, they would pose a substantial threat to Chinese PHEV exports. But the impact on Leapmotor would differ.

Unlike other Chinese companies, Leapmotor's overseas products are sold through Leapmotor International, a joint venture. Its export business is not affected by domestic production licenses, and on trade policy, it leverages Stellantis's localized European system.

More critically, Leapmotor's strategy is localized production, not mere export. The Zaragoza plant in Spain has completed retrofitting; the Kedah plant in Malaysia has begun mass production of the C10; and the Goiânia plant in Brazil has been selected as an assembly base for South America.

In other words, while the EU debates restricting "imports," Leapmotor is already building cars locally in Europe using Stellantis's factories. Import restrictions cannot touch an automaker producing locally. Of course, Leapmotor must share profits with its joint venture partner, yielding lower margins—but it avoids the burden of overseas tariffs and levies.

What Does Leapmotor Really Want to Become?

If we only consider "Leapmotor selling PHEVs overseas," the business logic remains fragile. While Stellantis's channels are open, Leapmotor's brand recognition in Europe is far below that of local players like Opel and Peugeot. Building brand acceptance overseas takes time.

Huxiu believes the real driver behind Leapmotor's PHEV push lies in technology supply to other automakers—a pivotal shift beyond its identity as a carmaker.

During the group interview, Zhu Jiangming voluntarily referenced two companies. He cited Apple as the "ultimate model"—deep supply chain control without owning factories, yet dictating all orders and components. He then mentioned Samsung, with its "full industry chain—screens, storage, and SOCs all in-house—making it the world's top phone maker." Leapmotor, he said, aims to absorb the strengths of both.

Currently, Leapmotor's technology supply strategy is steering it toward the Samsung path.

According to Huxiu, Leapmotor has already entered platform-level collaborations with FAW and Stellantis. The FAW project has entered mass production. Core components—battery packs, electric drives, controllers, and headlights—can all be developed, manufactured, and "packaged" by Leapmotor for partners.

A Leapmotor representative told Huxiu: "Platform-level packaging is a new supplier model we're piloting. It's somewhat similar to Huawei's smart driving model, but with a lower threshold. We can save partners at least 1,000–2,000 RMB per vehicle in core component costs."

Beyond FAW, Stellantis's Opel brand recently announced plans to co-develop a pure electric C-segment SUV with Leapmotor, using Leapmotor's electric architecture core components and battery technology.

Huxiu believes that before the MM-i PHET launch, Leapmotor could only offer pure electric and range-extended powertrain solutions to these clients. The underlying logic of Leapmotor's PHEV development is to expand and strengthen its technology supply business.

Three Major Challenges Ahead

Challenge 1: Ceding the Domestic Market to Competitors

Domestic licensing restrictions have indeed allowed Leapmotor to avoid direct competition with BYD and Geely in China's PHEV market. But avoidance also means abandonment.

Currently, China's PHEV market, though shrinking 27.6% year-on-year, still exceeds 2 million units annually. Without a license, Leapmotor cannot sell a single PHEV in this market.

More critically, the phrase "production license is being applied for" implies that Leapmotor itself does not know when—or if—approval will come. Until then, Leapmotor's PHEV line exists only for overseas markets, leaving it with far less room for error than other Chinese brands.

Challenge 2: Stellantis's "Protection" Comes at a Cost

As noted, Leapmotor's overseas products are sold through the Leapmotor International joint venture, leveraging Stellantis's European localized system, bypassing domestic licensing issues. But Stellantis is not a charity. It partnered with Leapmotor because the latter's platform architecture offers "higher cost efficiency," helping Stellantis "launch EVs faster with lower capital investment."

Once Stellantis's own electrification capabilities catch up—or it finds a cheaper alternative—Leapmotor's role in the joint venture could be marginalized. The equity structure of Leapmotor International means Leapmotor's overseas fate ultimately rests in Stellantis's hands.

Challenge 3: Difficulty Building Brand Irreplaceability

When Hongqi builds cars using Leapmotor's architecture, and Opel uses Leapmotor's platform for SUVs, where does Leapmotor's brand irreplaceability lie? This is the most critical question for Leapmotor as a vehicle manufacturer.

Consider Zhu's own Samsung analogy. Samsung makes its own screens, storage, and SOCs, yet its Galaxy phones consistently lose to Apple in the high-end market. The reason is simple: Samsung sells its best screens to Apple, and Apple captures 62% of the high-end market share through superior system integration and brand premium, leaving Samsung with only 20%.

Mastering upstream core components does not guarantee terminal brand pricing power. The more successful Leapmotor's technology supply becomes, the harder it will be for its own brand to establish differentiated positioning.

In other words, every time Leapmotor supplies a platform to another OEM, its own brand's scarcity diminishes by one degree.

Financial Implications: The MM-i Profitability Puzzle

To assess the prospects of Leapmotor's PHEV venture, we can use industry public parameters to estimate how the MM-i project might impact Leapmotor's profit statement.

Assume total fixed investment for the MM-i system's R&D and production line is 12–16 billion RMB, amortized over 5 years, yielding annual fixed amortization of 2.4–3.2 billion RMB. The production line's designed capacity is 150,000 units per year.

• If overseas MM-i-equipped vehicles sell only 50,000 units annually, production line utilization is just 33%, with per-vehicle amortization as high as 4,800–6,400 RMB. Heavy fixed costs would directly erode vehicle gross margins.
• If sales rise to 100,000 units, utilization approaches 67%, halving per-vehicle amortization.
• Once the 150,000-unit capacity is exceeded, further volume increases require additional capital expenditure.

According to Huxiu estimates, Leapmotor's complete LEAP platform plus MM-i hybrid package, supplied externally, carries a per-vehicle value of approximately 18,000–26,000 RMB. The gross margin for external supply is estimated at 12%–18%, higher than Leapmotor's own vehicle business. At this range, external orders of 60,000 units could absorb most of the MM-i R&D amortization.

However, the weakness of external supply is equally clear: order fate is tied to the performance of partner models like FAW and Stellantis. If customer products don't sell, expected external supply revenue evaporates.

Ultimately, whether the MM-i PHEV turns profitable is a question of scale. Only when overseas self-branded models and external supply components ramp up simultaneously can this system transition from a cost burden to a profit source. Otherwise, high amortization will persistently weigh on the profit statement.

Conclusion

At its core, Leapmotor's "license-free PHEV production" is a forced, circuitous escape. This transformation, with its uncertain path, carries enormous stakes and an extremely narrow window. The time Leapmotor has to experiment is running out.

This article is from Huxiu. Original link: https://www.huxiu.com/article/4892355.html?f=wyxwapp