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

Source: Huxiu Auto Author: Yang Jie Cover Image: Huxiu

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 vehicles and pure electric vehicles. Plug-in hybrids, because they "use an engine to provide driving power," fall under the fuel 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 in China predominantly hold licenses as "pure electric passenger vehicle (including range-extended electric passenger vehicle) manufacturers." Legally, they are not qualified to produce plug-in hybrids.

In response to this, a Leapmotor representative exclusively confirmed to Huxiu:

"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 license issue. We are currently applying for the relevant domestic production license."

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."

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

Why Invest in a Market You Can't Enter?

Pouring significant resources into building production lines and conducting R&D for a domestic market that remains inaccessible seems puzzling for any automaker. However, when viewed through the lens of the global market, Leapmotor's logic becomes clear.

PHEVs: The Final Piece of the Overseas Puzzle

Leapmotor's rationale for developing plug-in hybrids is rooted in China's vehicle export data.

According to Dataforce, in 2025, China's exports of plug-in hybrids to Europe surged 155% year-over-year, compared to just 12% growth for pure electric vehicles. By June 2026, Chinese-brand plug-in hybrids had captured a 34% market share in Europe, a record high. For every three new PHEVs sold in Europe, one comes from a Chinese brand.

Leapmotor has already tasted the benefits of this export boom. In the first half of 2026, the company exported 96,294 vehicles, a 372.6% increase year-over-year, surpassing its total exports for all of 2025 and accounting for 27% of its total sales.

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

The Shadow of EU Tariffs

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 and is preparing to impose additional PHEV import tariffs on top of existing tariffs on pure electric vehicles. Morgan Stanley research notes that after PHEVs were exempted from BEV tariff measures in 2024, 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 are enacted, they would pose a significant threat to Chinese automakers' PHEV exports. But the impact on Leapmotor would be different.

Unlike other Chinese companies, Leapmotor's overseas products are primarily sold through Leapmotor International, a joint venture. This structure means Leapmotor's export business is not constrained by China's domestic production license. Moreover, on the trade policy front, it leverages Stellantis's localized European system.

More critically, Leapmotor's strategy is localized production, not just export:

• The Zaragoza factory in Spain has completed supporting upgrades.
• The Kedah factory in Malaysia has begun mass production of the C10.
• The Goiânia factory 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, resulting in lower margins, but it avoids the burden of overseas tariffs and trade barriers.

What Does Leapmotor Really Want to Become?

If we only consider "Leapmotor selling PHEVs overseas," the business logic still seems 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 driving force behind Leapmotor's PHEV push lies in technology supply—a key pivot that could transform the company beyond being just an automaker.

During the group interview, Zhu Jiangming voluntarily referenced two companies. He described Apple's model as the "ultimate model"—deep supply chain control without owning factories, yet dictating all orders and components. He then cited Samsung, which "has a full industry chain, from screens to storage to SOCs, and became the world's top phone maker." Leapmotor, he said, aims to absorb the strengths of both.

Currently, Leapmotor's technology supply strategy is pushing 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 such as battery packs, electric drives, controllers, and lighting can be developed, manufactured, and "packaged" by Leapmotor for its partners.

A Leapmotor representative told Huxiu:

"Platform-level packaging is a new supplier model we are testing. It's somewhat similar to Huawei's smart driving model, but with a lower threshold. We can save partners at least one to two thousand yuan in core component costs per vehicle."

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

Huxiu believes that before the MM-i PHEV technology launch, Leapmotor could only offer pure electric and range-extended powertrains to these clients. The underlying logic of developing PHEVs is to expand and strengthen its technology supply business.

Three Major Challenges Ahead

Despite the strategic logic, Leapmotor faces three significant challenges as it enters the PHEV space.

Challenge 1: Ceding the Domestic Market to Competitors

The domestic license restriction means Leapmotor avoids direct competition with BYD and Geely in China's PHEV market. But avoidance is also surrender.

While China's domestic PHEV market has shrunk 27.6% year-over-year, it still exceeds 2 million units annually. Without a license, Leapmotor cannot sell a single PHEV in this market.

More concerning is the phrase "currently applying for" the domestic production license. The subtext is that Leapmotor itself does not know when—or if—approval will come. Until then, its PHEV line is an overseas-only product with a much narrower margin 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 system. This bypasses the domestic license issue.

But Stellantis is not a charity. It partnered with Leapmotor because the latter's platform architecture offers "higher cost efficiency," helping Stellantis "launch electric vehicles faster with lower capital investment."

If Stellantis's own electrification capabilities catch up, or if it finds a cheaper alternative, Leapmotor's role in the joint venture could be marginalized. The equity structure of Leapmotor International means that Leapmotor's fate in overseas markets ultimately depends on Stellantis.

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 uniqueness lie? This is the most critical question for Leapmotor as a vehicle manufacturer.

Consider Zhu's own analogy with Samsung. 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, while Samsung settles for 20%.

The lesson: controlling upstream core components does not guarantee downstream brand pricing power. The more successful Leapmotor's technology supply business 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 automaker, its own brand's scarcity diminishes by one degree.

The Financial Stakes

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

Assumptions:

• Total fixed R&D and production line investment for the MM-i system: 12–16 billion yuan
• Amortization period: 5 years
• Annual fixed amortization: 2.4–3.2 billion yuan
• Designed production capacity: 150,000 units/year

Scenario Analysis:

| Annual Sales (Units) | Capacity Utilization | Per-Unit Amortization | |----------------------|---------------------|----------------------| | 50,000 | 33% | 4,800–6,400 yuan | | 100,000 | 67% | 2,400–3,200 yuan | | 150,000+ | 100%+ | Requires additional CapEx |

According to Huxiu estimates, Leapmotor's packaged LEAP platform + MM-i hybrid system, when supplied externally, carries a per-unit value of approximately 18,000–26,000 yuan. The gross margin for this external supply business is estimated at 12%–18%, higher than Leapmotor's own vehicle business.

At this margin range, 60,000 units of external supply orders would be enough to absorb most of the MM-i R&D amortization.

However, the weakness of external supply is equally clear: order fate is tied to the sales performance of partners like FAW and Stellantis. If their products don't sell, expected external supply revenue will fall short.

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

Conclusion: A Forced, High-Stakes Gamble

At its core, Leapmotor's "license-free PHEV production" is a forced strategic detour—a circuitous escape route. This transformation, with its uncertain path, carries enormous stakes and a very narrow window of opportunity. The time Leapmotor has to experiment and get it right is running out.

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

Disclaimer: The above content (including any images or videos) is uploaded and posted by a user of NetEase Hao, a social media platform that provides information storage services only.