Is the new power starting the "Final Battle"?

Asking AI · How Will the Profitability of New Power Brands and AI Competitions Impact Industry Patterns?

After a decade of competition, the emerging brands have finally entered the next stage.

In 2025, several new power brands announced successively that they would achieve quarterly or full-year net profit turns, and the industry generally views this as a dividing line between profitability and survival for these brands. Recently, as the financial reports of various new power brands for 2025 were released, the answer was revealed.

Leap Motor achieved a net profit attributable to parent company of 540 million yuan in 2025, marking its first full-year profit since inception; Xiaomi Auto first achieved an annual operating profit of 900 million yuan; Li Auto’s net profit plummeted 85%, from 8.05B yuan in 2024 to 1.14B yuan, but still higher than other brands; Xpeng Motors achieved its first quarterly profit in Q4, with a net profit of 380 million yuan, while its full-year loss narrowed to 1.14 billion yuan, still unprofitable; NIO also achieved its first quarterly profit in Q4, but its 2025 net loss attributable to parent was still as high as 14.94 billion yuan. Seres has not yet announced its latest financial report, but its financials for the first three quarters of 2025 show a net profit of 5.31B yuan, a year-on-year increase of 31.56%.

Two or three years ago, when discussions centered on “who can survive,” these new brands have now crossed into profitability, meaning the “burning money era” has come to an end. After more than a decade of rapid growth, these brands have gone through several rounds of elimination, with only a few surviving.

As each new power brand reaches the turning point of profitability, the final battle has just begun.

Profitability Turning Point

For the overall new power brands, the 2025 financial reports can be seen as a positive signal, with several mainstream brands’ “self-sustaining ability” now taking shape.

Although profitability in 2025 declined significantly, Li Auto, as the earliest to achieve full-year profit among new brands, still ranks first in profitability. Its annual revenue reached 112.3 billion yuan, surpassing 1.14B yuan for three consecutive years, with a net profit of 406.3k yuan. In 2025, Li Auto delivered 406.3k vehicles, marking its first year-over-year decline in sales.

Following closely is Xiaomi Auto, which broke the 410k yuan revenue mark for the first time in 2025, reaching 106.1 billion yuan; its annual operating profit turned positive for the first time, reaching 900 million yuan. In 2025, Xiaomi delivered over 410k new vehicles, more than doubling its previous year; average selling price increased from 234.5k yuan to 251.2k yuan. The growth was mainly driven by high-end models like SU7 Ultra and YU7.

Leap Motor topped the new power list in 2025 with 596.6k deliveries, a year-over-year increase of 103.1%; its full-year revenue was 64.73 billion yuan, up 101.3%; net profit was 540 million yuan, achieving its first full-year profit. Relying on comprehensive breakthroughs in products and technology in 2025, as well as continuous improvement in the entire industry chain, Leap’s Chairman and CEO Zhu Jiangming stated, “In 2026, Leap will strive for a new goal of one million sales.”

Although NIO and Xpeng still did not turn losses into profits for the full year, both saw a turnaround in Q4. NIO achieved an operating profit of 1.25 billion yuan in Q4, and Xpeng posted a net profit of 380 million yuan in Q4, both marking the company’s first quarterly profit.

Among them, Xpeng’s profit sources, besides vehicle sales, also include an important component—technology R&D services for the public.

Financial reports show that Xpeng’s service and other income in Q4 was 3.18 billion yuan, a surge of 122% year-over-year, with a gross margin of 70.8%. A relevant Xpeng executive directly stated: “Xpeng has achieved a profit path very different from traditional automakers.”

Looking at gross profit margins, currently, Xpeng’s comprehensive gross margin is 18.9%, indicating improved profitability; Li Auto’s is 18.7%; Leap’s scale effect is gradually evident, with a gross margin of 14.5%; NIO’s gross margin increased to 13.6%; Xiaomi’s gross margin is 24.3%; Seres’ gross margin for the first three quarters of 2025 rose to 29.38%.

Compared to Tesla’s gross margin of 17.2% in 2025, most new power brands show better profitability, with cost control and value realization capabilities gradually emerging.

Opening a New Chapter

However, after entering the profitability turning point, the challenges in 2026 will be even greater. According to the strategic plans announced by many brands, “AI + chips” will become the new “battlefield,” which is also a field requiring much larger investment.

Xpeng’s AI landscape, from the journey of smart electric vehicles to flying cars, Turing AI chips, VLA autonomous driving models, humanoid robots IRON, Robotaxi, and more, is being fully expanded; Li Auto is gradually shifting toward “technology-driven” transformation, with AI accounting for over 60% of R&D investment, and its self-developed chip Mach 100 is scheduled for mass production in Q2 2026; NIO’s self-developed chip “Shenji” second generation has been successfully taped out, and a Shenji chip subsidiary has been established, raising over 2.2 billion yuan in funding, with plans for self-driving chips and layout of embodied robots.

Leap Motor defines 2026 as the “Year of Intelligent Driving,” planning to launch city navigation assistance covering the entire country in Q2, and by the end of the year, complete the construction of intelligent driving base models and develop AI large model-based assisted driving solutions; Xiaomi plans to invest 60 billion yuan in AI over the next three years, accelerating to become an AI-enabled full-ecosystem company for vehicles, homes, and people. Currently, Xiaomi’s AI large model capabilities are beginning to integrate into various core businesses.

Seres Group Chairman Zhang Xinghai has publicly stated that the next step for Seres is to seize the opportunity of “Artificial Intelligence + Automotive” integration, accelerate the application of AI technology in vehicle control, intelligent cockpits, and autonomous driving scenarios, and boldly explore new tracks like embodied intelligence, providing long-term support for industry upgrades.

As technological competition intensifies, increased investment will undoubtedly pose greater challenges to operations and profits. In 2025, Li Auto’s R&D expenditure reached a record high of 11.3 billion yuan, with AI-related investments accounting for 50%. In 2026, Li Auto will continue this investment strategy. Xpeng’s R&D spending in 2025 was 9.5 billion yuan, with 4.5 billion yuan dedicated to AI. In 2026, its physical AI R&D capacity will be increased to 7 billion yuan, attempting to build a long-term moat through technological differentiation.

NIO’s R&D expenses in 2025 showed a gradual decline each quarter, from 3.18 billion yuan in Q1 to 2.02 billion yuan in Q4. NIO CFO Qu Yu stated during the Q4 and full-year earnings call that in 2026, the company will maintain quarterly R&D investments of 2 to 2.5 billion yuan.

Leap Motor’s R&D expenditure in 2025 was 4.29 billion yuan. Regarding the planned significant increase for 2026, related executives said, “R&D expenses will be very noticeably higher than in 2025.”

Overall, the leading new power brands are now entering a new stage where scale and profitability are both prioritized, with technology and efficiency winning the race. Companies with full in-house R&D, precise positioning, and efficient operations will hold the advantage in the industry reshuffle.

Meanwhile, although investing in AI and autonomous driving has enormous future potential, these areas are unlikely to contribute significantly to revenue and profits in the short term. The profitability “life and death line” for new power brands still exists. Facing new competitive scenarios involving profitability, gross margins, AI technology, and ecosystem collaboration, the final stage of these brands’ journey has already shown a “hellish” mode.

Reporter: Zheng Yu