The automotive industry is renowned for its high barriers to entry, substantial investments, and extended profit cycles.

As industry titans often remark, venturing into car manufacturing without an initial investment of at least 20 billion yuan is futile. Early-stage players like NIO, Xpeng, and Li Auto invested heavily, each pouring in at least 20 billion yuan.

Even prominent figures like Xu Jiayin, who invested tens of billions in the sector, failed to make significant strides.

Despite such substantial initial investments, achieving profitability remains challenging due to the immense costs per vehicle. Sales volumes must reach a critical threshold to offset these costs and turn a profit.

Even Tesla, a pioneering player, struggled for over a decade before becoming profitable.

Among domestic manufacturers, Li Auto was the first to achieve profitability, albeit after seven to eight years of losses. The reason is straightforward: Li Auto's sales volumes have consistently ranked at the top, coupled with its premium pricing strategy. Prior to the L6, no Li Auto model was priced below 300,000 yuan, though the L6's introduction brought prices below this threshold.

The second profitable newcomer is AITO, a collaboration between Huawei and Thalys. AITO's profitability stems from similar factors: high pricing and robust sales. The AITO m9, in particular, commands a price exceeding 500,000 yuan, while other models like the m7 and m5 are priced above 200,000 and 300,000 yuan, respectively. AITO's sales volumes have also surged, outpacing Li Auto for several months and leading the new energy vehicle segment.

Recently, we've witnessed the emergence of the third profitable new force: Leapmotor. According to official data, Leapmotor recorded a positive net profit of 80 million yuan in the fourth quarter of 2024, surpassing its profitability target a year ahead of schedule and joining Li Auto and AITO as the third profitable automaker among new energy vehicle manufacturers.

Leapmotor's profitability can be attributed to both similarities and differences with Li Auto and AITO. Like its counterparts, Leapmotor benefits from high sales volumes, consistently ranking among the top three in recent months. However, it distinguishes itself by focusing on cost-effectiveness, with vehicles priced predominantly between 100,000 and 200,000 yuan, in contrast to AITO and Li Auto.

Ultimately, Leapmotor's profitability underscores the importance of high sales volumes in offsetting costs and achieving positive margins. Other new energy vehicle companies must follow suit, as prolonged unprofitability is unsustainable in an uncertain future. Achieving profitability is crucial for long-term viability.

As for the next profitable newcomer, opinions vary. Some predict Xiaomi, while others suggest Xpeng. Time will tell.