Leapmotor vehicles on display at the Shanghai Auto Show. (Photo/Leapmotor)

Chongqing - China’s fiercely competitive new energy vehicle (NEV) market produced contrasting results in July, as Leapmotor’s deliveries more than doubled to a record 101,267 vehicles while HIMA’s sales fell 5.7% to 45,064.

The figures have renewed debate over two approaches to carmaking: building core technologies in-house or working with technology partners to improve efficiency.

Leapmotor has rapidly expanded its market share over the past two years, with competitive pricing and high specifications becoming key strengths. Features once largely reserved for premium vehicles, including LiDAR, 800-volt platforms and advanced driving-assistance systems, are now available on its lower-priced models.

This pricing strategy is closely tied to Leapmotor's long-standing push for in-house development. The company develops and produces key components including batteries, electric drive systems, electronic control systems, intelligent driving chips and domain controllers. In-house components account for about 65% of its vehicle costs.

Greater control over core components can reduce some supply-chain costs while giving automakers more control over technology, product development and pricing.

But the model also requires heavy investment. Research, production lines and component manufacturing generate substantial fixed costs, which can only be spread effectively once sales reach sufficient scale. For Leapmotor, the logic is mutually reinforcing: in-house development lowers some costs, competitive prices boost sales, and greater scale helps spread R&D expenses.

Strong sales, however, still need to translate into sustainable profits. Leapmotor reported a profit of 540 million yuan (80.03 million U.S. dollars) in 2025, but profit per vehicle remained low. Its gross margin fell to 9.4% in the first quarter of this year, when it posted a quarterly loss of 390 million yuan. Improving profitability while continuing to expand market share remains a key challenge.

A different approach relies on deeper cooperation across the automotive industry, with HIMA offering one prominent example.

HIMA is not an independent automaker. Led by Huawei, it is an intelligent vehicle alliance developed with several Chinese carmakers. Huawei participates in product definition, technology development, component supply and sales, while its automotive partners contribute vehicle manufacturing and supply-chain capabilities.

The model is built around specialization. Automakers do not need to develop every technology themselves. Instead, they can integrate partners' established capabilities in areas such as intelligent driving, smart cockpits, software and communications.

As NEVs increasingly combine electrification, intelligent systems and software, building a complete in-house technology stack requires significant time and capital. Cooperation can shorten development cycles and lower the barriers to technology upgrades.

The trade-off is greater reliance on external partners. Outsourcing core systems can shift some R&D spending into procurement costs and may reduce an automaker's control over technology choices, product differentiation and costs. The success of the partnership model therefore depends heavily on a company's ability to integrate resources effectively.

HIMA's July sales decline does not mean the partnership model has failed. Likewise, Leapmotor's record monthly deliveries do not prove that in-house development is necessarily superior. The two approaches address different priorities: in-house development emphasizes control, while partnership-based carmaking focuses on resource efficiency.

In practice, the two models are not mutually exclusive. BYD is a case in point. Backed by a highly integrated supply chain and strong vertical integration, the company maintains extensive in-house capabilities in areas such as batteries and electric drive systems. Its July sales reached 419,211 vehicles, up 22% year on year.

At the same time, BYD is expanding external cooperation. While developing its own God's Eye intelligent driving system, its Formula Leopard brand has introduced models equipped with Huawei's intelligent driving system. BYD has also joined a Huawei-led high-voltage fast-charging alliance and works with Huawei in vehicle connectivity, communications modules and industrial digitalization.

BYD also supplies batteries and related technologies to other automakers, making it both a vehicle manufacturer and a supplier within the broader automotive ecosystem.