Key Points:
- Chinese NEV startups are launching sub-brands to target premium buyers or reach cheaper mass-market segments.
- Leapmotor plans to launch a premium brand priced above 300,000 yuan ($44,125) in 2027 to improve thin profit margins.
- Xiaomi will debut its second brand, Skynomad, in the second half of 2026 to target the under-200,000 yuan family SUV market.
- Industry experts warn that independent sub-brands risk burning billions of yuan on redundant R&D and sales networks.
Chinese new energy vehicle (NEV) startups are rolling out ambitious multi-brand strategies to expand their market coverage and improve profitability. However, automotive industry experts warn that this capital-intensive push carries massive financial risks. Building a completely new car brand from scratch demands full-scale reconstruction of sales channels, distinct marketing networks, and unique engineering structures. If these high-stakes ventures fail, startups risk burning billions of yuan in the process.
Leapmotor is among the latest startups seeking to climb upmarket through a secondary brand. During an earnings call in mid-May 2026, Leapmotor Vice-President Li Tengfei confirmed that the automaker plans to unveil a premium sub-brand by the end of this year or early next year. The company expects the official launch to take place in the middle to latter half of 2027. This new premium brand will target high-end products priced above 300,000 yuan (approximately $44,125) and operate an entirely standalone sales network.
This upward move comes as Leapmotor grapples with mounting pressure on profitability. The automaker swung to a net loss of 390 million yuan in the first quarter of 2026, reversing a net profit of 360 million yuan in the final quarter of 2025. Falling gross profit margins primarily dragged down the company’s financial performance. While Leapmotor delivered a robust 110,000 vehicles in the first quarter, its current product portfolio relies heavily on cost-effective mass-market models priced between 50,000 and 250,000 yuan, keeping per-vehicle margins exceptionally thin.
Industry consultants believe that Leapmotor’s current low-end positioning has reached its profit growth ceiling. Yale Zhang, the managing director of Shanghai-based consulting firm Automotive Foresight, explained that the company must spin off a separate premium brand to build a credible high-end market presence. Establishing distinct marketing channels and bespoke customer services will allow the manufacturer to attract wealthier buyers who would otherwise ignore the budget-friendly Leapmotor nameplate.
In contrast to Leapmotor’s upward ambitions, technology giant Xiaomi is taking its multi-brand strategy downward into the affordable, mass-market segment. Local media reports indicate that Xiaomi plans to launch its second car brand, Skynomad, in the second half of 2026. Skynomad will focus on family-oriented, range-extended hybrid SUVs, creating a clear strategic distinction from Xiaomi’s main automotive brand, which focuses on pure-electric, sporty, and tech-driven sedans.
This range-extender technology will also aid Xiaomi’s aggressive global expansion. By utilizing on-board petrol generators to charge the battery on the move, Skynomad can target overseas markets that currently lack robust public charging infrastructure. The team expects the new brand to target vehicle prices below 200,000 yuan, filling a critical market gap directly beneath Xiaomi’s existing lineup, which primarily commands prices between 200,000 and 300,000 yuan.
However, running separate car brands remains an incredibly expensive game. Fu Yuwu, the honorary president of the China Society of Automotive Engineers, pointed out that the automotive industry is inherently capital-intensive. He warned that independent sub-brands often duplicate corporate R&D, inflate marketing budgets, and strain limited cash reserves. He emphasized that automakers must focus on building a solid foundation and demonstrating long-term persistence rather than spreading their resources too thin.
Pioneer startup Nio has already learned this hard lesson. The company originally operated its second brand, Onvo, and its third brand, Firefly, as fully independent business units. While Onvo successfully delivered over 100,000 units in 2025, the astronomical cost of running three separate sales, service, and marketing teams heavily strained Nio’s balance sheet. In May 2025, Nio integrated these sub-brands back into its core group management, unifying their R&D, sales, and supply chains to share tech and battery-swap resources. This move successfully slashed Nio’s procurement costs by 15% to 20%.
Ultimately, multi-brand strategies in the global automotive industry follow a highly cyclical pattern. During the 2008 global financial crisis, American giant Ford Motor Company had to abandon its multi-brand approach, selling off premium brands like Volvo for billions of dollars just to stay afloat. Today, as Chinese NEV startups face intense domestic price wars and slowing growth, they must carefully evaluate their financial capabilities. Managing the balance between scaling market share and maintaining tight capital controls will decide which startups survive the next wave of industry consolidation.
