On August 19, 2026, SERES disclosed its semi-annual report for 2026. In the first half of the year, SERES sold 178,800 new energy vehicles, a year-on-year increase of 3.87%; SERES brand vehicle sales reached 160,800 units, up 5.6% year-on-year. Operating revenue came in at RMB 57.493 billion, down 7.87% year-on-year, while net profit attributable to shareholders swung to a loss of RMB 1.717 billion, compared with a profit of RMB 2.941 billion in the same period last year.
Earlier, SERES had already signaled profit pressure through a pre-earnings warning. What this latest report reveals is that investments in new models have been made, yet the revenue and cash inflows from those new models have not fully caught up.
Cost pressure was not something that only emerged after the interim report. On June 13, 2026, Zhang Xinghai, Chairman of SERES Group, stated at the China Auto Chongqing Forum that due to rising prices of memory chips, lithium carbonate, and other materials, the average cost per vehicle for the AITO brand has increased by RMB 15,000 to 20,000; meanwhile, vehicle selling prices continue to decline.
Two months later, the semi-annual report translated that pressure into financial figures.
Industry data shows that in the first half of the year, automotive manufacturing revenue grew 1.8%, but costs rose 2.8%, and total profits fell 19.5%. During the same period, lithium prices surged 132.2% year-on-year, and chip supply also faced disruptions. Automakers are under pressure to keep launching new products, yet material and component prices are climbing, while selling prices are constrained by market competition, squeezing profit margins in the process.
For SERES, which is in the midst of a model transition, rising costs are only one layer of pressure. New vehicle development, platform upgrades, and intelligent features all require upfront investment, which can only be recouped gradually once production volumes ramp up.
During the model changeover period, if new vehicle sales have not yet reached scale, the early-stage R&D, supply chain, and launch costs will first flow into current operating results.
SERES continued to increase R&D spending in the first half. The company's R&D investment reached RMB 7.007 billion, up 34.8% year-on-year, of which R&D expenses were RMB 3.734 billion and capitalized R&D expenditure was RMB 3.273 billion. For automakers, R&D investment itself is not the issue; the key lies in whether that investment can be spread across enough models and sales volume. Rising R&D investment alongside declining revenue indicates that the new round of investment has not yet been fully converted into current-period income.
The impairment of RMB 1.57 billion on technology development intangible assets and RMB 180 million on development expenditure should also be viewed in this context. Impairment directly impacts current profits, and it more closely reflects a reassessment of the expected recovery of some old R&D investments: as product iteration accelerates, the usable lifespan of older technologies shortens, the number of models over which they can be amortized decreases, and the originally anticipated returns must be recalculated.
This accounting is tied to SERES' current replacement cadence. In the past, a platform technology could cover a longer product cycle; now, new models and technologies are updated more quickly, requiring automakers to recover previous investments before the next wave of products arrives.
If the new platform has not yet reached full production volume, the expected returns on old investments change first, and impairments appear on the balance sheet. It is not the sole reason for the profit decline, but it demonstrates that the pressure to recover R&D investments has already become visible.
SERES does not currently face a significant liquidity crunch. As of the end of the reporting period, the company's cash reserves exceeded RMB 73.15 billion, and interest-bearing liabilities accounted for 3.2% of total assets, primarily long-term debt. SERES has the capital to complete its product transition. The fact that operating cash flow turned negative in the first half indicates the company still needs to rebuild cash collection through new models and its core business.
New models are the next direct test for SERES. The all-new generation AITO M9 has delivered over 20,000 units in seven weeks since launch, with the M9 Ultimate starting at over RMB 600,000. This delivery pace provides a starting point for the transition, but the performance of a single model is not enough to change the entire semi-annual report. What the new models truly need to address is whether, after improving the product mix, revenue can rebound, gross margins can climb again, and operating cash flow can recover alongside.
Looking at SERES' current plans, the direction it has outlined is to adjust the model structure to improve profit margins. That direction ultimately needs to be translated into specific selling prices, costs, and delivery volumes for each model.
The key focus for SERES in the second half of the year is whether new models can take over the revenue from older products and cover the previous round of R&D and transition investments. Sales growth has already proven the products still have market appeal; the question left by the semi-annual report is whether SERES can quickly convert those sales into profit and cash flow in a market characterized by rising costs and faster product updates.
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