The rising star in the new energy vehicle sector, SERES, has reported substantial losses shortly after achieving profitability.
Recently, SERES disclosed a preliminary earnings forecast indicating a loss. For the first half of 2026, the company expects a net profit attributable to shareholders of between -1.8 billion and -1.5 billion yuan, shifting from profit to loss year-on-year. Within this, its core subsidiary, Aito Auto, is projected to report a net loss attributable to shareholders of between -1.3 billion and -1.05 billion yuan.
SERES also anticipates a non-GAAP net loss of between -2.5 billion and -2.2 billion yuan, with Aito Auto's non-GAAP loss estimated at between -1.95 billion and -1.7 billion yuan.
This contrasts sharply with the first half of 2025, when SERES reported a total profit of 3.725 billion yuan, a net profit attributable to shareholders of 2.941 billion yuan, and a non-GAAP net profit of 2.474 billion yuan.
Underlying Factors for the Loss
The company attributes the expected loss primarily to two major factors.
The first is rising costs. Increases in the prices of key raw materials such as memory chips, industrial metals, and lithium carbonate have driven up production costs.
The second factor is asset impairment. Adhering to the principle of prudence and to solidify overall asset quality, the company has adjusted the book value of certain existing assets whose utility has become limited due to technological iteration and model updates, based on revised expectations for their future returns.
The bulk of the loss originated in the second quarter. Influenced by the aforementioned factors, the performance of the core subsidiary, Aito Auto, fluctuated, turning from profit to loss. Its second-quarter net profit attributable to the listed company's shareholders is estimated to be between -2.15 billion and -1.9 billion yuan.
The sudden and substantial projected loss at Aito Auto is not a simple matter and reveals several concerning signals.
Rising Production Costs Per Vehicle
On June 12th, SERES Chairman Zhang Xinghai stated at the China Auto Chongqing Forum that the average cost per Aito vehicle had increased by 15,000 to 20,000 yuan, describing the "pressure as still very significant."
He cited examples such as memory chip prices rising from about 20 yuan per unit to nearly 100 yuan, and lithium carbonate increasing from 80,000 yuan per ton in the same period of 2025 to 180,000 yuan per ton.
In the first half of this year, prices for major raw materials in the NEV sector, including memory chips, industrial metals, and lithium carbonate, experienced a significant surge.
For instance, the terminal prices for representative memory products like 16GB DDR5 memory and 1TB NVMe solid-state drives more than doubled from their levels at the start of the year. This tight supply situation, driven by a shift in production capacity towards high-value HBM products for AI servers, is expected to persist for several years.
Key industrial metals also saw substantial increases. The spot price of copper rose approximately 25.69% in the first half, while aluminum (A00 spot) increased by about 18.96%.
The price of battery-grade lithium carbonate reached a阶段性 high of 200,000 yuan per ton in mid-May before retreating. According to SMM statistics, the spot price accumulated a 32.07% increase in the first half, with the average price up 132.14% compared to the same period in 2025.
In the fiercely competitive red ocean of the NEV market, such cost increases cannot be easily passed on to downstream consumers.
The Emergence of "Outdated Capacity" as a Loss Driver
The adjustment of book values for assets with limited adaptability due to technological and model changes marks the first time SERES has cited this as a significant factor impacting profits.
Over the years, while SERES has recorded substantial annual depreciation and amortization expenses, it has largely avoided significant provisions for fixed asset impairment.
The book value of its fixed assets has grown significantly from 2023 to Q1 2026. However, prior to 2025, there were no major fixed asset impairment records, with the cumulative impairment provision balance at the end of 2025 being only 75.87 million yuan.
The depreciation of these existing assets signals that, against the backdrop of intense NEV competition and rapid product iteration, a substantial portion of SERES's fixed assets—such as factories, production lines, and equipment—are becoming or have already become "outdated capacity." Previous效益 expectations for these assets may have been overly optimistic.
Since the official launch of the Aito M5 on December 23, 2021, the Aito brand has maintained a pace of launching or significantly upgrading at least two models per year over the past nearly five years.
This rapid expansion has included the M7, M5 EV, a major refresh of the M7, the flagship M9, the M8 and its EV version, the 2026 M7, a refreshed M8, the new M6, and a next-generation M9. In just five years, Aito has completed a full lineup of five high-end SUV series (M5 through M9) and produced its one-millionth vehicle within 46 months.
As the Aito model range expands, SERES's investment in fixed assets will grow even larger. With the relentless pace of technological iteration in the NEV sector, the company faces the risk of an increasingly large pool of existing assets with limited adaptability, raising the potential for future book value adjustments.
Persistent Decline in Sales Volume
Production and sales reports show that SERES sold 196,600 vehicles in the first half of the year, a year-on-year decrease of 1.02%. Based on Q1 data, its Q2 sales were approximately 108,100 vehicles, down about 17% from 130,200 vehicles in the same period last year.
The sales pressure is not unique to Aito Auto; the overall NEV market faced headwinds in the first half.
While 2025 was a year of robust growth for the Chinese NEV market, the situation changed dramatically this year. According to data from the China Association of Automobile Manufacturers (CAAM), production and sales growth rates for NEVs in the first half slowed significantly to 6.7% and 7.3%, respectively. This growth was primarily driven by exports, which surged 120% year-on-year. Domestic NEV sales, however, fell sharply by 13.4%.
Achieving the full-year sales target of 19 million vehicles set by CAAM now appears challenging, given that first-half sales of 7.446 million vehicles represent only 39% of that goal.
A closer look reveals greater pressure on SERES's sales structure.
Extended-range electric vehicles (EREVs) have historically been the absolute mainstay of Aito's sales. Available data indicates that EREV sales peaked in 2024, saw a slight dip in 2025, and experienced a significant decline in the first half of this year, with a particularly sharp drop of around 40% in the second quarter.
While sales of pure electric Aito models are growing, their base is smaller, competitive advantages are less pronounced, and competitive pressure is high. It is unrealistic to expect them to become the primary sales driver and lift overall volumes in the short term.
This trend mirrors the broader market. In the first half, while pure electric vehicle sales grew year-on-year nationally and plug-in hybrid sales saw slight growth, EREV sales declined significantly. In the domestic market, both plug-in hybrids and EREVs saw substantial sales drops.
This points to an inconvenient truth: as technology advances, leading to greatly increased range and significantly reduced charging times, the advantages of pure electric vehicles are becoming more apparent, making them the choice for a growing number of consumers. Meanwhile, EREVs, representing a transitional technology path, are being abandoned by an increasing number of users.
This shift is even more evident in the sales figures of Li Auto, once the leader in EREV SUVs, which saw its EREV sales plummet approximately 65% year-on-year in the first half.
Today, SERES faces unprecedented pressure on its performance—rising costs, depreciation of heavy assets, and declining sales. Its stock price is experiencing a "double whammy," with shares hitting the跌停 limit down the day after the interim earnings forecast was released. From mid-October last year to the present, SERES's stock price has been on a downward trajectory, accumulating a drop of approximately 70%.
The question remains: how long can SERES and Aito Auto endure under these conditions?
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