Great Wall Motor's H1 2025 Profit Decline: A Buying Opportunity Amid Strategic Resilience?

Great Wall Motor’s H1 2025 financial results present a paradox: while total operating revenue rose 1.03% year-on-year, operating profit and net profit plummeted by 15.35% and 10.21%, respectively [1]. This divergence signals a company grappling with short-term margin pressures but investing aggressively in long-term transformation. For investors, the question is whether this pain is temporary or a harbinger of deeper structural challenges.

Strategic Resilience: Power 2025 and NEV Momentum

The decline in profitability is largely attributable to strategic reinvestment. Great Wall has poured resources into its Power 2025 strategy, which prioritizes electrification (via plug-in hybrids and hydrogen tech) and global expansion [4]. In Q2 2025 alone, the company achieved a 30.81% quarter-on-quarter revenue surge to 52.348 billion RMB ($7.33 billion), driven by a 33% year-on-year increase in NEV sales [4]. This growth was fueled by product innovation, including the TANK 300 and WEY Gaoshan 8/9, which cater to both domestic and international markets [1].

The company’s global footprint has also expanded dramatically, with 1,400+ overseas sales outlets and 2 million international units sold [3]. Notably, July 2025 saw overseas sales rise 7.6% year-on-year to 41,088 units [4]. Strategic partnerships, such as the collaboration with Faraday Future to bypass U.S. trade barriers, and localized models like the TANK 300 Middle East Edition, underscore GWM’s tailored approach to global markets [1].

Short-Term Pain vs. Long-Term Gain

The profit decline reflects the cost of this transformation. Increased R&D and capital expenditures for NEV development and global logistics have eroded margins [2]. Additionally, industry-wide price wars—exacerbated by competition from BYD and others—have further compressed profitability [1]. Yet, the company’s balance sheet remains resilient: total assets grew 2.17%, and owners’ equity rose 6.92% [1].

Analysts argue that these investments are justified. A recent “Buy” rating assigned a HK$23.00 price target, citing GWM’s strong balance sheet and strategic alignment with China’s EV transition [5]. The company’s focus on hydrogen powertrains—planned to invest ¥5 billion over five years—positions it to become a top-three global supplier by 2025 [5].

Risks and Opportunities

While the Power 2025 strategy is gaining traction, risks persist. The NEV market remains hyper-competitive, with BYD dominating domestic sales and Tesla intensifying global pressure. Moreover, GWM’s reliance on plug-in hybrids (PHEVs) could become a liability if regulatory tailwinds shift toward pure EVs.

However, GWM’s diversified approach—combining PHEVs, hydrogen tech, and AI-driven autonomous driving—creates a buffer against sector-specific shocks [5]. Its localized production and customization strategies also mitigate supply chain risks, a critical advantage in volatile markets.

Conclusion: A Calculated Bet

Great Wall Motor’s H1 2025 profit decline is not a red flag but a signal of strategic reinvestment. For investors with a 3–5 year horizon, the company’s NEV momentum, global expansion, and technological diversification present a compelling case. The key is to assess whether the current valuation discounts these long-term gains or overreacts to short-term pain. Given the company’s strong balance sheet and analyst optimism [5], this may be a buying opportunity for those willing to ride out the transition.

Source:
[1] Great Wall Motor Reports Mixed Financial Results for H1 2025 [https://www.tipranks.com/news/company-announcements/great-wall-motor-reports-mixed-financial-results-for-h1-2025]
[2] Great Wall Motor's Earnings Momentum and Strategic Position in China's EV Market [https://www.ainvest.com/news/great-wall-motor-earnings-momentum-strategic-position-china-ev-market-2507/]
[3] Great Wall Motor sees quarterly net profit hit new high in Q2 [https://autonews.gasgoo.com/m/70038292.html]
[4] GWM Achieves Dual Growth in NEV & Global Markets [https://www.gwm-global.com/news/3403750.html]
[5] Trending Great Wall Power 2025: Hydrogen & AI Innovations [https://www.accio.com/business/trending-great-wall-power-2025]