Time is pressing, and the transformation must accelerate, as it concerns survival. This is just one part of Geely Group's response to the technological arms race among automakers, and the best is yet to come.

On May 7, the automotive industry was awakened by a "stifling thunder" - Geely Automobile suddenly announced that it would privatize the Zeekr brand at a price of $25.66 per share, planning to acquire the remaining 34.3% of shares to achieve a full merger. It has only been a year since Zeekr landed on the New York Stock Exchange with the aura of "the fastest IPO for new carmaking forces in history".

A capital operation involving billions of dollars was conducted with extremely high confidentiality, with no prior leaks. To gain a deeper understanding of the logic behind Geely's decision, Lu Jiu Business Review contacted a friend who works at Geely's headquarters and obtained some unique perspectives on the issue.

Three "Situations" That Must Be Broken

Before Geely decided to privatize Zeekr, although there were no obvious signs, there were already three important signals indicating that Geely must take decisive action.

1. Management Urgency: Zeekr Must Regain Autonomy

Geely Automobile aims to focus on new energy, and Zeekr is undoubtedly a key piece. However, as a listed company, Zeekr is exhausted by information disclosure rules and short-term financial report pressures. For example, when a competitor (BYD) announced the launch of the second-generation Blade Battery, Zeekr was unable to respond to external concerns in a timely manner due to the restrictions of the financial report silent period. Moreover, in key decisions such as pricing strategies and technological routes, the rules and regulations of listed companies also tie Zeekr's hands. For instance, Zeekr needs to adjust the prices of some of its products, but it hesitates when considering shareholders' interests and the capital market's reaction (which values product gross margins).

In addition, against the backdrop of the Sino-US trade war, Chinese concept stocks face many hidden pressures in the US capital market. Retaining this status may expose Geely and Zeekr to sudden risks.

The friend who works at Geely Group's headquarters reminded Lu Jiu Business Review: "After Zeekr's privatization and delisting, in addition to having relatively stronger freedom to better cooperate with Geely Holding for internal integration, it can also better cope with the uncertainties of the international economic and trade environment, escort Geely's brand to go global. More importantly, it can escape the short-term performance pressure of the capital market and concentrate resources on the new energy sector. In the coming period, Zeekr needs to be free from the interference of stock price fluctuations and focus on improving its internal strength behind closed doors."

2. The Capital Market "Does Not Recognize Goodness": The Parent Company's Market Value Is Far Less Than BYD's, and the Subsidiary's Market Value Is Far Less Than NIO's

In the first quarter of 2025, BYD Automobile's cumulative sales exceeded the 1 million mark, and Geely Automobile's cumulative sales also exceeded 700,000, with the gap not being particularly large. However, BYD has surpassed a trillion market value, while Geely Holding's market value performance is poor, at less than HK$200 billion.

Comparing Zeekr with NIO makes it even more frustrating. In 2024, the Zeekr brand delivered a cumulative total of 222,100 new vehicles. Together with the Lynk & Co brand (which has been merged into Zeekr Technology Group), it exceeded 500,000 vehicles. In the same year, NIO delivered 221,900 vehicles, far less than Zeekr. Especially in terms of brand gross margin, NIO is less than 10%, while Zeekr maintains it between 15% and 18%. However, before announcing privatization, Zeekr's market value was only 65% of NIO's.

What caused this situation? Bias. In 2024, more than half of the vehicles sold by Geely Automobile were still fueled, dragging down Zeekr's valuation. But compared to NIO, Zeekr's advantages are solid and overwhelming.

Zeekr can share many resources with Geely, such as the global supply chain, where Zeekr and Volvo jointly purchase chips; the manufacturing system, where the Geely factory in Ningbo Hangzhou Bay has a capacity utilization rate of over 95%; and the channel network, where Geely has nearly 300 4S stores and nearly 500 brand dealers. How can NIO compare with these advantages? Why does the capital market turn a blind eye to them?

3. The Race Track Has Changed, No More "Brotherly Competition"

On September 1, 2024, the group's management went to Geely's first factory - the Linhai Base in Taizhou - to learn and issued the "Taizhou Declaration", clarifying the five strategies of "focus, integration, collaboration, steadiness, and talent" to promote the integration of the automotive business and return to "one Geely".

Subsequently, drastic brand integration began. Geely Geometry, Emgrand (LEVC), and Radar were directly merged into Geely Galaxy, and Lynk & Co was merged into Zeekr.

Years ago, in order for Geely Automobile to learn from the veterans in the automotive industry, it created (maintained) some independent brands so that they would not have the burden of history and could better benchmark the veterans. Over the years, Geely has gained safety genes from Volvo, intelligent experience from Meizu, global layout and channel integration capabilities from Renault, and experience in operating luxury car brands from Daimler AG.

Today, Geely Automobile has mastered various skills, but the automotive race track has changed, and cars are increasingly resembling electronic products, with new energy vehicles gradually becoming the mainstream. The numerous brands and vehicle lines formed by Geely Group over the years have resulted in obvious waste of resources. In addition to the overlap of office facilities, R&D and design teams, and marketing resources, more importantly, there is the issue of "brotherly competition" - multiple brands using the same set of suppliers, maintaining several teams, and producing several competing products in the same market segment.

The effect of brand consolidation and cost reduction is immediate. For example, after integrating Zeekr and Lynk & Co, R&D investment in the first quarter of 2025 decreased by more than 20% year-on-year, and intangible management costs decreased even more significantly. After Zeekr is merged into Geely as a wholly-owned subsidiary, technology, supply chain, and R&D resources can be more deeply integrated, which will greatly enhance resource efficiency and reduce operating costs. In addition, the issue of "brotherly competition" between multiple brands is also solved, allowing for unrestrained efforts in new energy technology breakthroughs.

Stock Price Surge! Will Geely Adjust Its Plan for Zeekr Privatization?

By understanding the three "situations" that Geely must break, we can better comprehend the move to privatize Zeekr and some considerations at the specific operational level.

In addition to artificial intelligence and the chip industry, the automotive industry is becoming a key area for the United States to curb China's technological progress. In recent years, the United States has issued laws such as the Holding Foreign Companies Accountable Act, the Inflation Reduction Act, the Tariff Act, and the Data Privacy and Protection Act, greatly increasing the compliance costs for Chinese automakers in the US capital market. Moreover, to meet the disclosure requirements and regulatory standards of the SEC (U.S. Securities and Exchange Commission), Zeekr also needs to pay tens of millions of dollars annually for auditing, investor relations, and other aspects.

In 2015, there was a wave of privatization of Chinese concept stocks. At that time, many Chinese concept stocks listed on the New York Stock Exchange chose to privatize and delist due to the pressure of dealing with multiple audits and potential policy risks, and then returned to China to fight for A-shares or Hong Kong stocks, including Qihoo 360 and Focus Media, among others.

On May 7, 2025, Wu Qing, Chairman of the China Securities Regulatory Commission, also stated at a press conference held by the State Council Information Office: "We will create conditions to support high-quality Chinese concept stock enterprises to return to mainland and Hong Kong stock markets." This is likely the starting point of a new wave of privatization of Chinese concept stocks.

A friend from Geely Group's public relations department said: "The privatization and acquisition of Zeekr can be said to be a move in line with the trend after the major shareholder (Geely) assesses the situation. As the major shareholder holding 65.7% of Zeekr's shares, Geely Holding is fully capable of pushing this plan to a successful completion. The most important thing now is to give Zeekr owners and small and medium shareholders a good return. By making Zeekr owners and small and medium shareholders satisfied, we can accumulate long-term reputation and trust for Geely Group."

For Zeekr owners, Geely Group may further integrate offline store resources and offer sincerity in multiple aspects such as intelligent driving system upgrades, charging network layout, and user community services. For small and medium shareholders, Geely Group has provided two compensation methods: "cash payment" (US$2.566 per share or US$25.66 per ADS) and "exchange for Geely Automobile shares" (each ordinary share of Zeekr can be exchanged for 1.23 ordinary shares of Geely, and each ADR can be exchanged for 12.3 shares).

Outsiders have observed that Zeekr's stock price surged after the privatization announcement, indicating that small and medium shareholders hope to sell their shares at a higher price. In response, some financial experts said: "Geely Automobile may weigh the acquisition price (the non-binding offer letter submitted to Zeekr is not binding), or Zeekr may establish an independent director committee to hire a third-party institution (such as an investment bank) to assess the fairness, and Geely will adjust the plan accordingly to respond to the expectations of small and medium shareholders."

Big Moves Behind Integrating Zeekr

The privatization process of Zeekr does require Geely to pay a certain price, but Geely Group's determination to integrate brands and technology assets is very firm. Some believe that there are more important big moves behind this - the first step is the merger of Zeekr and Lynk & Co, the second step is the privatization of Zeekr, and the third step is the establishment of the Geely New Energy Automobile Group. But these are just forms; the focus is to reconstruct the technological moat in the new energy sector, and Geely Group has a sense of crisis about this.

At the 2024 financial report communication meeting, Gan Jiayue, CEO of Geely Automobile Group, said: "Whether it's new energy or fueled vehicles, Geely always believes that future power forms will be diversified. Fueled vehicles are the embodiment of technological accumulation in the automotive industry over the past hundred years, and the overseas fueled vehicle market still accounts for a relatively large proportion. The development of fueled vehicles is Geely's advantage, and Geely has the ability to make good fueled vehicles." Many senior executives of Geely also Outspoken that they will continue to invest in related research and development and equip intelligent cabins, intelligent driving, and other functions on fueled vehicle models.

It seems reasonable that Geely has not gone all-in on new energy vehicles like BYD. According to GlobalData, a total of 89 million vehicles were sold globally in 2024, which is obviously a stock market (or even a shrinking market) compared to the historical peak of 95.66 million sales in 2017. More importantly, only 22 million of the 89 million vehicles were new energy vehicles, and the average age of car owners replacing their cars in EU countries over the past year was 55, with a more traditional fueled vehicle selection preference.

However, since this year, BYD has shown off its strength in the three-electric field (bringing a 580kW super electric drive, multiple world's first megawatt flash charging, which can charge 400km in 5 minutes, as fast as refueling), followed by CATL releasing the second-generation Cinera supercharging battery (with a maximum charging power of 1300kW while also achieving a pure electric range of 800km). With such formidable competitors in the new energy sector, will fueled vehicles still have a chance in the future?

In 2025, Zeekr Technology Group's sales target is 740,000 vehicles, but only 23.28% of the annual sales volume has been completed so far, with the Zeekr brand's annual target completion rate being 17.19%, lower than Lynk & Co's 28.31%. If Geely does not take action, Zeekr may not be able to catch up. Slow moves lead to defeat.

Zeekr's core technological moat mainly relies on Geely's CMA architecture (a modular automotive platform that supports efficient research and development of multiple vehicle models). The Zeekr 001 benefits from Geely's intelligent driving technology. The top-tier H9 solution of the "Thousand Miles and Vast Expanse" intelligent driving system uses dual NVIDIA ThorU chips to support L3 autonomous driving. The Xingrui Intelligent Computing Center 2.0 ranks second globally in computing power, and the No-Map City NOA technology (an intelligent driving assistance that can achieve autonomous navigation within cities without high-precision maps) leads the industry. These have brought significant gross margin advantages to the Zeekr brand, with the gross margin of Zeekr's vehicle sales reaching 15.6% in 2024 and increasing to 17.3% in Q4.

Zeekr (or even Geely) has excellent intelligent technology, but its three-electric technology (batteries, motors, and electronic controls) is not yet top-notch. The most difficult and important aspect of Geely Group's integration of technology assets is the merger of component companies in the industrial chain. Among them, Wray Electric (a joint venture with Geely and controlled by Zeekr) mainly targets three-electric technology and has independently developed the Golden Brick Battery equipped in Zeekr models.

To cope with the imminent competitive pressure from BYD and others, Geely Group needs to focus on three-electric technology, but the relevant technology assets are in the hands of Zeekr. In 2024, Wray Electric contributed about 22.12% of Zeekr's revenue. Geely Group's integration of Wray Electric will inevitably have a significant impact on Zeekr's performance and market value, triggering regulatory requirements. Therefore, integrating Zeekr is just one step in Geely Group's reconstruction of its technology landscape, far from the end goal.

A new battle is unfolding, and Geely has filled in the shortcomings of its three-electric technology, forming full-stack competitiveness from intelligent driving to core hardware. But time is pressing, and the transformation must accelerate, as it concerns survival. This is just one part of Geely Group's response to the technological arms race among automakers, and the best is yet to come.