Chinese mobility behemoth Geely is on the prowl for new markets for its electric vehicles (EV). Its premium EV brand, Zeekr, recently filed for an IPO in the US which is likely to take place in Q2, 2023.
Geely owns a clutch of premium EV brands, besides Zeekr. These include electric performance car brand, Polestar, which Geely founded with Swedish automaker Volvo as well as iconic British sports car brand, Lotus. Zeekr has a more recent pedigree – it was started only in 2021 – and targets a younger, more tech-forward, customer cohort. The company’s current portfolio includes the 001, an electric wagon, and the 009 electric passenger minivan which was unveiled in November 2022.
With its US IPO, Zeekr is hoping to follow in the footsteps of its Chinese rivals, Nio, Li Auto, and Xpeng each of whom raised over $1 billion in funding while going public during 2018-2020. A successful US IPO will allow Zeekr to fuel its entry into the European market in 2023, where the company plans to sell its 001 electric wagon. These European ambitions follow on the back of its solid performance in the domestic Chinese market where, according to the China Passenger Car Association, Zeekr sold around 60,000 cars over January-September 2022. Although falling well short of the sales of BYD’s Qin Plus and Tesla’s Model Y, it still represents a great start by a relative neophyte in the world’s largest EV market and will provide a shot in the arm to Zeekr’s plans for geographic expansion.
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Strong Showing by Domestic Brands
Chinese EV manufacturers have cut their teeth in China’s high growth, hyper aggressive EV market. Over 2020-2021, EVs experienced a 167.4% growth rate, battery electric vehicles (BEV) sales in particular, increased 173.4% year-over-year. A dominant strand of this narrative were the sales of domestic passenger vehicle brands which rose 23.2% year-over-year and accounted for 44.4% of total passenger vehicle sales in 2021.
Companies like Tesla, XPeng and Li Auto have reinforced powertrain transformation even as NIO’s battery swap and new business models like battery-as-a-service (BaaS) have energized the market.
The story of the Chinese EV juggernaut is really the story of the coming of age of Chinese domestic brands. Today, EV sales power traditional Chinese automakers. For instance, in 2021, EVs accounted for 0.6 million units out of BYD’s total sales of 0.7 million units and 0.5 million units out of SGMW’s total of 1.1 million units EV. Domestic Chinese OEMs accounted for 70% of the new EV models launched in China in 2021.
Our Perspective
Zeekr’s European ambitions reflect how Chinese EV automakers are increasingly flexing their muscle on the international stage. Drawing on their early mover advantage, these OEMs have already been blooded in China’s high intensity EV battleground. While vehicle design and quality specs are continually improving, the ability to scale up together with volume production mean that Chinese OEMs are cost competitive. Innovations—whether in terms of battery swapping technology or vehicle architecture like Geely’s highly flexible, Sustainable Experience Architecture (SEA) that is being deployed in Waymo’s autonomous commercial robotaxi—highlight the advanced technological competencies of Chinese automakers.
Indeed, the ability to rapidly incorporate cutting edge technologies, including connectivity and autonomy, into electrified vehicles will underline the global appeal of Chinese EVs, particularly with tech-savvy younger customers. Zeekr is collaborating with Mobileye on L4 autonomous driving. A continuous stream of new electric models, compatible both with traditional charging and new battery swapping technologies, and the incorporation of innovative features will underline performance improvements.
Prospects for global growth will reinforced by a strong supply chain. This is in contrast to car manufacturers elsewhere in the world who have struggled with volatile supply chains and reduced parts supply.
In China, domestic EV OEMs will continue to grow, driven by demand for newly launched models. Adoption rates in Tier I and Tier II cities in the country will pick up pace. Over the next two to three years, we will see more Chinese OEMs introduce and mass produce passenger vehicles with connected and autonomous driving applications. By 2025, these capabilities will be available at competitive prices and are set to make a smooth transition from domestic Chinese to international markets.
Companies like BYD, Nio, Great Wall Motors, and XPeng are already ramping up their European presence. German car rental company Sixt recently announced that it would be ordering 100,000 EVs from BYD by 2028.
It will not too long before the Chinese EV juggernaut rolls its way onto the global stage.
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