Author | Caijing New Media Writer Wang Jingya Editor | Gao Suying
Recently, it was reported that Geely's high-end electric vehicle brand Zeekr has restarted its initial public offering in New York, planning to raise up to $500 million. In response to the progress of the IPO, on April 11, ZEEKR responded to the author that ZEEKR has publicly submitted a prospectus to the US Securities and Exchange Commission, and the IPO is continuing to advance steadily.
Although ZEEKR, which is backed by Geely, has quickly emerged in the new energy vehicle market since its establishment in 2021, and has launched ZEEKR 001, ZEEKR 007, ZEEKR 009, and ZEEKR X models in just three years, the rapid development is also accompanied by high R&D costs and financial losses. According to the latest data, ZEEKR's cumulative R&D investment from 2021 to 2023 will reach 16.975 billion yuan, accounting for 18.84% of the cumulative revenue in the same period, and the cumulative loss has reached 20.4336 billion yuan.
In fact, the technology path of pure electric new energy vehicles determines that car companies need to invest a lot of money in research and development, and it is an important way to reduce costs or improve scale effects through self-development, or to achieve profitability. In order to compete for more market share, at the end of last year, the listing prices of ZEEKR 007 and 2024 ZEEKR 001 were lower than market expectations, and ZEEKR may have become one of the "volume kings" in the industry.
Sprint to IPO again
In the increasingly competitive market, as a high-end smart electric vehicle brand under Geely Holding Group, ZEEKR has once again stepped into the capital spotlight. According to the website of the U.S. Securities and Exchange Commission (SEC), ZEEKR has updated its prospectus on March 20.
In fact, ZEEKR's IPO in the United States has been in the making for a long time. As early as 2022, Geely Automobile (00175. HK) issued two announcements in a row to express its stance on this matter, of which in October it only proposed to spin off Zeekr, and in December it further proposed this spin-off action and listing plan. On August 25 of the following year, ZEEKR obtained the filing notice for overseas issuance and listing issued by the China Securities Regulatory Commission, and on November 9, New York time, ZEEKR submitted a registration statement to the US Securities and Exchange Commission.
However, just when the outside world was speculating about the listing time of ZEEKR, Lotus, another brand of Geely Group, was the first to land on the US stock market and began trading on the NASDAQ on February 23 this year.
A person close to ZEEKR told the author that the previous postponement of ZEEKR's listing may be related to profitability on the one hand, and on the other hand, it may be related to the internal coordination of Lotus to go public first.
ZEEKR is an important layout of Geely in the field of new energy vehicles. In 2015, Geely Group announced the "Blue Geely Initiative", which aims to account for more than 90% of Geely's overall sales of new energy vehicles by 2020. But this goal has not been achieved.
In 2021, Li Shufu said that Geely has formed two blue Geely action plans. The first is to focus on energy-saving and new energy vehicles, 90% of which are new energy hybrid vehicles, and about 10% are traditional energy-saving and small-displacement vehicles;
In March 2021, ZEEKR and Geely operated separately and achieved independence. In the following three years, ZEEKR launched a number of models, including ZEEKR 001, ZEEKR 007, ZEEKR 009, and ZEEKR X. Up to now, ZEEKR has delivered more than 230,000 units.
R&D costs are increasing year by year
Although it took less than three years from its establishment in 2021 to the submission of its prospectus in 2023, losses have always been an unavoidable topic.
Judging from the latest updated prospectus, ZEEKR's losses are still expanding. According to the data, in 2021, 2022 and 2023, the sales revenue of ZEEKR Automobile will be 1,544.3 million, 19,671.2 million and 33,911.8 million yuan respectively, corresponding to gross profit margins of 1.8%, 4.7% and 15.0%, the total revenue will be 6,527.5 million, 31,899.4 million yuan and 51,672.6 million yuan respectively, corresponding to gross profit margins of 15.9%, 7.7% and 13.3%, and the net loss will be 4,514.3 million, 7,655.1 million and 8,264.2 million yuan.
At present, there are not many car companies in the market that make pure electric models profitable, which makes it difficult for other manufacturers to make profits or is related to the technology model.
"The difficulty of making profits for new energy vehicle companies is determined by the technical path. The cost of new energy vehicles is higher, because the cost of three electrics, the cost of pure electric platform research and development, the cost of chips, lidar and other hard costs are very high. However, some hybrid models use gasoline vehicle technology to reduce costs, so it is easier to achieve profitability. Insiders of domestic new energy vehicle companies said.
The author noticed that in the past three years, the R&D expenses of ZEEKR have been increasing year by year. According to the prospectus, in 2021, 2022, and 2023, the R&D expenses of ZEEKR will be 3.160 billion, 5.446 billion, and 8.369 billion yuan respectively.
Part of the funds raised from the proposed listing will also be used for research and development. ZEEKR told the author that the raised funds will be mainly used in three aspects. Approximately 45% will be used for the development of more advanced BEV technologies and the expansion of the product portfolio, approximately 45% will be used for sales, marketing and expansion of the service and charging network, and approximately 10% will be used for the company's day-to-day operations to support the company's business growth.
It is worth noting that after the new energy vehicle industry realizes electrification, intelligent technology represented by autonomous driving has become the focus of industry competition.
At present, many car companies such as Xpeng, Xiaomi Automobile, Wenjie, Ideal, and Weilai are accelerating the expansion of urban intelligent driving coverage, but the progress of ZEEKR is relatively slow. However, ZEEKR is still increasing investment. ZEEKR told the author that aiming at the field of autonomous driving, ZEEKR plans to expand the scale of the intelligent driving team, which will exceed 2,000 people this year. In terms of technical path, while cooperating with Mobileye, we insist on the research and development of Haohan intelligent driving.
"Volume" prices compete for market share
Since the end of last year, the price war in the new energy vehicle industry has intensified, and many models have been remodeled and reduced in price. When the author visited the market, I found that the prices of the new models of ZEEKR 001, DENZA N7 and AVATR 12 have been lowered compared with the starting prices of the old models.
Among them, the starting price of the whole series dropped to 265,800 yuan after the Denza N7 dropped by 32,000 yuan to 62,000 yuan, and the AVATR 12 added an entry-level model, which was 35,000 yuan lower than before. In addition, while adding a new model, the starting price of the model has also been reduced by 20,000 yuan.
In the context of such a fierce price war, ZEEKR is also competing for price. At the end of last year, the ZEEKR 007 with 800V architecture was launched, with a starting price of 209,900 yuan. The starting price of the 2024 ZEEKR 001, which will be launched this year, will be directly lowered by 31,000 yuan to 269,000 yuan compared with the old model, and the launch prices of both models are lower than market expectations.
ZEEKR told the author that the reason why the new ZEEKR 001 and ZEEKR 007 can bring down the price is that on the one hand, it is to strengthen the vertical integration and ecological collaboration of the industrial chain, and on the other hand, it is to reduce the cost brought by self-developed new technologies, such as all the algorithms and software of the new ZEEKR 001 dual-cavity air suspension are independently developed by ZEEKR, and in the past, these need to be purchased independently from professional manufacturers;
"Expanding the scale, or taking the self-development route to reduce costs is an important way for car companies to achieve profitability. The above-mentioned domestic new energy vehicle company insiders further said. Judging from the performance of ZEEKR, by increasing self-research and replacing external procurement with its own technology, it may be an important way for ZEEKR to reduce costs.