Author|Zhang Yu
Editor|Yang Bocheng
IC Photo
Geely Automobile's new electric vehicle brand, Zeekr, has restarted its shelved listing plans.
According to the website of the U.S. Securities and Exchange Commission (SEC), ZEEKR has updated its prospectus on March 20. According to reports, ZEEKR plans to land on the New York Stock Exchange, and the IPO fundraising target has been significantly lowered to a maximum of $500 million, far lower than the previous target of more than $1 billion. In response, ZEEKR responded that the company has filed with the U.S. Securities and Exchange Commission (SEC) and is making preparations.
In fact, ZEEKR's listing plan has been in the making for a long time. In September 2020, Geely Automobile officially launched an attack on the "first stock of vehicles on the Science and Technology Innovation Board", and according to the purpose of the raised funds, it mainly includes new car product research and development, forward-looking technology research and development projects, industrial acquisition projects and supplementary working capital. Obviously, at that time, Geely Automobile was already actively preparing and planning for the establishment, R&D and development of Zeekr.
However, Geely Automobile finally stopped on the eve of listing, due to the tightening of the IPO policy of the Science and Technology Innovation Board, Geely Automobile withdrew its application for IPO and listing on the Science and Technology Innovation Board in June 2021, and announced that it would explore different external financing options to achieve the sustainable development of Zeekr.
ZEEKR has also officially embarked on the road of independent listing. In December 2022, Geely Automobile announced that it proposed to spin off ZEEKR and list it independently, and ZEEKR submitted a draft registration statement for a possible initial IPO to the SEC on a confidential basis on December 7, New York time.
In November 2023, ZEEKR publicly submitted an IPO prospectus to the U.S. Securities and Exchange Commission, planning to list on the New York Stock Exchange and intend to issue no more than 926 million shares of common stock. However, ZEEKR then temporarily shelved its plan to go public in the United States, and chose to continue to observe the market situation before making a decision.
On the one hand, the listing of ZEEKR can greatly alleviate the financial pressure of Geely Automobile and open up new financing channels, and on the other hand, in the case of increasingly fierce competition, listing can be exchanged for funds, brand influence and other chips, so as to seize the opportunity in the next game.
01. A huge loss of 20 billion yuan in three years
Founded in March 2021, ZEEKR is regarded as a new fulcrum for Geely Automobile to leverage the new energy vehicle market, and at the same time bears the heavy responsibility of Geely Automobile to achieve a high-end strategy, but since its establishment, ZEEKR is still mired in losses.
Judging from the updated prospectus, ZEEKR's losses are still expanding. From 2021 to 2023, ZEEKR's total revenue will be 6,527.5 million, 31,899.4 million and 51,672.6 million yuan respectively, and its net loss will be 4,514.3 million, 7,655.1 million and 8,264.2 million yuan respectively, with a total of more than 20 billion yuan in three years.
Source: ZEEKR prospectus
Although the total revenue shows a continuous growth trend, from the perspective of profitability, ZEEKR's net profit margin in 2023 will be -15.99%, which is up from -24.00% in 2022, but the net profit margin in the fourth quarter of 2023 will be -17.96% again, which means that its profitability is showing signs of decline.
From 2021 to 2023, the revenue of the automobile business will be 1,544.3 million, 19,671.2 million and 33,911.8 million yuan respectively, and the corresponding gross profit margin will be 1.8%, 4.7% and 15.0% respectively.
Although the main business continues to improve and various performance indicators improve, ZEEKR is still mired in huge losses, and one of the important reasons points to the fact that its R&D expenses are increasing year by year. According to the prospectus, from 2021 to 2023, the R&D expenses of ZEEKR will be 3.160 billion, 5.446 billion, and 8.369 billion yuan respectively.
Before hitting the capital market, ZEEKR had completed a $500 million Pre-A round of financing in August 2021, with investors including Intel Capital, CATL, Bilibili, Hongshang Group and Boyu Investment, with a post-investment valuation of $8.928 billion, and in February 2023, ZEEKR announced the completion of a $750 million Series A financing, which was led by Amnon Shashua, founder and CEO of Intel's Mobileye, CATL, Yuexiu Industrial Fund, Commerce Fund, Quzhou Xin'an Intelligent Manufacturing Fund participated in the investment, with a post-investment valuation of US$13 billion.
As of the end of 2023, ZEEKR's cash and cash equivalents are only 3.3 billion yuan, which can only last for half a year based on the current annual loss of 8.3 billion yuan.
An Conghui, President of Geely Holding Group, Chairman of Geely Automobile Group, and CEO of ZEEKR Intelligent Technology, said: "In 2024, ZEEKR will also launch three new products, and is full of confidence in the annual delivery target of 230,000 units.
The need to launch new vehicles and expand sales on the other hand means that if it cannot be listed in time to raise funds, the continued operation of ZEEKR will face serious challenges.
02. The "price war" is intensifying
Since entering 2024, the "price reduction tide" of new energy vehicles has been wave after wave.
On February 19, BYD took the lead in sounding the horn of "price war", and the starting price of its Qin PLUS Glory Edition and Destroyer 05 Glory Edition was reduced to 79,800 yuan, and shouted the slogan of "electricity is lower than oil".
Since then, SAIC-GM-Wuling, Changan Automobile, Nezha Automobile, Leapmotor, Tesla, Geely Automobile, Xiaopeng Motors, Wenjie, etc. have followed suit, or directly reduced prices, or given time-limited preferential policies, with price reductions ranging from 5% to 15%, and price reductions ranging from thousands of yuan to tens of thousands of yuan.
ZEEKR was also involved in this unusually tragic price war. On April 1, the ZEEKR 007, which is equipped with an 800V voltage platform as standard, launched a rear-wheel drive enhanced version with a price of 209,900 yuan, while the starting price of the 2024 ZEEKR 001 was directly reduced by 31,000 yuan to 269,000 yuan compared with the old model, and the listing prices of both models were lower than market expectations.
"Through rapid product iteration, new electric vehicles promote the high-end of the brand, continuously improve product configuration and battery life under the premise of unchanged or even slightly reduced prices, and improve users' cost-effective feelings with product strength. Overall, 2024 is a critical year for new energy vehicle companies to gain a firm foothold, and the competition is destined to be very fierce. Cui Dongshu, secretary general of the passenger association, said.
Some people in the industry believe that the price war in the absence of a scale effect will lead to the continuous expansion of the losses of new energy vehicle companies, as the price war intensifies, the competition in the new energy vehicle industry continues to intensify, and the development of new energy vehicle companies will be full of difficulties and obstacles.
But there are also those who hold the opposite view, "The price war in the industry may not be entirely a bad thing." A person in the new energy vehicle industry told DoNews, "behind the price war is actually the competition of core technology, scale, supply chain and cost control, etc., the fundamental reason for the price war is that the comprehensive strength is not as good as that of competitors, which will force the comprehensive development of new energy vehicle companies, and continue to improve in technology and services, and the real strength of new energy vehicle companies will smoothly enter a new stage of development."
As more and more new energy vehicle companies are involved in the "price war", the industry competition pattern will become complicated, and for ZEEKR, improving technology, supply chain and cost control will be its most challenging topic in 2024.
03. ZEEKR is in a brand crisis?
In the critical period of impacting the capital market, ZEEKR has encountered "brand crises" one after another.
In March 2024, at an auto show in Nanjing, a ZEEKR X show car accidentally started during the user experience, causing injuries to 5 visitors and damage to vehicles at adjacent booths. In this regard, ZEEKR said that after self-inspection, it was confirmed that due to the management error of the exhibited vehicles, the show car did not turn on the show car mode according to the regulations, and was in the parking comfort mode and the car key was within the effective use range. At present, ZEEKR has urgently started self-inspection of exhibition vehicles nationwide to avoid similar risks.
In fact, this is not the first time that a similar accident has happened to ZEEKR. In June 2023, the display vehicle of ZEEKR in a shopping mall in Xiamen, Fujian Province, was driven by a boy, and collided with the escalator of the mall after driving out of the booth, but fortunately there were no casualties.
The events that plunged ZEEKR into a brand crisis did not stop there. In February 2023, ZEEKR held a face-to-face live broadcast of car owners, and said that users were welcome to complain and interact during the live broadcast, but when some ZEEKR owners enthusiastically expressed their opinions, they unexpectedly found that they were banned.
It was originally an activity to promote communication between ZEEKR and car owners, but unexpectedly, it brought a completely opposite effect. A large number of ZEEKR car owners have questioned ZEEKR's behavior of deceitful users to place orders, unilaterally change contracts and related commitments on major social platforms.
Not only that, on short video platforms such as Douyin, there are also related video content such as "ZEEKR 001 false publicity, order fraud, and defective products". In response to various accusations, ZEEKR responded that ZEEKR will reserve the right to pursue relevant legal responsibilities for the use of content that is inconsistent with objective facts to mislead the public and cause damage to ZEEKR's reputation.
It is also worth noting that on the consumer complaint platform Black Cat Complaints, the number of related complaints is as high as 1060 with "Extreme Krypton" as the keyword, including "false publicity", "quality problems", "non-refundable deposits" and so on. It can be seen that ZEEKR has been in a brand crisis for a long time.
In the case of increasingly fierce competition in new energy vehicles, the impact of word-of-mouth is extremely far-reaching, for ZEEKR, we should not only think about the pursuit of sales and status, but should think about how to improve the quality of vehicles and service quality, if the reputation collapses, then the future of ZEEKR will be difficult to be optimistic.