On the one hand, Wall Street capital has welcomed the listing of China's new car-making forces with great enthusiasm, and this year they have welcomed the IPOs of Lotus and Zeekr, both Geely, and on the other hand, the American political circles have closed the doors of Chinese electric vehicles with the same enthusiasm and firm determination.
Text丨Zhijia.com Li Muyu
Edit|Langlang Mountain and Mingzhi Mountain
On May 10, while the senior management of ZEEKR and Geely was ringing the bell on Wall Street, the four models of ZEEKR 009, ZEEKR 01, ZEEKR 07 and ZEEKR X were placed in front of the New York Stock Exchange at 18 Broadway Avenue in New York, New York, USA.
In contrast to the warm atmosphere in the house, the American automotive industry media confirmed at the same time that these four models will officially be out of the US market in the short term.
Tim Levine, a reporter for InsideEV, an American electric vehicle media outlet, wrote in the article "The Automotive Cold War Has Officially Begind":
Today, two notable things are happening in the field of electric vehicles. First, Geely's Chinese electric vehicle brand Zeekr is listed on the New York Stock Exchange at a valuation of about $500 million. Then, about 2 miles south of Washington, D.C., news broke that the Biden administration would triple tariffs if Chinese-made electric cars were to be driven on American roads.
The timing may be pure coincidence. But after this week, one thing is clearer than ever: the automotive cold war between China and the West is in full swing, and electric vehicles in particular are at the center of it all.
The Wall Street Journal confirmed in its report that the White House plans to announce higher tariffs on Chinese new energy vehicle imports in the coming days. Anonymous sources told the outlet that under the new policy, tariffs on electric vehicles in China will quadruple, from the current 25% to a staggering 100%.
At present, the most likely way for ZEEKR to enter the US market is the driverless car that it is cooperating with Waymo, and ZEEKR will enter the US market by providing automotive hardware.
It's a strange scene.
On the one hand, Wall Street capital has welcomed the listing of China's new car-making forces with great enthusiasm, and this year they have welcomed the IPOs of Lotus and Zeekr, both Geely, and on the other hand, the American political circles have closed the doors of Chinese electric vehicles with the same enthusiasm and firm determination.
▲ New York Stock Exchange trading floor
But what is even more paradoxical is that under the impact of such a black swan event, Zeekr jumped from the issue price of $21 to the opening price of $26 on the opening day of its listing on the New York Stock Exchange, and then continued to rise all the way, finally closing at $28.26, with a market value of $6.898 billion (about 49.85 billion yuan), close to the $7.3 billion of Xpeng Motors.
Obviously, Wall Street Capital believes that even without the US market, the future of China's electric vehicles is also promising.
ZEEKR is listed on the New York Stock Exchange under the ticker symbol "ZK". Due to the oversubscription, ZEEKR expanded the size of the IPO, issuing a total of 21 million American Depositary Shares (ADSs, each ADS corresponds to 10 ordinary shares) at a price of US$21 per share, raising approximately US$441 million, and if the underwriters exercise their over-allotment rights, the issuance size will be further expanded to 24.15 million ADSs, raising approximately US$507 million.
In addition, the underwriters of this offering mainly include 12 of the most well-known institutions in China and the United States, including Goldman Sachs, Morgan Stanley, BofA Securities, and CICC.
This so-called automotive cold war is irrelevant.
In fact, two days before the bell rang for Zeekr, on May 8, U.S. Commerce Secretary Raimondo told Reuters that the U.S. might take "extreme action" to ban or impose restrictions on the import of Chinese connected cars. Reuters said in a report that this is the first time that the United States may issue a ban after U.S. President Joe Biden announced an investigation into China's connected cars in February.
On Feb. 29, Biden ordered an investigation into Chinese-made connected cars, citing "potential national security risks." According to the procedure, the U.S. Department of Commerce will solicit opinions on the so-called "potential risks" of China's connected cars within 60 days.
Raimondo told Reuters on May 8 that the Commerce Department was reviewing public comments submitted by April 30 and that "we have to digest all the data and then decide what we want to do."
In fact, compared with the 100% tariffs that may come from the United States, the listing of ZEEKR has brought warmth to both the capital market and China's auto start-up team.
For now, Wall Street is still the most optimistic capital market in the world for China's new automakers, and has so far achieved the listing of five Chinese start-up car companies, including Wei Xiaoli, Lotus and Zeekr.
▲ZEEKR CEO An Conghui exchanged listing commemorative gifts with the chairman of the New York Stock Exchange on behalf of ZEEKR
But it's a little regrettable that these five companies only raised money in the United States, but failed to achieve the landing of products in the United States.
In addition, the outside world calls the IPO of ZEEKR a lightning IPO, on the one hand, it is that ZEEKR itself has refreshed the fastest listing record in the history of new energy vehicles, and it took only 37 months from the release of the ZEEKR brand in 2021 to the successful IPO. In comparison, Tesla took seven years, and Xpeng, Ideal, and NIO used six, five, and four years, respectively. If ZEEKR announced its spin-off and listing in 2022 to its listing application in the United States in November 2023, followed by a suspension announced a month later, and then restarted its listing in less than half a year, its listing speed can almost be described as legendary.
On the other hand, it has seized the rare rebound in Chinese concept stocks for the first time in four years, which is behind the mainland's GDP growth of 5.3% in the first quarter and the high global attention to China's smart electric vehicles driven by the Beijing Auto Show.
And this kind of rapid listing has also caused a lot of damage to the first-tier investors of ZEEKR, that is, the IPO valuation is nearly 50% lower than the valuation of the last round of financing in February 2023, when the valuation of ZEEKR was $13 billion.
But this kind of operation also has a last resort for ZEEKR.
According to the data released in the prospectus, ZEEKR's revenue in 2021, 2022, and 2023 will be 6.528 billion yuan, 31.899 billion yuan, and 51.673 billion yuan respectively, although the compound annual growth rate is as high as 181.4%, but the net loss of ZEEKR in the same period will reach 4.363 billion yuan, 7.924 billion yuan, and 8.347 billion yuan respectively, with a cumulative loss of more than 20 billion yuan in three years.
As of the end of 2023, the amount of cash and cash equivalents of ZEEKR will be 3.26 billion yuan, which can hardly cover the research expenses of ZEEKR that are growing every year: from 2021 to 2023, ZEEKR's R&D expenses will be 3.160 billion yuan, 5.446 billion yuan, and 8.369 billion yuan respectively, with a year-on-year increase of more than 50%.
Selling electric vehicles is not profitable, and it is not sustainable for a start-up company backed by a large company like Geely.
However, judging from the enthusiasm of international capital for ZEEKR subscription and the rising trend of the day, ZEEKR opened high and went high, which greatly boosted morale.
ZEEKR is a company born with a golden spoon, and the initial investors have the support of well-known industrial capital and well-known institutions and people such as CATL, Intel, Boyu Capital and Mobileye founder Amnon Shashua.
However, for the successful listing of ZEEKR, a figure that makes Zhijia.com quite embarrassed is that the IPO of ZEEKR is the largest IPO of a Chinese company in the United States since Didi raised $4.4 billion in 2021.
Compared with the $441 million raised by ZEEKR, the scale has shrunk by 90%, and in the past four years, the temperature of China and the United States in the capital market has changed greatly, and ZEEKR's feelings can be said to be a witness to the warmth and coldness of Chinese and American capital.
And if you consider that when Lotus went public in February this year, it had already created the largest IPO of Chinese concept stocks listed in the United States since 2021, which is even more emotional.
The Didi incident was indeed a watershed moment.
At present, there are as many as 9 listed companies under Li Shufu: Geely Automobile, Volvo, Polestar, ECAR, Qianjiang Motorcycle, Hanma Technology, Lifan Technology, and Lotus.
And on April 29 this year, that is, 12 days ago, Cao Cao submitted a prospectus to the Hong Kong Stock Exchange.
If all goes well, Li Shufu will be the tenth listed company this year.
Li Shufu, who did not show up at the Beijing Auto Show, is already a well-deserved capital master in the Chinese market.
At a media conference in Beijing earlier this year, An Conghui said: "Geely's goal is to become a Volkswagen group in the new energy era. ”
With the launch of ZEEKR, this goal can be said to have gone further.
It's just that I'm afraid to be serious about everything.
In the four years that Geely has been listed in recent years, Polestar, ECARX and Lotus have all started high and gone low.
In fact, when Polestar and Lotus were listed, they once surpassed or approached the market of Geely Automobile, and it was also higher than NIO and Li Auto.
But today's situation is not optimistic, and so far no company has a market value comparable to NIO's $10.636 billion and ideally $28.318 billion.
Geely's extra children are good to fight, and the current sales are optimistic brands, and only the Zeekr and Galaxy series are on the rise.
Lotus and Polestar, and even ECARX are on the verge of widening losses.
At the highlight moment when he is about to hold 10 listed companies, Li Shufu bears huge debt risks, and only he knows the sweets and pains behind them.
And whether it can break the game, ZEEKR obviously bears more expectations.
▲Signature of the commemorative book of the listing
As for when ZEEKR will make a profit, ZEEKR CEO An Conghui said last year that in 2024, ZEEKR will complete the goal of annual sales of 230,000 vehicles and achieve profitability that year.
For the funds raised for the listing of ZEEKR, its official plan is to mainly use it for R&D, products, and channels, adhere to direct sales, and adhere to the self-built energy supplement system. Approximately 45% of this 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 general corporate purposes, including working capital needs, to support business operations.
At the same time, it is listed at this time, which is conducive to further opening up the overseas market of ZEEKR after the Beijing Auto Show.
▲ Idekai
ZEEKR has formulated the development strategy of "one vertical and one horizontal globalization", vertically strengthened the vertical integration of the industrial chain, horizontally strengthened ecological synergy, and laid out the world's only "three 800" ultra-fast charging full ecological solutions, including 800-volt vehicles, 800-volt electricity (power batteries), and 800-volt networks (energy replenishment networks).
Its model design fully considers the industry standards and user needs of major markets around the world, and the vast architecture meets the most stringent five-star safety standards in China, the United States, Europe and other countries around the world, and ZEEKR 001 and ZEEKR X have obtained the safety certification of the European Union and the United Nations, and are the first to start sales and delivery in developed countries in Europe.
In 2024, ZEEKR will not only enter the luxury market of 8 European countries, but also enter the markets of 50 countries and regions such as Southeast Asia, the Middle East, South America, and Australia, and its globalization strategy is accelerating in an all-round way. As of the end of April, ZEEKR has built nearly 380 stores around the world.
The downside is that the U.S. market is indeed becoming distant, on the other hand, Zeekr is facing competition within the group, with internal resources such as Polestar, Volvo, Galaxy, and Tesla, as well as a large-scale attack by NIO, Xiaomi, and Huawei.
Geely's global resources can help ZEEKR quickly connect with overseas markets.
Going to sea is a means for ZEEKR to get rid of involution.
Since its establishment more than three years ago, ZEEKR has launched five new models: hunting coupe ZEEKR 001, high-performance version of pure electric hunting supercar ZEEKR 001 FR, pure electric luxury MPV ZEEKR 009, four-seat ultra-luxury flagship MPV ZEEKR 009 Guanghui, SUV ZEEKR X, pure electric luxury sedan ZEEKR 007, and the family full-scene large five-seat ZEEKR MIX, which has just made its world debut at the Beijing Auto Show. In 2024, ZEEKR will also launch a new medium and large electric SUV.
As of the end of April 2024, ZEEKR has delivered more than 240,000 vehicles, and from January to April this year, a total of nearly 50,000 units have been delivered, more than doubling year-on-year.
ZEEKR's revenue consists of a diversified revenue structure composed of vehicle sales, three-electric business, R&D and other services.
This kind of diversified revenue is a major feature that distinguishes ZEEKR from other new car brands, and a large part of it comes from intellectual property rights.
According to data, in the first half of this year, the revenue outside of ZEEKR accounted for 38% of the total revenue, including the intellectual property income shared by SEA's vast architecture to other vehicle companies. Brands currently equipped with this architecture include Smart, Geely Galaxy, and Jiyue, which is jointly launched by Geely and Baidu.
Another thing that makes the capital market optimistic about ZEEKR is that in 2021, the first year of the release of the ZEEKR brand, the gross profit margin of ZEEKR vehicles will be positive, reaching 15% in 2023, an increase of 10.3 percentage points year-on-year from 4.7% in 2022.
This is also the reason why we are optimistic about ZEEKR for a long time.
Regarding the drag on profitability from the continuous huge R&D investment, An Conghui previously said, "Geely Holding Group's multi-brand strategic advantages can achieve manufacturing synergy and maximize production capacity; In addition, thanks to the platform strategy of Haohan Architecture, brands can form a large-scale effect through joint procurement, and the manufacturing cost will also be advantageous. ”
▲An Conghui at the listing ceremony of ZEEKR New York Stock Exchange
Of course, Geely is a domestic car company that will have more children and fight to the extreme, this advantage and how to coordinate the internal competition is An Conghui and Geely Group boss Li Shufu need to seriously consider the problem at the moment, only every child grows up healthily, it is possible to become the public in the new energy era.
But again this is almost impossible.
For ZEEKR, its first goal at the moment is to achieve the goal of selling 650,000 units in 2025 after its launch.
So will the Sino-US automotive cold war affect Geely's chess game?
Let this black swan fly for a while.
The complexity of China and the United States is vividly illustrated in the drama of the almost simultaneous occurrence of the ZEEKR IPO and the tariff stick. The Beijing Auto Show has shown that the world's auto industry is inseparable from China's intelligent electric vehicle industry chain.
The story is still in progress.