Source | Bohu Finance (bohuFN)
Author | Chen Ping'an
On the morning of May 10, U.S. time, ZEEKR officially landed on the New York Stock Exchange with the stock code "ZK", opening at $26 on the first day and closing at $28.26 per share, with a total market value of $6.898 billion (about RMB 50 billion).
This is also the ninth listed company under Geely's founder Li Shufu.
As one of the top three independent car manufacturers, Geely's voice is far inferior to that of its peers BYD in the wave of new energy car manufacturing in full swing in China. However, in terms of the wide range of investment layout, Geely should be regarded as the first independent manufacturer in China: satellites, mobile phones, chips, battery operating systems, computing platforms, etc.
Geely's actions in the capital market are also frequent. In the second half of 2022, Volvo's high-end electric vehicle brand Polestar landed on NASDAQ, followed by ECARX, an automotive intelligent solutions company, which also went to the United States to ring the bell. Earlier this year, Lotus went public in the United States through a SPAC (Special Purpose Acquisition Company).
This time it was the turn of Extreme Krypton.
Many media invariably used the word "fast" when reporting on the listing of ZEEKR. This fast manifests itself on multiple levels.
For example, in terms of delivery, as of December 31, 2023, ZEEKR has delivered a total of 196633 vehicles, which is one of the fastest brands in China's high-end pure electric vehicle market from October 2021 to December 2023. In April this year, ZEEKR delivered more than 16,000 units, a year-on-year increase of 99%.
Reflected in the financial report, in the past three years, the revenue of ZEEKR was 6.528 billion yuan, 31.899 billion yuan, and 51.7 billion yuan respectively, and the gross profit of the whole vehicle has also increased from 1.8% in 2021 to 15% in 2023.
For another example, from the brand launch to the successful listing, it took only 37 months for ZEEKR, and it took 4 years for NIO, the fastest new car-making force to go public.
Of course, this kind of speed is inseparable from the investment of internal resources of the group, from the allocation of founders to R&D resources, dealer models to energy replenishment facilities, Geely has almost put the best of Zeekr. An Conghui, CEO of ZEEKR, said that the ZEEKR products we see are not purely created by the ZEEKR team in three years, but are built on Geely's long-term accumulation and investment in the field of car manufacturing for more than 30 years, relying on system strength to get to where it is today.
An Conghui once said that Geely Holding Group wants to become a Volkswagen Group in the era of new energy vehicles, and as Geely's trump card of high-end pure electric vehicles, Zeekr must be the one that needs to make a big contribution. From a valuation of $13 billion after Series A financing to a maximum market value of $5.2 billion for listing, this is obviously not the best point in time. However, with the escalation of industry competition, ZEEKR not only needs to alleviate its financial pressure through listing, but also can leverage its strength to expand its overseas popularity and seek more possibilities.
01 Hope for the whole village
If you want to use one word to describe the status of Zeekr within Geely, the hope of the whole village must not be exaggerated.
The wave of new energy, Geely is not without. As early as 2015, Geely put forward the "Blue Geely Action Plan", announcing that by 2020, new energy vehicle sales will account for more than 90% of overall sales, and launched its first new energy vehicle, the Emgrand EV, that year.
That year, Tesla sold 76,000 new energy vehicles and Geely sold 49,000. However, at that time, Geely's fuel cars were selling hotly, and at the same time, the cost of electric cars was too high, and the battery pack of 40 degrees alone could buy an Emgrand, and it was obviously not cost-effective to switch to electric cars on a large scale.
Until 2020, the domestic Tesla detonated the market. Subsequently, Geely released version 2.0 of the "Blue Action Plan", which targets both hybrid and plug-in hybrid vehicles, as well as pure electric smart vehicles. The former includes brands such as Emgrand and Lynk & Co, while the latter has handed over the heavy responsibility to ZEEKR.
As Geely's No. 1 project, ZEEKR was originally just a pure electric division under Lynk & Co. After the establishment of the brand, Geely's resources began to rapidly tilt towards ZEEKR, not only led by Li Shufu, founder of Geely Holding Group, and An Conghui, president of Geely Holdings, but also Zero Concept, which originally belonged to Lynk & Co, was transformed into ZEEKR 001.
The three electric technologies are also all from Geely's accumulation.
In 2021, Geely Group transferred 51% of the equity of Ningbo Weirui and the entire equity of CEVT to ZEEKR. The former's main business includes the sale of hardware such as battery packs and energy supplement business such as charging piles, while the latter provides software technical services.
Ningbo Weirui undertakes most of Geely's brands, such as Lotus, Polestar, Lynk & Co, Galaxy and other needs. In 2022, Ningbo Weirui's gross profit will be 1.17 billion yuan, which is more than selling cars.
CEVT is even more significant. The full name of CEVT is Geely Central Europe Automotive Technology Center, from which the core SEA architecture of ZEEKR comes from. The significance of the architecture is to reduce the cost of the entire process from development to production by fixing certain important parameters, so that parts can be shared between different vehicle models.
Geely's official statement is that the SEA architecture "took four years of research and development and spent 18 billion yuan". But with the help of Geely, Zeekrypton became the one who picked peaches. In 2020, CEVT's revenue accounted for nearly 4% of ZEEKR.
Extreme Krypton is equivalent to fighting a novice village with top-level equipment.
Service and after-sales service have also been pulled to the top by Geely. As of December 31, 2023, ZEEKR has 24 ZEEKR centers, 240 ZEEKR spaces, 31 ZEEKR delivery centers and 45 ZEEKR houses. At the same time, ZEEKR has also established 882 charging stations in more than 130 cities in China, and based on the support of third-party charging stations, it has covered about 610,000 charging piles in more than 340 cities in China.
For consumers, the goodwill towards ZEEKR may come more from that chip replacement. After the delivery of ZEEKR 001, it was repeatedly complained about because of car problems, and then the official paid 300 million yuan out of his pocket to replace the 8155 chip for the owner for free.
This event also established the status of the ace of ZEEKR 001 sales: after the facelift this year, the new 001 still serves as the main sales force, with a large price of nearly 40,000. At present, ZEEKR has grown into the first place in the sales of more than 200,000 domestic pure electric models.
02 How to tell the story after independence
ZEEKR CEO An Conghui set ZEEKR's future goals as "sales of 650,000 units by 2025" and "the top three global luxury electric vehicle brands".
For ZEEKR, such a goal is obviously daunting.
For a long time, the focus of Zeekr's propaganda was on safety and control.
On the one hand, this is because the capabilities of their own intelligent cockpits are indeed inferior to those of their competitors. Although he paid out of his own pocket to replace the chip for free that year and won full applause, users who choose ZEEKR often do not rush to the cockpit and intelligent driving.
On the other hand, due to the frequent reports of accidents and the chassis is the shortcoming of many peers, it is indeed a good choice to focus on safety and driving experience in marketing.
However, when the industry enters the second half of intelligence, intelligent driving and intelligent cockpit have increasingly become the key factors affecting users' car purchases. The most typical example is Huawei's question, and Tesla's stock price has also risen sharply because of the news of FSD's entry into China. ZEEKR needs an intelligent label to boost sales.
Although the emphasis on intelligence is enough to put in place, not only the core personnel of the former Huawei autonomous driving department have been poached, the new model ZEEKR 007 has performed well in automatic parking, high-speed NZP, etc., and executives have also frequently spoken out on social platforms, saying that the intelligence of ZEEKR has been in the first echelon of the industry, but the public's impression of ZEEKR has changed limitedly. In particular, the intelligent performance of the main new 001 is not as good as that of 007, but 007 has not been able to support sales.
At the same time, competition in the industry is intensifying. Since entering 2024, the "price reduction tide" of new energy vehicles has been wave after wave.
On February 19, the starting price of BYD's Qin PLUS Glory Edition and Destroyer 05 Glory Edition was reduced to 79,800 yuan, and the slogan of "electricity is lower than oil" was shouted.
Other friends can only follow up with price reductions. Nezha, Shanghai Volkswagen, FAW-Volkswagen, Changan, Chery, Tesla, Geely Automobile, Xiaopeng Motors and other car companies have followed suit, or directly cut prices, or given limited-time preferential policies, price reductions ranging from 5% to 15%, and price reductions ranging from thousands to tens of thousands of yuan.
And Zeekrypton, of course, was also involved. 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.
Due to range anxiety and other limitations, pure electric models already lack steady-state sales, and the price war has made it even worse. In the second half of 2023, the monthly sales of ZEEKR hovered between 1.2-13,000 units, and the sales of the new model ZEEKR X did not meet expectations.
For car companies, scale not only means revenue, but also means that it can spread costs and improve profitability. Therefore, after independent listing, whether self-hematopoiesis can be completed is a major test. From 2021 to 2023, the net loss of ZEEKR will be 4.514 billion yuan, 7.655 billion yuan, and 8.264 billion yuan respectively, with a cumulative loss of 20.433 billion yuan in three years.
However, ZEEKR's cash flow performance is not optimistic, as of December 31, 2023, ZEEKR held cash, cash equivalents and restricted cash of about 4.1 billion yuan. Last year, ZEEKR spent 8.369 billion yuan on R&D expenditure alone.
However, the good news is that with the establishment of the brand power of ZEEKR and the circle-breaking effect brought by Xiaomi, the sales of ZEEKR are also growing rapidly. From January to April, ZEEKR sold a total of 49,148 vehicles, a year-on-year increase of 111%. From the perspective of gross profit, the 15% gross profit of ZEEKR is also ahead of other new car-making forces.
At the same time, as a high-end car brand with global positioning, the listing in the United States will not only help Zeekr open up its overseas popularity, but also help Geely enhance its brand image. On November 16 last year, Europe's first ZEEKR center store opened in Sweden. ZEEKR has also signed agreements with Israel and Kazakhstan, and landed in the United Arab Emirates, Saudi Arabia, Qatar, and Bahrain in the four Gulf countries.
For all new car companies, 2024 is not only a knockout race, but also a marathon, and the comparison is the comprehensive strength of manufacturers in core technology, scale, cost control and marketing. Relying on Geely's resource tilt, the electrification of Zeekr is very solid, but whether it can break out of the encirclement in the second half of the fierce competition and even feed Geely, it will take time to answer.
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