Sounding the "assembly call," Li Shufu bets on a big future

Author | Chai Xuchen

Editor | Zhou Zhiyu

"Reclaiming" ZEEKR is linked to the fate of the entire Geely.

On May 15, Geely Auto held a first-quarter earnings meeting, with the core topic being the urgency of this strategic integration.

"In the face of fierce market competition and an increasingly complex market environment, Geely Auto can only change the past phenomenon of 'small and scattered, scattered and chaotic' brands, conduct deep integration, and consolidate the company's resources into a single force if we are to have a chance of victory," said Guo Shengyue, CEO of Geely Auto Holdings, to Wall Street Insight.

A week earlier, Geely Auto submitted a non-binding offer letter to ZEEKR, proposing to privatize ZEEKR. At this time, it was less than a year since ZEEKR rang the bell at the New York Stock Exchange.

As the spearhead of the group's offensive, ZEEKR's position determines the direction of Geely's attack. This integration is driven by uncertainties due to geopolitical factors and is also a proactive adjustment made by Li Shufu and his Geely system in response to changes in the automotive market.

Over the past eight years, Li Shufu, who has been adept in the capital market, has built his Geely capital empire through "buying, buying, buying" and internal incubation. BYD, on the other hand, has surged forward with the tailwind of new energy, reaching a trillion market value in just four years. Both Wang Chuanfu and Li Shufu, the top business tycoons, have been maneuvering in their respective chess games.

Now, the trend of consolidation in China's new energy vehicle market is rolling in. On the eve of the final round, Geely has shifted from "having more children to fight" to "one Geely." Li Shufu, who put forward the "Taizhou Declaration," is determined to synchronize with this century-long transformation in the automotive history and ensure Geely laughs last.

Return

On the evening of May 13, ZEEKR announced that it had established a special committee to evaluate Geely Auto's proposal to privatize ZEEKR Group. This means that the process of delisting from the U.S. stock market and returning to the big Geely has been initiated.

Just a week earlier, on May 7, Geely Auto announced in the Hong Kong stock market that it planned to acquire all remaining shares of ZEEKR. If this acquisition is completed, ZEEKR will become a wholly-owned subsidiary of Geely Auto, achieving privatization and delisting from the New York Stock Exchange.

The delisting, combined with recent personnel changes at ZEEKR and pressure on sales, has caused a stir, quickly trending on social media.

"Time waits for no one. The current environment of the Chinese automotive market no longer allows us any margin for error." At this Geely Auto earnings meeting, Guo Shengyue explained the considerations behind the decisive move to bring ZEEKR Group back to Geely.

Guo Shengyue stated that since Geely Auto and ZEEKR are two independent listed companies, the previous internal integration process was complex, requiring approval from their respective boards of directors and even shareholders' meetings, leading to inefficiencies and slow progress with high communication costs. Additionally, the two companies have different incentive mechanisms, which may lead teams to tilt benefits towards their respective companies during actual business operations, significantly undermining the overall integration effect He summarized to Wall Street News that as development progresses, these issues will become increasingly prominent, so it is essential to quickly resolve problems and enhance corporate competitiveness from the root through integration.

Gui Shengyue also revealed the specific process of privatizing ZEEKR.

First, after Geely Auto issued a non-binding offer letter, the ZEEKR board established a special committee to negotiate the merger conditions with Geely Auto, including key terms such as the privatization price. Once a consensus is reached through negotiations, a contract will be signed.

Subsequently, ZEEKR will hold a shareholders' meeting, with Geely Auto, as the major shareholder, having voting rights. After that, Geely Auto will also send a circular to its shareholders, detailing the specific terms of the merger and future development prospects, and hold a shareholders' meeting. If Geely Auto's shareholders' meeting also passes smoothly, both parties will begin the settlement to complete the privatization of ZEEKR.

From Gui Shengyue's statements, it is clear that ZEEKR will definitely return to Geely.

He is also optimistic about the outcome of this merger. Gui Shengyue stated that after the "official announcement" on May 7, ZEEKR and Geely Auto's stock prices rose for two consecutive days, indicating support from the capital market for this merger.

At that time, the "non-binding offer letter" from Geely Auto quoted a price of $25.66 per ADS to buy back ZEEKR's shares, which is about a 14% premium over the closing trading price on the New York Stock Exchange the day before the announcement and more than a 20% premium over the IPO issuance price.

After throwing out this quite sincere buyback proposal, ZEEKR's stock price quickly rose from the previous day's $22.6 per share to the current $28.9, exceeding Geely Auto's suggested expected price.

Setbacks

Geely Auto's merger with ZEEKR Group reflects Geely's strategic flexibility in response to changes in the automotive industry in recent years.

As a representative of Geely's transformation into new energy, ZEEKR knocked on the door of IPO three years after separating from Lynk & Co; in November last year, ZEEKR merged with Lynk & Co to establish ZEEKR Technology Group; now, less than a year after the IPO, ZEEKR is returning to the Geely system.

"The market value is too low to raise funds." An insider from Geely pointed out that during ZEEKR's year of listing on the US stock market, it did not meet the original financing expectations. The market value has inverted, far below Geely's investment in ZEEKR over the years.

It is worth noting that after the Series A financing in 2023, ZEEKR's valuation reached $13 billion, but before the official IPO, the valuation was only $5.1 billion. From the outside, ZEEKR has already been "bleeding during its listing."

After officially landing on the secondary market, investor expectations for it have also fluctuated. Looking back at ZEEKR's performance in the US stock market over the past year, the market value peaked at only $8.4 billion and dipped to as low as $3.3 billion; the price-to-sales ratio was only 0.7 times, far lower than Nio, XPeng, and other new forces, and ZEEKR's proud technological genes have not been recognized by investors.

Currently, market enthusiasm for investment in the electric vehicle sector has cooled, and investors have raised higher requirements for the profitability and growth prospects of car companies. These factors have affected the valuation of ZEEKR in the US stock market. With the market value remaining low for a long time, existing shareholders are unwilling to issue new shares at a discount, and the scale of circulating shares that ZEEKR can issue is also limited. Additionally, with the US dollar financing interest rates still high, ZEEKR's financing space is further compressed For ZEEKR's return, Li Shufu has also made a firm decision. Industry insiders estimate that just the IPO expenses for ZEEKR in its first year of listing are likely to be in the tens of millions of dollars. However, considering the many uncertainties that Chinese companies face in the U.S. stock market in the future, injecting high-quality assets like Lynk & Co and ZEEKR into Geely Auto is still a long-term positive.

In fact, this is not the first time Li Shufu has sounded the "assembly call." Focusing on the main business in a fiercely competitive battlefield and returning to a unified Geely is a familiar combat strategy for Geely.

Before 2014, Geely had launched several sub-brands such as Emgrand, London Taxi, Global Hawk, King Kong, Panda, and Haijing, but due to the excessive variety and serious product homogeneity, resources were dispersed, making it difficult to form a synergy in market competition.

In 2014, Geely officially announced the integration of the Emgrand, Global Hawk, and London Taxi sub-brands back into the Geely brand, proclaiming the slogan "One Geely." This merger marked the beginning of Geely's cycle from growth to stagnation and then to a new round of growth. From 2017 to 2020, Geely Auto achieved four consecutive years of over one million vehicles sold.

However, from Lynk & Co in 2016, to Geometry in 2019, to ZEEKR in 2021, and then to the focus and integration curtain raised by the "Taizhou Declaration" in 2024. After ten years, Geely has once again raised the idea of "returning to one Geely." Although the expression is the same, the market competition and industry pressures faced by Geely are entirely different.

In the dual dilemma of upward growth and market pressure, Geely needs to self-correct once again.

Integration

Once, a "snake swallowing an elephant" acquisition of Volvo allowed Geely to rapidly develop in technology, branding, and international channels, laying the foundation for a series of subsequent capital operations, helping Geely become the leader in China's independent auto industry. However, in recent years, BYD has soared with its new energy layout, pushing Geely off the throne and igniting the new energy battle.

Currently, as the homogenization competition in the automotive market intensifies, car companies need to spare no effort in finding ways to cut costs, in order to stake their claim in a market where the Matthew effect is becoming increasingly prominent.

In this context, compared to BYD, which has frequently slashed prices in recent years, Geely's brands often respond passively, which is behind its relatively weaker profit margins. This is also related to Geely's past development model and the somewhat decentralized internal organizational structure.

Eight years ago, Li Shufu aimed to replicate more successful cases like Volvo through "buying, buying, buying" and internal incubation, or to acquire and incubate new technologies and brands to establish the Geely capital empire. At that time, the Chinese automotive market was still on the rise, and Geely's highly decentralized "internal horse racing" could tap into more segmented market demands and achieve scale growth.

This also led to the fact that before the release of the "Taizhou Declaration," Geely's internal resources were basically dispersed by automotive brand units, each having a high degree of autonomy. Each brand would equip its own personnel according to its established positioning, covering product design, development, procurement, and marketing.

For example, within Geely Group, there are five intelligent driving teams, coming from Geely Research Institute, ZEEKR, Lotus, Yikatong, and the closely related Furukawa Tech. These five teams do not share computing power and data, and their hardware levels are not unified As times change, in the current market environment of industry restructuring and intense competition, this model will gradually weaken the competitive advantage of pricing power that the entire group should originally possess.

In contrast, BYD, with its vertically integrated supply chain layout and platform structure for key technologies in the three electric systems, shows significant economies of scale. Its average vehicle price dropped from 173,800 yuan in 2022 to 144,500 yuan last year, while its automotive gross margin increased from 20.39% to 22.3%.

On the road to reclaiming the title of the top independent brand, Geely's integration and focus strategy is a necessary response to the changes in the competitive landscape.

At this performance meeting, Geely Automobile Group CEO Gan Jiayue emphasized to Wall Street that the core of the merger is to reach a consensus on product strategy and further focus and synergize resource integration. In the future, there will be a unified management structure and resource allocation to eliminate duplicate investments.

Geely Holding Group CEO Li Donghui stated, "Next, through a common management team, the synergy of the middle and back office can be maximized, saving hundreds of millions in R&D each year, and joint procurement has also saved billions, with significant effects on management costs."

Gan Jiayue expects that after merging with ZEEKR, Geely's overall efficiency will improve by more than 5%, and R&D, management, and marketing efficiency will increase by 15%-20%.

Focus

In the red ocean of smart electric vehicles, Li Shufu understands that the depth of resource integration will determine how far the company can go. In fact, since the release of the "Taizhou Declaration" last September, which called for strategic collaboration, Geely Holding's subsidiaries have begun a vigorous integration movement.

On the brand side, ZEEKR has absorbed Lynk & Co, while Geely has integrated Radar, Geometry, and LEVC into Geely Galaxy; on the R&D side, with the structural adjustments of brand companies, including ZEEKR, Lynk & Co, Lotus, and Polestar, the corresponding R&D teams have also been integrated into Geely Research Institute.

Recently, at the Shanghai Auto Show, it was announced that battery integration is also underway, gradually forming independent supply chain companies like BYD's Fudi, improving the operational efficiency of the entire system, reducing internal costs, and enhancing Geely's overall pricing power.

On the procurement side, the corresponding procurement subsidiaries of multiple brands have been integrated into Geely's unified procurement company, accompanied by significant personnel reductions.

The effects of this focus are beginning to show; in the first quarter, Geely Automobile sold 228,000 more vehicles than the same period last year, with revenue increasing by 25% to 72.49 billion yuan, while sales and administrative expenses decreased year-on-year; ZEEKR Group also saw a 1.1% increase in revenue compared to Q1 last year, with sales expenses down 9.2%.

In the face of increasing market uncertainty in 2025, Li Shufu has chosen to proactively contract, concentrate resources, and seek opportunities for the next breakthrough. Moving forward, under the banner of "One Geely," the intensity of integration will be further strengthened.

After returning to Geely, ZEEKR Technology has transformed from a listed company into one of the business groups under Geely Automobile, alongside the Geely Galaxy business group. After the merger, ZEEKR is positioned as a global luxury technology brand, Lynk & Co as a global high-end new energy brand, and Geely Galaxy and China Star as global mainstream brands. Thus, the four major brands of Geely's passenger vehicle sector have been established Gan Jiayue emphasized to Wall Street News that after the merger, the four major brands need to strengthen brand differentiation and form their own ecosystems. The core goal of JuLi is to create blockbuster and star products in every market segment. "The ability to create blockbusters is not just a product, but a system and methodology. Once established, the possibility of scaling up will increase."

Subsequently, further integration at the company and organizational structure level will follow with personnel adjustments.

At the performance meeting, senior executives announced that after completing the merger with ZEEKR, Gan Jiayue will serve as the CEO of the Hong Kong-listed company Geely Auto Group, with responsibilities expanded from managing the Geely Galaxy and China Star brands to all of Geely's proprietary automotive brands.

Li Donghui will serve as the Vice Chairman of Geely Holding Group, responsible for the daily management of the board and group investment and financing management, playing a role in capital operations and major external cooperation projects.

Veteran An Conghui will succeed Li Donghui as the CEO of Geely Holding Group. He will be fully responsible for the operational management of Geely Holding Group (including Geely Auto Group, Lotus Group, Volvo Group, and Battery Industry Group) and will report to Gan Jiayue.

Gui Shengyue will continue to serve as the Executive President and Executive Director of Geely Auto Holdings. Additionally, to cultivate young, versatile senior management talent, Dai Qing has been appointed as the rotating president of Geely Holding Group, reporting to the CEO of Geely Holding Group.

This comprehensive reform at Geely may reflect the shift of Chinese car companies from "having more children to fight better" to "bringing fingers together to form a tight fist."

For Geely, this adjustment is just the beginning. The integration of core components, the reshaping of the supply chain, and how to coordinate resources between fuel vehicle business and new energy business are still issues that this automotive empire needs to address to maximize overall group interests.

To become a giant automotive enterprise that survives to the end, these adjustments are essential. If the price war continues to escalate, this will be an important guarantee for solidifying its market share and position, and even seizing the opportunity to reclaim the title of the top independent brand.

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