Geely, a major Chinese automotive group, announced a restructuring plan to bring its premium EV brand Zeekr into control over its sister brand Lynk & Co as part of a broader cost-cutting and efficiency strategy. This move is a significant shift in Geely’s approach, which has historically focused on acquisitions but now aims to streamline its sprawling portfolio of over 10 automotive brands. Chairman Eric Li emphasized that this integration would help the group avoid internal competition, reduce redundant spending, and clarify the positioning of each brand to strengthen Geely’s overall market competitiveness.
The integration will see Zeekr and Lynk form a new energy vehicle (NEV) group targeting annual sales of over one million units, compared to their combined 2023 sales of approximately 339,000 vehicles. Geely executives highlighted the inefficiency of separate research, development, and sales efforts and believe that combining resources will not only improve efficiency but also reduce costs significantly. Geely’s CEO Gui Shengyue underscored the need for this change, warning that without integration, the group’s competitiveness would be compromised.
The restructuring involves Zeekr acquiring a 51% controlling stake in Lynk through the purchase of shares from Volvo Cars and Geely Holding, plus a capital injection. This deal values Lynk at about 18 billion yuan (or $2.5 billion) and is expected to be finalized by mid-2024. The markets reacted with U.S.-listed shares of Zeekr dropping over 7% following the announcement, while Volvo Cars’ shares rose by 3.5% in early trading, suggesting mixed investor sentiments about the strategic reorganization.
As part of the consolidation, Zeekr will lead research and development for electric and connected vehicles, with shared technology and resources expected to reduce R&D costs by 10% to 20% and material costs by 5% to 8%. The integration should also optimize capacity utilization across both brands. Lynk will leverage Zeekr’s technological advancements, and in turn, Zeekr will benefit from Lynk’s established sales network in lower-tier cities, potentially expanding its reach to a broader market.
Since its launch in 2016, Lynk has introduced nine models and sold about 195,600 units in the first nine months of 2023, marking a 40% year-over-year increase. Zeekr, launched just three years ago, has shown even faster growth, with nearly 143,000 units sold in the same period, representing an 81% increase. With Zeekr’s U.S.-listed shares up nearly 40% since its May listing and a market value of $7.3 billion, the integration is positioned as a strategic shift to maintain Geely’s growth momentum in the evolving NEV sector.