The highly-anticipated IPO of ZEEKR, a Chinese EV maker backed by Geely, has started trading on the NYSE under the symbol ZK, with shares priced at $41 per share at a market cap of over $5 billion. This IPO is significant as it is the first of its size from China since the issues surrounding Didi Chuxing’s listing and subsequent delisting in 2021. Bankers and investors are closely watching the reception of this IPO to determine if China is once again seen as an attractive investment opportunity.
Other U.S.-listed Chinese EV manufacturers such as XPeng, NIO, and Li Auto are also keeping a close eye on how Wall Street reacts to ZEEKR’s IPO. These companies have seen their stock prices drop since the beginning of the year due to weaker auto sales and industry consolidation. ZEEKR’s prospectus reveals that the company is rapidly growing but currently unprofitable, with revenues of $7.3 billion in 2023 and a positive gross margin of 15% on its EVs. However, it reported an operating loss of $1.15 billion for the year and expects a decline in revenues and gross margin in the first quarter of 2024.
ZEEKR’s majority owner, Geely, has ambitious global expansion plans for the brand, with aims to become a premium EV manufacturer from China. Geely also owns stakes in other European brands such as Volvo, Polestar, Lotus Cars, and Lynk and Co. The company sold nearly 1.7 million vehicles in 2023, generating $24.8 billion in revenues and showing profitability. ZEEKR plans to enter six European countries in 2024 and target an additional 38 markets across Southeast Asia and the Middle East. The CEO of ZEEKR, Conghui “Andy” An, is spearheading these efforts and is determined to make ZEEKR a major player in the global EV market.
The prospectus also sheds light on the related party transactions within ZEEKR, with Geely continuing to own over half of ZEEKR’s shares post-IPO. The company relies on Geely’s factories for manufacturing and shares its technology with other Geely brands. ZEEKR’s technology is impressive, with collaborations with companies like Mobileye and NVIDIA for autonomous driving technology. The company’s product range includes high-end EVs targeting the luxury market, as well as more affordable options to cater to different consumer segments.
Overall, ZEEKR’s IPO highlights China’s strategy to dominate the global market as cars transition to electric and intelligent technologies. Chinese EV manufacturers like ZEEKR are leveraging their domestic market to gain scale and drive innovation before expanding overseas to compete with established players in Europe and other regions. The future of the global auto market is at play, with Chinese companies poised to disrupt traditional automakers with their cost advantages and advanced technology. American car manufacturers are urged to focus on innovation, efficient production, and technology to survive in the evolving automotive industry.
