Geely’s Q1 Earnings Call: Management Reshuffle & Zeekr’s Privatization Strategy（Part 2.）

The following is the real-time record of Geely Auto’s Q1 2025 Earnings Call, transcribed from the recording. Due to the length of the content, the article is divided into two parts. (You can click here for Part I.)

Q7: At this year’s Shanghai Auto Show, many investors, including ourselves, have seen that Geely’s high-end strategy has been very successful. Zeekr 9X and Lynk & Co 900 have received a lot of attention. I would like to ask the management team for some more quantitative data on the specific sales targets and capability guidance for these two models in the second half of the year.

Eric: The merger of Zeekr and Lynk & Co is a major measure to implement Geely Holding’s Taizhou strategy. From the decision to do this at the end of last year to the settlement in February this year and the performance in the first quarter, I would like to thank the teams of the two brands for integrating well in the shortest time and achieving satisfactory results.

I would like to share some data:

In terms of sales expenses for Zeekr, it was 2.17 billion yuan in the first quarter of 2024, 3.14 billion yuan in the fourth quarter of 2024, and 2 billion yuan in the first quarter of this year, with a significant year-on-year and quarter-on-quarter decrease;

For administrative expenses, it was 750 million yuan in the first quarter of 2024, 970 million yuan in the fourth quarter of 2024, and 640 million yuan in the first quarter of 2025;

For capital expenditures, it was 690 million yuan in the first quarter of 2024, 400 million yuan in the fourth quarter of 2024, and 320 million yuan in the first quarter of 2025;

For R&D expenses, it was 2.33 billion yuan in the first quarter of 2024, 3.91 billion yuan in the fourth quarter of 2024, and 2.91 billion yuan in the first quarter of 2025;

For R&D expense ratio, it was 13.2% in the first quarter of 2024 and 11.9% in the first quarter of 2025.

After the merger, the positioning of the Lynk & Co and Zeekr brands has become clearer. Zeekr continues to move upward, and Lynk & Co moves wider. The brands have achieved the expected planning in the domestic and international markets and have won the praise of users.

In terms of technological planning, Lynk & Co and Zeekr have fully realized platformization in intelligent driving and cockpit. Lynk & Co 900 has applied the H7 intelligent driving system. In just three or four months, the two brands have realized the shared intelligent driving system.

The super electric hybrid this year will bring the future technological direction. It will integrate the advantages of pure electric, plug-in hybrid, and extended-range, and will be first equipped on Zeekr 9X and 8X.

For the product planning in the future, Lynk & Co and Zeekr will have five models this year. In addition to Zeekr 007GT and Lynk & Co 900, the hybrid model of Lynk & Co Z10 will be launched in the second quarter, and Zeekr 9X will also be introduced. In the fourth quarter, Zeekr 8X will be launched. These five products will contribute to the sales volume and gross margin of Zeekr Company.

The good gross margin seen in the first quarter is actually the effect of the integration of the two brands and several brands, and it is also the effect of product structure optimization. Therefore, after the launch of these five models, the product structure of Zeekr Technology in the future will be better.

They will make a good contribution to sales volume and gross margin. In terms of product planning, the number of our product developments has also been reduced by 20%. The adjustment and optimization of the organization and team have basically been completed.

Q8: After Zeekr returns to 175, there are still some listed assets in the Hong Kong and US stock markets. From the perspective of the entire group, are there any plans for integration or privatization? Can we understand that under the “Taizhou Declaration,” the positioning of 175 is the core listing platform for Geely Holding Group’s passenger vehicles?

Gui Shengyue: 175 is the flagship listed company for Geely’s own passenger car brands, the flagship listed company for all the brands that Geely fully owns, and it is returning to a single Geely.

In the past few years, there has been a phenomenon where people always feel that Geely’s financial statements are relatively complex because there are several statements, and it is not clear to see. After the merger is completed, there will be only one statement, which will be more intuitive.

Brands such as smart, Polestar, and Lotus are obviously not brands that Geely fully owns. For these brands, 175 has no acquisition plans, and I can give a clear answer to that.

Li Donghui: Geely Holding Group currently has no plans to privatize other listed companies outside of Zeekr, especially not to privatize them into the 0175 listed company.

However, I also need to point out that the integration of Zeekr and Geely Auto has a very positive and significant driving effect on encouraging other brands within Geely Holding Group to strengthen collaboration within the group and with the new Geely Auto.

Although Geely Holding has done a lot of work in promoting collaboration in the past, with many cases of joint R&D, joint procurement, and collaborative internal contract manufacturing, to be frank, sometimes some of our sub-brands, especially those with Western historical backgrounds, may question whether Geely Auto has not been able to collaborate fully.

Now, the integration of Geely Auto and Zeekr has already made all the brands within Geely Holding more enthusiastic about further in-depth collaboration.

Q9: Geely was actually the first in the industry to go global, but today it seems relatively conservative or prudent. What are the considerations? How are capacity, channels, and marketing considered? Why can sales turn around in the next few months? Because we see that the overseas sales in January-April, especially in April, were still somewhat lower than expected.

Gan Jiaye: Entering 2025, the international market business is facing increasing challenges due to the global economic situation, and the industry growth rate is also continuously narrowing.

From January to March this year, the total sales volume of the industry’s international exports was 1.178 million units, with the industry growth narrowing to 6.1%, a significant decrease compared to the high growth rate in the first quarter of last year.

However, with the development of China’s new energy vehicles, we believe that there is a very good opportunity in the global market.

From January to March 2025, Geely Auto achieved an export sales volume of 90,000 vehicles, a year-on-year increase of 2.2%, which did not outperform the overall trend.

The main reason is the Eastern European market.

If we exclude the Eastern European market, Geely’s export sales volume increased by more than 40% year-on-year, which means that in other market layouts, the current growth rate is still in a high-speed growth stage.

For example, in Latin America, the year-on-year growth rate in the first quarter reached 67%, in the Asia-Pacific region it exceeded 80%, and even in Central Asian countries, there was a significant growth rate.

Geely’s international layout is divided into two steps.

The first step is the layout of fuel vehicles. After 2021, we focused on four series of fuel vehicles in China, mainly focusing on the China Star series, Geely Emgrand series, etc. Around these four series, we will focus on some overseas markets, reduce the number of products, and form the ability to create blockbusters.

The second step is to synchronize the rapid launch of new energy products to the market.

In the field of new energy, especially E5, Starship 7, and Starwish, as well as subsequent products, will be gradually laid out in the ASEAN, Middle East, and Latin American markets.

However, the layout and certification of new energy products require a certain amount of time.

E5 gradually shows its competitiveness and has been the number one new energy vehicle in Malaysia for four consecutive months, with more than 800 units in April, surpassing similar competitors by 2-3 times.

In Thailand, Australia-New Zealand, and Indonesia, the order volume is also in the thousands. The competitiveness of new energy products is gradually being recognized in the overseas market.

I can also predict with everyone that after May, Geely’s international sales volume aims to return to more than 30,000 units per month, and in the future, we hope to have a month-on-month growth rate.

We aim to build a large market in the Middle East, striving to be the number one Chinese brand with a sales volume of more than 50,000 units.

In the Pan-European and Eastern European regions, although the Eastern European market was affected in the first quarter, falling from more than 10,000 units to 5,000-6,000 units, the product competitiveness has been adjusted recently, and in April, it has returned to around 8,600 units, with a 40% increase. The annual sales target for the Eastern European and Pan-European markets is 150,000-200,000 units.

In the Asia-Pacific market, we aim to build another regional market with a sales volume of more than 100,000 units.

The sales volume in the first quarter was 27,000-28,000 units, and looking at the whole year, it is very likely to exceed 100,000 units.

The third major market is the Latin American market, where we will also work with some international partners and leverage dealer resources to quickly increase the sales volume of new energy products, and we expect to build a market with a sales volume of more than 50,000 units this year.

Of course, in Europe, we will also focus on the Lynk & Co Europe strategy for better development, including Lynk & Co 08, Lynk & Co 01, and other products that will gradually show their full benefits in Europe.

Therefore, in Europe, we will aim for a market target of around 40,000 units, which we believe is very hopeful.

Overall, our international target for the year remains unchanged, and we are confident in achieving the overall international target for the year.

Q10: Do we have any plans to build factories overseas?

Gan Jiaye: Geely’s overseas strategy focuses on asset-light operations. Building entire factories by ourselves carries significant risks.

Geely has a deep degree of internationalization, and its international resources are among the best in Chinese automotive manufacturers. Therefore, we need to fully utilize international resources and local production capacity for comprehensive cooperation.

For example, in 2024, we established three factories, all of which were joint ventures with local partners, such as in Egypt, Nigeria, and Ghana. In 2025, we have plans to establish factories in Vietnam, Indonesia, North Africa, Latin America, and other regions.

Q11: Which models will be exported overseas? How do you view the electric transformation and the competitive landscape of the automotive industry in the Chinese market? What is the ultimate intelligent landscape?

Gan Jiaye: The domestic market competition in the first quarter was still very fierce and sufficient.

The national policy of encouraging trade-ins has effectively driven industry development, with more than 3 million applications for trade-ins as of May.

However, a key figure is that the discount rate in the first quarter was as high as 15.2%, indicating intense competition. Geely’s sales volume of 704,000 units in the first quarter achieved both year-on-year and quarter-on-quarter growth.

E5 and Starship 7 were indeed affected by price adjustments from competitors in the first quarter, but Geely’s product strength remains strong.

For example, E5’s overseas market prices are still relatively good, and its sales volume is 2-3 times that of most competitors.

Both the E5 and Starship 7 rank among the top players in their respective segments. In recent months, the E5 has achieved five consecutive weeks of sequential market share growth, while the Starship 7 has seen three straight weeks of increasing market share.

The launch of Starlight 8 has received high recognition from the market and customers. As of yesterday (May 14), the number of large orders has exceeded ten thousand units, fully demonstrating the competitiveness of the Galaxy products in the market.

In the second half of the second quarter to the third quarter, Galaxy will launch two more products. Next week, Galaxy will debut a large flagship six-seater SUV in Milan, Italy. At the end of the second quarter, a Class A+ or Class B- sedan will be launched. In the fourth quarter, 1-2 products will be launched as opportunities arise.

E5 has already been launched overseas, and Starship 7 will soon be launched in various markets.

Q12: After the development of the competitive landscape in the Chinese automotive market, what kind of companies will ultimately survive?

Gui Shengyue: One is to adhere to long-termism.

I think the meaning of long-termism is that an automotive company must have comprehensive capabilities, that is, the ability to develop well under different policy changes.

The development of China’s new energy in recent years is inseparable from the support of national policies. Geely Auto has also developed in accordance with national policy guidance and has become a company that is rapidly developing in the field of new energy.

However, as everyone knows, in two or three years, relevant national policies may change. I believe that at that time, companies with more comprehensive capabilities may have an easier time.

I think this is one of the important meanings of long-termism. Because an automotive company must have the ability to meet the needs of all investors, which is a comprehensive capability. I think Geely will adhere to long-termism in this regard.

In addition, I believe that future automotive companies must be powerful manufacturing intelligent technology companies if they are to develop in the long term.

I think future automotive companies must meet these two attributes. As for Geely, we are now working in these two directions.

In the past two years, we have also adjusted our strategy.

I believe that the momentum that Geely Auto has shown since last year will be well maintained.

I also have great confidence now that we will not disappoint the shareholders’ expectations in the future.