The CEO of Geely stated that Zeekr's privatization will result in savings of "several billion RMB" in research and development.

      Several models from Lynk & Co, including the brand's first battery EV, the Z10, are showcased outside a Geely factory in Zhangjiakou, a northern city in China. Credit: Geely/Volvo

      Geely of China could save "several billion yuan" annually by privatizing its New York-listed subsidiary, Zeekr, and integrating the luxury electric vehicle division with its mainstream car business listed in Hong Kong, according to Daniel Li, CEO of Geely Holding Group. During Geely’s first-quarter earnings call, the company’s management discussed the rationale behind the swift decision to take Zeekr private only one year after its New York listing, deeming it the "ultimate solution" to revamp Geely’s business operations. "We need to shift from a fragmented and disorganized brand portfolio to a deeper integration of our resources, consolidating them into one strong unit. This is our best chance at succeeding in an intensely competitive market," stated Gui Shengyue, CEO of Geely Auto, which is listed in Hong Kong.

      This shift is significant as Geely has been focusing on restructuring rather than expansion for several months, implementing its "Taizhou declaration" cost-saving strategy in September. This was succeeded by the merger of Zeekr and Lynk & Co, announced in November and finalized early this year. On Thursday, Geely Auto reported strong first-quarter results, with sales topping 703,800 units—marking a 48% increase year-on-year—and a net profit rising 264% to nearly RMB 5.7 billion ($788 million). Zeekr also significantly reduced its losses by 60% year-on-year, achieving a gross margin of 19.1% for the quarter ending March 31, though vehicle deliveries from January to April were below expectations.

      Li mentioned that an additional “several billion yuan” in savings would be realized through a new joint purchasing system for the various brands, anticipating notable cost reductions in manufacturing and support functions like finance and HR. This strategy aims to reduce communication obstacles, resolve conflicts of interest, and foster synergies between Zeekr and Geely Auto, which are currently two independent public entities, while also enhancing the benefits from the recent Zeekr and Lynk & Co merger, according to Gui.

      The four primary brands will be better defined. In addition to Zeekr, Lynk & Co focuses on the upper mass EV segment, Galaxy aims at broader mainstream EV expansion, and the Star Series offers energy-efficient, intelligent gas-powered vehicles, as stated by Geely. Once Zeekr's privatization is concluded, Geely Auto will serve as the main public entity of Geely Holding Group, which encompasses all of its wholly-owned car brands. Gui added that Geely has no intentions of acquiring other partially owned brands such as Smart, Polestar, and Lotus.

      In context, Geely Auto stands out as one of the few Chinese automakers experiencing significant revenue and profit growth recently, along with BYD, which reported RMB 170.4 billion in revenue and nearly RMB 9.2 billion in net profit last quarter. In contrast, SAIC and Changan saw slight revenue declines but experienced double-digit profit growth during the same period, while Great Wall Motor and GAC delivered lackluster performances in the first quarter.

      Jill Shen is a technology reporter based in Shanghai, covering Chinese mobility, autonomous vehicles, and electric cars. She can be reached via email at [email protected] or on Twitter at @jill_shen_sh.