Geely's Bold Bet on Privatizing ZEEKR: A Strategic Move or a Risky Gamble?

In early May 2025, Geely Auto (HKG: 0175) announced a non-binding proposal to take its premium electric vehicle (EV) brand, ZEEKR (NYSE: ZK), private in a $6.4 billion deal. The move marks a pivotal shift for ZEEKR, which only completed its U.S. IPO in November 2024. By acquiring the remaining 34.3% of ZEEKR it does not already own—valued at $2.2 billion—Geely aims to consolidate its EV ambitions, streamline operations, and position ZEEKR as a global competitor to luxury automakers like BMW and Mercedes-Benz. But is this a visionary play or a sign of vulnerability in an increasingly crowded EV market?

The Privatization Proposal: Premium Pricing and Strategic Intent

Geely’s offer of $2.57 per ZEEKR share (or $25.66 per ADS) represents a 13.6% premium over the stock’s May 6 closing price and a 20% premium over its 30-day volume-weighted average price. The proposal, if finalized, would end ZEEKR’s NYSE listing and allow Geely to fully integrate its operations under a unified corporate structure.

The stated rationale? Geely cites the need to consolidate resources, reduce redundancies, and focus on long-term growth in the face of global EV competition. By eliminating operational fragmentation across its portfolio—ZEEKR, Lynk & Co, and Volvo Cars—the group aims to optimize costs and sharpen ZEEKR’s focus on high-margin luxury EVs.

ZEEKR’s shares have struggled since its IPO, declining 12% over the past year amid trade tensions and pricing wars. The privatization premium, however, suggests Geely believes the brand’s value is undervalued by public markets.

Strategic Rationale: A Necessary Restructuring or a Halt to Progress?

Geely’s move aligns with broader automotive industry trends toward consolidation. EV startups like Nikola and Lordstown Motors have faced existential crises, while established players like Ford and GM are doubling down on electric vehicles. For Geely, privatizing ZEEKR offers two key advantages:

1. Operational Synergy: By merging ZEEKR with Lynk & Co (which it partially acquired in late 2024), Geely can reduce overlapping costs and accelerate innovation. The combined Zeekr Group has set a 2025 sales target of 710,000 vehicles—a 40% year-on-year jump—aiming to “fully surpass BMW, Mercedes-Benz, and Audi in the China market within two years.”

2. Geopolitical Risk Mitigation: With U.S.-China trade tensions escalating, delisting ZEEKR from the NYSE could reduce exposure to tariffs and regulatory hurdles. Geely’s CEO, Li Shufu, has emphasized the need to “align [ZEEKR’s] strategy with global market challenges,” suggesting a pivot toward markets less constrained by U.S. trade policies.

Market Reaction: A Vote of Confidence—or a Temporary Rally?

ZEEKR’s stock surged 11% in pre-market trading after the privatization announcement, reflecting investor optimism about the premium offer. However, this rally contrasts with the brand’s recent operational struggles:

• Delivery Declines: ZEEKR’s April 2025 deliveries fell 14.68% year-on-year to 41,316 units, while sister brand Lynk & Co grew 47.32% YoY, hinting at internal resource imbalances.
• Competitive Pressure: Chinese rivals like BYD and NIO have already captured significant market share in premium EV segments, leaving ZEEKR scrambling to differentiate itself.

The data underscores a critical challenge: ZEEKR must reverse its delivery slide while ramping up production to meet its 710,000-unit target.

Risks and Uncertainties

While the privatization proposal is strategically compelling, risks loom large:
- Execution Complexity: Merging ZEEKR with Lynk & Co and Volvo Cars requires seamless integration—a feat that has tripped up even giants like Ford.
- Valuation Concerns: The $6.4 billion valuation assumes ZEEKR can achieve its ambitious sales targets. If global EV demand slows or competition intensifies, this figure could look optimistic.
- Regulatory Hurdles: Geely must navigate Chinese and U.S. regulatory approvals, with the latter now under heightened scrutiny due to U.S.-China tech trade wars.

Conclusion: A Calculated Gamble with High Stakes

Geely’s privatization of ZEEKR is a bold move that reflects both ambition and pragmatism. By consolidating control, Geely gains the flexibility to streamline operations, reduce costs, and focus ZEEKR’s resources on competing in the luxury EV space. The 13.6% premium to shareholders signals Geely’s confidence in ZEEKR’s long-term potential, while the delisting removes the pressure of quarterly earnings expectations.

Yet the risks are undeniable. ZEEKR must reverse its delivery decline, outpace rivals like BYD, and navigate geopolitical headwinds—all while justifying a valuation that implies it can grow sales by 40% annually. If successful, Geely could solidify its position as a global EV leader. Fail, and the $6.4 billion bet could become a costly distraction in an increasingly crowded market.

For investors, the privatization offers a clear path forward for ZEEKR—but the road ahead is far from smooth.