Geely's Bold Move to Take Zeekr Private: A Strategic Gamble or Masterstroke?
15min read In a move that underscores the evolving landscape of China’s electric vehicle (EV) industry, Geely Automobile Holdings has proposed to take its premium EV subsidiary, Zeekr, private in 2025. The non-binding offer, priced at $2.57 per share—a 13.6% premium over recent trading prices—aims to consolidate Geely’s automotive empire, streamline operations, and position Zeekr as a core pillar in its global EV ambitions. But what does this mean for investors and the future of Zeekr? Let’s dissect the strategy, financials, and risks involved.
Ask Aime: What's the strategic significance of Geely's private offer for Zeekr in 2025?
The Proposal: A Strategic Play for Long-Term Gains
Geely currently holds 65.7% of Zeekr’s shares and seeks to acquire the remaining 34.3%, valued at approximately $2.2 billion. The stated rationale is to eliminate redundancies across its sprawling automotive portfolio, reduce costs, and unify strategic priorities under the “Taizhou Declaration.” This consolidation aligns with broader industry trends as Chinese EV manufacturers shift focus from rapid scaling to profitability and operational efficiency.
The privatization would end Zeekr’s brief public listing on the NYSE, where it debuted in May 2024. While this move risks losing public market liquidity, it could provide Geely with greater flexibility to invest in R&D, autonomous driving systems, and global expansion without the pressure of quarterly earnings expectations.
Financial Health: Growth Amid Challenges
Zeekr’s 2024 financials paint a picture of progress but also lingering challenges. Revenue surged 46.9% year-on-year to $10.4 billion, driven by strong sales of models like the Zeekr 001 and 007GT. Gross margins improved to 15.6% annually, with Q4 margins hitting 17.3%, signaling operational efficiency gains. However, the company still posted a net loss of $764 million for the year, though this marked a 29.9% improvement over 2023.
Despite these strides, Zeekr’s price-to-book ratio remains negative (-5.21), and it faces negative working capital, highlighting cash flow concerns. The proposed privatization could offer breathing room to address these issues without market scrutiny.
Market Reaction: Optimism Meets Caution
Zeekr’s stock surged 10% in pre-market trading following the announcement, climbing further to 18.8% by March 11, 2025, after news of autonomous driving breakthroughs and strong Q4 earnings. Analysts at CICC attribute this rally to investor confidence in Zeekr’s technological edge and Geely’s strategic vision. However, volatility persists: Zeekr’s stock price remains sensitive to macroeconomic headwinds and competition from rivals like Nio (currently valued at €7.93 billion vs. Zeekr’s €5.14 billion).
Operational Momentum: New Models and Global Ambitions
Zeekr’s product pipeline reinforces its growth potential. Key launches in 2025 include:- The Zeekr 9X, a flagship luxury SUV and the brand’s first hybrid model, targeting global markets.- The Zeekr 7GT, featuring silicon carbide-powered e-motors and 2.95-second 0-100 km/h acceleration, positioning it against Tesla’s Model S.- The Lynk & Co 900, a six-seater SUV with NVIDIA’s DRIVE AGX Thor platform (700 TOPS processing power), which has already garnered 40,000 pre-orders since December 2024.
These launches, paired with a planned Q3 2025 global rollout for the Zeekr 9X, signal a shift toward premium, high-margin segments. Deliveries in April 2025 reached 41,316 vehicles (up 1.5% month-over-month), with Zeekr’s share rising steadily.
Risks and Considerations
While the privatization offers strategic benefits, risks linger:1. Execution Risks: Integrating Zeekr fully into Geely’s ecosystem without disrupting operations will be critical.2. Market Saturation: China’s EV market is nearing saturation, with fierce competition from established players like BYD and emerging startups.3. Geopolitical Uncertainties: Trade tensions and supply chain disruptions could impact global expansion plans.
Conclusion: A Calculated Move with Upside Potential
Geely’s proposal to take Zeekr private is a bold but logical step to capitalize on its EV leadership. With Zeekr’s $6.4 billion valuation and its role as a flagship brand in Geely’s portfolio, the move aligns with the company’s long-term goals of reducing redundancies, focusing on innovation, and dominating premium segments. Key data points support this thesis:- Revenue Growth: 46.9% YoY in 2024, outpacing industry peers.- Margin Expansion: Gross margins improved to 17.3% in Q4 2024.- Product Momentum: Launches like the Zeekr 9X and Lynk & Co 900 reflect strong R&D execution.
While challenges like negative working capital and market volatility remain, Geely’s deep pockets and strategic vision position Zeekr to thrive in the premium EV space. For investors, the privatization could mark a turning point for Zeekr to focus on execution rather than market speculation—a shift that, if successful, could redefine its trajectory in the coming years.
