Zeekr's 19.7% YoY Delivery Growth Amid Controversy and Strategic Shifts: A Cautionary Tale for Investors

The Chinese electric vehicle (EV) market has long been a hotbed of innovation and hype, but few stories have captured the duality of ambition and risk as vividly as Zeekr's. In 2025, the brand achieved a 19.7% year-over-year (YoY) delivery growth, a figure that initially seemed to validate its position as a rising star in the premium EV segment. However, the narrative has taken a contentious turn with allegations of sales inflation and a strategic overhaul under Geely's ownership. For investors, the question is no longer just about whether Zeekr can sustain its growth but whether it can survive the reputational and regulatory storms brewing around it.

Strategic Shifts: Geely's Acquisition and the “One Geely” Play

In July 2025, Geely finalized its acquisition of Zeekr, a move that consolidates the latter's premium EV ambitions under the broader “One Geely” framework. The deal, valued at $26.87 per American Depositary Share (ADS), offered shareholders a 25.6% premium over the 30-day volume-weighted average price. This premium was partly a response to investor frustration over Zeekr's initial $6.5 billion valuation in 2021, which many felt undervalued the company's potential.

Geely's rationale is clear: by absorbing Zeekr into its ecosystem, it gains access to the brand's high-margin, tech-driven models like the Zeekr 9X while leveraging its own global manufacturing scale and supply chain efficiencies. Post-acquisition, Zeekr will operate as a wholly-owned subsidiary, delisted from the NYSE, and integrated into Geely's 39 international markets. This consolidation is expected to accelerate R&D cycles and reduce costs through platform-sharing, a critical advantage in a sector where economies of scale determine survival.

However, the strategic benefits come with risks. Geely's own EV brands, such as Lynk & Co, face stiff competition in a market saturated with over 100 EV startups. The “One Geely” strategy hinges on streamlining operations, but history shows that mergers in the EV space often lead to redundancies and cultural clashes. For investors, the key will be whether Geely can harmonize Zeekr's premium identity with its cost-cutting agenda without alienating the brand's core customer base.

The Sales Inflation Controversy: A Cracks in the Foundation

While Zeekr's 19.7% YoY growth appears impressive on paper, a Reuters investigation in July 2025 exposed a darker underbelly. The report alleged that Zeekr exploited a loophole in China's vehicle registration rules by insuring vehicles before they were sold to consumers. This “zero-mileage used car” tactic allowed the company to record sales once a vehicle was insured, even if it hadn't been delivered.

The most glaring example occurred in December 2024, when Zeekr reported 2,737 sales in Xiamen—14 times its monthly average—but only 271 vehicles actually received license plates. Many of these insured vehicles were showroom displays or corporate-owned units later resold. Zeekr denied the allegations, stating that the cars were insured for safety and remained “legally new,” but the lack of transparency in its response has fueled skepticism.

The controversy has had immediate consequences. On July 21, 2025, Zeekr's ADRs fell 3.59% to $28.99 after the Reuters report, and Geely's shares in Hong Kong dropped 4%. The Chinese government, already grappling with an EV overcapacity crisis, is reportedly considering a six-month resale ban on newly registered vehicles to close the loophole. If enacted, this could force Zeekr to abandon its current sales model, potentially derailing its growth trajectory.

Regulatory and Legal Risks: A Sector-Wide Wake-Up Call

Zeekr is not alone in this crisis. Rivals like Neta (owned by Zhejiang Hozon) have been similarly implicated, with the latter's sales plummeting from 152,000 in 2022 to just 1,215 units in Q1 2025. Neta's parent company filed for bankruptcy in June 2025, underscoring the financial risks of relying on inflated metrics. For Zeekr, the challenge is to prove it can adapt to a more transparent regulatory environment while maintaining its premium positioning.

The Pomerantz Law Firm is already investigating potential securities fraud, and a class-action lawsuit could emerge if the allegations gain traction. Such legal battles would not only drain resources but also damage Zeekr's reputation at a critical juncture. Meanwhile, state media like the China Securities Journal has publicly shamed the company, a rare move that signals regulatory intolerance for opaque practices.

Investment Implications: Balancing Ambition and Accountability

For investors, Zeekr's story is a cautionary tale about the perils of conflating growth with value. The 19.7% YoY delivery growth is a statistic, but its credibility is now in question. The Geely acquisition offers a lifeline through financial and operational support, yet it also raises concerns about brand dilution and governance.

In the short term, the stock's volatility will likely persist as the sales inflation controversy unfolds. Long-term viability depends on three factors:
1. Regulatory Compliance: Will Zeekr adopt a transparent sales model that aligns with new rules?
2. Geely's Integration: Can Geely balance cost-cutting with Zeekr's premium brand identity?
3. Market Differentiation: Can Zeekr's technology-led models (e.g., the Zeekr 9X) justify a premium price in a price-war-driven market?

Investors should also monitor Geely's voting behavior in shareholder approvals and the outcome of Pomerantz's investigation. A favorable resolution could stabilize the stock, while further scandals might trigger a sell-off. Given the sector's volatility, a diversified approach—mixing EV exposure with traditional automakers pivoting to electrification—may offer better risk-adjusted returns.

Conclusion: A High-Stakes Gamble

Zeekr's 19.7% YoY growth is a double-edged sword. It highlights the brand's potential in a booming market but also exposes the fragility of its business model. The Geely acquisition offers strategic advantages, but it cannot erase the reputational damage from the sales inflation controversy. For now, Zeekr remains a high-risk, high-reward investment. Investors must weigh the allure of premium EV innovation against the realities of regulatory scrutiny and operational transparency. In a sector where hype often outpaces fundamentals, Zeekr's future will be defined not by its growth numbers but by its ability to rebuild trust.