Tesla is good at marketing but it doesn’t mean Chinese consumers are buying into the hype. According to a July survey of nearly 4,000 people by JD Power, a US market research outfit, Chinese car buyers do not rate Tesla’s newer models particularly highly when it comes to product quality. Instead they see the NIO ES6 as the best luxury EV, while the XPENG G3 and BYD Han BEV top the compact and midsize leagues respectively.
That’s good news for homegrown EV players, many of which are hoping to stake their claim in the premium segment. Among them are Geely, which announced last week that it had raised $500 million in a financing round for ZEEKR Intelligent Technology, an EV unit it established in March.
The deal, for just 5.6% of ZEEKR’s enlarged capital, was backed by Contemporary Amperex Technology (CATL), the world’s largest EV battery maker. Other investors include US chipmaker Intel, video streaming platform Bilibili and private equity firm Cathay Fortune.
Zhejiang Geely Holding and its Hong Kong-listed arm Geely Automobile, which together started the venture an Rmb2 billion ($309.4 billion) investment, hold the remainder.
An Conghui, the CEO of ZEEKR, told the Securities Times that each of the new investors will bring strategic value to the start-up. Intel, for instance, will work with ZEEKR on smart driving and related software and hardware. Cathay Fortune, the controlling shareholder of China Molybdenum, a key supplier of cobalt and copper, will help secure raw materials for its batteries; which will be made by CATL. Bilibili will help the EV firm on marketing its models to the millennials and Gen Z-ers that ZEEKR believe will make up the bulk of its customers.
The Geely unit launched its first model, the ZEEKR 001 in April. Reportedly the hatchback has a driving range of 700 kilometres and comes at an average price of Rmb350,000 ($54,145), which is at the higher end of the EV market, yet Hong Kong Economic Times reported that 10,000 units of the model planned for delivery this year have already been pre-ordered and paid for.
Taking a page out of other premium car brands’ playbook, ZEEKR uses a direct sales model to manage pricing and inventory, and plans to open over 100 retail outlets in the country this year.
In an interview with Bloomberg, An – who joined Geely in 1996 – said that the company will introduce six different models in the coming five years. Making its cars in the eastern city of Ningbo, ZEEKR wants to start exporting to Europe by 2022, and has targeted annual EV sales of 650,000 units globally by 2025. An, the CEO, hopes that ZEEKR will rank among the world’s top three premium EV brands by then, which means competing not only with its sister firm Volvo, but also other new entrants like Xiaomi (see WiC546), and potentially, Apple.
Through a series of acquisitions and JVs, Geely already owns a number of EV brands including LYNK & Co, Geometry and Polestar.
The addition of ZEEKR is aimed at lifting the contribution of new energy vehicles (NEVs) in the Zhejiang-based Geely’s overall sales so as to comply with new Chinese carbon credit trading rules that, as of this year, requires 14% of its production volume for passenger vehicles to be NEVs (see WiC462).
Of the 729,512 units of vehicles that Geely sold in the first seven months, only 5% were NEVs. The carbon cost of not producing enough NEVs helps to explain why the company struck a flurry of new energy partnerships early this year with companies including Baidu, Foxconn and Renault.
With ZEEKR, Geely is predicting that by 2025 smart electric vehicles will account for more than 30% of its vehicle sales (totalling 3.65 million units). ZEEKR will also operate Geely’s first EV charging service known as ZEEKR Power, as unveiled at this week’s Chengdu Motor Show. In addition to a network of public chargers, ZEEKR Power will offer app-based services that support route planning and a door-to-door charging service, reported Gasgoo, an autonews outlet.
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