Geely Twin Stars "Merger"

Author | Wang Xiaojun

Editor | Zhou Zhiyu

Geely's two major twin stars - ZEEKR and Lynk & Co have officially "merged."

Geely Holding Group announced on November 14 that it would optimize the equity structure of ZEEKR and Lynk & Co, streamline equity relationships, reduce related party transactions, eliminate competition among peers, and promote deep integration and efficient fusion of internal resources.

Specifically, ZEEKR will acquire 20% and 30% of Lynk & Co shares held by Geely Group and Volvo, respectively, with a total transaction amount of approximately 9 billion yuan. Subsequently, ZEEKR will increase its capital in Lynk & Co by 367 million yuan. After a series of transactions are completed, ZEEKR will hold 51% of Lynk & Co shares, while the remaining 49% will continue to be held by a wholly-owned subsidiary of Geely Automobile. The equity structure adjustment is expected to be completed in the first half of 2025.

This means that Lynk & Co will become an indirect non-wholly-owned subsidiary of ZEEKR and Geely Automobile, and its financial performance will be consolidated into the financial statements of both companies. Subsequently, ZEEKR and Lynk & Co will also strengthen collaboration in technology, products, supply chain, manufacturing, marketing and services, and international market expansion.

At the ZEEKR Q3 2024 earnings call, An Conghui, President of Geely Holding Group and CEO of ZEEKR Intelligent Technology, responded to the equity structure adjustment of ZEEKR and Lynk & Co. An Conghui expects that by maximizing synergy, the R&D investment of the two brands will be reduced by 10-20%, BOM costs will decrease by 5-8%, and support and service department expenses will be reduced by 10-20%.

Geely Automobile Holdings Limited CEO Gui Shengyue stated on the same day that a conclusion can be drawn from the historical development and current situation of ZEEKR and Lynk & Co: the strategic integration of ZEEKR and Lynk & Co is imperative today. Wall Street Journal learned that Geely's move is mainly aimed at reducing internal friction and enhancing overall competitiveness.

This move is also a key measure for Geely Holding Group to implement the "Taizhou Declaration" strategic framework. In September this year, Geely Holding released the "Taizhou Declaration," announcing that the company has entered a new stage of strategic transformation. The group will focus on the automotive main business, layout a technology ecosystem, enhance competitiveness, seek progress while maintaining stability, and promote sustainable development through five major measures: "strategic focus, strategic integration, strategic synergy, strategic stability, and strategic talent."

After that, Geely began a series of integrations, with the incorporation of Lynk & Co into ZEEKR being an important part of it.

In Gui Shengyue's view, Lynk & Co has incurred losses due to the impact of its European business, leading to a low valuation, making this transaction a good opportunity for ZEEKR; on the other hand, as ZEEKR's sales have increased, its performance has also risen significantly, making this transaction the best timing for Geely Automobile as well.

Over the past decade, Geely's strategy in brand layout has always been "having more children is good for fighting," either through self-building or acquisitions. Now, Geely has more than ten automotive brands under its umbrella, covering the automotive consumer market almost completely from low-end to high-end.

In the "Taizhou Declaration," Li Shufu, Chairman of Geely Holding Group, pointed out that "Geely will reassess the retention of brands."

This also means that, in addition to the current series of integrations, some of the current brands under Geely will no longer exist Currently, market competition is intensifying, and Geely Holding Group's integration of its various brands is an important measure to respond to market changes, improve operational efficiency, and reduce operating costs. In the future, Geely Holding Group is committed to building ZEEKR and Lynk & Co into a global electric vehicle group with an annual production and sales volume of one million units by the end of 2026