New stock market competition for Tesla, NIO & Co: Geely subsidiary Zeekr before IPO

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• Geely wants to take the e-car subsidiary Zeekr public
• Targeted valuation of Zeekr at US$10 billion
• With Polestar, competition from the company’s own family

Zeekr is considered a luxury car brand in the electric car sector. The demand for premium products with alternative drives has apparently not yet been satisfied – in order to be able to ramp up production, the company is now planning an IPO on Wall Street. The Chinese parent company Geely had already made the stock exchange plans public in October, and the Chinese are now taking the first official step in this regard.

Billion valuation planned

According to Reuters, Geely recently applied for a stock exchange listing and submitted the necessary documents. Zeekr’s IPO is then planned for the second quarter of 2023, two people entrusted with the process told the news agency.

According to reports, the company wants to raise more than one billion US dollars as part of the IPO, and hopes for a company valuation of ten billion US dollars. In the last financing round in 2021, Zeekr was valued at around 9 billion dollars. The hope for a higher valuation is said to be the reason why the decision was made not to list in Hong Kong.

First China issue in New York in a year and a half

If it actually goes public in New York, it would be the first IPO by a Chinese company on the US stock exchange in around a year and a half. In July 2021, the Chinese government introduced stricter control rules for Chinese companies listed abroad, probably ensuring that some Chinese companies at least reconsidered their IPO in the United States. The US government had also increased regulatory pressure on Chinese companies listed on US stock exchanges in connection with the tensions between Washington and Beijing.

What are the stock market prospects for Zeekr?

Zeekr is still a relatively young company on the electric car market. The parent company Geely founded the electric car subsidiary in April 2021 in view of increasing demand for premium electric vehicles in China. Zeekr currently has a vehicle model on the market with the “001”, and the Geely subsidiary brought a total of 60,600 of these vehicles to the Chinese people between January and September 2022. For the coming year, Zeekr plans to expand into Europe, but it is not yet clear whether the “001” can also be purchased in Germany directly at the European market launch.

The product range is to be expanded to seven vehicles by 2025. Zeekr is planning vehicle variants with both single and dual engines.

So the plans for the future are ambitious, but the competition is tough. Zeekr is in direct competition with the much more established and production-experienced electric car manufacturers Tesla and NIO. In addition, Polestar is a rival from its own family of companies: Geely’s Swedish subsidiary Polestar only celebrated its stock market debut in New York in the summer of 2021 – through a SPAC deal. Polestar and Zeekr are quite comparable: Both are active in the premium segment, and at the time of the IPO Polestar sold 55,000 vehicles, selling a similar number of cars as Zeekr is currently selling.

The Polestar IPO had flushed $850 million into the group’s coffers, although the company’s hopes of around $1 billion in possible IPO revenue had previously been similar to those of Zeekr. Although the Polestar share was able to jump in price right from the start, the Polestar share has lost significantly in value since then and is currently listed massively below its starting price.

For investors considering an investment in Zeekr, this is initially sobering news. The electric car sector is characterized by strong competition, mainly because established traditional car manufacturers such as Volkswagen and BMW are increasingly stepping up their electric car ambitions. An investment in this area is anything but low-risk.

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