On May 10, Zeekr’s shares soared almost 35% above their initial public offering price, marking a robust debut for the electric vehicle (EV) manufacturer. This is the first significant U.S. market debut by a China-based company since 2021. Zeekr’s successful U.S. flotation aims to distinguish it from the competition of Chinese EV makers vying for a larger European market share.
Zeekr, a high-end EV brand under Geely, the parent company of Volvo and Lotus, has been gaining attention for its luxury electric sedans and SUVs. The company’s flagship model, the Zeekr 001, boasts features like rapid acceleration, advanced driving assistance systems, and a fast-charging battery, making it a strong contender in the premium segment.
High Stakes: Chinese EV Giants Eye Premium Market to Navigate US Tariffs
US Tariffs and Market Strategy
In the past year, Chinese electric car manufacturers have shifted their focus from producing small, inexpensive vehicles to targeting the premium market. This transition coincides with a new 100% import duty imposed by the US on Chinese EVs, posing a significant challenge as these companies begin their global expansion with high-end cars.
Zeekr’s debut comes as the Biden administration plans to increase tariffs on Chinese vehicle imports.
ZEEKR’s CEO, Conghui “Andy” An, has said that,
“ZEEKR plans to enter six European countries in 2024, including Germany, Sweden, and the Netherlands, and is targeting another 38 markets across Southeast Asia and the Middle East.”
Consequently, some companies might halt US expansion plans due to increased costs, while others may establish production facilities in Mexico to bypass tariffs.
Zeekr’s Strategic Leap: Strong IPO and Global Ambitions Amid EV Competition
CATL Partnership
A key factor behind Zeekr’s appeal is its cutting-edge technology. The company benefits from a close relationship with CATL, China’s largest battery manufacturer, providing early access to the latest battery advancements. This partnership ensures that Zeekr vehicles have a competitive range and performance, crucial for success in the high-end market.
Expansion Plans Beyond China
Zeekr was established to meet the growing demand for premium models in China. While the high-end EV brand has seen strong sales growth at home, the company now aims to expand internationally. The US debut marks a key step in Zeekr’s strategy to capture a share of the lucrative North American EV market. This entry coincides with rising consumer demand for electric vehicles, driven by growing environmental awareness and supportive government policies.
Intense competition in China among domestic EV makers and with Tesla has squeezed profits, pushing companies to explore international markets.
As highlighted by Zeekr, the IPO debut achieved a fully diluted valuation of $6.8 billion, about half of the $13 billion valuation from a funding round last year.
In the competitive market, Chinese automakers like BYD, SAIC, and Great Wall Motor are also targeting Europe. They are launching electric models to compete with established European manufacturers. This is why Chinese EV sales in Europe have grown significantly in recent years.
source: Stock analysis
Zeekr’s Stock Soars: Stellar Market Performance Amidst EV Boom
Latest market reports state that Zeekr’s shares peaked at $29.36 after opening at $26, well above the IPO price of $21, closing at $28.26, up 34.6%.
In 2023, Zeekr Intelligent Technology Holding achieved impressive financial results. Here are the key highlights:
Annual Revenue:
- Zeekr’s annual revenue in 2023 reached $7.29 billion.
- This represents a remarkable 59.24% growth compared to the previous year.
source: Stock Analysis
Quarterly Performance:
- For the quarter ending December 31, 2023, Zeekr reported revenue of $2.31 billion.
- The year-over-year growth rate for this quarter was an impressive 75.69%.
EV Sales:
Zeekrs is renowned for focusing on electric mobility. By the end of 2023, Zeekr had delivered over 100,000 electric vehicles. The brand unveiled its third model, the Zeekr X, and began delivering vehicles to users in Europe.
Significantly, this year Zeekr aims to 2x its annual sales with a target of over 200,000 units.
Zeekr has outpaced its competitors in deliveries since the beginning of the year. By April 30, Zeekr delivered 49,148 vehicles, surpassing Xpeng’s 31,214 units and Nio’s 45,673 cars during the same period.
The company’s IPO comes amid rising geopolitical tensions between the U.S. and China, involving trade, intellectual property, Taiwan, and China’s stance on the Russia-Ukraine war.
In April Zeekr witnessed a remarkable achievement by surpassing Tesla in car sales.
This strongly indicated potential competition for the American EV giant. The achievement further highlights Zeekr’s strong domestic presence and its ability to challenge established industry leaders.
On this stellar performance, Zeekr CEO Andy An commented:
“Our sales gap with Tesla keeps on narrowing,”
Despite the impressive sales performance, Zeekr faces fierce competition from Tesla and others in the EV market, amid geopolitical tensions and trade uncertainties. Yet, its focus on luxury features, innovative tech, and a successful IPO signals optimism and strong investor interest amidst broader market losses.
The company said in its SEC filing:
“Through developing and offering next-generation premium BEVs and technology-driven solutions, we aspire to lead the electrification, intelligentization, and innovation of the automobile industry.”
Looking forward, Zeekr’s ~ 35% surge in its US market debut marks a promising start for the Chinese EV maker. Zeekr is committed to delivering high-quality, technologically advanced EVs as it navigates the competitive landscape and expands its international footprint Investors and consumers alike will be watching closely to see how Zeekr leverages this momentum in the coming months.
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